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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (31285)	4/25/2000 12:13:00 PM
From: broken_cookie	Read Replies (1) \| Respond to of 50167

Hi Ike, Re: MSFT buyback. MSFT completed a merger accounted for by a "pooling of interests" with VSIO on Jan 7,2000. They may be prevented in any stock repurchase from 6 months to as long as 2 years. Any clarification from this thread's accounting experts would be appreciated. cfonet.com CLOUDS IN THE FUTURE While the merits of pooling have been debated for almost 30 years, the latest round began when the SEC killed a major pooling deal a year ago--the $10 billion bid for First Interstate Bancorp, of Los Angeles, by First Bank System Inc., of Minneapolis. The culprit? FBS's announced intent to buy back shares as part of its offer--a violation of 1 of the 12 conditions of a pooling laid out in APB 16. To strengthen the FBS ruling, the SEC issued Staff Accounting Bulletin 96 in March 1996, further restricting a pooler's ability to make major stock repurchases for up to 24 months around any pooling transaction. In response, many companies, including Cisco Systems Inc. and Gillette, canceled announced buyback plans to preserve their ability to pool. abanet.org i. SAB 96 was issued in March, 1996, on accounting for treasury stock repurchases. SAB 96 responds to practice inconsistencies regarding pooling of interest accounting. It states that staff will presume that treasury stock transactions within 6 months of the pooling will be presumed related to the pooling. All tainted treasury shares must be evaluated, even if they are disposed of for other events like stock options. If a stock repurchase plan is made before a pooling, and continues after the pooling, is not treated differently from any other treasury transaction. Really horrible stuff follows. Rule 47B applies as well but it is too long to copy here. Have fun! geocities.com [APB 16.48] Absence of planned transactions. Some transactions after a combination is consummated are inconsistent with the combining of entire existing interests of common stockholders. Including those transactions in the negotiations and terms of the combination, either explicitly or by intent, counteracts the effect of combining stockholder interests. The three conditions in this paragraph relate to certain future transactions. a. The combined corporation does not agree directly or indirectly to retire or reacquire all or part of the common stock issued to effect the combination. b. The combined corporation does not enter into other financial arrangements for the benefit of the former stockholders of a combining company, such as a guaranty of loans secured by stock issued in the combination, which in effect negates the exchange of equity securities. c. The combined corporation does not intend or plan to dispose of a significant part of the assets of the combining companies within two years after the combination other than disposals in the ordinary course of business of the formerly separate companies and to eliminate duplicate facilities or excess capacity.