Quarterly report pursuant to Section 13 or 15(d)

Basic and Diluted Earnings (Loss) Per Share

v3.21.2
Basic and Diluted Earnings (Loss) Per Share
3 Months Ended
Jul. 31, 2021
Earnings Per Share [Abstract]  
Basic and Diluted Earnings (Loss) Per Share

2. Basic and Diluted Earnings (Loss) Per Share

ASC 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 (loss) per share. The Company has granted and expects to continue to grant to certain employees under its restricted stock agreements grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities. Therefore, the Company is required to apply the two-class method in calculating earnings (loss) per share. The two-class method of computing earnings (loss) per share is an earnings allocation formula that determines earnings (loss) 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 (loss) per common share was computed using the two-class method by dividing basic net earnings (loss) attributable to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per common share was computed using the two-class method by dividing diluted net earnings (loss) 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. Financial instruments that are not in the form of common stock, but when converted into common stock increase earnings per share, are anti-dilutive and are not included in the computation of diluted earnings (loss) per share. For the three months ended July 31, 2020, the Company was in a net loss position and diluted net loss per share therefore excluded the effects of common equivalents consisting of restricted awards, which were all antidilutive.

During the three months ended July 31, 2021 and 2020, restricted stock awards of 1.4 million and 1.7 million were outstanding, respectively, but not included in the computation of diluted earnings (loss) per share because they were anti-dilutive. 

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

 

 

 

Three Months Ended

July 31,

 

 

 

2021

 

 

2020

 

 

 

(in thousands, except per share data)

 

Net income (loss) attributable to Korn Ferry

 

$

74,823

 

 

$

(30,833

)

Less: distributed and undistributed earnings to nonvested restricted stockholders

 

 

1,897

 

 

 

144

 

Basic net earnings (loss) attributable to common stockholders

 

 

72,926

 

 

 

(30,977

)

Add: undistributed earnings to nonvested restricted stockholders

 

 

1,725

 

 

 

 

Less: reallocation of undistributed earnings to nonvested restricted stockholders

 

 

1,707

 

 

 

 

Diluted net earnings (loss) attributable to common stockholders

 

$

72,944

 

 

$

(30,977

)

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

Basic weighted-average number of common shares outstanding

 

 

52,760

 

 

 

53,264

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

Restricted stock

 

 

558

 

 

 

 

ESPP

 

 

2

 

 

 

 

Diluted weighted-average number of common shares outstanding

 

 

53,320

 

 

 

53,264

 

 

 

 

 

 

 

 

 

 

Net earnings (loss) per common share:

 

 

 

 

 

 

 

 

Basic earnings (loss) per share

 

$

1.38

 

 

$

(0.58

)

Diluted earnings (loss) per share

 

$

1.37

 

 

$

(0.58

)