Calculation of Earnings per Share

Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing net income attributable to VCA Inc. by the weighted- average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period. Basic and diluted earnings per share were calculated as follows (in thousands, except per share amounts):



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Net income attributable to VCA Inc.	$	67,712	$	64,050	$	118,805	$	110,277
Weighted-average common shares outstanding:
Basic	81,267		80,835		81,256		80,806
Effect of dilutive potential common shares:
Stock options	361		295		361		294
Non-vested shares and units	600		599		587		530
Diluted	82,228		81,729		82,204		81,630
Basic earnings per common share	$	0.83	$	0.79	$	1.46	$	1.36
Diluted earnings per common share	$	0.82	$	0.78	$	1.45	$	1.35

For the three months ended June 30, 2017 and 2016, potential common shares of 58,359 and 21,122, respectively, were excluded from the computation of diluted earnings per share because their inclusion would have had an antidilutive effect.

For the six months ended June 30, 2017 and 2016, potential common shares of 68,938 and 24,047, respectively, were excluded from the computation of diluted earnings per share because their inclusion would have had an antidilutive effect.

In March 2016, the FASB issued ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,”, requiring all tax benefits and tax deficiencies be recognized as income tax

expense or benefit in the income statement. Since excess tax benefits are no longer recognized in additional paid-in capital, we amended our calculation of earnings per share to exclude the excess tax benefits that would be included in additional paid-in capital under the treasury stock method. We elected to adopt this standard prospectively effective January 1, 2017. The adoption of this standard did not have a material impact on the weighted average number of diluted shares outstanding during the period.