NET INCOME PER SHARE

6 Months Ended

Jun. 30, 2011

NET INCOME PER SHARE

NET INCOME PER SHARE

3. NET INCOME PER SHARE

The Company computes basic net income per share by dividing net income by the weighted average number of common shares outstanding during the period.  Diluted net income per share is based upon the weighted average number of common and common equivalent shares outstanding during the period.

Common equivalent shares related to stock options, restricted stock, restricted stock units, and performance share units are calculated using the treasury stock method.  Performance share units are included in the weighted average common equivalent shares based on the number of shares that would be issued if the end of the reporting period were the end of the performance period and if the result would be dilutive.

The Company’s convertible debt issues have net share settlement features requiring the Company upon conversion to settle the principal amount of the debt for cash and the conversion premium for cash or shares of the Company’s common stock, at the Company’s option.  The convertible notes are included in the calculation of diluted net income per share if their inclusion is dilutive under the treasury stock method.

A reconciliation of the weighted average number of shares outstanding used in calculating diluted earnings per share is as follows (in thousands):

	For the Three MonthsEnded June 30,		For the Six MonthsEnded June 30,
	2011	2010	2011	2010
Weighted average number of basic common shares outstanding	49,718	47,791	49,519	47,054
Weighted average dilutive stock options, restricted stock, restricted stock units and performance share units	614	1,394	911	1,554
Assumed conversion of convertible debt	773	1,662	704	2,424
Weighted average number of diluted common and common equivalent shares outstanding	51,105	50,847	51,134	51,032
Anti-dilutive potential common shares	1,649	2,921	1,461	2,815

Anti-dilutive potential common shares for the three and six months ended June 30, 2011 includes approximately 1.1 million shares and 1.2 million shares, respectively, which could be issued under the Company’s convertible debt if the Company experiences substantial increases in its common stock price.  Under the treasury stock method, the convertible debt will generally have a dilutive impact on net income per share if the Company’s average stock price for the period exceeds the conversion price for the convertible debt.

The Company has Conversion Spread Hedges outstanding at June 30, 2011 that would have increased the effective conversion price of the Company’s 0.75% Convertible Senior Notes due 2013 (the “2013 Notes”) from $40.38 to $50.47 per share from the Company’s perspective and which were designed to reduce potential dilution upon conversion of the debt at maturity (see Note 8).  Since the beneficial impact of the Conversion Spread Hedges was anti-dilutive, it was excluded from the calculation of net income per share.