Note  1 -- Summary of Significant Accounting Policies Note  2 -- Accounting Changes Note  3 -- Special Charges Note  4 -- Segment Information Note  5 -- Leases Note  6 -- Supplementary Income Statement Information Note  7 -- Provision for Income Taxes Note  8 -- Earnings Per Share Note  9 -- Supplementary Balance Sheet Information Note 10 -- Property, Plant and Equipment - Net Note 11 -- Deferred Income Taxes Note 12 -- Goodwill Note 13 -- Other Intangible Assets Note 14 -- Debt Note 15 -- Financial Instruments Note 16 -- Shareholder's Equity Note 17 -- Preferred Stock Note 18 -- Incentive Plans and Stock Options Note 19 -- Retirement Programs Note 20 -- Commitments and Contingencies Note 21 -- Quarterly Data (Unaudited)
 

NOTE 8. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income for the period by the weighted average number of Praxair common shares outstanding. Diluted earnings per share is computed by dividing net income for the period by the weighted average number of Praxair common shares outstanding and dilutive common stock equivalents, as follows:

	2003	2002	2001
NUMERATOR (MILLIONS OF DOLLARS)
Income before cumulative effect of accounting changes	$ 585	$548	$ 432
Cumulative effect of accounting changes	—	(139)	(2)
Net income	$ 585	$409	$ 430
DENOMINATOR (THOUSANDS OF SHARES)
Weighted average shares outstanding	325,198	324,311	321,782
Shares earned and issuable under compensation plans	1,190	1,225	1,238
Weighted average shares used in basic earnings per share	326,388	325,536	323,020
Effect of dilutive securities:
Convertible debt	269	55	90
Employee stock options	4,334	3,898	3,904
Weighted average shares used in diluted earnings per share	330,991	329,489	327,014
BASIC EARNINGS PER COMMON SHARE
Income before cumulative effect of accounting changes	$1.79	$1.68	$1.34
Net income	$1.79	$1.26	$1.33
DILUTED EARNINGS PER COMMON SHARE
Income before cumulative effect of accounting changes	$1.77	$1.66	$1.32
Net income	$1.77	$1.24	$1.31

Stock options for 2,420,200 and 4,907,790 shares were not included in the computation of diluted earnings per share for the years ended December 31, 2002 and 2001, respectively, because the exercise prices were greater than the average market price of the common stock. In 2003, no stock options were excluded from the computation.