Earnings Per Share

Basic earnings per share (EPS) amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared, by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.

The information used to compute basic and diluted EPS attributable to Arconic common shareholders was as follows (shares in millions):



	Second quarter ended						Six months ended
	June 30,						June 30,
	2018		2017				2018			2017
Net income	$	120	$	212			$	263		$	534
Less: Preferred stock dividends declared	—		(18		)		(1		)	(35		)
Net income available to Arconic common shareholders - basic	120		194				262			499
Add: Interest expense related to convertible notes	3		2				6			4
Add: Dividends related to mandatory convertible preferred stock	—		—				—			34
Net income available to Arconic common shareholders - diluted	$	123	$	196		—	$	268		$	537

Average shares outstanding - basic	483		441				483			440
Effect of dilutive securities:
Stock options	—		2				—			2
Stock and performance awards	5		5				5			5
Mandatory convertible preferred stock	—		—				—			39
Convertible notes	14		14				14			14
Average shares outstanding - diluted	502		462				502			500

The following shares were excluded from the calculation of average shares outstanding – diluted as their effect was anti-dilutive (shares in millions).



	Second quarter ended		Six months ended
	June 30,		June 30,
	2018	2017	2018	2017
Mandatory convertible preferred stock	—	39	—	—
Stock options⁽¹⁾	9	7	9	7


⁽¹⁾	The average exercise price of options per share was $26.80 for the second quarter and six months ended June 30, 2018 and $28.85 for the second quarter and six months ended June 30, 2017.