Earnings Per Share

3 Months Ended

Mar. 30, 2013

Earnings Per Share

Note G – Earnings Per Share

The following table represents the calculation of net earnings (loss) per common share:

	First Quarter
(In thousands, except per share amounts)	2013			2012
Basic Earnings Per Share
Numerator:
Net earnings (loss) attributable to common shareholders	$	(16,824	)	$	41,287
Assumed distribution to participating securities		—			(2,331	)
Assumed undistributed earnings (loss) attributable to common stock		(16,824	)		38,956
Denominator:
Weighted-average shares outstanding		281,579			278,552
Basic earnings (loss) per common share	$	(0.06	)	$	0.14
Diluted Earnings Per Share
Numerator:
Net earnings (loss) attributable to Office Depot, Inc.	$	(6,655	)	$	49,503
Denominator:
Weighted-average shares outstanding		281,579			278,552
Effect of dilutive securities:
Stock options and restricted stock		6,298			4,765
Redeemable preferred stock		81,355			75,546
Diluted weighted-average shares outstanding		369,232			358,863
Diluted earnings per common share		N/A		$	0.14

Basic earnings per share is computed after consideration of preferred stock dividends. Shares of the redeemable preferred stock have equal dividend participation rights with common stock. The Company has never paid a dividend on common stock, but the participation provisions require application of the two-class method for computing earnings per share. In periods of sufficient earnings, this method assumes an allocation of undistributed earnings to both participating stock classes. For the first quarter of 2012, Basic EPS for common shares is $0.14, all undistributed. Basic EPS for the redeemable preferred shares is also $0.14, composed of $0.11 distributed and $0.03 assumed distributed under the two-class method.

The diluted EPS calculation under the two-class method includes two tests to determine the most dilutive. These tests, and the diluted EPS calculation which includes the dilutive impact of stock options and restricted stock under the treasury stock method and redeemable preferred stock under the if-converted method, result in diluted EPS for the first quarter of 2012 of $0.14. The diluted EPS calculation for the first quarter of 2013 was antidilutive and the two-class method was not applicable. The share amounts for that period have been presented for informational purposes.

Awards of options and nonvested shares representing 8 million additional shares of common stock were outstanding for the first quarter of 2013, and 12 million for the first quarter of 2012, but were not included in the computation of diluted earnings per share because their effect would have been antidilutive. For purposes of calculating weighted average shares, no tax benefits have been assumed in jurisdictions where deferred tax valuation allowances have been recorded.

Dividends on preferred stock that are paid-in-kind are measured at fair value for financial reporting purposes and may be higher or lower than the cash-equivalent for the period. For additional information, refer to Note K.