>>>>"Costs incurred on uncompleted contracts, in excess of progress billings" on balance sheet 4M - do you know what that is and why it went up from March 2010?
Here is the explanation of this from the 10-K. If you still have questions, please ask. "Revenue and costs are recognized on the units of delivery method. This method recognizes as revenue the contract price of units of the product delivered during each period and the costs allocable to the delivered units as the cost of earned revenue. When the sales agreements provide for separate billing of engineering services, the revenues for those services are recognized when the services are completed. Costs allocable to undelivered units are reported in the balance sheet as costs incurred on uncompleted contracts. Amounts in excess of agreed upon contract price for customer directed changes, constructive changes, customer delays or other causes of additional contract costs are recognized in contract value if it is probable that a claim for such amounts will result in additional revenue and the amounts can be reasonably estimated. Revisions in cost and profit estimates are reflected in the period in which the facts requiring the revision become known and are estimable. The unit of delivery method requires the existence of a contract to provide the persuasive evidence of an arrangement and determinable seller’s price, delivery of the product and reasonable collection prospects. The Company has written agreements with the customers that specify contract prices and delivery terms. The Company recognizes revenues only when the collection prospects are reasonably assured."
This pretty much means that "Costs incurred on uncompleted contracts, in excess of progress billings" is like inventory or AR and its expansion is not a positive.
>>>>"Although we provide manufacturing services for large governmental programs, we usually do not work directly for agencies of the United States government. Rather, we perform our services for large governmental contractors and large utility companies. However, our business is dependent in part on the continuation of governmental programs which require the services we provide." - how sure are they that these government programs will continue?
I'm not sure what this text is talking about. I'm not aware of governmental programs that they are working on indirectly. Maybe this is legacy text relating to past business. I'd have to dig in further to understand this.
I am pretty sure they are talking about BAE systems and the fact that BAE is purchasing TPCS products for government funded programs. I did not look at what exactly are BAE orders though.
Overall, though I pretty much stay at my previous conclusion: cheap with high potential reward but also high risk. :) |
