Earnings Per Share

9 Months Ended

Sep. 29, 2012

Earnings Per Share

Note F – Earnings Per Share

The following table represents the calculation of net loss per common share:

	Third Quarter				Year-to-Date
(In thousands, except per share amounts)	2012		2011		2012		2011
Basic Earnings Per Share
Numerator:
Net earnings (loss) available to common shareholders	$	(69,566)	$	91,659	$	(92,560)	$	47,705
Assumed distribution to participating securities		—		(11,892)		—		—
Assumed undistributed earnings available to common stock		(69,566)		79,767		(92,560)		47,705
Denominator:
Weighted-average shares outstanding		280,238		278,559		279,438		277,627
Basic earnings (loss) per share	$	(0.25)	$	0.29	$	(0.33)	$	0.17
Diluted Earnings Per Share
Numerator:
Net earnings (loss) attributable to Office Depot, Inc.	$	(61,916)	$	100,872	$	(69,795)	$	75,344
Denominator:
Weighted-average shares outstanding		280,238		278,559		279,438		277,627
Effect of dilutive securities:
Stock options and restricted stock		3,480		4,774		4,186		5,583
Redeemable preferred stock		79,371		73,703		77,450		73,703
Diluted weighted-average shares outstanding		363,089		357,036		361,074		356,913
Diluted earnings (loss) per share		N/A	$	0.28		N/A		N/A

Basic earnings (loss) per share (“EPS”) is computed after consideration of preferred stock dividends. Shares of the redeemable preferred stock have equal dividend participation rights with common stock. The company has never paid a dividend on common stock, but the participation provisions require application of the two-class method for computing earnings per share. In periods of sufficient earnings, this method assumes an allocation of undistributed earnings to both participating stock classes. The two-class method impacted the computation of earnings for the first quarter of 2012, but was not applicable to the third quarter or year-to-date 2012 because it would have been antidilutive. For the third quarter of 2011, Basic EPS for common shares is $0.29, all undistributed. Basic EPS for the redeemable preferred shares is also $0.29, composed of $0.13 distributed and $0.16 undistributed. The two-class method of calculating EPS is antidilutive for year-to-date 2011. The preferred shareholders are not required to fund losses.

The diluted EPS calculation under the two-class method includes two tests to determine the most dilutive. These tests, and the diluted EPS calculation which includes the dilutive impact of stock options and restricted stock under the treasury stock method and redeemable preferred stock under the if-converted method, result in diluted EPS for the third quarter of 2011 of $0.28. The diluted EPS calculation for the other periods presented was antidilutive. The share amounts for that period have been presented for informational purposes.

Awards of options and nonvested shares representing approximately 17.5 million and 15.6 million additional shares of common stock were outstanding for the third quarter and year-to-date 2012, respectively, and 16.0 million and 12.4 million for the third quarter and year-to-date 2011, respectively, but were not included in the computation of diluted weighted-average shares outstanding because their effect would have been antidilutive. For purposes of calculating weighted average shares, no tax benefits have been assumed in jurisdictions where deferred tax valuation allowances have been recorded.