NWSS
Well, the earnings number based on a diluted number seems to be correct, with respect to the number of common shares then. So they treat exercisable options as exercised.
- the common share count (basic) is the number of actually out standing common shares.
- the common share count (diluted) is the number obtained by adding in any convertible preferreds, rights which are ready to be execised.
But: "In December 1997, the Company adopted SFAS No. 128, "Earnings Per Share". This statement requires the Company to change the method that was previously used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating basic earnings per share, the dilutive effect of stock options and warrants are excluded."
The profit/loss atributable to common is calculated by taking away the preferred dividends from yearly income.
The conversion is fixed in a four to one ratio, as found in an old 10k. So it is in fact antidilutive when the yearly declared preferred dividend is greater than the income share atributable to the common stock issuable upon any future conversion given a certain converstion rate. Which is the case.
The co stated it in its 10k: "For 1996 and 1995, the stock purchase warrants, options, and convertible preferred stock have not been included in the computation of earnings per share, since the effect would be anti-dilutive."
Besides that they have restated more or less all past 10k on a frequently upon adoption of new rules and/or disagreements with auditors, and the resulting share count may be $1M, the earnings numbers seem correct. They do earn money, even when they have difficulties in cashing in due to their long-lived contracts, so they have a log of unbilled earings or assets carried on a cost basis.
Along with the small float, which is -not - that heavily shorted as real fishes, I won't take it. There are bigger and better shorts out, especially co's which do neither earn money nor generate cash flows.
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