3. Earnings Per Share

Basic earnings or loss per share attributable to PHH Corporation was computed by dividing Net income or loss attributable to PHH Corporation for the period by the weighted-average number of shares outstanding during the period. Diluted earnings or loss per share attributable to PHH Corporation was computed by dividing Net income or loss attributable to PHH Corporation for the period by the weighted-average number of shares outstanding during the period, assuming all potentially dilutive common shares were issued.

In the third quarter of 2014, as discussed in Note 13, “Stock-Related Matters”, the Company entered into two separate Accelerated Share Repurchase agreements to repurchase an aggregate of $200 million of PHH’s Common stock. The initial delivery of shares resulted in an immediate 6,962,695 reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings or loss per share on the effective date of the agreement.

The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method excludes the effect of any contingently issuable securities where the contingency has not been met and the effect of securities that would be anti-dilutive. Anti-dilutive securities may include:

§ outstanding stock-based compensation awards representing shares from restricted stock units and stock options;

§ stock assumed to be issued related to convertible notes; and

§ sold warrants related to the Company’s Convertible notes due 2014.

The computation also excludes shares related to the issuance of the Convertible notes due 2014 and the related purchased options as they were required to be settled in cash, which matured and expired, respectively, on September 1, 2014. Shares associated with anti-dilutive securities are outlined in the table below.

The following table summarizes the calculations of basic and diluted earnings or loss per share attributable to PHH Corporation for the periods indicated:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
	(In millions, except share and per share data)
(Loss) income from continuing operations, net of tax	$	(85)	$	(63)	$	(154)	$	71
Less: net income attributable to noncontrolling interest	3		6		5		30
Net (loss) income from continuing operations attributable to PHH Corporation	(88)		(69)		(159)		41
Income from discontinued operations, net of tax	303		17		273		49
Net income (loss) attributable to PHH Corporation	$	215	$	(52)	$	114	$	90

Weighted-average common shares outstanding — basic	53,781,049		57,383,139		56,307,165		57,318,131
Effect of potentially dilutive securities:
Share-based payment arrangements(1)	—		—		—		207,572
Conversion of debt securities	—		—		—		7,977,723
Weighted-average common shares outstanding — diluted	53,781,049		57,383,139		56,307,165		65,503,426

Basic earnings (loss) per share:
From continuing operations	$	(1.64)	$	(1.19)	$	(2.83)	$	0.73
From discontinued operations	5.64		0.29		4.86		0.85
Total attributable to PHH Corporation	$	4.00	$	(0.90)	$	2.03	$	1.58

Diluted earnings (loss) per share:
From continuing operations	$	(1.64)	$	(1.19)	$	(2.83)	$	0.64
From discontinued operations	5.64		0.29		4.86		0.74
Total attributable to PHH Corporation	$	4.00	$	(0.90)	$	2.03	$	1.38

———————

(1) Represents incremental shares from restricted stock units and stock options.

The following table summarizes anti-dilutive securities excluded from the computation of dilutive shares:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2014	2013	2014	2013

Outstanding stock-based compensation awards(1)	1,575,780	2,037,307	1,575,780	688,338
Assumed conversion of debt securities	8,794,619	8,274,740	9,124,934	—

———————

(1) For both the three and nine months ended September 30, 2014, excludes 619,398 shares that are contingently issuable for which the contingency has not been met.