(8) Earnings Per Share

The Company has outstanding common stock and equity awards that consist of restricted stock, RSUs, PSUs and stock options. The restricted stock and RSUs maintain non-forfeitable dividend rights that result in dividend payment obligations on a one-to-one ratio with common shares for any future dividend declarations.

Unvested restricted stock and unvested RSUs are deemed participating securities for purposes of calculating earnings per share ("EPS") as they maintain dividend rights. We calculate EPS using the two-class method. Under the two-class method, we allocate earnings to common shares (excluding unvested restricted stock) and vested RSUs outstanding for the period. Earnings attributable to unvested participating securities, along with the corresponding share counts, are excluded from EPS as reflected in our unaudited condensed consolidated statements of income.

In calculating basic EPS, we deduct any dividends and undistributed earnings allocated to unvested restricted stock and unvested RSUs from net income and then divide the result by the weighted-average number of common shares and vested RSUs outstanding for the period.

We determine the potential dilutive effect of PSUs and stock options outstanding (“contingently issuable shares”) on EPS using the treasury-stock method. Under this method, we determine the proceeds that would be received from the issuance of the contingently issuable shares if the end of the reporting period were the end of the contingency period. The proceeds from the contingently issuable shares include: the remaining unrecognized compensation expense of the awards, the cash received for the exercise price on stock options, and the resulting effect on the income tax deduction from the vesting of PSUs and the exercise of stock options. We then use the average market price of our common shares during the period the contingently issuable shares were outstanding to determine how many shares we could repurchase with the proceeds raised from the issuance of the contingently issuable shares. The net incremental share count issued represents the potential dilutive securities. We then reallocate earnings to common shares and vested RSUs by incorporating the increased fully diluted share count to determine diluted EPS.

The calculation of basic and diluted EPS follows.

	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
	(In thousands, except per-share amounts)
Basic EPS
Numerator:
Net income	$	58,037		$	49,350		$	162,540		$	141,924
Income attributable to unvested participating securities		(494	)		(379	)		(1,353	)		(1,196	)
Net income used in calculating basic EPS	$	57,543		$	48,971		$	161,187		$	140,728
Denominator:
Weighted-average vested shares		47,008			50,082			47,736			51,494
Basic EPS	$	1.22		$	0.98		$	3.38		$	2.73
Diluted EPS
Numerator:
Net income	$	58,037		$	49,350		$	162,540		$	141,924
Income attributable to unvested participating securities		(493	)		(379	)		(1,352	)		(1,196	)
Net income used in calculating diluted EPS	$	57,544		$	48,971		$	161,188		$	140,728
Denominator:
Weighted-average vested shares		47,008			50,082			47,736			51,494
Dilutive effect of incremental shares to be issued for contingently issuable shares		43			22			39			32
Weighted-average shares used in calculating diluted EPS		47,051			50,104			47,775			51,526
Diluted EPS	$	1.22		$	0.98		$	3.37		$	2.73