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To: MikeM54321 who wrote (11018)	4/17/2001 8:02:02 PM
From: EJhonsa	Respond to of 12823

Depreciation expense related to write down of capex does cause a reduction in "net income." Exactly. Which is another reason why, if a company that's operating a highly capitol-intensive business with rapid depreciation rates on existing capitol investments (such as Sprint) happens to cut back significantly on capex spending in a given year, you can't really draw a correlation to any changes in its net income, due to the fact that net income will be affected by depreciation on capitol expenditures that were recently made (at a point when the capex budget was much higher), but are now depreciating rapidly. Thus, just a company's net income would overstate its free cash flow (the true measure of a company's ability to generate long-term shareholder value) in a year that it significantly boosted its capex budget, it would be understated in a year in which its capex budget is slashed to a great extent. Eric