Per your request, Bob. The following will provide reference for talking points in Ch2m discussions. I improvement initiatives, financial observations, Litigation risk and provide a tally of the mounting challenges we’ve discussed. Quickly • I think we agree additional capital is needed to execute a program that can deliver a stock deal with a public firm. • Laval in is flush with cash, has very little unfunded pension would benefit from water franchise. Their Asset utilization reflects their holding equity stakes in projects (a strategy that required the discipline ch2m seeks). • Value indication is based on TTM EBITDA of $207mm at 7.6 times (multiple is per Jan 2015 NYU Stern study based on 56 global E&C business). Backing out …show more content…
Needed sales growth is no surprise - asset impairment is another story. Overhead distribution; Business segment disclosures from the February 2015 investor presentation offer indication that Transportation, Oil & Gas and IUE segments bear relatively heavier overhead and non-cash burden than the Water and Environment & Nuclear segments. This cost burden ran at an estimated at $20mm - $30mm between 2011 and 2014, but perhaps reaches as much as as $40mm - $50mm in 2014 (aggressive view). Burden appears reduced in 2015 – 2019 estimates, perhaps a benefit of reclassification of actuarial losses (see Pension - Impact on Restructuring). 2015 – 2019 estimates suggests an overweight allocation run rate of $9mm - $12mm annually ($25mm aggressive case). Pension Deficit; Halcrow came in 2011 with a significant underfunded pension scheme. Ch2m plan obligations/deficit grew from $188/$49mm (2010) to $1,132/$367mm (2011) to $1,505/$367mm (2014). $225mm of this due to actuarial (pension) losses booked to in AOIC in 2011 ($27mm), 2012 ($83mm) and 2014 ($112mm). Pension - Impact on …show more content…
The Table below is calculated based on plan buy-out at 10% increase in plan liabilities. Outsized underfunded status carries a significant discount. Pension - Risk and Risk and cost of carry A 10% asset shock scenario is also weighed, a $97mm shock increases unfunded status to $629 million. This result also outweighs the industry (by virtue of CH2M’s overall scheme size). As a percentage of total assets, only KBR sees shock impact exceeding Ch2m. Their deficit of $500mm is only 12% of total assets, however. Further modeling can aid understanding potential impact of economic scenarios on plan assets, changes in asset allocation and actuarial assumptions. Unrecognized pension lasses - Share Price Unrecognized losses (AOIC) currently represents $9 or 16% of calculated current share value of
Can We Keep Our Promises? The purpose of this paper is to provide a summary of the article called “Can We Keep Our Promises?” by Robert D. Arnott, and to help better understand the three key risks facing each investor. Robert Arnott describes risk and return as “having two sides of the same coin” meaning risk is inseparable from return. Arnott points out the most important risks that are faced by managers of company pension plans: underperforming other corporate pension funds (their peers), losing money (mostly associated with portfolio standard deviation or volatility), and underperforming the values of pension obligations and therefore losing actuarial ground.
Financial Accounting Standards Board. (1985). Statement of Financial Accounting Standards No. 86. Norwalk. Retrieved April 7, 2014, from http://www.fasb.org/cs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1175820922177&blobheader=application%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-Disposition&blobheadervalue2=189998&blobheadervalue1=filename%3Dfas86.pdf&blobcol=url
Table C projects the break even analysis in both units and dollars as a basis for further projections. As seen in Table C substantially larger sales are required to break even.
Valuation refers to the procedure of converting forecast into an estimation of company assets or equity value. The four available models have been used to for JB HI-FI are including the discounted dividends (DDM), discounted abnormal earnings (RIM), discounted abnormal operating earnings (ROIM) and discounted cash flow (DCF).
Based on the Terminal P/E and the cost of equity I made a sensitivity analysis chart through which I came up with a price of $33.37. This chart shows the different price ranges of the stock which could be possible if the Terminal P/E went higher or lower compared to the Cost of Equity.
But divesture of three out of four divisions leads to a very small portfolio which leads to chances of high risks as well. The process of restructuring and forming a better portfolio would provide the firm with a lot many opportunities including exploring newer and more compatible product lines and segments, thus increasing its opportunities to earn better revenues with efficient management.
In conclusion, we have realized the significance of including just the netted plan assets and the PBO and not including the full amount of the plan assets and the PBO on the balance sheet. This type of accounting flexibility by the FASB helps companies and ultimately hurts investors who are unaware of the consequences. Usually, the estimated PBO and plan assets are very large in relation to the debt and equity capitalization of the company. The financial situation is therefore skewed and is not represented correctly on the company’s balance sheet which then in turn distorts financial ratios. Investors who are unaware of these accounting rules will end up making erroneous conclusions. Also, this accounting flexibility allows managers to manipulate financial statements whether intentionally or unintentionally by influencing their actuarial assumptions.
Discounted Cash Flow Method takes the forecast free cash flows during forecasted horizon. Then we estimate the cost of capital (weighted average cost of capital) and estimate continuing value (value after forecast horizon). The future value is discounted to the present value. We than add back cash ($13 Million) and non-current assets and deduct total debt. With the information provided several assumptions had to be made to obtain reasonable values (life period of 30-years, Capital expenditures not to exceed $1 million dollars, depreciation to stay constant at $1.15 Million and a discounted rate of 10%). Based on our analysis, the company has a stand-alone value of $51 Million at the end of fiscal year end 1990 with a net present value of cash flows of $33 million that does not include the cash and non-current assets a cash of and non-current assets.
In the current industry trend of Universal Health Services, the company has a common stock traded on the New York Stock Exchange under the symbol UHS. This organization acts as the advisor to Universal Health Realty Income Trust (uhsinc.com, 2014). In fact, the annual reports of 2012-2014 show the attributable to UHS was $406.4 million in 2012, $452.1 million in 2013, and $581.8 million in 2014. Hence, compared to 6.96 billion in 2012, the net revenue increased 4.6 percent; to 7.28 billion in 2013, which further increased 10.7 percent; to 8.07 billion in 2014 (Annual Report Archive,
Financial Future: Where Will it be in 10 Years? Retrieved on November 20, 2013 from
The high-risk, cyclical nature of our business demands a strong financial base. We must retain the capital resources to meet our current commitments and make substantial investments to develop new products and new technology for the future. This objective also requires contingency planning and
...h the full expenses included. Challenge overseeing and incorporating over a huge supply change and developing patterns.
After analyzing our most recent annual report from 2012. We noticed that our operational cost is approximately $20,000 over our revenue. Looking at our data from previous years, the $20,000 over-budget has occurred in the past. In 2010, Partners in Health had approximately $90,000 in unused funds which carry over at the end of ...
Value of the company can be calculated using the PVGO: however, there is a problem with the formula because I found that in my case, g>k. To find the g rate, I was using the formula PEG ratio = (P/E)/g. Using the data from Yahoo Finance, I found P/E=15.93 and PEG ratio = 2.00. Therefore, g = (P/Ettm)/PEG ratio = 15.93 / 2 = 7.965%
However, when comparing the multiples to total enterprise value (TEV), we see a different story. To expand on Appomattox’s advice and research I further calculated the TEV, from Exhibit 5, of each competitor and then chose to compare the multiples that have similar TEVs. The companies with similar values are as follows: D&B Shoe Company ($545,540), Surfside Footwear ($766,224), Templeton Athletic ($567,288). When comparing the multiples of these companies to the proposed multiples offered by AGI, we see that they are higher than the average between these companies. The average EBIT multiple is 6.3 compared to 7.5 and the average EBITDA is 5.4 compared to