Conference 7.286::digital

				Creditability?

      Should that be credibility? Or possibly both?
    
    Ken
    
    (Only half 8*))

Yes. Yes.

(The other half 8*))

    Patents? Licence rights?

    Lawsuit settlement?  
    
    --bonnie

    
    The old classic  -  'Goodwill'.
    
    

Hey, that'd be a great rumor -- we're being bought out by Goodwill.
(For those outside the U.S., Goodwill Industries is an organization
that helps down-and-out people by having them refurbish donated goods,
sort of like the Salvation Army).

    I think "intangibles" refers to all the internal equipment we in sales
    support were promised when we worked in Digital Consulting but never
    got because it arrived two days after we got put back unders Sales.
    
    Dan

    	Goodwill, from an accounting perspective, is the difference
    	between the price paid for an entire business and the book value
    	of that business on the seller's books.  Goodwill is treated as
    	an "intangible asset".
    
    	I "suspect" that a large portion of this write-off is related to
    	some of our recent business acquistions, Kinzle and Phillips being
    	the biggies.

    
    	Intangibles is business-speak for assets carried on our balance
    sheet at a value higher than cost.
    	It can include "Goodwill" charges for our European ventures with
    Olivetti, Philips, and Kienzle (which is no small sum, my figures show
    we spent over $500-million on those "turkeys").
    	It may also include assets listed as finished goods, but which now
    have no value (ie. software that doesn't sell, or dead hardware
    projects like "Mustang").
    	Ain't living in the Yellow Submarine fun?
    
    		the Greyhawk
    

    re .9
    
    Good one! 8*)

A likely component that made it to the balance
sheet has to do with capitalizing software development
expenses.  About 3 or 4 years ago the FASB (financial
accounting standards board) allowed (or required, 
I dont remember) companies to  capitalize certain 
costs associated with software development instead of 
expensing them.  Thus those costs did not hit the 
bottom line of the income statement in the period incurred.
DEC took advantage of this so as to be able to do more 
engineering and show more profit at the same time. 

the following is note D from last years annual report that shows
168M of this. (VTX IS) 

FINANCIAL STATEMENTS

Note D - Capitalized Computer Software Development Costs

  Unamortized computer software development costs  were $138,024,000 and
  $133,800,000 at July 3, 1993 and June 27, 1992, respectively. Amortization
  expense was $68,978,000, $63,956,000 and $44,424,000 for the years ended
  July 3, 1993, June 27, 1992 and June 29, 1991, respectively. Accumulated
  amortization was $168,845,000 and $186,051,000 at July 3, 1993 and June 27,
  1992, respectively.

According to note C from the annual report we had 84M of deffered 
taxes out of a reported 464M of "Prepaid expenses and deferred income 
taxes". So that leaves 380M of other stuff. Pretty close to the
"350-400M" that we are going to write off.

I think that the 168M software charge is part of this leaving 
212M unexplained. I think that the Phillips/Mannesman thing is a good 
bet.  There might be some other things in there that are left over 
from other deals done in the past, like the Trilogy deal, or the 
MIPS deal, or other ones.    

If we are taking a bath for the quarter, we may as well come clean...

    Goodwill is the value paid for an asset (like a business etc.) which
    exceeds what the books actually show.   It is what the sellers think
    (and the buyers agree) that such things as good name, brand name,
    customer loyalty, what have you are worth.  Things you cannot see, feel
    etc.  

Question ?

	Do we now have negative Goodwill ? :*>

Never covered this in accounting, but looking at our
situation I would say this is negative godwill or
badwill.

The other way to look at it is that stock buyera will
pay what they think the company stock will be worth
in 6 to 12 months. It looks like they think we 
will be losing more money.

Goodwill?

	Let me see if I understand this.  If Digital has DC on 
the books as being worth 1.5 billion then sell it 1.2 billion 
then we have a intagibles loss of 300 million? I guess the 
same would apply to the sell of Avastor if it were a loss.

                                                           
    re .-2
    
    I'm surprised if Goodwill didn't come into the accounting course you
    did.
    
    If when you buy a company it costs more than the asset value, then it
    has to go somewhere on the balance sheet.   You either write it off
    (implying that you paid to much for it) or you term it goodwill, and
    then do what the hell you like with it (depreciate it ?).
    
    What you are doing is saying the value of the whole item is worth more
    than the the individual quantifiable bits.  This 'whole' will generate 
    synergy (that favorite buzz-word of the consultants) with the existing
    company (ie the combined resources will out-perform what the individual
    bits would have generated.)  Normally a complete load of tosh.
    
    N.