(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 the reportable period. 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, 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 July 2016, the Company completed an underwritten public offering of 98,900,000 shares of its common stock, with an offering price to the public of $13.00 per share. Net proceeds from the common stock offering were approximately $1,247 million, after underwriting discount and offering expenses. The proceeds from the offering were used to repay $375 million of the $750 million term loan entered into in November 2015 and to settle certain tender offers by purchasing an aggregate principal amount of approximately $700 million of the Company’s outstanding senior notes due in the first quarter of 2018. The remaining proceeds of the offering have been used for general corporate purposes.

The depositary shares issued in January 2015 entitles the holder 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 (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 total potential shares of common stock resulting from the conversion will range from 63,829,830 to 74,999,895 shares.

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. Accordingly, 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.

On June 21, 2017, the Company declared its quarterly dividend, payable to holders of the mandatory convertible preferred stock, and announced that it would pay the quarterly dividend in stock, in lieu of cash, to the extent permitted by the certificate of designations for the Series B preferred stock. The Company issued 3,346,738 shares of common stock on July 17, 2017 in payment for the dividend.

The following table presents the computation of earnings per share for the three and six months ended June 30, 2017 and 2016:


	For the three months ended				For the six months ended
	June 30,				June 30,
	2017		2016		2017		2016
	(in millions, except share/per share amounts)
Net income (loss)	$	284	$	(593)	$	635	$	(1,725)
Mandatory convertible preferred stock dividend		27		27		54		54
Participating securities - mandatory convertible preferred stock		33		–		76		–
Net income (loss) attributable to common stock	$	224	$	(620)	$	505	$	(1,779)

Number of common shares:
Weighted average outstanding		496,419,815		385,594,815		494,753,391		384,232,831
Issued upon assumed exercise of outstanding stock options		–		–		3,317		–
Effect of issuance of non-vested restricted common stock		761,311		–		707,576		–
Effect of issuance of non-vested performance units		1,043,473		–		1,163,559		–
Effect of issuance of mandatory convertible preferred stock		–		–		–		–
Weighted average and potential dilutive outstanding		498,224,599		385,594,815		496,627,843		384,232,831

Earnings (loss) per common share:
Basic	$	0.45	$	(1.61)	$	1.02	$	(4.63)
Diluted	$	0.45	$	(1.61)	$	1.02	$	(4.63)

The following table presents the common stock shares equivalent excluded from the calculation of diluted earnings per share for the three and six months ended June 30, 2017 and 2016, as they would have had an antidilutive effect:


	For the three months ended		For the six months ended
	June 30,		June 30,
	2017	2016	2017	2016
Unvested stock options	−	4,028,819	1,344,942	4,781,109
Unvested share-based payment	6,106,322	3,353,371	3,504,222	2,844,365
Performance units	1,268,040	780,920	980,836	577,624
Mandatory convertible preferred stock	74,999,895	74,999,895	74,999,895	74,999,895
Total	82,374,257	83,163,005	80,829,895	83,202,993