Earnings Per Share

Basic earnings per share (EPS) amounts are computed by dividing earnings (loss), 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):



For the year ended December 31,	2018			2017			2016
Net income (loss) from continuing operations attributable to Arconic	$	642		$	(74	)	$	(1,062	)
Less: preferred stock dividends declared	(2		)	(53		)	(69		)
Income (loss) from continuing operations available to Arconic common shareholders	640			(127		)	(1,131		)
Income from discontinued operations after income taxes and noncontrolling interests⁽¹⁾	—			—			121
Net income (loss) available to Arconic common shareholders—basic	640			(127		)	(1,010		)
Add: interest expense related to convertible notes	11			—			—
Net income (loss) available to Arconic common shareholders - diluted	$	651		$	(127	)	$	(1,010	)
Average shares outstanding - basic	483			451			438
Effect of dilutive securities:
Stock options	1			—			—
Stock and performance awards	5			—			—
Convertible notes	14			—			—
Average shares outstanding - diluted	503			451			438


⁽¹⁾	Calculated from the Statement of Consolidated Operations as Income from discontinued operations after income taxes less Net income from discontinued operations attributable to noncontrolling interests.

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



	2018	2017	2016
Mandatory convertible preferred stock	n/a	39	39
Convertible notes	—	14	14
Stock options⁽¹⁾	9	11	13
Stock awards	—	7	8


⁽¹⁾	The average exercise price of options per share was $26.79, $33.32, and $26.93 for 2018, 2017, and 2016, respectively.

In 2017, had Arconic generated sufficient net income, 30 million, 14 million, 5 million, and 1 million potential shares of common stock related to the mandatory convertible preferred stock, convertible notes, stock awards, and stock options, respectively, would have been included in diluted average shares outstanding. The mandatory convertible preferred stock converted on October 2, 2017 (see Note I).

In 2016, had Arconic generated sufficient net income, 28 million, 10 million, 4 million, and 1 million potential shares of common stock related to the mandatory convertible preferred stock, convertible notes, stock awards, and stock options, respectively, would have been included in diluted average shares outstanding.