13. Earnings per share

Basic earnings per share include shares of restricted stock that meet the definition of a participating security because these shares are eligible to receive non-forfeitable dividend equivalents at the same rate as common stock. Basic earnings per share have been calculated using the two-class method and basic earnings per share for the three months ended September 30, 2015 and 2014, reflects only undistributed earnings. The computation below of basic earnings per share excludes the net income attributable to shares of unvested restricted stock (participating non-vested restricted stock) from the numerator and excludes the dilutive impact of these unvested shares of restricted stock from the denominator.

Diluted earnings per share have been calculated to give effect to the number of shares of additional common stock that would have been outstanding if the potential dilutive instruments had been issued in each period. Stock options are included in the calculation of diluted earnings per share utilizing the treasury stock method and are not considered to be participating securities as the stock options do not contain non-forfeitable dividend rights. The calculation of diluted earnings per share includes the dilutive effect of a portion of the restricted stock granted to employees in February 2012, August 2013, August 2014, November 2014 and August 2015 as these shares of restricted stock are considered contingently returnable shares for the purposes of the diluted earnings per share calculation and the vesting conditions in respect of a portion of the restricted stock had been satisfied. The vesting conditions are discussed in Note 18 to the Company's audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2015.

The following table presents net income attributable to Net1 (income from continuing operations) and the share data used in the basic and diluted earnings per share computations using the two-class method:


		Three months ended
		September 30,
		2015			2014
		(in thousands except percent
		and
		per share data)
Numerator:
Net income attributable to Net1	$	23,020		$	24,089
Undistributed earnings		23,020			24,089
Percent allocated to common shareholders (Calculation 1)		99	%		99	%
Numerator for earnings per share: basic and diluted	$	22,817		$	23,847

Denominator:
Denominator for basic earnings per share: weighted-average common shares
outstanding		46,209			46,751
Effect of dilutive securities:
Stock options		460			109
Denominator for diluted earnings per share: adjusted weighted average
common shares outstanding and assumed conversion		46,669			46,860

Earnings per share:
Basic	$	0.49		$	0.51
Diluted	$	0.49		$	0.51

(Calculation 1)
Basic weighted-average common shares outstanding (A)		46,209			46,751
Basic weighted-average common shares outstanding and unvested restricted shares
expected to vest (B)		46,620			47,226
Percent allocated to common shareholders (A) / (B)		99	%		99	%

Options to purchase 874,443 shares of the Company's common stock at prices ranging from $22.51 to $24.46 per share were outstanding during the three months ended September 30, 2015, but were not included in the computation of diluted earnings per share because the options' exercise price were greater than the average market price of the Company's common stock. The options, which expire at various dates through August 27, 2018, were still outstanding as of September 30, 2015.