EARNINGS PER SHARE

Basic and diluted earnings per share are based on the weighted-average number of shares of common stock and potential common stock outstanding during the period. Potential common stock, for purposes of determining diluted earnings per share, includes the effects of dilutive restricted stock units, stock options and convertible securities. The effect of such potential common stock is computed using the treasury stock method or the if-converted method, as applicable.

The following tables present a reconciliation of the numerator and denominator of the basic and diluted earnings per share computation for income from continuing operations for the three and nine months ended September 30, 2013 and 2012. In the table below, income represents the numerator and weighted-average shares represent the denominator:



	Three Months Ended September 30,
	2013					2012
	Income		Shares	$ per Share		Loss			Shares	$ per Share
	(in millions except per share data)
BASIC EARNINGS PER SHARE
Income (loss) from continuing operations attributable to The AES Corporation common stockholders	$	129	742	$	0.17	$	(1,585	)	747	$	(2.12	)
EFFECT OF DILUTIVE SECURITIES
Stock options	—		1	—		—			—	—
Restricted stock units	—		4	—		—			—	—
DILUTED EARNINGS PER SHARE	$	129	747	$	0.17	$	(1,585	)	747	$	(2.12	)



	Nine Months Ended September 30,
	2013					2012
	Income		Shares	$ per Share		Loss			Shares	$ per Share
	(in millions except per share data)
BASIC EARNINGS PER SHARE
Income (loss) from continuing operations attributable to The AES Corporation common stockholders	$	410	745	$	0.55	$	(1,171	)	759	$	(1.54	)
EFFECT OF DILUTIVE SECURITIES
Restricted stock units	—		4	—		—			—	—
DILUTED EARNINGS PER SHARE	$	410	749	$	0.55	$	(1,171	)	759	$	(1.54	)

The calculation of diluted earnings per share excluded 6.1 million and 6.4 million options outstanding at September 30, 2013 and 2012, respectively, that could potentially dilute basic earnings per share in the future. These options were not included in the computation of diluted earnings per share because the exercise price of these options exceeded the average market price during the related period. The calculation of diluted earnings per share also excluded 2.0 million options outstanding at September 30, 2012 that could potentially dilute earnings per share in the future. These options were not included in the computation of diluted earnings per share for three and nine months ended September 30, 2012 because the potential shares would be anti-dilutive given the loss from continuing operations. Had the Company generated income from continuing operations in the three and nine months ended September 30, 2012, 1.0 million and 1.1 million, respectively, of potential common shares of common stock related to the options would have been included in diluted average shares outstanding.

The calculation of diluted earnings per share also excluded 1.4 million and 1.2 million restricted stock units outstanding at September 30, 2013 and 2012, respectively, that could potentially dilute basic earnings per share in the future. These restricted stock units were not included in the computation of diluted earnings per share because the average amount of compensation cost per share attributed to future service and not yet recognized exceeded the average market price during the related period and thus to include the restricted units would have been anti-dilutive. The calculation of diluted earnings per share also excluded 5.3 million restricted stock units outstanding at September 30, 2012 that could potentially dilute earnings per share in the future. These restricted units were not included in the computation of diluted earnings per share for the three and nine months ended September 30, 2012 because the potential shares would be anti-dilutive given the loss from continuing operations. Had the Company generated income from continuing operations in the three and nine months ended September 30, 2012, 3.1 million and 3.0 million, respectively, of potential common shares of common stock related to the restricted stock units would have been included in diluted average shares outstanding.

For the three and nine months ended September 30, 2013 and 2012, all 15.0 million shares of potential common stock associated with convertible debentures were omitted from the earnings per share calculation because they were anti-dilutive.

During the three and nine months ended September 30, 2012, 0.2 million and 1.3 million shares of common stock were issued upon the exercise of stock options. During the nine months ended September 30, 2013 and 2012, 1.0 million shares of common stock were issued, respectively, under the Company’s profit-sharing plan.