12. Earnings per Share

Basic earnings per share have been computed by dividing net earnings by the weighted average number of common shares outstanding during the applicable period. Diluted earnings per share reflect the potential dilution that could occur if stock options or other contracts to issue common shares were exercised or converted into common stock.

For the three and six months ended August 31, 2018, all options were included in the diluted earnings per share computation because the average fair market value of the Company’s stock exceeded the exercise price of the options. For the three and six months ended August 31, 2017, 42,500 and 95,692 shares, respectively, related to stock options were not included in the diluted earnings per share computation because the exercise price exceeded the average fair market value of the Company’s stock. The following table sets forth the computation for basic and diluted earnings (loss) per share for the periods indicated:

	Three months ended				Six months ended
	August 31,				August 31,
	2018		2017		2018		2017
Basic weighted average common shares outstanding		25,671,643		25,342,747		25,510,356		25,388,292
Effect of dilutive options		13,871		23,254		12,475		17,571
Diluted weighted average common shares outstanding		25,685,514		25,366,001		25,522,831		25,405,863
Earnings per share
Net earnings - basic	$	0.37	$	0.34	$	0.74	$	0.64
Net earnings - diluted	$	0.37	$	0.34	$	0.74	$	0.64
Cash dividends	$	0.225	$	0.200	$	0.425	$	0.375