(4) Net Earnings (Loss) per Share

In accordance with ASC 260-10-45, Share-Based Payment Arrangements and Participating Securities and the Two-Class Method, the Company’s unvested restricted shares, unvested restricted stock units and shares issuable under the Company’s deferred compensation plan are considered participating securities. During periods of net income, the calculation of earnings per share for common stock are reclassified to exclude the income attributable to the unvested restricted shares, unvested restricted stock units and shares issuable under the Company’s deferred compensation plan from the numerator and exclude the dilutive impact of those shares from the denominator. Diluted earnings per share for the 13 weeks ended November 1, 2014 and October 26, 2013 were calculated using the two-class method for stock options, restricted stock and restricted stock units, and the if-converted method for the preferred stock.

During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company. Due to the net loss during the 26 weeks ended November 1, 2014 and the 26 weeks ended October 26, 2013, participating securities in the amounts of 3,833,723 and 2,758,721, respectively, were excluded in the calculation of loss per share using the two-class method because the effect would be antidilutive. The Company’s outstanding stock options and accretion/payments of dividends on preferred shares were also excluded from the calculation of loss per share using the two-class method because the effect would be antidilutive.

The following is a reconciliation of the Company’s basic and diluted income (loss) per share calculation:


	13 weeks ended						26 weeks ended
	November 1, 2014			October 26, 2013			November 1, 2014			October 26, 2013
Numerator for basic income (loss) per share:
Net income (loss) attributable to Barnes & Noble, Inc.	$	12,298			13,229		$	(16,151	)		(73,793	)
Preferred stock dividends		(3,941	)		(3,942	)		(7,883	)		(7,884	)
Accretion of dividends on preferred stock		(758	)		(316	)		(1,516	)		(631	)
Less allocation of earnings and dividends to participating securities		(455	)		(363	)		—			—

Net income (loss) available to common shareholders	$	7,144			8,608		$	(25,550	)		(82,308	)


Numerator for diluted income (loss) per share:
Net income (loss) available to common shareholders	$	7,144			8,608		$	(25,550	)		(82,308	)
Preferred stock dividends ^(a)		—			—			—			—
Accretion of dividends on preferred stock ^(a)		—			—			—			—
Allocation of earnings and dividends to participating securities		455			363			—			—
Less diluted allocation of earnings and dividends to participating securities		(454	)		(363	)		—			—

Net income (loss) available to common shareholders	$	7,145			8,608		$	(25,550	)		(82,308	)

Denominator for basic income (loss) per share:
Basic weighted average common shares		59,343			58,956			59,289			58,862

Denominator for diluted income (loss) per share:
Basic weighted average common shares		59,343			58,956			59,289			58,862
Preferred shares ^(a)		—			—			—			—
Average Dilutive Options		66			—			—			—

Diluted weighted average common shares		59,409			58,956			59,289			58,862

Income (loss) per common share:
Basic	$	0.12			0.15		$	(0.43	)		(1.40	)
Diluted	$	0.12			0.15		$	(0.43	)		(1.40	)

^(a)

Although the Company was in a net income position during the 13 weeks ended November 1, 2014 and the 13 weeks ended October 26, 2013, the dilutive effect of the Company’s convertible preferred shares were excluded from the calculation of income per share using the two-class method because the effect would be antidilutive.