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Gold/Mining/Energy : American Eco (ECGOF, ECX on Toronto exchange) -- Ignore unavailable to you. Want to Upgrade?

To: Wade who wrote (2484)	5/25/1998 10:47:00 PM
From: david james	Read Replies (1) \| Respond to of 2841

Wade, Yes, Eco has been a good trading stock. Not one to hold long term - unless long term is longer than 2 years. The audits of this financials, like most companies, occur once a year and applied to the 10k filed in February. The new auditors, Coopers and Lybrand, are one of the "Big Four" auditors. So whatever one thinks of Eco, I believe the 10k is at least fair, and maybe a bit conservative measure of Eco's business. The 1997 10k included earnings as would be reported under Canadian accounting practices as well as U. S. accounting practices (U.S. GAAP). sec.yahoo.com (see section 15) In U.S. dollars the basic earnings by Canadian GAAP would be $1.08 and by U.S. GAAP would be 66 cents. That would have been $.73 and $.54 had they been fully taxed at a 35% rate. The difference between the U.S. accounting and the Canadian accounting is primarily due to when several one time charges had to be booked. The debentures was the largest charge ($3.5 mill) which by Canadian accounting is spread over several years, but was completely booked in 1997 using U.S. GAAP. The other significant charge (1.5 mill) was due to how losses by EIFH in early 1997 had to be booked. There were also some differences with the way the NOLs were applied. However, Eco will not be using NOLs in 98, EIFH seems to be making a small profit, and there are no more debentures. So U.S. GAAP will likely be higher than Canadian GAAP in 1998. The big question is what they earn in 98. McGinnis has stated that they will earn at least 70 to 80 cents - which would be close to flat growth. The story going round is that McGinnis has become more conservative and that these numbers come from current business only - not projecting what might be brought in from new contracts. In that case, the new pipeline contract will add significantly to those estimates. If they only make 60 cents over the next three quarters, I suspect we will move up a bit from the current price - but not a lot. In that case, although one's money would be relatively safe here (IMO), there would certainly be better places for it. We should start to learn if Eco has a new strategy, when we see earnings on July 8. I am expecting that the 18 cent estimate is conservative. We may find out sooner whether the bond deal attracts a buy rec and an institutional following. At the very least, a buy rec should provide a short term boost. Also Nesbitt Burns is one of the largest Market Makers on the Canadian exchange. Might be interesting to watch and see whether their role in the bond deal produces an increase in activity on that exchange. If both Jefferies and Nesbitt give buy recs, then at least a couple institutions should notice. Thursday is the shareholders meeting, so only a couple more days left, if Eco has something to make shareholders happy. David