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Earnings Per Share | 9 Months Ended
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Sep. 30, 2019
Earnings Per Share |
13. | 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 September 30, 2019 and 2018. Basic and diluted weighted average shares outstanding were as follows:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
|  | (Amounts in thousands, except per share data) |
Net income |  | $ | 1,659 |  |  | $ | 4,794 |  |  | $ | 17,807 |  |  | $ | 10,979 |
Weighted average shares used in computing net income per share—basic |  |  | 50,852 |  |  |  | 43,822 |  |  |  | 47,087 |  |  |  | 43,729 |
Effect of dilutive shares: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Stock options and restricted stock awards |  |  | 957 |  |  |  | 651 |  |  |  | 843 |  |  |  | 511 |
Convertible senior notes |  |  | — |  |  |  | 1,355 |  |  |  | — |  |  |  | 892 |
Dilutive potential common shares |  |  | 957 |  |  |  | 2,006 |  |  |  | 843 |  |  |  | 1,403 |
Weighted average shares used in computing net income per share—diluted |  |  | 51,809 |  |  |  | 45,828 |  |  |  | 47,930 |  |  |  | 45,132 |
Earnings per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 0.03 |  |  | $ | 0.11 |  |  | $ | 0.38 |  |  | $ | 0.25 |
Diluted |  | $ | 0.03 |  |  | $ | 0.10 |  |  | $ | 0.37 |  |  | $ | 0.24 |
At September 30, 2019, there were outstanding options to purchase 959,916 shares of the Company’s common stock at a weighted average exercise price of $30.44 per share and 740,213 shares of common stock issuable upon the vesting of RSUs. For the three and nine months ended September 30, 2019, 47,705 and 85,503 options to purchase shares of the Company’s common stock, respectively, 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 September 30, 2018, there were outstanding options to purchase 1,033,312 shares of the Company’s common stock at a weighted average exercise price of $26.99 per share and 707,716 shares issuable upon the vesting of RSUs. For the three and nine month periods ended September 30, 2018, 329,409 and 485,520 options to purchase shares of the Company’s common stock, respectively, 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 2016 Notes, the Company had a choice to settle the conversion obligation for the 2016 Notes in cash, shares or any combination of the two. During the third quarter of 2019 , the Company settled the remaining 2016 Notes for a $115.0 million total aggregate principal and 2,316,200 shares of its common stock. In July 2019, the Company issued $287.5 million aggregate principal amount of the 2019 Notes. As provided by the terms of the indenture underlying the 2019 Notes, conversion of the 2019 Notes will be settled in cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. As of September 30, 2019, the 2019 Notes were not convertible. The Company currently intends to settle the par value of the 2019 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 the 2019 Notes. Accordingly, the par value of the 2019 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 2019 Notes is based on the difference between the Company’s current period average stock price and the conversion price of the 2019 Notes, provided there is a premium. Pursuant to this accounting standard, there is no dilution from the accreted principal of the 2019 Notes for the periods show n.

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- Definition The entire disclosure for earnings per share. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 260 -URI http://asc.fasb.org/topic&trid=2144383 + Details
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