3. EARNINGS PER SHARE

9 Months Ended

Feb. 28, 2014

Earnings Per Share

EARNINGS PER SHARE

3. EARNINGS PER SHARE

Earnings per share is computed based on the weighted average number of common and common equivalent shares (common stock options and ESPP shares) outstanding, when dilutive, during each period using the treasury stock method.

The following table presents the computation of basic and diluted net income (loss) per share attributable to Aehr Test Systems common shareholders (in thousands, except per share data):

	Three Months Ended					Nine Months Ended
	February 28,					February 28,
	2014		2013			2014		2013
Numerator: Net income (loss)	$	212	$	(1,458	)	$	183	$	(2,565	)
Denominator for basic net income (loss) per share:
Weighted-average shares outstanding		10,982		9,363			10,807		9,276
Shares used in basic net income (loss) per share calculation		10,982		9,363			10,807		9,276
Effect of dilutive securities		1,295		--			776		--
Denominator for diluted net income (loss) per share		12,277		9,363			11,583		9,276
Basic net income (loss) per share	$	0.02	$	(0.16	)	$	0.02	$	(0.28	)
Diluted net income (loss) per share	$	0.02	$	(0.16	)	$	0.02	$	(0.28	)

For the purpose of computing diluted earnings per share, weighted average potential common shares do not include stock options with an exercise price greater than the average fair value of the Company’s common stock for the period, as the effect would be anti-dilutive.  Stock options to purchase 192,000 shares of common stock and ESPP rights to purchase 177,000 ESPP shares were outstanding for the three months ending February 28, 2014, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive.  Stock options to purchase 370,000 shares of common stock and ESPP rights to purchase 177,000 ESPP shares were outstanding for the nine months ending February 28, 2014, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive.  In the three and nine months ended February 28, 2013, potential common shares have not been included in the calculation of diluted net loss per share as the effect would be anti-dilutive.  As such, the numerator and the denominator used in computing both basic and diluted net loss per share for these periods are the same.  Stock options to purchase 2,967,000 shares of common stock and ESPP rights to purchase 178,000 ESPP shares were outstanding on February 28, 2013, but were not included in the computation of diluted net loss per share, because the inclusion of such shares would be anti-dilutive.