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Strategies & Market Trends : Employee Stock Options - NQSOs & ISOs -- Ignore unavailable to you. Want to Upgrade?

To: hueyone who wrote (46)	6/14/2002 8:38:24 PM
From: rkral	Read Replies (1) \| Respond to of 786

>>Companies are already writing off the value of shares connected with stock options when they report net income to the IRS.<< "write-off -- to charge an asset amount to expense or loss, in order to reduce the value of that asset and one's earnings" from investorwords.com. Huey, I believe you are referring to the employee compensation expense claimed (due to option exercise) on the corporate tax return .. which results in a "tax benefit". I doubt that a write-off of assets is involved in determining that tax benefit. Ron

To: hueyone who wrote (46)	6/20/2002 5:57:08 PM
From: Biomaven	Read Replies (3) \| Respond to of 786

Please show me where a diluted EPS takes into account the differernce between strike price and market price, the cost? FAS 128, which governs reporting of diluted earnings, does precisely that, using what is known as the Treasury Stock Method. You basically buy back shares at the average price for the quarter using the proceeds of the assumed exercise (plus a tax benefit for NQ options). Net result is that the cheaper an option is the more dilution it causes. Options whose strike price is equal to the average stock price for the quarter are a wash - neither dilutive nor anti-dilutive. Peter