Note 2. Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income 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 per share for the three and nine months ended December 31, 2014 and 2013 were as follows (in thousands, except per share data):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2014		2013		2014		2013
Basic Net Income Per Share
Net income	$	12,684	$	4,393	$	14,814	$	3,729


Weighted average shares used in computing basic net income per share		40,856		39,592		40,456		39,179


Net income per share - basic	$	0.31	$	0.11	$	0.37	$	0.10


	Three Months Ended December 31,				Nine Months Ended December 31,
	2014		2013		2014		2013
Diluted Net Income Per Share
Net income	$	12,684	$	4,393	$	14,814	$	3,729


Weighted average shares used in computing basic net income per share		40,856		39,592		40,456		39,179
Effect of dilutive securities		2,028		2,134		1,889		2,136

Weighted average shares used in computing diluted net income per share		42,884		41,726		42,345		41,315

Net income per share - diluted	$	0.30	$	0.11	$	0.35	$	0.09

For the three and nine months ended December 31, 2014, approximately 1,000 and 36,000 shares underlying stock options primarily related to out-of-the-money stock options were not included in the computation of diluted earnings per share. Also, approximately 460,000 restricted shares in each of the three and nine months ended December 31, 2014 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 and nine months ended December 31, 2013, approximately 3,000 and 252,000 shares underlying stock options primarily related to out-of-the-money stock options were not included in the computation of diluted earnings per share. Also, approximately 354,000 restricted shares in each of the three and nine months ended December 31, 2013 primarily related to performance-based awards for which milestones have not been met, were not included in the computation of diluted earnings per share.