Earnings Per Share

9 Months Ended

Sep. 30, 2019

EARNINGS PER SHAREBasic earnings per common share is computed by dividing net income 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 January 2015, the Company issued 34,500,000 depositary shares that entitled the holder to a proportional fractional interest in the rights and preferences of the mandatory convertible preferred stock, including conversion, dividend, liquidation and voting rights. The mandatory convertible preferred stock had 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, therefore, was considered a participating security. Accordingly, it has been 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, earnings are allocated to participating securities 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 January 12, 2018, all outstanding shares of mandatory convertible preferred stock converted to 74,998,614 shares of the Company’s common stock. The Company paid out its last dividend payment of approximately $27 million associated with the depositary shares in January 2018.

During the second half of 2018, the Company repurchased 39,061,269 shares of its outstanding common stock for approximately $180 million at an average price of $4.63 per share. In the first quarter of 2019, the Company completed its share repurchase program by purchasing 5,260,687 shares of its outstanding common stock for approximately $21 million at an average price of $3.84 per share.

The following table presents the computation of earnings per share for the three and nine months ended September 30, 2019 and 2018:


	For the three months ended September 30,						For the nine months ended September 30,
(in millions, except share/per share amounts)	2019		2018		2019		2018
Net income (loss)	$	49	$	(29)	$	781	$	230
Participating securities – mandatory convertible preferred stock	—		—		—		1
Net income (loss) attributable to common stock	$	49	$	(29)	$	781	$	229

Number of common shares:
Weighted average outstanding	539,221,101		581,171,753		539,315,170		577,912,421
Issued upon assumed exercise of outstanding stock options	—		—		—		—
Effect of issuance of non-vested restricted common stock	187,706		—		400,120		640,365
Effect of issuance of non-vested performance units	629,380		—		727,359		1,276,072
Weighted average and potential dilutive outstanding	540,038,187		581,171,753		540,442,649		579,828,858

Earnings per common share
Basic	$	0.09	$	(0.05)	$	1.45	$	0.40
Diluted	$	0.09	$	(0.05)	$	1.44	$	0.39

The following table presents the common stock shares equivalent excluded from the calculation of diluted earnings per share for the three and nine months ended September 30, 2019 and 2018, as they would have had an antidilutive effect:


	For the three months ended September 30,			For the nine months ended September 30,
	2019	2018	2019	2018
Unexercised stock options	5,102,882	717	5,115,334	—
Unvested share-based payment	2,136,453	3,463,802	1,797,963	4,246,492
Performance units	240,450	2,000,553	247,443	856,703
Mandatory convertible preferred stock	—	—	—	3,296,642
Total	7,479,785	5,465,072	7,160,740	8,399,837