Common use of NET LOSS PER SHARE Clause in Contracts

NET LOSS PER SHARE. Basic and diluted net loss per share is computed using the weighted average number of common shares outstanding during the period, less outstanding nonvested shares. Outstanding nonvested shares are not included in the computation of basic and diluted net loss per share until the time-based vesting restriction has lapsed. However, for the purposes of computing diluted earnings per share in periods with a profit, the dilutive effect of outstanding nonvested shares would be included using the treasury stock method. The Company has other securities outstanding that could dilute basic earnings per share in the future that were not included in the computation of diluted net loss per share in the periods presented as their effect is antidilutive. For additional disclosures regarding potentially dilutive stock options, warrants, nonvested shares and convertible debentures, see Notes 4 and 7. The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts): 2000 1999 1998 ------- -------- -------- Numerator for basic and diluted net loss per share: Net loss.......................................... $(6,293) $(21,399) $(40,658) ======= ======== ======== Denominator: Weighted-average common shares.................... 26,046 25,403 25,082 Weighted-average nonvested shares subject to repurchase..................................... (680) (1,142) (1,585) ------- -------- -------- Denominator for basic and diluted net loss per share............................................. 25,366 24,261 23,497 ======= ======== ======== Basic and diluted net loss per share................ $ (0.25) $ (0.88) $ (1.73) ======= ======== ======== 41 44 HEARTPORT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NET LOSS PER SHARE. Basic and diluted net Net loss per share is computed using the weighted average number of common shares outstanding during the period, less outstanding nonvested shares. Outstanding nonvested shares are not included in the computation of basic and diluted net loss per share until the time-based vesting restriction has lapsed. However, for the purposes of computing diluted earnings per share in periods with a profit, the dilutive effect of outstanding nonvested shares would be included using the treasury stock method. The Company has other securities outstanding that could dilute basic earnings per share in the future that were not included in the computation of diluted net loss per share in the periods presented as their effect is antidilutive. For additional disclosures regarding potentially dilutive stock options, warrants, nonvested shares and convertible debentures, see Notes 4 and 7share. The following table sets forth the computation of basic and diluted net loss per share (in thousandsfor the periods indicated: YEAR ENDED JUNE 30, except per share amounts): 2000 1999 1998 ------- -------- -------- Numerator for basic and diluted net loss per share: (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Net loss.......................................... $(6,29350,983) $(21,3999,296) $ (182) Accretion of mandatorily redeemable convertible preference redemption value.................... (84) (98) (71) Net loss attributable to ordinary shareholders.... $(51,067) $(40,6589,394) ======= $ (253) ======== ======= == Denominator=====enominator: Weighted-average common shares.................... 26,046 25,403 25,082 Weighted-average nonvested shares subject to repurchase..................................... (680) (1,142) (1,585) ------- -------- -------- Denominator for Shares used in computing basic and diluted net loss per share............................................. 25,366 24,261 23,497 ======= ................................. 14,836 5,466 4,962 ======== ======== Basic and diluted net loss per share................ $ (0.25) $ (0.88) $ (1.73) ======= asic and diluted net loss per share attributable to ordinary shareholders............................. $ (3.44) $ (1.72) $(0.05) ======== ======= ======eighted average antidilutive securities including restricted ordinary shares not included in net loss per shares calculation....................... 23,859 13,468 3,641 ======== 41 44 HEARTPORT======= ====== Numerator: D B W options, INCwarrants, preference shares and Pro forma net loss per share (unaudited). NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table sets forth the computation of pro forma basic and diluted net loss per share for the year ended June 30, 2000: PRO FORMA YEAR ENDED JUNE 30, 2000 (CONTINUED)UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Numerator: Denominator: Shares used in computing basic and diluted net loss per Share.................................................. 14,836 Adjustment to reflect assumed conversion of all preference shares from date of issuance........................... 17,445 Shares used in computing pro forma basic and diluted net loss per share......................................... 32,281 Weighted average antidilutive securities including restricted ordinary shares, options and warrants not