Huey, re "before-tax numbers are not being disclosed AFAIK. "
Good thing I added the AFAIK. :-)
From the MSFT's 1Q04 10-K ... "Stock-based employee compensation expense was $1.05 billion ($702 million after-tax or $0.06 per diluted share) for the three months ended September 30, 2002 and $1.02 billion ($680 million after-tax or $0.06 per diluted share) for the three months ended September 30, 2003." sec.gov, note 3 to financial statements
That's typical of the 2Q and 3Q statements. For FY2004 and FY2003 restatements, the "tax rate" for stock-based compensation is disclosed as 33%. Not just near 33%, but exactly 33%, as if a statutory rate were being used.
But I'm sure the IRS is not allowing an option expense deduction twice, for the "estimated" and then again for the "actual", as John Shannon used to refer to the grant and exercise occasions.
Also from the same note ... ""The June 30, 2003 balance sheet has been restated for the retroactive adoption of the fair value recognition provisions of SFAS 123 which resulted in a $13.89 billion increase in common stock and paid-in capital, a $10.00 billion decrease in retained earnings, and a $3.89 billion increase in deferred income taxes."
So I believe "expensing twice" doesn't happen through the use of "deferred income taxes", but I don't know exactly how.
The $10 billion transfer from retained earnings to CS&APIC is also of interest. It recognizes that these assets were the result of cash-flow-from-financing .. instead of operations. For MSFT that's nothing new, of course. As room222 pointed out on the SUNW thread, MSFT used to report the cash flow as CFFF years ago, even when not expensing options.
Regards, Ron |
