Earnings per Share

9 Months Ended

Oct. 30, 2021

5. Earnings per Share

The following is a reconciliation between basic and diluted weighted average shares outstanding:

	13 Weeks Ended				39 Weeks Ended
	October 30,		October 31,		October 30,		October 31,
(In thousands)	2021		2020		2021		2020
Weighted average common shares outstanding:
Basic number of common shares outstanding		167,637		166,185		168,062		166,385
Dilutive effect of convertible notes		33,687		16,382		34,616		—
Dilutive effect of stock options and non-vested restricted stock		3,689		1,830		4,354		—
Diluted number of common shares outstanding		205,013		184,397		207,032		166,385
Anti-Dilutive Shares*		286		1,423		172		9,250

*For the 39 weeks ended October 31, 2020, there were 1.4 million potentially dilutive equity awards and 7.8 million potentially dilutive shares from the Company’s convertible senior notes that were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive. For all other periods, anti-dilutive shares relate to stock options and unvested restricted stock.

The Company has the right to settle the Notes in any combination of cash and shares of common stock. However, the Company intends to settle the original principal portion of the Notes in cash and any conversion value above the principal in common stock. Because of this repayment policy election, only the conversion spread portion of the amount owed is reflected as dilutive in our weighted average diluted shares outstanding. The Company uses the average of the daily closing prices of its common stock (NYSE: AEO) as reported on the New York Stock Exchange to calculate the conversion spread. The Notes could have a potential dilutive effect in future periods.

Refer to Notes 8 and 9 to the Consolidated Financial Statements for additional information regarding the Notes and share-based compensation, respectively.