Earnings Per Share

9 Months Ended

Sep. 30, 2020

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, performance stock units 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. In periods when the Company has a net loss, stock awards are excluded from the calculation of earnings per share as their inclusion would have an antidilutive effect.

Basic and diluted weighted average shares outstanding were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(Amounts in thousands, except per share data)
Net income	$	14,552	$	1,659	$	40,228	$	17,807

Weighted average shares used in computing net income per share - diluted		52,545		50,852		52,341		47,087
Effect of dilutive shares:
Stock options and restricted stock awards		916		957		951		843
Dilutive effect of unvested performance stock units		8		—		8		—

Dilutive potential common shares		924		957		959		843

Weighted average shares used in computing net income per share - diluted		53,469		51,809		53,300		47,930

Earnings per share:
Basic	$	0.28	$	0.03	$	0.77	$	0.38

Diluted	$	0.27	$	0.03	$	0.75	$	0.37

At September 30, 2020, there were outstanding options to purchase 723,914 shares of the Company’s common stock at a weighted average exercise price of $41.03 per share and 675,567 shares of common stock issuable upon the vesting of stock units, which include RSUs and performance stock units. For the three and nine months ended September 30, 2020, 60,202 and 117,160 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 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 issuable upon the vesting of stock units. For the three and nine months ended September 30, 2019, 47,705 and 85,503 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

2016

Notes, the Company had a choice to settl

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 total aggregate principal of $

115.0

million and

2,316,200

shares of its common stock. As of March

2019

, the par value of the

2016

Notes is not included in the calculation of diluted earnings per share, but the dilutive effect of the conversion premium is considered in the calculation of diluted earnings per share using the treasury stock method. The dilutive impact of the

2016

Notes was based on the difference between the Company’s current period average stock price and the conversion price of the

2016

Notes, provided there was a premium.

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, 2020, 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 three and nine months ended September 30, 2020.