3. Earnings Per Share
Basic earnings per share (“EPS”) are calculated as net income divided by the weighted-average number of shares of common stock outstanding during the period, including restricted stock. Restricted shares of the Company’s common stock have full voting rights and participate equally with common stock in dividends declared, if any, and undistributed earnings. As participating securities, the shares of restricted stock are included in the calculation of basic EPS using the two-class method. Diluted earnings per share assumes issuance of the net incremental shares from stock options and restricted stock units when dilutive. The weighted-average common shares outstanding used to calculate diluted earnings per share reflect the dilutive effect of common stock equivalents including options to purchase shares of common stock and restricted stock units, using the treasury stock method.
Basic and diluted weighted-average common shares outstanding and earnings per share include the following for the years ended December 31, (in thousands, except per share data):
| 2012 | 2011 | 2010 | ||||||||||
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Net income |
$ | 805 | $ | 23,970 | $ | 9,486 | ||||||
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Basic weighted-average common shares outstanding |
37,266 | 37,034 | 36,751 | |||||||||
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Dilutive effect of common stock equivalents |
228 | 262 | 193 | |||||||||
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Diluted weighted-average common shares outstanding |
37,494 | 37,296 | 36,944 | |||||||||
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Earnings per share: |
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Basic |
$ | 0.02 | $ | 0.65 | $ | 0.26 | ||||||
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Diluted |
$ | 0.02 | $ | 0.64 | $ | 0.26 | ||||||
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Stock options and restricted stock units excluded from diluted weighted-average common shares outstanding because their inclusion would have an anti-dilutive effect: |
906 | 423 | 531 | |||||||||