Just give me the facts! I've heard all the shorts
opinions, the Chapter 11 and Mr. Gann but no one has
challenged this post(#5100).
With all due respect I
would love to hear what you think Mr. Gann regarding
this post. I can believe in further devaluation to
$3-4 because of all the talk and sometimes rumors do
move the market but ... I also strongly believe it
will comeback just as fast as it declined. Good post
If the notes for $150MM constitute the
significant principal paydown due in 2000, then this stock is
sorely depressed and undervalued. Based on the
statements for the period ending 09/30/99, the company had
already made enough money to cover the $150MM and service
all its debt without even considering the money that
would have been available had the company not paid any
dividends during the year. In fact, it leaves about $93MM
available to absorb the higher interest expense that the
company incurs due to debt downgrades. Again, this
analysis does not even consider the dividend cash
One could reasonably argue that it makes more sense
to buy the debt about right now than it does to buy
At this point, I can't figure much
risk of bankruptcy.
I'm probably wasting my
time explaining because those who are capable of
understanding this stuff have undoubtedly already figured this
out for themselves. If by chance, however, someone
with a great deal of money happens past this post then
I suppose (s)he might appreciate something
meaningful and worth consideration. Heck, when you're down
50% as I am, you start marketing the stock
As of 09/3099, EBIT was $418,402M while depreciation
and amortization was $185,092M. Add the two and you
have $593,504M available cash with which to pay down
debt. According to the 09/30/99 10Q, current maturities
of principal was $88,718M. Add the $150MM notes to
that and you end up with about $239MM in principal
pmts for 2000. My projected interest expense for the
full year of 1999 was $231,484M. If you add the $30MM
marginal increase in interest expense (per 11/23/99 press
release) to $231.5M, you end up projecting interest
expense of $261.5.
$593.5MM minus $239MM minus
$261.5MM still leaves $93MM for additional debt payments
or heck, at this price, banks permitting, stock
repurchases. And again, this does not consider the $90MM+ that
would have been allocated to dividends.
important point- of the entire $312MM restructuring and
non-recurring charge only $22.83MM will be paid out in cash per
year over the next six years (per 1/12/99 press
release). It's for the reasons expressed that I think the
present market value and debt ratings are absurd and
saliently reflect just how poor the stock and bond analysts
of today's markets are.
Posted as a reply to: Msg 1 by YahooFinance
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As noted in post 5108, there was an error in post
5100. 09/30/99 EBIT was $408,402M, not $418,402.
To recap, depreciation and amortization was
$185,092M. EBITDA totaled $593,504M; this is available cash
with which to pay down debt.
The conclusion of
post 5100 was that there was more than enough cash
flow from operations available to pay down debt. What
struck me as particularly cogent was that the available
cash flow was based on 09/30/99 results.
is where my argument gets a bit scary, so scary in
fact that I'm beginning to doubt myself. You see,
SCI's cash flow from operations has grown from 12/31/95
to 12/31/98 at a compounded annual growth rate of
24.34%. And guess what? It's still growing. The total
cash flow from operations for the year ended 12/31/98
was $329.6MM. For the period ended 09/30/99, it had
already reached ~$327MM, a 28% increase over 09/30/98
results of $256MM.
So how much do you figure will
be added during the final quarter? Another $50MM? Or
maybe $75MM? Well, the point is that there will be even
more cash to increase EBITDA and pay down
So what scares me?
According to the article dated 1/24/00, Moody's made the
cuts "based on the weakness of (SCI's) cash flow
generation relative to the company's high level of debt, as
well as significant upcoming debt repayment
obligations that the company must meet over the medium term."
Pretty scary, huh?
First, the company's cash flow
generation is weak relative to the company's high level of
debt. I suppose one would reasonably inquire as to what
amount would make the company's cash flow generation
strong relative to its high level of debt? Second, on
what basis did you choose this amount since it's
clearly not based on the company's ability to service the
outstanding debt? Third, what constitutes significant debt
repayment obligations? And finally, what's the medium
Seems to me, Moody's analysts should have access to
plenty more information than I do, yet there's this
downgrade. On the other hand, S&P chose not to follow suit.
I'd like to think that S&P has the better analysts,
at least I hope it does.
Gann is a winner, don't confuse him with facts.
Chapter 11 will be unable to go beyond the first
Their minds are made up and no
information to the contrary will changed them.
found 5100 interesting. May he be proven right.
Am in the process of trying to analyze this
issue. I have considerable holdings but my choices of
late leave a lot to be desired, at least at this time.
Probably an unfair question, but wondering if a lot of the
positive posters are extremely long. I totally understand
this, if it is the case, as I am in that posture on
several other stocks. My main concern is the Chapter 11
issue. I know people have used this vehicle for
possitive gains but for me personally it is the kiss of
death. Sorry for being so wordy but I would truly like
your opinion as to the future of SRV. Thanks.
I purchased a very small position of 500 shares @
$18 thinking I was at a double bottom. I had a chance
to move out at $21 and though tempted, decided to
hold on. I've been watching from a distance for the
last few months waiting for and opportunity to buy
some more. I must say my tech stocks have received the
bulk of my attention in recent months.
personally don't think we are in danger of Chapter 11 but I
do think that there is a chance of further erosion
to $4. I think I'll wait until they report before I
buy again, even if I have to pay a premium.
also have to tell you that instead of buying more SRV
I'm thinking of buying CSV instead. I think they were
pulled down by LWN and SRV and unfairly so. I think
their debt and fundamentals are sound and as a result
they will probably turn around quicker. Then I'll jump
from them and go back to SRV. In any case poster #5100
made some good points and it would be great if someone
challenged his numbers.
The more opinions the better.
Then I'll decide from what I hear and what I see
what's best for me.
I can tell you all you want to know about the
debt. I have done the homework- and I have the facts.
Ask a ? Get an answer. NO BS...just the facts. No
liquidity problem, just a bunch of rumors. What do you want
to know? THE BLIND TIGER HAS SPOKEN!