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 zero and 48,502 for the three and nine months ended September 30, 2018 and 867,930 and 475,905 for the three and nine months ended September 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				For the Nine Months Ended
	September 30,				September 30,
(in thousands except per share data)	2018		2017		2018		2017

Net income (loss)	$	4,369	$	(4,161)	$	(5,321)	$	(20,258)

Weighted average shares outstanding - basic		36,857		36,340		36,717		36,239
Effect of potentially dilutive restricted stock units and options (1)		700		—		—		—
Weighted average shares outstanding - diluted		37,557		36,340		36,717		36,239

Basic income (loss) per share	$	0.12	$	(0.11)	$	(0.14)	$	(0.56)

Diluted income (loss) per share	$	0.12	$	(0.11)	$	(0.14)	$	(0.56)

(1) In accordance with ASC 260 - Earnings Per Share, during periods of a net loss, shares used to compute diluted per share amount exclude potentially dilutive shares related to unvested restricted stock units and unexercised options. For the three months ended September 30, 2017, 224,663 shares were excluded. For the nine month periods ended September 30, 2018 and 2017, shares excluded were 680,444 and 295,089, respectively.