Re: quick question
Short answer (subject to change based on nuances and your actual approach), is not to adjust for ESO. Because we assume the cash required by the company upon exercise is raised by issuing new shares (hence treasury method of adjusting for dilutive options). If one adjusts for ESO as a non-cash adj... Short answer (subject to change based on nuances and your actual approach), is not to adjust for ESO. Because we assume the cash required by the company upon exercise is raised by issuing new shares (hence treasury method of adjusting for dilutive options).

If one adjusts for ESO as a non-cash adjustment, then you should adjust for taxes payable (not part of working cap) and all the other non-cash items that’s below NI/Depr, and above Working Capital on CF statement. Read More

Re: Merger Modeling & LBO Modeling - FASB 141r
Transaction costs are now expensed. for simplicity, we treat it the same as tendor costs, that is, via Retained Earnings on the BS. If you want to be really correct, you would have a tax savings on that which we'd run through our NOL schedule. Ditto for tender costs, but it's so immaterial, we chose... Transaction costs are now expensed. for simplicity, we treat it the same as tendor costs, that is, via Retained Earnings on the BS. If you want to be really correct, you would have a tax savings on that which we'd run through our NOL schedule. Ditto for tender costs, but it's so immaterial, we chose to just flow it thru Retained Earnings.

No other adjustments that would impact our model. FAST 141R actually has some other items like R&D being capitalized instead of expensed and changes in treatment of earnouts, etc, but those are industry specific and earnouts are specific to private companies. Read More

Re: Debt Extinguishment - Equity offered
Thank you for your inquiry. Can you clarify the corporate structure as well as the exact flow. With all the "Company" and "XYZ" reference, it's not straightforward to follow the ownership structure (to determine consolidation requirements) and ultimately the flow of funds. Howev... Thank you for your inquiry.
Can you clarify the corporate structure as well as the exact flow. With all the "Company" and "XYZ" reference, it's not straightforward to follow the ownership structure (to determine consolidation requirements) and ultimately the flow of funds.

However, if we took a guess from your actual question at the bottom, it seems as if the debt is gone in place of more stock. If so, here's how we would entre this transaction (and YES CFS impact, although nets out):

1) under our debt sweep, in your mandatory payment assumptions, set it equal to negative beginning balance. this effectively wipes out the bonds
2) in CFS, under stock issued, enter the same amount from #1 above; make sure to input this as a positive number.
NET IMPACT at this point: Cash Avaialble / Required Before Debt is now higher (since cash wasn't actually received) and gets negated out at the top of the Debt Sweep in the net calculation of Cash available (row 12 from class) due to the mandatory payment.

BS IMPACT: This will then automatically flow into APIC on the BS and debt goes down, abiding by double entry accounting.

Please do not forget to increase number of shares outstanding to reflect new capital structure. Read More

Re: Estimated Taxes
A saw a sort of rule of thumb while on-line --- in order to determine actual cash taxes (as in the actual amount paid to the government). The reason why I have been asking about this is that, cash taxes are very commonly used in a the FCF calculation in my field that usually goes as follows: (E... A saw a sort of rule of thumb while on-line --- in order to determine actual cash taxes (as in the actual amount paid to the government).

The reason why I have been asking about this is that, cash taxes are very commonly used in a the FCF calculation in my field that usually goes as follows: (EBITDA)-(INTEREST)-(CAPX)-(Change in WORKING CAPITAL)-(CASH TAXES) - (OTHER) = FCF

Their approach below is to......Start with book taxes from the income statement. From there, either add the year over year increase in the company's deferred income tax liability (or subtract increase in the company's deferred tax asset) ... etc...

Anyway, here is the actual blurb.......

"How Do We Calculate a Company's Cash Taxes?"

Advanced Approach. In this approach, we make a number of detailed adjustments.

1. Book taxes. We start with a company's income tax provision found on the income statement.

2. Change in deferred taxes. Next, we add the year-to-year increase in a company's deferred income tax liability (or subtract the increase in a company's deferred tax asset). These line items can be found on a company's balance sheet. However, sometimes, this liability is not separately broken out. In those cases, there are two alternate sources for a company's change in deferred taxes:

"Adjustments to reconcile net income to net cash provided by operating activities" in the "Cash flows from operating activities" section of the Cash Flow Statement. A deferred tax liability occurs when a company pays less in cash taxes than it reports in book taxes. Thus, an increase in a company's deferred tax liability represents a source of cash. Conversely, a deferred tax asset occurs when a company pays more in cash taxes than it reports in book taxes. Thus, an increase in a company's deferred tax asset represents a use of cash.

The Income Taxes section of the Notes to the Consolidated Financial Statements, where the 10-K will list the "components of the provision for income taxes". We subtract the sum of the annual U.S. and Foreign deferred income taxes from a company's income tax provision. When annual U.S. and foreign deferred taxes are positive, the company has increased its net deferred tax liability, which reduces the tax onus. Conversely, when annual U.S. and foreign deferred taxes are negative, the company has increased its net deferred tax asset, which increases the tax onus. (Note: the sum of U.S. and Foreign deferred income taxes should be identical to the number in the Cash Flow Statement.)


Do you agree with this approach or no? Or even partially?

Thanks Read More

WST Macro Problem
Hi,

My WST Macros (3.2.5) aren't working in Excel 2003. I have the Capital IQ plugin installed as well, as well as a couple of other plugins and addins. Is there a way to disable them when necessary and then re-enable them when needed? I would like to use the WST Macros primarily.

Thanks.