Earnings per share

12 Months Ended

Dec. 31, 2016

Earnings per share. The Company’s basic earnings (loss) per share (EPS) attributable to Stewart is calculated by dividing net income (loss) attributable to Stewart by the weighted-average number of shares of Common Stock outstanding during the reporting periods.

To calculate diluted earnings per share, net income and number of shares are adjusted for the effects of any dilutive shares. Using the if-converted method, net income is adjusted for interest expense, net of any tax effects, applicable to the Convertible Senior Notes, which were fully converted into common stock during October 2014. The number of shares is adjusted by adding the number of dilutive shares, assuming they are issued, during the same reporting period. 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 loss per share and diluted loss per share is computed in the same manner as basic loss per share.

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



	For the Years Ended December 31,
	2016		2015		2014
	($000 omitted)
Numerator:
Net income (loss) attributable to Stewart	55,478		(6,204	)	29,753
Less: Cash paid on Class B Common Shares conversion (a)	(12,000	)	—		—
Net income (loss) for calculating basic EPS	43,478		(6,204	)	29,753
Add: Interest expense, net of tax effects	—		—		1,006
Adjusted net income (loss) for calculating diluted EPS	43,478		(6,204	)	30,759
Denominator (000):
Basic average shares outstanding	23,364		23,544		22,778
Average number of dilutive shares relating to options	—		—		2
Average number of dilutive shares relating to convertible senior notes	—		—		1,641
Average number of dilutive shares relating to restricted shares grant	108		—		289
Diluted average shares outstanding	23,472		23,544		24,710
Basic earnings (loss) per share attributable to Stewart	1.86		(0.26	)	1.31
Diluted earnings (loss) per share attributable to Stewart	1.85		(0.26	)	1.24

(a) - In accordance with the ASC 260, Earnings Per Share, the $12.0 million payment to the holders of the Class B Common Stock shares (refer to Note 12) 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 the adjusted net income for calculating basic and diluted EPS.