Interpreting Financial Statements: Earnings per Share
Pierre’s, headquartered in Paris, reports the following note to its 1999 financial statements:
Share Capital: The share capital comprises fully paid shares with a nominal value of 1 FRF [French franc]. Shares at the beginning of the year and changes in the number of shares are as follows:
|
1999 |
1998 |
|
|
On January 1 |
75,452,501 |
74,442,637 |
|
In lieu of cash (stock) dividends |
— |
725,402 |
|
Exercise of stock options |
112,095 |
140,550 |
|
Conversion of bonds |
745 |
3,324 |
|
Exercise of staff (employee) options |
— |
25,733 |
|
On December 31 |
75,565,341 |
75,337,646 |
Information relevant to the earnings per share calculations is as follows:
|
Average outstanding |
75,422,540 |
75,122,483 |
|
Profit attributed to shareholder (FRF) |
965,000,000 |
841,000,000 |
Required
a. Explain each item in Pierre’s note.
b. What differences might exist between stock options and staff options?
c. Why does the average number of shares outstanding differ from the balances on January 1 and December 31?
d. Calculate Pierre’s earnings per share (EPS).