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 June 30						Six Months Ended June 30
(in thousands, except per share amounts)	2017			2016			2017			2016
Numerator:
Numerator for basic earnings per share:
Net income attributable to Graham Holdings Company common stockholders	$	41,996		$	60,766		$	63,082		$	98,546
Less: Dividends paid-common stock outstanding and unvested restricted shares	(7,080		)	(6,775		)	(21,282		)	(20,533		)
Undistributed earnings	34,916			53,991			41,800			78,013
Percent allocated to common stockholders	99.06		%	98.68		%	99.06		%	98.68		%
	34,588			53,277			41,407			76,981
Add: Dividends paid-common stock outstanding	7,013			6,685			21,082			20,264
Numerator for basic earnings per share	$	41,601		$	59,962		$	62,489		$	97,245
Add: Additional undistributed earnings due to dilutive stock options	3			4			3			5
Numerator for diluted earnings per share	$	41,604		$	59,966		$	62,492		$	97,250
Denominator:
Denominator for basic earnings per share:
Weighted average shares outstanding	5,539			5,544			5,537			5,584
Add: Effect of dilutive stock options	38			30			36			29
Denominator for diluted earnings per share	5,577			5,574			5,573			5,613
Graham Holdings Company Common Stockholders:
Basic earnings per share	$	7.51		$	10.82		$	11.29		$	17.42
Diluted earnings per share	$	7.46		$	10.76		$	11.21		$	17.33

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 June 30		Six Months Ended June 30
(in thousands)	2017	2016	2017	2016
Weighted average restricted stock	29	41	28	39

The diluted earnings per share amounts for the three and six months ended June 30, 2017 and June 30, 2016 exclude the effects of 104,000 and 102,000 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 six months ended June 30, 2017 and June 30, 2016 exclude the effects of 5,250 and 6,100 restricted stock awards, respectively, as their inclusion would have been antidilutive due to a performance condition.

In the three and six months ended June 30, 2017, the Company declared regular dividends totaling $1.27 and $3.81, respectively. In the three and six months ended June 30, 2016, the Company declared regular dividends totaling $1.21, and $3.63 respectively.