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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Mike Buckley who wrote (52201)	7/19/2002 4:00:13 AM
From: hueyone	Read Replies (1) of 54805

That depends on your definition of free cash flow. Using the definition I use which is different than yours, it's not possible that financing activities will fund free cash flow. Mike, As far as I can tell from your posts over the last year, you appear to be using a very close version (or the same version) of the calculation for free cash flow that I developed and introduced to the thread a couple of years ago---which I titled "adjusted free cash flow". More specifically, I see you are using operating cash flow less tax benefit related to employee stock options less capex, whereas I may have been using gaap income plus depreciation and amortization less tax benefit for exercise less capex, but the two are close in that they remove the tax benefit from exercise of stock options. That “adjusted free cash flow” calculation, that removed tax benefit from exercise of stock options, was my first attempt to try to separate out the impact from stock options from the free cash flow calculation. I have some reservations about that calculation now. More next week. Have a great weekend. Best, Huey

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