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Computation of Earnings per Share

9 Months Ended

Sep. 30, 2017

Computation of Earnings per Share. Basic earnings per share is computed by dividing net income or loss by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net income or loss by the weighted average number of common shares outstanding plus additional common shares that would have been outstanding if dilutive potential common shares had been issued. For the purposes of this calculation, stock options are considered common stock equivalents in periods in which they have a dilutive effect. Stock options that are anti-dilutive are excluded from the calculation.

Net income per share is calculated as follows (in thousands, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016

Net income	$	1,229	$	1,573	$	1,863	$	3,643

Shares outstanding:
Weighted-average common shares outstanding		21,679		22,847		21,900		22,934
Additional dilutive common stock equivalents		79		92		67		62
Diluted shares outstanding		21,758		22,939		21,967		22,996

Net income per share – basic	$	0.06	$	0.07	$	0.09	$	0.16
Net income per share - diluted	$	0.06	$	0.07	$	0.08	$	0.16

For the three and nine month periods ended September 30, 2016, options to purchase 54,034 shares of common stock were outstanding, but were not included in the computation of diluted EPS because the options’ exercise prices were greater than the average market price of the common stock and thus would be anti-dilutive.