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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club

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To: Sun Tzu who wrote (4451)	4/12/1999 9:32:00 PM
From: Bill Shepherd	Read Replies (2) of 15132

RE: Stock options, employee salaries, etc..."Then the company can announce that they are doing stock buy back (and the stock would rise due to the announcement), but in reality all the are doing is to get the IOUs that they gave their employees (i.e. the options) and pay them for it. Am I making sense now?" Your initial hypothetical would certainly make operating earnings look impressive, in the short run. BUT, when the company executes the stock buyback (to gather shares for the employees) wouldn't that take real cash?? If so, that would be reflected in operating earnings. Isn't what were talking about just a timing thing? If so, then the accounting rules should be changed to make such activities appear "on balance sheet" rather than just in the financial statement footnotes, which is where they appear now, right? [I see Pete has addressed this question more completely...thanks, Pete!] Regards...Bill S

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