Note 4. Earnings per Common Share

Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding for the period.

Diluted earnings per common share reflects the potential dilution that could occur if convertible securities, or other contracts to issue common stock, were exercised or converted into common stock. Dilutive securities are included in the calculation of diluted earnings per common share using the treasury stock method and the if-converted method in accordance with ASC Topic 260, “Earnings per Share.” Dilutive securities include convertible notes, options granted pursuant to the Company’s stock option plans and outstanding restricted stock units and performance share units granted to employees and non-employee directors (see Note 12).

Weighted-average common shares outstanding—diluted is the same as weighted-average common shares outstanding—basic in periods when a net loss is reported or in periods when anti-dilution occurs.

The following table summarizes the computation of basic and diluted earnings per share:



	Years Ended December 31,
	2016		2015		2014
	(In thousands, except per share data)
Earnings per common share—basic
Net income attributable to Callaway Golf Company	$	189,900	$	14,568	$	16,008
Weighted-average common shares outstanding—basic	94,045		83,116		77,559
Basic earnings per common share	$	2.02	$	0.18	$	0.21

Earnings per common share—diluted
Net income attributable to Callaway Golf Company	$	189,900	$	14,568	$	16,008
Weighted-average common shares outstanding—basic	94,045		83,116		77,559
Options and restricted stock	1,800		1,495		826
Weighted-average common shares outstanding—diluted	95,845		84,611		78,385
Dilutive earnings per common share	$	1.98	$	0.17	$	0.20

(1)

During the fourth quarter of 2016, the Company reversed a significant portion of the valuation allowance on its U.S. deferred tax assets. This resulted in a favorable impact to net income of $156,600,000 ($1.63 per share), partially offset by $15,974,000 ($0.16 per share) as the result of the recognition of income taxes that were retroactive for all of 2016 on the Company's U.S. business (see Note 9). In addition, net income for 2016 includes a $17,662,000 ($0.18 per share) pre-tax gain from the sale of approximately 10.0% of the Company's investment in Topgolf (see Note 6).

Earnings per share—diluted, reflects the potential dilution that could occur if convertible securities, or other contracts to issue common stock, were exercised or converted into common stock. Options with an exercise price in excess of the average market value of the Company's common stock during the period have been excluded from the calculation as their effect would be antidilutive.

Antidilutive securities excluded from the earnings per share computation are summarized as follows:


•	For the year ended December 31, 2016, securities outstanding totaling approximately 313,000, comprised of anti-dilutive options.


•	For the year ended December 31, 2015, securities outstanding totaling approximately 10,812,000, including common shares underlying convertible senior notes of 10,248,000, in addition to anti-dilutive options.


•	For the year ended December 31, 2014, securities outstanding totaling approximately 16,000,000, including common shares underlying convertible senior notes of 15,000,000, in addition to anti-dilutive options.