NOTE 3 – EARNINGS PER SHARE

The Company presents basic net income per share attributable to PriceSmart using the two-class method. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders and that determines basic net income per share attributable to PriceSmart for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings that would have been available to common stockholders. A participating security is defined as a security that may participate in undistributed earnings with common stock. The Company’s capital structure includes securities that participate with common stock on a one-for-one basis for distribution of dividends. These are the restricted stock awards and restricted stock units issued pursuant to the 2013 Equity Incentive Award Plan. The Company determines the diluted net income per share attributable to PriceSmart by using the more dilutive of the two class-method or the treasury stock method and by including the basic weighted average of outstanding stock options in the calculation of diluted net income per share attributable to PriceSmart under the two-class method and including all potential common shares assumed issued in the calculation of diluted net income per share attributable to PriceSmart under the treasury stock method.

The following table sets forth the computation of net income per share attributable to PriceSmart for the three and nine months ended May 31, 2018 and 2017 (in thousands, except per share amounts):



	Three Months Ended				Nine Months Ended
	May 31,		May 31,		May 31,		May 31,
	2018		2017		2018		2017
Net income attributable to PriceSmart, Inc. per share available for distribution:	$	18,694	$	18,838	$	55,332	$	70,926
Less: Allocation of income to unvested stockholders		(244)		(272)		(642)		(1,034)
Net earnings available to common stockholders	$	18,450	$	18,566	$	54,690	$	69,892
Basic weighted average shares outstanding		30,137		30,043		30,105		30,010
Add dilutive effect of stock options (two-class method)		—		2		—		4
Diluted average shares outstanding		30,137		30,045		30,105		30,014
Basic	$	0.61	$	0.62	$	1.82	$	2.34
Diluted	$	0.61	$	0.62	$	1.82	$	2.34