3. INCOME PER SHARE:

The weighted average number of common shares outstanding is calculated as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Weighted average shares outstanding - basic		50,814		51,244		50,719		51,832
Effect of dilutive stock-based compensation		464		504		519		533
Effect of convertible notes		6,033		7,464		5,798		7,682
Effect of common stock warrants		3,224		5,678		3,042		5,940

Weighted average shares outstanding - diluted		60,535		64,890		60,078		65,987

The Company had stock-based compensation awards outstanding with respect to approximately zero and 0.1 million shares of common stock for the three months ended June 30, 2014 and 2013, respectively, and approximately zero and 0.1 million shares of common stock for the six months ended June 30, 2014 and 2013, respectively, that could potentially dilute earnings per share in the future but were excluded from the computation of diluted earnings per share for the respective periods as the effect of their inclusion would have been anti-dilutive.

As discussed more fully in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, in 2009 the Company issued 3.75% Convertible Senior Notes due 2014 (the “Convertible Notes”). The Company will settle the outstanding face value of the Convertible Notes in cash upon conversion/maturity. Any conversion spread associated with the conversion of the Convertible Notes will be settled in shares of the Company’s common stock. The Convertible Notes are convertible through the close of business on September 29, 2014 pursuant to the indenture for the Convertible Notes.

In connection with the issuance of the Convertible Notes, the Company sold common stock purchase warrants to counterparties affiliated with the initial purchasers of the Convertible Notes whereby the warrant holders may purchase shares of the Company’s stock. At June 30, 2014, approximately 9.6 million shares of the Company’s common stock were issuable pursuant to the warrants, with an adjusted strike price of $25.01 per share, which reflects the warrant settlements and repurchases discussed in Note 7 and the adjustments made in connection with the cash dividend paid by the Company to stockholders on July 15, 2014. The number of shares underlying the warrants and the strike price thereof are subject to further anti-dilution adjustments, including for quarterly cash dividends paid by the Company. If the average closing price of the Company’s stock during a reporting period exceeds this strike price, these warrants will be dilutive. Unless modified prior to maturity, the warrants may only be settled in shares of the Company’s common stock.

In May and June 2014, the Company modified the agreements with two of the note hedge counterparties to cash settle a portion of the warrants as described in Note 7. In April 2014 and previously in June 2013, the Company entered into agreements with the note hedge counterparties to proportionately reduce the number of Purchased Options (as defined below) and the warrants discussed above in conjunction with a repurchase of a portion of the Convertible Notes. Each of these agreements were considered modifications to the Purchased Options and warrants (as applicable), and based on the terms of the agreements, the Company recognized a charge of $5.0 million and $4.9 million in the three months and six months ended June 30, 2014 and 2013, respectively. The charge for the 2014 period is recorded as an increase to accumulative deficit and derivative liability, as the liability was settled in cash, and the charge for the 2013 period was recorded as an increase to accumulated deficit and additional paid-in-capital, as the obligation was settled in shares, in the accompanying condensed consolidated balance sheets. These charges also represent a deduction from net income in calculating net income available to common shareholders and earnings per share available to common shareholders in the accompanying condensed consolidated statements of operations.