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 March 31
(in thousands, except per share amounts)	2018			2017
Numerator:
Numerator for basic earnings per share:
Net income attributable to Graham Holdings Company common stockholders	$	42,891		$	21,086
Less: Dividends paid-common stock outstanding and unvested restricted shares	(14,638		)	(14,202		)
Undistributed earnings	28,253			6,884
Percent allocated to common stockholders	99.30		%	99.04		%
	28,057			6,818
Add: Dividends paid-common stock outstanding	14,539			14,066
Numerator for basic earnings per share	$	42,596		$	20,884
Add: Additional undistributed earnings due to dilutive stock options	1			—
Numerator for diluted earnings per share	$	42,597		$	20,884
Denominator:
Denominator for basic earnings per share:
Weighted average shares outstanding	5,436			5,535
Add: Effect of dilutive stock options	37			34
Denominator for diluted earnings per share	5,473			5,569
Graham Holdings Company Common Stockholders:
Basic earnings per share	$	7.84		$	3.77
Diluted earnings per share	$	7.78		$	3.75

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 March 31
(in thousands)	2018	2017
Weighted average restricted stock	28	28

The diluted earnings per share amounts for the three months ended March 31, 2018 and March 31, 2017 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 months ended March 31, 2018 and March 31, 2017 exclude the effects of 5,250 and 5,450 restricted stock awards, respectively, as their inclusion would have been antidilutive due to a performance condition.

In the three months ended March 31, 2018, and March 31, 2017, the Company declared regular dividends totaling $2.66 and $2.54 per common share, respectively.