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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Earnings Per Share
In accordance with SFAS 128, “Earnings per Share,” the following table sets forth the computation of basic and diluted net income per
share for the fiscal years ended July 2, 2004 and June 27, 2003 (in millions, except per share data):
Options to purchase 3.7 million, 0.5 million and 10.8 million shares of common stock were outstanding during fiscal years 2004, 2003
and 2002, respectively, but were not included in the computation of diluted net income per share because the options’ exercise price was
greater than the average market price of the common shares and, therefore, the effect would be antidilutive.
Pro Forma Effects of Stock-Based Compensation on Earnings Per Share
Fiscal Years Ended
July 2,
2004
June 27,
2003
June 28,
2002
Numerator:
Net Income
$
529
$
641
$
153
Denominator:
Denominator for basic net income per share—weighted average number of
preferred and common shares outstanding during the period
452
418
401
Incremental common shares attributable to exercise of outstanding options
46
52
27
Denominator for diluted net income per share
498
470
428
Earnings per share:
Basic
$
1.17
$
1.53
$
0.38
Diluted
$
1.06
$
1.36
$
0.36
In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure” (“SFAS
148”). SFAS 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation,” (“SFAS 123”) to provide alternative methods of
transition to SFAS 123’s fair value method of accounting for stock-based employee compensation. SFAS 148 also amends the disclosure
provisions of SFAS 123 and APB Opinion No. 28, “Interim Financial Reporting,” to require disclosure in the summary of significant
accounting policies of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported net income
and earnings per share in annual and interim financial statements.
70