USAI Balance Sheet shows Total Asset of $14bn, of that $7bn is made up of Goodwill and other Intangibles, leaving them Net Asset of $7bn. They show Liabilities of $7bn. With the purchase of the remainder of EXPE shares, they will have a lot more Goodwill, as EXPE has very little in the way of Asset for a $5+ billion company.
These guys are such losers. EXPE is one of the most overvalued stocks out there and they pay 20% premium. Reminds me of the great 1999 acquisitions of stocks that all fell from 200 to 10 in 3 months.
USAI has such a poor balance sheet and tries to improve by buying a profitable company with their shares only and not with cash. This should be outlawed. Well, in any case, EXPE's business will slow and USAI will be the big loser soon.
gerwols-you said "USAI has such a poor balance sheet and tries to improve by buying a profitable company with their shares only and not with cash.">
You are right on half of what you said. The profit figure for EXPE is overstated, who know how "profitable" they are? Just look at Options.
Richard Barton�s 2002 Option Stock sales totaled over $20ml. Greg Maffei, in one week- in November 2002, sold 150,000 shares totaling $11 million. These two Insiders option Sales totaled over $30 ml in 2002, if these and other peoples� Options were expensed would EXPE have any profit? Plus Barton sold many more million in 2003. http://biz.yahoo.com/t/16/1691.html http://biz.yahoo.com/t/e/expe.html
These 2002 transaction, are but a few out of many concerning Options issued to employees and Insiders, that do not show up as an expense in the financial statements. Expedia shows a $66ml ��profit�� for the year ended 12/31/02 but they completely ignored this Payroll-Option Expense, and no one seems to mind or understand this. Also USAI covers expenses of EXPE.
From an article(part)-a general discussion on Options- ��...Step one to recovery: Admit that options aren't free. They involve taking something away from the existing shareholders of a company and handing it to the company's employees. This transfer of wealth, or at least potential wealth, may be a good idea. It may pay off for investors in the long run. But the transfer is real nonetheless. Giving out options costs a company's shareholders in two ways. The first is by diluting their stake in the company. When employees exercise their options, a company has to issue new shares. This means there are more shares outstanding, which in turn means the stake of existing shareholders in the company is reduced. So when an option is issued, it amounts to a claim on the company-- think of it as someone putting a lien on your house. And the only way to find out about that lien is to look deep in the footnotes of the annual report. The other price shareholders pay is the opportunity cost their company incurs by selling shares at a low price to employees instead of selling them at full price to investors.... ... So here's a lesson for investors: When a company hands out tens of millions of options every year and contends through its earnings statement that the things cost nothing, it is telling--there's really no other way to put this--a big stinking lie. So how should we account for options? The simplest way is the way the Internal Revenue Service does it. As far as Uncle Sam is concerned, Jack Welch's hypothetical $1 billion gain from exercising options would count as $1 billion in compensation expense for GE. And this is fun: All that compensation expense (which, remember, doesn't even show up on GE's earnings statement) would be tax- deductible....��