Earnings Per Share

3 Months Ended

Mar. 31, 2019

Basic earnings per share (“basic EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share (“diluted EPS”) gives effect to all dilutive potential shares outstanding resulting from employee stock options, restricted stock units, performance share units and stock appreciation rights ("SARs") during the period.

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2019 and 2018:



	Three Months Ended March 31,
	2019		2018
Net income	$	1,021	$	10,657

Basic – weighted average shares outstanding	28,173		28,008

Effect of dilutive potential securities	861		565

Diluted – weighted average shares outstanding	29,034		28,573

Net income (per share)
Basic	$	0.04	$	0.38
Diluted	0.04		0.37

The shares used in the calculation of diluted EPS exclude options and SARs to purchase shares where the exercise price was greater than the average market price of common shares for the period and the effect of the inclusion would be anti-dilutive. Such shares aggregated approximately 0.3 million and 0.4 million for the three months ended March 31, 2019 and 2018. As more fully described in Note 17, our 2.625% convertible notes due in 2024 (the “Notes”) are convertible under certain circumstances, as defined in the indenture, into a combination of cash and CONMED common stock. As a result of convertible note hedge transactions, potential dilution upon conversion of the Notes occurs when the market price per share of our common stock, as measured under the terms of the convertible note hedge transactions, is greater than the strike price of the convertible note hedge transactions ($114.92). As of March 31, 2019, our share price has not exceeded the strike price of the convertible note hedge transactions. Therefore, under the net share settlement method, there were no potential shares issuable under the Notes to be used in the calculation of diluted EPS.