7. NET INCOME (LOSS) PER SHARE

Basic net income per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted average number of common and potentially dilutive shares outstanding during the period, including the potentially dilutive shares resulting from the conversion of the 2024 Notes, and excluding the effect of stock options and restricted stock outstanding for periods when their effect is anti-dilutive, using the treasury stock method.

Convertible debt instruments that may be settled entirely or partly in cash (such as the 2024 Notes) may, in certain circumstances where the borrower has the ability and intent to settle in cash, be accounted for under the treasury stock method. The Company issued the 2024 Notes with a combination settlement feature, which it has the ability and intent to use upon conversion of the notes, to settle the principal amount of debt for cash and the excess of the principal portion in shares of the Company’s common stock. As a result, of the approximately 6.8 million shares underlying the 2024 Notes, only the shares required to settle the excess of the principal portion would be considered dilutive under the treasury stock method. Further, approximately 0.3 million restricted stock units (RSUs) with performance-based vesting requirements (PRSUs) have been excluded from the calculation of diluted net income per share as the performance condition has not been achieved. In loss periods, basic net loss per share and diluted net loss per share are identical because the otherwise dilutive potential common shares become anti-dilutive and are therefore excluded.

Net income (loss) per share was calculated as follows (in thousands, except per share data):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2018		2017			2018		2017
Net income (loss) - basic and diluted	$	50,764	$	(11,125	)	$	3,033	$	(149,436	)
Weighted-average common shares outstanding:
Basic		90,555		88,325			90,064		87,894
Effect of dilutive securities:
Employee stock purchase program		7		—			2		—
Stock options		3,352		—			3,322		—
Restricted stock		629		—			558		—
2024 Notes		2,255		—			1,326		—
Diluted		96,798		88,325			95,272		87,894
Net income (loss) per share:
Basic	$	0.56	$	(0.13	)	$	0.03	$	(1.70	)
Diluted	$	0.52	$	(0.13	)	$	0.03	$	(1.70	)

Shares which have been excluded from diluted per share amounts because their effect would have been anti-dilutive include the following (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

2018

2017

2018

2017

Stock options and restricted stock

882

7,862

823

7,898