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 and shares issuable under the employee stock purchase plan (calculated using the treasury stock method) during the period they were outstanding and potential dilutive common shares from the conversion spread on the Company’s Convertible Notes and the Company's warrants.

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,
	2018		2017		2018		2017
Numerator:
Income from continuing operations	$	158,857	$	126,720	$	409,949	$	305,874
Loss from discontinued operations, net of income taxes	—		—		—		(42,704		)
Net income	$	158,857	$	126,720	$	409,949	$	263,170
Denominator:
Denominator for basic net earnings per share - weighted-average shares outstanding	135,055		151,156		136,752		151,896
Effect of dilutive employee stock awards	2,731		1,987		2,594		2,538
Effect of dilutive Convertible Notes	6,999		1,484		5,892		1,950
Effect of dilutive warrants	2,783		—		1,316		—
Denominator for diluted net earnings per share - weighted-average shares outstanding	147,568		154,627		146,554		156,384

Basic earnings (loss) per share:
Income from continuing operations	$	1.18	$	0.84	$	3.00	$	2.01
Loss from discontinued operations	—		—		—		(0.28		)
Basic net earnings per share	$	1.18	$	0.84	$	3.00	$	1.73
Diluted earnings (loss) per share:
Income from continuing operations	$	1.08	$	0.82	$	2.80	$	1.96
Loss from discontinued operations	—		—		—		(0.28		)
Diluted net earnings per share:	$	1.08	$	0.82	$	2.80	$	1.68

For the three and nine months ended September 30, 2018, the weighted-average number of shares outstanding used in the computation of diluted earnings per share includes the dilutive effect of the Company's warrants, as the average stock price during the quarter was above the weighted-average warrant strike price of $95.25 per share. For the three and nine months ended September 30, 2017, 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. Anti-dilutive stock-based awards excluded from the calculations of diluted earnings per share were immaterial during the periods presented.

The Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on its 0.500% Convertible Notes due 2019 (the “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 of $71.91 per share of common stock. For the three and nine months ended September 30, 2018 and 2017, the average market price of the Company's common stock exceeded the conversion price; therefore, the dilutive effect of the Convertible Notes was included in the denominator of diluted earnings per share. See Note 11 for detailed information on the Convertible Notes offering.