Kaneb(KAB) Message Board

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Microcap & Penny Stocks : Kaneb(KAB)

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To: Bob Davis who wrote (56)	4/3/1998 11:32:00 AM
From: Boyd Hinds	Read Replies (1) of 91

Bob: Great website. I have enjoyed reading your posts and the in-depth analyses of KAB, MTY, etc. I have several questions about the derivation of the NPV of $12.60/share for KAB using discounted cash flows. 1) Why don't you include some measure of capital expenditures in your calculation of cash flow? If you add back depreciation and amortization, why shouldn't Cap Expenditures be subtracted from net income?? 2) Do you believe that changes in ST assets and liabilities (AKA changes in Working Capital) should be excluded from the cash flow calculation? and why? 3) What about the costs of interest/borrowing expenses? In 1997, KAB paid out nearly 15.5 million in interest (from the income statement). However, in looking at the cash flow statement, the company actually paid down its LT debt by 4.149 million! I'm not quite sure how to account for this in a cash flow model--how do you account for it, if at all?? 4) It looks like you DON'T use fully diluted shares outstanding when calculating your final NPV. Why?? And should one use the most current number for outstanding shares (as of the day of the 10K) or a weighted average over the course of a year or quarter? Thanks for your help and I look forward to your reply.

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