Earnings Per Share

9 Months Ended

Sep. 26, 2020

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income by the weighted average common shares outstanding for the period and includes the dilutive impact of potential new common shares issuable upon vesting and exercise of stock options, vesting of restricted stock units, and assumed conversion of $402.5 million of aggregate principal amount of the 2025 Notes. Potential shares of common stock are excluded from the computation of diluted EPS if their effect is anti-dilutive.

We have the intent to settle the principal amount of the 2025 Notes in cash upon conversion, and to pay the conversion premium in cash or stock at our option; potentially dilutive common shares related to the 2025 Notes will be determined by applying the treasury stock method. See Note 4. “Long-term Debt” for more information on the 2025 Notes.

The shares underlying the conversion option of the 2025 Notes will have an impact on our diluted EPS when net income is reported and when the average market price of our common stock for the period exceeds the conversion price of $31.17 per share.

A reconciliation of the numerators and denominators of the basic and diluted EPS calculations is as follows:


	Three Months Ended				Nine Months Ended
In thousands, except EPS	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
Net income	$	35,289	$	1,192	$	1,198	$	28,879
Weighted average shares outstanding for basic EPS	80,676		78,474		80,376		78,387
Effect of dilutive securities:
Stock options	1,694		3,024		1,818		3,074
Restricted stock	195		63		114		49
2025 Notes	1,230		—		410		—
Weighted average shares outstanding for diluted EPS	83,795		81,561		82,718		81,510
Basic EPS	$	0.44	$	0.02	$	0.01	$	0.37
Diluted EPS	$	0.42	$	0.01	$	0.01	$	0.35
Anti-dilutive options, RSUs outstanding excluded from EPS	426		315		516		289