Earnings Per Share

Our basic earnings per share (“EPS”) is computed based on the weighted average number of shares, including vested but unissued stock units, share units, performance shares and restricted stock units ("RSUs"), outstanding during each respective period. Our diluted EPS reflects the dilution from potential common stock issuable pursuant to the exercise of equity-classified stock-based awards and convertible senior notes, if outstanding and dilutive, during each respective period.

As of April 30, 2014, we had $191,499,000 of our 3.0% convertible senior notes outstanding, all of which were redeemed or repurchased in May 2014. Pursuant to FASB ASC 260, "Earnings Per Share," equity-classified stock-based awards that are subject to performance conditions are not considered in our diluted EPS calculations until the respective performance conditions have been satisfied. When calculating our diluted earnings per share, we consider (i) the amount a recipient must pay upon assumed exercise of stock-based awards; (ii) the amount of stock-based compensation cost attributed to future services and not yet recognized; and (iii) the amount of excess tax benefits, if any, that would be credited to additional paid-in capital assuming settlement of in-the-money stock-based awards. This excess tax benefit is the amount resulting from a tax deduction for compensation in excess of compensation expense recognized for financial reporting purposes.

Weighted average basic and diluted shares outstanding for the three and nine months ended April 30, 2015 reflects a reduction of approximately 83,000 and 27,000 shares as a result of the repurchase of our common shares during the respective periods. Weighted average basic and diluted shares outstanding for the three and nine months ended April 30, 2014 reflects a reduction of approximately 482,000 and 657,000 shares as a result of the repurchase of our common shares during the respective periods. See Note (16) – “Stockholders’ Equity” for more information on our stock repurchase program.

Weighted average stock options outstanding to purchase 685,000 and 566,000 shares for the three months ended April 30, 2015 and 2014, respectively, were not included in our diluted EPS calculation because their effect would have been anti-dilutive. Weighted average stock options outstanding to purchase 477,000 and 898,000 shares for the nine months ended April 30, 2015 and 2014, respectively, were not included in our diluted EPS calculation because their effect would have been anti-dilutive.

Our EPS calculations exclude 124,000 and 92,000 weighted average RSUs with performance measures (which we refer to as performance shares) outstanding for the three months ended April 30, 2015 and 2014, respectively, and 118,000 and 78,000 weighted average performance shares outstanding for the nine months ended April 30, 2015 and 2014, respectively, as the respective performance conditions had not yet been satisfied. However, the compensation expense related to these awards is included in net income (the numerator) for EPS calculations for each respective period.

Liability-classified stock-based awards, when outstanding, do not impact and are not included in the denominator for EPS calculations.

The following table reconciles the numerators and denominators used in the basic and diluted EPS calculations:



	Three months ended April 30,			Nine months ended April 30,
	2015		2014	2015	2014
Numerator:
Net income for basic calculation	$	4,960,000	5,875,000	17,770,000	17,163,000
Effect of dilutive securities:
Interest expense (net of tax) on 3.0% convertible senior notes	—		1,117,000	—	3,351,000
Numerator for diluted calculation	$	4,960,000	6,992,000	17,770,000	20,514,000

Denominator:
Denominator for basic calculation	16,202,000		15,200,000	16,220,000	15,882,000
Effect of dilutive securities:
Stock-based awards	180,000		290,000	248,000	218,000
Conversion of 3.0% convertible senior notes	—		6,274,000	—	6,224,000
Denominator for diluted calculation	16,382,000		21,764,000	16,468,000	22,324,000