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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (58219)	4/30/1999 2:11:00 PM
From: Michael Bakunin	Read Replies (1) \| Respond to of 132070

The difference is because of the way grants are charged off against pro-forma earnings. FASB left companies too much leeway even in the footnotes, but most charge off the value of vested options, while the tables show granted options. Since it is possible employees will leave before options vest, I grudgingly accept the former method, though I often adjust much as you do. I have also been known to apply a correction to the values using the implied volatilities from a company's longest LEAPs instead of the volatility presented by management. -mb

To: Freedom Fighter who wrote (58219)	4/30/1999 2:14:00 PM
From: Don Lloyd	Respond to of 132070

Wayne - (If you multiply the options granted times their value and use that number to adjust the reported net income you don't come up with the adjusted net income they present in the pro-forma data. I've tried various combinations of tax benefits and spreading out the cost over the years the options will take to vest, but I can never square to the company numbers.) If the discrepancy is too little cost of options, it may be that the grandfathered option grants that need not be included could be contributing to your calculation. Just a thought. Regards, Don

To: Freedom Fighter who wrote (58219)	4/30/1999 2:19:00 PM
From: Mike M2	Read Replies (1) \| Respond to of 132070

Wayne, I'm sorry I am not familiar. You could try Andrew Smithers site go to fiendbear.com look there or Colin Seymour's site linked at the fiend. How large ( in percentage terms) are your discrepancies with you method? I would concede that there are difficulties in determining the cost of employee stock options but the effect of current accounting practices is there is no cost to them from the perspective of the income statement plus the company receives a tax benefit for the tax paid by the employee. Mike