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— John Cajigas, director of finance at Biosite, says there is no good way to put a value on stock options. David Pendarvis, legal vice president of ResMed, says, "The problem with expensing options is valuing them up front without knowing in the end what the actual expense will be."

Wangerin says that 500 companies have begun expensing options, but 10,000 have not. Coca-Cola has begun expensing options. "But Coke has 40,000 employees and only gives options to 400 of them. Some tech companies offer options to 60 to 80 percent of employees."

How can you find out the real earnings of a stock you own? Go to its annual 10-k report to the Securities and Exchange Commission. In the footnotes where it states its earnings, the company must also state what those earnings would have been if the company expensed options. Also, Standard & Poor's has a concept called "core earnings." It not only shaves options expense from a company's stated earnings, but also excludes gains from asset sales, insurance, or litigation from profits. It records pension, corporate restructuring, and merger and acquisition costs that some companies try to ignore. Thus, core earnings eliminate many abuses that have bloated profits for years.

You should be able to get a Standard & Poor's report online or from your broker. If you have questions, ask the investor-relations department of the company about the discrepancy between its reported earnings and core earnings. That is, unless you own stock of Wireless Facilities. Alone among the San Diego companies I contacted, its bean counters said they were not familiar with Standard & Poor's core earnings.

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