To: RetiredNow who wrote (67951 ) 5/21/2005 12:55:32 PM From: rkral Read Replies (1) | Respond to mindmeld, re "But there's an even greater flaw to [ed: pfalk's] argument. Once an option is issued, it has already created dilution. EPS is calculated taking into account all potentially dilutive securities, including options. "fasb.org 17. The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method unless [ed: some exceptions] Equivalents of options and warrants include nonvested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions. Under the treasury stock method: The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the period. Options and warrants will have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options or warrants (they are “in the money”) . Previously reported EPS data shall not be retroactively adjusted as a result of changes in market prices of common stock. "21. In applying the treasury stock method described in paragraph 17, the assumed proceeds shall be the sum of (a) the amount, if any, the employee must pay upon exercise, (b) the amount of compensation cost attributed to future services and not yet recognized, and (c) the amount of tax benefits (both deferred and current), if any, that would be credited to additional paid-in capital assuming exercise of the options. "Message 21105036 Message 21316588
