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Biotech / Medical : Sepracor-Looks very promising -- Ignore unavailable to you. Want to Upgrade?

To: Biomaven who wrote (3681)	9/8/1999 10:39:00 PM
From: LLCF	Respond to of 10280

< I agree that pooling is cleaner and there will be some pressure to get in ahead of the deadline (which isn't a definite date yet - the 12/2000 date is just an estimate).> This was my recollection as well... didn't think they set a date. Thanks for the great commentary all!!! Great stuff... if the options weren't so damn fat on this thing I'd buy some... holding stock. DAK

To: Biomaven who wrote (3681)	9/9/1999 5:10:00 PM
From: Ed Ajootian	Read Replies (1) \| Respond to of 10280

Accounting Rule Makers Unveil Plan To Abolish Poolings of Interest in Deals By ELIZABETH MACDONALD Staff Reporter of THE WALL STREET JOURNAL U.S. accounting rule makers released their long-awaited proposal to abolish pooling of interests, the popular merger bookkeeping method for all-stock deals. The death of pooling, used in megadeals such as the Citicorp-Travelers and Exxon-Mobil mergers, will fundamentally alter the M&A landscape. Under the plan proposed by the Financial Accounting Standards Board, beginning Jan. 1, 2001, merging companies will no longer be able to simply combine their balance sheets and avoid big merger charges from goodwill, the premium acquiring companies pay over a target acquisition's book value. Instead, to complete their mergers, companies will have to use so-called purchase accounting, which the FASB also has changed. Now, under purchase accounting, companies will have to write off goodwill over a new, shorter 20-year period, rather than the present 40-year term. To calm corporate fears of earnings shocks from this shorter period, the FASB is going to let companies display in their financial statements a second earnings-per-share number that doesn't include these goodwill charges, a result that will look better than regular EPS. There has been growing corporate opposition to the plan. "Not everyone embraces the elimination of pooling-of-interest accounting," said Edmund L. Jenkins, FASB chairman. In particular, Mr. Jenkins noted "there is concern on the part of many" on the shorter write-off period for goodwill. But the FASB argues having one merger accounting method clears up investor confusion, and, as cross-border deals pick up, believes the changes bring U.S. accounting more in line with overseas practices. The end of pooling comes at the same time Congress is moving to eliminate the Glass-Steagall Act, a move that was expected to ignite a flood of mergers among banks, insurance companies and brokerage houses. "Just as the merger boom was about to take off because of this change, now this rule comes, which could slow down merger activity," said Michael Mayo, a bank analyst at Credit Suisse First Boston. It seems, though, that merging companies have already begun backing away from using pooling because they saw the window closing. Last year, the total dollar value of all pooling deals hit a record $850 billion, more than half of the $1.6 trillion value of all U.S. deals. So far this year, the value of pooling deals has dropped 70% from that level, said Richard Peterson, market strategist at Thomson Financial/Securities Data Co. "The great urgency to do poolings is dissipating, because people are beginning to look at earnings on a cash-flow basis, which ignores goodwill charges," said Robert Willens, a managing director at Lehman Brothers Inc. Indeed, a growing number of merging companies have begun spotlighting cash earnings results that don't account for goodwill. In a harbinger of things to come, Food Lion Inc. and Hannaford Bros. Co., in their announcement of their $3.6 billion merger, noted their merger would post gains on a strictly cash-flow basis but warned it would be "dilutive" to earnings on a regular income basis. ********************************************************** Peter, thanks for your thoughts. Looks like the effective date will not be any earlier than 12/31/00. If later then even better for SEPR.