Net Income Per Share

3 Months Ended

Nov. 30, 2019

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 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. Effective in fiscal 2016, the Company discontinued its granting of restricted share awards.

The following table sets forth the computation of basic and diluted net income per common share under the two-class method for the thirteen weeks ended November 30, 2019 and December 1, 2018, respectively:


	Thirteen Weeks Ended
	November 30,		December 1,
	2019		2018
Net income attributable to MSC Industrial as reported	$	65,418	$	74,232
Less: Distributed net income available to participating securities		(7)		(20)
Less: Undistributed net income available to participating securities		(5)		(33)
Numerator for basic net income per share:
Undistributed and distributed net income available to common shareholders	$	65,406	$	74,179
Add: Undistributed net income allocated to participating securities		5		33
Less: Undistributed net income reallocated to participating securities		(5)		(33)

Numerator for diluted net income per share:
Undistributed and distributed net income available to common shareholders	$	65,406	$	74,179
Denominator:
Weighted average shares outstanding for basic net income per share		55,275		55,502
Effect of dilutive securities		169		329
Weighted average shares outstanding for diluted net income per share		55,444		55,831
Net income per share Two-class method:
Basic	$	1.18	$	1.34
Diluted	$	1.18	$	1.33

Potentially dilutive securities		1,557		408

Potentially dilutive securities attributable to outstanding stock options, restricted stock units, and performance share 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.