Korn Ferry Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Basic and Diluted Earnings Per Share

Basic and Diluted Earnings Per Share

6 Months Ended

Oct. 31, 2015

2. Basic and Diluted Earnings Per Share

Accounting Standards Codification 260, Earnings Per Share, requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividends prior to vesting as a separate class of securities in calculating earnings per share. We have granted and expect to continue to grant to certain employees under our restricted stock agreements, grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities. Therefore, we are required to apply the two-class method in calculating earnings per share. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The dilutive effect of participating securities is calculated using the more dilutive of the treasury method or the two-class method.

Basic earnings per common share was computed using the two-class method by dividing basic net earnings attributable to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per common share was computed using the two-class method by dividing diluted net earnings attributable to common stockholders by the weighted-average number of common shares outstanding plus dilutive common equivalent shares. Dilutive common equivalent shares include all in-the-money outstanding options or other contracts to issue common stock as if they were exercised or converted. The application of the two-class method did not have a material impact on the earnings per share calculation for the three and six months ended October 31, 2014.

During the three and six months ended October 31, 2015 and 2014, all shares of outstanding options were included in the computation of diluted earnings per share. During the three and six months ended October 31, 2015, restricted stock awards of 0.5 million were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive.

The following table summarizes basic and diluted earnings per common share attributable to common stockholders:


	Three Months Ended October 31,				Six Months Ended October 31,
	2015		2014		2015		2014
	(in thousands, except per share data)
Net income	$	17,971	$	25,403	$	41,053	$	39,936
Less: distributed and undistributed earnings to nonvested restricted stockholders		167		—		390		—

Basic net earnings attributable to common stockholders		17,804		25,403		40,663		39,936
Add: undistributed earnings to nonvested restricted stockholders		118		—		292		—
Less: reallocation of undistributed earnings to nonvested restricted stockholders		117		—		289		—

Diluted net earnings attributable to common stockholders	$	17,805	$	25,403	$	40,666	$	39,936

Weighted-average common shares outstanding:
Basic weighted-average number of common shares outstanding		49,981		49,082		49,737		48,893
Effect of dilutive securities:
Restricted stock		330		554		433		710
Stock options		49		104		58		117
ESPP		2		—		5		—

Diluted weighted-average number of common shares outstanding		50,362		49,740		50,233		49,720

Net earnings per common share:
Basic earnings per share	$	0.36	$	0.52	$	0.82	$	0.82

Diluted earnings per share	$	0.35	$	0.51	$	0.81	$	0.80