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 December 31,
	2013				2012
	Basic		Diluted		Basic		Diluted
Numerator for Basic and Diluted Earnings per Share:
Net income	$	71,629	$	71,629	$	47,489	$	47,489

Denominator for Basic and Diluted Earnings per Share:
Weighted average shares outstanding		68,715		68,715		69,009		69,009
Employee stock options		0		863		0		725

Total weighted average shares outstanding		68,715		69,578		69,009		69,734

Earnings per Share:
Earnings per share	$	1.04	$	1.03	$	0.69	$	0.68


	Six Months Ended December 31,
	2013				2012
	Basic		Diluted		Basic		Diluted
Numerator for Basic and Diluted Earnings per Share:
Net income	$	118,081	$	118,081	$	102,044	$	102,044

Denominator for Basic and Diluted Earnings per Share:
Weighted average shares outstanding		69,131		69,131		68,846		68,846
Employee stock options		0		816		0		736

Total weighted average shares outstanding		69,131		69,947		68,846		69,582

Earnings per Share:
Earnings per share	$	1.71	$	1.69	$	1.48	$	1.47

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 943,458 and 1,642,862 shares of our common stock were outstanding for the three months ended December 31, 2013 and 2012, respectively, and were excluded from the computation of diluted earnings per share because they would have been antidilutive. No restricted shares and restricted stock units were outstanding for the three months ended December 31, 2013 and 2012, respectively, that were excluded from the computation of diluted earnings per share as they also would have been antidilutive. Options to purchase 1,014,125 and 1,542,575 shares of our common stock were outstanding for the six months ended December 31, 2013 and 2012, respectively, and were excluded from the computation of diluted earnings per share because they would have been antidilutive. In addition 177,489 and 59,352 of restricted shares and restricted stock units were outstanding for the six months ended December 31, 2013 and 2012, respectively, that were excluded from the computation of diluted earnings per share as they also would have been antidilutive.

In October 2012, we repaid our $400.0 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 six months ended December 31, 2013. For the three and six months ended December 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 in cash per $1,000 principal amount of Convertible Senior Notes 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 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.