19. Earnings Per Share

Income (Loss) Attributable to Archrock Common Stockholders Per Common 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, performance-based restricted stock units and stock to be issued pursuant to our employee stock purchase plan unless their effect would be anti-dilutive.

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



	Year Ended December 31,
	2018			2017			2016
Net income (loss) from continuing operations attributable to Archrock stockholders	$	21,063		$	19,007		$	(54,129	)
Loss from discontinued operations, net of tax	—			(54		)	(426		)
Net income (loss) attributable to Archrock stockholders	21,063			18,953			(54,555		)
Less: Net income attributable to participating securities	(815		)	(681		)	(630		)
Net income (loss) attributable to Archrock common stockholders	$	20,248		$	18,272		$	(55,185	)

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



	Year Ended December 31,
	2018		2017		2016
Weighted average common shares outstanding including participating securities	110,843		70,860		70,468
Less: Weighted average participating securities outstanding	(1,538	)	(1,308	)	(1,475	)
Weighted average common shares outstanding — used in basic income (loss) per common share	109,305		69,552		68,993
Net dilutive potential common shares issuable:
On exercise of options and vesting of performance-based restricted stock units	111		112		*
On the settlement of employee stock purchase plan shares	5		—		—
Weighted average common shares outstanding — used in diluted income (loss) per common share	109,421		69,664		68,993

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*	Excluded from diluted 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):



	Year Ended December 31,
	2018	2017	2016
Net dilutive potential common shares issuable:
On exercise of options where exercise price is greater than average market value for the period	195	268	597
On exercise of options and vesting of restricted stock units	—	—	60
Net dilutive potential common shares issuable	195	268	657