Note 2 – Earnings Per Share

We calculate basic earnings per share (EPS) by dividing Net income attributable to Pool Corporation by the weighted average number of common shares outstanding. We include outstanding unvested restricted stock awards of our common stock in the basic weighted average share calculation. Diluted EPS reflects the dilutive effects of potentially dilutive securities, which include in-the-money outstanding stock options and shares to be purchased under our employee stock purchase plan. Using the treasury stock method, the effect of dilutive securities includes these additional shares of common stock that would have been outstanding based on the assumption that these potentially dilutive securities had been issued. As discussed in Note 1, as a result of the adoption of ASU 2016-09, the calculation of the effect of dilutive securities now excludes any derived excess tax benefits or deficiencies from assumed future proceeds, resulting in an increase in diluted weighted average shares outstanding for the three and nine months ended September 30, 2017.

Stock options with exercise prices that are higher than the average market prices of our common stock for the periods presented are excluded from the diluted EPS calculation because the effect is anti-dilutive.

The table below presents the computation of EPS, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except EPS):



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Net income	$	48,783	$	44,421	$	165,674	$	146,031
Net loss attributable to noncontrolling interest	—		113		294		309
Net income attributable to Pool Corporation	$	48,783	$	44,534	$	165,968	$	146,340

Weighted average shares outstanding:
Basic	40,659		42,020		41,065		42,092
Effect of dilutive securities:
Stock options and employee stock purchase plan	1,548		1,099		1,626		1,109
Diluted	42,207		43,119		42,691		43,201

Earnings per share:
Basic	$	1.20	$	1.06	$	4.04	$	3.48
Diluted	$	1.16	$	1.03	$	3.89	$	3.39

Anti-dilutive stock options excluded from diluted earnings per share computations	108		1		108		1