NOTE B — EARNINGS PER SHARE

Basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares outstanding during the period plus any potentially dilutive common shares, such as stock options, restricted stock units and performance-based units calculated using the treasury stock method. Total anti-dilutive shares excluded from the diluted earnings per share were 54,467 and 119,881 for the three and six months ended June 30, 2018 and 449,602 and 312,790 for the three and six months ended June 30, 2017.

Our credit agreement restricts the payment of dividends or other distributions to our shareholders with respect to Hanger, Inc., or any of its subsidiaries.

The reconciliation of the numerators and denominators used to calculate basic and diluted earnings per share are as follows:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(in thousands except per share data)	2018		2017		2018			2017

Net income (loss)	$	12,928	$	1,637	$	(9,690	)	$	(16,097	)


Weighted average shares outstanding - basic	36,790		36,287		36,645			36,187
Effect of potentially dilutive restricted stock units and options (1)	614		257		—			—

Weighted average shares outstanding - diluted	37,404		36,544		36,645			36,187


Basic income (loss) per share	$	0.35	$	0.05	$	(0.26	)	$	(0.44	)


Diluted income (loss) per share	$	0.35	$	0.04	$	(0.26	)	$	(0.44	)

(1) As we are recognizing a loss for the six months periods ended June 30, shares used to compute diluted per share amounts excludes 669,641 shares for 2018 and 330,195 shares for 2017 of potentially dilutive shares related to unvested restricted stock units and unexercised options in accordance with ASC 260 - Earnings Per Share.