Computation of Basic and Diluted Net Income (Loss) Per Common Share

9 Months Ended

Sep. 28, 2013

Computation of Basic and Diluted Net Income (Loss) Per Common Share

8. Computation of Basic and Diluted Net Income (Loss) Per Common Share

Basic net income per share is computed by dividing net income for the period by the weighted average number of shares outstanding during the period.

Diluted net income per share is computed as follows:

In periods of net income from continuing operations, diluted net income per share is computed by dividing net income for the period by the weighted average number of shares, plus the weighted average common stock equivalents outstanding during the period, which included1,000,000 shares of common stock issuable upon conversion of 500,000 shares of convertible Series A Preferred Stock. In June 2013, the Series A Preferred Stock was converted into 1,000,000 shares of common stock. The Company excludes options from the computation of diluted weighted average shares outstanding if the exercise price of the options is greater than the average market price of the shares because the inclusion of these options would be anti-dilutive to earnings per share. Accordingly, for the three months ended September28, 2013 and September29, 2012, respectively, stock options to purchase 147,111 and 881,893 shares were excluded from the computation of diluted weighted average shares outstanding. For the nine months ended September28, 2013 and September29, 2012, respectively, stock options to purchase 543,142 and 899,809 shares were excluded from the computation of diluted weighted average shares outstanding.

In periods of net loss from continuing operations, the basic and diluted weighted average shares of common stock and common stock equivalents are the same because inclusion of common stock equivalents would be anti-dilutive.

A reconciliation of the numerator and denominator of basic and diluted net income (loss) per common share is provided as follows:

	ThreeMonthsEnded					NineMonthsEnded
(in thousands, except per share amounts)	September28, 2013		September29, 2012			September28, 2013		September29, 2012
Numerator:
Income (loss) from continuing operations	$	530	$	(555	)	$	1,819	$	(423	)
Income (loss) from discontinued operations		0		(190	)		0		1,619
Net income (loss)	$	530	$	(745	)	$	1,819	$	1,196
Denominator:
Weighted average shares of common stock (basic)		9,796		9,005			9,044		8,974
Effect of dilutive preferred shares		0		0			597		0
Effect of dilutive stock options		276		0			270		0
Effect of dilutive contingent shares		105		0			84		0
Weighted average shares of common stock (diluted)		10,177		9,005			9,995		8,974
Per share data:
Basic income (loss) per share:
Income (loss) before discontinued operations	$	0.05	$	(0.06	)	$	0.20	$	(0.05	)
Discontinued operations		0.00		(0.02	)		0.00		0.18
Net income (loss)	$	0.05	$	(0.08	)	$	0.20	$	0.13
Diluted income (loss) per share:
Income(loss) before discontinued operations		0.05		(0.06	)		0.18		(0.05	)
Discontinued operations		0.00		(0.02	)		0.00		0.18
Net income (loss)	$	0.05	$	(0.08	)	$	0.18	$	0.13