Net Income per Share

9 Months Ended

Oct. 03, 2015

Basic net income per share is computed by dividing net income during the period by the weighted average number of shares of common stock outstanding during that period, less unvested restricted stock awards. Diluted net income per share is impacted by equity instruments considered to be potential common shares, if dilutive, computed using the treasury stock method of accounting.

The calculations for basic and diluted net income per share for the three and nine months ended October 3, 2015 and September 27, 2014 are as follows:



	Three Months Ended				Nine Months Ended
	October 3, 2015		September 27, 2014		October 3, 2015		September 27, 2014
	(In thousands, except per share amounts)
Net income	$	77,624	$	37,535	$	172,043	$	93,868
Weighted average common shares used to calculate basic net income per share	284,818		284,462		284,880		283,141
2015 Warrants	20,548		17,580		20,031		15,070
Stock-based awards	7,820		7,953		7,988		7,384
Weighted average common shares used to calculate diluted net income per share	313,186		309,995		312,899		305,595
Net income per share - basic	$	0.27	$	0.13	$	0.60	$	0.33
Net income per share - diluted	$	0.25	$	0.12	$	0.55	$	0.31

As a result of the 2015 Warrants, Cadence experiences dilution to its diluted earnings per share when its average closing stock price exceeds $10.78 until the remaining 2015 Warrants expire in December 2015. During the three months ended October 3, 2015, approximately 15.2 million of the 2015 warrants expired, requiring Cadence to issue, on a net settlement basis, approximately 7.3 million shares of common stock to the 2015 Warrant counterparties. For an additional description of the 2015 Warrants, see Note 2 in the notes to condensed consolidated financial statements.

The following table presents shares of Cadence’s common stock outstanding for the three and nine months ended October 3, 2015 and September 27, 2014 that were excluded from the computation of diluted net income per share because the effect of including these shares in the computation of diluted net income per share would have been anti-dilutive:



	Three Months Ended		Nine Months Ended
	October 3, 2015	September 27, 2014	October 3, 2015	September 27, 2014
	(In thousands)
Options to purchase shares of common stock	1,472	1,403	1,362	3,479
Non-vested shares of restricted stock	169	53	68	24
Total potential common shares excluded	1,641	1,456	1,430	3,503