(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 Company’s participating securities do not participate in undistributed net losses because they are not contractually obligated to do so.

The following table presents the computation of earnings per share for the three and six months ended June 30, 2015 and 2014:


	For the three months ended					For the six months ended
	June 30,					June 30,
	2015			2014		2015		2014
	(in millions, except share/per share amounts)
Net income (loss)	$	(788)	$		207	$	(710)	$	401
Mandatory convertible preferred stock dividend		27			–		52		–
Net income (loss) attributable to common stock		(815)			207		(762)		401

Number of common shares:
Weighted average outstanding		382,114,011			351,391,582		378,797,446		351,307,527
Issued upon assumed exercise of outstanding stock options (1)		–			490,302		–		418,987
Effect of issuance of non-vested restricted common stock (2)		–			577,599		–		472,008
Effect of issuance of non-vested performance units (3)		–			120,039		–		107,746
Effect of issuance of mandatory convertible preferred stock (4)		–			–		–		–
Weighted average and potential dilutive outstanding		382,114,011			352,579,522		378,797,446		352,306,268

Earnings (loss) per common share:
Basic	$	(2.13)	$		0.59	$	(2.01)	$	1.14
Diluted	$	(2.13)	$		0.59	$	(2.01)	$	1.14

⁽¹⁾

Due to the net loss for the three and six months ended June 30, 2015, options of 3,832,533 shares and 3,768,666 shares, respectively, were antidilutive and excluded from the calculation of diluted earnings per share. For the three and six months ended June 30, 2014, options of 654,189 shares and 1,026,958 shares, respectively, were antidilutive and excluded from the calculation of diluted earnings per share.

⁽²⁾

Due to the net loss for the three and six months ended June 30, 2015, 1,507,788 shares and 1,787,257 shares, respectively, of restricted stock were antidilutive and excluded from the calculation of diluted earnings per share. For the three and six months ended June 30, 2014, 19,045 shares and 22,952 shares, respectively, of restricted stock were antidilutive and excluded from the calculation of diluted earnings per share.

⁽³⁾

Due to the net loss for the three and six months ended June 30, 2015, 129,202 shares and 116,185 shares, respectively, of performance units were antidilutive and excluded from the calculation of diluted earnings per share.

⁽⁴⁾

Due to the net loss for the three and six months ended June 30, 2015, 72,723,440 and 64,687,701 of weighted average common shares issuable upon the assumed conversion of the mandatory convertible preferred stock, respectively, were antidilutive and excluded from the calculation of diluted earnings per share.