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Net Income (Loss) per Share
 3 Months Ended
Mar. 31, 2016
Net Income (Loss) per Share  
Net Income (Loss) per Share

 

2. Net Income (Loss) per Share

 

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common shares outstanding. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common shares and dilutive potential common share equivalents then outstanding. Dilutive potential common share equivalents include the assumed exercise, vesting and issuance of employee stock awards using the treasury stock method, as well as common shares issuable upon assumed conversion of our convertible debt using the if-converted method.

 

The following table shows the computation of basic and diluted net income per share for the three months ended March 31, 2016 and 2015:

 

 

 

Three Months Ended March 31,

 

(In thousands except for per share amounts)

 

2016 (1)

 

2015

 

Numerator:

 

 

 

 

 

Net income (loss), basic and diluted

 

$
4,435

 

$
(10,667

)

 

 

 

 

 

 

Denominator:

 

 

 

 

 

Weighted-average shares used to compute basic net income (loss) per share

 
112,482

 
114,658

 

Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan

 
196

 

—

 

Dilutive effect of unvested restricted stock awards (“RSAs”)

 
500

 

—

 

 

 

 

 

 

 

Weighted-average shares used to compute diluted net income (loss) per share

 
113,178

 
114,658

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share

 

 

 

 

 

Basic

 

$
0.04

 

$
(0.09

)

 

 

 

 

 

 

 

 

Diluted

 

$
0.04

 

$
(0.09

)

 

 

 

 

 

 

 

 

 

Anti-Dilutive Securities

 

The following common share equivalents were not included in the computation of diluted net income (loss) per share because their effect was anti-dilutive:

 

 

 

Three Months Ended March 31,

 

(In thousands)

 

2016 (1)

 

2015 (2)

 

Outstanding options and awards granted under equity incentive plan and employee stock purchase plan

 
3,917 

 
5,866 

 

Unvested RSAs

 
510 

 
1,930 

 

Shares issuable upon conversion of convertible subordinated notes

 
12,904 

 
12,494 

 

 

 

 

 

 

 

 

 
17,331 

 
20,290 

 

 

 

 

 

 

 

 

 

(1)

Includes 3.3 million options, 0.1 million restricted stock units, and 0.4 million unvested RSAs retained by former employees who were transferred to Theravance Biopharma, Inc. (“Theravance Biopharma”) in connection with the Spin-Off of Theravance Biopharma in June 2014 (the “Spin-Off”). Subsequent to the Spin-Off, stock-based compensation expense associated with the awards held by Theravance Biopharma employees granted prior to the Spin-Off is recognized by Theravance Biopharma. Stock options of 3.3 million were excluded from the diluted net income per share calculation as their effect was anti-dilutive.

 

(2)

Includes 4.5 million options, 0.6 million restricted stock units, and 1.2 million unvested RSAs retained by former employees who were transferred to Theravance Biopharma in connection with the Spin-Off. All of these awards were excluded from the diluted net loss per share calculation as their effect was anti-dilutive.