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Earnings per Share
12 Months Ended
Dec. 31, 2019
Earnings Per Share [Abstract]  
Earnings per Share Earnings per Share
Basic earnings per share (EPS) is calculated using the weighted-average number of common shares outstanding. Diluted EPS is calculated using the weighted-average number of common shares outstanding, including the dilutive effect of the Company’s: stock option grants; SARs; warrants; ESPP awards; and the 2023 Notes, as determined per the treasury stock method.

Effect of Convertible Notes and Related Convertible Note Hedges and Warrants

In connection with the issuance of the 2023 Notes, the Company entered into Convertible Note Hedge and Warrant Transactions as described further in Note 9, Convertible Senior Notes Due 2023. The expected collective impact of the Convertible Note Hedge and Warrant Transactions is to reduce the potential dilution that may occur between the conversion price of $59.33 per share and the strike price of the warrants of $80.9063 per share.

The 2023 Notes and related Convertible Note Hedge and Warrant Transactions are excluded in the calculation of diluted EPS because their inclusion would be anti-dilutive. Specifically, the denominator of the diluted EPS calculation excludes the additional shares related to the 2023 Notes and warrants, because the average price of the Company's common stock was less than the conversion price of the 2023 Notes of $59.33 per share and the strike price of the warrants of $80.9063 per share. Prior to actual conversion, the Convertible Note Hedge Transactions are not considered in calculating diluted earnings per share, as their impact would be anti-dilutive.

In addition to the above described effect of the 2023 Notes and the related Convertible Note Hedge and Warrant Transactions, the Company also excluded the common stock equivalents for outstanding stock-based awards in the calculation of diluted EPS, because their inclusion would be anti-dilutive.
 
Years Ended December 31,
 
2019
 
2018
 
2017
Stock options
1,145,446

 
199,982

 
40,009



The following table sets forth the computation of basic and diluted net earnings per share for the years ended December 31, 2019, 2018 and 2017:
 
Years Ended December 31,
 
2019
 
2018
 
2017
Numerator, dollars in thousands:
 

 
 

 
 

Net earnings
$
113,056

 
$
110,993

 
$
57,284

Adjustments:
 
 
 
 
 
Interest expense on Convertible Senior Secured Notes due 2019

 

 
134

Changes in fair value of derivative liabilities

 

 
(76
)
Loss on extinguishment of debt

 

 
295

Loss on extinguishment of outstanding debt, as if converted

 

 
(321
)
Total adjustments

 

 
32

Net earnings used for calculation of diluted EPS
$
113,056

 
$
110,993

 
$
57,316

 
 
 
 
 
 
Denominator:
 
 
 
 
 
Weighted average shares outstanding, basic
52,412,181

 
51,989,824

 
50,756,603

Effect of dilutive securities:
 
 
 
 
 
Shares underlying Convertible Senior Secured Notes due 2019

 

 
285,257

Shares issuable to settle interest make-whole derivatives

 

 
7,012

Stock options and SAR
1,404,573

 
2,109,048

 
2,252,278

Total dilutive potential common shares
1,404,573

 
2,109,048

 
2,544,547

Weighted average shares outstanding, diluted
53,816,754

 
54,098,872

 
53,301,150

 
 
 
 
 
 
Earnings per share, basic
$
2.16

 
$
2.13

 
1.13

Earnings per share, diluted
$
2.10

 
$
2.05

 
1.08