OT ... Lizzie, re "I definitely accept the fact that some of Cisco's cash on hand comes from options exercises. No doubt that is true, except that most of that benefit happened long ago, 98/99 timeframe."
Here are some options numbers (in millions) from FY '98/'99 versus *since* '99.
98/99 Since
Paid-in capital from exercise prices $946 $2,532
Tax benefit from stock option exercise $1,259 $5,894
John Shannon's *actual* exp.(incl. benefit) $3,597 $16,840
After-tax SFAS 123 grant expense $777 $5,663
Before-tax SFAS 123 grant expense (35% tax) $1,196 $8,680
Before-tax SFAS 123 grant exp. incurred $8,264 $35,018
So since '99, if Cisco had no options program, it would not have received $2.5B in exercise prices *and* it would not have had a tax benefit of $5.9B. That is a total of $8.4B *since 99 -- compared to $2.2B for 98/99.
*All* the numbers since 1999 are significantly larger than the totals for 98/99. I see *nothing* to support your statement that "most of [rkral edit: the option exercise] benefit happened long ago, 98/99 timeframe". Was that a WAG?
The most alarming data points, IMHO? Since FY '99, while Cisco incurred $35B of option grant expense per SFAS 123, it amortized less than $9B. That means *there is approx. $25B option expense left to be amortized -- even if Cisco totally stopped granting options today.* (The $25B is only an estimate, due to the amortization schedule.) Sure most of those options are underwater, but probably none expire before FY '10 either.
Regards, Ron |
