Earnings Per Common Share

12 Months Ended

Jul. 31, 2020

Basic Earnings Per Common Share (“EPS”) is computed based upon the weighted average number of common shares outstanding for the year. Diluted EPS is computed based upon the weighted average number of common shares outstanding for the year plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the year. As we expect to settle the principal amount of our outstanding convertible debt in cash and any excess in shares of our common stock, we use the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted earnings per share, if applicable. The conversion spread will have a dilutive impact on diluted earnings per share of common stock when the average market price of our common stock for a given period exceeds the conversion price of $41.51 per share. Our convertible debt is further described in Note 11, “Financing Arrangements.”

We include participating securities (nonvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents) in the computation of EPS pursuant to the two-class method. Our participating securities consist solely of nonvested restricted stock awards, which have contractual participation rights equivalent to those of stockholders of unrestricted common stock. The two-class method of computing earnings per share is an allocation method that calculates earnings per share for common stock and participating securities.

The following table sets forth the computation of basic and diluted EPS available to stockholders of common stock (excluding participating securities):


	Year Ended July 31,
	2020		2019		2018
Numerator for basic and diluted earnings per share:
Net income	$	13,708	$	55,042	$	91,041
Less income allocated to participating securities	(1)		(51)		(320)
Net income available to common shareholders	$	13,707	$	54,991	$	90,721
Denominator for basic and diluted earnings per share, as adjusted for participating securities:
Denominator for basic earnings per share - weighted average number of shares outstanding attributable to common stock	42,238,282		41,700,926		41,567,722
Dilutive effect of stock options using the treasury stock method and the average market price for the year	45,643		56,190		67,356
Dilutive effect of convertible debt outstanding	25,291		—		—
Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock	42,309,216		41,757,116		41,635,078
Earnings per share attributable to common stock:
Basic earnings per share	$	0.32	$	1.32	$	2.18
Diluted earnings per share	$	0.32	$	1.32	$	2.18
Stock options excluded from weighted average dilutive common shares outstanding because their inclusion would have been antidilutive	—		—		—

A reconciliation of weighted average number of shares and common stock equivalents attributable to common stock, as determined above, to our total weighted average number of shares and common stock equivalents, including participating securities, is set forth in the following table:


	Year Ended July 31,
	2020	2019	2018
Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock	42,309,216	41,757,116	41,635,078
Participating securities	5,716	38,905	148,700
Total weighted average number of shares and common stock equivalents attributable to both common stock and participating securities	42,314,932	41,796,021	41,783,778