M.	Earnings Per Share

The Company calculates basic earnings per share based upon the weighted average number of common shares outstanding during the period, while the calculation of diluted earnings per share includes the dilutive effect of potential common shares outstanding during the period.

The calculation of diluted earnings per share excludes all potential common shares if their inclusion would have an anti-dilutive effect. Restricted stock award recipients have a non-forfeitable right to receive dividends declared by the Company, and are therefore included in computing earnings per share pursuant to the

two

-class method.

The components of basic and diluted earnings per share were as follows:

	For the Quarter Ended
	September 29, 2017			September 30, 2016
Basic:
Net income (loss)	$	3,405		$	(2,671	)
Less: Net earnings attributable to noncontrolling interest		(13	)		(25	)
Less: Undistributed earnings attributable to unvested shares		(85	)		-
Net income (loss) available to Twin Disc shareholders		3,307			(2,696	)

Weighted average shares outstanding - basic		11,256			11,217

Basic Earnings Per Share:
Net income (loss) per share - basic	$	0.29		$	(0.24	)

Diluted:
Net income (loss)	$	3,405		$	(2,671	)
Less: Net earnings attributable to noncontrolling interest		(13	)		(25	)
Less: Undistributed earnings attributable to unvested shares		(85	)		-
Net income (loss) available to Twin Disc shareholders		3,307			(2,696	)

Weighted average shares outstanding - basic		11,256			11,217
Effect of dilutive stock awards		3			-
Weighted average shares outstanding - diluted		11,259			11,217

Diluted Earnings Per Share:
Net income (loss) per share - diluted	$	0.29		$	(0.24	)

For the quarters ended

September 29, 2017

and

September 30, 2016,

the calculation of diluted earnings per share excluded

9,906

and

16,800

stock options, respectively, because they were anti-dilutive.