(5) EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income (loss) attributable to common stock by the weighted average number of common shares outstanding during each year. The diluted earnings per share calculation adds to the weighted average number of common shares outstanding: the incremental shares that would have been outstanding assuming the exercise of dilutive stock options, the vesting of unvested restricted shares of common stock and performance units and the assumed conversion of mandatory convertible preferred stock. An antidilutive impact is an increase in earnings per share or a reduction in net loss per share resulting from the conversion, exercise, or contingent issuance of certain securities.

In January 2015, the Company completed concurrent underwritten public offerings of 30,000,000 shares of its common stock and 34,500,000 depositary shares (both share counts include shares issued as a result of the underwriters exercising their options to purchase additional shares). The common stock offering was priced at $23.00 per share. Net proceeds, after underwriting discount and expenses, from the common stock offering were approximately $669 million. Net proceeds, after underwriting discount and expenses, from the depositary share offering were approximately $1.7 billion. Each depositary share represents a 1/20th interest in a share of the Company’s mandatory convertible preferred stock, with a liquidation preference of $1,000 per share (equivalent to a $50 liquidation preference per depositary share). The proceeds from the offerings were used to partially repay borrowings under the Company’s $4.5 billion 364-day bridge facility with the remaining balance of the bridge facility fully repaid with proceeds from the Company’s January 2015 public offering of $2.2 billion in long-term senior notes.

The mandatory convertible preferred stock entitles the holders to a proportional fractional interest in the rights and preferences of the convertible preferred stock, including conversion, dividend, liquidation and voting rights. Unless converted earlier at the option of the holders, on or around January 15, 2018 each share of convertible preferred stock will automatically convert into between 37.0028 and 43.4782 shares of the Company’s common stock (and, correspondingly, each depositary share will convert into between 1.85014 and 2.17391 shares of the Company’s common stock), subject to customary anti-dilution adjustments, depending on the volume-weighted average price of the Company’s common stock over a 20 trading day averaging period immediately prior to that date.

The mandatory convertible preferred stock has the non-forfeitable right to participate on an as converted basis at the conversion rate then in effect in any common stock dividends declared and as such, is considered a participating security. As such, it is included in the computation of basic and diluted earnings per share, pursuant to the two-class method. In the calculation of basic earnings per share attributable to common shareholders, participating securities are allocated earnings based on actual dividend distributions received plus a proportionate share of undistributed net income attributable to common shareholders, if any, after recognizing distributed earnings.

The following table presents the computation of earnings per share for the three month periods ended March 31, 2015 and 2014:


		For the three months ended
		March 31,
		2015		2014

		(in millions, except share/per share amounts)
Net income	$	78	$	194
Mandatory convertible preferred stock dividend		25		–
Net income attributable to shareholders		53		194
Participating securities - mandatory convertible preferred stock		7		–
Net income attributable to common stock		46		194

Number of common shares:
Weighted average outstanding		375,444,030		351,222,538
Issued upon assumed exercise of outstanding stock options (1)		–		348,798
Effect of issuance of non-vested restricted common stock (1)		133,634		349,608
Effect of issuance of non-vested performance units		390		64,877
Effect of mandatory convertible preferred stock (2)		–		–
Weighted average and potential dilutive outstanding		375,578,054		351,985,821

Earnings per common share:
Basic	$	0.12	$	0.55
Diluted	$	0.12	$	0.55

⁽¹⁾

Options for 3,704,089 shares and 1,916,645 shares of restricted stock were excluded from the calculation for the three months ended March 31, 2015 because they would have had an antidilutive effect. Options for 1,179,914 shares and 29,688 shares of restricted stock were excluded from the calculation for the three months ended March 31, 2014 because they would have had an antidilutive effect.

⁽²⁾

Weighted average common shares issuable upon the assumed conversion of the mandatory convertible preferred stock totaling 58,333,252 shares were excluded from the computation of diluted earnings per share as such conversion would have been antidilutive.