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To: Thomas M. who wrote (51197)	3/25/1998 11:37:00 AM
From: The Duke of URL©	Read Replies (1) \| Respond to of 186894

Under the present law and GAAP if a dollar is paid in cash as salary then current EP is reduced by a dollar. If the dollar is paid by a stock option, retained earnings are adjusted at the time the option is exercised, not out of current EP. If that same employee is given options then EP is diluted by the options required NOW required to be stated as part of the fully diluted amount of shares. It may be generally better to give options. It conserves cash, and some other vendors of the Company may not wish to be paid in options.

To: Thomas M. who wrote (51197)	3/25/1998 1:03:00 PM
From: Khris Vogel	Respond to of 186894

Re: Yes, but the cost savings outweigh the dilution in the income statement. I'm not an accountant, so I can't explain this in great detail. I am. There has been new accounting pronouncements that address this issue, as well as the income statement ramifications. I can't tell you when they were put into force, or even if, as I'm in private industry now, so I can ignore the issues non-applicable to my companies. Off the top of their heads, does anybody else remember the accounting effect? TIA