Vari-L (VARL) Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Vari-L (VARL)

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Bosco who wrote (2220)	5/17/2000 9:21:00 AM
From: Labrador	Read Replies (1) of 2702

They apparently did not apply the requirements of Statement 128 properly in calculating fully diluted earnings per share. With nonqualified stock options, the company receives a tax benefit upon the exercise of the option. This benefit is a tax deduction upon the exercise for the excess of market value over the exercise price. This tax deduction is treated as part of the proceeds [additional proceeds] upon exercise of the option in the diluted EPS calculation. Consequently, the effect of the exercise of the nonqualified stock options is not as adverse since the company essentially saves taxes when the options are exercised. Recognize that the calculations of fully diluted EPS is a hypothetical calculation, determined on a "as if" basis. Thus, besides considering the shares exercised since dilutive, one must also factor in the tax savings the company gets upon the exercise. Overall, quite positive -- but wish it were not buried in the release. Essentially, the dilution only hurts us by about 60% of the bargain element since the company gets a tax deduction for this amount. [This assumes a 40% effective tax rate.]

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next