Loss Per Share

3 Months Ended

Jun. 18, 2011

Loss Per Share

Loss Per Share

19.  Loss Per Share

Basic loss per share is computed by dividing loss available to common shareholders by the weighted average shares outstanding for the reporting period.  Diluted loss per share reflects all potential dilution, using either the treasury stock method or the "if-converted" method, and assumes that the convertible debt, stock options, restricted stock, performance restricted stock, warrants, preferred stock, and other potentially dilutive financial instruments were converted into common stock on the first day of the period.  If the conversion of a potentially dilutive security yields an antidilutive result, such potential dilutive security is excluded from the diluted earnings per share calculation.

The following table contains common share equivalents, which were not included in the historical loss per share calculations as their effect would be antidilutive:

	16 Weeks Ended	16 Weeks Ended
	June 18, 2011	June 19, 2010
Stock options	5,096,413	1,988,469
Warrants	6,965,858	686,277
Performance restricted stock units	-	218,294
Restricted stock units	719,533	1,080,710
Convertible debt	11,157,569	8,086,769
Financing warrant	11,157,569	11,278,988
Preferred stock	35,804,000	35,000,000

The following table sets forth the calculation of basic and diluted loss per share (in thousands):

	16 Weeks Ended			16 Weeks Ended
	June 18, 2011			June 19, 2010
Loss from continuing operations	$	(177,791	)	$	(115,607	)
Preferred stock dividends		-			(4,308	)
Beneficial conversion feature amortization		(1,482	)		(1,481	)
Loss from continuing operations - basic		(179,273	)		(121,396	)
Adjustments for convertible debt (1)		-			(10,655	)
Adjustments on Other financial liabilities (2)		-			(8,277	)
Loss from continuing operations–diluted	$	(179,273	)	$	(140,328	)
Weighted average common shares outstanding		53,852,470			55,926,065
Share lending agreement (3)		-			(2,427,944	)
Common shares outstanding–basic		53,852,470			53,498,121
Effect of dilutive securities:
Convertible debt (1)		-			3,192,219
Convertible financial liabilities (2)		-			(26,165,689	)
Common shares outstanding–diluted		53,852,470			30,524,651

   (1) We have debt instruments with a bifurcated conversion feature that were recorded at a significant discount.  (Refer to Note 8 – Indebtedness and Other Financial Liabilities).  For purposes of determining if an application of the "if-converted method" to these convertible instruments produces a dilutive result, we consider the combined impact of the numerator and denominator adjustments, including a numerator adjustment for gains and losses, which would have been incurred had the instruments been converted on the first day of the period presented.  

   (2) Our Series B Warrants are classified as a liability because a third party has the right to determine their cash or share settlement.    (Refer to Note 8 – Indebtedness and Other Financial Liabilities).  These warrants are marked-to-market in our Consolidated Statements of Operations.  For example, in periods when the market price of our common stock decreases, our income from continuing operations is increased.   For purposes of determining if an application of the treasury stock method produces a dilutive result, we assume proceeds are used to repurchase common stock and we adjust the numerator similar to the adjustments required under the "if-converted" method.  We consider the combined impact of the numerator and denominator adjustments, including a denominator adjustment to reduce shares, even when the average market price of our common stock for the period is below the warrant's strike price.  

(3) As of June 19, 2010, we had 5,634,002 of loaned shares under our share lending agreements, which were considered issued and outstanding.  The obligation of the financial institutions to return the borrowed shares has been accounted for as prepaid forward contract and, accordingly, shares underlying this contract are removed from the computation of basic and diluted earnings per share, unless the borrower defaults on returning the related shares.  On September 15, 2008, Lehman Europe, who is a party to a 3,206,058 share lending agreement with our Company filed under chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court and/or commenced equivalent proceedings in jurisdictions outside of the United States (collectively, the "Lehman Bankruptcy").  As such, we have included these loaned shares as issued and outstanding effective September 15, 2008 for purposes of computing our basic and diluted weighted average shares and (loss) income per share.  During fiscal 2009, Bank of America, N.A., who is a party to our share lending agreement, returned 2,500,000 shares, eliminating our obligation to lend additional shares to them in the future.  The returned shares were immediately retired, reducing our issued and outstanding shares. For the 16 weeks ended June 19, 2010, weighted average common shares relating to share lending agreements of 2,427,944 were excluded from the computation of earnings per share. As of February 26, 2011, there were no shares outstanding with Bank of America, N.A.