Earnings Per Share

3 Months Ended

Mar. 31, 2017

J. Earnings Per Share

Basic earnings per share (EPS) amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared, by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.

The number of shares and per share amounts for all periods presented below have been updated to reflect the Reverse Stock Split (see Note A).

The information used to compute basic and diluted EPS attributable to Arconic common shareholders was as follows (shares in millions):


	First quarter ended
	March 31,
	2017			2016
Income from continuing operations after income taxes	$	322		$	110
Less: Preferred stock dividends declared		(17	)		(18	)

Income from continuing operations available to Arconic common shareholders		305			92
Income (loss) from discontinued operations after income taxes and noncontrolling interests		—			(94	)

Net income (loss) available to Arconic common shareholders - basic		305			(2	)
Add: Interest expense related to convertible notes		2			—
Add: Dividends related to mandatory convertible preferred stock		17			—

Net income (loss) available to Arconic common shareholders - diluted	$	324		$	(2	)

Average shares outstanding - basic		440			438
Effect of dilutive securities:
Stock options		1			—
Stock and performance awards		5			—
Mandatory convertible preferred stock		39			—
Convertible notes		14			—

Average shares outstanding - diluted		499			438

The following shares were excluded from the calculation of Average shares outstanding – diluted as their effect was anti-dilutive.


	First quarter ended
	March 31,
	2017		2016
Mandatory convertible preferred stock		—		26
Convertible notes		—		9
Stock awards		—		3
Stock options⁽¹⁾		4		1

⁽¹⁾	Average option price of shares excluded from the calculation of Average shares outstanding – diluted was $33.32 for the first quarter of 2017 and $38.22 for the first quarter of 2016.