Note 12. Basic and Diluted Earnings Per Share

Basic earnings per share of common stock is computed using the weighted average number of shares of common stock outstanding during each period. The diluted earnings per share of common stock may include the effect of outstanding stock options, shares of restricted stock, or shares of our common stock held in a rabbi trust except in periods in which there is a net loss. The following table summarizes the calculation of basic and diluted earnings per share:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011			2010		2011			2010
(millions, except per share amounts)
Net Income	$	441		$	232	$	749		$	673
Earnings Adjustment from Assumed Conversion of
Dilutive Shares of Common Stock in Rabbi Trust (1)		(12	)		-		(10	)		3
Net Income Used for Diluted Earnings Per Share Calculation	$	429		$	232	$	739		$	676

Weighted Average Number of Shares Outstanding, Basic		177			175		176			175
Incremental Shares from Assumed Conversion of
Dilutive Stock Options, Restricted Stock and Shares of Common Stock in Rabbi Trust		3			2		3			3
Weighted Average Number of Shares Outstanding, Diluted		180			177		179			178
Earnings Per Share, Basic	$	2.50		$	1.33	$	4.25		$	3.86
Earnings Per Share, Diluted		2.39			1.31		4.12			3.80

Number of antidilutive stock options and shares of restricted
stock excluded from calculation above		1			2		2			2

(1)

Consistent with GAAP, when dilutive, deferred compensation gains or losses, net of tax, are excluded from net income while the NBL shares held in the rabbi trust are included in the diluted share count. For this reason, the diluted earnings per share calculations for the three and nine months ended September 30, 2011 exclude deferred compensation gains, net of tax; and the diluted earnings per share calculation for the nine months ended September 30, 2010 excludes a deferred compensation loss, net of tax.