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, Earnings Per Share, 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 all periods presented, the treasury stock method was used in the computation of diluted net income per share, as the result was more dilutive. The following presents a reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share (in thousands, except share and per share data):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Numerator:
Net income, as reported	$	7,039		$	7,064		$	23,175		$	22,991
Less: net income attributable to participating securities		(140	)		(114	)		(430	)		(383	)

Net income available to common shareholders—basic and diluted	$	6,899		$	6,950		$	22,745		$	22,608

Denominator:
Basic:
Weighted-average shares of common stock outstanding		39,222,580			38,919,553			39,290,673			38,368,929
Less: weighted-average shares of unvested restricted common stock outstanding		(791,549	)		(642,663	)		(747,272	)		(651,046	)

Weighted-average number of common shares used in computing basic net income per common share		38,431,031			38,276,890			38,543,401			37,717,883

Net income per share applicable to common shareholders—basic	$	0.18		$	0.18		$	0.59		$	0.60


	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Diluted:
Weighted-average shares of common stock outstanding		39,222,580			38,919,553			39,290,673			38,368,929
Less: weighted-average shares of unvested restricted common stock outstanding		(791,549	)		(642,663	)		(747,272	)		(651,046	)
Weighted-average number of common shares issuable upon exercise of outstanding stock options, based on the treasury stock method		893,081			1,164,688			946,674			1,283,758
Weighted-average number of restricted stock outstanding, based on the treasury stock method		163,190			215,896			173,732			204,274

Weighted-average number of common shares used in computing diluted net income per common share		39,487,302			39,657,474			39,663,807			39,205,915

Net income per share applicable to common shareholders—diluted	$	0.17		$	0.18		$	0.57		$	0.58

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Options		307,516		456,627		380,544		363,137
Unvested restricted stock		817		2,022		156,148		23,175
Unvested restricted stock units		2,043		—		2,961		—