EARNINGS (LOSS) PER COMMON SHARE

Basic earnings (loss) per common share is computed by dividing net income (loss) allocated to common shares by the weighted average number of common shares outstanding. Diluted income (loss) per common share, if applicable, considers the dilutive effect of common stock equivalents. The reconciliation of the numerator and denominator used for the computation of basic and diluted income (loss) per common share is as follows (in thousands, except per share data):



	Fiscal Year Ended
	November 1, 2015		November 2, 2014		November 3, 2013
Numerator for Basic and Diluted Earnings (Loss) Per Common Share:
Net income (loss) applicable to common shares⁽¹⁾	$	17,646	$	11,085	$	(12,885	)
Denominator for Basic and Diluted Earnings (Loss) Per Common Share:
Weighted average basic number of common shares outstanding	73,271		73,079		44,761
Common stock equivalents:
Employee stock options	652		729		—
PSUs and Performance Share Awards	—		901		—
Weighted average diluted number of common shares outstanding	73,923		74,709		44,761
Basic earnings (loss) per common share	$	0.24	$	0.15	$	(0.29	)
Diluted earnings (loss) per common share	$	0.24	$	0.15	$	(0.29	)

(1)

Net income (loss) applicable to common shares includes an allocation of earnings to participating securities. Participating securities consist of the Convertible Preferred Stock, as defined below, for the period prior to its conversion to Common Stock of the Company and the unvested restricted Common Stock related to our Incentive Plan. These participating securities do not have a contractual obligation to share in losses; therefore, no losses were allocated in fiscal 2013. The Convertible Preferred Stock was converted into shares of our Common Stock in the third quarter of fiscal 2013. The Unvested Common Stock related to our Incentive Plan was allocated earnings in fiscal 2015 and 2014.

On May 14, 2013, the CD&R Funds, the holders of 339,293 Preferred Shares, as defined below, delivered a formal notice requesting the Conversion of all of their Preferred Shares into shares of our Common Stock. In connection with the Conversion request, we have issued the CD&R Funds 54,136,817 shares of our Common Stock. The Conversion eliminated all the outstanding Convertible Preferred Stock during our third quarter of fiscal 2013.

We calculate earnings (loss) per share using the “two-class” method, whereby unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are “participating securities” and, therefore, these participating securities are treated as a separate class in computing earnings (loss) per share. The calculation of earnings (loss) per share for Common Stock presented here excludes the income, if any, attributable to Series B Cumulative Convertible Participating Preferred Stock (the “Convertible Preferred Stock,” and shares thereof, “Preferred Shares”) for the period prior to their Conversion to Common Stock of the Company and the unvested restricted stock awards from the numerator and excludes the dilutive impact of those shares from the denominator. The Convertible Preferred Stock was converted into shares of our Common Stock in the third quarter of fiscal 2013. There was no income amount attributable to Preferred Shares or unvested restricted stock for fiscal 2013 as the Preferred Shares and unvested restricted stock do not share in the net losses. However, in periods of net income allocated to common shares, a portion of this income will be allocable to the unvested restricted stock.

The number of weighted average options that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive represented approximately 145,140 shares for fiscal 2015. Additionally, for the fiscal year ended November 1, 2015, Performance Share Awards and PSUs of 98,840 shares and 45,172 shares, respectively, were not included in the diluted income per common share calculation because the achievement of the performance and market conditions had not been achieved as of November 1, 2015. For the fiscal year ended November 2, 2014, the number of weighted average options that were not included in the diluted income per common share calculation because the effect would have been anti-dilutive was 20,458 shares. Also, 57,332 shares of the Performance Share Awards were not included in the diluted income per common share calculation in fiscal 2014 because the achievement of free cash flow and earnings per share targets had not been achieved as of November 2, 2014. In addition, the final number of Performance Share Awards earned for the awards granted in December 2013 will be based in part on the achievement of free cash flow and earnings per share targets over a three-year period. For the fiscal year ended November 3, 2013, all options, PSUs and Performance Share Awards were anti-dilutive and, therefore, not included in the diluted loss per common share calculation.