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.

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,
	2018		2017		2018		2017
Net income	$	69,261	$	48,783	$	217,649	$	165,674
Net loss attributable to noncontrolling interest	—		—		—		294
Net income attributable to Pool Corporation	$	69,261	$	48,783	$	217,649	$	165,968

Weighted average shares outstanding:
Basic	40,422		40,659		40,416		41,065
Effect of dilutive securities:
Stock options and employee stock purchase plan	1,375		1,548		1,415		1,626
Diluted	41,797		42,207		41,831		42,691

Earnings per share:
Basic	$	1.71	$	1.20	$	5.39	$	4.04
Diluted	$	1.66	$	1.16	$	5.20	$	3.89

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