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To: Investor2 who wrote (3134)	1/29/1998 9:39:00 PM
From: Investor2	Respond to of 42834

"In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE, ("SFAS 128") which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options, warrants and the Convertible Preferred Stock, Series D and Series E, will be excluded." ""Earnings per Share" establishes standards for computing and presenting earnings per share (EPS) and applies to entities with publicly held common stock or potential common stock. This Statement simplifies the standards for computing earnings per share previously found in APB Opinion No. 15, Earnings per Share, and makes them comparable to international EPS standards. It replaces the presentation of primary EPS with a presentation of basic EPS. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation." "Statement No. 128 Earnings per Share (Issue Date 2/97) Summary This Statement establishes standards for computing and presenting earnings per share (EPS) and applies to entities with publicly held common stock or potential common stock. This Statement simplifies the standards for computing earnings per share previously found in APB Opinion No. 15, Earnings per Share, and makes them comparable to international EPS standards. It replaces the presentation of primary EPS with a presentation of basic EPS. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Diluted EPS is computed similarly to fully diluted EPS pursuant to Opinion 15. This Statement supersedes Opinion 15 and AICPA Accounting Interpretations 1-102 of Opinion 15. It also supersedes or amends other accounting pronouncements listed in Appendix D. The provisions in this Statement are substantially the same as those in International Accounting Standard 33, Earnings per Share, recently issued by the International Accounting Standards Committee. This Statement is effective for financial statements issued for periods ending after December 15, 1997, including interim periods; earlier application is not permitted. This Statement requires restatement of all prior-period EPS data presented." Best wishes, I2

To: Investor2 who wrote (3134)	1/29/1998 10:05:00 PM
From: Boca_PETE	Read Replies (1) \| Respond to of 42834

I2: re:<companies will be reporting two "earnings per share" numbers.> Your insights are mostly correct. On the face of financial statements (income statement) published in annual reports and SEC filings, companies are required by Statement of Financial Accounting Standards No 128 (SFAS 128) to report two Per Share amounts starting with reports for 4th Quarter and Year 1997 financial statements (No such requirements exist for press releases of earnings, however due to confusion in the media, many companies decided to report both amounts in their press release to avoid distractions from phone inquiries if they only reported one figure). BASIC EPS = (Net Income Available to Common Shareholders) DIVIDED BY (Average Common Shares Outstanding for the period). This figure would be higher for companies that previously included common stock equivalents from outstanding stock options and warrants under the previous "Primary EPS" requirement. The denominator to calculate the other per share figure, DILUTED EPS, includes the above average shares PLUS additional dilution from assumed exercise of outstanding stock options and warrants and from other convertible securities assumed to be converted to common stock. The numerator is the above net income number plus or minus any effects (e.g., preferred stock dividends no longer payable) from assumed conversion of all sercurities convertible into common stock. Diluted EPS almost the same calculation as had been required for the previously required Fully Diluted EPS. Hope this clarifies the situation. Now you can take and pass the CPA Exam :-)) ! P