Re ICTS
The company plans to repurchase the shares at prices of up to $10 each.
What is to stop the company from buying shares at $3.50? Is the limit 1M shares, with a cap at $10 and therefor a maximum of $10M? Buying back 1M shares out of 6.5M is nothing to sneeze at, but does it mean they will go private any time soon? The buyback would drain up to 2/3 of the treasury.
In fact, in light of the TSA contract troubles, and that fact that the company permanently lost the vast majority of its business, the 1M share buyback may just be a cushion for insiders to dump into. If insiders start buying on the open market, then your scenario is probably right. As it is, insiders have been getting shares off-market (presumably option exercise or stock grants) and selling privately.
Contract Issues with the TSA
In February 2002, we entered into an aviation security services contract with the TSA to continue to provide aviation security services in all of its current airport locations until the earlier of either the completed transition of these security services on an airport by airport basis to the U.S. Federal Government or November 2002. In the process of definitizing the Contract, the TSA has expressed its view that the definitization process should be on a "cost plus basis". Accordingly, with respect to the TSA's interpretation of the Contract as well as its calculation of payments made to Huntleigh for services provided under the Contract, the TSA has made to Huntleigh an overpayment of approximately US$ 32,000,000 in the aggregate. The TSA derives this amount from various items, consisting primarily of actual costs incurred in the contract plus allowing a ten (10%) percent profit.
Since the contract clearly states that it is a firm fixed price contract the Company has taken the position that the definitization can not be calculated on a cost plus basis and that the only issue for validation is the number of hours worked. In addition, the Company claims unpaid invoices of $11.5 million, corporate bonus of 5% equaling $10.5 million and claims in the amount of $21 million due to notice not being given on time, as specified in the contract. On primary billings, the Company has been paid by the TSA $14.3 million more than initial invoices. When this is taken into account, according to the Company's calculations, the balance due from the TSA is $28.7 million. These claims have been challenged by the TSA.
We have not recorded our claim against the TSA on our financial statements. In the event that we are not successful in resolving our disagreement with the TSA, then there may be a material adverse effect on our financial condition, by an expense of up to approximately $32 million.
Other than that, a trailing PE of 3.9 looks good doesn't it.? ;)
GLTA
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