Earnings Per Share

6 Months Ended

Mar. 02, 2013

NOTE 6 – EARNINGS PER SHARE

Basic earnings per common share (EPS) is calculated by dividing net income or loss by the weighted-average number of common shares outstanding for the period. Diluted EPS is calculated by dividing net income or loss by the weighted-average number of common shares outstanding plus the assumed exercise of all dilutive securities using the treasury stock method or the “if converted” method, as appropriate. In conjunction with modifications to our management stock loan program in previous periods, we determined that the shares of management stock loan participants that were placed in the escrow account are participating securities because they continue to have equivalent common stock dividend rights. Accordingly, these management stock loan shares are included in our basic EPS calculation during periods of net income and are excluded from the basic EPS calculation in periods of net loss. Our unvested share-based compensation awards are not entitled to participate in dividends until they vest and are excluded from our EPS calculation.

The following table presents the computation of our EPS for the periods indicated (in thousands, except per share amounts):



	Quarter Ended				Two Quarters Ended
		March 2,		February 25,		March 2,		February 25,
		2013		2012		2013		2012
Numerator for basic and
diluted earnings per share:
Income before income taxes	$	2,669	$	2,159	$	7,362	$	5,233
Provision for income taxes		(1,077)		(997)		(2,873)		(2,409)
Net income	$	1,592	$	1,162	$	4,489	$	2,824

Denominator for basic and
diluted earnings per share:
Basic weighted average shares
outstanding⁽¹⁾		18,550		17,764		18,356		17,748
Effect of dilutive securities:
Stock options and other
share-based awards		117		27		74		29
Common stock warrants		1,042		496		1,063		365
Diluted weighted average
shares outstanding		19,709		18,287		19,493		18,142

EPS Calculations:
Net income per share:
Basic	$	0.09	$	0.07	$	0.24	$	0.16
Diluted		0.08		0.06		0.23		0.16

⁽¹⁾ Since we recognized net income for the quarter and two quarters ended March 2, 2013 and February 25, 2012, basic weighted average shares for those periods include 3.3 million shares of common stock held by management stock loan participants that were placed in escrow. Since the management stock loans were repaid near the end of the quarter ended March 2, 2013, common shares formerly held in escrow will not be outstanding in future periods.

At March 2, 2013 and February 25, 2012, we had approximately 0.2 million and 0.7 million stock options outstanding, which were not included in the computation of diluted EPS because the options’ exercise prices were greater than the average market price of our common shares for the respective periods. Although these shares were not included in our calculation of diluted EPS, these stock options, and other dilutive securities, including performance share-based compensation instruments, may have a dilutive effect on our EPS calculation in future periods if the price of our common stock increases. At March 2, 2013, our common stock warrants were substantially exercised (Note 3). Accordingly, future dilution from these instruments will be insignificant.

- Definition

The entire disclosure for earnings per share.

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