Quarterly report pursuant to Section 13 or 15(d)

Earnings Per Share

v2.4.0.8
Earnings Per Share
6 Months Ended
Jun. 30, 2014
Earnings Per Share [Abstract]  
Earnings Per Share

11. Earnings Per Share

Basic earnings per share represents net income divided by the weighted average number of common shares outstanding for the period. Diluted earnings per share represents net income divided by the weighted average number of common shares outstanding, inclusive of the effect of dilutive securities such as outstanding stock options, SARs, stock units and warrants.

The following are the common share amounts used to compute the basic and diluted earnings per share for each period:

 

     For the Three Months
Ended June 30,
     For the Six Months
Ended June 30,
 
     2014      2013      2014      2013  
     (in thousands)  

Weighted average shares used in basic computations

     86,113         102,993         90,732         103,551   

Dilutive effect of exercise of equity grants outstanding

     5,059         4,090         5,202         4,038   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average shares used in diluted computations

     91,172         107,083         95,934         107,589   
  

 

 

    

 

 

    

 

 

    

 

 

 

There were an aggregate of 3.5 million of equity grants that were outstanding during both the three and six months ended June 30, 2014, and an aggregate of 4.1 million of equity grants that were outstanding during both the three and six months ended June 30, 2013, consisting of stock options, SARs, and stock units, but were not included in the computation of diluted earnings per share because their effect would be anti-dilutive or the market condition for the award had not been satisfied.

Since the Company will settle the principal amount of its Convertible Notes in cash and settle the conversion feature for the amount above the conversion price in common shares, or the conversion spread, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted earnings per share, if applicable. The conversion spread will have a dilutive impact on diluted earnings per share when the average market price of the Company’s common shares for a given period exceeds the initial conversion price of $86.28 per share. For the three and six months ended June 30, 2014, the Convertible Notes have been excluded from the computation of diluted earnings per share as the effect would be anti-dilutive since the conversion price of the Convertible Notes exceeded the average market price of the Company’s common shares for the three and six months ended June 30, 2014. The initial conversion rate and conversion price is described further in Note 4, Long-Term Debt.

 

The Capped Call Transactions executed in connection with the issuance of the Convertible Notes are excluded from the calculation of diluted earnings per share because their impact is always anti-dilutive.