American Home Shield 2002 Annual Report Download - page 59

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ServiceMaster 55
Earnings Per Share
Basic earnings per share is computed by dividing
income available to common stockholders by the
weighted-average number of shares outstanding for the
period. The weighted average common shares for the
diluted earnings per share calculation includes the
incremental effect related to outstanding options whose
market price is in excess of the exercise price. Shares
potentially issuable under convertible securities have
been considered outstanding for purposes of the diluted
earnings per share calculations. In computing diluted
earnings per share, the after-tax interest expense relat-
ed to convertible debentures is added back to net income
in the numerator, while the diluted shares in the denom-
inator include the shares issuable upon conversion of
the debentures. The effects of outstanding stock options
whose market price is in excess of the exercise price and
shares potentially issuable under convertible securities
have not been included in the 2001 diluted loss per
share calculation as their effect would have been anti-
dilutive. As a result, diluted earnings per share is the
same as basic earnings per share. Had the Company
recognized income from continuing operations in 2001,
incremental shares attributable to the assumed exercise
of outstanding options and conversion of debentures
would have increased diluted shares outstanding by
12.7 million shares, and the after-tax interest expense
related to convertible debentures that would have been
added to net income in the numerator totaled $4.8 million.
The following table reconciles both the numerator and
the denominator of the basic earnings per share from
continuing operations computation to the numerator
and the denominator of the diluted earnings per share
from continuing operations computation.
(In thousands, except per share data)
For year ended 2002 For year ended 2001 For year ended 2000
Continuing Operations: Income Shares EPS Loss Shares EPS Income Shares EPS
Basic EPS $170,098 300,383 $0.57 $(164,464) 298,659 $(0.55) $124,274 302,487 $0.41
Effect of Dilutive
Securities, net of tax:
Options 5,529 - 3,031
Convertible
debentures 4,780 8,200 -- --
Diluted EPS $174,878 314,112 $0.56 $(164,464) 298,659 $(0.55) $124,274 305,518 $0.41
Notes to Consolidated Financial Statements