Financial Reporting and Analysis 6e Structure of the Balance Sheet and Statement of Cash Flows
CHAPTER 4
STRUCTURE OF THE BALANCE
SHEET AND STATEMENT OF
CASH FLOWS
Chapter Overview
The balance sheet and statement of cash flows are two of the primary financial statements
required under generally accepted accounting principles (GAAP). The balance sheet shows the
assets owned by a company at a given point in time and how those assets are financed (debt versus
equity). When making intercompany comparisons, financial statement users must be careful to
recognize how the different measurement bases affect key financial ratios and how account titles
and statement formats vary across countries.
Financial statement footnotes are an integral part of companies’ financial reports and provide
a wealth of information that allows statement users to better understand and interpret the numbers
presented in the body of the financial statements.
The statement of cash flows shows the change in cash for a given period broken down into
operating, investing, and financing activities. Successive balance sheets and the statement of cash
flows articulate with one another meaning changes in noncash balance sheet accounts can be used
to explain changes in cash for a period. Therefore, analysis of changes in selected balance sheet
accounts also can be used to explain why operating cash flows differ from accrual income.
Conversely, the statement of cash flows provides information that enables users to understand
changes in balance sheet accounts that have occurred over the reporting period.
Understanding the interrelationships between successive balance sheets and the statement of
cash flows and being able to exploit these interrelationships to derive unknown account balances
are important skills for analysts and lending officers. Additionally, understanding the basic
differences between the direct and indirect methods to presenting cash flows from operations, and
differences between where certain items are reported on a cash flow statement under IFRS versus
U.S. GAAP is important in arriving at appropriate conclusions about cash flows and in making
comparisons.
Chapter Outline
I. CLASSIFICATION CRITERIA AND MEASUREMENT CONVENTIONS FOR
BALANCE SHEET ACCOUNTS
A. FASB defines the three basic elements of the balance sheet (also called the statement of
financial position) as follows:
1. Assets are the probable future economic benefits obtained or controlled by an
entity as a result of past transactions or events.
2. Liabilities are probable future sacrifices of economic benefits arising from present
obligations to transfer assets or provide services to other entities in the future as a
result of past transactions or events.
3. Shareholders’ Equity is the residual interest in the entity’s assets that remain after
deducting its liabilities. It is known as shareholders’ or stockholders’ equity for a
corporation.
B. The balance sheet provides information for assessing an entity’s rates of return, capital
structure, liquidity, solvency, and financial flexibility.
1. Rates of return measures are used to evaluate operating efficiency and
Financial Reporting and Analysis 6e Structure of the Balance Sheet and Statement of Cash Flows
profitability.
a. Two common returns measures are return on assets (ROA) and return on
common equity (ROCE). Precise calculations for these performance measures
are detailed in Chapter 5.
b. By comparing ROA to ROCE, users can gain insight into whether leverage
(i.e., debt financing) enhances the return earned by shareholders.
2. Capital structure refers to the relative proportion of financing for assets that comes
from debt or equity sources. An important decision in corporate finance is
determining the proper mix of debt (with tax-deductible interest) and equity
financing (debt/equity ratio) so as not to be overleveraged (too much debt).
3. The balance sheet and related footnotes provide information for evaluating the
maturity structure (liquidity, solvency, and capital structure) of the existing
liabilities
a. Liquidity measures how readily assets can be converted to cash relative
to how soon liabilities will have to be paid in cash.
b. Solvency refers to company’s ability to generate sufficient cash flows to
maintain its productive capacity and still meet interest and principal payments
on long–term debt.
c. Operating and Financial flexibility refers to a company’s ability to adjust to
unexpected downturns in the economic environment in which it operates or to
take advantage of profitable investment opportunities as they arise.
C. A classified balance sheet groups similar items to reveal important relationships.
1. Assets:
a. Current assets.
i. Assets expected to be converted into cash or consumed within the
next 12 months or the operating cycle (if longer) are reported as
current assets and listed in the descending order of liquidity.
ii. Assets not meeting criteria (i) above are reported separately.
b. Long-term investments.
c. Property, plant, and equipment.
d. Intangible assets.
e. Other (long-term) assets.
2. Liabilities:
a. Current liabilities.
b. Long-term liabilities.
i. Liabilities expected to be settled from current assets within the next
12 months (or operating cycle if longer) are reported as current
liabilities.
ii. All other liabilities are reported as noncurrent or long-term
obligations.
3. Owners’ equity (also known as stockholders’ equity section):
a. Capital stock.
b. Additional paid-in capital.
c. Retained earnings.
4. While many people characterize generally accepted accounting principles (GAAP)
balance sheet carrying amounts as historical costs, they are a mixture of historical
costs, current replacement costs, fair values, net realizable values, and
discounted present values.
D. Cash and Cash Equivalents: The amount of money or currency the firm has on hand in bank
Financial Reporting and Analysis 6e Structure of the Balance Sheet and Statement of Cash Flows
accounts or in certificates of deposit.
1. If cash consists exclusively of U.S. dollar amounts, the balance sheet Cash account
reflects the historical amount, which is identical to the current market value of
cash.
2. Cash amounts denominated in foreign currency units is translated into U.S.
dollar equivalents at the balance sheet date using the current rate of exchange.
This portion of cash is carried at its current market price.
E. Short-term investments:
1. The intended holding period of the company that owns the securities determines
how the debt and equity securities are measured on the balance sheet.
a. Debt securities to be held to maturity are carried at amortized cost.
b. Debt/Equity securities to be held for short-range investment are carried at fair
value on each balance sheet date.
2. Some investments will be carried at amortized cost (debt securities), and others at
fair value. Equity securities held for the short term are always measured at fair
value. When the balance sheet amount is written up or down to current fair value,
the offsetting gain/loss appears on the income statement for trading securities and
on the Other Comprehensive Income for available-for–sale securities (see Ch 16).
F. Accounts receivable – Net:
1. Gross accounts receivable equal the face amounts due arising from past credit
sales transactions.
2. Gross accounts receivable are reduced by an estimate of the proportion of
existing accounts receivable that an entity believes will ultimately not be
collected.
3. As a consequence, net accounts receivable are carried at net realizable value.
G. Inventories
1. The measurement of inventory depends on the comparison between historical costs
and current market prices.
2. When costs are lower than market price, the carrying amount for inventory
conform to the historical cost convention.
3. When cost exceeds market, inventories on the balance sheet are carried at current
market price, where that market price is the cost to replace them (subject to U.S.
GAAP rules described in Chapter 9).
H. Deferred income taxes are reported at their undiscounted amount.
1. Rules differ for financial reporting (book income) from those for determining
income for taxation purposes (taxable income), creating temporary (or timing)
differences.
2. Deferred tax assets arise when a revenue (expense) is reported in an earlier (later)
period for tax purposes than for book purposes.
3. Deferred tax liabilities arise when a revenue (expense) is reported later (earlier)
period for tax purposes than for book purposes.
4. Net deferred tax assets (or liabilities) are classified according to whether the asset or
liability giving rise to the temporary difference is classified as current or noncurrent.
I. Property, plant, and equipment – Net:
1. All items in this category are carried on the balance sheet at historical cost
minus accumulated depreciation.
2. However, when a long-lived asset becomes impaired—that is, when its carrying
amount may no longer be recoverable—the fixed asset is reduced to its lower fair
value.
J. Investments are reported at their fair values on the balance sheet date.
Financial Reporting and Analysis 6e Structure of the Balance Sheet and Statement of Cash Flows
1. This classification consists of U.S. government and agency obligations and corporate
debt and equity securities which are not expected to be sold in the near term.
K. Goodwill:
1. It is initially measured as the difference between the consideration given to acquire
another business entity and the fair value of the identifiable net assets of that entity on
the date of acquisition.
2. Impairments will reduce the reported amount of goodwill.
L. Other Assets: Mainly composed of intangible assets. These assets are carried at
historical cost less amounts amortized, and royalty licensing agreements. These assets
are carried at historical costs less amounts amortized to date.
M. Current Portion of Long-Term Debt: The current portion of
long–term debt represents current liabilities and are reported at their undiscounted face
amount (amount due at the payment date).
N. Accounts payable and accrued liabilities are reflected on the balance sheet at the
amount of the original liability (i.e., historical cost).
O. Long-term debt:
1. The initial balance sheet carrying amount is determined by computing the
discounted present value of the sum of (1) the future principal repayment plus (2)
the periodic interest payments.
2. The effective yield rate is used for discounting the principal and periodic interest
amounts.
i. when bonds are issued at par, the cash received equals the face value of
the debt
ii. when bonds are issued at a premium or a discount, the initial carrying
amount is equal to the present value of the future interest and principal
payments discounted at the effective yield rate.
3. The bonds’ carrying amount will differ from the bonds’ current market price
whenever interest rates have changed subsequent to issuance.
P. Other Liabilities: Includes any other obligations such as obligations to employees
arising from pension benefits
Q. Common stock is reported at historical par (or stated) value.
R. Additional paid-in capital is reported at historical cost as the excess of original issue
price and par (or stated) value.
S. Retained earnings:
1. This account measures the net of the cumulative earnings less cumulative
dividend distributions of the company since inception.
2. Since different measurement bases pervade the balance sheet, income (and
retained earnings) is a mixture of many bases such as historical costs, current
values, fair values, and present values.
T. Accumulated Other Comprehensive Income:
1. This account measures the net of the cumulative unrealized gains and losses from
other comprehensive income components recognized in current and prior years.
2. This account is debited for unrealized losses and credited for unrealized
gains. All amounts are shown net of tax effects.
U. Noncontrolling Interests: Represents the net assets of the subsidiary held by investors
other than the acquiring company (parent company). Noncontrolling interests are
reported in the stockholders’ equity section of the balance sheet and are measured at the
fair value of the subsidiary at the time of its acquisition.
V. Analytical Insights: Understanding the Nature of a Firm’s Business
1. One tool for gaining insights into the company’s operations and for analyzing its
Financial Reporting and Analysis 6e Structure of the Balance Sheet and Statement of Cash Flows
assets and financial structures is to prepare a common-size balance sheet.
2. Each balance sheet account is expressed as a percentage of total assets or,
equivalently, as a percentage of total liabilities plus owner’s equity.
3. The types of assets and the mix of assets along with the method of financing
these assets determine the financial risk of an organization. This should be
balanced with the operational risk of the entity giving the optimum capital
structure.
4. Companies balance their risk factors and leverage both financial and operational
risks to maximize returns while minimizing the corporate risk.
W. International Differences in Balance Sheet Presentation: Analysts must pay
attention to the differences in account titles, format, and valuation techniques that are
allowed by different countries’ “GAAP” procedures.
1. U.S. firms list assets in the order of liquidity. Firms using the IFRS are allowed,
but not required, to reverse the ordering of assets from least liquid to most liquid.
2. The account titles and formats for balance sheets prepared in other countries can
sometimes differ from those prepared in the U.S. In the U.S. assets are presented
in decreasing order of liquidity. In the U.K., Germany, Netherlands, and other
European countries, fixed assets are presented first, followed by current assets
displayed in an increasing order of liquidity.
X. Notes to Financial Statements:
1. The footnotes to the financial statements provide a wealth of information that
allows users to better understand and interpret the numbers presented in the body
of the financial statements.
2. The summary of significant accounting policies explains the important
accounting choices that the reporting entity uses to account for selected
transactions and accounts.
3. Subsequent events are events or transactions that have a significant effect on a
company’s financial position or results of operations occurring after the close of
its fiscal year-end but before the financial statements are issued.
4. Related-party transactions occur when a company enters into a transaction with
individuals (or businesses) in some way connected with it or its management or
board of directors.
II. STATEMENT OF CASH FLOWS:
A. Cash flows are critical to assessing a company’s liquidity and creditworthiness. The
statement of cash flows shows the user why a firm’s investments and financial structure
have changed between two balance sheet dates.
1. The critical issue then becomes the timing of income recognition.
2. The connection between successive balance sheet positions and the statement of
cash flows can be demonstrated through manipulation of the simple accounting
equation:
a. Assets = Liabilities + Owners’ equity.
b. Cash + Noncash assets = Liabilities + Owners’ equity.
c. Cash = Liabilities – Noncash assets + Owners’ equity.
d. ∆Cash = ∆Liabilities – ∆Noncash assets + ∆Owners’ equity.
e. Thus, the cash flow statement simultaneously provides an explanation of
why a firm’s cash position has changed between successive balance
sheet dates and explains changes that have taken place in the firm’s
noncash asset, liability, and stockholders’ equity accounts over the same
Financial Reporting and Analysis 6e Structure of the Balance Sheet and Statement of Cash Flows
time period.
3. The change in a firm’s cash position between successive balance sheet dates
will not equal the reported earnings for that period.
a. Reported net income will not equal cash flow from operating activities
because of differences between accrual-based and cash-based accounting.
b. Changes in cash may be caused by nonoperating investing activities like
the purchase or sale of fixed assets.
c. Changes in cash may be caused by nonoperating financing activities like
the issuance of stock or bonds or the repayment of a bank loan or
dividends paid to stockholders.
B. The cash flow statement summarizes the cash inflows and outflows of a company broken
into three activities:
1. Cash flows from operating activities result from the cash effects of
transactions and events that affect operating income at some point.
2. Cash flows from investing activities result from the cash effects of transactions
and events that affect long-term assets.
3. Cash flows from financing activities result from the cash effects of
transactions and events that affect long–term liabilities and owners’ equity
(other than net income).
C. Cash flows versus accrual earnings and determination of cash flow information:
1. Indirec t method arri ves at ne t cash flows from op erations by a djusting net income
for the differences between accrual-basis earnings and cash-basis earnings.
a. Operating section reconciles net income to cash provided by operations.
i. Add noncash expenses (e.g., depreciation; amortization; losses on sales
of property, plant and equipment; amortization of bond discount) to net
income.
ii. Subtract (add) net increases (decreases) in current assets.
iii. Add (subtract) net increases (decreases) in current liabilities.
b. Investing section shows components of changes in long-term assets as
inflows and outflows.
c. Financing section shows components of changes in long–term liabilities and
owners’ equity as inflows and outflows.
2. The direct method shows the individual operating cash inflows and outflows as
it “directly” relates to income statement classifications of revenues and expenses.
D. The statement of cash flows is useful because it:
1. Shows the entity’s ability to generate future cash flows.
2. Shows the entity’s ability to pay dividends and meet obligations.
3. Details differences between net income and cash provided by operations.
4. Details cash and noncash investing and financing activities.
Teaching Tip: Increases in noncash working capital are subtracted from net income in the
process of calculating operating cash flow. While increases in working capital are
generally viewed as a positive occurrence, this “negative” effect can lead to nice classroom
discussion of earnings versus cash flows with students.
III. GLOBAL VANTAGE POINT:
IFRS (IAS 7) encourages, but does not require, entities to report cash flows from operating
activities using the direct method because it is believed to provide information useful in
Financial Reporting and Analysis 6e Structure of the Balance Sheet and Statement of Cash Flows
estimating future cash flows not available under the indirect method.
A. Exhibit 4.15 in the text illustrates the various sections, categories, and
subcategories for the statement of cash flows with subtle differences such as:
1. U.S. GAAP requires entities to report cash interest from investments as part of
operating cash flows while IAS 7 allows the option of reporting it as part of
investing activities. Comparability is impacted by such a difference.
2. Chapter 17 addresses further differences between IFRS and U.S. GAAP.
Financial Reporting and Analysis 6e Structure of the Balance Sheet and Statement of Cash Flows
CHAPTER QUIZ
1. Heath Co. ‘s working capital (i.e., current assets – current liabilities) at the beginning of
January 2014 was $35,000. The following transactions occurred during January 2014:
Performed services on account $15,000
Purchased supplies on account 2,500
Consumed supplies 2,000
Purchased office equipment for cash 1,000
Paid short–term bank loan 3,250
Paid salaries not previously accrued 5,000
Accrued salaries 1,750
What is the amount of working capital at the end of January?
a. $23,750
b. $25,250
c. $39,250
d. $40,250
2. At the end of 2014 Beta Graphics had $20 million of debt that was due to be paid in full
during the following year. In January of 2015, subsequent to its fiscal year end and prior to
the issuance of its 2014 financial statements, Beta refinanced the debt so that it matures in
2020. Beta reports this $20 million in debt on its December 31, 2014 balance sheet as:
a. A current liability, with no related footnote disclosure.
b. A current liability, with a related footnote disclosure.
c. A long-term liability, with a related footnote disclosure.
d. A current liability for some portion of the $20 million, with the remaining portion a
long-term liability.
3. Eastman Kodak discloses the following in its annual report to shareholders. During 1996,
Kodak settled a lawsuit, requiring the Company to evaluate and upgrade its industrial sewer
system over a 12–year period. The expenditures required to complete this program cannot
currently be reasonably estimated since upgrade plans must be developed on an ongoing
basis. Further, costs associated with the program will be for capital expenditures. Kodak:
a. Should have disclosed the event only because costs could not be reasonably estimated.
b. Would have capitalized the costs in 1996 if they could have been reasonably estimated.
c. Would have disclosed the amounts even if the costs could have been estimated
since the expenditures are for capital equipment.
d. Did not have to disclose this event since the costs could not be reasonably estimated.
4. Rice Co. was formed on January 2, 2014 with $500,000 from the issuance of stock and
$75,000 from borrowed funds. Net income during 2014 was $25,000. On December 15,
Rice paid a $2,000 cash dividend. No other activities affected owners’ equity in 2014. At
December 31, 2014, Rice’s liabilities had increased to a total of $94,000. What amount of
total assets should Rice report in its December 31,2014, balance sheet?
a. $598,000.
b. $600,000.
c. $617,000.
d. $619,000.
Financial Reporting and Analysis 6e Structure of the Balance Sheet and Statement of Cash Flows
5. We typically think of all liabilities as debt. While unearned revenue is reported as a
(current) liability, do analysts consider unearned revenue to be debt?
a. Yes. Unearned revenue is considered debt because it requires cash repayment.
b. Yes. Unearned revenue is considered debt because it requires the delivery of goods
or services.
c. No. Unearned revenue is really an asset since the firm already received the cash.
d. No. Unearned revenue is not considered debt, but is an indicator of a firm’s
future profitability.
6. The importance of segregating operating activities from investing and financing activities on
the statement of cash flows is because:
a. Investing and financing activities are discretionary sources and uses of cash.
b. Net losses always result in cash used by operations, but investing and financing
activities can mask these problems by resulting in an overall net increase in cash.
c. Investing and financing activities provide investors and creditors with information
on the quality of income.
d. Cash provided by operating activities is all one needs to consider in projecting
future cash flows.
7. Ledger, Inc. had the following activities during 2014:
• Acquired 2,000 shares of stock in Maybell, Inc. for $52,000.
• Sold an investment in Rate Motors for $70,000 when the carrying value was $66,000.
• Purchased a $100,000, four-year certificate of deposit from a bank. Ledger earned
$7,000 in interest on this CD.
• Collected dividends of $ 2,400 on stock investments.
In Ledger’s 2014 statement of cash flows, net cash used (i.e., cash outflows) in
investing activities should be:
a. $82,000
b. $84,400
c. $86,000
d. $89,000
8. Reported net cash flow, unlike net income, is not affected by the choice of accounting
alternatives. However, whether an expenditure is recorded as a long-term asset
(capitalized) or expensed has a significant impact on the components of cash flow (i.e.,
operating, investing, and/or financing sections). Which of the following statements is
true?
a. Operating cash flows are unaffected by the decision to capitalize or expense.
b. Investing cash flows are unaffected by the decision to capitalize or expense.
c. When given a choice, managers would rather capitalize than expense an outlay since
capitalization increases operating cash flows relative to expensing.
d. Total cash flows are higher if the outlay is recorded as a capital expenditure.
Financial Reporting and Analysis 6e Structure of the Balance Sheet and Statement of Cash Flows
9. The net cash provided by operating activities in Delmar Corporation’s 2014 annual report
was $8,000,000. For 2014, depreciation expense was $3,800,000, a gain on sale of
equipment was $600,000, t otal curren t assets (o ther than cash) decr eased by $1,00 0,000, and
total current liabilities decreased by $300,000. Based on the preceding information, calculate
Delmar Corporation’s 2014 net income?
a. $2,900,000
b. $4,100,000
c. $7,900,000
d. $11,900,000
10. Suppose an extraordinary gain, net of tax, of $13,000 is reported on an income statement.
Assume that the tax effect is $7,000. Which of the following best characterizes how this
extraordinary item affects the statement of cash flows?
a. The before-tax gain of $20,000 is subtracted from the operating section of the statement
of cash flows.
b. The after-tax gain of $13,000 is subtracted from the operating section of the statement of
cash flows.
c. The amount of cash involved is not required before concluding anything about the
investing or financing section.
d. Extraordinary items do not affect operating cash flows since they are not part of
operating income.
Essay question
The statement of cash flow reports three cash flow amounts including 1) operating cash flow, 2)
investing cash flows, and 3) financing cash flows. Describe the corporate strategy of a company
that has a positive operating cash flow, an investing cash flow that is negative, and a financing
cash flow that is positive. (Note to instructors: You can change each of the three variables
indicating different entity strategies)
QUIZ ANSWERS:
1. d. Beginning working capital $35,000
Effect on working capital:
Performed services on account 15,000
Purchased supplies on account 0
Consumed supplies (2,000)
Purchased office equipment for cash (1,000)
Paid short–term bank loan 0
Paid salaries not previously accrued (5,000)
Accrued salaries (1,750)
Ending working capital $40,250
Financial Reporting and Analysis 6e Structure of the Balance Sheet and Statement of Cash Flows
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$20 million with long-term debt, there would be no need to satisfy this debt with current
assets. Reporting this obligation as a current liability would misstate its liquidity.
3. c. Since the expenditures are capital in nature (i.e., for property, plant, and equipment),
Kodak will wait until any expenditures are made, even if exact figures are known.
Conservatism says that in times of uncertainty, we should tend toward understatement of
assets and earnings. Recording a contingent asset if amounts are known and before the
assets are in place would be contrary to the principle of conservatism.
4. c. Assets = Liabilities + Owners’ equity
Assets = $94,000 + ($500,000 + $25,000 –
$2,000) Assets = $617 ,000
5. d. Unearned revenues are not debt, as they will not require cash repayment. They will be
satisfied through the delivery of goods or services, and are an indicator of a firm’s future
profitability.
6. a. Investing and financing activities are discretionary sources and uses of cash. Effects of
investing and financing decisions are reported in these sections in the period in which they
are made. Effects of fundamental changes in operations may be felt incrementally over
several periods.
7. a. Investing activities:
Purchase of Maybell, Inc. stock ($52,000)
Sale of Rate Motors stock 70,000
Purchase of CD (100.000)
Net cash used in investing activities ($82,000)
The $2,000 gain on the sale of Rate Motors is shown as a reduction of operating cash
flows. Interest income and dividend income are components of operating cash flows
since they are included in net income.
8. c. Capitalizing expenditures results in cash ouflows under the investing section of the
statement of cash flows. Expensing these amounts lowers cash provided by operations since
net income is lower in this case.
9. b. NI + $3,800,000 (depreciation expense) + $1,000,000 (decrease in current assets) –
$300,000 (decrease in current liabilities)
(decrease in current liabilities) = $8,000,000. Therefore, NI = $3,500,000.
10. a. The before-tax gain of $20,000 is subtracted from the operating section of the statement of
cash flows. One cannot really conclude anything about the investing and operating section
since we do not know the cash amount involved nor do we know whether this event relates to
a long-term asset or liability.
RECOMMENDED EXHIBITS
1. Exhibit 4.1—Motorola Solutions, Inc. Consolidated Balance Sheets.
2. Exhibit 4.2—Common-size Balance Sheet Comparison.
3. Exhibit 4.3—Burberry Group Balance Sheet Fiscal 2011/2012
4. Exhibit 4.8 – Wal-Mart Stores Inc., Consolidated Statements of Cash Flows.
5. Figure 4.1—Adjustments to Accrual Earnings for Changes in Working Capital Accounts to
Obtain Cash Flows from Operations.
6. Exhibit 4.15—Recommended Sections, Categories, and Subcategories for Statement of
Financial Position and Statement of Cash Flows.
Financial Reporting and Analysis 6e Structure of the Balance Sheet and Statement of Cash Flows
SUGGESTED READINGS
1. Frigo, Mark L.; Graziano, Ron, 2003. Strategic decisions and cash flow. Strategic Finance
Jul. 2003, Vol. 85 Issue 1, pp. 8–11.
2. Hilsenrath, J. 2001. Experts say corporate layoffs often hurt more than help. The Wall
Street Journal (February 21).
3. McGee, S. 2001. Convertible securities to fill hole left by decline in IPO offerings. The
Wall Street Journal (February 1).
4. McGough, R. 2000. Stock-picking style is in vogue again. The Wall Street Journal
(December 28).
5. Weil, J. 2001. Did accountants fail to flag woes at Dot-Com casualties? The Wall Street
Journal (February 9).