Computation of Earnings per Common Share

The following table sets forth the computation of basic and diluted earnings per common share (dollars in thousands, except per share amounts):



	For the Three Months Ended
	October 28, 2017		October 29, 2016
Net income available to common stockholders (numerator)	$	28,776	$	51,050

Weighted-average number of common shares (denominator)	31,061,448		31,429,493

Basic earnings per common share	$	0.93	$	1.62

Weighted-average number of common shares	31,061,448		31,429,493
Potential shares of common stock arising from stock options, and unvested restricted share units⁽¹⁾	830,126		770,794
Total shares-diluted (denominator)	31,891,574		32,200,287

Diluted earnings per common share	$	0.90	$	1.59

⁽¹⁾As discussed in Note 1, Basis of Presentation and Accounting Policies, the Company has adopted ASU 2016-09. Under the amended guidance, windfalls or shortfalls are recognized in the Company’s provision for income taxes in the consolidated statements of operations rather than as additional paid-in capital in the consolidated balance sheets. Because windfalls are no longer recognized in additional paid-in capital, the amount is excluded from the hypothetical proceeds used to repurchase shares when computing diluted earnings per common share under the treasury stock method. As a result of the amended guidance, diluted shares increased by approximately 169,000 shares during the fiscal quarter ended October 28, 2017. ASU 2016-09’s effect on the calculation of diluted earnings per common share may result in significant volatility in earnings based on the timing and extent of share-based award vesting and exercise events.

The weighted-average number of common shares outstanding used in the computation of diluted earnings per common share excludes the effect of the following instruments because their inclusion would have been anti-dilutive:



	For the Three Months Ended
	October 28, 2017	October 29, 2016
Stock-based awards	125,074	41,302
0.75% convertible senior notes due 2021	5,005,734	5,005,734
Warrants	5,005,734	5,005,734
Total anti-dilutive weighted shares excluded from the calculation of earnings per common share	10,136,542	10,052,770

Under the treasury stock method, the convertible senior notes will have a dilutive impact on earnings per common share if the Company’s average stock price for the period exceeds the conversion price for the convertible senior notes of $96.89 per share. The warrants will have a dilutive impact on earnings per common share if the Company’s average stock price for the period exceeds the warrant strike price of $130.43 per share. As the Company’s average stock price for the three months ended October 28, 2017 was below the conversion price for the convertible senior notes and the strike price for the warrants, the underlying common shares were anti-dilutive as reflected in the table above.

In connection with the offering of the convertible senior notes, the Company entered into convertible note hedge transactions with counterparties for the purpose of reducing the potential dilution to common stockholders from the conversion of the notes and offsetting any potential cash payments in excess of the principal amount of the notes. Prior to conversion, the convertible note hedge is not included for purposes of the calculation of earnings per common share as its effect would be anti-dilutive. Upon conversion, the convertible note hedge is expected to offset the dilutive effect of the convertible senior notes when the average stock price for the period is above $96.89 per share. See Note 11, Debt, for additional information related to the Company’s convertible senior notes, warrant transactions, and hedge transactions.