Net Income per Share

9 Months Ended

Sep. 30, 2014

Earnings Per Share Reconciliation [Abstract]

Net Income per Share

Net Income per Share

Basic net income per share is computed using the weighted average number of common shares outstanding during the applicable period. Diluted net income per share is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential common stock. Potential common stock consists of shares issuable pursuant to stock options, restricted stock units (“RSUs”), deferred stock units, convertible senior notes and warrants issued by the Company. The dilutive effect of outstanding awards and convertible securities is reflected in diluted earnings per share by application of the treasury stock method.

The following table sets forth the components used in the computation of basic and diluted net income per share for the three and nine months ended September 30, 2014 and 2013 (in thousands, except per share data):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2014		2013		2014		2013
Numerator:
Net income	$	91,155	$	79,756	$	236,841	$	213,138
Denominator:
Shares used for basic net income per share	178,186		178,235		178,324		178,008
Effect of dilutive securities:
Stock options	1,146		1,580		1,257		1,693
RSUs and deferred stock units	1,623		2,107		1,697		1,922
Convertible senior notes	—		—		—		—
Warrants related to issuance of convertible senior notes	—		—		—		—
Shares used for diluted net income per share	180,955		181,922		181,278		181,623
Basic net income per share	$	0.51	$	0.45	$	1.33	$	1.20
Diluted net income per share	$	0.50	$	0.44	$	1.31	$	1.17

For the three and nine months ended September 30, 2014 and 2013, certain potential outstanding shares from stock options, service-based RSUs, convertible notes and warrants were excluded from the computation of diluted net income per share because the effect of including these items would be anti-dilutive. Additionally, certain performance-based RSUs were excluded from the computation of diluted net income per share because the underlying performance conditions for such RSUs had not been met as of these dates. The number of potentially outstanding shares excluded from the computation of diluted net income per share for the three and nine months ended September 30, 2014 and 2013 are as follows (in thousands):

	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2014	2013	2014	2013
Stock options	261	1,308	462	1,782
Service-based RSUs	797	37	773	234
Performance-based RSUs	565	1,140	572	1,145
Convertible senior notes	—	—	—	—
Warrants related to issuance of convertible senior notes	—	—	—	—

The calculation of assumed proceeds used to determine the diluted weighted average shares outstanding under the treasury stock method in the periods presented was adjusted by tax windfalls and shortfalls associated with all of the Company’s outstanding stock awards. Such windfalls and shortfalls are computed by comparing the tax deductible amount of outstanding stock awards to their grant date fair values and multiplying the results by the applicable statutory tax rate. A positive result creates a windfall, which increases the assumed proceeds, and a negative result creates a shortfall, which reduces the assumed proceeds.