Earnings Per Share

Basic earnings per share is calculated by dividing net income associated with common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share assumes the issuance of additional shares of common stock by the Company upon exercise of all outstanding stock options and contingently issuable securities if the effect is dilutive, in accordance with the treasury stock method or two-class method (whichever is more dilutive).

Restricted stock units without performance criteria are included as participating securities, since they have the right to share in dividends, if declared, equally with common shares. During periods of net income, participating securities are allocated a proportional share of net income determined by dividing total weighted average participating securities by the sum of total weighted average common shares and participating securities (“the two-class method”). During periods of net loss, no effect is given to participating securities since they do not share in the losses of the Company. When discontinued operations are reported, income from continuing operations represents the “control number” in determining whether potential shares of common stock are dilutive or anti-dilutive. Participating securities have the effect of diluting both basic and diluted earnings per share during periods of net income.

The following is a reconciliation of the numerators and denominators used in computing earnings per share (in thousands, except per share amounts):



	Thirteen Weeks Ended
	May 27, 2017		May 28, 2016
Net income from continuing operations	$	7,997	$	10,088
Net income from continuing operations attributable to participating securities	139		176
Net income from continuing operations available to shareholders	$	7,858	$	9,912

Net income (loss) from discontinued operations	$	143	$	(462	)
Net income (loss) from discontinued operations attributable to participating securities	3		(9		)
Net income (loss) from discontinued operations available to shareholders	$	140	$	(453	)
Net income available to shareholders	$	7,998	$	9,459
Basic earnings per share:
Weighted-average number of common shares outstanding	40,274		41,769
Basic earnings per share:
Continued operations	$	0.20	$	0.24
Discontinued operations	—		(0.01		)
Basic earnings per share	$	0.20	0.23
Diluted earnings per share:
Weighted-average number of common shares outstanding	40,274		41,769
Dilutive effect of potential common shares(a)	88		121
Diluted weighted-average number of common shares outstanding	40,362		41,890
Diluted earnings per share:
Continued operations	$	0.20	$	0.24
Discontinued operations	—		(0.01		)
Diluted earnings per share	$	0.20	$	0.23


(a)	The computation of diluted earnings per share excludes options to purchase approximately 3.4 million and 3.0 million shares of common stock in the thirteen weeks ended May 27, 2017 and May 28, 2016, respectively, because the impact of such options would have been anti-dilutive.