Earnings Per Share

9 Months Ended

Jul. 02, 2016

EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the daily weighted average number of common shares outstanding during the applicable period. Our TEUs are assumed to be settled at the minimum settlement amount of 1.9841 shares per TEU when calculating weighted-average common shares outstanding for purposes of basic earnings per share.

Using the treasury stock method, diluted earnings per share includes the potentially dilutive effect of common shares issued in connection with outstanding stock-based compensation options and grants. The potentially dilutive effect of common shares issued in connection with outstanding stock options is determined based on the average market price for the period. For diluted earnings per share, our TEUs are assumed to be settled at a conversion factor based on our daily volume-weighted average price per share of our common stock for the 20 consecutive trading days preceding the end of the current fiscal year quarter not to exceed 2.3810 shares of common stock per TEU.

Under the treasury stock method, shares associated with certain stock options have been excluded from the diluted weighted average shares outstanding calculation because the exercise of those options would lead to a net reduction in common shares outstanding or anti-dilution. As a result, stock options to acquire 733 and 183 weighted common shares have been excluded from the diluted weighted average common shares outstanding calculation for the three months ended July 2, 2016 and June 27, 2015, respectively. Stock options to acquire 657 and 140 weighted common shares have been excluded from the diluted weighted average common shares outstanding calculation for the nine months ended July 2, 2016 and June 27, 2015, respectively.

In connection with the pricing of our TEUs, we entered into capped call transactions. The capped call transactions will not be reflected in the calculation of diluted earnings per share until settled as they are anti-dilutive. See Note 12 for additional information on our equity instruments.

Basic and diluted earnings per share were calculated as follows:



	Three Months Ended				Nine Months Ended
(in thousands, except per share data)	July 2, 2016		June 27, 2015		July 2, 2016		June 27, 2015
Net income	$	7,150	$	10,783	$	21,922	$	36,275

Weighted average common shares outstanding	15,514		14,905		15,044		15,000
Effect of dilutive securities
Stock-based compensation	82		165		104		165
Tangible equity units	64		—		21		—
Weighted average dilutive common shares outstanding	15,660		15,070		15,169		15,165

Earnings per share
Basic	$	0.46	$	0.72	$	1.46	$	2.42
Diluted	$	0.46	$	0.72	$	1.45	$	2.39