Note 3. Net Income per Share

The Company’s non-vested restricted share awards contain non-forfeitable rights to dividends and meet the criteria of a participating security as defined by Accounting Standards Codification (“ASC”) Topic 260, “Earnings Per Share”. Under the two-class method, net income per share is computed by dividing net income allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, net income is allocated to both common shares and participating securities based on their respective weighted average shares outstanding for the period. The following table sets forth the computation of basic and diluted net income per common share under the two-class method for the thirteen and thirty-nine weeks ended June 1, 2019 and June 2, 2018, respectively:


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	June 1,		June 2,		June 1,		June 2,
	2019		2018		2019		2018
Net income attributable to MSC Industrial as reported	$	79,601	$	79,069	$	222,257	$	256,206
Less: Distributed net income available to participating securities		(10)		(14)		(34)		(73)
Less: Undistributed net income available to participating securities		(19)		(56)		(66)		(248)
Numerator for basic net income per share:
Undistributed and distributed net income available to common shareholders	$	79,572	$	78,999	$	222,157	$	255,885
Add: Undistributed net income allocated to participating securities		19		56		66		248
Less: Undistributed net income reallocated to participating securities		(19)		(55)		(66)		(247)

Numerator for diluted net income per share:
Undistributed and distributed net income available to common shareholders	$	79,572	$	79,000	$	222,157	$	255,886
Denominator:
Weighted average shares outstanding for basic net income per share		55,158		56,420		55,266		56,382
Effect of dilutive securities		229		384		290		351
Weighted average shares outstanding for diluted net income per share		55,387		56,804		55,556		56,733
Net income per share two-class method:
Basic	$	1.44	$	1.40	$	4.02	$	4.54
Diluted	$	1.44	$	1.39	$	4.00	$	4.51

Potentially dilutive securities		1,093		-		939		-

Potentially dilutive securities attributable to outstanding stock options and restricted stock units are excluded from the calculation of diluted earnings per share where the combined exercise price and average unamortized fair value are greater than the average market price of MSC common stock, and therefore their inclusion would be anti-dilutive.