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Strategies & Market Trends : Bankruptcy Predictor Model -- Ignore unavailable to you. Want to Upgrade?

To: Razorbak who wrote (45)	3/16/1999 7:45:00 PM
From: mc	Read Replies (1) \| Respond to of 477

Razorbak, that is fabulous work on PKD and the thread as a whole. I just found this thread and am loving it. I'm a math junkie and really appreciate all the efforts put forth on this thread. While at the time I didn't have this formula available to me, I had suspected after reviewing the financials that Parker was hurting bad and the debt was potentially a killer. I'm an SESI shareholder and was incredibly relieved when the deal was called off. Your analysis only lends validity to my previous fears. Keep up the good work, Gary

To: Razorbak who wrote (45)	5/12/1999 12:17:00 AM
From: Razorbak	Read Replies (1) \| Respond to of 477

Parker Drilling Company (NYSE:PKD), Rev. 1 ------------------------------------------------------- Analysis: Altman Bankruptcy Predictor Company Name: Parker Drilling Company Ticker Symbol: NYSE:PKD Date of Analysis: 5/11/99 Conducted by: Samuel M. Williams Vice President Turnaround & Crisis Management, Inc. Two Mid America Plaza, Suite 714 Oakbrook Terrace, IL 60181 Tel: 630-990-9718 Fax: 630-990-9693 E-mail: sam@turnrnd.com turnrnd.com ------------------------------------------------------------------------------------------------ Financial Summary, US$ Millions (1) 8/31/94A 8/31/95A 8/31/96A 8/31/97A 8/31/98A 3/31/99Q ------------------------------------------------------------------------------------------------ Working Capital, WC 40.7 56.0 102.9 275.2 86.7 35.0 Retained Earnings, RE (28.3) (24.4) (20.3) (4.0) 24.1 (3.4) Earnings B4 Interest & Taxes, EBIT (26.9) 7.2 10.2 56.4 93.9 (27.2) Market Value of Equity, MVE 294.0 303.5 381.3 1,071.7 369.1 273.8 Book Value of Tot. Liab., BVTL 25.5 30.0 31.9 635.4 822.6 790.8 Total Sales, TS 152.4 157.4 156.7 311.6 481.2 347.2 Total Assets, TA 209.4 217.0 276.0 984.1 1,200.5 1,142.4 ------------------------------------------------------------------------------------------------ Altman's Financial Ratios 8/31/94A 8/31/95A 8/31/96A 8/31/97A 8/31/98A 3/31/99Q ------------------------------------------------------------------------------------------------ X1 = WC/TA 0.19 0.26 0.37 0.28 0.07 0.03 X2 = RE/TA (0.14) (0.11) (0.07) (0.00) 0.02 0.00 X3 = EBIT/TA (0.13) 0.03 0.04 0.06 0.08 (0.02) X4 = MVE/BVTL 11.52 10.10 11.95 1.69 0.45 0.35 X5 = TS/TA 0.73 0.73 0.57 0.32 0.40 0.30 ------------------------------------------------------------------------------------------------ Bankruptcy Predictor Index, Z (2) 7.26 7.05 8.20 1.85 1.04 0.47 ------------------------------------------------------------------------------------------------ Company Health Assessment (3,4,5) Strong Strong Strong In Near Near Danger Death Death ------------------------------------------------------------------------------------------------ Footnotes: ---------- 1. 3/31/99 figures are based upon the quarterly earnings press release dated 5/10/99 (see URL below). All other figures are from previous Form 10-K's. MVE was valued at $3.56/share on 3/31/99. EBIT and TS for 3/31/99 are quarterly results multiplied times four to get an annualized basis. biz.yahoo.com 2. Bankruptcy Predictor Index: Z = (1.2X1)+(1.4X2)+(3.3X3)+(0.6X4)+(1.0*X5) 3. Company Health Assessment: Z > 3.0 = Strong 1.8 < Z < 3.0 = In Danger Z < 1.8 = Near Death 4. The Altman Bankruptcy Predictor is widely used in the turnaround industry to assess and predict a company's short-term survival prospects. The model is named after the renowned Edward I. Altman, Max L. Heine Professor of Finance at New York University's Stern School of Business, who published the initial research back in 1968. According to one scholarly journal, Altman's Bankruptcy Predictor has proven consistently accurate over the period of time since its development. The original samples in Altman's research displayed accuracy of 95 percent based on data from approximately one year prior to failure. The accuracy dropped to 72 percent based on two-year data. Subsequent tests on firms that have gone bankrupt since 1968 have shown an accuracy level of 82 to 85 percent. 5. CAUTION!!! This analysis should only be used as an analytical tool. While it can greatly assist an investor or stakeholder in identifying weak companies for further investigation, it should not be used to the exclusion of other types of experienced and informed personal evaluation techniques. Also, please remember that, when using the Bankruptcy Predictor Model, the recent trend is the most important indicator of future success or failure since companies' fortunes rarely turn on a dime.