Microsoft Dynamics Community

GL Integration and Brainworks?

mnhall — Tue, 13 May 2008 15:14:32 GMT

Anyone out there know of possibilities for this integration? Done it before?

Any help would be greatly appreciated!

Dynamics GL integration for VisualHomes

Ramses — Thu, 08 May 2008 15:15:09 GMT

Does anyone here know anything about Dynamics GL integration for VisualHomes?*

*VisualHomes is a Housing management software

Adjusting price upon receiving...

ForceSports — Fri, 09 May 2008 19:55:22 GMT

We are in a bind. We are manufacturer, distributor, and online retailer (yes, we do it all). We bought GP back in January and unfortunately, the company that set it up...

Currently, we make hockey jerseys then sell them. We buy the materials, send it to a contractor (the sewers) then receive it back. The problem we're having is getting everything to work correctly in the GL.

So we have an inventory item -- let's call it FLJ-C-AS (Force League Jersey- Custom -Adult Small). We do a PO for it to our sewer. The thing is, we are only pay for her services, not for an actual inventory item. So when we receive it, it goes into inventory...but not at the correct cost (it'll go in at what she charges us...not the final cost of materials and her labor).

How is it possible to do a PO to the sewer, but when we receive them back, adjust them automatically to the correct price?

Changing 'Ship To' Field

ForceSports — Thu, 08 May 2008 16:14:43 GMT

We would like to contact name in the 'Ship To' fields. How do we alter these fields in the Invoicing, Orderforms, etc.

How do we do this permanently?

Territory

Vaani — Tue, 13 May 2008 10:25:16 GMT

Hi,

I need to create sub territories within a territory. My requirement is that need to create a territory say USA and within that two sub territories say North US and South US.

I tried in customizations ended up without any solution. Please do guide me in achieving this.

Thanks in Advance,

Vaani

www shareinfoline com

shareinfoline — Tue, 13 May 2008 06:33:43 GMT

Visit our websitr www shareinfoline com is a group of professionals who on a continuous basis do market research and critically examine each and every market information. After thorough research and examination, our research teams share their views, Our Chartists with best of their skills make analysis and give us fruitful information.

www.shareinfoline.com

shareinfoline — Tue, 13 May 2008 06:31:19 GMT

Visit our website www.shareinfoline.com is a group of professionals who on a continuous basis do market research and critically examine each and every market information. After thorough research and examination, our research teams share their views, Our Chartists with best of their skills make analysis and give us fruitful information.

Fixed Assets software compatible with SL

Bonnie T — Fri, 09 May 2008 13:58:23 GMT

I have inquired with MS about fixed assets software that is compatible with Dynamics SL since they don't offer a product themselves. We have a 3rd party software we're using right now that is not really all we expected it to be. Does anyone have any suggestions on or personal experience with a fixed asset software that is compatible with SL and also meets your business needs? I was hoping MS would provide me a list of products that were compatible but they referred me to their Communities website. Any suggestions are appreciated.

Thanks.

I am new with CRM and need help on data migration wizard configuration

Trude — Thu, 03 Apr 2008 06:39:38 GMT

Hi,

My name is Trude Ko. We have just started with CRM (version 4.0). Just installed Data Migration Wizard 4.0.

During the configuration, got an error stating "The specified Microsoft Dynamics CRM server is not available.

Make sure that the URL is correct. To test the URL, try opening it in Internet Explorer.". I did try the same URL

in Internet Explorer, I was able to connect to the CRM server. The URL I used has a port number of 5555.

Any help you can provide will be greatly appreciated. I have spent lots of time on this problem. Our CRM version is

4.0.7333.169. The Data Migration Wizard version is 4.0.7333.3. Saw some documentation said the two versions

must be the same. Not sure if this matters. If it matters, where do I find the same version?

Notes do not follow lead to account creation

Steve Beckett — Thu, 01 May 2008 19:10:02 GMT

How can I get the notes I enter into the lead main form to carry over to the account main form?

They are around the corner?

Bruno — Mon, 05 May 2008 18:12:30 GMT

Been involver with customers for years and frequently via our IT business, I have (re)discover the power of meeting personally with our local business owners and professionals. I really think that it bring great apprehension and direct knowledge in my field witch is marketing. Microsoft have launch a new approach “software & services”, never the less personal communication with people are of importance for us (Microsoft is good with people as well). Money and customers are often just around the corner, I think that when we cash in our street with are able to communicated better with customers online and somehow identified their personality better to serve and give answers not only on a digital way, but also on a human one which we have learn around the corner. The result is that you may increase your presence by creating some closeness often difficult to achieve with customers and getting them to return doing business with your company.

Add Marketing List members other than Accounts, Contacts and Leads

JamesH — Wed, 07 May 2008 07:01:18 GMT

Marketing list can be prepared for only Accounts, Contacts and Leads. Can we prepare a external marketing list? If no than is there a workaround

Anyone Done AX in Poultry Processing?

Abel Ahing — Tue, 06 May 2008 04:06:21 GMT

Greetings from Malaysia, Truly Asia. My organization has just purchased Dynamics AX after evaluating other ERP packages. One of the business of this organization is integrated poultry processing from farm to market. We have breeder farm, hatchery, broiler farms and processing plant where chicken are processed into various products and value-added food products.

I'm at lost as to how to implement MRP and Production Planning. Specifically, BOM design. Products are chicken parts such as whole leg, wing, ***, boneless leg, boneless and skinless leg, boneless ***, etc. Is anyone familiar with designing BOM in this area?

Regards,

Abel

Unvouchered Receipts

Kimberly — Wed, 21 Nov 2007 14:42:25 GMT

Just started a new job and one of my new tasks is to clean up the unvouchered receipts. It looks as if items were received against a PO but when the invoice was entered it was not tied to a PO. Therefore, the unvouchered receipts report looks as if we have a ton of receipts to be invoiced.

My question is this ~ Is there a way to either void a receipt or how do I clean up this report?

Re: FRX

gharmon — Wed, 16 Apr 2008 17:06:47 GMT

I work for a $50 million manufacturing company. I wanted to use another budgeting tool other than Native GP. Is there anything out there that is less expensive than Forecastor but still as good?

It's Alive: Data-tagging Plan Expected Wednesday

Anonymous — Tue, 13 May 2008 17:00:00 GMT

The SEC likely will roll out a timetable for companies to begin submitting their financial statements in interactive XBRL format.

Securities and Exchange Commission Chairman Christopher Cox is expected Wednesday to announce a long-awaited plan to mandate companies to file their financial statements in an interactive data-tagging format.

Also known as XBRL, for extensible business reporting language, the data-tagging technology could be a boon to information-hungry investors and analysts who would be able to more easily search and compare companies' financial statements, proponents say. However, it could also cause headaches for CFOs, depending on how long the SEC gives them to turn their traditional, static financial statements into interactive, searchable documents.

The SEC has hinted at its plans, noting on Wednesday's agenda that it will consider whether to propose an interactive data amendment to determine how any mandate might be phased in. Cox's enthusiasm has been clear from the start, as he has relentlessly pushed XBRL as the keystone to his agenda for greater transparency.

"This will probably be one of the most important changes since the Securities Act of 1933 and when Edgar put filings online in 1996," says Sunir Kapoor, a board member of XBRL US and CEO of UBmatrix, a provider of XBRL products.

Kapoor said he expects Cox to announce that the agency will take six months to get its interactive data team ready and that big companies will be required to file in XBRL format sometime next year. The SEC's Committee on Improvements to Financial Reporting (CIFR), an advisory board, recently recommended that the commission mandate XBRL's use and suggested the agency require all publicly traded companies to data-tag their financial documents using a phased-in schedule based on company size.

Prospects of a new mandate have drawn the ire of some critics who worry about the costs and wonder about the benefits of XBRL. Wednesday's announcement could dash any last hopes for a future of static financial statements.

"The train has left the station," Kapoor says. "The only question is really the scope and the timing."

S&P on Junk: the Future Is Now

Anonymous — Tue, 13 May 2008 16:00:00 GMT

The ratings agency changes its speculative-grade ratings method, focusing on risks in play over a two-year time horizon.

Standard & Poor's announced Tuesday that it is changing its approach to rating speculative-grade credit by placing more emphasis on near-term risk factors.

The new practice for rating so-called "junk" securities — rated BB or lower — places greater emphasis on expected risk over a two-year period. And S&P now will emphasize a one-year horizon in determining speculative-grade ratings outlooks, which indicate the likelihood for rating changes.

S&P formerly focused risk factors in play over three to five years, for both speculative-grade and investment grade credit.

In a report released Tuesday, S&P said the move was prompted by "the market's increasing willingness to accept riskier credits in recent years." However, that has been a long-term evolutionary process. In its report the firm chose to compare the percentage of below-investment-grade industrial ratings today, 72 percent, with that of 27 years ago, when it stood at 32 percent.

In a subsequently issued FAQ sheet, S&P, which has come under heavy fire recently for some of its ratings methodologies, gave this answer to the question of why these changes are being made now: "This initiative is largely a function of our ongoing efforts to improve our products and keep them current with market developments. We think of these changes as evolutionary, building on past enhancements. We should also be better positioned to confront the current credit environment and its challenges — even if the timing is coincidental."

In general, the shift to a shorter time horizon for evaluating risk recognizes that investors take a more near-term approach when it comes to leveraged investments. "For speculative-grade companies, change is the rule," S&P wrote.

"For example, massive debt maturities in the next 12 to 18 months are much more relevant than business risk concerns a company may have to deal with four or five years from now," the ratings firm said. "The refinancing requirement creates a near-term risk with a relatively high level of occurrence, especially for a speculative-grade company."

To help with its revised focus, S&P said it created a new risk matrix to evaluate the probability, impact, and time frame of a company's risks and opportunities. "For example, technology companies are generally associated with higher levels of business risk; so are companies of small size," the firm wrote. "However, the business dynamics of a particular niche may argue for placing less emphasis on the general risk profile."

The analytical enhancements are not designed to affect the ratings distribution, according to Standard & Poor's. "On the other hand," it added, "we cannot predict that the overall impact will be neutral, particularly given the current backdrop of economic and credit-market challenges."

S&P also plans to "bolster transparency by including in our published reports a more detailed discussion of alternative scenarios that could cause a transition in a rating or outlook, as well as a higher level of specificity when discussing covenant compliance and headroom."

Auto Numbers in Microsoft Dynamics CRM

Anonymous — Tue, 13 May 2008 15:11:21 GMT

Today we welcome our guest blogger and CRM MVP Ayaz Ahmad.

Last week I looked for the best approach to use auto numbers in Microsoft Dynamics CRM. After discussion with my peers I have come to the following possible options that can be used for auto numbering. These may not be the most efficient techniques to get auto numbers to work in CRM, but they are all workable and easy to implement solutions.

Option 1:

Very simple, supported and mostly acceptable way of auto numbering is to read the attribute Max value and then add 1 to get next auto number. For example you have a custom entity named Project and you want to auto number Project_Ref_Number attribute. But do not retrieve all records. Just retrieve the record with maximum number value by using following two properties of PageInfo Class in SDK and set descending order.

PageInfo.Count = 1;
PageInfo.PageNumber = 1;

One more consideration should be taken in account to register your auto number plugin to at PreCreate rather at PostCreate.

Issues:

In multi-user environment, this approach can come up with duplicate numbers in Project_Ref_Number when more than one user is creating project records.

Option 2:

This technique requires a bit more work but still supported way of doing things and all the time you will be getting 100% unique number.

You need to create a new table for project entity in a different database and not in CRM default database.

create table dbo.ProjectNumbers
(
Project_Ref_Number int identity(1,1) primary key clustered,
Projectid uniqueidentifier not null
)
go

Create a stored procedure for inserting a record into new database. This will increase the performance of your insert query.

create procedure dbo.proc_new_ProjectNumber
@ProjectId uniqueidentifier,
@Project_Ref_Number int output
as
insert into dbo.ProjectNumber
(
ProjectId
)
values
(
@ProjectId
)
select @Project_Ref_Number = scope_identity()
go

In your Plugin/Callout:

1. Access you database using ADO.NET
2. Execute stored procedure and get next number from returned results
3. Set the value of the returned number to target entity attribute appropriately.
4. All Done

Issues:

1. You have to setup database.
2. You have to read and insert into external database.

Option 3:

This option used a lock mechanism on a text file placed somewhere at your webserver. You can create one file to store next number for all entities or you can create one file for each entity. In your Plugin/Callout:

1. Put a lock on file.
2. Read the file and read the number there.
3. Update the number by adding 1.
4. Release the lock.
5. Use this number and set your target entity attribute appropriately.

string ProjectAutoNumber = "FilePath"
lock(this)
{
TextReader textReader = File.OpenText(ProjectAutoNumber);
AutoNumber = textReader.ReadLine();
textReader.Close();
AutoNumber = (long.Parse(AutoNumber) + 1).ToString();
TextWriter textWriter = File.CreateText(ProjectAutoNumber);
textWriter.WriteLine(AutoNumber);
textWriter.Close();
}

Issues:

1. Resource locking
2. File system Read/write cost

Although all these options work well but I am still looking for a more robust solution. Ideally I am looking for something using GUIDs which are instantly available and 100% unique.

For your suggestions and improvements, please comment.

Ayaz Ahmad

Which Rules Rule? Now Ask FASB

Anonymous — Tue, 13 May 2008 14:00:00 GMT

New FAS 162 determines that FASB statements top staff positions and AICPA bulletins — at least until IFRS takes over.

The Financial Accounting Standards Board has issued a new statement creating a "GAAP hierarchy" intended to clarify what should happen in the event that accounting principles conflict with each other.

In an effort to reduce complexity, the new statement, FAS 162, identifies the sources of various accounting principles, and outlines the ranking of their importance to companies and corporate structures that are not part of governments. Moreover, FASB has concluded that this hierarchy should reside in its own FASB accounting literature, rather than with the American Institute of Certified Public Accountants.

This shift from basing the hierarchy with FASB rather than AICPA has been in the making since 2005. But FAS 162 now replaces the AICPA's older version of a hierarchical description, which was directed at auditors and was seen by many as too complicated. (The AICPA's hierarchy, however, still applies for governmental agencies.) FAS 162 also puts FASB's authority at the forefront, rather than ranking its standards below other industry practices in some cases.

Atop the new hierarchy will be FASB statements of standards and implementations, staff positions, and AICPA research bulletins not in conflict with FASB actions. Next are FASB technical bulletins and, if FASB approves them, AICPA audit and accounting guides and positions statements.

Further down the list are practice bulletins produced by the AICPA accounting standards executive committee, which also require FASB approval, and consensus positions of FASB's emerging issues task force. At the bottom of the hierarchy are FASB implementation guides, AICPA accounting interpretations and industry guides and, finally, any other positions or generally recognized practices that are not cleared by FASB.

The new statement will become effective 60 days after the Securities and Exchange Commission approves new auditing amendments from the Public Company Accounting Oversight Board.

FAS 162 is not expected to have an impact on investment decisions, Jack Ciesielski, author of the The Analyst's Accounting Observer, notes on his blog.

The impact of the statement could also be moot relatively soon, as America's generally accepted accounting standards appear likely to eventually be dumped in favor of International Financial Reporting Standards used around much of the rest of the world.

Bernanke: "Markets Are Still Far from Normal"

Anonymous — Tue, 13 May 2008 14:00:00 GMT

The Fed chairman defends recent moves to stabilize the markets and says any expectations of future government bailouts will be defused through stricter bank regulation.

Financial markets are recovering from the worst of the subprime crisis, but remain "far from normal," said Federal Reserve Chairman Ben Bernanke in a speech Tuesday.

Speaking via satellite to the Federal Reserve Bank of Atlanta Financial Markets Conference in Sea Island, Georgia, Bernanke focused primarily on justifying the Federal Reserve's decision to open its discount lending window to Bear Stearns and to primary dealers in mid-March. Bernanke cited the work of 19th-century economist Walter Bagehot, who said the role of a central bank during a liquidity crisis is to lend freely.

Bernanke said the Fed's actions had helped stave off an immediate crisis, noting that liquidity in several markets had improved and spreads on a number of financial instruments, including corporate debt, have declined from recent highs.

However, Bernanke warned, "conditions in financial markets are still far from normal. A number of securitization markets remain moribund, risk spreads — although off their recent peaks — generally remain quite elevated, and pressures in short-term funding markets persist." He added that spreads of term dollar Libor over comparable-maturity overnight index swap rates remain abnormally high, and that strong participation at recent Fed credit auctions indicate that credit remains hard to come by for many institutions.

Although Bernanke cited Bagehot's theories as justifying the Fed's actions, Bagehot also warned that central bank lending in a time of crisis should carry a high-interest rate to avoid creating a moral hazard. Explaining why the Fed had deviated from Bagehot's prescription in that regard, Bernanke noted that Bagehot, writing in 1873, was writing about the Bank of England, which at the time was a quasi-public institution working within a gold standard with limited holdings. Today, he explained, "potential limitations on the central bank's lending capacity are not nearly so pressing an issue as in Bagehot's time." Thus, Bernanke hinted strongly that any moral hazard would be more effectively short-circuited through regulation, and he hinted strongly that future regulations will require banks to carry more protection against a sudden loss of secured financing. "The problem of moral hazard," he said, "can perhaps be most effectively addressed by prudential supervision and regulation that ensures that financial institutions manage their liquidity risks effectively in advance of the crisis."

Deals: Sprinting into the Future?

Anonymous — Tue, 13 May 2008 13:00:00 GMT

In our M&A Roundup for the week ended May 11, as "near deals" percolate, the two top transactions may foreshadow a bigger move involving Nextel.

The merger mill continues to grind this week with potential deals-in-the-making — including Hewlett-Packard connecting with EDS, aircraft leasing giant International Lease Finance disconnecting from insurance giant American International Group, and Coca-Cola Co. thirsting for beverage acquisitions. But if such talk was too early-stage for last week's roundup, the $15.47 billion worth of North American transactions that were announced still made for another active seven days.

Led by a $10.6 billion worth of deals involving Clearwire Corp. and Sprint Nextel Corp. — seen by some as a possible preliminary to Sprint's disconnecting from Nextel — the week featured two other notable deals in Illinois Tool Works Inc.'s $2.24-billion purchase of London-based toolmaker Enodis Plc, and Best Buy Co.'s $2.13-billion purchase of half of Carphone Warehouse Group Plc's retail business. Some intriguing private equity deals were also included among the 33 transactions reported in data provided to CFO.com by mergermarket.

The dealmaking increased the number of transactions year-to-date to 1,286, worth a total of $251.53 billion, still far below the 1,916 deals last year at this time, valued at $631.51 billion.

Here are the top 10 North American deals of the week.

Clearwire Corp. to buy Sprint Nextel Corp.'s 2.5-GHz spectrum and WiMAX-related assets for $7.40 billion
Kirkland, Wash.-based Internet services provider Clearwire agreed to acquire the two businesses of Reston, Va.-based Sprint, the wireless and wireline communications company in a deal involving 370 million newly issued Clearwire Class B common shares priced at $20 each. Terms call for Clearwire to merge into a newly created indirect subsidiary with Sprint's 2.5 GHz spectrum and WiMAX related assets, and certain hardware, software, and all WiMax based trademarks and other WiMax related intellectual property. The transaction is expected to close in the fourth quarter.
Seller financial advisor: Citigroup; Lehman Brothers
Bidder financial advisor: JPMorgan; Morgan Stanley
Seller legal advisor: Jones Day; King & Spalding
Bidder legal advisor: Davis Polk & Wardwell; Davis Wright Tremaine; Kirkland & Ellis; Latham & Watkins (Advising Morgan Stanley); Paul Weiss Rifkind Wharton & Garrison

Bright House Networks, Comcast Corp., Google Inc., Intel Corp., and Time Warner Cable Inc. to buy 22 percent of Clearwire for $3.20 billion
The buyers are paying cash for 135 million Class B shares and 25 million Class A shares of Clearwire at $20 each, a 21.5-percent premium. Philadelphia-based Comcast is a cable operator, while Google, of Mountain View, Calif., is a provider of index and web content provider; Santa Clara, Calif.-based Intel makes semiconductor chip producer and markets digital products; and New York City-based Time Warner Cable is a cable operating company. The acquisition is part of the agreement between Sprint Nextel and Clearwire. The transaction is approved by all of the parties' board of directors and is expected to close in the fourth quarter.
Seller financial advisor: Not Available
Bidder financial advisor: Merrill Lynch
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Illinois Tool Works Inc. to buy Enodis Plc for $2.24 billion
Glenview, Ill.-based foodservice equipment and machinery company Illinois Tool Works agreed to acquire the entire outstanding share capital of London-based Enodis, a food and beverage equipment manufacturer. Enodis holders will receive an ex-dividend offer that includes a per-share premium of 15 percent. There is an 8.53-percent premium over another bid to acquire Enodis, from Manitowoc Co.
Seller financial advisor: Credit Suisse; N M Rothschild & Sons
Bidder financial advisor: UBS
Seller legal advisor: Ashurst; Hammonds (Advising N M Rothschild & Sons)
Bidder legal advisor: Hammonds

Best Buy Co. to buy a 50 percent stake in the retail business of Carphone Warehouse Group Plc $2.13 billion
Richfield, Minn.-based consumer electronics retailer Best Buy agreed to acquire a 50 percent stake in the retail business operations of London-based Carphone Warehouse Group for cash and will form a new company with Carphone, with each company holding a 50 percent stake. The transaction is expected to close by Aug. 30.
Seller financial advisor: Credit Suisse
Bidder financial advisor: Goldman Sachs
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Shareholders to buy Celera Corp. from Applera Corp. for $940 million
Norwalk, Conn.-based Applera's board agreed to spin-off the Alameda, Calif.-based Celera Group division, a diagnostic business of the life sciences company. The price is based on 79.646 million shares of Celera at $12.58 per share. Terms call for the separation to be conducted through redemption of all of the outstanding shares of Applera-Celera tracking stock. The transaction is expected to close on July 1.
Seller financial advisor: Morgan Stanley
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Carlyle Group LLC to buy 73.54 percent of Neochimiki L.V. Lavrentiadis S.A. from Lavrentis Lavrentiadis for $747 million
Carlyle, the Washington, D.C.-based private equity firm, acquired the stake in Athens-based Neochimiki L.V. Lavrentiadis, a group of companies engaged in the production and trade of chemical products. Neochimiki holders will be entitled to a cash per-share that offers a 2.7-percent premium.
Seller financial advisor: Deutsche Bank; Dresdner Kleinwort
Bidder financial advisor: ABN Amro; Sal. Oppenheim jr & Cie
Seller legal advisor: Not Available
Bidder legal advisor: Clifford Chance; Karatza & Partners

Schlumberger Ltd. and First Reserve Corp. to buy Saxon Energy Services Inc. for $654 million
Calgary-based Saxon Energy Services reached its agreement with Sword Canada Acquisition Corp., which is indirectly jointly owned by Schlumberger and investment funds affiliated with First Reserve. Certain members of Saxon's management will have an equity position in Sword. Saxon is an emerging international oilfield services company. First Reserve is a private equity firm focusing on the energy industry. Houston-based Schlumberger is an oilfield services company. The price of $6.95 a share represents a 0.1-percent premium. The transaction should be completed by late July or early August.
Seller financial advisor: Thomas Weisel Partners Group
Bidder financial advisor: RBC Capital Markets
Seller legal advisor: Not disclosed
Bidder legal advisor: Davies Ward Phillips & Vineberg; Osler Hoskin & Harcourt; Simpson Thacher & Bartlett

Carlyle to buy a 71.50-percent stake in NH Techno Glass Corp. from Hoya Corp. and Nippon Sheet Glass Co. for $558 million
Carlyle's acquisition of the stake in NH Techno Glass is part of a management buyout from owners Hoya and Nippon Sheet Glass, both of Tokyo. Terns call for Carlyle to form a special purpose vehicle to acquire the company, with Nippon offloading its entire 50-percent stake for $377.58 million and Hoya offloading a 21.5-percent stake for $162.75 million. The transaction is expected to close by June.
Seller financial advisor: UBS
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Nishimura & Asahi; Tsar & Tsai Law Firm

OmniSource Corp. to buy a 75-percent stake in Recycle South LLC for $508 million
OmniSource, a Fort Wayne, Ind.-based scrap metal recycling unit of Steel Dynamics Inc., agreed to acquire the 75 percent of Spartanburg, S.C.-based Recycle South that OmniSource doesn't now own. Recycle South provides metal recycling services. The $370 million price, before including $138 million of net debt, consists of $138 million in stock and $232 million in cash. As a part of the equity consideration Recycle South holders would receive about 3.93 million shares of Steel Dynamics common stock value at $35.27 a share. The transaction is expected to close by the end of the second quarter.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Rainbow Media Holdings LLC to buy Sundance Channel from General Electric Co., CBS Corp., and NBC Universal Inc. for $496 million
Rainbow Media is the New York City-based television programming and entertainment company and subsidiary of Cablevision Systems Corp., the Bethpage, N.Y., media, entertainment, and telecommunications company. Its purchase of New York City-based Sundance cable channel is from Fairfield, Conn.-based GE, and New York City-based CBS and NBC Universal, and actor and private investor Robert Redford, of Salt Lake City. Terms call for payment exchanging about 12.7 million shares of GE held by Rainbow Media, with a cash adjustment at closing, and with CBS and Redford receiving cash in exchange for their stakes.
Seller financial advisor: UBS
Bidder financial advisor: Goldman Sachs
Seller legal advisor: Allen & Overy; Dewey & LeBoeuf; Jackoway Tyerman Wertheimer Austen Mandelbaum & Morris (Advising Robert Redford)
Bidder legal advisor: Sullivan & Cromwell

source: mergermarket

Fair Value: Nothing New Under the Sun?

Anonymous — Tue, 13 May 2008 11:00:00 GMT

Contrary to popular belief, the idea "has been in place for decades," FASB leaders contend.

With the credit crisis adding to already simmering controversies about the changeover to fair-value accounting, the Financial Accounting Standards Board apparently thinks the topic worth revisiting in an informal manner. Last week, week, the board issued a two-page article on fair value and financial reporting to set the record straight on what it feels are some basic misconceptions.

Indeed, while fair value been widely cast as a new concept, it has, in fact, "been in place for decades," according to the article's authors, FASB chairman Robert Herz and FASB director of planning, development, and support activities Linda MacDonald.

For instance, derivatives (with certain exceptions for hedges), trading securities, and available-for-sale securities have long been marked to market, the authors say. For many years before FAS 157, the new fair-value rule, the method has been used to recognize impairments or declines in value of financial assets in down markets. "Again, this is by no means new. The requirement to recognize impairments has been in place for many years and spans several periods in which there were down markets," Herz and MacDonald note.

What's more, although FAS 157 contains the genuinely new requirement that preparers separate the inputs used to estimate the fair value of financial assets and liabilities into three risk-based buckets, "the objective remains the same — a current exchange price for the asset or liability," they write.

The article also sought to define the limits of the new rule. FASB, which has deferred the use of fair value for all assets and liabilities, Currently, only mandates it for financial assets and liabilities, the authors point out. The bottom line on fair value is that fair value is that it "is not required in many instances," they assert.

The impetus for the article, the authors say, is to provide "some basic facts" about fair-value accounting to help financial statement users and preparers understand the debate — which has been raging since September 2006, when FASB released FAS 157 Fair Value Measurement.

FAS 157 was an effort to clarify the thinking behind reporting fair value estimates and to lay out a framework within which to value the assets and liabilities. Mainly, the estimates are intended to provide investors with the value of an asset or liability on the measurement day, rather than reporting a value based on some future date, such as a future settlement or maturity date.

Further, the rule requires enhanced disclosure requirements and a measurement hierarchy that separates assets and liabilities into three categories based on risk-related criteria. For their part, investors say they are getting a clearer picture of the company's financial health, while companies have balked at the accounting volatility the measurement creates. Preparers in the financial-services industry have also complained that the new reporting requirements may have exacerbated the subprime crisis.

The article is part of a FASB series called "Understanding the Issues," written to bring "clarity on technical issues that is needed," noted FASB spokesperson Neal McGarity. Launched in May of 2001, the first letter covered expected cash flows, while the second, also released in May of that year, focused on measuring liabilities at fair value — an enduring subject, judging from the most recent release.

Private Equity Paints "Help Wanted" Sign

Anonymous — Tue, 13 May 2008 11:00:00 GMT

Don't let the private-equity swoon nix any thoughts you may have about moving to the private side. In fact, opportunities could be right around the corner.

Despite the recent steep decline in private-equity deals, the job market for CFOs at portfolio companies promises to brighten later this year.

A possible easing of the credit crunch could provide more funding for private-equity acquisitions, resulting in top-management shake-ups at many newly acquired companies. At the same time, the tough economic environment could prompt private-equity firms to replace finance executives at portfolio companies that fail to perform as expected.

In late April at the Milken Institute Global Conference in Beverly Hills, Calif., two executives involved in private equity offered glimmers of hope that more debt financing will be available later this year. Leon Black, founder of Apollo Management, was quoted as saying, "We're well on our way" to a recovery in the credit markets; and David Solomon, co-head of investment banking at Goldman Sachs, reportedly said, "Things feel better."

Indeed, banks and brokerage firms have reduced their U.S. leveraged-loan volume to $93 billion at the end of April from a peak of $237 billion in July, according to Standard & Poor's, which could open the door for new loans. On the other hand, S&P also warned that curbed investor appetite for buying leveraged loans in the secondary market is forcing up interest rates on such loans.

While acknowledging that private equity's search for CFOs "has gotten a little quieter" this year, Christopher Langhoff, a consultant at executive recruiting firm Russell Reynolds Associates, said private-equity firms still need new CFOs, particularly for their smaller portfolio companies.

"We're seeing quite a few CFO searches this year for companies with annual revenues of $10 million to $20 million," said Langhoff.

Private-equity deals have recently skewed toward smaller companies largely as a result of tight credit. The average private-equity acquisition in North America totaled $101 million for the first quarter of this year, compared with $475 million during the same period last year, according to Mergermarket. The number of acquisitions declined 44 percent, to 138 deals from 249.

Small companies, often harder hit by rough economic seas, are more likely than large ones to switch CFOs in the months ahead, Langhoff said. But he added that he expects to see an across-the-board uptick in private-equity CFO searches thanks in part to the poor economy.

"With the sheer magnitude of private-equity transactions the past 18 months, a natural evolution will work itself out," said Langhoff. "A honeymoon period will end, and they (private equity firms) will decide that some guys and gals are keepers, and others are not. And given the economy, such as it is, poor performance will hurt some teams. Private-equity owners will not hesitate to make changes."

Private equity's sensitivity to performance underscores the fact that CFOs at portfolio companies face different kinds of pressures than do those on the public side.

While finance executives at portfolio companies escape the tyranny of quarterly earnings reports and the burden of regulatory compliance, they often must focus laser-like on cash flow, needed to service the substantial debt that private equity firms incur.

"Private-equity owners ideally want somebody who has already had private equity experience," said Walter Williams, a partner at the executive search firm Battalia Winston International. "But second, they want somebody who has worked in a financially leveraged company, private or public. That means private-equity owners want people who are operationally oriented as opposed to accounting oriented, somebody who can focus on how to improve operations to free up cash, whether that means selling assets, getting rid of non-performing product lines, or downsizing the organization.

"In a highly leveraged environment," Williams added, "you have to deal with a sense of urgency, to make decisions and move on. It's not for the faint of heart."

As for remuneration, according to Williams, a CFO at a portfolio company might earn 20 percent to 40 percent less in total annual cash compensation than a CFO at a similar public company — commonly, a similar base salary minus an annual bonus. But he said private-equity CFOs can earn a payout of 5 to 10 times their annual salary when the company is sold or following an initial public offering, typically anywhere from 18 months to five years from the date of acquisition by the private-equity owner.

"The payoff could be a lot higher if the CFO joins very early in the cycle and the company grows a lot before the sale," he said, "or it could be lower if the company is sold quickly or if growth or cash flow stalls."

Working for a portfolio company takes a different mentality than at a public company, a mentality that does not necessarily suit every CFO, according to Williams.

"I worry that somebody who has worked for a big company for 20 years can make the transition to a smaller, entrepreneurial company," he said. "Some people not in the private-equity world don't understand that you're not working up the corporate ladder; you're working for a specific goal."

Brett White, CFO of the Silicon Valley tech company Meru Networks, is typical of CFOs who are focused on the transaction that produces the hoped-for payoff, otherwise known as the exit.

"I was brought in to bring the company public," said White, who joined Meru, a provider of wireless, data-networking infrastructure, in January. Following the IPO, anticipated in about a year, White said he will probably stay at Meru until he is fully vested in his stock options, commonly a four-year period.

White's resume exemplifies the kind of well-rounded experience that private-equity firms often seek in a portfolio company CFO. Beginning in 1989, White spent 10 years at Oracle, rising from finance manager of an international division to the company's vice president of finance. At the international division, White was involved in setting up stand-alone Oracle operations in emerging markets such as Brazil, Chile, and India — often on an initial outlay of about $250,000 per startup.

"Under the umbrella of a big company, I had a lot of experience building small companies," he said. "That was very helpful."

After leaving Oracle, White moved on to the CFO position at two more publicly traded high-tech companies and then worked as CFO of a private tech company for two years before joining Meru.

White said that "it takes a certain kind of person who can take the risk and build a company."

"In a public company," he said, "you usually have a larger and more experienced management team. But if you're the CFO at a smaller startup, a lot of what the company does will fall on your shoulders. You'll probably be one of the most seasoned, mature people there. There's a lot of pressure to get things right, because the business can succeed or fail based on decisions you make every day."

Can This Relationship Be Saved?

Anonymous — Tue, 13 May 2008 10:00:00 GMT

Auditors and CFOs aren't the friends they once were, but they are working out their differences.

The healing has begun. It's been six years since the passage of the Sarbanes-Oxley Act, and four years since companies faced their first Sarbox audits. After a painful start, compliance with the act has become more or less routine for many businesses and their external auditors.

But what about the CFO-auditor relationship? Once close and collegial, it turned acrimonious at the start of the post-Sarbox era, when auditors drew back from their clients in the name of objectivity. Has the passage of time produced a détente, or are relations between the two parties still tense? What effect have regulations passed in the wake of Sarbox had on the relationship — and, for that matter, on audits? We decided to find out, through interviews with and surveys of finance chiefs and auditors. (The CFO's perspective is presented here; for the auditors' side of the relationship, see the companion story, "Auditor Angst.")

Let's start with some reasonably good news. In March, CFO magazine conducted a survey of 205 senior financial executives on the state of external audits (see the link to "What CFOs Have to Say about Auditors" at the end of this article). Forty-two percent of those executives said they were very satisfied with their audit firms, while 44 percent said they were somewhat satisfied. Anecdotally, CFOs who have seen both audits and auditor relationships improve in recent years attribute much of the change to greater familiarity with Sarbox.

"People have had a chance to digest Sarbanes-Oxley — to get used to it and work with it for a while," says Barbara Klein, CFO at CDW, a provider of technology products and devices that was recently acquired by a private-equity firm. Finance chiefs say their departments are documenting controls and accounting decisions more carefully and preparing more thoroughly for their audits; 27 percent have added internal-audit employees in the past two years, according to CFO's survey.

Auditors have come up to speed, too, say finance chiefs. "I wouldn't go so far as to say that auditors have loosened up, but they've developed a more standardized approach to working with [Sarbox]," says Chris Johns, CFO of PG&E Corp., the holding company of the California utility giant. "They've become more efficient."

At Johnson Controls, for example, auditors have developed a method for deciding when to refer issues to the national office. "There's more of a system now," says Bruce McDonald, CFO of the $34 billion diversified industrial company. "They set some parameters for people to exercise their local judgment." By contrast, in the early years of Sarbox, it was "frustrating" when auditors started passing questions on to the national office, says McDonald. "It extended the time frame on a lot of decisions."

Stingy with Advice
Still, many auditors continue to be reluctant to provide advice — and many CFOs continue to chafe at that reluctance. Forty-two percent of survey respondents who were dissatisfied with their auditors say they don't provide enough guidance on accounting issues.

At a recent gathering of finance executives from around the country, grumbling about reticent auditors was universal. One CFO complained that she was paying more for her audit but getting much less for her money, because her auditors no longer provided accounting advice, which she considered the most valuable component of audits past.

"They'll give you information, but they won't give you a recommendation," sums up Peter Kruse, CFO of Nissan Forklift. (Ironically, information delivery is among the key complaints that auditors levy against clients; see "Auditor Angst.")

PG&E is one of many companies that have engaged a third-party consulting firm to help address complicated accounting questions. "By the time we go to our auditors with an accounting issue, we've pretty much got it wrapped up," says Johns. "In the past there was a lot more willingness on the part of our auditors to engage and talk about the accounting. Now they'll listen, but it's by no means similar to the conversations we had before [Sarbox]."

Seventy percent of CFOs say they meet with their auditors ahead of time to determine the areas up for review, a critical exercise in which CFOs point out the greatest risks and share the work internal audit has already done. But these conversations are more guarded than they once were.

"The auditors leave a little bit in their back pocket," says Tom Ackerman, CFO at Charles River Laboratories, a provider of research models and laboratory services to biotech and pharmaceutical firms. "In earlier days they would lay out everything they were going to look at, but these days they don't share their entire audit program with you. There's a little bit left unsaid."

Too Expensive
Although practically everyone complains about the dearth of auditor advice, that ranks as the number-three gripe of finance chiefs. What's number one? Fees.

Audits in the post-Sarbox era are too expensive, according to nearly half of those who say they are dissatisfied. Fees were widely expected to fall after the first year of Sarbox implementation, but in fact they have continued to climb at most companies. Eighty-two percent of finance executives surveyed reported an increase in fees from 2007 to 2008, although the majority of those say the increase was slight — from 1 to 10 percent. Only 6 percent of companies saw fees fall. Seventy-three percent expect fees to rise again next year.

Given the increased scope and complexity of audits, rising costs seem inevitable, says CDW's Klein. "With the passage of Sarbanes-Oxley, there was more work, and if there's more work there's going to be more cost," she says. "The fees have come down from the early years, but they're never going to be at the levels they were pre-Sarbox."

CFOs bemoan the complexity of new accounting regulations and say they expect complicated rules to drive audit costs even higher in the years to come. "If you look at something like derivatives accounting, you have companies like Fannie Mae and the major banks, which have an awful lot of smart people who go through the issues with their auditors, and they can't seem to get it right," says McDonald of Johnson Controls. "The complexity of these standards is worrying, and documenting and implementing them tend to drive up costs."

At the top of the list of future audit-cost drivers are fair-value issues, say CFOs: 37 percent of survey respondents said fair-value accounting standards like FAS 157 and FAS 159 would be most likely to raise the price of their company's audit in the next year. A short supply of audit staff and a possible new format for financial statements also ranked as areas that will increase costs.

The Effect of AS5
One measure that many hoped would reduce costs significantly was Auditing Standard No. 5, issued in July 2007 by the Public Company Accounting Oversight Board (PCAOB). AS5 instructs accounting firms to take a more selective, risk-based approach to audits. But although the standard has helped matters (along with a similar Securities and Exchange Commission interpretation), it has hardly been revolutionary.

"AS5 hasn't resulted in the change a lot of us expected," says PG&E's Johns. In fact, a majority of finance chiefs surveyed by CFO — 64 percent — say they have seen no audit changes at all as a result of the new standard.

Still, a third of CFOs report that auditors have narrowed their scope at least somewhat thanks to AS5. That's confirmed by Robert Kueppers, deputy CEO at Deloitte, who says AS5 has reduced Deloitte's time on engagements and enabled the firm "to hold the line on audit costs."

At Johnson Controls, McDonald has been one of the lucky few to see a significant impact: "The adoption of AS5 and the risk-based approach resulted in probably about a 20 percent reduction for us in the cost of compliance with Section 404 [which mandates documentation and testing of internal controls]. The auditors have been able to step back and look at something like our petty-cash controls and say, 'That's not going to lead to a significant financial-reporting problem.'"

Ackerman of Charles River says he was skeptical about whether auditors would really take AS5 to heart and scale back the scope of their audits. "It seemed like they might have a hard time moving away from entrenched practices," he says. But Charles River has benefited from the new standard: its audit fees came down more than 15 percent in 2007 from 2006. "Once AS5 was written down, it gave audit firms something to lean on," says Ackerman. Auditors used to include 90 percent of the company's global locations for either complete or limited testing, but last year fewer locations were scrutinized. "The approach was more risk-based, taking into consideration the work we do at each of the different locations," says Ackerman.

Jonathan Mason, CFO of specialty chemical maker Cabot Corp., views AS5 as "a step in the right direction." He says the company's auditors are making a greater effort to identify significant controls and examine those areas thoroughly. External auditors are also relying more on the internal auditors' efforts, he adds. "The auditors are not going to write an opinion based on internal audit's work, but they can get comfort on some of the less critical areas," says Mason. This marks a significant shift from the early Sarbox days, when external auditors couldn't consider internal audit's work, because of a mandate that external auditors conduct testing on all material items. Ackerman also notes that there is now a greater reliance on testing done by the internal-audit staff than in the past, and says this has been a major factor in reducing Charles River's audit costs.

With time and experience, auditors have gained a better understanding of the PCAOB's expectations. "What you saw initially was a disconnect," says Mike Burke, a former KPMG partner who is now CFO at Aecom Technology, a provider of technical- and management-support services. "The auditors focused on the minutiae and companies focused on the biggest risk areas. Now we have a greater alignment between the way auditors and companies look at the business."

The Way Ahead
Clearly, both companies and auditors have come a long way since the early days of Sarbox implementation, when no one knew quite what regulators expected or what was required for a "passing" grade on Section 404. "There was a lot of running around, chasing our tails, and learning from month to month," recalls McDonald. Adds CDW's Klein, "Both companies and auditors probably did more work than was required because we didn't know exactly what was required."

The lessons learned by auditors and finance staffers as they institutionalize the many changes mandated by Sarbox have proved as important as the additional guidance from regulators in improving the process. While the CFO-auditor relationship may not be as warm as before, it's still evolving. One good sign: finance executives don't seem quite as angry as they were a few years ago.

Of course, there will continue to be struggles over fees and the amount of advice or information auditors are willing to share, as well as how long it takes to get that information. But many CFOs see things moving in the right direction. "We are moving much closer to a collaborative relationship," says Mason. "Collaboration does not mean that the company doesn't have the primary responsibility for making the accounting decisions and judgments. It just means that the auditor can add value."

Kate O'Sullivan is a senior writer at CFO.

To see what CFOs in our survey had to say about auditors, click here.

Hewlett-Packard, Electronic Data Near Merger?

Anonymous — Mon, 12 May 2008 18:00:00 GMT

HP looks to expand its business services operation, something it has been trying to do for eight years.

Hewlett-Packard and Electronic Data Systems confirmed rumors that gripped the markets Monday afternoon that they are in advanced discussions about a possible business combination.

Both pointedly said there are no assurances that an agreement will be reached or a transaction concummated and declined further comment.

Such a deal, which Bloomberg News reported could be valued as high as $13 billion, would be HP’s largest since it bought Compaq Computer for $20 billion six years ago.

EDS provides technology consulting and outsourcing services. In fiscal 2007, HP's services business accounted for $16.6 billion of its $104 billion in revenue, The Wall Street Journal pointed out. HP has been anxious to expand this business ever since its failed attempt to buy PricewaterhouseCoopers' consulting division in 2000. Two years later, rival IBM bought the PwC unit.

HP has since made smaller acquisitions, including Mercury Interactive Corp. for $4.5 billion in 2006.

Observers think a merger of HP and EDS could trigger other deals as cash-rich companies try to buy smaller rivals whose stock prices are down from their highs. It also could spawn more so-called strategic mergers among companies in unrelated industries. Those would not be as dependent on a friendly credit market as deals involving private equity firms, which heavily drove the record deal volume in 2006 and early 2007.

Weather Report

Anonymous — Mon, 12 May 2008 17:00:00 GMT

A new study highlights the leaders and losers when it comes to CSR reporting.

Whether it's due to regulation, pressure from stakeholders or genuine anxiety about the fate of our planet, climate change is becoming a boardroom issue. Or, at least, companies are making it appear so.

Corporate Register, an online directory of corporate social responsibility (CSR) reporting, recently studied the latest batch of non-financial reports from the 500 largest listed companies in the world. Two-thirds of the companies issued a CSR report, with nearly 90% of them addressing climate change specifically. In Corporate Register's opinion, companies in Australia and Japan disclose the most thorough, useful information about climate change, followed closely by European firms. Companies in North America lag behind significantly.

It is somewhat surprising that Australian firms should rate so highly, given that the country only ratified the Kyoto Protocol in December, some ten years after the international treaty was agreed. But relative to their peers elsewhere, companies in Australia are more likely to report on absolute and relative greenhouse-gas emissions across their supply chains and to discuss a wide range of mitigation measures.

Despite government officials' sluggish response to climate change, "environmental issues have been very 'top of mind' over the last few years," explains Emma Herd, senior adviser for corporate responsibility and sustainability at Westpac, a Sydney-based bank considered by Corporate Register to be a leader in climate-change disclosure. One reason is a severe drought that began in 2002, which has pushed up food prices and led to water restrictions in many parts of Australia.

Westpac first published an environmental policy back in 1992. According to Herd, the bank's focus on the environment is based on "recognition that greater operational efficiency would deliver cost savings." To make this clear to shareholders, Westpac reports on its progress in reducing direct emissions — energy usage, business travel, recycling and the like — as well as tracking the proportion of its lending that it considers to have "added environmental benefit." All of this information is verified by a third-party assurance company.

Though the policymakers' response to climate change is well advanced in Europe, it appears that the region's companies can do more to explain their own environmental impact. Shareholders will likely appreciate more, and better, information now about how well the firms they invest in are prepared should disaster strike later.

Wachovia Faces Auction-Rate Securities Probes

Anonymous — Mon, 12 May 2008 16:00:00 GMT

The financial services company blames auction failures for its problems.

The Securities and Exchange Commission and several state regulators have sent subpoenas and inquiries Wachovia Securities, LLC and the unit's affiliated firms asking for information about the underwriting, sale, and auctions of municipal auction-rate securities and preferred securities, according to Wachovia Corp.

Since February, the auctions that set the rates for most ARS issues have failed, resulting in a lack of liquidity for the securities, Wachovia stated in a 10-Q it filed on Monday. The company said it expects further review and inquiry by regulators and will cooperate fully.

Further, Wachovia and Wachovia Securities have been named in a civil suit, Judy M. Waldman Trustee v. Wachovia Corporation and Wachovia Securities LLC filed March 19 in U.S. District Court for the Southern District of New York. Charging the companies with misrepresenting the quality, risk, and characteristics of ARS, the suit seeks class-action status for customers who bought and still hold the securities. The company said it intends to defend itself vigorously.

New York's attorney general and securities regulators in a number of states are conducting a broad investigation of ARS and the role played by Wall Street firms in promoting and marketing them to investors>The Wall Street Journalreported.

Wachovia is one among a number of large financial institutions that recently took large write-offs, slashed their dividends and raised new capital.

Last week the company announced that Ken Thompson will no longer serve as chairman, but will remain president and chief executive officer and continue to serve on the board. Board member Lanty Smith will serve as chairman, making Wachovia the latest company to separate the chairman and CEO roles. At last month’s annual meeting, shareholders repeatedly called for Thompson’s resignation altogether.

On Monday, Thompson told an investor conference that Wachovia is taking steps to fix a recent spate of regulatory and other issues, including hiring a third-party firm to analyze its financial controls and risk management practices, according to the Charlotte Observer.

Wachovia shouldn't be considered a "company in crisis," he said. Thompson also said he plans to cut one-third of the bank’s fixed-income employees and 10 percent of its corporate and investment bank support staff, according to Reuters.

Tax Court: No Theft at WorldCom

Anonymous — Mon, 12 May 2008 15:00:00 GMT

The IRS wins a victory over a former Worldcom employee who tried to claim a tax deduction for losses sustained when the scandal-ridden company collapsed.

Here is a tale of woe, for at least one Worldcom shareholder.

Mahdi Taghadoss was employed by WorldCom for more than 17 years. During that span, he received stock options which he exercised on October 31, 2000. He also acquired Worldcom shares in the follow way: on the open market, through Worldcom's 401(k) plan, and through the company's employee stock purchase plan (ESPP).

Worldcom filed a Chapter 11 bankruptcy petition on July 21, 2002. Clearly, fraudulent accounting practices by certain Worldcom officers contributed to the company's bankruptcy filing. In fact, several of those officers pleaded guilty to charges ranging from fraud to conspiracy. The value of Worldcom's stock declined precipitously and Taghadoss claimed a loss of $1,344,863 from a "casualty" or "theft" on his 2003 federal income tax return. The Internal Revenue Service disallowed the deduction and in April, the tax court, in Taghadoss v. Commissioner, (T.C. Summ. Op. 2008-44) upheld the IRS decision.

The tax code ( provides that no deduction shall be allowed under Section 165(a) solely because the value of stock owned decline when the decline is due to a fluctuation in the market price of the stock, or to some other similar circumstance. Thus, no loss in the value of stock owned shall be allowable for an IRS deduction, except insofar as the loss is recognized upon the sale or exchange of the stock, or if the stock becomes wholly worthless.*

In the case of Taghadoss, neither a sale or exchange, nor a claim of worthlessness was made. Accordingly, the plaintiff's only hope was to demonstrate that he had suffered a casualty loss or a theft loss. In order for a loss to qualify as a casualty loss, however, the loss must be the result of physical damage to the taxpayer's property.

Obviously, there was no physical damage to Taghadoss's securities. Instead, his losses arose from the misconduct of Worldcom's officers, Worldcom's bankruptcy filing, and the liquidation of his securities pursuant to Worldcom's plan of reorganization. Thus, it was clear that the taxpayer did not sustain a casualty loss.

Theft Loss
Under Regulation Section 1.165-8, any loss arising from theft is allowable as a deduction for the taxable year in which the loss is sustained. What's more, a loss from theft will be treated as so sustained during the taxable year in which the taxpayer discovers the loss. In these cases, the amount of the loss to be taken into account shall be the lesser of (1) the decline in the fair value of the property, or (2) the property's adjusted basis in the taxpayer's hands.

Whether admittedly fraudulent acts constitute a theft, however, is determined by the law of the state where the loss was sustained. In the instant case, Virginia law was controlling. Under Virginia law, the term larceny is defined as the willful or fraudulent taking of personal goods, of some intrinsic value, belonging to another and without his assent and most importantly, with the intent to deprive the owner thereof permanently.

In the Taghadoss case, the taxpayer failed to prove that he had, under Virginia law, suffered a theft. The court noted that there was no evidence establishing that Worldcom's officers willfully took Taghadoss's money or property with the requisite intent to "deprive him thereof permanently." In fact, Taghadoss did not purchase his securities from the Worldcom officers and those officers had had no direct dealings with Taghadoss.

Finally, there was no evidence introduced that indicated that Taghadoss relied upon the fraudulent financial statements or the memoranda circulated to employees which assured them that "everything was fine at Worldcom" when he purchased his securities. Further, there was no evidence that he relied upon such memoranda with respect to his decision to retain the securities. Accordingly, under the governing law, there was no theft perpetrated upon Taghadoss.

In the absence of showing that the Worldcom securities had become wholly worthless in 2003 (an assertion which the court also rejected), Taghadoss's tax deductions will have to await his sale or exchange of the Worldcom securities.

Moreover, his loss at that time will be classified as a capital loss. Had his loss been classified as a casualty or theft loss, Taghadoss would have enjoyed the distinct advantages of ordinary loss designation.

Contributor Robert Willens, founder and principal of Robert Willens LLC, writes a weekly tax column for CFO.com.

* In the event of worthlessness, the loss is treated as a loss from the sale or exchange of a capital asset on the last day of the taxable year in which the worthlessness takes place.

MBIA on $2.4B Loss: Fair Value Isn't Fair

Anonymous — Mon, 12 May 2008 15:00:00 GMT

Marking a $3.6 billion credit derivatives loss to market is different for an insurer than it is for a bank, the company complains.

MBIA Inc., the the holding company of struggling municipal bond insurer MBIA Insurance Corp., posted a loss of $2.4 billion for the first quarter that it says stems largely from the need to mark a pre-tax $3.6 billion unrealized loss on insured credit derivatives to market.

On Monday, the company reported the $3.6 billion, first-quarter, pre-tax unrealized loss on credit derivatives that it insured, which reflects the net present-value basis of the losses it expects to pay. That figure included $800 million of credit impairments.

The company claimed, however, that fair-value accounting losses aren't as serious for an insurer as they are for other kinds of financial-services companies. "While attention-getting, the mark-to-market loss," the company said in a press release, "does not accurately indicate actual or expected losses. In addition, mark-to-market losses, except for the impairment, do not affect the insurance company's statutory capital or rating agency capital requirements."

In contrast to banks' "tradable, liquid portfolios of derivative assets and liabilities," contingent insurance liabilities aren't usually tradable. "Fair value accounting, however, results in some inappropriate comparisons of MBIA’s position to those of other financial institutions who must transact or collateralize at current market values or who could be subject to accelerated payments," said, noting that those two conditions are ones that insurance companies don't normally face.

That situation spawns confusion about the real effect of fair-value losses on the company's current, according to the insurer. MBIA "does not expect the full amount of cumulative mark-to-market losses to be realized, except to the extent of the $1.0 billion in impairments estimated to date," the company stated.

The company also said that it raised $2.6 billion in the quarter to support its Triple-A ratings, which it claims "the most raised by any monoline insurer in the current troubled capital market."

Testing CRM Plug-ins

Anonymous — Mon, 12 May 2008 14:44:27 GMT

During the development of CRM plug-ins, a developer will test his/her plug-in before putting in production server to make sure it works as designed. One way to do it is to have a development environment to test plug-in. However, the turnaround time between deploy-test-debug-build-deploy is very significant even when putting the plug-in on disk.

It would be nice to test plug-in locally without deploying it on CRM server. The approach I am going to demonstrate is to execute a plug-in in a small EXE container. Since IPluginExecutionContext is just an interface, we can mimic the context in our test container. Effectively, you will be able to rapidly develop/test/debug plug-in without ever leaving Visual Studio until you are ready.

I created a sample solution containing a simple test context and a test plug-in on code.msdn (http://code.msdn.microsoft.com/MSCRMPluginDebugger). This sample shows you how to populate relevant input parameters and how to create CrmService behind context. You might need to add more implementation to TestContext to suite your needs but this sample should be a foundation you can build on for example pre/post image or MetadataService.

A developer can use this approach for both debugging during development or for writing unit test. It would enable ISV to write unit test and run it from test harness/framework such as one provided by TFS.

Even though mocking IPluginExecutionContext can emulate container that plug-in will execute in, it is only approximation. Other differences can still make running in production different from test context, for example:

Security context. CRM runs plug-in in service account (usually network service). Test contain runs plug-in in currently logged in user context. Files/registries may be accessible from log in user but service account may not , and vice versa.
HttpContext. Accessing HttpContext.Current is not recommended. If you need something that is available only HttpContext.Current, please let us know. Ideally, plug-in should be able to get everything from IPluginExecutionContext.

NOTE: Depending on currently logged in user, you may or may not be able to impersonate a particular user. Only AD user in PrivUserGroup can impersonate other user in CRM.

Akezyt Janedittakarn