3DFX Message Board - Msg: 9351561

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Technology Stocks : 3DFX

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To: Piranha who wrote (12312)	5/6/1999 7:02:00 AM
From: Michael G. Potter	Read Replies (1) of 16960

The proxy and the press release said that the acquisition will be treated as a purchase not a pooling of interests. APB 16 does give a little wiggle room as to when and how the acquisition has to be reported: ----- APB16, Par. 93 93. The Board believes that the date of acquisition of a company should ordinarily be the date assets are received and other assets are given or securities are issued. However, the parties may for convenience designate as the effective date the end of an accounting period between the dates a business combination is initiated and consummated. The designated date should ordinarily be the date of acquisition for accounting purposes if a written agreement provides that effective control of the acquired company is transferred to the acquiring corporation on that date without restrictions except those required to protect the stockholders or other owners of the acquired company--for example, restrictions on significant changes in the operations, permission to pay dividends equal to those regularly paid before the effective date, and the like. Designating an effective date other than the date assets or securities are transferred requires adjusting the cost of an acquired company and net income otherwise reported to compensate for recognizing income before consideration is transferred. The cost of an acquired company and net income should therefore be reduced by imputed interest at an appropriate current rate on assets given, liabilities incurred, or preferred stock distributed as of the transfer date to acquire the company. APB16, Par. 94 94. The cost of an acquired company and the values assigned to assets acquired and liabilities assumed should be determined as of the date of acquisition. The statement of income of an acquiring corporation for the period in which a business combination occurs should include income of the acquired company after the date of acquisition by including the revenue and expenses of the acquired operations based on the cost to the acquiring corporation. ---- I think that they may have room here to report a combined Q1. It probably is in the best interests of their shareholders to report as if the acquisition happened 4/30 as it will give us the best information to make judgements about the company. I hope that they've approached the SEC to discuss this. They have been running the company as if they already were combined since the announcement and the merger agreement made it pretty likely that the merger would occur. Pro-forma statements are the minimum I would expect. Michael

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