Note 3. 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 units, performance-based stock awards and shares to be purchased under the Company’s employee stock purchase plan. The Company’s basic and diluted net income per share for the three months ended June 30, 2017 and 2016 were as follows (in thousands, except per share data):

	For the Three Months Ended June 30,
	2017		2016
Basic Net Income Per Share
Net income	$	37,374	$	12,910

Weighted average shares used in computing basic net income per share		43,895		42,811

Net income per share - basic	$	0.85	$	0.30

	For the Three Months Ended June 30,
	2017		2016
Diluted Net Income Per Share
Net income	$	37,374	$	12,910

Weighted average shares used in computing basic net income per share		43,895		42,811
Effect of dilutive securities		1,713		2,367
Weighted average shares used in computing diluted net income per share		45,608		45,178

Net income per share - diluted	$	0.82	$	0.29

For the three months ended June 30, 2017, approximately 54,000 shares underlying out-of-the-money stock options, were excluded in the computation of diluted earnings per share because their effect would have been anti-dilutive. Also, approximately 80,000 restricted shares in the three months ended June 30, 2017, respectively, 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 June 30, 2016, approximately 48,000 shares underlying out-of-the-money stock options, were excluded in the computation of diluted earnings per share because their effect would have been anti-dilutive. Also, approximately 241,000 restricted shares in the three months ended June 30, 2016, related to performance-based awards for which milestones had not been met were not included in the computation of diluted earnings per share.