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Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year -- Ignore unavailable to you. Want to Upgrade?

To: Tom_ who wrote (4378)	1/29/1999 1:09:00 AM
From: Chuzzlewit	Read Replies (2) \| Respond to of 4509

Tom, they are saying what every company receiving this kind of scrutiny has been saying: We followed your guidelines that were in effect at the time, and now you come to us and tell us to redo the numbers after the fact. Tom, these are really non-issues as far as the results of operations are concerned. They simply have to do with write-offs for future R&D required to complete "in process R&D". The effect is to increase the book value of the company by the amount in dispute, and to amortize it over the life of the project. Prior to this ruling companies would simply take it as a one-time expense at the time of the acquisition. Since it was one-time it was ignored by the financial press. The effect of the ruling is to make it a recurring expense, so maybe the financial analysts won't ignore it. I believe that the SEC's guidelines are proper. Companies using pooling of interests try to hide the costs of the merger in a number ow ways, and a typical method is to lump a whole bunch of future costs into a single "merger-related cost" and thus avoid having those costs appear with annoying regularity in the future. That's why you should get in the habit of reading cash flow statements rather than earnings statements. You can't use those smoke and mirrors tricks with cash flow. Hope this helps, TTFN, CTC