Note 7 – Earnings Per Share

We apply the two-class method when computing earnings per share, which requires that net income per share for each class of shares entitled to dividends be calculated assuming all of our net income is distributed as dividends to these shareholders based on their contractual rights.

The following table presents the calculation of basic and diluted earnings per share of common stock outstanding:


	Three Months Ended March 31,
	2013				2012
	Basic		Diluted		Basic		Diluted
Numerator for Basic and Diluted Earnings per Share:
Net income	$	34,873	$	34,873	$	172,656	$	172,656

Denominator for Basic and Diluted Earnings per Share:
Weighted average shares outstanding		69,109		69,109		71,622		71,622
Employee stock options		0		783		0		982

Total weighted average shares outstanding		69,109		69,892		71,622		72,604

Earnings per Share:
Earnings per share	$	0.50	$	0.50	$	2.41	$	2.38


	Nine Months Ended March 31,
	2013				2012
	Basic		Diluted		Basic		Diluted
Numerator for Basic and Diluted Earnings per Share:
Net income	$	136,917	$	136,917	$	280,278	$	280,278

Denominator for Basic and Diluted Earnings per Share:
Weighted average shares outstanding		68,932		68,932		71,395		71,395
Employee stock options		0		744		0		868

Total weighted average shares outstanding		68,932		69,676		71,395		72,263

Earnings per Share:
Earnings per share	$	1.99	$	1.97	$	3.93	$	3.88

Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities, as defined under GAAP, and are included in the computation of earnings per share pursuant to the two-class method.

Certain options were outstanding and not included in the computation of diluted net earnings per share because the assumed exercise of these options would have been antidilutive. Options to purchase 1,245,003 and 981,637 shares of our common stock were outstanding for the three months ended March 31, 2013 and 2012, respectively, and were excluded from the computation of diluted earnings per share because they would have been antidilutive. In addition, no restricted shares and restricted stock units for the three months ended March 31, 2013 and 2012 were excluded from the computation of diluted earnings per share as they did not have an antidilutive impact.

Options to purchase 1,339,085 and 1,943,917 shares of our common stock were outstanding for the nine months ended March 31, 2013 and 2012, respectively, and excluded from the computation of diluted earnings per share because they would have been antidilutive. In addition, 59,161 and 5,000 restricted shares and restricted stock units were outstanding during the nine months ended March 31, 2013 and 2012, respectively, and were excluded from the computation of diluted earnings per share as they also would have been antidilutive.

In October 2012, we repaid our $400 million of 1.25 percent convertible senior notes due October 15, 2012 (the “Convertible Senior Notes”), and therefore the Convertible Senior Notes had no impact on our calculation of earnings per share for the three and nine months ended March 31, 2013. For the three and nine months ended March 31, 2012, the conversion terms of the Convertible Senior Notes would have affected the calculation of diluted earnings per share if the price of our common stock exceeded the conversion price of the Convertible Senior Notes. The initial conversion price of the Convertible Senior Notes was approximately $104 per share, subject to adjustment in specified circumstances as described in the indenture governing the Convertible Senior Notes, as amended (the “Indenture”). Upon conversion, a holder of the Convertible Senior Notes would have received an amount per $1,000 principal amount of Convertible Senior Notes in cash equal to the lesser of $1,000 or the conversion value of the Convertible Senior Notes, determined in the manner set forth in the Indenture. If the conversion value exceeded $1,000, we would have delivered $1,000 in cash and, at our option, cash or common stock or a combination of cash and common stock for the conversion price in excess of $1,000. The conversion option was indexed to our common stock and was therefore classified as equity in our Condensed Consolidated Balance Sheet at June 30, 2012. The conversion option would not have resulted in an adjustment to net income in calculating diluted earnings per share. The dilutive effect of the conversion option was calculated using the treasury stock method. Therefore, conversion settlement shares would have been included in diluted shares outstanding if the price of our common stock exceeded the conversion price of the Convertible Senior Notes. Refer to Note 9 – Debt for more information.