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Technology Stocks : Truevision
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To: Esvida who wrote (113)1/5/1998 6:29:00 PM
From: Lou Doctor  Read Replies (3) of 216
 
I'm stepping in here just to clarify things. At the end of last quarter, we had no bank borrowings although funds were available to us under our line of credit (just like your visa card- even when its paid off you have a credit line). The company pays the bank to establish the credit line (once a year) and the amount of credit is calculated through a formula, but there is no guarantee that the money will be available since credit lines do have covenants (financial requirements). This is sort of an 'out' for the bank if the company's financial conditions were to change for the worse (who said you can only get a loan when you don't need it?). We operated outside of covenant (but with a waiver- kind of like a get-out-of-jail-free card) for most of last fiscal year since one of the covenants is showing a profit. We are presently operating within covanent.

I hope that helps and happy new year to everyone.

Lou.
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