50 Notes to Consolidated Financial Statements Franklin Covey 2000 Annual Report 17. EARNINGS PER SHARE 18. STATEMENTS OF CASH FLOWS Basic EPS is calculated by dividing income from continuing operations by the weighted-average number of common shares outstanding during the period. Diluted EPS is calculated by dividing income from continuing operations by the weighted-average number of common shares outstanding plus the assumed exer- cise of all dilutive securities using the treasury stock method. During periods of net operating loss, all com- mon stock equivalents, including the effect of common shares from the issuance of Preferred Stock on an “as converted” basis, are excluded from the diluted EPS calculation. Significant components of the numerator and denominator used for basic and diluted EPS are as follows (in thousands, except per share amounts): Due to their antidilutive effect, the following incremental shares from the effect of the Preferred Stock on an “as converted basis” and options to purchase common stock have been excluded from the EPS calculations: Options to purchase 1,661,875 shares of common stock with exercise prices ranging from $23.00 to $34.50 per share were outstanding during fiscal 1998 but were excluded in the calculation of diluted EPS because the exercise price was greater than the average market price of the common shares. The following supplemental disclosures are provided for the consolidated statements of cash flows (in thousands): YEAR ENDED  AUGUST 31, 2000 1999 1998 Cash paid for: Income taxes $ (250) $ 22,701 $ 15,961 Interest 7,353 9,219 5,991 Fair value of  assets acquired $ 21,444 $ 19,025 $ 18,943 Cash paid for  net assets (21,444) (19,025) (16,786) Liabilities assumed  from acquisitions $ – $ – $ 2,157 Tax effect of  exercise of affiliate  stock options $ 557 $ 1,320 $ 266 YEAR ENDED AUGUST 31, 2000 1999 Number of preferred shares on  an “as converted” basis 5,793,529 1,339,286 Common stock equivalents  from the assumed exercise  of stock options 82,144 171,929 Total antidilutive shares excluded  from the EPS calculation 5,875,673 1,511,215 YEAR ENDED AUGUST 31, 2000 1999 1 998 (Loss) income before  accounting change $ (4,409) $ (8,772) $42,13 8 Cumulative effect of  accounting change,  net of tax (2,080) Net (loss) income (4,409) (8,772) 40,058 Preferred stock dividends 8,005 1,875 (Loss) income available to  common shareholders $(12,414) $(10,647) $40,058 Basic weighted-average  shares outstanding 20,437 20,881 24,09 1 Incremental shares from the  assumed exercise of  stock options 635 Diluted weighted-average  shares outstanding 20,437 20,881 2 4,726 (Loss) income from  continuing operations  per share: Basic $ (.61) $ (.51) $ 1.7 5 Diluted (.61) (.51) 1 .70 Cumulative effect of  accounting change, net  of tax, per share: Basic (.09) Diluted (.08) Net (loss) income per share: Basic $ (.61) $ (.51) $ 1.6 6 Diluted (.61) (.51) 1 .62