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 shall simultaneously 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 our Class A common stock and our Class B common stock:


	Three Months Ended September 30,
	2017				2016
	Class A		Class B		Class A		Class B
	(in thousands, except per share data)
Basic net income per share:
Numerator:
Allocation of net income	$	5,787	$	1,322	$	3,901	$	912

Denominator:
Weighted-average shares outstanding		21,756		5,577		21,078		5,577

Basic net income per share	$	0.27	$	0.24	$	0.19	$	0.16

Diluted net income per share:
Numerator:
Allocation of net income	$	5,787	$	1,322	$	3,901	$	912

Denominator:
Number of shares used in basic computation		21,756		5,577		21,078		5,577
Weighted-average shares effect of dilutive securities
Director and employee stock options		461		—		831		—

Number of shares used in diluted computation		22,217		5,577		21,909		5,577

Diluted net income per share	$	0.26	$	0.24	$	0.18	$	0.16


	Nine Months Ended September 30,
	2017				2016
	Class A		Class B		Class A		Class B
	(in thousands, except per share data)
Basic net income per share:
Numerator:
Allocation of net income	$	8,066	$	1,829	$	20,329	$	4,918

Denominator:
Weighted-average shares outstanding		21,669		5,577		20,791		5,577

Basic net income per share	$	0.37	$	0.33	$	0.98	$	0.88

Diluted net income per share:
Numerator:
Allocation of net income	$	8,066	$	1,829	$	20,329	$	4,918

Denominator:
Number of shares used in basic computation		21,669		5,577		20,791		5,577
Weighted-average shares effect of dilutive securities
Director and employee stock options		778		—		560		—

Number of shares used in diluted computation		22,447		5,577		21,351		5,577

Diluted net income per share	$	0.36	$	0.33	$	0.95	$	0.88

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

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Number of options to purchase Class A shares excluded

5,178,629

—

1,382,400

—