Computation of Earnings per Share

3 Months Ended

Mar. 31, 2016

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 March 31,
	2016		2015

Net income	$	635	$	272

Weighted average common shares outstanding		22,993		22,866
Additional dilutive common stock equivalents		12		21
Diluted shares outstanding		23,005		22,887

Net income per share – basic	$	0.03	$	0.01
Net income per share – diluted	$	0.03	$	0.01

For the three month periods ended March 31, 2016 and 2015, options to purchase 64,034 and 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.