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To: stockman_scott who wrote (153059)	2/5/2000 2:28:00 AM
From: Chuzzlewit	Read Replies (2) \| Respond to of 176387

Scott, OT I certainly do have thoughts. Pooling of interests is supposed to be a merger of equals. Unfortunately, this accounting method hides the true cost of the merger from shareholders because the value of the assets "purchased" is never accounted for. The two balance sheets are simply added up without regard to the market value of the assets being purchased. This device is used to hide costs. The odd thing is that the accounting method has nothing to do with how well the combined entity performs. Nothing changes except the way the purchase is accounted for. Many tech companies have used purchase method accounting and write off the cost of IPR&D to accomplish much the same thing by taking a one time write off which analysts and the street promptly ignore. That technique minimizes goodwill, and it has come under close scrutiny by the SEC. Regardless of the accounting method (pooling or purchase), cash flow remains unchanged, and that's why I think cash flow is a better metric for analyzing mergers than earnings. A good merger should not be dependent on the accounting method. If mergers and acquisitions stop because of how the FASB mandates merger accounting then those mergers should probably not have taken place to begin with. TTFN, CTC

To: stockman_scott who wrote (153059)	2/5/2000 5:30:00 AM
From: arthur pritchard	Read Replies (1) \| Respond to of 176387

stockman: <accounting> thanks for posting that merc news article. I enjoyed the last part: After Doerr, Barksdale and others testified, FASB Chairman Ed Jenkins said he ''was trying to learn and understand'' their concerns, but did not say whether he was moved by their arguments. At one point, in an apparent conciliatory gesture to Barksdale, Jenkins said he wanted to thank Barksdale and his wife for a large donation they had made to charity. Barksdale fired back: ''Thank you Mr. Chairman, but we were beneficiaries of pooling accounting.'' Doerr was less kind. He said ''the FASB is the most powerful body in the world that reports to no one.''

To: stockman_scott who wrote (153059)	2/5/2000 2:57:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 176387

Scott, One additional point I failed to make: pooling also hides costs by restating previous years' results. If you look at SEC filings for companies that have used pooling you will find filings (10-K and 10-Qs) made before the pooling and see vastly different numbers for the same period after the pooling. In effect, what the tech companies are complaining about is the fact that their results will appear to be much worse under purchase method accounting, and that the street's tendency to value a company based on earnings will cause the stock to stumble. My major point is this: pooling creates a materially false picture of a company's financial position and may have caused at least part of the market bubble we see today. TTFN, CTC