Computation of Earnings (Loss) Per Share

3 Months Ended

Mar. 31, 2017

Computation of Earnings (Loss) Per Share

For the three months ended March 31, 2017 and 2016, basic earnings (loss) per share was computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding, including restricted stock units (RSUs) vested during the period. Diluted earnings per share (“EPS”) reflects the potential dilution that could occur if the earnings were divided by the weighted-average number of common shares and potentially dilutive common shares from outstanding stock options as well as unvested RSUs. Potential dilutive common shares were calculated using the treasury stock method and represent incremental shares issuable upon exercise of the Company’s outstanding stock options and unvested RSUs.

The following table reconciles the weighted-average shares used in computing basic and diluted earnings (loss) per share in the respective periods (in thousands):



	Three months ended March 31,
	2017	2016
Shares used in basic earnings (loss) per share (weighted-average common shares outstanding)	33,202	32,727
Effect of dilutive stock options and restricted stock units	796	—
Shares used in diluted earnings (loss) per share calculation	33,998	32,727
Potentially dilutive shares excluded from calculation due to anti-dilutive effect	1,972	3,147

Additionally, stock options are excluded from the calculation of diluted EPS when the combined exercise price and unrecognized stock-based compensation are greater than the average market price for the Company’s common stock because their effect is anti-dilutive. Stock options and RSUs that would have been included in the diluted EPS calculation if the Company had earnings amounted to 0.6 million for the three months ended March 31, 2016.

As discussed in Note 6, the Company issued its 3.25% Convertible Senior Notes due 2020 (“Convertible Senior Notes”) in December 2014. It is the Company’s intent and policy to settle conversions through combination settlement, which essentially involves repayment of an amount of cash equal to the “principal portion” and delivery of the “share amount” in excess of the conversion value over the principal portion in cash or shares of common stock (“conversion premium”). No conversion premium existed as of