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To: Wyätt Gwyön who wrote (120620)	6/18/2002 1:23:30 AM
From: Clarksterh	Read Replies (1) \| Respond to of 152472

just as you would not want to have a technical CDMA debate with somebody who doesn't know the first thing about wireless technology, i don't want to debate financial issues with somebody who doesn't understand that, in the context of service providers, EBITDA MEANS THE SAME THING AS CASH FLOW! Ok, I'll agree I was overly harsh in that there is a commonly used definition of cash flow that defines it to be EBITDA. But there are other definitions that use the term 'cash flow' interchangeably with 'free cash flow'. For instance, in my dictionary of accounting terms, cash flow is defined to be "Cash receipts minus cash disbursements" and taxes/interest are definitely disbursements of cash. Given that I was talking about capital expenditures and their impacts on "Cash Flow" I took it for granted you'd understand which I was using. To quote from some on-line 'experts' -g-: <<A common misconception is that EBITDA represents cash earnings. EBITDA is good metric to evaluate profitability, but not cash flow. ... Lately, EBITDA is commonly quoted by many industries (especially technology) even when it isn't warranted. This has meant that more and more EBITDA is being used as an accounting gimmick to dress up a company's earnings.>> investopedia.com OR <<First, EBITDA leaves out so many expenses that to think of it as a measure of profitability is a huge mistake. Second, it's not a proxy for cash flow, since it doesn't measure actual cash flowing into a company.>> fool.com Note, that anything with depreciating capital expenditures as large as AWE's (or even PCS) is more like an Intel than a TCI. For instance, TCI invests in lines and the lines are good for 30 years with only relatively minor upgrades needed thereafter. At some point you know the assets will finish depreciating, but they will actually still be producing revenues so EBITDA is a good measure of the earnings when this happens. Entirely not true in the case of AWE which is greatly expanding it capital expenditures just to keep its current cusotmers and perhaps marginally grow revenues. do you know why the concept of EBITDA was developed and which types of businesses it was applied to? let me give you a hint: it is the CAPITAL INTENSIVE ONES! Yes, the ones with permanent, non-depreciating assets, like TCI, but not like AWE. BTW - I had realized that there was some slop in the definition of 'cash flow', but hadn't realized how much until I started debating with you. So this debate is still entertaining/useful to me. But if you want to back out, feel free to do so and use EBITDA to evaluate AWE and PCS. Clark

To: Wyätt Gwyön who wrote (120620)	6/18/2002 3:07:18 AM
From: Clarksterh	Read Replies (2) \| Respond to of 152472

Mucho - Found an expert that should convince even you that EBITDA is not the same as cash flow even though the term is often incorrectly used as if it were: moodys.com Which explicitly states that cash flow is not the same as EBITDA, and: "EBITDA is a better measurement for companies whose assets have longer lives - it is not a good tool for companies whose assets have shorter lives or for companies in industries undergoing a lot of technological change." And they are even harsher than I am on in what industries EBITDA applies to: "EBITDA is not well suited for the analysis of many industries because it ignores their unique attributes... Cable companies need to reinvest amounts comparable to depreciation over time to upgrade technology that is constantly changing. Amortization is continuing source of cash flow and can be looked at for debt service." Based on their data and their argument and further thought I would agree that EBITDA is not appropriate for the cable industry, and if it isn't appropriate to cable it is a pathetic measure for wireless providers. Clark