Computation of Earnings per Share

9 Months Ended

Sep. 30, 2016

Computation of Earnings per Share. Basic earnings per share is computed by dividing net income or loss by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net income or loss by the weighted average number of common shares outstanding plus additional common shares that would have been outstanding if dilutive potential common shares had been issued. For the purposes of this calculation, stock options are considered common stock equivalents in periods in which they have a dilutive effect. Stock options that are anti-dilutive are excluded from the calculation.

Net income per share is calculated as follows (in thousands, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015

Net income	$	1,573	$	2,197	$	3,643	$	2,788

Shares outstanding:
Weighted-average common shares outstanding		22,847		22,930		22,934		22,888
Additional dilutive common stock equivalents		92		81		62		61
Diluted shares outstanding		22,939		23,011		22,996		22,949

Net income per share – basic	$	0.07	$	0.10	$	0.16	$	0.12
Net income per share - diluted	$	0.07	$	0.10	$	0.16	$	0.12

For the three month periods ended September 30, 2016 and 2015, options to purchase 20,834 and 64,034 shares of common stock were outstanding, but were not included in the computation of diluted EPS because the options’ exercise prices were greater than the average market price of the common stock and thus would be anti-dilutive.

For the nine month periods ended September 30, 2016 and 2015, options to purchase 54,034 shares of common stock were outstanding, but were not included in the computation of diluted EPS because the options’ exercise prices were greater than the average market price of the common stock and thus would be anti-dilutive.