NOTE 5. Loss Per Share

Basic earnings or loss per share is computed by dividing net income or net loss, respectively, by the weighted average number of common shares outstanding for the period. Diluted earnings per share is applicable only in periods of net income and is computed by dividing net income by the weighted average number of common shares outstanding for the period and potentially dilutive common stock equivalents outstanding for the period. Periods of net loss require the diluted computation to be the same as the basic computation. As of the end of the second quarter of fiscal 2011 and 2010, options to purchase 4,216,096 and 6,603,062 shares, respectively, of potentially anti-dilutive common stock equivalents were outstanding. For fiscal year-to-date 2011 and 2010, options to purchase 5,058,177 and 6,324,204 shares, respectively, of potentially anti-dilutive common stock equivalents were outstanding. The calculation of dilutive shares also excludes the portion of the performance stock awards granted to certain members of our management in March 2009 that are not expected to be earned or vest as the issuance of the underlying shares is contingent upon achieving certain performance goals in fiscal 2011.

A reconciliation of the numerator and denominator of basic and diluted loss per share is as follows (in thousands, except per share amounts):

	Three Months Ended						Six Months Ended
	July 30, 2011			July 31, 2010			July 30, 2011			July 31, 2010
Basic and diluted loss per share computation:
Numerator	$	(6,220	)	$	(6,269	)	$	(13,881	)	$	(8,046	)
Denominator:
Weighted average common shares outstanding		44,843			44,563			44,778			44,480

Basic and diluted loss per share	$	(0.14	)	$	(0.14	)	$	(0.31	)	$	(0.18	)