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,

zero

and

429

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, 2018,

and

977

and

4,118

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

three

and

nine

-month periods ended

September 30, 2017,

respectively. On

May 1, 2018,

the Company repurchased the outstanding balance of the

6.25%

Notes. See Note

“

Long-Term Obligations

.” Weighted average restricted stock units of

and

264

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

three

and

nine

-month periods ended

September 30, 2018,

respectively, because they were out of the money and, therefore, anti-dilutive. 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 anti-dilutive and excluded from the calculation of diluted loss per share.

The calculation of basic and diluted earnings per share for the

three

and

nine

-month periods ended

September 30, 2018

and

2017

are as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017

Net income (loss) attributable to Alaska Communications	$	1,817	$	320	$	7,360	$	(3,154	)

Weighted average common shares outstanding:
Basic shares		53,184		52,434		52,994		52,159
Effect of stock-based compensation		932		1,360		893		-
Diluted shares		54,116		53,794		53,887		52,159

Net income (loss) per share attributable to Alaska Communications:
Basic	$	0.03	$	0.01	$	0.14	$	(0.06	)
Diluted	$	0.03	$	0.01	$	0.14	$	(0.06	)