PLS:
I'm sorry, but the bottom line is this is a crock. Now that I've had to go all over kingdom come to wade through this nonsense of yours, after stupid statements, one after another, you actually come up with "everyone is right and everyone is wrong" and "one time NON CASH CHARGES then you can say these companies are losing money."
Before we get to specifics, here is Richard Russell, generally, on your fantasy world of "earnings":
"February 16, 2002 -- I don't think in my half century of watching the stock market that I've ever seen anything like the circus, the phony circus, that is taking place today.
Currently we're seeing two kinds of earnings. There are the deceptive earnings known as "operating earnings" and then there are the downright deceitful earnings. The deceptive earnings, the operating earnings that are issued by S&P and copied by Barron's, are earnings before interest, taxes, depreciation and amortization.
These operating earnings are also figured before extraordinary losses. John Hussman in his brilliant report says that in most cases these losses can be defined as "exactly enough to make operating earnings beat expectations by a penny."
So operating earnings are earnings in which most real expenses are er, well they're not accounted for. On that basis almost every company in the nation is earning something. Ridiculous."
Here's some of the explanation of FLEX's "non-cash" earnings, more accurately "unusual charges" from the FLEX MD&A. They had to write off a half billion dollars in factories. Now, this business isn't writing off some 30 year old steel mill, but some fancy, gleaming, state of the art techno something or other which is absolutely useless to anyone else on the planet. That doesn't sound like some NON CASH, unimportant, no future effect on the business charge to me. That sounds like a company which just wasted a half billion dollars by building something absolutely useless. They thought they'd be manufacturing gizmos and widgets in these spanking clean clean rooms and now it's a useless hulk. Half a bil, just write it off.
Read through this, you'll find that they've actually already run as much of these unusual charges through the upper income statement as, mirabile dictu, "cost of sales," and the rest they put down as unusual charges, but not non-cash charges, which makes you think that it's something like depreciation & amortization, it ain't: they are closing down factories and firing workers. Presumably, the new, slimmer and trimmer FLEX with fewer factories and fewer workers won't be able to produce as many goods, and so $$$ going forward will be smaller as well. But hey, those are simply unimportant footnotes, nothing to even think about. Looked at one way (falling down drunk perhaps and cockeyed, to boot), FLEX actually had a pretty good year, sort of, maybe, well . . .
AND GUESS WHO FLEX'S AUDITORS ARE????
DRUM ROLL
ARTHUR ANDERSEN!!! NO FRIGGIN JOKE.
freeedgar.com
<<Unusual Charges
Fiscal 2002
We recognized unusual pre-tax charges of approximately $516.1 million during the second quarter of fiscal 2002, of which $500.3 million related to closures of several manufacturing facilities and $15.8 million was primarily for the impairment of investments in certain technology companies. As further discussed below, $439.4 million of the charges relating to facility closures have been classified as a component of Cost of Sales.
Unusual charges recorded in the second quarter of fiscal 2002 by segments are as follows: Americas, $224.4 million; Asia, $70.7 million; Western Europe, $170.1 million; and Central Europe, $50.9 million.
. . .
In connection with the September 2001 quarter facility closures, we developed formal plans to exit certain activities and involuntarily terminate employees. Management's plan to exit an activity included the identification of duplicate manufacturing and administrative facilities for closure or consolidation into other facilities. Management currently anticipates that the facility closures and activities to which all of these charges relate will be substantially completed within one year of the commitment dates of the respective exit plans, except for certain long-term contractual obligations.
Of the total pre-tax facility closure costs recorded in the second quarter, $124.0 million related to employee
termination costs, of which $93.4 million has been classified as a component of Cost of Sales. As a result of the various exit plans, we identified 11,168 employees to be involuntarily terminated related to the various facility closures. As of December 31, 2001, 3,817 employees had been terminated, and another 7,351 employees had been notified that they are to be terminated upon completion of the various facility closures and consolidations. During the second and third quarters, we paid employee termination costs of approximately $19.4 million and $25.0 million, respectively, related to the fiscal 2002 restructuring activities. The remaining $79.6 million of employee termination costs was classified as accrued liabilities as
of December 31, 2001 and is expected to be paid out within one year of the commitment dates of the respective exit plans.
The unusual pre-tax charges recorded in the second quarter included $163.7 million for the write-down of property, plant and equipment associated with various manufacturing and administrative facility closures from their carrying value of $232.6 million. This amount has been classified as a component of Cost of Sales during the September 2001 quarter. Certain assets will be held for use and remain in service until their anticipated disposal dates pursuant to the exit plans. Since the assets will remain in service from the date of the decision to dispose of these assets to the anticipated disposal date,
the assets are being depreciated over this expected period. For assets being held for use, an impairment loss is recognized if the carrying amount of the asset exceeds its fair value. Certain other assets will be held for disposal as these assets are no longer required in operations. Assets held for disposal are no longer being depreciated. For assets being held for disposal, an impairment loss is recognized if the carrying amount of the asset exceeds its fair value less cost to sell. The impaired long-lived assets consisted of machinery and equipment of $105.7 million and building and improvements of $58.0 million.>>
Yeah right, we're all right, and we're all wrong. Where is Barney when you need him for a song?
Kb |
