Algonquin Power & Utilities Corp. – Consolidated Financial Statements ALGONQUIN POWER & UTILITIES CORP.  Notes to the Consolidated Financial Statements  December 31, 2012 and 2011   (in thousands of Canadian dollars except as noted and amounts per share)  The reconciliation of the net income and the weighted average shares used in the computation of  basic and diluted earnings per share are as follows:  The shares potentially issuable as a result of the convertible debentures as well as stock options  of 1,354,531 respectively (2011 – 1,326,900) are excluded from this calculation as they are anti- dilutive. APUC and its subsidiaries are involved in various claims and litigation arising out of the  ordinary course and conduct of its business. Although such matters cannot be predicted with  certainty, management does not consider APUC’s exposure to such litigation to be material to  these financial statements, with the exception of those matters described below. Accruals for  any contingencies related to these items are recorded in the financial statements at the time it  is concluded that its occurrence is probable and the related liability is estimable.  The water lease with Seaway Management contains an indemnification clause which  management believes mitigates this claim and management intends to vigorously defend  its position. As a result, the probability of loss, if any, and its quantification cannot be  estimated at this time but could range from $nil to $5,800. In 2012, the Company paid an  amount of $1,884 (2011 - $ nil) to the government of Québec in relation to the early years  covered by the claim in order to mitigate the impact of accruing interests on any amount  ultimately determined to be payable or recoverable.  21.  Commitments and contingencies  20.  Basic and diluted net earnings per share (continued)  2012 2011 Net earnings attributable to shareholders of APUC  $ 14,532  $ 23,381 Preferred shares dividend  769  - Net earnings attributable to common shareholders of APUC –  Basic and Diluted  $ 13,763  $ 23,381 Weighted average number of shares  Basic 158,304,340 116,712,934 Dilutive effect of share-based awards  605,281  249,854 Diluted 158,909,621 116,962,788 a) Contingencies i) On October 21, 2011 the Québec Court of Appeal ordered a subsidiary of APUC to pay  approximately $5,400 (including interest) to the government of Québec relating to water  lease payments that the APUC subsidiary has been paying to the St. Lawrence Seaway  Management Corporation (“Seaway Management”) under its water lease with Seaway  Management in prior years. 2012 Annual Report 124