Earnings Per Share (Unaudited)

9 Months Ended

Sep. 30, 2011

3. Earnings Per Share


		Three Months Ended September 30,
		2011		2010		2011		2010
		Basic				Diluted
	($ in millions except per share, shares in millions)

Net income	$	554	$	445	$	554	$	445
Dividend equivalent payments		(2)		(2)		0		(2)
Income available to common stockholders	$	552	$	443	$	554	$	443

Weighted-average shares outstanding		343.2		366.3		343.2		366.3
Dilutive effect of outstanding options and share-settled awards						5.8		5.3
Adjusted weighted-average shares outstanding						349.0		371.6
Earnings per share	$	1.61	$	1.21	$	1.59	$	1.19


		Nine Months Ended September 30,
		2011		2010		2011		2010
		Basic				Diluted
	($ in millions except per share, shares in millions)

Net income	$	1,436	$	1,094	$	1,436	$	1,094
Dividend equivalent payments		(6)		(6)		(2)		(6)
Income available to common stockholders	$	1,430	$	1,088	$	1,434	$	1,088

Weighted-average shares outstanding		349.8		368.5		349.8		368.5
Dilutive effect of outstanding options and share-settled awards						5.8		5.3
Adjusted weighted-average shares outstanding						355.6		373.8
Earnings per share	$	4.09	$	2.95	$	4.03	$	2.91

During the third quarters and first nine months of 2011 and 2010, dividend equivalent payments were made to holders of stock options and restricted stock units. For purposes of computing basic earnings per share, the total amount of dividend equivalent payments made to holders of stock options and restricted stock units were deducted from net income to determine income available to common stockholders. For purposes of computing diluted earnings per share, NS evaluates on a grant-by-grant basis those stock options and restricted stock units receiving dividend equivalent payments under the two-class and treasury stock methods to determine which method is the more dilutive for each grant. For those grants for which the two-class method was more dilutive, net income was reduced by the amount of dividend equivalent payments on these grants to determine income available to common stockholders. The diluted calculations exclude options having exercise prices exceeding the average market price of Common Stock as follows: zero in 2011 and 2010.