NOTE 23 — EARNINGS (LOSS) PER SHARE (EPS)

The following tables reconcile net income to the amounts used to calculate basic and diluted earnings per share.

Basic


	2018
	Common	Preferred	Total
	(in thousands, except share and per share data)
Basic numerator
Allocated net income (loss) available to common and preferred shareholders	774,279	1,529,589	2,303,868

Basic denominator
Weighted-average outstanding shares, after deducting the average tresuary shares	571,929,945	1,129,851,598

Earnings per share (in R$) — Basic	1.35	1.35


	2017
	Common	Preferred	Total
	(in thousands, except share and per share data)
Basic numerator
Allocated net income (loss) available to common and preferred shareholders	(120,267)	(239,093)	(359,360)

Basic denominator
Weighted-average outstanding shares, after deducting the average tresuary shares	571,929,945	1,137,012,265

Loss per share (in R$) — Basic	(0.21)	(0.21)


	2016
	Common	Preferred	Total
	(in thousands, except share and per share data)
Basic numerator
Allocated net income (loss) available to common and preferred shareholders	(969,954)	(1,920,857)	(2,890,811)

Basic denominator
Weighted-average outstanding shares, after deducting the average tresuary shares	571,929,945	1,132,626,373

Loss per share (in R$) — Basic	(1.70)	(1.70)

Diluted


Diluted numerator		2018
Allocated net income available to Common and Preferred shareholders
Net income allocated to preferred shareholders		1,529,589
Add:
Adjustment to net income allocated to preferred shareholders in respect to the potential increase in number of preferred shares outstanding, as a result of options granted to acquire stock of Gerdau.		6,515
		1,536,104
Net income allocated to common shareholders		774,279
Less:
Adjustment to net income allocated to preferred shareholders in respect to the potential increase in number of preferred shares outstanding, as a result of options granted to acquire stock of Gerdau.		(6,515)
		767,764
Diluted denominator
Weighted - average number of shares outstanding
Common Shares		571,929,945
Preferred Shares
Weighted-average number of preferred shares outstanding		1,129,851,598
Potential increase in number of preferred shares outstanding in respect of stock option plan		14,440,860
Total		1,144,292,458
Earnings per share — Diluted (Common and Preferred Shares)		1.34

Due to the net loss in the years of 2017 and 2016, the Company is considering for these two years the same basic and diluted loss, without considering the effects on the diluted calculation of the potential increase in preferred shares as a result of the long-term incentive plans.