Earnings Per Share

3 Months Ended

May 31, 2017

NOTE 9—Earnings Per Share

The Company computes basic net income per common share by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted net income per common share is computed by dividing net income by the weighted average number of common shares and dilutive potential common share equivalents then outstanding. Potential common share equivalents consist of shares issuable upon the exercise of stock options or vesting of share-based awards.

The following table reconciles the numerators and denominators of the earnings per share (“EPS”) calculation for the three months ended May 31, 2017 and May 31, 2016 (in thousands, except per share amounts):


	Three Months Ended
	May 31, 2017		May 31, 2016
Net income, basic and diluted	$	73,190	$	61,184

Weighted average common shares outstanding		177,243		181,168
Incremental shares attributable to assumed vesting or exercise of outstanding equity award shares		2,974		3,019
Dilutive effect of convertible notes		1,593		—

Diluted shares		181,810		184,187

Diluted net income per share	$	0.40	$	0.33

With respect to the Company’s convertible notes, the Company has the option to pay cash or deliver, as the case may be, either cash, shares of its common stock or a combination of cash and shares of its common stock for the aggregate amount due upon conversion of the convertible notes. The Company’s intent is to settle the principal amount of the convertible notes in cash upon conversion. As a result, upon conversion of the convertible notes, only the amounts payable in excess of the principal amounts of the convertible notes are considered in diluted EPS under the treasury stock method. See NOTE 14—Convertible Notes for detailed information on the convertible notes.

Warrants to purchase 10,965,630 shares of the Company’s common stock at $101.65 per share were outstanding during the three months ended May 31, 2017 and May 31, 2016 but were not included in the computation of diluted EPS because the warrants’ exercise price was greater than the average market price of the Company’s common stock during the related period.

The following share awards were not included in the computation of diluted EPS because the aggregate value of proceeds considered received upon either exercise or vesting was greater than the average market price of the Company’s common stock during the related periods and the effect of including such share awards in the computation would be anti-dilutive (in thousands):


	Three Months Ended
	May 31, 2017		May 31, 2016
Number of shares considered anti-dilutive for calculating diluted EPS		14		1,081