3 -

Earnings Per Share

We have two classes of common stock, which we refer to as our Class A common stock and our Class B common stock. Our certificate of incorporation provides that whenever our board of directors declares a dividend on our Class B common stock, our board of directors must also declare a dividend on our Class A common stock that is payable to the holders of our Class A common stock at the same time and as of the same record date at a rate that is at least 10% greater than the rate at which our board of directors declared a dividend on our Class B common stock. Accordingly, we use the two-class method to compute our earnings per common share. The two-class method is an earnings allocation formula that determines earnings per share separately for each class of common stock based on dividends we have declared and an allocation of our remaining undistributed earnings using a participation percentage that reflects the dividend rights of each class. The table below presents for the periods indicated a reconciliation of the numerators and denominators we used to compute basic and diluted net income per share for each class of our common stock:


	Three Months Ended September 30,
	2013				2012
	Class A		Class B		Class A		Class B
	(in thousands, except per share data)
Basic and diluted net income per share:
Numerator:
Allocation of net income	$	6,133	$	1,521	$	5,465	$	1,374

Denominator:
Weighted-average shares outstanding		20,383,165		5,576,775		20,041,620		5,576,775

Basic net income per share	$	0.30	$	0.27	$	0.27	$	0.25


Diluted net income per share:
Numerator:
Allocation of net income	$	6,133	$	1,521	$	5,465	$	1,374

Denominator:
Number of shares used in basic computation		20,383,165		5,576,775		20,041,620		5,576,775
Weighted-average shares effect of dilutive securities
Add: Director and employee stock options		224,446		—		268,476		—

Number of shares used in per share computations		20,607,611		5,576,775		20,310,096		5,576,775


Diluted net income per share	$	0.30	$	0.27	$	0.27	$	0.25


	Nine Months Ended September 30,
	2013				2012
	Class A		Class B		Class A		Class B
	(in thousands, except per share data)
Basic and diluted net income per share:
Numerator:
Allocation of net income	$	13,414	$	3,344	$	13,478	$	3,395

Denominator:
Weighted-average shares outstanding		20,246,449		5,576,775		20,026,652		5,576,775


Basic net income per share	$	0.66	$	0.60	$	0.67	$	0.61


Diluted net income per share:
Numerator:
Allocation of net income	$	13,414	$	3,344	$	13,478	$	3,395

Denominator:
Number of shares used in basic computation		20,246,449		5,576,775		20,026,652		5,576,775
Weighted-average shares effect of dilutive securities
Add: Director and employee stock options		305,377		—		310,117		—

Number of shares used in per share computations		20,551,826		5,576,775		20,336,769		5,576,775


Diluted net income per share	$	0.65	$	0.60	$	0.66	$	0.61

We did not include outstanding options to purchase the following number of shares of Class A common stock in our computation of diluted earnings per share because the exercise price of the options was greater than the average market price of our Class A common stock during the applicable period:

Three Months Ended September 30,

Nine Months Ended September 30,

2013

2012

2013

2012

Number of Class A shares excluded

1,559,267

1,222,000

1,209,000

1,219,000