Earnings per share

6 Months Ended

Jun. 30, 2016

Earnings per share. The Company’s basic earnings per share (EPS) attributable to Stewart is calculated by dividing net income attributable to Stewart by the weighted-average number of shares of Common Stock outstanding during the reporting periods. To calculate diluted earnings per share, the number of shares is adjusted for the effects of any dilutive shares. The treasury stock method is used to calculate the dilutive number of shares related to the Company’s long term incentive and stock option plans. In periods of loss, dilutive shares are excluded from the calculation of the diluted earnings per share and diluted earnings per share is computed in the same manner as basic earnings per share.

On April 27, 2016, the Company issued 1,050,012 shares of Common Stock and $12.0 million in cash in exchange for the retirement of the outstanding 1,050,012 Class B Common Stock shares (refer to Note 12). Under U.S. GAAP, the $12.0 million payment to the holders of the Class B Common Stock shares is treated in a manner similar to the treatment of dividends on preferred stock for the purpose of calculating EPS. Accordingly, the $12.0 million payment was deducted from the 2016 net income to arrive at income available to common stockholders for calculating basic and diluted EPS.

The calculation of the basic and diluted earnings per share is as follows:



	For the Three Months Ended June 30,			For the Six Months Ended June 30,
	2016		2015	2016		2015
	($000 omitted, except per share)
Numerator:
Net income attributable to Stewart	23,599		17,106	12,404		4,658
Less: Cash paid on Class B Common Shares conversion	(12,000	)	—	(12,000	)	—
Net income available to common shareholders	11,599		17,106	404		4,658

Denominator (000):
Basic average shares outstanding	23,365		23,624	23,357		23,806
Average number of dilutive shares relating to options	1		2	1		2
Average number of dilutive shares relating to grants of restricted shares	193		169	184		167
Diluted average shares outstanding	23,559		23,795	23,542		23,975

Basic earnings per share attributable to Stewart	0.50		0.72	0.02		0.20

Diluted earnings per share attributable to Stewart	0.49		0.72	0.02		0.19