Earnings Per Share

12 Months Ended

Dec. 31, 2020

Unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of earnings per share pursuant to the two-class method. Prior to June 30, 2018, certain of Mattel’s RSUs were considered participating securities because they contained nonforfeitable rights to dividend equivalents.

Under the two-class method, net income is reduced by the amount of dividends declared in the period for each class of common stock and participating securities. The remaining undistributed earnings are then allocated to common stock and participating securities as if all of the net income for the period had been distributed. Basic earnings per common share excludes dilution and is calculated by dividing net income allocable to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net income allocable to common shares by the weighted-average number of common shares for the period, as adjusted for the potential dilutive effect of non-participating share-based awards.

The following table reconciles earnings per common share:


	For the Year Ended
	December 31, 2020		December 31, 2019		December 31, 2018
	(In thousands, except per share amounts)
Basic
Net income (loss)	$	126,628	$	(213,512)	$	(533,299)
Less: Net income (loss) allocable to participating RSUs (a)	—		—		—
Net income (loss) available for basic common shares	$	126,628	$	(213,512)	$	(533,299)
Weighted-average number of common shares	347,463		346,127		345,012
Basic net income (loss) per common share	$	0.36	$	(0.62)	$	(1.55)
Diluted
Net income (loss)	$	126,628	$	(213,512)	$	(533,299)
Less: Net income (loss) allocable to participating RSUs (a)	—		—		—
Net income (loss) available for diluted common shares	$	126,628	$	(213,512)	$	(533,299)
Weighted-average number of common shares	347,463		346,127		345,012
Dilutive stock options and restricted stock units ("RSUs") (b)	1,653		—		—
Weighted-average number of common and potential common shares	349,116		346,127		345,012
Diluted net income (loss) per common share	$	0.36	$	(0.62)	$	(1.55)

(a) Mattel did not have participating RSUs for the years ended December 31, 2020 or 2019. For the year ended December 31, 2018, Mattel did not allocate its net loss to its participating RSUs as its participating RSUs are not obligated to share in Mattel's losses.

(b) Nonqualified stock options and RSUs totaling 21.7 million were excluded from the calculation of diluted net income per common share for the year ended December 31, 2020, because their effect would be antidilutive. Mattel was in a net loss position for the years ended December 31, 2019 and 2018, and, accordingly, all outstanding nonqualified stock options and non-participating RSUs were excluded from the calculation of diluted earnings per common share because their effect would be antidilutive.