AMN 2017 Annual Report

41 the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in income tax expense. (n) Fair Value of Financial Instruments The carrying amounts of the Company’s cash equivalents and restricted cash equivalents and investments approximate their respective fair values due to the short-term nature and liquidity of these financial instruments. As it relates to the Company’s Notes (as defined in Note (3) below), which were issued in October 2016 with a fixed rate of 5.125%, fair value disclosure is detailed in Note (4), “Fair Value Measurement.” See Note (8), “Notes Payable and Credit Agreement,” for additional information. The fair value of the long-term portion of the Company’s insurance accruals cannot be estimated because the Company cannot reasonably determine the timing of future payments. (o) Share-Based Compensation The Company accounts for its share-based employee compensation plans by expensing the estimated fair value of share- based awards on a straight-line basis over the requisite employee service period, which is the vesting period. Restricted stock units (“RSUs”) typically vest at the end of a three-year vesting period, however, 33% of the awards may vest on the 13th month anniversary of the grant date and 34% on the second anniversary of the grant date if certain performance targets are met. Share- based compensation cost of RSUs is measured by the market value of the Company’s common stock on the date of grant, and the Company records share-based compensation expense only for those awards that are expected to vest. Performance restricted stock units (“PRSUs”) primarily consist of PRSUs that contain a performance condition dependent on the Company’s adjusted EBITDA margin during the third year of the three-year vesting period, with a range of 0% to 175% of the target amount granted to be issued under the award. Share-based compensation cost for these PRSUs is measured by the market value of the Company’s common stock on the date of grant, and the amount recognized is adjusted for estimated achievement of the performance conditions. A limited amount of PRSUs contain a market condition dependent upon the Company’s relative and absolute total shareholder return over a three-year period, with a range of 0% to 175% of the target amount granted to be issued under the award. Share-based compensation cost for these PRSUs is measured using the Monte-Carlo simulation valuation model and is not adjusted for the achievement, or lack thereof, of the performance conditions. (p) Net Income per Common Share Share-based awards to purchase 20, 16 and 9 shares of common stock for the years ended December 31, 2017, 2016 and 2015, respectively, were not included in the calculation of diluted net income per common share because the effect of these instruments was anti-dilutive. The following table sets forth the computation of basic and diluted net income per common share for the years ended December 31, 2017, 2016 and 2015, respectively: Years Ended December 31, 2017 2016 2015 Net income $ 132,558 $ 105,838 $ 81,891 Net income per common share - basic $ 2.77 $ 2.21 $ 1.72 Net income per common share - diluted 2.68 2.15 1.68 Weighted average common shares outstanding - basic 47,807 47,946 47,525 Plus dilutive effect of potential common shares 1,623 1,321 1,318 Weighted average common shares outstanding - diluted 49,430 49,267 48,843 (q) Segment Information The Company’s operating segments are identified in the same manner as they are reported internally and used by the Company’s chief operating decision maker for the purpose of evaluating performance and allocating resources. The Company has three reportable segments: (1) nurse and allied solutions, (2) locum tenens solutions, and (3) other workforce solutions. The nurse and allied solutions segment consists of the Company’s nurse, allied, local and labor disruption and rapid response staffing businesses. The locum tenens solutions segment consists of the Company’s locum tenens staffing business. The other workforce solutions segment consists of the following Company businesses (i) physician permanent placement services, (ii)