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):



	First quarter ended
	March 31,
	2019			2018
Net income	$	187		$	143
Less: preferred stock dividends declared	(1		)	(1		)
Net income available to Arconic common shareholders - basic	186			142
Add: Interest expense related to convertible notes	4			3
Net income available to Arconic common shareholders - diluted	$	190		$	145

Average shares outstanding - basic	471			482
Effect of dilutive securities:
Stock options	—			5
Stock and performance awards	4			2
Convertible notes	14			14
Average shares outstanding - diluted	489			503

Common stock outstanding at March 31, 2019 and 2018 was 453 and 483, respectively. The decrease in common stock outstanding at March 31, 2019 was due to the impact of share repurchases of approximately 32 in the first quarter of 2019 (see Note H). As average shares outstanding are used in the calculation for both basic and diluted EPS, the full impact of share repurchases was not realized in the first quarter of 2019 EPS as the share repurchases occurred midway through the quarter on February 21, 2019.

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



	First quarter ended
	March 31,
	2019	2018
Stock options⁽¹⁾	8	6


⁽¹⁾	The average exercise price per share of options was $26.67 and $30.75 for the first quarter of 2019 and 2018, respectively.