Earnings Per Share

3 Months Ended

Dec. 31, 2012

Basic net income per common share is calculated based on the weighted average number of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number of common and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares of our stock result from dilutive common stock options and shares purchased through our employee stock purchase plan.

The following table is a reconciliation of the numerators and denominators in the net income per common share calculations (in thousands, except per common share data):



	Three months ended December 31,
	2012		2011
Numerator:
Net income	$	1,230	$	724
Denominator:
Denominator for basic net income per common share — weighted average shares outstanding	26,188		25,639
Effect of dilutive securities:
Employee stock options and employee stock purchase plan	246		504
Denominator for diluted net income per common share — adjusted weighted average shares	26,434		26,143
Net income per common share, basic	$	0.05	$	0.03
Net income per common share, diluted	$	0.05	$	0.03

Because their effect would be anti-dilutive, certain potentially dilutive shares related to stock options to purchase common shares were not included in the above computation of diluted earnings per common share. This is because the options’ exercise prices were greater than the average market price of our common shares. There were 4,278,823 and 1,810,830 potentially dilutive shares related to such stock options for the three month periods ended December 31, 2012 and 2011, respectively.

- Definition

The entire disclosure for earnings per share.

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