GV,
As of Dec. 31, 2001,
Long Term Debt = $3,262M [Nothing due until 2006!]
Short Term Debt = $77M
Principle on Convert #1 = $1,885M
Principle on Convert #2 = $1,750M
Even if you consider the convert as debt rather than equity, the total is less than $7B
You are of course considering ALL liabilities as Debt, which is, in the context of this board, a little disingenuous. NOBODY uses total liabilities as debt in computing enterprise value. At the very least, you should net it against tangible current assets.
Cash on Dec. 31, 2001 = $3,069
Proceeds of March Convert = $1,750
Cash balance at end of March = $4,819 - quarterly cash burn
Operating Cash Flow in December quarter (1Q02) = ($408M)
CAPEX = $116
1Q02 Cash impact ex. non-op investments and financings = ($524)
Management Guidance from the pre-announcement for higher revenues +5-10% AND considerably higher op margins ~1500bp Dec to March, SO cash impact should be lower not higher and Cash balances ex. one-time restructuring charges should be as much as $4,500M at end of March.
Expect $1,200M in cash restructuring charges to be taken over the next 3 quarters, offset by $800-$1,000M in working capital reductions and up to $600M in further asset sales. Factor in declining cash impact of operations. It appears that LU has ample cash to fund its currently announced uses.
As for EV, Equity Market Cap = $14,620M
+Debt +converts = $6,974M
-Cash = $4,500M
-Value of AGR = $3,800M
__________
Enterprise Value = $13,294
Things would have to get MUCH worse for LU to flirt with bankruptcy. |
