Cavan I have just started looking at this interesting company. Trading volume is really low and I would have a concern of trying to sell if I owned it. Have you owned and tried to sell this stock? Also, would like your input on this part of today's 10Q -
>>LIQUIDITY AND CAPITAL RESOURCES
Net cash of $2,226,000 was provided by operating activities during fiscal year 2002 compared to net cash of $731,000 that was provided by operating activities during fiscal year 2001. The $1,495,000 increase in operating cash flows was primarily the result of collecting $3,061,000 more from accounts receivable invoices than during fiscal year 2001. That increase in collections was linked to a significant increase in total amounts billed customers during fiscal year 2002 compared to fiscal year 2001. The increase in cash collections was partially offset by a $1,667,000 increase in cash disbursements for payment of accounts payable invoices during fiscal year 2002 compared to the prior year.
To supplement cash provided by operating activities in order to meet its cash obligations, the Company maintains a revolving line of credit with a commercial bank and pays market interest on the outstanding balance. The outstanding balance under this line of credit at May 31, 2002 was $3,371,000, compared to an outstanding balance of $4,857,000 at May 31, 2001. The maximum borrowing limit under the line of credit was $4,300,000 as of May 31, 2002. Therefore, the amount available for borrowing at May 31, 2002 was $929,000. The revolving line of credit, which matures on October 15, 2002, is covered by a business loan agreement that contains various financial covenants. At May 31, 2002 the Company was not in compliance with one of those covenants. The bank has waived that covenant violation. Based upon previous discussions with its current commercial bank, as well as with other prospective banks, Hi-Shear's management is confident that the availability of sufficient supplemental cash under a revolving line of credit will continue well beyond the maturity date of the current line of credit.
In its attempt to minimize interest expense associated with the outstanding balance under the revolving line of credit, the Company consistently maintains a minimal cash balance. As cash becomes available through collections of accounts receivable it is used to make payments on Company obligations, including reductions on the revolving line of credit. "Cash and cash equivalents" of $113,000 reported on the Company's balance sheet at May 31, 2002 was the approximate amount of cash deposited into the Company's bank account at or just before the end of the fiscal year ended May 31, 2002 that had not yet been "cleared" by the bank for the Company to use. <<
Their effort to keep cash low to avoid debt does not appear to be working that well as they do have considerable debt. Am I missing something?
I do like their position in aerospace and defense at this time with homeland security at its current high priority.
TIA
Jim |
