Earnings Per Share

9 Months Ended

Sep. 30, 2020

12. EARNINGS PER SHARE

Basic earnings per share (EPS) is calculated by dividing net income or loss attributable to NCR, less any dividends (declared or cumulative undeclared), deemed dividends, accretion or decretion, redemption or induced conversion on our Series A Convertible Preferred Stock, by the weighted average number of shares outstanding during the period.

In computing diluted EPS, we adjust the numerator used in the basic EPS computation, subject to anti-dilution requirements, to add back the dividends (declared or cumulative undeclared), deemed dividends, accretion or decretion, redemption or induced conversion on our Series A Convertible Preferred Stock. We adjust the denominator used in the basic EPS computation, subject to anti-dilution requirements, to include the dilution from potential shares related to the Series A Convertible Preferred Stock and stock-based compensation plans.

The holders of Series A Convertible Preferred Stock, unvested restricted stock units and stock options do not have nonforfeitable rights to common stock dividends or common stock dividend equivalents. Accordingly, the Series A Convertible Preferred Stock, unvested restricted stock units and stock options do not qualify as participating securities. See Note 7, Stock Compensation Plans for share information on NCR’s stock compensation plans.

The components of basic earnings per share are as follows:


In millions, except per share amounts	Three months ended September 30				Nine months ended September 30
	2020		2019		2020		2019
Numerator:
Income from continuing operations	$	31	$	105	$	118	$	230
Dividends on Series A Convertible Preferred Stock	(6)		(12)		(19)		(37)
Deemed dividend on Series A Convertible Preferred Stock redemption	—		(67)		—		(67)
Income from continuing operations attributable to NCR common stockholders	25		26		99		126
Loss from discontinued operations, net of tax	—		(15)		—		(15)
Net income attributable to NCR common stockholders	$	25	$	11	$	99	$	111

Denominator:
Basic weighted average number of shares outstanding	128.5		121.4		128.2		120.3

Basic earnings per share:
From continuing operations	$	0.19	$	0.21	$	0.77	$	1.05
From discontinued operations	—		(0.12)		—		(0.13)
Total basic earnings per share	$	0.19	$	0.09	$	0.77	$	0.92

The components of diluted earnings per share are as follows:


In millions, except per share amounts	Three months ended September 30				Nine months ended September 30
	2020		2019		2020		2019
Numerator:
Income from continuing operations	$	31	$	105	$	118	$	230
Dividends on Series A Convertible Preferred Stock	(6)		(12)		(19)		(37)
Deemed dividend on Series A Convertible Preferred Stock redemption	—		(67)		—		(67)
Income from continuing operations attributable to NCR common stockholders	25		26		99		126
Loss from discontinued operations, net of tax	—		(15)		—		(15)
Net income attributable to NCR common stockholders	$	25	$	11	$	99	$	111

Denominator:
Basic weighted average number of shares outstanding	128.5		121.4		128.2		120.3

Dilutive effect of as-if converted Series A Convertible Preferred Stock	—		—		—		—
Dilutive effect of restricted stock units and stock options	1.2		2.0		1.6		2.4
Weighted average diluted shares	129.7		123.4		129.8		122.7

Diluted earnings per share:
From continuing operations	$	0.19	$	0.21	$	0.76	$	1.03
From discontinued operations	—		(0.12)		—		(0.12)
Total diluted earnings per share	$	0.19	$	0.09	$	0.76	$	0.90

For the three months ended September 30, 2020, shares related to the as-if converted Series A Convertible Preferred Stock of 13.6 million were excluded from the diluted share count because their effect would have been anti-dilutive. For the three months ended September 30, 2020, weighted average restricted stock units and stock options of 14.1 million were excluded from the diluted share count because their effect would have been anti-dilutive.

For the three months ended September 30, 2019, shares related to the as-if converted Series A Convertible Preferred Stock of 28.0 million were excluded from the diluted share count because their effect would have been anti-dilutive. The number of shares of Series A Convertible Preferred Stock that were excluded is inclusive of both existing and redeemed shares. For the three months ended September 30, 2019, weighted average restricted stock units and stock options of 4.5 million were excluded from the diluted share count because their effect would have been anti-dilutive.

For the nine months ended September 30, 2020, shares related to the as-if converted Series A Convertible Preferred Stock of 13.4 million were excluded from the diluted share count because their effect would have been anti-dilutive. For the nine months ended September 30, 2020, weighted average restricted stock units and stock options of 10.5 million were excluded from the diluted share count because their effect would have been anti-dilutive.

For the nine months ended September 30, 2019, shares related to the as-if converted Series A Convertible Preferred Stock of 29.0 million were excluded from the diluted share count because their effect would have been anti-dilutive. The number of shares of Series A Convertible Preferred stock that were excluded is inclusive of both existing and redeemed shares. For the nine months ended September 30, 2019, weighted average restricted stock units and stock options of 4.4 million were excluded from the diluted share count because their effect would have been anti-dilutive.