So the usual "guide math" foris you do Equity + Net Debt + - JVs + Leases + Pension + "Financing-ish" Obligations (environmental reserves, etc.), which is pretty straightforward. However, in practice, how often do you guys actually add back pensions?
The reason I'm hesitant is that for every other adjustment, there's a corresponding "denominator" adjustment that makes it make sense when doing EV /* ratios. We add debt, but don't count interest expense (the "I" in EBITDA); when we do minority or JVs, the denominator, through consolidation, makes everything apples-to-apples. Similarly, at my bank at least, when we add back operating leases (rent expense x 8), we usually only look at EBITDAR ratios to keep things apple-to-apples: if you claim operating leases are really sources of financing, you shouldn't think of rent expense in the denominator as operational and thus should use EBITDAR.
For pensions, though, I've seen a lot of guys play fast and loose, adding pension liability or net underfunded status to EV but not really doing EBITDAP (or, "EBITDABOPEB") in the denominator. This invariably leads to high (and I'd argue, inflated)multiples for companies with significant pension liabilities, such as Europeans or unionized companies. What are your thoughts on this from both a technical and practitioner's point of view?