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 and nine months ended December 31, 2017 and 2016 were as follows (in thousands, except per share data):

	For the Three Months Ended December 31,				For the Nine Months Ended December 31,
	2017		2016		2017		2016
Basic Net Income Per Share
Net income	$	13,446	$	15,432	$	75,323	$	37,217

Weighted average shares used in computing basic net income per share		44,247		43,431		44,095		43,125

Net income per share - basic	$	0.30	$	0.36	$	1.71	$	0.86

	For the Three Months Ended December 31,				For the Nine Months Ended December 31,
	2017		2016		2017		2016
Diluted Net Income Per Share
Net income	$	13,446	$	15,432	$	75,323	$	37,217

Weighted average shares used in computing basic net income per share		44,247		43,431		44,095		43,125
Effect of dilutive securities		1,622		1,339		1,636		1,472
Weighted average shares used in computing diluted net income per share		45,869		44,770		45,731		44,597

Net income per share - diluted	$	0.29	$	0.34	$	1.65	$	0.83

For the three and nine months ended December 31, 2017, approximately 2,600 and 4,800 shares underlying out-of-the-money stock options, respectively, were excluded in the computation of diluted earnings per share because their effect would have been anti-dilutive. Also, approximately 128,000 restricted shares in each of the three and nine months ended December 31, 2017, respectively, related to performance-based and market-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, 2016, approximately 28,000 and 17,000 shares underlying out-of-the-money stock options, respectively, were excluded in the computation of diluted earnings per share because their effect would have been anti-dilutive. Also, approximately 185,000 restricted shares in each of the three and nine months ended December 31, 2016, respectively, related to performance-based and market-based awards for which milestones have not been met, were not included in the computation of diluted earnings per share.