3. Earnings per Share

Accounting Standards Codification (“ASC”) 260, Earnings per Share, requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividend or dividend equivalents as a separate class of securities in calculating earnings per share. We have granted and expect to continue to grant to employees restricted stock grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities under ASC 260. As such, we are required to include these grants in the calculation of our basic earnings per share and calculate basic earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings.

Basic earnings per share is computed utilizing the two-class method and is calculated based on the weighted-average number of common shares outstanding during the periods presented.

Diluted earnings per share is computed using the weighted-average number of common and common equivalent shares outstanding during the periods utilizing the two-class method for stock options and nonvested restricted stock.

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2014			2013			2014			2013
	(in thousands, except per share amounts)
Numerator:
Income from continuing operations	$	174,589		$	151,067		$	347,771		$	310,678
Income (loss) from discontinued operations	(19		)	13			(19		)	5
Net income	174,570			151,080			347,752			310,683
Adjustment for basic earnings per share:
Earnings allocated to unvested shareholders	(1,035		)	(820		)	(2,027		)	(1,553		)
Numerator for basic earnings per share:
From continuing operations	173,554			150,247			345,744			309,125
From discontinued operations	(19		)	13			(19		)	5
	173,535			150,260			345,725			309,130
Adjustment for diluted earnings per share:
Effect of reallocating undistributed earnings of unvested shareholders	8			10			17			19
Numerator for diluted earnings per share:
From continuing operations	173,562			150,257			345,761			309,144
From discontinued operations	(19		)	13			(19		)	5
	$	173,543		$	150,270		$	345,742		$	309,149
Denominator:
Denominator for basic earnings per share — weighted-average shares	107,692			106,326			107,417			106,094
Effect of dilutive shares from stock options and restricted stock	1,389			1,460			1,528			1,546
Denominator for diluted earnings per share — adjusted weighted-average shares	109,081			107,786			108,945			107,640
Basic earnings per common share:
Income from continuing operations	$	1.61		$	1.41		$	3.22		$	2.91
Income from discontinued operations	—			—			—			—
Net income	$	1.61		$	1.41		$	3.22		$	2.91
Diluted earnings per common share:
Income from continuing operations	$	1.59		$	1.39		$	3.17		$	2.87
Income from discontinued operations	—			—			—			—
Net income	$	1.59		$	1.39		$	3.17		$	2.87

The following shares attributable to outstanding equity awards were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive:

	Three Months Ended				Six Months Ended
	March 31,				March 31,
	2014		2013		2014		2013
	(in thousands, except per share amounts)

Shares excluded from calculation of diluted earnings per share	215		752		256		365
Weighted-average price per share	$	79.67	$	57.30	$	79.67	$	54.18