12. Net income per share

Basic and diluted earnings per share are computed pursuant to the two-class method. The two-class method determines earnings per share for each class of common stock and participating security according to their respective participation rights in undistributed earnings. Unvested restricted stock awards granted to employees are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock. In accordance with ASC Topic No. 260, diluted net income per share is calculated using the more dilutive of the following two approaches:

Assume exercise of stock options and vesting of restricted stock using the treasury stock method.

Assume exercise of stock options using the treasury stock method, but assume participating securities (unvested restricted stock) are not vested and allocate earnings to common shares and participating securities using the two-class method.

For the year ended December 31, 2013, the treasury stock method was used in the computation as it was more dilutive of the two approaches. For the year ended December 31, 2012, the two class method was used in the computation as it was more dilutive of the two approaches. For the year ended December 31, 2011, the treasury stock method was used in the computation as both approaches resulted in the same diluted net income per share. The following presents a reconciliation of the numerator and denominator used in the calculation of basic net income per share and a reconciliation of the denominator used in the calculation of diluted net income per share (in thousands, except share and per share data):


	Year Ended December 31,
	2013			2012			2011
Numerator:
Net income, as reported	$	31,085		$	28,965		$	22,669
Less: net income attributable to participating securities		(503	)		(469	)		(367	)

Net income available to common shareholders—basic and diluted for 2013, basic for 2012, basic and diluted for 2011	$	30,582		$	28,496		$	22,302

Denominator:
Basic:
Weighted-average shares of common stock outstanding		38,470,376			36,914,163			35,939,104
Less: weighted-average shares of unvested restricted common stock outstanding		(636,559	)		(602,328	)		(581,474	)

Weighted-average number of common shares used in computing basic net income per common share		37,833,817			36,311,835			35,357,630

Net income per share applicable to common shareholders—basic	$	0.81		$	0.78		$	0.63

Denominator:
Diluted:
Weighted-average shares of common stock outstanding		38,470,376						35,939,104
Less: weighted-average shares of unvested restricted common stock outstanding		(636,559	)					(581,474	)
Weighted-average number of common shares issuable upon exercise of outstanding stock options, based on the treasury stock method		1,240,629						1,326,873
Weighted-average number of shares of restricted common stock outstanding, based on the treasury stock method		211,205						132,876

Weighted-average number of common shares used in computing diluted net income per common share		39,285,651						36,817,379

Net income per share applicable to common shareholders—diluted	$	0.78					$	0.61

Numerator:
Net income available to common shareholders—basic				$	28,496
Plus: undistributed earnings allocated to participating securities					424
Less: undistributed earnings reallocated to participating securities					(410	)

Net income available to common shareholders—diluted				$	28,510

Denominator:
Diluted:
Weighted-average shares of common stock outstanding					36,914,163
Less: weighted-average shares of unvested restricted common stock outstanding					(602,328	)
Weighted-average number of common shares issuable upon exercise of outstanding stock options, based on the treasury stock method					1,250,118

Weighted-average number of common shares used in computing diluted net income per common share					37,561,953

Net income per share applicable to common shareholders—diluted				$	0.76

The following common share equivalents have been excluded from the computation of diluted weighted-average shares outstanding, for the periods indicated, as their effect would have been anti-dilutive:


	Year Ended December 31,
	2013		2012		2011
Unvested restricted common stock		17,620		1,459		14,322
Options		390,974		1,638,905		1,479,608