Note 3 – Earnings per Share

The following table sets forth the computation of basic and diluted earnings (loss) per share:

	Quarter Ended						Nine-Month Period Ended
(Dollars and shares in thousands, except per share amounts)	October 2			September 27			October 2			September 27
	2016			2015			2016			2015
Numerator:
Income (loss) from continuing operations, net of tax	$	1,056		$	(2,371	)	$	4,650		$	3,351
Loss from discontinued operations, net		(111	)		(106	)		(328	)		(317	)
Net income (loss)	$	945		$	(2,477	)	$	4,322		$	3,034
Denominator:
Weighted average shares (denominator for basic earnings (loss) per share)		14,700			15,000			14,862			15,000
Effect of dilutive securities		-			-			7			-
Adjusted weighted average shares and assumed conversions (denominator for diluted earnings (loss) per share)		14,700			15,000			14,869			15,000

Basic earnings (loss) per share:
Income (loss) from continuing operations, net of tax	$	0.07		$	(0.16	)	$	0.31		$	0.22
Loss from discontinued operations, net		(0.01	)		(0.01	)		(0.02	)		(0.02	)
Basic earnings (loss) per share	$	0.06		$	(0.17	)	$	0.29		$	0.20
Diluted earnings (loss) per share:
Income (loss) from continuing operations, net of tax	$	0.07		$	(0.16	)	$	0.31		$	0.22
Loss from discontinued operations, net		(0.01	)		(0.01	)		(0.02	)		(0.02	)
Diluted earnings (loss) per share	$	0.06		$	(0.17	)	$	0.29		$	0.20

Diluted earnings per share of common stock is computed similarly to basic earnings per share except the weighted average shares outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents, if dilutive. The J. Alexander’s Holdings, LLC Class B Units are considered common stock equivalents for this purpose. The number of additional shares of common stock related to these common stock equivalents is calculated using the if-converted method. The 833,346 Class B Units associated with management’s profits interest awards are considered to be antidilutive, and, therefore have been excluded from the diluted earnings per share calculations for the quarter and nine-month period ended October 2, 2016. The 1,500,024 Black Knight profits interest Class B Units were also considered antidilutive for the third quarter ended October 2, 2016, and are therefore excluded from the diluted earnings per share calculation for the quarter. However, because the Black Knight profits interest Class B Units were dilutive for the first quarter of 2016, the impact for the nine-month period ended October 2, 2016 on the diluted earnings per share calculation was 7,069.

The number of additional shares of common stock related to stock option awards is calculated using the treasury method, if dilutive. The 450,750 stock option awards outstanding as of October 2, 2016 were considered antidilutive and, therefore are excluded from the diluted earnings per share calculation for the quarter and nine-month period ended October 2, 2016.

As stated above, the periods prior to the Distribution presented in the accompanying Condensed Consolidated Financial Statements represent the historical operating results and financial position of J. Alexander’s Holdings, LLC. For comparison purposes, earnings per share amounts are calculated for such periods using a weighted average number of common shares outstanding based on the number of shares outstanding on the Distribution date as if all shares had been outstanding since the first day of the earliest period presented.