Computation of (Loss) Earnings Per Share

For the three and nine months ended September 30, 2014, basic (loss) earnings per share were computed by dividing net (loss) earnings by the weighted-average number of common shares outstanding, including vested restricted stock awards, during the period. Diluted earnings per share reflects the potential dilution that could occur if the earnings were divided by the weighted-average number of common shares and potentially dilutive common shares from outstanding stock options as well as unvested restricted stock awards. Potential dilutive common shares were calculated using the treasury stock method and represent incremental shares issuable upon exercise of the Company’s outstanding stock options and unvested restricted stock awards. For periods in which the Company incurs losses, potentially dilutive shares are not considered in the calculation of net loss per share as their effect would be anti-dilutive. For periods in which the Company has earnings, stock options are excluded from the calculation of diluted net income per share when the combined exercise price, unrecognized stock-based compensation and expected tax benefits upon exercise are greater than the average market price for the Company’s common stock because their effect is anti-dilutive. For the three and nine months ended September 30, 2014, there were no differences between the number of common shares used for the basic and diluted earnings per share (“EPS”) computation as the Company incurred a net loss. For the three and nine months ended September 30, 2014, 1.0 million and 1.1 million, respectively, stock options and shares of restricted stock were excluded from diluted loss per share that would have been included if the Company had been in a net income position. Additionally, stock options totaling 1.2 million and 1.1 million for the three and nine months ended September 30, 2014, respectively, were not included in the computation of diluted EPS because the exercise of such options would be anti-dilutive. For the three and nine months ended September 30, 2014, there were no participating securities. As such, the treasury stock method was applied in calculating EPS rather than the more dilutive of the treasury stock or the two-class method, as performed in previous periods.

For the three and nine months ended September 30, 2013, diluted net income per share was reported based on the more dilutive of the treasury stock or the two-class method. Under the two-class method, net income is allocated to common stock and participating securities. For the nine months ended September 30, 2013, the Company’s unvested restricted stock awards and certain unvested restricted stock units met the definition of participating securities. Basic net income per share under the two-class method was computed by dividing net income adjusted for earnings allocated to unvested stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share under the two-class method was computed by dividing net income adjusted for earnings allocated to unvested stockholders for the period by the weighted average number of common and common equivalent shares outstanding during the period. The Company excludes stock options from the calculation of diluted net income per share when the combined exercise price, unrecognized stock-based compensation and expected tax benefits upon exercise are greater than the average market price for the Company’s common stock because their effect is anti-dilutive. Stock options totaling 0.6 million and 0.5 million for the three and nine months ended September 30, 2013 were not included in the computation of diluted EPS because the exercise of such options would be anti-dilutive. Due to the fact that the holders of participating securities are not contractually required to share in the Company's losses, no allocation to participating securities was made for periods in which the Company incurred a net loss in applying the two-class method to compute basic net loss per common share. For the three months ended September 30, 2013, 1.2 million stock options and shares of restricted stock were excluded from diluted loss per share that would have been included if the Company had been in a net income position.

The following table sets forth the computation of basic and diluted EPS for the nine months ended September 30, 2013 (in thousands, except per share amounts):



	2013
Basic net income per share:
Net income	$	6,251
Less: income allocated to participating securities	(16		)
Net income allocated to common stockholders	$	6,235
Weighted average common shares outstanding — basic	33,774
Net income per share — basic	$	0.18
Diluted net income per share:
Net income	$	6,251
Less: income allocated to participating securities	(16		)
Net income allocated to common stockholders	$	6,235
Weighted average common shares outstanding — basic	33,774
Dilutive securities	1,060
Weighted average common shares outstanding — diluted	34,834
Net income per share — diluted	$	0.18