RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME

(Unaudited, in thousands, except per share amounts)

Three months ended

June 30,

Six months ended

June 30,

2013

2012

2013

2012

Net income 

$    6,592

$    7,989

$    9,587

   Net income as a percentage of revenue

9.5%

11.2%

7.3%

8.8%

Adjustments to reconcile net income to non-GAAP net income:

    Stock-based compensation

$   5,190

$    3,829

$    9,850

$    7,144

    Cash award 

(266)

-

(266)

-

    Tax effect 

(1,111)

(275)

(1,838)

(462)

    Non-GAAP net income

$   9,302

$  10,146

$  15,735

$  16,269

        Non-GAAP net income as a percentage of revenue

16.1%

17.3%

14.4%

14.9%

Non-GAAP earnings per share, excluding stock-based compensation and related tax effects:

    Basic

$     0.25

$     0.29

$     0.43

$     0.47

    Diluted

$     0.24

$     0.28

$     0.41

$     0.46

Shares used in the calculation of non-GAAP earnings per share:

    Basic

37,053

34,665

36,657

34,385

    Diluted

38,239

35,997

38,019

35,660