Earnings per Share

3 Months Ended

May 01, 2021

5. Earnings per Share

The following is a reconciliation between basic and diluted weighted average shares outstanding:

	13 Weeks Ended
	May 1,		May 2,
(In thousands)	2021		2020
Weighted average common shares outstanding:
Basic number of common shares outstanding		167,257		166,781
Dilutive effect of convertible notes		33,798		—
Dilutive effect of stock options and non-vested restricted stock		5,507		—
Diluted number of common shares outstanding		206,562		166,781
Anti-Dilutive Shares*		93		3,040

*For the 13 weeks ended May 2, 2020, there were 0.7 million potentially dilutive equity awards that were excluded from diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive.

The Company has the right to settle the Notes in any combination of cash and shares of common stock. However, the Company intends to settle the original principal portion of the Notes in cash and any conversion value above the principal in stock. Because of this repayment policy election, only the conversion spread portion of the amount owed is reflected as dilutive in our weighted average diluted shares outstanding. The Company uses the average of the daily closing prices of its common stock (NYSE: AEO) as reported on the New York Stock Exchange to calculate the conversion spread. The Notes could have a potential dilutive effect in future periods.

Refer to Note 8 and 9 to the Consolidated Financial Statements for additional information regarding the Notes and share-based compensation, respectively.