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

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,

977

and

4,118

shares related to the

6.25%

Notes have been excluded from the calculation of diluted earnings per share for the

three

and

nine

-month periods ended

September 30, 2017,

respectively, and

9,143

and

9,298

shares were excluded from the calculation of diluted earnings per share for the

three

and

nine

-month periods ended

September 30, 2016,

respectively. Due to the Company’s reported net loss for the

nine

-month period ended

September 30, 2017,

2,976

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 bas

ic and diluted earnings per share for the

three

and

nine

-month periods ended

September 30, 2017

and

2016

are as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017			2016

Net income (loss) attributable to Alaska Communications	$	320	$	354	$	(3,154	)	$	757

Weighted average common shares outstanding:
Basic shares		52,434		51,340		52,159			51,105
Effect of stock-based compensation		1,360		1,114		-			1,025
Diluted shares		53,794		52,454		52,159			52,130

Net income (loss) per share attributable to Alaska Communications:
Basic	$	0.01	$	0.01	$	(0.06	)	$	0.01
Diluted	$	0.01	$	0.01	$	(0.06	)	$	0.01