Rules on Earnings Per Share Disclosure

Basic EPS is calculated by dividing net income or loss attributable to common shareholders by the weighted average number of common shares outstanding during the period.
Net income or loss for EPS purposes is net income after preferred dividends are deducted.
The weighted average number of common shares is adjusted for events changing shares outstanding without changing resources.

Diluted EPS adjusts net income and weighted average shares for effects of all dilutive potential common shares.
Adjustments include after-tax dividends on dilutive shares, interest on dilutive shares, and income/expense changes from conversion.
Potential common shares are considered converted as of the beginning of the period or issuance date if later.
Dilutive options and other potential common shares are assumed exercised with adjustments for proceeds at fair value.
Potential common shares are dilutive only when their conversion decreases net income per share.

Basic and diluted EPS must be retroactively adjusted for stock dividends, stock splits, and reverse splits.
Adjustments also apply for corrections of errors and retroactive changes in accounting principles.
Business combinations accounted as pooling of interests require EPS adjustments.

Corporations must present both basic and diluted EPS on the income statement with equal prominence.
Presentation is required even if EPS amounts are negative (loss per share).

Disclosure must include numerators used for EPS calculations and reconciliations to net income or loss.
Weighted average numbers of shares used as denominators must be disclosed with reconciliations.
If EPS is computed for components of net income other than net income attributable to common shareholders, disclosures and reconciliations are required.

The provisions of SFAS No. 29 supplement the circular for clarification.
The rule is effective for financial statements covering periods ending on or after December 31, 1998, with encouragement for earlier adoption.
Prior period EPS data must be restated for comparability during the adoption period.
The circular took effect fifteen days after publication in two newspapers of general circulation.