Annual report pursuant to Section 13 and 15(d)
Net Income per Share
|12 Months Ended
Dec. 31, 2020
|Earnings Per Share [Abstract]
|Net Income per Share
|Net Income per ShareThe Company has adopted the two class method of calculating earnings per share, due to the issuance of the Series A Preferred Stock in December 2015. Under this method, when the Company had a net loss the Company would not allocate the net loss to the holders of the Series A Preferred Stock (participating shareholders) as they did not have a contractual obligation to share in losses. Under this method, when the Company had net income, the Company will compute net income per share using the weighted average number of common shares outstanding during the applicable period plus the weighted average number of preferred shares outstanding during the period.
Diluted net income per share is computed using the weighted average number of common shares outstanding during the applicable period, plus the dilutive effect of potential common stock. Potential common stock consists of shares issuable pursuant to stock options and convertible notes as well as nonvested restricted stock awards which are not considered outstanding with respect to the weighted average common shares outstanding in the calculation of basic net income per share. Potentially dilutive shares are determined by applying the treasury stock method to the Company's outstanding stock options and restricted stock awards. Potentially dilutive shares issuable upon conversion of the 1.25% Convertible Senior Notes due 2025 are calculated using the if-converted method.
The following table provides the computation of basic and diluted net income per share attributable to common stockholders for the years ended December 31, 2020, 2019 and 2018 (in thousands, except share and per share amounts):
An entity using the if-converted method assumes that a convertible debt instrument was converted into common shares at the beginning of the reporting period. As a result, net income is adjusted to reverse any recognized interest expense (including any amortization of discounts). Although the Company is in an income position for the year ended December 31, 2020, the effect of this adjustment on both net income and weighted average diluted common shares outstanding would be anti-dilutive and therefore net income was not adjusted for any recognized interest expense add-back. For the year ended December 31, 2020, the Company excluded $4.8 million in recognized interest expense related the 2025 Convertible Notes because the effect of adjusting the recognized interest expense was anti-dilutive.
The following potential dilutive shares were excluded from the calculation of diluted net loss per share because the effect of including these potential shares was anti-dilutive for the years ended December 31, 2020, 2019 and 2018: