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. The dilutive effects of performance-based stock awards described in the Stock-Based Compensation footnote are included in the computation of diluted earnings per share at the level the related performance criteria are met through the respective balance sheet date. The total shareholder return performance shares of 174,400 shares granted in 2016 and 174,750 shares granted in 2018 were excluded from the computation of the diluted earnings per share for the three and nine months ended September 30, 2018 because the impact of these potential shares would be anti-dilutive to the basic earnings per share.

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



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except per share amounts)	2018		2017		2018		2017
Basic earnings per share:
Net earnings attributable to BorgWarner Inc.	$	203.8	$	184.9	$	700.7	$	586.1
Weighted average shares of common stock outstanding	207.471		209.803		208.505		210.657
Basic earnings per share of common stock	$	0.98	$	0.88	$	3.36	$	2.78

Diluted earnings per share:
Net earnings attributable to BorgWarner Inc.	$	203.8	$	184.9	$	700.7	$	586.1

Weighted average shares of common stock outstanding	207.471		209.803		208.505		210.657
Effect of stock-based compensation	1.267		1.210		1.282		0.918
Weighted average shares of common stock outstanding including dilutive shares	208.738		211.013		209.787		211.575
Diluted earnings per share of common stock	$	0.98	$	0.88	$	3.34	$	2.77