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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club

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To: Sun Tzu who wrote (4457)	4/12/1999 4:47:00 PM
From: Boca_PETE	Read Replies (1) of 15132

Sun Tzu: RE: <Counting "In-the-money Options as Outstanding for EPS" Currently under the new FASB 128, in-the-money shares under option are counted as "outstanding" in reported "Diluted Earnings Per Share" (EPS), but not in Basic EPS. Under the previous requirement (APB 15), such options were counted as outstanding for BOTH "Primary EPS" and "Diluted EPS". More such options were counted as "outstanding for "diluted EPS" where the company's stock price at period-end was greater than the average stock price for the period. Your point that "stock buy back plans are geared towards counteracting the employee option plans. Thus assets do leave the company to pay for employee option plans" is only true by ASSUMING that such "gearing" always occurs. You can't prove this gearing is occuring. I see stock buy-backs and option plans as different in nature and in need of two separate distinct accounting treatments. If you believe such gearing is almost always occuring, I can understand your sympothy with the FASB viewpoint - although I obviously disagree. I say FOLLOW THE CASH in both situations, separately - you get two distinctly different answers. Jmho ! P

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