Earnings Per Share

3 Months Ended

Mar. 31, 2019

12.

Earnings Per Share

The Company reports earnings per share in accordance with ASC 260,

“Earnings Per Share,”

which establishes standards for computing and presenting earnings per share. Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares and dilutive common share equivalents then outstanding. Potential common share equivalents consist of restricted stock awards and the incremental common shares issuable upon the exercise of stock options. Under the treasury stock method, unexercised “in-the-money” stock options and warrants are assumed to be exercised at the beginning of the period or at issuance, if later. The assumed proceeds are then used to purchase common shares at the average market price during the period. Share-based payment awards that entitle their holders to receive non-forfeitable dividends before vesting are considered participating securities and are considered in the calculation of basic and diluted earnings per share. There were no such participating securities outstanding during the three-month periods ended March 31, 2019 and 2018.

Basic and diluted weighted average shares outstanding were as follows:

	Three Months Ended March 31,
	2019		2018
	(Amounts in thousands, except per share data)
Net income	$	8,053	$	3,448
Weighted average shares used in computing net income per share - basic		43,968		43,621
Effect of dilutive shares:
Stock options and restricted stock awards		725		390
Convertible senior notes		1,586		316
Dilutive potential common shares		2,311		706
Weighted average shares used in computing net income per share - diluted		46,279		44,327
Earnings per share:
Basic	$	0.18	$	0.08
Diluted	$	0.17	$	0.08

At March 31, 2019, there were outstanding options to purchase 1,027,831 shares of the Company’s common stock at a weighted average exercise price of $28.53 per share and 680,549 shares of common stock issuable upon the vesting of RSUs. For the three months ended March 31, 2019, 210,388 shares of the Company’s common stock were excluded from the calculation of diluted earnings per share because the exercise prices of the stock options were greater than or equal to the average price of the common shares and were therefore anti-dilutive.

At March 31, 2018, there were outstanding options to purchase 1,109,353 shares of the Company’s common stock at a weighted average exercise price of $25.34 per share and 703,076 shares issuable upon the vesting of RSUs. For the three months ended March 31, 2018,

593,874

options to purchase shares of the Company’s common stock were excluded from the calculation of diluted earnings per share because the exercise prices of the stock options were greater than or equal to the average price of the common shares and were therefore anti-dilutive.

As provided by the terms of the indenture underlying the senior convertible notes (the “Convertible Notes”), the Company has a choice to settle the conversion obligation for the Convertible Notes in cash, shares or any combination of the two. The Company currently intends to settle the par value of the Convertible Notes in cash and any excess conversion premium in shares. The Company applies the provisions of ASC 260,

“Earnings Per Share”,

Subsection 10-45-44, to determine the diluted weighted average shares outstanding as it relates to the conversion spread on its Convertible Notes. Accordingly, the par value of the Convertible Notes is not included in the calculation of diluted income per share, but the dilutive effect of the conversion premium is considered in the calculation of diluted net income per share using the treasury stock method. The dilutive impact of the Convertible Notes is based on the difference between the Company’s current period average stock price and the conversion price of the Convertible Notes, provided there is a premium. Pursuant to this accounting standard, there is no dilution from the accreted principal of the Convertible Notes for the periods shown.