11.

EARNINGS PER SHARE

Earnings per share are based on the weighted average number of shares of common stock and dilutive potential common share equivalents outstanding. Basic earnings per share assumes no dilution and is computed by dividing net income attributable to Alaska Communications by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company. Potential common share equivalents include restricted stock granted to employees and deferred shares granted to directors. The Company includes dilutive stock options based on the “treasury stock method.”

Effective in 2015, the Company discontinued use of the “if converted” method in calculating diluted earnings per share in connection with its contingently convertible debt. Accordingly, 2,502 and 5,714 shares related to the 6.25% Notes have been excluded from the calculation of diluted earnings per share for the three and six-month periods ended June 30, 2017, respectively, and 9,143 and 9,298 shares were excluded from the calculation of diluted earnings per share for the three and six-month periods ended June 30, 2016, respectively. Due to the Company’s reported net loss for the three and six-month periods ended June 30, 2017, 1,957 potential common share equivalents outstanding, consisting of restricted stock and deferred shares granted to directors, were antidilutive and excluded from the calculation of diluted loss per share.

The calculation of basic and diluted earnings per share for the three and six-month periods ended June 30, 2017 and 2016 are as follows:


	Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016		2017			2016

Net (loss) income attributable to Alaska Communications	$	(2,798	)	$	317	$	(3,474	)	$	403


Weighted average common shares outstanding:
Basic shares		52,341			51,231		52,177			50,986
Effect of stock-based compensation		—			907		—			1,020

Diluted shares		52,341			52,138		52,177			52,006


Net (loss) income per share attributable to Alaska Communications:
Basic	$	(0.05	)	$	0.01	$	(0.07	)	$	0.01

Diluted	$	(0.05	)	$	0.01	$	(0.07	)	$	0.01