Net Income Per Share

3 Months Ended

Mar. 31, 2017

(2) Net Income Per Share

Basic and diluted earnings or loss per share (“EPS”) are computed using the two-class method, which is an earnings allocation that determines EPS for each class of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. Restricted Stock Awards (“RSAs”) are considered participating securities because they are legally issued at the date of grant and holders are entitled to receive non-forfeitable dividends during the vesting term.

The computation of diluted EPS includes additional common shares, such as unvested stock options with exercise prices less than the average market price of the Company’s common stock during the period (“in-the-money options”), which would be considered outstanding under the treasury stock method. The treasury stock method assumes that additional shares would have to be issued in cases where the exercise price of stock options is less than the value of the common stock being acquired because the cash proceeds received from the stock option holder would not be sufficient to acquire that same number of shares. The Company does not compute diluted EPS in cases where the inclusion of such additional shares would be anti-dilutive in effect.

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2017 and 2016, (in thousands, except for earnings per share):


	Three Months Ended
	March 31,
	2017		2016
Weighted-average shares:
Common shares outstanding		40,669		32,625
RSAs		59		-
Total weighted-average shares		40,728		32,625
Earnings per common share—Basic
Net income	$	8,447	$	3,448
Less: Undistributed earnings allocated to RSAs		12		-
Net income available to common shareholders—Basic	$	8,435	$	3,448

Net income per common share—Basic	$	0.21	$	0.11

Basic weighted-average common shares outstanding		40,669		32,625
Effect of diluted shares		839		-
Diluted weighted-average shares outstanding		41,508		32,625

Net income per common share—Diluted	$	0.20	$	0.11

During the three month periods ended March 31, 2017 and 2016, respectively, there were 75,193 and 263,924 shares excluded from the computation of EPS because they were anti-dilutive under the treasury method calculation of diluted weighted average shares outstanding. During the three month period ended March 31, 2016, the Company had 794,037 stock options that were excluded due to the exercise price exceeding the average fair value of the Company’s common stock during the period.