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

To: James Clarke who wrote (16673)	3/25/2003 5:37:01 PM
From: Jack Hartmann	Read Replies (1) \| Respond to of 78621

Here is the excerpt 10K. Really no red flags. 1999 2000 2001 ---- ---- ---- (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS) <S> <C> <C> <C> Revenues .................................................. $4,072,107 $4,195,115 $4,380,477 Operating unit expenses ................................... 2,688,849 2,816,363 2,905,043 Corporate general and administrative expenses ............. 149,285 148,023 167,206 Provision for doubtful accounts ........................... 342,708 98,037 107,871 Depreciation and amortization ............................. 374,248 360,847 375,270 Loss on termination of credit facility (Note 1) ........... -- -- 6,475 Loss on sale of assets (Note 16) .......................... -- -- 174,127 Impairment and restructuring charges (Note 13) ............ 121,037 -- -- Interest expense .......................................... 176,652 221,595 218,100 Interest income ........................................... (10,587) (9,104) (7,349) ---------- ---------- ---------- 3,842,192 3,635,761 3,946,743 ---------- ---------- ---------- Income before income taxes and minority interests ......... 229,915 559,354 433,734 Provision for income taxes (Note 10) ...................... 66,929 181,808 139,467 ---------- ---------- ---------- 162,986 377,546 294,267 Minority interests ........................................ 86,469 99,081 91,880 ---------- ---------- ---------- Net income ................................................ $ 76,517 $ 278,465 $ 202,387 ========== ========== ========== Weighted average common shares outstanding ................ 408,195 385,666 389,717 ========== ========== ========== Net income per common share ............................... $ 0.19 $ 0.72 $ 0.52 ========== ========== ========== Weighted average common shares outstanding - assuming dilution ........................................ 414,570 391,016 399,227 ========== ========== ========== Net income per common share - assuming dilution ........... $ 0.18 $ 0.71 $ 0.51

To: James Clarke who wrote (16673)	3/27/2003 9:57:38 PM
From: Bob Rudd	Read Replies (1) \| Respond to of 78621

James Clarke HRC: I put this list together prior to reading any posts after Jim's 'challenge' Possible Red flags: Balance sheet: Inventories +21% vs 4% Rev increase [Inventories are more concerning in a retailer or wholesaler than in a service co like this, yet it is still a red flag. Net Accounts Rec looks OK, but the allowance for doubtful accounts jumped - raising that allowance is generally more conservative - it decreases income, but volatility in that allowance bears watching - I'd be looking at the footnotes to see why. Prepaid Expenses & Other Current assets +54% vs 4% Rev increase - OCA is potential slush bucket - These led to a 21% increase in current assets, but were still only a 2% increase in total assets: Revenue and earnings overstatements lead to increases in asset accounts[or reductions in liability accounts], yet overall, total assets only grew modestly...inline with revenues. Payables all dropped substantially from -54% for AP -20% in Accrued interest payable & other liability another slush bucket and the largest of the payables accounts. Offsetting this is HUGE increase in deferred income taxes indicating a mismatch between financial statements and tax reporting. Overall, internal accounts seem rather volatile and several of the items would make me want to dig deeper. Income Statement: Revenue and operating expenses look fine - slow growth, in line with one another. SG&A took an outsize jump of 13% form 00 to 01, a bit worrisome, but not indicative of fraud...just poor cost control at hq. The doubtful accounts provision took a huge drop 99 to 00 effectively juicing income - I'd be looking for 'splaining in MDA on that. Substantial one-time charges/losses in both 99 & 01 that analysts might ignore...are they a serial restructurer? Cashflow statement: The big changes in allowance for doubtful accounts flows thru from above. Large mismatch between PPE change on BS [-97mm] vs investment in PPE on cashflow statement of 440mm, or 235 mm if the 'non-strategic assets sold were PPE assets - This looks pretty red flaggish, but I'm not sure how to interpret it - It should have caused me look further though. How'd I do, Professor Clarke?