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To: Reginald Middleton who wrote (59)	2/2/1999 4:34:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 419

Yes, Reginald, I read the article. And I agree with much of what you said, although I take issue with other points. For example, I do not believe that marketing expenses and R&D should be treated as if they were the same. I believe that some portion of cumulative marketing expense goes to building a brand whose effects are lasting, but I also believe that the bulk of advertising is properly treated as an expense of the period. For example, current beer consumption is tightly correlated with current advertising, not past advertising. There is little lasting brand loyalty in beer. By comparison, toothpaste has lasting brand loyalty. We also have issues that emerge from mergers. For example, the SEC is now asking companies to capitalize future expenses for the completion of "in-process R&D" rather than expense them. If the SEC's guidelines are used, current earnings increase and future decrease over the life of the project, making the "pooling of interest" merger a little closer to purchase accounting which recognizes "goodwill" as a non-cash expense. TTFN, CTC