NOTE 8. EARNINGS PER SHARE

The following table represents the calculation of net earnings (loss) per common share (“EPS”):


	Third Quarter					Year-to-Date
(In millions, except per share amounts)	2014		2013			2014			2013
Basic Earnings Per Share
Numerator:
Net income (loss) available to common shareholders	$	29	$	133		$	(270	)	$	52
Assumed distribution to participating securities		—		(14	)		—			—

Assumed undistributed income (loss) available to common stock		29		119			(270	)		52
Denominator:
Weighted-average shares outstanding		536		284			534			282
Basic earnings (loss) per share	$	0.05	$	0.42		$	(0.51	)	$	0.18
Diluted Earnings Per Share
Numerator:
Net income (loss) attributable to Office Depot, Inc.	$	29	$	161		$	(270	)	$	100
Preferred stock redemption dividend		—		(22	)		—			(22	)

Net income(loss) available for assumed distribution		29		139			(270	)		78
Denominator:
Weighted-average shares outstanding		536		284			534			282
Effect of dilutive securities:
Stock options and restricted stock		9		5			—			5
Redeemable preferred stock		—		45			—			69

Diluted weighted-average shares outstanding		545		334			534			356
Diluted earnings (loss) per share	$	0.05		0.41		$	(0.51	)		N/A

The weighted average shares outstanding for the third quarter and year-to-date 2014 are impacted by the shares issued in connection with the Merger. Potentially dilutive stock options and restricted stock and 8 million shares were excluded from the year-to-date 2014 diluted loss per share calculation because of the net loss in the periods.

Awards of options and nonvested shares representing approximately 9 million and 10 million additional shares of common stock were outstanding for the third quarter and year-to-date 2014, respectively, and 5 million and 7 million for the third quarter and year-to-date 2013, respectively, but were not included in the computation of diluted weighted-average shares outstanding because their effect would have been antidilutive. For the periods presented, no tax benefits have been assumed in the weighted average share calculation in jurisdictions with valuation allowances.

Shares of the redeemable preferred stock were fully redeemed in 2013. In periods in which the redeemable preferred stocks were outstanding, basic EPS was computed after consideration of preferred stock dividends. The redeemable preferred stock had equal dividend participation rights with common stock that required 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 third quarter of 2013, but was not applicable to the year-to-date 2013 because it would have been antidilutive. The year-to-date 2013 diluted share amount is provided for informational purposes. For the third quarter of 2013, basic EPS for common stock was $0.42, all undistributed. Basic EPS for redeemable preferred stock is also $0.42, composed of $0.13 distributed and $0.29 undistributed. The third quarter of 2013 diluted EPS was also impacted by the $22 million preferred stock redemption dividend (refer to Note 2). Accounting rules require that if antidilutive, the redeemed preferred stock be considered separately from other shares not redeemed of the same class. The preferred stock redemption dividend is at a rate greater than basic EPS calculated under the two-class method and is therefore antidilutive. Using the weighted average share impact of the preferred stock, distribution to these shares would be $4.54 per share. Accordingly, the preferred stock redemption dividend is excluded in calculating diluted EPS for the third quarter of 2013 as that produces the most dilutive calculation. The preferred stockholders were not required to fund losses.