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Technology Stocks : Siebel Systems (SEBL) - strong buy? -- Ignore unavailable to you. Want to Upgrade?

To: hueyone who wrote (5968)	6/9/2002 7:35:03 PM
From: hueyone	Read Replies (1) \| Respond to of 6974

In my last post, #5968, where I tried to back into the pre tax stock option expense from the cash flow line item "tax benefit from exercise of stock options", the number I ended up with was a 145.4 million pre tax stock option expense. I just realized that this number immediately presents a problem---and that is that Tom Siebel alone exercised stock options worth 175 million dollars. We get another 35 million in stock options exercise from adding Paul Wahl into the mix and I have no clue what the value of all the rest of the employee's stock options exercises were. So clearly my estimate of 145.4 million for the pre tax stock option compensation expense is low. Sorry, I gave it an honest try but it just didn't pan out. Again, if the Levin/McCain bill were passed, the pre tax expense that Siebel declared to get the tax benefit would be out in the open where we wouldn't have to fumble around trying to figure out what it is. Best, Huey

To: hueyone who wrote (5968)	6/9/2002 11:19:35 PM
From: rkral	Read Replies (1) \| Respond to of 6974

Huey, maybe I can help you out ... SEBL FY01 (parentheses indicate a negative number): 255M GAAP net income as reported + ( 54)M tax benefit from exercise of options = 201M net income excluding tax benefit (Calculated - C) + (722)M after-tax impact of SFAS 123 (using Black-Sholes) = (521)M net income incl. SFAS 123 & excl. tax benefit (C) So including the after-tax effect of option grant (SFAS 123), and excluding the after-tax effect of option exercise (tax benefit), the reported GAAP net income is reduced by $766 million. Wow! That is a 300% decrease. No need to mess with the effective tax rate. We are given the after-tax numbers. Employee stock exercise compensation: $53.8M tax benefit from option exercise / 37% effective tax rate = $145M employee stock exercise compensation (C) / 20.6M shares exercised = $ 7.06 intrinsic value per average share (C) + $ 5.25 exercise price per ave. weighted share = $ 12.31 market price ave. on exercise date (C) Numbers followed by (C) are calculated, others are from SEBL FY01 10-K. Numbers read from Excel spreadsheet, so there may be some rounding errors. Intrinsic value per option share = market price - exercise price Huey, your after-tax, and pre-tax (if it exists), option grant expense using SFAS 123 look OK imho. So the only place you ran into trouble is in your stock exercise expense calculations starting with the tax benefit. Ron