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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Bob Rudd who wrote (8815)	10/29/1999 10:57:00 PM
From: Q.	Read Replies (2) \| Respond to of 78752

Bob, re. ISTN, I found the explanation in the 10k for "Deferred contract revenue" Revenues are deferred on vehicle service contracts in those instances where the Company directly receives cash for that portion of the total service contract that is allocated to estimated claims reserves. Deferred contract revenue is recorded as earned over the life of the service contract in proportion to expected claims. It seems to me that this is essentially a long-term liability, because the company expects that it must pay this cash back, as claims come in. So we should subtract it from the working capital to get the net-net value. It's such a huge number for ISTN that it takes the net-net value way down from $40 M way down to merely $8 M. Thus, the stock trades at 3X net-net, rather than 65% of net-net. Big difference. This stock might still be a great buy for other reasons, but I wouldn't buy it for the liquidation value of the company. It should be disqualified from a net-net list.