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Computation of Basic and Diluted Net Income Per Common Share
 3 Months Ended
Mar. 29, 2014
Computation of Basic and Diluted Net Income Per Common Share

8. Computation of Basic and Diluted Net Income Per Common Share

Basic net income per share is computed by dividing net income for the period by the weighted average number of shares outstanding during the period.

Diluted net income per share is computed by dividing net income for the period by the weighted average number of shares, plus the weighted average common stock equivalents outstanding during the period. The Company excludes options from the computation of diluted weighted average shares outstanding if the exercise price of the options is greater than the average market price of the shares because the inclusion of these options would be anti-dilutive to earnings per share. Accordingly, for the three months ended March 29, 2014 and March 30, 2013, respectively, stock options to purchase 48,253 and 755,013 shares were excluded from the computation of diluted weighted average shares outstanding.

A reconciliation of the numerator and denominator of basic and diluted net income per common share is provided as follows:

 

 

  

Three Months Ended

 

(in thousands, except per share amounts)

  

March 29,
2014

 

  

March 30,
2013

 

Numerator:

  

 

 

 

  

 

 

 

Net income

  

$

487 

  

  

$

874  

 

 

Denominator:

  

 

 

 

  

 

 

 

Weighted average shares of common stock (basic) 

  

 

9,963 

 

  

 

8,511 

 

Effect of dilutive preferred shares 

  

 

— 

 

  

 

1,000 

 

Effect of dilutive stock options 

  

 

371 

 

  

 

261 

 

Effect of dilutive contingent shares 

  

  

192  

 

  

  

30 

 

Weighted average shares of common stock (diluted) 

  

  

10,526  

 

  

  

9,802 

 

 

Per share data:

 

 

 

 

 

 

 

 

Basic net income per share

  

$

0.05 

  

  

$

0.10 

 

Diluted net income per share 

  

$

0.05 

  

  

$

0.09