Quarterly report pursuant to Section 13 or 15(d)

Earnings Per Share

v2.4.1.9
Earnings Per Share
3 Months Ended
Mar. 31, 2015
Earnings Per Share [Abstract]  
Earnings Per Share

11. Earnings Per Share

Basic earnings per share represents net income divided by the weighted average number of common shares outstanding for the period. Diluted earnings per share represents net income divided by the weighted average number of common shares outstanding, inclusive of the effect of dilutive securities such as outstanding stock options, SARs, stock units and warrants.

The following are the common share amounts used to compute the basic and diluted earnings per share for each period:

 

     For the Three Months
Ended March 31,
 
     2015      2014  
     (in millions)  

Weighted average shares used in basic computations

     82.3         95.4   

Dilutive effect of exercise of equity grants outstanding

     2.3         5.4   
  

 

 

    

 

 

 

Weighted average shares used in diluted computations

  84.6      100.8   
  

 

 

    

 

 

 

There were an aggregate of 8.7 million and 2.0 million of equity grants, consisting of stock options, SARs, and stock units that were outstanding during the three months ended March 31, 2015 and 2014, respectively, but were not included in the computation of diluted earnings per share because their effect would be anti-dilutive.

Since the Company will settle the principal amount of its Convertible Notes in cash and settle the conversion feature for the amount above the conversion price in common shares, or the conversion spread, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted earnings per share, if applicable. The conversion spread will have a dilutive impact on diluted earnings per share when the average market price of the Company’s common shares for a given period exceeds the initial conversion price of $86.28 per share. For the three months ended March 31, 2015 and 2014, the Convertible Notes have been excluded from the computation of diluted earnings per share as the effect would be anti-dilutive since the conversion price of the Convertible Notes exceeded the average market price of the Company’s common shares for the three months ended March 31, 2015 and 2014. The initial conversion rate and conversion price is described further in Note 4, Long-Term Debt.

The Capped Call Transactions executed in connection with the issuance of the Convertible Notes are excluded from the calculation of diluted earnings per share because their impact is always anti-dilutive.