Interestingly enough AMD did their math wrong.
income: $189,349,000
shares (diluted) 171,942,000
eps: $1.10
...Am I messing something up here?
You made a good observation & the discrepancy is kind of technical.
Most of the difference between basic & fully diluted shares outstanding is roughly 14 million shares into which AMD's Convertible Subordinated Notes may be converted. The 10-K shows that $517.5 million of Notes were issued in 1998 at an interest rate of 6% and are convertible into AMD shares at a price of $37. (BTW, they can be called by AMD on or after May 15, 2001, in which case the interest payments would stop.)
When they do the fully diluted calculation, they figure the effect of these Notes two ways: as if they were converted and as if they weren't converted, then pick the more conservative presentation. For example, if they're losing money, they always assume non-conversion because it makes the loss per share bigger. Next, if they're making money, then basically if the interest on the notes is less than the earnings on the number of shares into which they might be converted, then they assume conversion, so they figure on additional shares but no interest on the Notes.
For Q1, the accrued interest on the Notes was about $8 million ($517.5 million x .06 x 1/4, plus a little for 14 weeks instead of 13.14). So the calculation becomes ($189 million + $8 million)/(172 million shares) = $1.15/share.
For last Q4, the interest on one share's worth of Notes was $37 x .06 x 1/4 = $.50, which was greater than the reported EPS of $.43, so they presented their results assuming no conversion. |
