CEO Shuts Down Hostess

[pimpdave]

http://www.alternet.org/corporate-accou ... paging=off

[Timminz]

This shit disgusts me. The "job creators" at work...

The article linked here contains new (to me) information and it just adds fuel to the fire of my hatred for the fucking assholes responsible for this..... and I don't give a fuck about Twinkies.

The craziest thing about this particular situation is the fact that it was first brought into the public eye by people trying to blame the ones who took large pay cuts, and to put on a pedestal the ones who gave themselves large increases and lied to investors in order to sell their shares at artificially inflated prices. They fucked the employees coming, and then fucked them again on the way out.

Stealing pension plans.... fucking low...

[HapSmo19]

See: Social Security Trust Fund
...over at Wiki

[Timminz]

See: Social Security Trust Fund
...over at Wiki

Are you agreeing with me?!


Weird.

[notyou2]

Capitalism run amok. This appears to be another case of the tail wagging the dog. These fuckers should be jailed.

[stahrgazer]

They won't be jailed, because what they did is within the laws, and is, as the article claims, the same tactics Mitt Romney initiated with his Bain Capital company (which is why Romney did not get my vote after all.)

Won't see Congress changing these laws, either, because they operate very similarly, voting themselves all sorts of raises and luxury benefits while laying off the average gov't worker; "borrowing" from Social Security to fund the government then putting the country into panics because the money is gone and not enough is coming in to keep the promises.

And the Pension Guaranty is just another company bailout, if you think about it. Company going bust, CEOs snap up what's left of the dough and leave the taxpayer to fund whatever's needed - unemployment for the workers, parts of the pension for the retirees.

As the article claims, this is Capitalism without Ethics; or, as I've called it, Capitalism without Patriotism. The, "gimme gimme and f* everyone else," brand of capitalism that our founding fathers naively believed would not occur here so they failed to put brakes against it, into the Constitution.

[notyou2]

I believe the brakes were there and removed by both parties but especially by the Repugnatants under George junior.

[stahrgazer]

I believe the brakes were there and removed by both parties but especially by the Repugnatants under George junior.

Brakes were not there for Congress. They were not there for business for many years, were put in after "The Great Depression," and yes, were removed by both parties, especially Republicans under W which is about when THIS Republican started to look at Demo candidates after the Perots and Naders weren't winning.

[thegreekdog]

is, as the article claims, the same tactics Mitt Romney initiated with his Bain Capital company (which is why Romney did not get my vote after all.)

Yeah, so... that's actually not true at all. In fact it's 100% false.

[saxitoxin]

I'm confused, AlterNet says the WSJ said Hostess redirected pension monies to pay executives, but the original WSJ article said Hostess redirected pension monies for "operations to keep the company afloat." I took this to mean shipping, rent, equipment repair, amortization and depreciation, etc.

The AlterNet version is a more exciting read, though. I feel scandalized and irate reading the version where the CEO was using pension funds to buy 12 year old Thai prostitutes versus bored and disinterested reading the version where they were buying a new temperature calibration unit for an industrial confectionary oven.

[Timminz]

I'm confused, AlterNet says the WSJ said Hostess redirected pension monies to pay executives, but the original WSJ article said Hostess redirected pension monies for "operations to keep the company afloat." I took this to mean shipping, rent, equipment repair, amortization and depreciation, etc.

I heard that that was one of the biggest issues at Hostess*: they were spending millions on depreciation and amortization. It was just sucking their bank accounts dry.


* I have not, as yet, been able to find copies of their financial statements, to verify the rumour.

[thegreekdog]

I'm confused, AlterNet says the WSJ said Hostess redirected pension monies to pay executives, but the original WSJ article said Hostess redirected pension monies for "operations to keep the company afloat." I took this to mean shipping, rent, equipment repair, amortization and depreciation, etc.

I heard that that was one of the biggest issues at Hostess*: they were spending millions on depreciation and amortization. It was just sucking their bank accounts dry.


* I have not, as yet, been able to find copies of their financial statements, to verify the rumour.

I don't think one "spends money" on depreciation or amortization.

[Symmetry]

I'm confused, AlterNet says the WSJ said Hostess redirected pension monies to pay executives, but the original WSJ article said Hostess redirected pension monies for "operations to keep the company afloat." I took this to mean shipping, rent, equipment repair, amortization and depreciation, etc.

I heard that that was one of the biggest issues at Hostess*: they were spending millions on depreciation and amortization. It was just sucking their bank accounts dry.


* I have not, as yet, been able to find copies of their financial statements, to verify the rumour.

I don't think one "spends money" on depreciation or amortization.

I'm no expert, but it certainly looks like it's possible, and perhaps even a good business strategy under some circumstances:

http://biztaxlaw.about.com/od/depreciation101/f/grosenondeprec.htm

[thegreekdog]

I'm confused, AlterNet says the WSJ said Hostess redirected pension monies to pay executives, but the original WSJ article said Hostess redirected pension monies for "operations to keep the company afloat." I took this to mean shipping, rent, equipment repair, amortization and depreciation, etc.

I heard that that was one of the biggest issues at Hostess*: they were spending millions on depreciation and amortization. It was just sucking their bank accounts dry.


* I have not, as yet, been able to find copies of their financial statements, to verify the rumour.

I don't think one "spends money" on depreciation or amortization.

I'm no expert, but it certainly looks like it's possible, and perhaps even a good business strategy under some circumstances:

http://biztaxlaw.about.com/od/depreciation101/f/grosenondeprec.htm

Depreciation is a business expense which is, basically, the wear and tear on tangible personal property (or buildings) that one purchases for use in the business. So, in order to have an actual cash outlay, one needs to spend money on the depreciable property; there is no further cash outlay as the depreciable property depreciates. So, if we say Hostess spent money on depreciation or amortization, what we mean to say is that Hostess spent money on depreciable products and amortizable intangibles.

There are certain tax advantages to owning depreciable property, one of which has been around since about 2003, which is accelerated depreciation; meaning one can take a higher deduction for depreciation in the first year in which the property is placed in service. For example, there is 100% bonus depreciation. So, if the property is purchased and placed in service in Year One and is valued at $100,000, the company gets a 100% depreciation deduction and is able to deduct $100,000 in that year. Again, there is no additional cash outlay apart from the $100,000 that the company used to purchase property useful to the business.

[Symmetry]

I'm confused, AlterNet says the WSJ said Hostess redirected pension monies to pay executives, but the original WSJ article said Hostess redirected pension monies for "operations to keep the company afloat." I took this to mean shipping, rent, equipment repair, amortization and depreciation, etc.

I heard that that was one of the biggest issues at Hostess*: they were spending millions on depreciation and amortization. It was just sucking their bank accounts dry.


* I have not, as yet, been able to find copies of their financial statements, to verify the rumour.

I don't think one "spends money" on depreciation or amortization.

I'm no expert, but it certainly looks like it's possible, and perhaps even a good business strategy under some circumstances:

http://biztaxlaw.about.com/od/depreciation101/f/grosenondeprec.htm

Depreciation is a business expense which is, basically, the wear and tear on tangible personal property (or buildings) that one purchases for use in the business. So, in order to have an actual cash outlay, one needs to spend money on the depreciable property; there is no further cash outlay as the depreciable property depreciates. So, if we say Hostess spent money on depreciation or amortization, what we mean to say is that Hostess spent money on depreciable products and amortizable intangibles.

There are certain tax advantages to owning depreciable property, one of which has been around since about 2003, which is accelerated depreciation; meaning one can take a higher deduction for depreciation in the first year in which the property is placed in service. For example, there is 100% bonus depreciation. So, if the property is purchased and placed in service in Year One and is valued at $100,000, the company gets a 100% depreciation deduction and is able to deduct $100,000 in that year. Again, there is no additional cash outlay apart from the $100,000 that the company used to purchase property useful to the business.

Just to be clear, I'm not saying that Hostess did or didn't do this, just pointing out that it's possible they could have been spending money on depreciation. I don't pretend expertise on this.

[Timminz]

I'm confused, AlterNet says the WSJ said Hostess redirected pension monies to pay executives, but the original WSJ article said Hostess redirected pension monies for "operations to keep the company afloat." I took this to mean shipping, rent, equipment repair, amortization and depreciation, etc.

I heard that that was one of the biggest issues at Hostess*: they were spending millions on depreciation and amortization. It was just sucking their bank accounts dry.

* I have not, as yet, been able to find copies of their financial statements, to verify the rumour.

I don't think one "spends money" on depreciation or amortization.

Ah, but what about the amortization of inter-company profits held in depreciable assets? Hostess Brands, is/was a holding company of sorts, after all.

[thegreekdog]

I'm confused, AlterNet says the WSJ said Hostess redirected pension monies to pay executives, but the original WSJ article said Hostess redirected pension monies for "operations to keep the company afloat." I took this to mean shipping, rent, equipment repair, amortization and depreciation, etc.

I heard that that was one of the biggest issues at Hostess*: they were spending millions on depreciation and amortization. It was just sucking their bank accounts dry.

* I have not, as yet, been able to find copies of their financial statements, to verify the rumour.

I don't think one "spends money" on depreciation or amortization.

Ah, but what about the amortization of inter-company profits held in depreciable assets? Hostess Brands, is/was a holding company of sorts, after all.

What?

[Timminz]

I'm confused, AlterNet says the WSJ said Hostess redirected pension monies to pay executives, but the original WSJ article said Hostess redirected pension monies for "operations to keep the company afloat." I took this to mean shipping, rent, equipment repair, amortization and depreciation, etc.

I heard that that was one of the biggest issues at Hostess*: they were spending millions on depreciation and amortization. It was just sucking their bank accounts dry.

* I have not, as yet, been able to find copies of their financial statements, to verify the rumour.

I don't think one "spends money" on depreciation or amortization.

Ah, but what about the amortization of inter-company profits held in depreciable assets? Hostess Brands, is/was a holding company of sorts, after all.

What?

Amortization of unrealized profits, from the sale of depreciable assets, between affiliated companies.

[thegreekdog]

I'm confused, AlterNet says the WSJ said Hostess redirected pension monies to pay executives, but the original WSJ article said Hostess redirected pension monies for "operations to keep the company afloat." I took this to mean shipping, rent, equipment repair, amortization and depreciation, etc.

I heard that that was one of the biggest issues at Hostess*: they were spending millions on depreciation and amortization. It was just sucking their bank accounts dry.

* I have not, as yet, been able to find copies of their financial statements, to verify the rumour.

I don't think one "spends money" on depreciation or amortization.

Ah, but what about the amortization of inter-company profits held in depreciable assets? Hostess Brands, is/was a holding company of sorts, after all.

What?

Amortization of unrealized profits, from the sale of depreciable assets, between affiliated companies.

Transactions between affiliated entities should not be reflected in financial statements and really has no effect on financial statements unless one of the entities engaged in the transaction is removed from the consolidated group.

So, if there is unrealized profits between Companies A and B and then Company B is sold two years later, any gain or loss is recognized upon the sale two years later. At least that's how it works for tax purposes.

[Timminz]

Unless it's a fixed asset, and then any profit (or loss) from the sale is amortized onto the consolidated statements over the remaining expected useful life of the asset.

But, you're right. None of this has anything to do with cash. I was initially making a joke about what Saxi wrote. A joke, that only you, and maybe a couple other posters here, might get. There was really no point in carrying it further than the initial post.

[thegreekdog]

Unless it's a fixed asset, and then any profit (or loss) from the sale is amortized onto the consolidated statements over the remaining expected useful life of the asset.

But, you're right. None of this has anything to do with cash. I was initially making a joke about what Saxi wrote. A joke, that only you, and maybe a couple other posters here, might get. There was really no point in carrying it further than the initial post.

Ah... I probably should have gotten the joke. Sorry about that.

[HapSmo19]

See: Social Security Trust Fund
...over at Wiki

Are you agreeing with me?!


Weird.

On this point, i think so
They should at least be returned any cash contribution they made to the fund.

[stahrgazer]

is, as the article claims, the same tactics Mitt Romney initiated with his Bain Capital company (which is why Romney did not get my vote after all.)

Yeah, so... that's actually not true at all. In fact it's 100% false.

Nope, not false.

[saxitoxin]

Wait - but what if a company that's imploding sells partially depreciated property for a gain? Wouldn't they have to plan for capital gains at EOY? By which I mean, couldn't you sell a delivery truck now, use the money from the sale to pay the electricity bill in the hope your situation will turn around in 8 months, then when it doesn't - and you owe capital gains - expropriate part of the pension allocation to pay that? Maybe I misunderstand, though ... in the words of Symm -

I don't pretend expertise on this.

[stahrgazer]

Wait - but what if a company that's imploding sells partially depreciated property for a gain? Wouldn't they have to plan for capital gains at EOY? By which I mean, couldn't you sell a delivery truck now, use the money from the sale to pay the electricity bill in the hope your situation will turn around in 8 months, then when it doesn't - and you owe capital gains - expropriate part of the pension allocation to pay that? Maybe I misunderstand, though ... in the words of Symm -

I don't pretend expertise on this.

You can also borrow money to buy a delivery truck, depreciate it, then sell the delivery truck now, use the money from the delivery truck depreciation and following sale to pay the executive bonuses (or pay out juicy stock dividends) and at the end of the year have to come up with the money to pay the loan on the delivery truck as well as the capital gains; and expropriate part of the pension allocation to pay that.

Then claim bankruptcy because the money's gone, and ask the judge to award some bonus money to the execs who "stay on to help with the bankruptcy filing."