Note 2 – Earnings Per Share

We calculate basic earnings per share (EPS) by dividing Net income by the weighted average number of common shares outstanding. We include outstanding unvested restricted stock awards of our common stock in the basic weighted average share calculation. Diluted EPS reflects the dilutive effects of potentially dilutive securities, which include in-the-money outstanding stock options and shares to be purchased under our employee stock purchase plan. Using the treasury stock method, the effect of dilutive securities includes these additional shares of common stock that would have been outstanding based on the assumption that these potentially dilutive securities had been issued.

Stock options with exercise prices that are higher than the average market prices of our common stock for the periods presented are excluded from the diluted EPS calculation because the effect is anti-dilutive.

The table below presents the computation of EPS, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except EPS):



	Three Months Ended
	March 31,
	2019		2018
Net income	$	32,637	$	31,339

Weighted average shares outstanding:
Basic	39,479		40,370
Effect of dilutive securities:
Stock options and employee stock purchase plan	1,217		1,492
Diluted	40,696		41,862

Earnings per share:
Basic	$	0.83	$	0.78
Diluted	$	0.80	$	0.75

Anti-dilutive stock options excluded from diluted earnings per share computations	65		85