16. Earnings per Share

Basic income (loss) attributable to Archrock common stockholders per common share is computed using the two-class method, which is an earnings allocation formula that determines net income (loss) per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Under the two-class method, basic income (loss) attributable to Archrock common stockholders per common share is determined by dividing income (loss) attributable to Archrock common stockholders after deducting amounts allocated to participating securities, by the weighted average number of common shares outstanding for the period. Participating securities include unvested restricted stock and stock settled restricted stock units that have nonforfeitable rights to receive dividends or dividend equivalents, whether paid or unpaid. During periods of net loss, no effect is given to participating securities because they do not have a contractual obligation to participate in our losses.

Diluted income (loss) attributable to Archrock common stockholders per common share is computed using the weighted average number of shares outstanding adjusted for the incremental common stock equivalents attributed to outstanding options and stock to be issued pursuant to our employee stock purchase plan unless their effect would be anti-dilutive.

The following table summarizes net income (loss) attributable to Archrock common stockholders used in the calculation of basic and diluted loss per common share (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Income (loss) from continuing operations attributable to Archrock stockholders	$	9,974		$	(10,181	)	$	8,095		$	(28,553	)
Loss from discontinued operations, net of tax	—			(54		)	—			(54		)
Net income (loss) attributable to Archrock stockholders	9,974			(10,235		)	8,095			(28,607		)
Less: Net income attributable to participating securities	(241		)	(179		)	(554		)	(513		)
Net income (loss) attributable to Archrock common stockholders	$	9,733		$	(10,414	)	$	7,541		$	(29,120	)

The following table shows the potential shares of common stock that were included in computing diluted income (loss) attributable to Archrock common stockholders per common share (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Weighted average common shares outstanding including participating securities	129,486		70,952		104,489		70,847
Less: Weighted average participating securities outstanding	(1,644	)	(1,308	)	(1,576	)	(1,327	)
Weighted average common shares outstanding — used in basic income (loss) per common share	127,842		69,644		102,913		69,520
Net dilutive potential common shares issuable:
On exercise of options	111		*		96		*
On the settlement of employee stock purchase plan shares	2		*		4		*
Weighted average common shares outstanding — used in diluted income (loss) per common share	127,955		69,644		103,013		69,520

——————


*	Excluded from diluted income (loss) per common share as their inclusion would have been anti-dilutive.

The following table shows the potential shares of common stock issuable that were excluded from computing diluted income (loss) attributable to Archrock common stockholders per common share as their inclusion would have been anti-dilutive (in thousands):



	Three Months Ended September 30,		Nine Months Ended September 30,
	2018	2017	2018	2017
Net dilutive potential common shares issuable:
On exercise of options where exercise price is greater than average market value for the period	187	240	199	278
On exercise of options	—	100	—	116
Net dilutive potential common shares issuable	187	340	199	394