Computation of Earnings Per Common Share

12 Months Ended

Jan. 25, 2020

Computation of Earnings Per Common Share

Computation of Earnings per Common Share

The following table sets forth the computation of basic and diluted earnings per common share (dollars in thousands, except per share amounts):



	Fiscal Year Ended				Six Months Ended		Fiscal Year Ended
	January 25, 2020		January 26, 2019		January 27, 2018		July 29, 2017
Net income available to common stockholders (numerator)	$	57,215	$	62,907	$	68,835	$	157,217

Weighted-average number of common shares (denominator)	31,498,474		31,250,376		31,059,140		31,351,367

Basic earnings per common share	$	1.82	$	2.01	$	2.22	$	5.01

Weighted-average number of common shares	31,498,474		31,250,376		31,059,140		31,351,367
Potential shares of common stock arising from stock options, and unvested restricted share units⁽¹⁾	323,308		555,993		778,411		633,364
Potential shares of common stock issuable on conversion of 0.75% convertible senior notes due 2021⁽²⁾	—		183,799		217,394		—
Total shares-diluted (denominator)	31,821,782		31,990,168		32,054,945		31,984,731

Diluted earnings per common share	$	1.80	$	1.97	$	2.15	$	4.92

Anti-dilutive weighted shares excluded from the calculation of earnings per common share:
Stock-based awards	253,000		130,779		93,117		73,830
0.75% convertible senior notes due 2021^{(2) (3)}	4,747,706		4,821,935		4,788,340		5,005,734
Warrants^{(2) (3)}	4,747,706		5,005,734		5,005,734		5,005,734
Total	9,748,412		9,958,448		9,887,191		10,085,298

⁽¹⁾We adopted ASU 2016-09 on a prospective basis effective July 30, 2017, the first day of the 2018 transition period. Under the amended guidance, excess tax benefits and tax deficiencies arising from the vesting and exercise of share-based awards are no longer included in the hypothetical proceeds used to repurchase shares when computing diluted earnings per common share under the treasury stock method. As a result, diluted shares used in computing diluted earnings per common share for the 2018 transition period increased by approximately 177,575 shares.

⁽²⁾Under the treasury stock method, the convertible senior notes will have a dilutive impact on earnings per common share if our average stock price for the period exceeds the $96.89 per share conversion price. Our average stock price did not exceed the per share conversion price during fiscal 2020; therefore, there was no dilutive impact on earnings per common share for this period. During the first and second quarters of fiscal 2019, and the second quarter of the 2018 transition period, our average stock price of $110.46, $99.27, and $106.11, respectively, each exceeded the conversion price. As a result, shares presumed to be issuable under the convertible senior notes that were dilutive during each period are included in the calculation of diluted earnings per share for fiscal 2019 and the 2018 transition period. The warrants associated with our convertible senior notes will have a dilutive impact on earnings per common share if our average stock price for the period exceeds the $130.43 per share warrant strike price. As our average stock price did not exceed the strike price for the warrants for any of the periods presented, the underlying common shares were anti-dilutive as reflected in the table above.

⁽³⁾In connection with the purchase of $25 million of the convertible senior notes (“Notes”) in fiscal 2020, we unwound convertible note hedge transactions and warrants proportionately to the number of Notes, which decreased the number of excluded shares from 5.006 million to 4.748 million.

In connection with the offering of the convertible senior notes, we entered into convertible note hedge transactions with counterparties for the purpose of reducing the potential dilution to common stockholders from the conversion of the notes and

offsetting any potential cash payments in excess of the principal amount of the notes. Prior to conversion, the convertible note hedge is not included for purposes of the calculation of earnings per common share as its effect would be anti-dilutive. Upon conversion, the convertible note hedge is expected to offset the dilutive effect of the convertible senior notes when the average stock price for the period is above $96.89 per share. See Note 14, Debt, for additional information related to our convertible senior notes, warrant transactions, and hedge transactions.