20-04-2002 06:24									#31
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Colon,

Thanks for your take.

I work as a ski instructor there. They generaally have a good rep, fininacially. Especially as compared to Intrawest or American Ski corp which are much higher leveraged. Real Estate is small at Vail (6% of revenue). The ski slopes themselves are federal land (leased). They do real estate on associated developments. I don't think they could have a liquidity crunch because they have a large line of credit available.

Regarding outsourcing: usually the revenue remains the same (based on end product sales). COGS remains ABOUT (maybe small incr or decr.) the same...what changes is portion of COGS spent on manuf versus raw materials...but that is usually not broken out anyway...for external eyes.) Also some other effects lower CAPEX, lower PPE, lower working capital, one-time charges/benefits (associated with sale of assets, cleanup of facilities, severances, etc.), lower depreciation.

The one example I'm familar with is drug manufacturing.

Last edited by TCO on 20-04-2002 at 10:22

	20-04-2002 16:18									#32
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Could you tell me how large that credit line is and what the conditions are?

Finances indeed look worse at those other two, but that doesn’t necessarily mean they’re “good” at MTN. All those companies went through rapid growth the past few years and it could be the sector collectively over-extended itself. (compare it to the movie-theater business)
The least you could say is that growth at this rate may not be attainable in the future.

Of course, I’m saying this with reservation because I don’t know much about the sector. Actually, I’m surprised it has such large stock market-listed corporations.

What’s COGS?

	20-04-2002 21:45									#33
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COGS = cost of goods sold
PPE = property, plant, and equipment

According to Yahoo message boards:

quote: They have a $400 million revolving line of credit that is untapped....no problem closing this deal and soon....bonus for quick closing. Expect it by mid to late April.

Looking at the 2001 10K:

it is up to 450 mil useable up to 2003. And currently Vail is only using 120 mil of it. It is described on page F-12.

	24-04-2002 02:52									#34
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MTNs line of credit is lead managed by Bank of America, however as is common with large corporate loans, it is syndicated, which means that the lead bank keeps some of the loan (or commitment) and sells off the balance to other banks/finance companies.

The line matures in '06 and carries a 0.375% commitment fee and a 1.375% + 3mo Libor interest rate if drawn. (revolving lines are like credit cards - they carry a maximum and can be drawn and paid back - used a lot for seasonal businesses)

The loan commitment is 146 pages long, but it does have some language about minimum EBITDA coverage, debt to cap and other stuff like that.

EBITDA to interest coverage has been running about 4x, which is not bad for a B/B2 rated company, but the rating is there because of the highly seasonal nature of the business. I would expect that a decent chunk of the value of their business is the real estate that they own some of their development subsidiaries, so P/E may not be super relevant. Those properties would be carried at book, and if the real estate has appreciated, like all good real estate does in the USofA, then they should have a significant unrealized gain on the books.

	24-04-2002 07:35									#35
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Sten, I just read the 10k. Is the 146 page loan commitment public? How does one look at it? just curious.

	24-04-2002 15:35									#36
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GP, thanks for explaining the acronyms.

Sten, at which point would they revalue RE in the books?

When you said that P/E may not be super relevant, did you meant that the analysts following the corp don't pay much attention at it, or that there shouldn't be paid much attention at it? (there's a difference between principle and practice)

	24-04-2002 19:28									#37
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quote: Originally posted by Colon Sten, at which point would they revalue RE in the books?

Colon it's one of those things about accounting. Book value of land is initial purchase price...sometimes for decades. Just one more reason to be very wary of accounting or simple ratios when doing valuations.

quote: When you said that P/E may not be super relevant, did you meant that the analysts following the corp don't pay much attention at it, or that there shouldn't be paid much attention at it? (there's a difference between principle and practice)

I think his point is that EPS doesn't reflect real value.

	24-04-2002 19:35									#38
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Yes, but what do the analysts think about it? I'm interested in how much influence it has on the share price, not so much whether it in fact is a good tool to measure the corp's real value.

	25-04-2002 01:39									#39
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quote: Originally posted by GP Sten, I just read the 10k. Is the 146 page loan commitment public? How does one look at it? just curious.

It is Exhibit A of the 10-Q, should be public; I got it on the Bloomberg. I think it is page 146 of 365 or so, rather than 146 pages long... my bad. Might be accessable because there is a secondary market for bank loans now - didn't used to be the case before this new-fangled internet thing.

Not at all sure how MTN disloses their real estate ownership. Some is probably in whole or partially owned subsidiaries and partnerships. If I were going to evaluate the company thoroughly, I would try to find out what property they own, how it is listed on the books and what, if any, difference there might be between book and market.

Real estate and finance companies are notoriously hard to analyze properly - give me a manufacturing company anytime.

colon - I'll dig up an analyst report on MTN and see what they say about valuation metrics...

	25-04-2002 01:44									#40
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Ok, thanks.

	25-04-2002 01:54									#41
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Sten, the company only had 6% of revenue from real estate last year...and typically doesn't have much real estate income. This makes them different from Intrawest which started life as a real estate company and still gets substantial income from real estate.

Colon if EPS is a flawed metric and if analysts rely on it/taut it, how would that affect your evaluation of the company? (Not a rhetorical question...am asking seriously how that would affect your view of the company as an investment or as an operation?)

Last edited by TCO on 25-04-2002 at 02:01

	25-04-2002 02:05									#42
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Income from Real Estate and Book Value from Real Estate are very different things. Lack of income doesn't necessarily mean lack of book value.

	25-04-2002 02:13									#43
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Agreed. And I expected somebody to say that. But if the company traditionally has low % of income from real estate...and if they lease all their slope land from the forest service, that info should help some...

	25-04-2002 04:42									#44
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holy hell. AOL/TW posted 50 billion...im pretty sure it is billion and not million..

anyway they said it was a concern, but did better than expected

	25-04-2002 09:20									#45
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What is the difference between GDP and GNP? Or are they the same, just that GDP is more... in vogue?

	25-04-2002 11:26									#46
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GDP is value created within the boundaries of a country.

GNP is value created by nationals/entities of a country.

	25-04-2002 13:23									#47
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Unbelievable! Alan the wondernerd takes a shot at the GSEs.....

http://www.msnbc.com/news/742434.asp

Might that be because when they get in trouble, Alan has run out of bailout-ammunition ?

	25-04-2002 13:45									#48
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quote: Originally posted by Saras GDP is value created within the boundaries of a country. GNP is value created by nationals/entities of a country.

Which one is a more accurate estimate, considering that there are transnational corporations and such?

	25-04-2002 19:43									#49
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GP, if EPS is an important measure to analysts I’d believe the stock price would fall in the future because P/E is quite high, but it wouldn’t affect my judgement on the fundamental value of the corp.

Faded, this was to be expected, after the acquisition of TW they had over $120bn of goodwill (the sums AOL paid in excess of the value of TW’s assets) sitting on their books. The economic hardships provides a good excuse for many corps (who similarly overpaid for their acquisitions) to write it off in one go, since losses were expected by the markets anyway. (in the case of AOLTW there'll still be a massive $80bn of goodwill left)

UR, you can’t say either is better than the other, it just depends on what you want to measure. If you’re interested in the economic power of your residents GNP would be more accurate, if instead, you’re interested in how much is produced within the boundaries of a country GDP would be more accurate.

	25-04-2002 19:51									#50
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Speaking of AOL, if you exclude their goodwill, they have some $17bn in shareholders' equity against $63bn in liabilities. Could be better.

	25-04-2002 20:12									#51
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"Which one is a more accurate estimate, considering that there are transnational corporations and such?"

Depends on whether you're a communist or capitalist. For the longest time, the U.S. insisted on trumpeting the GNP number. Wasn't till communism "fell" that we moved the GDP number in everything. Still, for the longest time, all of the newspapers focused on nominal GDP growth. It wasn't until the mid-90s that everything was standardized to real GDP growth.

Colon: AOL's portfolio of goodwill is high value.

	25-04-2002 20:27									#52
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Dan, did the US switched to GDP because foreign residents started owning a larger share of US' production than vice versa?

I didn't understood your second point.

	25-04-2002 20:43									#53
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"Dan, did the US switched to GDP because foreign residents started owning a larger share of US' production than vice versa?"

I can't say as I'm qualified to answer such a technical point. But I do remember that there was some anti-communist politics associated with using GDP. Maybe a macroeconomist can pipe in here and explain why this was so.

Re AOL's goodwill, AOL/TW has a huge and valuable library of music and video titles. I think that much of that will show up in goodwill (pls. correct me if I'm wrong).

	25-04-2002 21:16									#54
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Dan, well it’s just a guess, but since few USSR residents owned assets outside of Russia, while the US had plenty, using GNP showed the US in a favourable light. Similarly, as US net assets turned negative since the early 90’s (I assume GDP became larger than GNP at that point as well), using GDP would present the US favourably. Maybe it’s not a technical issue, just one of winning the pissing contest.

You may have the wrong idea of goodwill. For instance, firm A buys firm B for $10 million and firm B has assets worth of $8mn, to be transferred to firm A’s books when the acquisition is completed. There’s an excess of $2mn that has to show up somewhere in firm A’s books, so it’s filed as goodwill, to be written off over time.

That library you mentioned is accounted somewhere else.

	25-04-2002 21:17									#55
	Put an end to popups!

Dow Jones < 10,000

DAX -> 5,000

	25-04-2002 21:36									#56
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"just one of winning the pissing contest"

Undoubtedly, this is the case. I'm just not sure what we were having the pissing contest over. Over the last 10 years, real GNP and GDP were pretty much in lock-step. ~39% growth.

	26-04-2002 19:03									#57
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You know, it feels like the economy just ate a whole bag of potato chips. Filling, but makes you feel like crap afterwards...

	26-04-2002 20:47									#58
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Dan, nominal GNP and GDP diverged by only $6bn in 2001, so I guess that speculation of mine is wrong. Maybe they just switched to GDP because it's more relevant to national economic policy and foreign investors.

BTW, do you have a time-table to compare historical GNP and GDP?

	26-04-2002 21:51									#59
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No, I don't. But it wouldn't be too hard to take and graph the following two series:

http://www.stls.frb.org/fred/data/gdp/gdpc96
http://www.stls.frb.org/fred/data/gdp/gnpc96

	27-04-2002 01:21									#60
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Chain weighted the average difference over the past 15 years is only 15 billion per quarter - I think that qualifies as statistically irrelevant to a nearly 10 trillion number.