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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Exacctnt who wrote (71164)	12/1/1999 12:17:00 AM
From: Simba	Read Replies (1) \| Respond to of 132070

Exacctnt & Others: Thanks for amending that post. I was about to ask you about that. In your example $80 / option share was considered an expense to get a tax credit from IRS for $28 / share tax credit. Shouldn't they subtract the $80 per option share multiplied by the number of shares exercised in that quarter from the earnings and THEN divide by the shares outstanding at the end of the quarter. Is this not what Bill Parish has been saying that MSFT and CSCO does not do ? The company can say that they did not really pay $80 in cash to the optionee who exercised, but then why claim so with IRS for a tax credit. Don't you think it would be fair if either: 1. They claimed a tax credit and subtracted the expense from the Earnings in the numerator of EPS instead of adjusting the "denominator" shares by a fictitious number or 2. Don't claim tax credit as they did not really pay out in cash to the employee but divide by the full shares outstanding at the end of the quarter. I think the effect of using the option 1. above can be highly damaging to EPS as Bill Parish has shown, while the effect of 2. can be less damaging but more fair to the company and shareholder. I would like your or others comments on this. Simba