The 2016 annual report of Best Buy Co., Inc. reported profitable operations for the most recent three years. However, the company suffered a net loss in 2012. Best Buy reported the following for the twelve months ended March 3, 2012:

Basic (loss) earnings per share:

Continuing operations ..............................................................$(2.89)

Discontinued operations ............................................................(0.47)

Basic (loss) earnings per share ....................................................$(3.36)

Diluted (loss) earnings per share:

Continuing operations ..............................................................$(2.89)

Discontinued operations .............................................................(0.47)

Diluted (loss) earnings per share ..................................................$(3.36)

Dividends declared per Best Buy Co., Inc. common share ......................$ 0.62

Weighted average common shares outstanding (in millions)

Basic ...................................................................................366.3

Diluted ................................................................................366.3

The calculation of diluted earnings per share assumes the conversion of the company's previously outstanding convertible debentures due in 2024 into 8.8 million shares common stock . . . and adds back the related after tax interest expense of $1.5. . . . The calculation of diluted (loss) per share for the twelve months ended March 3, 2012, does not include potential dilutive shares of common stock because their inclusion would be anti dilutive (i.e., reduce the net loss per share).

Required:

1. The note indicates that Best Buy does not include potentially dilutive shares when calculating EPS for the twelve months ended March 3, 2012. What are potentially dilutive shares?

2. The note indicates that "diluted earnings per share assumes the conversion of the company's previously outstanding convertible debentures due in 2024 into 8.8 million shares common stock . . . and adds back the related after-tax interest expense of $1.5." Apparently, these bonds were actually converted during the year. Would diluted EPS have been different if the bonds had not been converted and were still outstanding? Explain.

3. Best Buy does not include potentially dilutive shares when calculating EPS for the twelve months ended March 3, 2012. Why not? Assume Best Buy had 40 million common equivalent shares and included them in the calculation, what would have been the amount of diluted loss per share for the twelve months ended March 3, 2012?