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, 2018 and 2017 were as follows (in thousands, except per share data):

	For the Three Months Ended June 30,
	2018		2017
Basic Net Income Per Share
Net income	$	90,066	$	37,374

Weighted average shares used in computing basic net income per share		44,546		43,895

Net income per share - basic	$	2.02	$	0.85

	For the Three Months Ended June 30,
	2018		2017
Diluted Net Income Per Share
Net income	$	90,066	$	37,374

Weighted average shares used in computing basic net income per share		44,546		43,895
Effect of dilutive securities		1,623		1,713
Weighted average shares used in computing diluted net income per share		46,169		45,608

Net income per share - diluted	$	1.95	$	0.82

For the three months ended June 30, 2018, approximately 36,000 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 85,000 restricted shares in the three months ended June 30, 2018, 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, 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, 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.