Calculation of Earnings per Share

3 Months Ended

Mar. 31, 2017

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 March 31,
	2017		2016
Net income attributable to VCA Inc.	$	51,093	$	46,227
Weighted-average common shares outstanding:
Basic	81,245		80,776
Effect of dilutive potential common shares:
Stock options	360		284
Non-vested shares and units	574		463
Diluted	82,179		81,523
Basic earnings per common share	$	0.63	$	0.57
Diluted earnings per common share	$	0.62	$	0.57

For the three months ended March 31, 2017 and 2016, potential common shares of 72,225 and 40,193, respectively, were excluded from the computation of diluted earnings per share.

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.