Earnings Per Share

9 Months Ended

Sep. 30, 2020

Earnings Per ShareWe calculate basic earnings per share (EPS) by dividing Net income by the weighted average number of common shares outstanding. Diluted EPS reflects the dilutive effects of potentially dilutive securities, which include in-the-money outstanding stock options and shares to be purchased under our employee stock purchase plan. Using the treasury stock method, the effect of dilutive securities includes these additional shares of common stock that would have been outstanding based on the assumption that these potentially dilutive securities had been issued.

Stock options with exercise prices that are higher than the average market prices of our common stock for the periods presented are excluded from the diluted EPS calculation because the effect is anti-dilutive.

The table below presents the computation of EPS, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except EPS):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Net income	$	119,098	$	79,525	$	307,565	$	243,551

Weighted average shares outstanding:
Basic	40,123		39,933		40,073		39,750
Effect of dilutive securities:
Stock options and employee stock purchase plan	716		932		776		1,061
Diluted	40,839		40,865		40,849		40,811


Earnings per share:
Basic	$	2.97	$	1.99	$	7.68	$	6.13
Diluted	$	2.92	$	1.95	$	7.53	$	5.97

Anti-dilutive stock options excluded from diluted earnings per share computations	—		—		—		1