Earnings Per Share

The Company presents both basic and diluted earnings per share of common stock (“EPS”). Basic EPS is calculated by dividing net earnings attributable to BorgWarner Inc. by the weighted average shares of common stock outstanding during the reporting period. Diluted EPS is calculated by dividing net earnings attributable to BorgWarner Inc. by the weighted average shares of common stock and common equivalent stock outstanding during the reporting period.

The dilutive impact of stock-based compensation is calculated using the treasury stock method. The treasury stock method assumes that the Company uses the assumed proceeds from the exercise of awards to repurchase common stock at the average market price during the period. The assumed proceeds under the treasury stock method include the purchase price that the grantee will pay in the future and compensation cost for future service that the Company has not yet recognized. Options are only dilutive when the average market price of the underlying common stock exceeds the exercise price of the options.

The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share of common stock:



	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except per share amounts)	2017		2016		2017		2016
Basic earnings per share:
Net earnings attributable to BorgWarner Inc.	$	212.0	$	164.4	$	401.2	$	328.5
Weighted average shares of common stock outstanding	210.572		215.735		211.084		216.562
Basic earnings per share of common stock	$	1.01	$	0.76	$	1.90	$	1.52

Diluted earnings per share:
Net earnings attributable to BorgWarner Inc.	$	212.0	$	164.4	$	401.2	$	328.5

Weighted average shares of common stock outstanding	210.572		215.735		211.084		216.562
Effect of stock-based compensation	0.906		0.928		0.773		0.839
Weighted average shares of common stock outstanding including dilutive shares	211.478		216.663		211.857		217.401
Diluted earnings per share of common stock	$	1.00	$	0.76	$	1.89	$	1.51