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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Wally Mastroly who wrote (2304)	3/12/2003 5:41:18 PM
From: Boca_PETE	Respond to of 10065

Wally M: re: ("The Expensing of Stock Option Issue AGAIN") "So, when you hear that expensing options would "cost" Intel (Nasdaq: INTC) $1.1 billion out of the $3.2 billion that it earned in 2002, recognize that this is BOGUS. The reported number would be lower, Intel's ECONOMIC RESULTS WOULD BE THE SAME." AMEN! However they decide how to report the stock option expense no matter how it is calculated; it will be put back into "Cash Generated from Operations" on the Cash Flow Statement. As I have posted repeatedly, the issuance and exercise of stock options by employees DOES NOT RESULT IN CASH OR ASSETS LEAVING THE COMPANY - therefore it can't be an expense of the company just as the amount I pay for my personal home heating oil bill can't be an expense of the company. Instead, shareholders buying company employee shares bought under option plans pay cash directly to the employee at the market price at date of share resale. Those resale proceeds include the enormous profits such employees make on reselling such shares. FOLLOW THE CASH and YOU SHALL BE ENLIGHTENED. Stock options are a direct expense of such shareholders (like their personal Mastercard bill). Companies correctly do not consolidate into their financial statements the personal income and expenses of their employees. So to be "Politically Correct", pressured FASB rule-makers will now require companies to record a BOGUS stock option expense on the income statement that will be put back into "cash generated from operations" on the "Cash Flow Statement". They will rationalize the adoption of this incorrect rule by saying the are seeking to "coordinate U.S. accounting policy with the International Accounting Standard (IAS), which has already adopted expensing." This way everyone's books in the world will be ficked-up :-) Maybe now, analysts will put a greater value on "Cash Flow Per Share" making the accounting rule makers look as absurd as they are acting on the option expensing issue. JMHO, P

To: Wally Mastroly who wrote (2304)	3/13/2003 6:56:23 AM
From: Boca_PETE	Read Replies (1) \| Respond to of 10065

Wally M: re:("Plan Restricting Stock Options Stalls at S.E.C.") NOW THIS WOULD HAVE BEEN CONSTRUCTIVE. - It would have given company shareholders a way to stop company management from reaching directly into their wallets and unknowingly having shareholders directly pay employee shareholders profits on their shares purchased under option plans at lower prices. - It would have given company shareholders a way to stop dilution of their share values from excessive company granting of stock options to employees and executives. EXPENSING OPTIONS IS A BOOKKEEPING FARCE because it distorts COMPANY option cash flows in COMPANY financial statements. It's a bad joke! The king has no clothes! nytimes.com "The rule, proposed in August by the New York Stock Exchange, would require companies whose shares are traded on the exchange to put all new stock option plans to a vote of their shareholders. The rule would also stop brokerage firms from voting the shares of customers who have not voted themselves. Such broker votes are always cast with management on matters that come up for a shareholder vote." ---- JMHO, P