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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 78.16

+0.2%

Dec 26 9:30 AM EST

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To: GVTucker who wrote (62825)	1/30/2003 4:24:21 PM
From: Stock Farmer	Read Replies (2) of 77400

Not an accountant, but I believe the theory is as follows: 1) reduce net cash provided by all activities... No. Net cash measures the change in the cash account. Parting with capital stock by way of grant does not increase or decrease cash. Unless the company were to purchase the share back on the open market to offset dilution. In which case there would be a reduction to net cash from financing activities. 2) Reduce Assets/Liabilities/Stockholders Equity (which I think is questions two and three, but I'm not sure) No. Assets are unchanged unless the transaction is nondilutive. Same with liabilities. Shareholder equity which represents the difference is not affected therefore. However, the distribution of shareholder equity within the three major accounts (retained earnings, paid in capital, other) will change. I suspect what must happen is that since assets are unchanged you would see a reduction in "retained earnings" and an increase in "paid in capital", as if the employee had been paid a wage in cash and then invested this cash directly back into the company. Which transaction would also have no effect on net cash (although cash from operations would be reduced and cash from financing would be increased), or assets or liabilities. Again, I'm not an accountant, but that's how my understanding of the theory suggests things should follow. John

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