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Technology Stocks : Applied Magnetics Corp -- Ignore unavailable to you. Want to Upgrade?

To: T Bowl who wrote (11153)	12/28/1997 11:40:00 PM
From: Jonathan Bird	Read Replies (1) \| Respond to of 12298

You chose shares outstanding as: APM Shares Outstanding = 23,976,711 (says so in the OE section of the ballance sheet) Todd, Yes I did. But I just realized that it would be more precise to say that Outstanding Stock = Issued Stock - Treasury Stock. Treasury stock is shares bought back by APM from the market mostly for use in employee incentive and compensation plans. They remain "issued" but are no longer "outstanding". So guess that means Outstanding Stock is actually 23,848,327. If you wouldn't ask so many questions I wouldn't look so stupid :) So to answer your question #1, Outstanding Stock is any shares not owned by APM(the corporate entity). So there are 23,848,327 shares "out there" that can be traded. Although that doesn't mean they will be. Many will be stuffed under matresses. Still, these shares are considered to be "in the market". About all this EPS stuff. I heard that the raw GAAP(Generally Accepted Acounting Pricipals) issued by FASB(Financial Accounting Standards Board) pertaining to the calculation of EPS is over 100 pages long. So as mortals we can't hope to comprehend it fully. But I'll tell you enough to know what it is that we will never understand. Here are the equations: Basic EPS = Net Earnings - Prefered Dividends/Weighted Average Number of Common Stock Outstanding Weighted Average of shares is important because the Income Statement represents the results of the company over a period of time. On the other hand Book Value is calculated using the Ballance Sheet, which is a snapshot of the company at a point in time, so no averaging is necessary. Prefered Didividends = dividends paid to holders of prefered stock. APM has issued no prefered stock and so has no prefered shareholders. Although is has a lot of them who would prefer not to be hehehe. ;) Primary EPS(PEPS) = Net Earnings - Prefered Dividends + Adjustment for CSEs/Weighted Average Number of Common Stock Outstanding + Weighted Average CSEs CSE= Common Share Equivilents, like bonds, options or other expected contingent share offerings. Only CSEs that will be dilutive(become shares, based on stock price at end of reporting period) within 5 years of the reporting period are included in the PEPS. Fully Diluted EPS(FDEPS) = Net Earnings - Prefered Dividends + Adjustment for CSEs and OPDS/Weighted Average Number of Common Stock Outstanding + Weighted Average CSEs and OPDS OPDS= Other Potentially Dilutive Securities, sorry no example. Only CSEs and OPDS that will be dilutive within 10 years of the reporting period are included in the FDEPS. APMs convertable debentitures will become shares in the year 2006, hence they are a CSE that quialifies for the FDEPS equation, but not the PEPS. At least until 2001. I think that there should be enough information in the 10-K to recontruct how APM has calculated the EPS. But thats not my idea of a good time, even if I thought I could do it right. Which I don't. Ask me tomorrow and I probably be able to tell you that something I just told you is wrong. :) BTW, do you ever sleep? Yes, but not on a regular basis. Jon Bird

To: T Bowl who wrote (11153)	12/30/1997 10:17:00 AM
From: Dave Chanoux	Respond to of 12298

Perhaps I can help regarding primary and fully diluted earnings: The difference between the two arises from the convertible debt, stock options or other issued vehicles which may increase the number of common shares. John Bird is right in defining what must/should be considered as effecting the number of shares used in eps calculations. Generally, if eps changes by 3% or more when share equivalents are considered, the company must report both primary and fully diluted eps. For APM, the convertible debt is interest bearing and convertible into approximately 6.2 Million shares. Primary eps is computed by dividing net income by the number of shares outstanding: (From the unaudited 10/23 press release) Income $100.3 M, 24.78 Million Shares, $4.05 EPS To compute fully diluted eps, assume that the convertible debt had been converted to shares and no interest had been paid. Start with before tax income, add back interest paid on the debt (from my memory, about $8.5 M), deduct taxes on the revised amount, divide by the number of shares including the 6.2 million arising from the debt. It is not clear what assumptions were made in the tax treatment of the interest. Income $108.5 M, 31.0 Million Shares, $3.50 EPS You're not a moron, you're smarter than most. I hope this helps. Regards, Dave Chanoux