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Net Income Per Share
9 Months Ended
Sep. 30, 2017
Net Income Per Share  
Net Income Per Share

 

2. Net Income Per Share

 

Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding. Diluted net income per share is computed by dividing net income adjusted with the interest expense on our unsecured convertible subordinated notes due 2023 (the “2023 Notes”) by the weighted-average number of shares of common stock and dilutive potential common stock equivalents then outstanding. Dilutive potential common stock equivalents include the assumed exercise, vesting and issuance of employee stock awards using the treasury stock method, as well as common stock issuable upon assumed conversion of our 2023 Notes using the if-converted method.

 

Our 2025 Notes are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election. Our intent is to settle the principal amount of the 2025 Notes in cash upon conversion. The impact of the assumed conversion premium to diluted net income per share is computed using the treasury stock method. As the average market price per share of our common stock as reported on The NASDAQ Global Select Market was lower than the initial conversion price of $17.26 per share, there was no dilutive effect of the assumed conversion premium for the three and nine months ended September 30, 2017.

 

The following table shows the computation of basic and diluted net income per share for the three and nine months ended September 30, 2017 and 2016:

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

(In thousands except per share data)

 

2017

 

2016

 

2017

 

2016

 

Numerator:

 

 

 

 

 

 

 

 

 

Net income, basic

 

$

23,767

 

$

15,033

 

$

75,758

 

$

34,065

 

Add: interest expense on 2023 Notes

 

1,410

 

1,429

 

4,231

 

 

 

 

 

 

 

 

 

 

 

 

Net income, diluted

 

$

25,177

 

$

16,462

 

$

79,989

 

$

34,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

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

 

106,841

 

109,282

 

107,236

 

111,128

 

Dilutive effect of 2023 Notes

 

12,189

 

12,398

 

12,189

 

 

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

 

766

 

313

 

695

 

455

 

 

 

 

 

 

 

 

 

 

 

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

 

119,796

 

121,993

 

120,120

 

111,583

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share

 

 

 

 

 

 

 

 

 

Basic

 

$

0.22

 

$

0.14

 

$

0.71

 

$

0.31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.21

 

$

0.13

 

$

0.67

 

$

0.31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anti-Dilutive Securities

 

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

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

(In thousands)

 

2017

 

2016

 

2017

 

2016

 

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

 

1,779

 

3,881

 

2,287

 

4,216

 

Shares issuable upon conversion of 2023 Notes

 

 

 

 

12,635

 

 

 

 

 

 

 

 

 

 

 

 

 

1,779

 

3,881

 

2,287

 

16,851