EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the daily weighted average number of common shares outstanding during the applicable period. The TEUs are assumed to be settled at the minimum settlement amount of 1.9841 shares per TEU when calculating weighted-average common shares outstanding for purposes of basic earnings per share.

Using the treasury stock method, diluted earnings per share includes the potentially dilutive effect of common shares issued in connection with outstanding stock-based compensation options and grants. The potentially dilutive effect of common shares issued in connection with outstanding stock options is determined based on the average market price for the period. For diluted earnings per share, the TEUs are assumed to be settled at a conversion factor based on our daily volume-weighted average price per share of our common stock for the 20 consecutive trading days preceding the end of the current fiscal quarter not to exceed 2.3810 shares of common stock per TEU.

Under the treasury stock method, shares associated with certain stock options have been excluded from the diluted weighted average shares outstanding calculation because the exercise of those options would lead to a net reduction in common shares outstanding, or anti-dilution. As a result, stock options to acquire 667 and 813 weighted common shares have been excluded from the diluted weighted average common shares outstanding calculation for the three months ended June 30, 2018 and July 1, 2017, respectively. Stock options to acquire 548 and 702 weighted common shares have been excluded from the diluted weighted average common shares outstanding calculation for the nine months ended June 30, 2018 and July 1, 2017, respectively.

In connection with the pricing of the TEUs, we purchased Capped Calls. The Capped Calls will not be reflected in the calculation of diluted earnings per share until settled as they will lead to a net reduction in common shares outstanding, or anti-dilution. See Note 12 for additional information on our equity instruments.

Basic and diluted earnings per share are calculated as follows:



	Three Months Ended				Nine Months Ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Net income	$	8,979	$	10,610	$	50,568	$	19,514

Weighted average common shares outstanding	19,174		19,052		19,149		19,012
Effect of dilutive securities
Stock-based compensation	131		86		120		96
Weighted average dilutive common shares outstanding	19,305		19,138		19,269		19,108

Earnings per share
Basic	$	0.47	$	0.56	$	2.64	$	1.03
Diluted	0.47		0.55		2.62		1.02