Annual report pursuant to Section 13 and 15(d)

Basic and Diluted Earnings Per Share

v3.7.0.1
Basic and Diluted Earnings Per Share
12 Months Ended
Apr. 30, 2017
Basic and Diluted Earnings Per Share

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. 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 per share.

During fiscal 2017, 2016 and 2015, restricted stock awards of 0.5 million shares, 0.6 million shares and 0.5 million shares, respectively, 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:

 

     Year Ended April 30,  
     2017      2016      2015  
     (in thousands, except per share data)  

Net income attributable to Korn/Ferry International

   $ 84,181      $ 30,913      $ 88,357  

Less: distributed and undistributed earnings to nonvested restricted stockholders

     765        280        860  
  

 

 

    

 

 

    

 

 

 

Basic net earnings attributable to common stockholders

     83,416        30,633        87,497  

Add: undistributed earnings to nonvested restricted stockholders

     560        82        815  

Less: reallocation of undistributed earnings to nonvested restricted stockholders

     553        81        804  
  

 

 

    

 

 

    

 

 

 

Diluted net earnings attributable to common stockholders

   $ 83,423      $ 30,634      $ 87,508  
  

 

 

    

 

 

    

 

 

 

Weighted-average common shares outstanding:

        

Basic weighted-average number of common shares outstanding

     56,205        52,372        49,052  

Effect of dilutive securities:

        

Restricted stock

     646        487        605  

Stock options

     24        50        105  

ESPP

     25        20        4  
  

 

 

    

 

 

    

 

 

 

Diluted weighted-average number of common shares outstanding

     56,900        52,929        49,766  
  

 

 

    

 

 

    

 

 

 

Net earnings per common share:

        

Basic earnings per share

   $ 1.48      $ 0.58      $ 1.78  
  

 

 

    

 

 

    

 

 

 

Diluted earnings per share

   $ 1.47      $ 0.58      $ 1.76