Net Income Per Share of Class A and Class B Common Stock

6 Months Ended

Jun. 30, 2018

Net Income Per Share of Class A and Class B Common Stock

We compute net income per share of Class A and Class B common stock using the two-class method. Under this method, basic net income per share is computed using the weighted average number of common shares outstanding during the period excluding common shares underlying equity awards that are unvested or subject to forfeiture. Diluted net income per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the common shares issuable upon the net exercise of stock options and unvested RSUs and is reflected in diluted earnings per share by application of the treasury stock method. The computation of the diluted net income per share of Class A common stock assumes the conversion of Class B common stock, while the diluted net income per share of Class B common stock does not assume the conversion of those shares.

Except with respect to voting and transfer rights, the rights of the holders of our Class A and Class B common stock are identical. Under our Articles of Incorporation, the Class A and Class B common stock share equally in any dividends, liquidation proceeds or other distribution with respect to our common stock and the Articles of Incorporation can only be amended by a vote of the shareholders. Additionally, Oregon law provides that amendments to our Articles of Incorporation that would adversely alter the rights, powers or preferences of a given class of stock, must be approved by the class of stock adversely affected by the proposed amendment. As a result, the undistributed earnings for each year are allocated based on the contractual participation rights of the Class A and Class B common shares as if the earnings for the year had been distributed. Because the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis.

Following is a reconciliation of net income and weighted average shares used for our basic earnings per share (“EPS”) and diluted EPS (in thousands, except per share amounts):



Three Months Ended June 30,	2018					2017
(in thousands, except per share data)	Class A		Class B			Class A		Class B
Net income applicable to common stockholders - basic	$	58,213	$	2,447		$	50,520	$	2,680
Reallocation of net income as a result of conversion of dilutive stock options	1		(1		)	1		(1		)
Reallocation of net income due to conversion of Class B to Class A common shares outstanding	289		—			340		—
Conversion of Class B common shares into Class A common shares	2,149		—			2,334		—
Effect of dilutive stock options on net income	8		(8		)	5		(5		)
Net income applicable to common stockholders - diluted	$	60,660	$	2,438		$	53,200	$	2,674

Weighted average common shares outstanding – basic	23,793		1,000			23,791		1,262
Conversion of Class B common shares into Class A common shares	1,000		—			1,262		—
Effect of dilutive stock options on weighted average common shares	89		—			53		—
Weighted average common shares outstanding – diluted	24,882		1,000			25,106		1,262

Net income per common share - basic	$	2.45	$	2.45		$	2.12	$	2.12
Net income per common share - diluted	$	2.44	$	2.44		$	2.12	$	2.12



Three Months Ended June 30,	2018		2017
Diluted EPS	Class A	Class B	Class A	Class B
Antidilutive Securities
Shares issuable pursuant to stock options not included since they were antidilutive	30	—	22	—



Six Months Ended June 30,	2018					2017
(in thousands, except per share data)	Class A		Class B			Class A		Class B
Net income applicable to common stockholders - basic	$	108,199	$	4,522		$	98,337	$	5,590
Reallocation of distributed net income as a result of conversion of dilutive stock options	2		(2		)	2		(2		)
Reallocation of distributed net income due to conversion of Class B to Class A common shares outstanding	557		—			700		—
Conversion of Class B common shares into Class A common shares	3,947		—			4,876		—
Effect of dilutive stock options on net income	16		(16		)	12		(12		)
Net income applicable to common stockholders - diluted	$	112,721	$	4,504		$	103,927	$	5,576

Weighted average common shares outstanding – basic	23,930		1,000			23,765		1,351
Conversion of Class B common shares into Class A common shares	1,000		—			1,351		—
Effect of employee stock purchases and restricted stock units on weighted average common shares	98		—			61		—
Weighted average common shares outstanding – diluted	25,028		1,000			25,177		1,351

Net income per common share - basic	$	4.52	$	4.52		$	4.14	$	4.14
Net income per common share - diluted	$	4.50	$	4.50		$	4.13	$	4.13



Six Months Ended June 30,	2018		2017
Diluted EPS	Class A	Class B	Class A	Class B
Antidilutive Securities
Shares issuable pursuant to stock options not included since they were antidilutive	56	—	11	—