Earnings per Share

9 Months Ended

Oct. 28, 2017

4. Earnings per Share

Basic earnings per common share amounts are calculated using the weighted average number of common shares outstanding for the period. Diluted earnings per common share amounts are calculated using the weighted average number of common shares outstanding plus the additional dilution for all potentially dilutive securities, such as nonvested restricted stock and stock options. During loss periods, diluted loss per share amounts are based on the weighted average number of common shares outstanding, because the inclusion of common stock equivalents would be antidilutive.

The dilutive effect of stock-based compensation arrangements is accounted for using the treasury stock method. This method assumes that the proceeds the Company receives from the exercise of stock options are used to repurchase common shares in the market. Prior to the adoption of ASU No. 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting, in the first quarter of fiscal 2017, the Company included as assumed proceeds the amount of compensation costs attributed to future services and not yet recognized, and the amount of tax benefits, if any, that would be credited to additional paid-in capital assuming exercise of outstanding options and vesting of nonvested restricted stock. Following the adoption of ASU No. 2016-09, the assumed proceeds include only the amount of compensation costs attributed to future services and not yet recognized but does not include any tax benefits arising from the assumed exercise of outstanding options and the vesting of nonvested restricted stock. For the thirty-nine weeks ended October 28, 2017 and October 29, 2016, there were 0 and 5,000 stock options, respectively, and 137,000 and 247,000 shares of nonvested restricted stock, respectively, excluded from the calculation of diluted earnings per share because of antidilution. For the thirteen weeks ended October 28, 2017 and October 29, 2016, there were 0 and 3,000 stock options, respectively, and 124,000 and 224,000 shares of nonvested restricted stock, respectively, excluded from the calculation of diluted earnings per share because of antidilution.

The following table provides a reconciliation of the average number of common shares outstanding used to calculate basic earnings per share to the number of common shares and common stock equivalents outstanding used in calculating diluted earnings per share for the thirty-nine and thirteen week periods ended October 28, 2017 and October 29, 2016:


	Thirty-Nine Weeks Ended
	October 28, 2017	October 29, 2016
Average number of common shares outstanding	14,221,388	14,648,961
Incremental shares from assumed vesting of nonvested restricted stock	49,030	3,065
Average number of common shares and common stock equivalents outstanding	14,270,418	14,652,026


	Thirteen Weeks Ended
	October 28, 2017	October 29, 2016
Average number of common shares outstanding	13,563,295	14,676,990
Incremental shares from assumed vesting of nonvested restricted stock	51,109	—
Average number of common shares and common stock equivalents outstanding	13,614,404	14,676,990