

7.	Net Income Per Share

We utilize the two-class method to compute net income per share. The two-class method allocates a portion of net income to participating securities, which includes unvested awards of share-based payments with non-forfeitable rights to receive dividends. Net income allocated to unvested share-based payments is excluded from net income allocated to common shares. Any undistributed losses resulting from dividends exceeding net income are not allocated to participating securities. Basic net income per share is computed by dividing net income allocated to common shares by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income allocated to common shares by the weighted average number of common shares outstanding during the period, plus the dilutive effect of outstanding stock options.

The following table summarizes the net income allocated to common shares and the basic and diluted shares used in the net income per share computations:



	Three Months Ended March 31,
	2018			2017
	(in thousands)

Net income	$	49,991		$	35,628
Less distributed and undistributed earnings allocated to participating securities	(585		)	(781		)
Net income allocated to common shares	$	49,406		$	34,847

Weighted average common shares outstanding	41,224			41,130
Incremental shares from assumed LTIP awards and conversions of common stock options	493			202
Adjusted weighted average common shares outstanding	41,717			41,332