VOA慢速英语20060505b

ECONOMICS REPORT - Stock Options Take Bite Out of Earnings¹ StatementsBy Mario Ritter

Broadcast: Friday, May 05, 2006

I'm Steve Ember with the VOA Special English Economics Report.

Last week, we described stock options. These are agreements that give investors² the right to buy or sell shares of stock for a set price at a time in the future.

For years, companies have used stock options as a form of pay. At first, only top officers in companies got them. The value of a stock option rises or falls with the price of a company stock. So this gave the people at the top a strong reason to do their jobs well.


Financial Information

During the nineteen nineties, technology companies started to offer stock options to skilled workers. Many of these businesses were newly formed Internet companies. Soon stock options became a common form of pay in American businesses.

Since options are linked to stock market prices, estimating their value can be difficult. Most companies did not report them as an expense, a cost of doing business. As a result, shareholders³ were not getting a true picture of a company's financial condition.

New rules from the Financial Accounting⁴ Standards Board are meant to change that. The board is a private organization that establishes how financial reports should be prepared. Its work is officially recognized by the United States Securities and Exchange Commission.

The new rules start with the two thousand six financial year. Companies publicly traded in the United States must now treat options as an expense against earnings. Some already do.

A company can deal with employee stock options in two ways. It can trade its own stock when an employee exercises an option. Or it can create additional stock. But more stock weakens the value of a company's shares.

In other words, either the company pays for the options or its shareholders pay.

Since last year, company purchases of stock to pay for options have increased sharply.

Standard & Poor's said in November that the new rules will cut earnings by more than four percent at companies on the S&P Five Hundred list. The financial rating agency says the information technology industry will see its earnings reduced the most, eighteen percent.

In its last three-month period, expensed options cut fifteen percent from the earnings at Intel, the leading maker⁵ of computer processors.

Standard & Poor's says some companies will have to report a loss as a result of the new rules.

This VOA Special English Economics Report was written by Mario Ritter. You can find the first part of our report on stock options at www.unsv.com. I'm Mario Ritter.

1 earnings   

n.工资收人；利润，利益，所得

参考例句：

• That old man lives on the earnings of his daughter.那个老人靠他女儿的收入维持生活。
• Last year there was a 20% decrease in his earnings.去年他的收入减少了20%。

2 investors   

n.投资者，出资者( investor的名词复数 )

参考例句：

• a con man who bilked investors out of millions of dollars 诈取投资者几百万元的骗子
• a cash bonanza for investors 投资者的赚钱机会

3 shareholders   

n.股东( shareholder的名词复数 )

参考例句：

• The meeting was attended by 90% of shareholders. 90%的股东出席了会议。
• the company's fiduciary duty to its shareholders 公司对股东负有的受托责任

4 accounting   

n.会计，会计学，借贷对照表

参考例句：

• A job fell vacant in the accounting department.财会部出现了一个空缺。
• There's an accounting error in this entry.这笔账目里有差错。

5 maker   

n.制造者，制造商

参考例句：

• He is a trouble maker，You must be distant with him.他是个捣蛋鬼，你不要跟他在一起。
• A cabinet maker must be a master craftsman.家具木工必须是技艺高超的手艺人。