Note 2 - Income (Loss) Per Common Share

The Company considers unvested share-based awards that have non-forfeitable rights to dividends prior to vesting to be participating shares, which are treated as a separate class of security from the Company’s common shares for calculating per share data. Therefore, the Company applies the two-class method when calculating income (loss) per share. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. However, since the holders of the participating shares are not obligated to fund losses, participating shares are excluded from the calculation of loss per share.

The dilutive effect of the Convertible Senior Notes on income (loss) per share is calculated using the treasury stock method since the Company has both the current intent and ability to settle the principal amount of the Convertible Senior Notes in cash. See Note 5, “Liabilities,” for additional information on the Convertible Senior Notes.

Basic income (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares outstanding during the period under the two-class method. Diluted income per share is calculated by dividing net income by the weighted average number of shares used to calculate basic income (loss) per share plus the weighted average number of common share equivalents outstanding during the period. The dilutive effect of outstanding options to purchase common stock and non-participating share-based awards is considered in diluted income per share by application of the treasury stock method. The dilutive effect of performance share units is included in diluted income per common share in the periods the performance targets have been achieved. The computations of basic and diluted income (loss) per share for the three and six months ended June 30, 2018 and 2017 are as follows:

	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
	(in thousands, except per share amounts)
Net income (loss)	$	(237,634	)	$	(20,817	)	$	(253,461	)	$	(19,177	)

Net income (loss) per common share:
Basic	$	(5.02	)	$	(0.49	)	$	(5.35	)	$	(0.47	)
Diluted	$	(5.02	)	$	(0.49	)	$	(5.35	)	$	(0.47	)

Basic weighted average shares outstanding	47,311			42,656			47,332			41,160
Effect of potentially dilutive share-based awards	—			—			—			—

Diluted weighted average shares outstanding	47,311			42,656			47,332			41,160

Unvested participating shares excluded from basic weighted average shares outstanding since the securityholders are not obligated to fund losses	17			228			17			228

Common share equivalents excluded from the diluted weighted average shares outstanding since Veeco incurred a net loss and their effect would be antidilutive	22			330			23			294

Potentially dilutive non-participating shares excluded from the diluted calculation as their effect would be antidilutive	2,706			1,265			2,204			1,462

Maximum potential shares to be issued for settlement of Convertible Senior Notes excluded from the diluted calculation as their effect would be antidilutive	8,618			8,618			8,618			8,618