Note 11. Net Income Per Share of Class A and Class B Common Stock

We compute net income per share of Class A and Class B common stock using the two-class method. Under this method, basic net income per share is computed using the weighted average number of common shares outstanding during the period excluding unvested common shares subject to repurchase or cancellation. Diluted net income per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the common shares issuable upon the net exercise of stock options and unvested restricted stock units and is reflected in diluted earnings per share by application of the treasury stock method. The computation of the diluted net income per share of Class A common stock assumes the conversion of Class B common stock, while the diluted net income per share of Class B common stock does not assume the conversion of those shares.

Except with respect to voting and transfer rights, the rights of the holders of our Class A and Class B common stock are identical. Under our Articles of Incorporation, the Class A and Class B common stock share equally in any dividends, liquidation proceeds or other distribution with respect to our common stock and the Articles of Incorporation can only be amended by a vote of the shareholders. Additionally, Oregon law provides that amendments to our Articles of Incorporation that would adversely alter the rights, powers or preferences of a given class of stock, must be approved by the class of stock adversely affected by the proposed amendment. As a result, the undistributed earnings for each year are allocated based on the contractual participation rights of the Class A and Class B common shares as if the earnings for the year had been distributed. Because the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis.

Following is a reconciliation of the income from continuing operations and weighted average shares used for our basic earnings per share (“EPS”) and diluted EPS (in thousands, except per share amounts):

Three Months Ended September 30 ,	2015						2014
Basic EPS from Continuing Operations	Class A			Class B			Class A			Class B
Numerator:
Income from continuing operations applicable to common stockholders	$	39,162		$	4,229		$	31,149		$	3,388
Distributed income applicable to common stockholders		(4,745	)		(512	)		(3,765	)		(409	)
Basic undistributed income from continuing operations applicable to common stockholders	$	34,417		$	3,717		$	27,384		$	2,979

Denominator:
Weighted average number of shares outstanding used to calculate basic income per share		23,727			2,562			23,556			2,562

Basic income per share from continuing operations applicable to common stockholders	$	1.65		$	1.65		$	1.32		$	1.32
Basic distributed income per share from continuing operations applicable to common stockholders		(0.20	)		(0.20	)		(0.16	)		(0.16	)
Basic undistributed income per share from continuing operations applicable to common stockholders	$	1.45		$	1.45		$	1.16		$	1.16

Three Months Ended September 30 ,	2015					2014
Diluted EPS from Continuing Operations	Class A		Class B			Class A		Class B
Numerator:
Distributed income applicable to common stockholders	$	4,745	$	512		$	3,765	$	409
Reallocation of distributed income as a result of conversion of dilutive stock options		3		(3	)		3		(3	)
Reallocation of distributed income due to conversion of Class B to Class A common shares outstanding		509		-			406		-
Diluted distributed income applicable to common stockholders	$	5,257	$	509		$	4,174	$	406
Undistributed income from continuing operations applicable to common stockholders	$	34,417	$	3,717		$	27,384	$	2,979
Reallocation of undistributed income as a result of conversion of dilutive stock options		27		(27	)		28		(28	)
Reallocation of undistributed income due to conversion of Class B to Class A		3,690		-			2,951		-
Diluted undistributed income from continuing operations applicable to common stockholders	$	38,134	$	3,690		$	30,363	$	2,951

Denominator:
Weighted average number of shares outstanding used to calculate basic income per share from continuing operations		23,727			2,562			23,556			2,562
Weighted average number of shares from stock options		191			-			241			-
Conversion of Class B to Class A common shares outstanding		2,562			-			2,562			-
Weighted average number of shares outstanding used to calculate diluted income per share from continuing operations		26,480			2,562			26,359			2,562

Diluted income per share from continuing operations applicable to common stockholders	$	1.64		$	1.64		$	1.31		$	1.31
Diluted distributed income per share from continuing operations applicable to common stockholders		(0.20	)		(0.20	)		(0.16	)		(0.16	)
Diluted undistributed income per share from continuing operations applicable to common stockholders	$	1.44		$	1.44		$	1.15		$	1.15

Three Months Ended September 30 ,	2015				2014
Diluted EPS	Class A		Class B		Class A		Class B
Antidilutive Securities
Shares issuable pursuant to stock options not included since they were antidilutive		18		-		13		-

Nine Months Ended September 30 ,	2015						2014
Basic EPS from Continuing Operations	Class A			Class B			Class A			Class B
Numerator:
Income from continuing operations applicable to common stockholders	$	122,092		$	13,175		$	85,124		$	9,277
Distributed income applicable to common stockholders		(13,303	)		(1,436	)		(10,578	)		(1,153	)
Basic undistributed income from continuing operations applicable to common stockholders	$	108,789		$	11,739		$	74,546		$	8,124

Denominator:
Weighted average number of shares outstanding used to calculate basic income per share		23,742			2,562			23,509			2,562

Basic income per share from continuing operations applicable to common stockholders	$	5.14		$	5.14		$	3.62		$	3.62
Basic distributed income per share from continuing operations applicable to common stockholders		(0.56	)		(0.56	)		(0.45	)		(0.45	)
Basic undistributed income per share from continuing operations applicable to common stockholders	$	4.58		$	4.58		$	3.17		$	3.17

Nine Months Ended September 30 ,	2015						2014
Diluted EPS from Continuing Operations	Class A			Class B			Class A			Class B
Numerator:
Distributed income applicable to common stockholders	$	13,303		$	1,436		$	10,578		$	1,153
Reallocation of distributed income as a result of conversion of dilutive stock options		11			(11	)		12			(12	)
Reallocation of distributed income due to conversion of Class B to Class A common shares outstanding		1,425			-			1,141			-
Diluted distributed income applicable to common stockholders	$	14,739		$	1,425		$	11,731		$	1,141
Undistributed income from continuing operations applicable to common stockholders	$	108,789		$	11,739		$	74,546		$	8,124
Reallocation of undistributed income as a result of conversion of dilutive stock options		86			(86	)		82			(82	)
Reallocation of undistributed income due to conversion of Class B to Class A		11,653			-			8,042			-
Diluted undistributed income from continuing operations applicable to common stockholders	$	120,528		$	11,653		$	82,670		$	8,042

Denominator:
Weighted average number of shares outstanding used to calculate basic income per share from continuing operations		23,742			2,562			23,509			2,562
Weighted average number of shares from stock options		196			-			266			-
Conversion of Class B to Class A common shares outstanding		2,562			-			2,562			-
Weighted average number of shares outstanding used to calculate diluted income per share from continuing operations		26,500			2,562			26,337			2,562

Diluted income per share from continuing operations applicable to common stockholders	$	5.10		$	5.10		$	3.58		$	3.58
Diluted distributed income per share from continuing operations applicable to common stockholders		(0.56	)		(0.56	)		(0.45	)		(0.45	)
Diluted undistributed income per share from continuing operations applicable to common stockholders	$	4.54		$	4.54		$	3.13		$	3.13

Nine Months Ended September 30 ,	2015				2014
Diluted EPS	Class A		Class B		Class A		Class B
Antidilutive Securities
Shares issuable pursuant to stock options not included since they were antidilutive		17		-		13		-