Note 2. Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of dilutive common shares outstanding during the period. Diluted shares outstanding are calculated by adding to the weighted average shares outstanding any potential dilutive securities outstanding for the period. Potential dilutive securities include stock options, restricted stock awards, restricted stock units, performance-based stock awards and shares to be purchased under the Company’s employee stock purchase plan. In periods when a net loss is reported, all common stock equivalents are excluded from the calculation because they would have an anti-dilutive effect, meaning the loss per share would be reduced. Therefore, in periods when a loss is reported, basic and dilutive loss per share are the same. The Company’s basic and diluted net income (loss) per share for the three and six months ended September 30, 2013 and 2012 were as follows (in thousands, except per share data):


	Three Months Ended September 30,				Six Months Ended September 30,
	2013		2012		2013			2012
Basic Net Income (Loss) Per Share
Net income (loss)	$	1,059	$	5,469	$	(664	)	$	8,588


Weighted average shares used in computing basic net income (loss) per share		39,260		39,431		38,971			39,288


Net income (loss) per share - basic	$	0.03	$	0.14	$	(0.02	)	$	0.22


	Three Months Ended September 30,				Six Months Ended September 30,
	2013		2012		2013			2012
Diluted Net Income (Loss) Per Share
Net income (loss)	$	1,059	$	5,469	$	(664	)	$	8,588


Weighted average shares used in computing basic net income (loss) per share		39,260		39,431		38,971			39,288
Effect of dilutive securities		2,077		2,291		—			2,357

Weighted average shares used in computing diluted net income (loss) per share		41,337		41,722		38,971			41,645

Net income (loss) per share - diluted	$	0.03	$	0.13	$	(0.02	)	$	0.21

For the three months ended September 30, 2013, approximately 297,000 shares underlying stock options and approximately 85,000 restricted shares primarily related to out-of-the-money stock options and performance-based awards where milestones were not met, were not included in the computation of diluted earnings per share because their inclusion would have been anti-dilutive.

For the six months ended September 30, 2013, approximately 3,923,000 shares underlying stock options and approximately 1,198,000 restricted shares were excluded from the calculation of diluted weighted average shares outstanding because the Company incurred a loss in the period and to include them would have been anti-dilutive.

Approximately 647,000 and 505,000 shares underlying outstanding securities were not included in the computation of diluted earnings per share for the three and six months ended September 30, 2012, respectively. The excluded shares primarily related to out-of-the-money stock options and performance-based awards where milestones were not met.