Earnings Per Share

9 Months Ended

Sep. 30, 2011

4. Earnings per Share

Earnings per share are computed using the weighted average number of shares of capital stock outstanding. Earnings and diluted earnings per share for 2011 and 2010 are computed as follows (in thousands, except per share data):


	Net Income
For the Three Months Ended September 30,	Income		Shares		Earnings per Share
2011
Earnings	$	21,887		20,674	$	1.06
Dilutive stock options		-		293
Nonvested stock awards		-		88
Diluted earnings	$	21,887		21,055	$	1.04

2010
Earnings	$	20,988		22,597	$	0.93
Dilutive stock options		-		304
Nonvested stock awards		-		95
Diluted earnings	$	20,988		22,996	$	0.91


	Net Income
For the Nine Months Ended September 30,	Income		Shares		Earnings per Share
2011
Earnings	$	60,274		20,934	$	2.88
Dilutive stock options		-		379
Nonvested stock awards		-		87
Diluted earnings	$	60,274		21,400	$	2.82

2010
Earnings	$	59,201		22,604	$	2.62
Dilutive stock options		-		314
Nonvested stock awards		-		88
Diluted earnings	$	59,201		23,006	$	2.57

For the three and nine-month periods ended September 30, 2011, 1.5 million and 980,000 stock options, respectively, were excluded from the computation of diluted earnings per share as their exercise prices were greater than the average market price for most of the period. For the three and nine-month periods ended September 30, 2010, 990,000 and 986,000 stock options, respectively, were excluded from the computation of diluted earnings per share.

Diluted earnings per share may be impacted in the future as the result of the issuance of our 1.875% Senior Convertible Notes (the "Notes") and related purchased call options and sold warrants. Per FASB's authoritative guidance on the effect of contingently convertible instruments on diluted earnings per share and convertible bonds with an issuer option to settle for cash upon conversion, we will not include any shares related to the Notes in our calculation of diluted earnings per share until our average stock price for a quarter exceeds the current conversion price. We would then include in our diluted earnings per share calculation those shares issuable using the treasury stock method. The amount of shares issuable is based upon the amount by which the average stock price for the quarter exceeds the conversion price. The purchased call option does not impact the calculation of diluted earnings per share as it is always anti-dilutive. The sold warrants become dilutive when our average stock price for a quarter exceeds the strike price of the warrant.

The following table provides examples of how changes in our stock price impact the number of shares that would be included in our diluted earnings per share calculation. It also shows the impact on the number of shares issuable upon conversion of the Notes and settlement of the purchased call options and sold warrants:


		Shares				Total Treasury		Shares Due			Incremental
		Underlying 1.875%				Method		to the Company			Shares Issued/
Share		Convertible		Warrant		Incremental		under Notes			Received by the Company
Price		Notes		Shares		Shares (a)		Hedges			upon Conversion (b)
$	80.73		28,058		-		28,058		(30,015	)		(1,957	)
$	90.73		283,300		-		283,300		(303,066	)		(19,766	)
$	100.73		487,865		-		487,865		(521,903	)		(34,038	)
$	110.73		655,480		119,789		775,269		(701,214	)		74,055
$	120.73		795,329		317,554		1,112,883		(850,820	)		262,063
$	130.73		913,783		485,064		1,398,847		(977,538	)		421,309

a) Represents the number of incremental shares that must be included in the calculation of fully diluted shares under U.S. GAAP.

b) Represents the number of incremental shares to be issued by the Company upon conversion of the 1.875% Convertible Notes, assuming concurrent settlement of the note hedges and warrants.