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To: David Lawrence who wrote (5404)	4/6/1998 8:57:00 PM
From: Biomaven	Read Replies (2) \| Respond to of 9068

David, <<I believe that vested, in-the-money options are already included in fully diluted shares/outstanding and PR, PS that are stated on that basis. That may be true of vested, not-in-the-money grants too.>> This is not correct. FAS 128, which governs EPS disclosures, takes no account of vesting, and accounts fully for all in-the-money grants, whether vested or not. It also ignores vested not-in-the-money grants.(Except that you are supposed to disclose how many out-of-the-money grants there are - but a lot of companies haven't done this, as FAS 128 is new and they haven't got the hang of it yet <G>). FAS 123, which requires companies to disclose the "fair value" of the options granted, and to disclose a pro forma expense hit, does consider vesting in figuring out the period over which the expense should be amortized as well as compensating for grants that don't ever vest. Peter

To: David Lawrence who wrote (5404)	4/6/1998 9:26:00 PM
From: Roger A. Babb	Read Replies (1) \| Respond to of 9068

David, the share ownership and options are spelled out in gory detail in the filing. I will leave it as an exercise for anyone interested to add up the "true" number. Everyone should note that earnings must grow at a rapid clip just to keep dilution from reducing the EPS as more shares enter the equation. Ooops, I forgot, EPS, PE, and PS are no longer important in the "new market". So I guess it is really not important. For what it is worth, ALL of the outstanding options are currently in the money. They were issued at 85% of market price at time of issue, so all are well below $50, most in the 30's or lower. If the stock price drops, they probably would reprice the options. Any time an option is issued, investors should promptly assume that those options will soon show up in the total share count, they almost always do. When options can be repriced down as the price drops, to me that contradicts the term "incentive" and makes the options nothing but a pay bonus at stockholder expense.