Table:
|  |  | Year Ended December 31, |  |
| --- | --- | --- | --- |
|  | 2019 | 2018 | 2017 |
| Distributed earnings | $43,207 | $39,627 | $32,709 |
| Undistributed earnings | 70,683 | 42,470 | 81,432 |
| Net income | $113,890 | $82,097 | $114,141 |
| Class A common stock: |  |  |  |
| Basic net income available to common stockholders | $76,294 | $54,715 | $75,413 |
| Basic weighted average common shares outstanding | 26,763 | 26,354 | 25,685 |
| Basic earnings per share | $2.85 | $2.08 | $2.94 |
| Diluted net income available to common stockholders | $76,555 | $54,937 | $75,698 |
| Effect of potential exercise of stock options | 279 | 324 | 288 |
| Diluted weighted average common shares outstanding | 27,042 | 26,678 | 25,973 |
| Diluted earnings per share | $2.83 | $2.06 | $2.91 |
| Class B common stock: |  |  |  |
| Basic net income available to common stockholders | $37,596 | $27,382 | $38,728 |
| Basic weighted average common shares outstanding | 13,188 | 13,189 | 13,190 |
| Basic earnings per share | $2.85 | $2.08 | $2.94 |
| Diluted net income available to common stockholders | $37,335 | $27,160 | $38,443 |
| Diluted weighted average common shares outstanding | 13,188 | 13,189 | 13,190 |
| Diluted earnings per share | $2.83 | $2.06 | $2.91 |
| For the years ended December 31, 2019, 2018 and 2017, options to purchase 288,133 shares, 293,898 shares and 265,866 |  |  |  |
Paragraphs:
6. Earnings per Share
Under ASC 260, Earnings per Share, the two-class method is an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared (or accumulated) and participation rights in undistributed earnings. Under that method, basic and diluted earnings per share data are presented for each class of common stock.
In applying the two-class method, we determined that undistributed earnings should be allocated equally on a per share basis between Class A and Class B common stock. Under our Certificate of Incorporation, the holders of the common stock are entitled to participate ratably, on a share-for-share basis as if all shares of common stock were of a single class, in such dividends, as may be declared by the Board of Directors. During the years ended December 31, 2019, 2018 and 2017, we declared and paid quarterly dividends, in the amount of $0.27, $0.25 and $0.21 per share on both classes of common stock.
Basic earnings per share has been computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding during each period. Shares issued during the period and shares reacquired during the period are weighted for the portion of the period in which the shares were outstanding. Diluted earnings per share have been computed in a manner consistent with that of basic earnings per share while giving effect to all potentially dilutive common shares that were outstanding during each period.
The net income available to common stockholders and weighted average number of common shares outstanding used to compute basic and diluted earnings per share for each class of common stock are as follows (in thousands, except per share amounts):
For the years ended December 31, 2019, 2018 and 2017, options to purchase 288,133 shares, 293,898 shares and 265,866 shares, respectively, were outstanding but not included in the computation of diluted earnings per share because the options' effect would have been anti-dilutive. For the years ended December 31, 2019, 2018 and 2017, there were 338,748 shares, 420,524 shares and 463,800 shares, respectively, issued from the exercise of stock options.
Question:
What does the two-class method mean under ASC 360?
Answer: an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared (or accumulated) and participation rights in undistributed earnings