Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have

been outstanding had potential dilutive shares of common stock been issued. The dilutive effect of stock options, RSUs and performance shares are reflected in diluted net income per share by applying the treasury stock method. There were no Frontdoor equity awards outstanding prior to the Spin-off.



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions, except per share data)	2019		2018		2019		2018
Net Income	$	61	$	49	$	134	$	108
Weighted-average common shares outstanding⁽¹⁾		84.7		84.5		84.6		84.5
Effect of dilutive securities:
RSUs		0.2		—		0.1		—
Stock options⁽²⁾		0.1		—		0.1		—
Weighted-average common shares outstanding - assuming dilution		84.9		84.5		84.8		84.5
Basic earnings per share	$	0.72	$	0.58	$	1.59	$	1.28
Diluted earnings per share	$	0.72	$	0.58	$	1.58	$	1.28

(1)For the three and nine months ended September 30, 2018, earnings per share was calculated based on the 84,515,619 shares of Frontdoor stock that were outstanding at the date of the Spin-off.

(2)Options to purchase 0.3 million shares and 0.5 million shares for the three and nine months ended September 30, 2019, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.