BASIC AND DILUTED NET INCOME (LOSS) PER SHARE

We compute basic net income (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding during the relevant period. Diluted net income (loss) per common share has been computed by dividing net income (loss) by the diluted number of common shares outstanding during the period. Except where the result would be antidilutive to net income, diluted net income per common share would be computed assuming the impact of the conversion of the 2.50% convertible senior notes due 2019 (the “2019 Convertible Notes”) and the 3.25% convertible senior notes due 2022 (the “2022 Convertible Notes”), the exercise of outstanding stock options, the vesting of restricted stock units (“RSUs”), and the exercise of warrants.

We have a choice to settle the conversion obligation of our 2022 Convertible Notes and the 2019 Convertible Notes (together, the “Convertible Notes”) in cash, shares, or any combination of shares and cash. Our six-year $350.0 million term loan facility (the “2015 Term Loan Facility”), which was repaid in full in May 2017, contained certain covenants that, prior to May 2017, restricted us from settling the conversion obligation in whole or in part with cash unless certain conditions in the 2015 Term Loan Facility were satisfied. Prior to the repayment of the 2015 Term Loan Facility, we utilized the if-converted method to reflect the impact of the conversion of the Convertible Notes. Our current policy is to settle the principal balance of the Convertible Notes in cash. As such, subsequent to the repayment of the 2015 Term Loan Facility, we apply the treasury stock method to these securities and the dilution related to the conversion premium, if any, of the Convertible Notes is included in the calculation of diluted weighted-average shares outstanding to the extent each issuance is dilutive based on the average stock price during each reporting period being greater than the conversion price of the respective Convertible Notes.

The components of basic and diluted net income (loss) per share for the three and nine months ended September 30, 2017 and 2016, were as follows (in thousands, except per share data):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2017			2016		2017			2016
Net (loss) income	$	(152,061	)	$	16,196	$	(202,688	)	$	8,074
Weighted average common shares outstanding	35,311			34,171		34,948			34,377
Effect of dilutive securities:
Stock options and RSUs	—			558		—			387
2019 Convertible Notes	—			7,382		—			—
Shares used in calculating dilutive net (loss) income per share	35,311			42,111		34,948			34,764

Net (loss) income per share:
Basic	$	(4.31	)	$	0.47	$	(5.80	)	$	0.23
Diluted	$	(4.31	)	$	0.43	$	(5.80	)	$	0.23

The following table sets forth the potential common shares issuable upon the exercise of outstanding options, the vesting of RSUs, the exercise of warrants (prior to consideration of the treasury stock method), and the conversion of the Convertible Notes, which were excluded from our computation of diluted net income (loss) per share because their inclusion would have been anti-dilutive (in thousands):



	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Options to purchase shares of common stock	3,145	2,218	3,389	2,778
Shares of common stock issuable upon the vesting of RSUs	932	249	1,140	654
Warrants	1,008	7,382	1,008	7,382
2022 Convertible Notes	11,695	—	11,695	—
2019 Convertible Notes	790	—	790	7,382
Total	17,570	9,849	18,022	18,196

In connection with the issuance of the 2019 Convertible Notes, in February 2014, we entered into convertible bond hedges. The convertible bond hedges are not included for purposes of calculating the number of diluted shares outstanding, as their effect would be anti-dilutive. The convertible bond hedges are generally expected, but not guaranteed, to reduce the potential dilution and/or offset the cash payments we are required to make upon conversion of the remaining 2019 Convertible Notes.