Item 7.01 – Regulation FD Disclosure

Computational Guidance on Earnings Per Share Estimates

The Registrant frequently receives questions from analysts and shareholders regarding its diluted earnings per share (“EPS”) computation.  The information furnished in this Form 8-K provides additional information on the impact of key variables on the EPS computation. 

Accounting principles require that EPS be computed based on the weighted average shares outstanding (“basic”), and also assuming the issuance of potentially issuable shares (such as those subject to stock options, warrants, convertible notes, etc.) if those potentially issuable shares would reduce EPS (“diluted”). 

The number of shares related to options, warrants, and similar instruments included in diluted EPS is based on the “Treasury Stock Method” prescribed in Statement of Financial Accounting Standards (“SFAS”) No. 128.  This method assumes a theoretical repurchase of shares using the proceeds of the respective stock option or warrant exercise at a price equal to the issuer’s average stock price during the related earnings period.   Accordingly, the number of shares includable in the calculation of diluted EPS in respect of stock options, warrants and similar instruments is dependent on this average stock price and will increase as the average stock price increases.

The number of shares includable in the calculation of diluted EPS in respect of convertible or exchangeable securities is based on the “If Converted” method prescribed in SFAS No. 128.  This method assumes the conversion or exchange of these securities for shares of common stock.  In determining if convertible or exchangeable securities are dilutive, the interest savings (net of tax) subsequent to an assumed conversion are added back to net earnings.  The shares related to a convertible or exchangeable security are included in diluted EPS only if EPS as otherwise calculated is greater than the net interest savings divided by the shares issuable upon conversion or exchange of the instrument (“incremental earnings per share”).  Accordingly, the calculation of diluted EPS for these instruments is dependent on the level of net earnings.  Each series of convertible or exchangeable securities is considered individually and in sequence, starting with the series having the lowest incremental earnings per share, to determine if its effect is dilutive or anti-dilutive.

The Registrant’s convertible Liquid Yield Option™ Notes (“LYONs”) have a “put” feature that may be settled at the option of the Registrant in common stock, as the Registrant did in June 2004.  Having once used this stock-settlement feature, the Registrant must calculate the dilution effect of the LYONs based upon the scenario that is most advantageous to the LYONs holders—that is, the scenario most dilutive to the Registrant—either conversion of the LYONs or a put of the LYONs back to the Registrant in exchange for stock at the average stock price for the related earnings period.   Accordingly, determining whether the LYONs are dilutive is dependent on both the level of net earnings, as in the case of all convertible instruments, and the average stock price.  As the average stock price increases, the net earnings level at which the LYONs become dilutive increases, but the number of shares included in the computation decreases.

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