The PR mentions a need to improve the financial condition of the company.
The company's liquidity has changed mightily from this winter, when I was expecting Mattson to have tons of cash and working capital, after the merger. It didn't happen.
Cash is down to $85 million, a figure that is misleadingly high. Cash should have been only $40 million except that MTSN failed to pay its $45 M note to the Germans on July 1 when it was due. The PR says it is renegotiating the repayment terms.
So how long will the remaining $40 million last them?
Till December, by my estimate:
Cash flow from operations was a negative ($23 million) in the last 3 months, which I calculated by comparing the two most recent 10Q's. That cash burn rate could actually grow, as revenues fall, unless they can cut expenses faster.
If you extrapolate using the most recent cash burn rate of $23 million per quarter, the $40 M of cash will be gone in early December.
In the 10Q, the co. seems to be more optimistic, which I assume is based on the assumption that they can postpone the loan payment to the Germans into 2002 or otherwise reduce cashburn. Here's what the 10Q says:
"Based on current projections, we believe that our current cash and investments positions will be sufficient to meet our anticipated cash needs for the remainder of 2001. "
The only positive element I see in this situation is that the currency exchange rate has changed in the company's favor this year, making the debt in Deutsche Marks a few million dollars less.
I wish them luck. |
