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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 74.40

-1.4%

Jan 14 3:59 PM EST

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To: RetiredNow who wrote (60262)	7/28/2002 11:07:02 AM
From: rkral	Read Replies (1) of 77400

OT ... You'll see that for the 9 months ended April 2002, Cisco experienced a total tax benefit from exercise of stock options of $51 million. Now Net Income for the same period of time was $1,121 million. So the total percent lower that earnings would have been for that period would have been 4.5%, not 67%. Sorry for this delayed reply, but I just returned from vacation. mm, you need to be looking at FAS 123 option grant costs to approximate ML's estimate of 67%. As a first approximation: 1) annualize the 9 month 2002 GAAP earnings; $1.972B x 1.33 = $2.63B, 2) assume FAS 123 costs for FY02 the same as FY01; ($1.014B)-($2.705) = $1.691B 3) calculate options cost percentage; $1.69/$2.63 = 64%. ML's estimate is likely "fine-tuned" to get their 67%. Ron P.S. For options discussions, please come visit Subject 53027.

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