Earnings (Loss) Per Share Attributable to Navistar International Corporation

The following table presents the information used in the calculation of our basic and diluted earnings (loss) per share all attributable to NIC in our Consolidated Statements of Operations:



	Three Months Ended July 31,					Nine Months Ended July 31,
(in millions, except per share data)	2017		2016			2017			2016
Numerator:
Amounts attributable to Navistar International Corporation common stockholders:
Income (loss) from continuing operations, net of tax	$	36	$	(34	)	$	(106	)	$	(63	)
Income from discontinued operations, net of tax	1		—			1			—
Net income (loss)	$	37	$	(34	)	$	(105	)	$	(63	)

Denominator:
Weighted average shares outstanding:
Basic	98.3		81.7			91.1			81.7
Effect of dilutive securities	0.3		—			—			—
Diluted	98.6		81.7			91.1			81.7

Earnings (loss) per share attributable to Navistar International Corporation:
Basic:
Continuing operations	$	0.37	$	(0.42	)	$	(1.16	)	$	(0.77	)
Discontinued operations	0.01		—			0.01			$	—
	$	0.38	$	(0.42	)	$	(1.15	)	$	(0.77	)
Diluted:
Continuing operations	$	0.37	$	(0.42	)	$	(1.16	)	$	(0.77	)
Discontinued operations	0.01		—			0.01			—
	$	0.38	$	(0.42	)	$	(1.15	)	$	(0.77	)

The conversion rate on our 4.5% Senior Subordinated Convertible Notes due 2018 (the "2018 Convertible Notes") is 17.1233 shares of common stock per $1,000 principal amount of 2018 Convertible Notes, equivalent to an initial conversion price of approximately $58.40 per share of common stock. The 2018 Convertible Notes have an anti-dilutive effect when calculating diluted earnings per share when our average stock price is less than $58.40.

The conversion rate on our 4.75% Senior Subordinated Convertible Notes due 2019 (the “2019 Convertible Notes”) is 18.4946 shares of common stock per $1,000 principal amount of 2019 Convertible Notes, equivalent to an initial conversion price of approximately $54.07 per share of common stock. The 2019 Convertible Notes have an anti-dilutive effect when calculating diluted earnings per share when our average stock price is less than $54.07.

The computation of diluted earnings per share also excludes outstanding options and other common stock equivalents in periods where inclusion of such potential common stock instruments would be anti-dilutive.

For the three months ended July 31, 2016, no dilutive securities were included in the computation of diluted earnings per share because they would have been anti-dilutive due to the net loss attributable to NIC. Additionally, certain securities have been excluded from the computation of earnings per share, as our average stock price during the period was less than their respective exercise prices. For the three months ended July 31, 2016, the aggregate shares not included were 15.2 million.

For the three months ended July 31, 2017, certain securities have been excluded from the computation of earnings per share, as our average stock price during the period was less than their respective exercise prices. For the three months ended July 31, 2017, the aggregate shares not included were 14.6 million.

In February 2017, we consummated our previously announced strategic alliance with Volkswagen Truck & Bus ("VW T&B"), which included an equity investment in the Company by VW T&B pursuant to a Stock Purchase Agreement (the "Stock Purchase Agreement"), a License and Supply Framework Agreement and a Procurement JV Framework Agreement.

Pursuant to the Stock Purchase Agreement, on February 28, 2017 we issued and VW T&B purchased 16.2 million shares of our common stock for an aggregate purchase price of $256 million at $15.76 per share (a 19.9% stake (16.6% on a fully-diluted basis)) in the Company, excluding stock issuance costs.

For both the nine months ended July 31, 2017 and 2016, no dilutive securities were included in the computation of diluted earnings per share because they would have been anti-dilutive due to the net loss attributable to NIC. Additionally, certain securities have been excluded from the computation of earnings per share, as our average stock price during the period was less than their respective exercise prices. For the nine months ended July 31, 2017 and 2016, the aggregate shares not included were 14.7 million and 15 million, respectively.

For both the three and nine months ended July 31, 2017 and 2016, the aggregate shares not included in the computation of earnings per share were primarily comprised of 3.4 million shares related to the 2018 Convertible Notes and 7.6 million shares related to the 2019 Convertible Notes.