COMPARISON OF RETIREMENT AND TREASURY STOCK ACCOUNTING SHARE BUYBACKS – American Semiconductor’s balance sheet included the following: Shareholders' Equity ($ in millions) Common stock, 100 million shares at $1 par $ 100 Paid-in capital excess of par 900 – Paid-in capital share repurchase 2 – Retained earnings 2,000 Retirement Treasury Stock Reacquired 1 million of its common shares Case 1: Shares repurchased at $7 per share Common stock 1 Treasury stock 7 ($1 par x 1 million sh) (cost) PIC excess of par 9 – ($9 per sh) PIC share repurchase 3 (difference) – Cash 7 Cash 7 OR Case 2: Shares repurchased at $13 per Common stock 1 Treasury stock 13 ($1 par x 1 million sh) (cost) PIC excess of par 9 – ($9 per sh) PIC share repurchase 2* – Retained earnings 1 (difference) Cash 13 Cash 13 *Because there is a $2 million credit balance. T18-9
COMPARISON OF RETIREMENT AND TREASURY STOCK ACCOUNTING – SHARE BUYBACKS American Semiconductor’s balance sheet included the following: Shareholders' Equity ($ in millions) Common stock, 100 million shares at $1 par $ 100 Paid-in capital – excess of par 900 Paid-in capital – share repurchase 2 Retained earnings 2,000 Retirement Treasury Stock Reacquired 1 million of its common shares Case 1: Shares repurchased at $7 per share Common stock ($1 par x 1 million sh) 1 Treasury stock (cost) 7 PIC – excess of par ($9 per sh) 9 PIC – share repurchase (difference) 3 Cash 7 Cash 7 OR Case 2: Shares repurchased at $13 per Common stock ($1 par x 1 million sh) 1 Treasury stock (cost) 13 PIC – excess of par ($9 per sh) 9 PIC – share repurchase 2* Retained earnings (difference) 1 Cash 13 Cash 13 *Because there is a $2 million credit balance. T18-9
Ch18%20Shareholders%20Equity.docx