Creative 2000 Annual Report Download - page 24

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24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – NET INCOME (LOSS) PER SHARE
The Company adopted SFAS 128, “Earnings per Share” during the second quarter of the fiscal year 1998 and retroactively
restated net income (loss) per share data for all periods presented. SFAS 128 requires the Company to report both basic
earnings per share and diluted earnings per share. Basic earnings per share is computed using the weighted average number
of Ordinary Shares outstanding during the period. Diluted earnings per share is computed using the weighted average
number of ordinary and potentially dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent
shares are excluded from the computation if their effect is anti-dilutive. The following is a reconciliation between the
average number of ordinary shares outstanding and equivalent shares outstanding (in ’000):
As of June 30
2000 1999 1998
Average ordinary shares outstanding 82,028 89,818 90,654
Stock options 4,584 2,423 4,310
Average ordinary shares and equivalent outstanding 86,612 92,241 94,964
In computing the diluted earnings per share, the treasury stock method is used to determine, based on average stock prices
for the respective periods, the ordinary equivalent shares to be purchased using funds received from the exercise of stock
options. Other than the dilutive effect of stock options, Creative did not have any other financial instruments that would
have a material impact on the weighted average number of ordinary shares outstanding, used for computing diluted earnings
per share. The potentially dilutive ordinary equivalent shares outstanding under the employee share purchase plan were not
material and therefore, were not included for diluted earnings per share computation.