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Non-Tech : Bill Wexler's Trading Cabana -- Ignore unavailable to you. Want to Upgrade?

To: incomep who wrote (303)	2/11/2004 11:34:57 AM
From: Carl Worth	Read Replies (1) \| Respond to of 6370

the shareholder equity went down because when they buy back shares, they not only spend the cash to buy them, but they record the retired shares in the treasury stock category as a negative item, thus the balance sheet takes a double hit on the repurchase amount...my father is a CPA and i discussed this with him as i didn't understand it, hopefully i can explain it clearly as he explained it to me: when the stock of the company is trading above tangible book, every time a share is bought back at market price, the remaining shareholders suffer dilution in terms of book value, since more of the assets are paid for the "bought back" shares than were represented by those shares prior to the buyback...thus, book value and shareholder equity go down after the purchase, though in reality the remaining shareholders now own a slightly larger portion of the forward earnings as such, that negative item will never improve in the "treasury stock" category, but the company expects to gradually reduce the significance of that item as they generate cash flow, pay off debt, etc. to raise the total assets of the company as for the buybacks vs. insiders, there has been very little stock sold by true insiders...the bulk of the selling has been by the various apollo entities...out of 5.5M shares sold in the last 6 months, over 5.4M of them were sold by apollo the company is not borrowing money to buy these shares, they are buying them from cash on hand...the company still has 144M in cash on hand at year end 2003, and this is after buying back over 6M shares in calendar 2003 voluntary disclosure: still no position, i should have bought at the open yesterday <g> carl