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Perma-Fix Environmental Services Inc. Message Board

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  • Eggplant101 Eggplant101 May 16, 2012 3:18 PM Flag

    10-Q // SEHC ugly

    No, positive $507k was EBITDA they reported in their press release. Subtract out the non-cash gain from "amortization of fair value of customer contracts" of $853k from Q1, and you get negative $304k. The customer contracts item is a complex accounting entry related to the acquisition of SEHC -- they knew it would be a money loser after acquisition, so they allocated approx. $3.5m to this as a liability item which will amortize into income as those losses are incurred, effectively cancelling out the first $3.5m of operating losses from SEHC after the acquisition closes. They effetively capitalized $3.5m of SEHC operating losses into Goodwill for the acquisition at the time of the deal. The accounting is correct, but it causes the company to overstate its income and EBITDA, at least to the tune of $3.5m. The accounting is correct of course, but requires proper treatment to get correct adjusted #'s.

    Another issue is the rate at which SEHC's revenue is deteriorating. I think PESI stepped in poo. I think they deserve a year to prove otherwise. For now, not looking good.

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