3. Net Income (Loss) Per Common Share

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per common share reflects the potential dilution, using the treasury stock method, which could occur if stock options are exercised. Diluted net income (loss) per common share has been computed based on the weighted average number of shares outstanding, including the effect of outstanding stock options, if dilutive, in each of the thirteen and twenty-six week periods set forth below. The difference between basic and diluted net income (loss) per share is solely attributable to stock options. A reconciliation of the weighted average shares for basic and diluted net income (loss) per common share is as follows:


	Thirteen Weeks Ended
(in thousands)	July 30, 2011		July 31, 2010
Weighted average shares outstanding:
Basic		15,737		15,723
Dilutive effect of stock options outstanding		—		6

Diluted		15,737		15,729


	Twenty-Six Weeks Ended
(in thousands)	July 30, 2011		July 31, 2010
Weighted average shares outstanding:
Basic		15,692		15,742
Dilutive effect of stock options outstanding		—		7

Diluted		15,692		15,749

For the thirteen week periods ended July 30, 2011 and July 31, 2010, options for approximately 22,000 and 6,000, respectively, of our shares were outstanding but were excluded from the computation of diluted weighted-average common shares because the options’ exercise price was greater than the average market price of the common shares and their effect would have been anti-dilutive. For the twenty-six week periods ended July 30, 2011 and July 31, 2010, options for approximately 22,000 and 6,000, respectively, of our shares were outstanding but were excluded from the computation of diluted weighted-average common shares because the options’ exercise price was greater than the average market price of the common shares and their effect would have been anti-dilutive.

The Company’s unvested restricted shares are entitled to receive nonforfeitable dividends, and thus, are participating securities requiring the two class method of computing net income (loss) per share. The weighted average shares outstanding and net income (loss) per share for the thirteen and twenty-six weeks ended July 30, 2011 and July 31, 2010 were computed using the two class method.