z.B. Cisco leider nur englisch,keine Zeit für translation,muss kochen
Cisco Systems Inc. calls it ``pro forma net income.'' Procter & Gamble Co.
prefers ``core net earnings.'' And SCI Systems Inc. presents ``cash earnings
per share before realignment charges.''
Earnings aren't what they used to be, as reported by scores of U.S. companies facing pressure to show shareholders perpetual growth. Many are departing from the standard measure of net income. Instead, they pick and choose what to highlight. They may include gains that gild their results or exclude routine costs such as stock-based compensation.
``Companies want to show smooth, upwardly sloping earnings, and the best way to do that is to factor out all these costs.''
As many as 300 companies have switched to reporting some type of pro-forma earnings, estimates Thomson Financial/First Call, a Boston-based research firm that tracks analysts' estimates.
At Cisco, for example, pro-forma net income was $230 million in the fiscal third quarter. Pro forma, by Cisco's definition, means before acquisition-related costs, payroll taxes on exercises of stock options, restructuring costs, investment gains and a $2.25 billion pretax charge for writing down the value of inventory. What Cisco terms its ``actual loss'' was $2.69 billion.
The rise of high-flying Internet stocks like Amazon.com Inc. and Yahoo! Inc., which popularized pro-forma earnings to minimize losses in the late 1990s, made it more acceptable for companies to pitch alternate profit measures, analysts said.
Goodwill is the amount a purchaser pays beyond book value for a company's assets -- substantial sums in the case of technology companies with soaring stocks.
New FASB rules, passed last month, allow companies to assess the value of goodwill on their books periodically and take charges only when that value has fallen. The group backed away from a proposal that would have forced companies to ``amortize,'' or write off, the value over 20 years.
Lynn Turner, the SEC's chief accountant, has put the issue on the agency's radar screen. More than once, he has referred to the pro-forma trend as ``everything but bad stuff'' earnings reports.
Turner said in June that the SEC is investigating whether four companies misled investors with pro-forma earnings statements. He has prodded Financial Executives International, a trade group, to release guidelines calling on companies to ensure that any pro-forma earnings cited in press releases are clearly reconciled with generally accepted accounting principles.
The GAAP basis is strict about what constitutes an ``extraordinary item,'' requiring it to be both unusual and infrequent,
In theory, that rules out ``some things we see a lot,'' Grant said, such as inventory writedowns, gains or losses from property sales and charges for corporate reorganizations. Unlike SEC filings, statements to the public and press don't have to meet GAAP standards.
Cisco's Way
Cisco excluded the $2.25 billion pretax charge for inventory it says is worthless, and many analysts did the same. But Nortel Networks Corp. included $650 million of pretax inventory charges in its second-quarter earnings, while excluding some of the same things Cisco did, such as stock-based compensation and goodwill from acquisitions. Again, many analysts followed.
``The way results are coming out now, it's just way too subjective,'' Yucius said. ``There used to be a commonly understood set of principles.''
Cisco spokeswoman Abby Smith said the company's reporting style isn't arbitrary. Cisco has used a ``consistent methodology'' for more than five years for calculating and reporting inventory, she said.
und zu dem Thema noch ein Artikel bei Cnet gefunden:
BOSTON--The numbers are pretty staggering: Corning writes off $5.1 billion in inventory and acquisitions. JDS Uniphase writes off $38.7 billion in goodwill. Verisign writes off $9.9 billion in acquisitions and related goodwill.
And more are likely to come, said James Simms, managing director of Adams, Harkness & Hill and co-head of the brokerage firm's mergers and acquisitions division, who was speaking at the firm's conference here.
Why? Well, some of it is surely related to the plunging valuations of tech stocks, which have caused many companies to re-evaluate the premium prices they paid during acquisition sprees.
But many of those write-offs may be an attempt by companies to get their financial houses in order before a new set of accounting rules goes into effect related to how they account for those premiums, analysts said.
The Financial Accounting Standards Board recently implemented two new rules that did away with a popular merger accounting method known as pooling of interests--in which two companies combine their balance sheets after a merger--and revised how companies account for goodwill.
Goodwill essentially reflects the premium paid for a company over and above the real value of all of its assets. Traditionally that excess was amortized over a long period of time, allowing companies to write off a little bit of the acquisition charge every quarter.
But the new rules will significantly alter what is considered goodwill, and they will require companies to do an annual "impairment test" to determine if the goodwill has lost its value. Instead of writing off the goodwill every quarter, it will sit until it's determined to be impaired, at which point a company will write off the entire amount.
The new rules are extremely complex, so much so that Simms joked they should have been titled "The Auditor and Accountant Full Employment Act."
"At the conclusion of this meeting, you should go out and call your accountant," Simms said. "This means revisiting deals that are old and cold."
Act now or wait for rules?
In fact the process is so hairy that Simms speculated many companies are going through their books now, in an effort to deal with the issue before they're forced to work under the new rules. The rule eliminating pooling of interests mergers went into effect June 30, but most companies will have until Jan. 1, 2002 before they can no longer amortize goodwill.
"I have to assume that what JDS Uniphase realized was something akin to realizing you have to clean the house before your parents get home," Simms said. Companies are going to be saying, "We'll make our own decisions rather than have someone else tell us what to do."
But there may be some advantages to waiting for the new rules to take effect, said Pat McConnell, a senior managing director in equity research and head of accounting and taxation at Bear Stearns.
Companies that record impairment charges when they switch to the new accounting rules will be able to cite them as a by-product of the new accounting change, which is regarded by most people as a one-time event.
The accounting upheaval could have an impact beyond the financial statements. Simms speculated that many companies may put off doing big deals until they've managed to straighten up their finances.
Mergers and acquisitions "probably won't be robust again until after the impairment analyses have taken place," he said.
Cisco Systems Inc. calls it ``pro forma net income.'' Procter & Gamble Co.
prefers ``core net earnings.'' And SCI Systems Inc. presents ``cash earnings
per share before realignment charges.''
Earnings aren't what they used to be, as reported by scores of U.S. companies facing pressure to show shareholders perpetual growth. Many are departing from the standard measure of net income. Instead, they pick and choose what to highlight. They may include gains that gild their results or exclude routine costs such as stock-based compensation.
``Companies want to show smooth, upwardly sloping earnings, and the best way to do that is to factor out all these costs.''
As many as 300 companies have switched to reporting some type of pro-forma earnings, estimates Thomson Financial/First Call, a Boston-based research firm that tracks analysts' estimates.
At Cisco, for example, pro-forma net income was $230 million in the fiscal third quarter. Pro forma, by Cisco's definition, means before acquisition-related costs, payroll taxes on exercises of stock options, restructuring costs, investment gains and a $2.25 billion pretax charge for writing down the value of inventory. What Cisco terms its ``actual loss'' was $2.69 billion.
The rise of high-flying Internet stocks like Amazon.com Inc. and Yahoo! Inc., which popularized pro-forma earnings to minimize losses in the late 1990s, made it more acceptable for companies to pitch alternate profit measures, analysts said.
Goodwill is the amount a purchaser pays beyond book value for a company's assets -- substantial sums in the case of technology companies with soaring stocks.
New FASB rules, passed last month, allow companies to assess the value of goodwill on their books periodically and take charges only when that value has fallen. The group backed away from a proposal that would have forced companies to ``amortize,'' or write off, the value over 20 years.
Lynn Turner, the SEC's chief accountant, has put the issue on the agency's radar screen. More than once, he has referred to the pro-forma trend as ``everything but bad stuff'' earnings reports.
Turner said in June that the SEC is investigating whether four companies misled investors with pro-forma earnings statements. He has prodded Financial Executives International, a trade group, to release guidelines calling on companies to ensure that any pro-forma earnings cited in press releases are clearly reconciled with generally accepted accounting principles.
The GAAP basis is strict about what constitutes an ``extraordinary item,'' requiring it to be both unusual and infrequent,
In theory, that rules out ``some things we see a lot,'' Grant said, such as inventory writedowns, gains or losses from property sales and charges for corporate reorganizations. Unlike SEC filings, statements to the public and press don't have to meet GAAP standards.
Cisco's Way
Cisco excluded the $2.25 billion pretax charge for inventory it says is worthless, and many analysts did the same. But Nortel Networks Corp. included $650 million of pretax inventory charges in its second-quarter earnings, while excluding some of the same things Cisco did, such as stock-based compensation and goodwill from acquisitions. Again, many analysts followed.
``The way results are coming out now, it's just way too subjective,'' Yucius said. ``There used to be a commonly understood set of principles.''
Cisco spokeswoman Abby Smith said the company's reporting style isn't arbitrary. Cisco has used a ``consistent methodology'' for more than five years for calculating and reporting inventory, she said.
und zu dem Thema noch ein Artikel bei Cnet gefunden:
BOSTON--The numbers are pretty staggering: Corning writes off $5.1 billion in inventory and acquisitions. JDS Uniphase writes off $38.7 billion in goodwill. Verisign writes off $9.9 billion in acquisitions and related goodwill.
And more are likely to come, said James Simms, managing director of Adams, Harkness & Hill and co-head of the brokerage firm's mergers and acquisitions division, who was speaking at the firm's conference here.
Why? Well, some of it is surely related to the plunging valuations of tech stocks, which have caused many companies to re-evaluate the premium prices they paid during acquisition sprees.
But many of those write-offs may be an attempt by companies to get their financial houses in order before a new set of accounting rules goes into effect related to how they account for those premiums, analysts said.
The Financial Accounting Standards Board recently implemented two new rules that did away with a popular merger accounting method known as pooling of interests--in which two companies combine their balance sheets after a merger--and revised how companies account for goodwill.
Goodwill essentially reflects the premium paid for a company over and above the real value of all of its assets. Traditionally that excess was amortized over a long period of time, allowing companies to write off a little bit of the acquisition charge every quarter.
But the new rules will significantly alter what is considered goodwill, and they will require companies to do an annual "impairment test" to determine if the goodwill has lost its value. Instead of writing off the goodwill every quarter, it will sit until it's determined to be impaired, at which point a company will write off the entire amount.
The new rules are extremely complex, so much so that Simms joked they should have been titled "The Auditor and Accountant Full Employment Act."
"At the conclusion of this meeting, you should go out and call your accountant," Simms said. "This means revisiting deals that are old and cold."
Act now or wait for rules?
In fact the process is so hairy that Simms speculated many companies are going through their books now, in an effort to deal with the issue before they're forced to work under the new rules. The rule eliminating pooling of interests mergers went into effect June 30, but most companies will have until Jan. 1, 2002 before they can no longer amortize goodwill.
"I have to assume that what JDS Uniphase realized was something akin to realizing you have to clean the house before your parents get home," Simms said. Companies are going to be saying, "We'll make our own decisions rather than have someone else tell us what to do."
But there may be some advantages to waiting for the new rules to take effect, said Pat McConnell, a senior managing director in equity research and head of accounting and taxation at Bear Stearns.
Companies that record impairment charges when they switch to the new accounting rules will be able to cite them as a by-product of the new accounting change, which is regarded by most people as a one-time event.
The accounting upheaval could have an impact beyond the financial statements. Simms speculated that many companies may put off doing big deals until they've managed to straighten up their finances.
Mergers and acquisitions "probably won't be robust again until after the impairment analyses have taken place," he said.
