NOTE 6. 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, stock appreciation rights, ESPP shares, warrants, and shares issuable upon conversion of convertible debt.

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 has a dilutive effect when the average share price of the Company’s common stock during the period exceeds the conversion price. The computation of diluted net income per share for the year ended December 31, 2015 reflects the application of the “if-converted” method for the first quarter of 2015 and the “cash settlement” method for the second and third quarters of 2015 given the demonstrated and asserted redemption of the outstanding debt. The Company completed the settlement of all of its Convertible Notes during the third quarter of 2015 as described in Note 10, “Debt.” The calculation of diluted net income per common share for the year ended December 31, 2015 includes approximately 3.9 million contingently issuable shares related to the Convertible Notes.

The Company used the “if-converted” method to compute the dilutive effect of the Convertible Notes for the calculation of diluted net income per common share for the year ended December 31, 2014. 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 in periods in which there would have been a dilutive effect. The calculation of diluted net income per common share for the year ended December 31, 2014 includes approximately 10.1 million contingently issuable shares related to the Convertible Notes.

In periods in which 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 the years ended December 31, 2015 and 2014, employee stock-based awards to purchase approximately 1.4 million and 1.3 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. For the year ended December 31, 2013, approximately 25.1 million potentially dilutive common shares were excluded from the diluted net loss per common share computation because such securities had an anti-dilutive effect on net loss per common share due to the Company’s net loss for that year.

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

	Years Ended December 31,
	2015		2014		2013
Numerator:
Net income (loss)	$	244,725	$	276,452	$	(42,613	)
Interest expense on convertible notes, net of tax		3,629		14,030		—
Numerator for diluted net income (loss) per common share calculation	$	248,354	$	290,482	$	(42,613	)
Denominator:
Weighted-average common shares, basic		160,345		153,859		150,331
Dilutive effect of common stock equivalents		8,979		16,142		—
Weighted-average common shares, diluted		169,324		170,001		150,331