9.	Net Earnings (Loss) per Share

In accordance with ASC 260-10-45, Share-Based Payment Arrangements and Participating Securities and the Two-Class Method, unvested share-based payment awards that contain rights to receive non-forfeitable dividends are considered participating securities. The Company’s unvested restricted shares and unvested restricted stock units granted prior to July 15, 2015 and shares issuable under the Company’s deferred compensation plan are considered participating securities. Cash dividends to restricted stock units and performance-based stock units granted on or after July 15, 2015 are not distributed until and except to the extent that the restricted stock units vest, and in the case of performance-based stock units, until and except to the extent that the performance metrics are achieved or are otherwise deemed satisfied. Stock options do not receive cash dividends. As such, these awards are not considered participating securities.

Basic earnings per common share is calculated by dividing the net income, adjusted for preferred dividends and income allocated to participating securities, by the weighted average number of common shares outstanding during the period. Diluted net income per common share reflects the dilution that would occur if any potentially dilutive instruments were exercised or converted into common shares. The dilutive effect of participating securities is calculated using the more dilutive of the treasury stock method or two-class method. Other potentially dilutive securities include preferred stock, stock options, restricted stock units granted after July 15, 2015, and performance-based stock units and are included in diluted shares to the extent they are dilutive under the treasury stock method for the applicable periods.

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 13 weeks ended October 31, 2015 and the 26 weeks ended October 31, 2015 and November 1, 2014, participating securities in the amounts of 2,330,973, 2,512,070 and 3,833,723, respectively, were excluded from the calculation of loss per share using the two-class method because the effect would be antidilutive. The Company’s outstanding non-participating securities consisting of dilutive stock options were 198,596, 66,002, 170,247 and 46,309, for the 13 weeks ended October 31, 2015 and November 1, 2014, and the 26 weeks ended October 31, 2015 and November 1, 2014, respectively, 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
	October 31, 2015			November 1, 2014			October 31, 2015			November 1, 2014
Numerator for basic income (loss) per share:
Net loss from continuing operations attributable to Barnes & Noble, Inc.	$	(27,203	)		(5,109	)	$	(34,954	)		(3,086	)
Inducement fee paid upon conversion of Series J preferred stock		—			—			(3,657	)		—
Preferred stock dividends		—			(3,941	)		—			(7,883	)
Preferred stock dividends paid in shares		—			—			(1,783	)		—
Accretion of dividends on preferred stock		—			(758	)		(4,204	)		(1,516	)
Less allocation of dividends to participating securities		(332	)		—			(692	)		—
Less allocation of undistributed earnings to participating securities		—			587			—			—

Net loss from continuing operations available to common shareholders	$	(27,535	)		(9,221	)	$	(45,290	)		(12,485	)
Net income (loss) from discontinued operations attributable to Barnes & Noble, Inc.		(12,023	)		17,407			(39,146	)		(13,065	)
Less allocation of undistributed earnings to participating securities		—			(1,042	)		—			—

Net income (loss) from discontinued operations available to common shareholders		(12,023	)		16,365			(39,146	)		(13,065	)

Net income (loss) available to common shareholders	$	(39,558	)		7,144		$	(84,436	)		(25,550	)


Numerator for diluted income (loss) per share:
Net loss from continuing operations available to common shareholders	$	(27,535	)		(9,221	)	$	(45,290	)		(12,485	)
Preferred stock dividends ^(a)		—			—			—			—
Accretion of dividends on preferred stock ^(a)		—			—			—			—
Allocation of undistributed earnings to participating securities		—			587			—			—
Less diluted allocation of undistributed earnings to participating securities		—			(587	)		—			—

Net loss from continuing operations available to common shareholders	$	(27,535	)		(9,221	)	$	(45,290	)		(12,485	)
Net income (loss) from discontinued operations available to common shareholders		(12,023	)		16,365			(39,146	)		(13,065	)
Allocation of undistributed earnings to participating securities		—			1,042			—			—
Less diluted allocation of undistributed earnings to participating securities		—			(1,042	)		—			—

Net income (loss) from discontinued operations available to common shareholders		(12,023	)		16,365			(39,146	)		(13,065	)

Net income (loss) available to common shareholders	$	(39,558	)		7,144		$	(84,436	)		(25,550	)


Denominator for basic income (loss) per share:
Basic weighted average common shares		75,557			59,343			70,552			59,289

Denominator for diluted income (loss) per share:
Basic weighted average common shares		75,557			59,343			70,552			59,289
Preferred shares ^(a)		—			—			—			—
Average dilutive options^(a)		—			—			—			—

Diluted weighted average common shares		75,557			59,343			70,552			59,289


Basic income (loss) per common share:
Loss from continuing operations	$	(0.36	)		(0.16	)	$	(0.64	)		(0.21	)
Income (loss) from discontinued operations		(0.16	)		0.28			(0.55	)		(0.22	)

Basic income (loss) per common share	$	(0.52	)		0.12		$	(1.20	)		(0.43	)


Diluted income (loss) per common share:
Loss from continuing operations	$	(0.36	)		(0.16	)	$	(0.64	)		(0.21	)
Income (loss) from discontinued operations		(0.16	)		0.28			(0.55	)		(0.22	)

Diluted income (loss) per common share	$	(0.52	)		0.12		$	(1.20	)		(0.43	)

^(a)

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