EARNINGS PER SHARE

Basic earnings per share is calculated by dividing income available to stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share is computed using the weighted-average number of common and dilutive common share equivalents outstanding during the period. Dilutive common share equivalents consist of shares issuable upon the exercise or settlement of stock awards (calculated using the treasury stock method) during the period they were outstanding.

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share information):



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017			2016
Numerator:
Income from continuing operations	$	126,720	$	111,737	$	305,874		$	291,280
Income (loss) from discontinued operations, net of income taxes	—		20,164		(42,704		)	44,982
Net income	$	126,720	$	131,901	$	263,170		$	336,262
Denominator:
Denominator for basic net earnings per share - weighted-average shares outstanding	151,156		155,525		151,896			154,847
Effect of dilutive employee stock awards	1,987		2,007		2,538			1,850
Effect of dilutive Convertible Notes	1,484		—		1,950			—
Denominator for diluted net earnings per share - weighted-average shares outstanding	154,627		157,532		156,384			156,697

Basic earnings (loss) per share:
Income from continuing operations	$	0.84	$	0.72	$	2.01		$	1.88
Income (loss) from discontinued operations	—		0.13		(0.28		)	0.29
Basic net earnings per share	$	0.84	$	0.85	$	1.73		$	2.17
Diluted earnings (loss) per share:
Income from continuing operations	$	0.82	$	0.71	$	1.96		$	1.86
Income (loss) from discontinued operations	—		0.13		(0.28		)	0.29
Diluted net earnings per share:	$	0.82	$	0.84	$	1.68		$	2.15
Anti-dilutive weighted-average shares from stock awards	393		60		225			460

The weighted-average number of shares outstanding used in the computation of basic and diluted earnings per share does not include common stock issuable upon the exercise of the Company's warrants. The effects of these potentially issuable shares were not included in the calculation of diluted earnings per share because the effect would have been anti-dilutive.

The Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on its Convertible Notes on diluted earnings per share, if applicable, because upon conversion the Company will pay cash up to the aggregate principal amount of the Convertible Notes to be converted and pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election, in respect of the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted. The conversion spread will have a dilutive impact on diluted earnings per share when the average market price of the Company’s common stock for a given period exceeds the conversion price. Prior to the separation of the GoTo Business on January 31, 2017, the conversion price was $90.00 per share. As a result of the Spin-off, the conversion rate for the Convertible Notes was re-set as of the opening of business on February 1, 2017 to 13.9061 shares of the Company’s common stock per $1,000 principal amount of Convertible Notes, which corresponds to a conversion price of $71.91 per share of common stock. Similar adjustments were made to the conversion rates for the Convertible Note Hedge and Warrant Transactions as of the opening of business on February 1, 2017. For the three and nine months ended September 30, 2017, the average market price of the Company's common stock exceeded the new conversion price; therefore, the dilutive effect of the Convertible Notes was included in the denominator of diluted earnings per share. For the three and nine months ended September 30, 2016, the Convertible Notes have been excluded from the computation of diluted earnings per share as the effect would be anti-dilutive since the prior conversion price of the Convertible Notes exceeded the average market price of the Company’s common stock. In addition, the Company uses the treasury stock method for calculating any potential dilutive effect related to the warrants. See Note 11 for detailed information on the Convertible Notes offering.