NOTE 13. NET INCOME (LOSS) PER COMMON SHARE

The computation of basic net income (loss) per common share is based on the weighted-average number of common shares outstanding during each period. The computation of diluted net income (loss) per common share is based on the weighted-average number of common shares outstanding during the period plus, when their effect is dilutive, incremental shares consisting of shares subject to stock options, restricted stock units, performance share units, stock appreciation rights, ESPP shares, warrants, and shares issuable upon conversion of convertible debt.

In periods where the Company reports a net loss, all common stock equivalents are deemed anti-dilutive such that basic net loss per common share and diluted net loss per common share are equal.

For both the three and six months ended June 30, 2016, approximately 13.4 million potentially dilutive common shares of the Company’s common stock were excluded from the computation of diluted net loss per common share due to the Company’s net loss for these periods. For the three and six months ended June 30, 2015, employee stock-based awards to purchase approximately 1.3 million and 1.0 million shares of the Company’s common stock, respectively, were excluded from the computation of diluted net income per common share because their effect would have been anti-dilutive.

The following table reconciles the numerator and denominator used to calculate diluted net income (loss) per common share:


	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2016			2015		2016			2015
Numerator:
Net income (loss)	$	(403,922	)	$	25,826	$	(399,106	)	$	22,708

Denominator:
Weighted-average common shares, basic		164,926			158,505		164,586			157,576
Dilutive effect of common stock equivalents		—			10,185		—			5,419

Weighted-average common shares, diluted		164,926			168,690		164,586			162,995

At June 30, 2015, the Company had $167.8 million aggregate principal amount of the Convertible Notes outstanding, for which the Company controlled the settlement method. During the second quarter of 2015, the Company asserted its intent and ability to settle the outstanding Convertible Notes for a combination of cash and common stock. Under the “cash settlement” method, interest is not added back to the numerator, and only the contingently issuable shares related to the conversion spread are included in the denominator, if dilutive. Under such method, the settlement of the conversion spread had a dilutive effect when the average share price of the Company’s common stock during the period exceeded the conversion price of approximately $25.62 per share of common stock. The calculation of diluted net income per common share for the three months ended June 30, 2015 includes the effect of approximately 4.8 million common shares related to the conversion spread of the Convertible Notes.

The computation of diluted net income per common share for the six months ended June 30, 2015 reflects the application of the “if-converted” method for the first quarter of 2015 and the “cash settlement” method for the second quarter of 2015 given the demonstrated and asserted redemption for the outstanding debt. Under the “if-converted” method, interest expense, net of tax, related to the Convertible Notes, is added back to net income, and the Convertible Notes are assumed to have been converted into common shares at the beginning of the period during periods in which there would have been a dilutive effect. For the six months ended June 30, 2015, the impact of the Convertible Notes has been excluded from the calculation of diluted net income per common share because the effect of their inclusion would have been anti-dilutive (approximately 7.4 million contingently issuable shares have been excluded).

The Company completed the settlement of the Convertible Notes during the third quarter of 2015 as discussed further in Note 10, “Debt.”