Earnings per Share

6 Months Ended

Jun. 30, 2011

Earnings per Share

Earnings per Share

Note 6 - Earnings per Share

Basic net income per common share of stock is calculated by dividing net income available to common stockholders by the basic weighted-average common shares outstanding for the respective period.  The Company’s earnings per share calculations reflect the impact of any repurchases of shares of common stock made by the Company.

Diluted net income per common share of stock is calculated by dividing adjusted net income by the number of diluted weighted-average common shares outstanding, which includes the effect of potentially dilutive securities.  Potentially dilutive securities for this calculation consist of unvested restricted stock units (“RSUs”), in-the-money outstanding options to purchase the Company’s common stock, contingent Performance Share Awards (“PSAs”), and shares into which the 3.50% Senior Convertible Notes are convertible.

The PSAs represent the right to receive, upon settlement of the PSAs after the completion of the three-year performance period, a number of shares of the Company’s common stock that may range from zero to two times the number of PSAs granted on the award date.  The number of potentially dilutive shares related to PSAs is based on the number of shares, if any, which would be issuable at the end of the respective reporting period, assuming that date was the end of the contingency period.  For additional discussion on PSAs, please refer to Note 8 - Compensation Plans under the heading Performance Share Awards Under the Equity Incentive Compensation Plan.

The Company’s 3.50% Senior Convertible Notes have a net-share settlement right whereby the Company has the option to irrevocably elect, by notice to the trustee under the indenture for the notes, to settle the Company’s obligation to deliver shares of the Company’s common stock, in the event that holders of the notes elect to convert all or a portion of their notes, by delivering cash in an amount equal to each $1,000 principal amount of notes surrendered for conversion and, if applicable, at the Company’s option, shares of common stock or cash, or any combination of common stock and cash, for the amount of conversion value in excess of the principal amount.  For accounting purposes, the treasury stock method is used to measure the potentially dilutive impact of shares associated with this conversion feature.  Shares of the Company’s common stock traded at an average closing price exceeding the $54.42 conversion price for the three-month and six-month periods ended June 30, 2011.  The 3.50% Senior Convertible Notes had a dilutive impact for the three-month and six-month periods ended June 30, 2011, as calculated in the basic and diluted earnings per share table below.  The 3.50% Senior Convertible Notes were not dilutive for the three-month and six-month periods ended June 30, 2010.

The treasury stock method is used to measure the dilutive impact of unvested RSUs, contingent PSAs, and in-the-money stock options, as calculated in the basic and diluted earnings per share table below.

The following table sets forth the calculation of basic and diluted earnings per share:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2011		2010		2011		2010
	(in thousands, except per share amounts)
Net income	$	124,533	$	18,068	$	106,030	$	144,246
Basic weighted-average common shares outstanding	63,638		62,917		63,543		62,855
Add: dilutive effect of stock options, unvested RSUs, and contingent PSAs	2,182		1,649		2,161		1,638
Add: dilutive effect of 3.50% Senior Convertible Notes	1,089		—		991		—
Diluted weighted-average common shares outstanding	66,909		64,566		66,695		64,493
Basic net income per common share	$	1.96	$	0.29	$	1.67	$	2.29
Diluted net income per common share	$	1.86	$	0.28	$	1.59	$	2.24