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, 2014 and 2013 were as follows (in thousands, except per share data):


	Three Months Ended September 30,				Six Months Ended September 30,
	2014		2013		2014		2013
Basic Net Income (Loss) Per Share
Net income (loss)	$	3,839	$	1,059	$	2,130	$	(664	)


Weighted average shares used in computing basic net income (loss) per share		40,448		39,260		40,256		38,971


Net income (loss) per share - basic	$	0.09	$	0.03	$	0.05	$	(0.02	)


	Three Months Ended September 30,				Six Months Ended September 30,
	2014		2013		2014		2013
Diluted Net Income (Loss) Per Share
Net income (loss)	$	3,839	$	1,059	$	2,130	$	(664	)


Weighted average shares used in computing basic net income (loss) per share		40,448		39,260		40,256		38,971
Effect of dilutive securities		1,791		2,077		1,813		—

Weighted average shares used in computing diluted net income (loss) per share		42,239		41,337		42,069		38,971

Net income (loss) per share - diluted	$	0.09	$	0.03	$	0.05	$	(0.02	)

For the three months ended September 30, 2014, approximately 47,000 shares underlying stock options primarily related to out-of-the-money stock options and approximately 465,000 restricted shares primarily related to performance-based awards for which milestones have not been met, were not included in the computation of diluted earnings per share.

For the six months ended September 30, 2014, approximately 44,000 shares underlying stock options primarily related to out-of-the-money stock options and approximately 465,000 restricted shares primarily related to performance-based awards for which milestones have not been met, were not included in the computation of diluted earnings per share.

For the three months ended September 30, 2013, approximately 297,000 shares underlying stock options primarily related to out-of-the-money stock options and approximately 354,000 restricted shares primarily related to performance-based awards for which milestones have not been met, were not included in the computation of diluted earnings per share.

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.