Note 6. 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 takes into account the potential dilution that could occur if certain dilutive securities were exercised. Dilutive securities are included in the calculation of diluted earnings per common share using the treasury stock method in accordance with ASC Topic 260, “Earnings per Share.” Dilutive securities include outstanding stock options, restricted stock units and performance share units granted to employees and non-employee directors (see Note 14).

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,
	2018		2017		2016⁽¹⁾
	(In thousands, except per share data)
Earnings per common share—basic
Net income attributable to Callaway Golf Company	$	104,740	$	40,806	$	189,900
Weighted-average common shares outstanding—basic	94,579		94,329		94,045
Basic earnings per common share	$	1.11	$	0.43	$	2.02

Earnings per common share—diluted
Net income attributable to Callaway Golf Company	$	104,740	$	40,806	$	189,900
Weighted-average common shares outstanding—basic	94,579		94,329		94,045
Options and restricted stock	2,574		2,248		1,800
Weighted-average common shares outstanding—diluted	97,153		96,577		95,845
Diluted earnings per common share⁽¹⁾	$	1.08	$	0.42	$	1.98

(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 11). 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 8).

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, 2018, there were no securities excluded from the calculation of earnings per common share—diluted.


•	For the year ended December 31, 2017, securities outstanding totaling approximately 129,000, compromised of anti-dilutive options.


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