Net Income (Loss) Per Share

9 Months Ended

Sep. 30, 2016

Note 10. Net Income (Loss) Per Share

Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the periods less shares of common stock subject to repurchase and non-vested stock awards. Diluted net income (loss) per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the periods. The dilutive effect of outstanding stock options and restricted stock awards is reflected in diluted earnings per share by application of the treasury stock method. Potentially dilutive common shares consist of common shares issuable upon the exercise of stock options. Potentially dilutive common shares are excluded in net loss periods, as their effect would be anti-dilutive.

A reconciliation of the numerators and denominators of the basic and diluted net income (loss) per share calculations is as follows (in thousands, except per share data):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Numerator:
Net income (loss) attributable to AXT, Inc	$	2,229	$	42	$	3,422	$	(985)
Less: Preferred stock dividends		(44)		(44)		(132)		(132)
Net income (loss) available to common stockholders	$	2,185	$	(2)	$	3,290	$	(1,117)
Denominator:
Denominator for basic net income (loss) per share - weighted average common shares		32,110		31,988		32,043		32,262
Effect of dilutive securities:
Common stock options		827		—		425		—
Restricted stock awards		201		—		147		—
Denominator for dilutive net income (loss) per common shares		33,138		31,988		32,615		32,262
Net income (loss) attributable to AXT, Inc. per common share:
Basic	$	0.07	$	(0.00)	$	0.10	$	(0.03)
Diluted	$	0.07	$	(0.00)	$	0.10	$	(0.03)
Options excluded from diluted net income (loss) per share as the impact is anti-dilutive		652		3,037		910		3,037
Restricted stock excluded from diluted net income (loss) per share as the impact is anti-dilutive		—		466		—		466

The 883,000 shares of $0.001 par value Series A preferred stock issued and outstanding as of September 30, 2016 and December 31, 2015, valued at $3,532,000, are non-voting and non-convertible preferred stock with a 5.0% cumulative annual dividend rate payable when declared by the board of directors and a $4 per share liquidation preference over common stock, which must be paid before any distribution is made to common stockholders. These preferred shares were issued to Lyte Optronics, Inc. stockholders in connection with the completion of our acquisition of Lyte Optronics, Inc. on May 28, 1999.