Net Income Per Share |
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Net Income Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Share | 4. NET INCOME PER SHARE
The Company’s non-vested restricted stock 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. The presentation of basic and diluted earnings per share is required only for each class of common stock and not for participating securities. As such, the Company presents basic and diluted earnings per share for its one class of common stock.
The dilutive effect of participating securities is calculated using the more dilutive of the treasury stock or the two-class method. For the fiscal years ended August 31, 2019 and September 1, 2018, the Company had determined the two-class method to be the more dilutive. As such, the earnings allocated to be allocated to common stock shareholders in the basic earnings per share calculation is adjusted for the reallocation of undistributed earnings to participating securities to arrive at the earnings allocated to common stock shareholders for calculating the diluted earnings per share. For the fiscal year ended August 29, 2020, the Company has determined the treasury stock method to be the more dilutive. The Company discontinued its grants of these participating securities in fiscal 2015 and the remaining restricted stock awards vested in March 2020.
The following table sets forth the computation of basic and diluted net income per common share under the treasury stock method for the fiscal year ended August 29, 2020 and under the two-class method for the fiscal years ended August 31, 2019 and September 1, 2018:
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. |