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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 76.22+0.1%3:59 PM EST
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To: hueyone who wrote (62713)1/17/2003 4:37:55 PM
From: RetiredNow  Read Replies (2) of 77400
 
Well, there are several components to this. First, there is the expense, which if placed on the income statement would reduce free cash flows. Then there is the cash inflow when options are exercised. That is a valid cash inflow that should be added back to free cash flow. Then at the end of the day, there should be a true up, which would reflect the know quantity value of the stock options on the date they were expensed. So if you ended up overestimating the expense on the income statement, then I think their should be a contra-expense that gets recorded to retained earnings to reflect the true costs as found out when options are exercised. That contra-expense might not hit the income statement, but it might very well increase free cash flows and rightly so.
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