EARNINGS PER SHARE

The Company’s unvested restricted stock awards contain nonforfeitable rights to dividends and, therefore, are considered participating securities for purposes of computing earnings per share pursuant to the two-class method. The diluted earnings per share computed under the two-class method is lower than the diluted earnings per share computed under the treasury stock method, resulting in the presentation of the lower amount in diluted earnings per share. The computation of the earnings per share under the two-class method excludes the income attributable to the unvested restricted stock awards from the numerator and excludes the dilutive impact of those underlying shares from the denominator.

The following reflects the Company’s net income and share data used in the basic and diluted earnings per share computations using the two-class method:



	Three Months Ended September 30						Nine Months Ended September 30
(in thousands, except per share amounts)	2018			2017			2018			2017
Numerator:
Numerator for basic earnings per share:
Net income attributable to Graham Holdings Company common stockholders	$	125,064		$	24,784		$	214,521		$	87,866
Less: Dividends paid-common stock outstanding and unvested restricted shares	(7,048		)	(7,047		)	(28,635		)	(28,329		)
Undistributed earnings	118,016			17,737			185,886			59,537
Percent allocated to common stockholders	99.34		%	99.07		%	99.34		%	99.07		%
	117,235			17,572			184,657			58,981
Add: Dividends paid-common stock outstanding	7,001			6,981			28,447			28,066
Numerator for basic earnings per share	$	124,236		$	24,553		$	213,104		$	87,047
Add: Additional undistributed earnings due to dilutive stock options	5			1			8			4
Numerator for diluted earnings per share	$	124,241		$	24,554		$	213,112		$	87,051
Denominator:
Denominator for basic earnings per share:
Weighted average shares outstanding	5,302			5,518			5,354			5,530
Add: Effect of dilutive stock options	35			36			36			37
Denominator for diluted earnings per share	5,337			5,554			5,390			5,567
Graham Holdings Company Common Stockholders:
Basic earnings per share	$	23.43		$	4.45		$	39.81		$	15.74
Diluted earnings per share	$	23.28		$	4.42		$	39.54		$	15.64

Diluted earnings per share excludes the following weighted average potential common shares, as the effect would be antidilutive, as computed under the treasury stock method:



	Three Months Ended September 30		Nine Months Ended September 30
(in thousands)	2018	2017	2018	2017
Weighted average restricted stock	21	30	23	29

The diluted earnings per share amounts for the three and nine months ended September 30, 2018 and September 30, 2017 exclude the effects of 104,000 stock options outstanding, as their inclusion would have been antidilutive due to a market condition. The diluted earnings per share amounts for the three and nine months ended September 30, 2018 and September 30, 2017 exclude the effects of 5,250 restricted stock awards, as their inclusion would have been antidilutive due to a performance condition.

In the three and nine months ended September 30, 2018, the Company declared regular dividends totaling $1.33 and $5.32 per common share, respectively. In the three and nine months ended September 30, 2017, the Company declared regular dividends totaling $1.27 and $5.08 per common share, respectively.