Note 9 — Earnings per Common Share

Basic net income per common share is based upon the weighted average common shares outstanding during the period. Diluted net income per common share is based upon the weighted average number of common shares outstanding, including the dilutive effect, if any, of stock options, warrants and the conversion feature of convertible notes using the treasury stock method.

Previously, diluted net income per share assumed the principal amount of the convertible Notes would be cash settled and any conversion spread would be settled using common shares, as the Company has the choice of settling either in cash or shares. The Company had demonstrated a past practice and intent of cash settlement for the principal and stock settlement of the conversion spread. As a result, earnings per share calculations for periods ended prior to and including September 30, 2014 only included the assumption of conversion to common shares for the convertible spread. During the quarter ended December 31, 2014, the Company changed its practice of cash settlement and settled redemptions using common shares for both the principal and conversion spread and accordingly, earnings per share amounts were calculated using the if-converted method. For the year ended December 31, 2015, the earnings per share amounts were calculated using the if-converted method.

The Company’s potentially dilutive shares consist of: (i) vested and unvested stock options that are in-the-money, (ii) unvested RSUs, (iii) warrants that are in-the-money, and (iv) shares potentially issuable upon conversion of the Notes.

A reconciliation of the earnings per share data from a basic to a fully diluted basis is detailed below (amounts in thousands, except per share data):

	2015		(3) 2014 (as Restated)			2013
Income from continuing operations used for basic earnings per share	$	150,798	$	14,388		$	52,362
Convertible debt income adjustments, net of tax	3,222		—			—

Income from continuing operations adjusted for convertible debt as used for diluted earnings per share	$	154,020	$	14,388		$	52,362
Income from continuing operations per share:
Basic	$	1.29	$	0.14		$	0.54
Diluted (1)	$	1.22	$	0.13		$	0.46
Loss from discontinued operations, net of tax	$	—	$	(504	)	$	—
Loss from discontinued operations, net of tax per share:
Basic	$	—	$	(0.01	)	$	—
Diluted	$	—	$	—		$	—
Shares used in computing income (loss) per share:
Weighted average basic shares outstanding	116,980		103,480			96,181
Dilutive securities:
Stock options and unvested RSUs	1,667		4,234			4,516
Stock warrants	—		1,874			6,702
Shares issuable on conversion of the Notes (2)	7,115		—			6,499

Total dilutive securities	8,782		6,108			17,717

Weighted average diluted shares outstanding	125,762		109,588			113,898

(1)

Due to a change in the expectation that management may settle all future note conversions solely through shares in the year and quarter ended December 31, 2014, the diluted income from continuing operations per share calculation includes the dilutive effect of convertible debt and is offset by the exclusion of interest expense and deferred financing fees related to the convertible debt of $3.2 million, after-tax for the year ended December 31, 2015.

(2)

Shares issuable on conversion of the Notes for the year ended December 31, 2015 have increased in comparison to the fiscal year ended December 31, 2013 due to stock appreciation which underlies the shares issuable on conversion of the Notes and the Company’s change in practice on October 1, 2014 to more likely than not settle future Note conversions solely through shares as we are now utilizing the if-converted method for convertible debt conversion obligations. This practice was continued in the year ended December 31, 2015.

(3)

In the year ended December 31, 2014 the computation of diluted net earnings per share does not include the effect of convertible debt under the if-converted method, consisting of 13.5 million shares and $5.8 million of additional income, as the effect would have been antidilutive.