Earnings Per Share

Basic earnings per share (EPS) was computed by dividing the earnings available to Xcel Energy Inc.’s common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS was computed by dividing the earnings available to Xcel Energy Inc.’s common shareholders by the diluted weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other agreements to issue common stock (i.e., common stock equivalents) were settled. The weighted average number of potentially dilutive shares outstanding used to calculate Xcel Energy Inc.’s diluted EPS is calculated using the treasury stock method.

Common Stock Equivalents — Xcel Energy Inc. currently has common stock equivalents related to certain equity awards in share-based compensation arrangements.

Common stock equivalents causing dilutive impact to EPS include commitments to issue common stock related to time based equity compensation awards and time based employer matching contributions to certain 401(k) plan participants. In October 2013, Xcel Energy determined that it would settle 401(k) employer matching contributions in cash instead of common stock for substantially all of its employees. Share-based compensation accounting for the impacted employee groups ceased in October 2013, and corresponding expense amounts recorded to equity were reclassified to a liability for expected cash settlements.

Stock equivalent units granted to Xcel Energy Inc.’s Board of Directors are included in common shares outstanding upon grant date as there is no further service, performance or market condition associated with these awards. Restricted stock, granted to settle amounts due to certain employees under the Xcel Energy Inc. Executive Annual Incentive Award Plan, is included in common shares outstanding when granted.

Share-based compensation arrangements for which there is currently no dilutive impact to EPS include the following:


•	Equity awards subject to a performance condition; included in common shares outstanding when all necessary conditions for settlement have been satisfied by the end of the reporting period.


•	Liability awards subject to a performance condition; any portions settled in shares are included in common shares outstanding upon settlement.

The dilutive impact of common stock equivalents affecting EPS was as follows:



	Three Months Ended Sept. 30, 2014					Three Months Ended Sept. 30, 2013
(Amounts in thousands, except per share data)	Income		Shares	Per Share Amount		Income		Shares	Per Share Amount
Net income	$	368,582				$	364,752
Basic EPS:
Earnings available to common shareholders	368,582		506,082	$	0.73	364,752		498,149	$	0.73
Effect of dilutive securities:
Time based equity awards	—		283			—		492
Diluted EPS:
Earnings available to common shareholders	$	368,582	506,365	$	0.73	$	364,752	498,641	$	0.73



	Nine Months Ended Sept. 30, 2014					Nine Months Ended Sept. 30, 2013
(Amounts in thousands, except per share data)	Income		Shares	Per Share Amount		Income		Shares	Per Share Amount
Net income	$	824,967				$	798,179
Basic EPS:
Earnings available to common shareholders	824,967		502,983	$	1.64	798,179		495,256	$	1.61
Effect of dilutive securities:
Time based equity awards	—		230			—		511
Diluted EPS:
Earnings available to common shareholders	$	824,967	503,213	$	1.64	$	798,179	495,767	$	1.61