Ok, I'm starting to wade through the 10K. Looks like I found out what BW is for. It is a 279,000 square foot manufacturing facility in mainland China.
Looks like for the year ended Jan 31, 1997 FIBR relied on 1 single OEM for 22.7% of net sales. Yikes! That's a lot riding on one customer. I hope FIBR has diversified their customer base over the past year. Didn't FIBR state that the decline in sales last Q was due to slowing spending from OEM's? I hope they still have a cozy relationship with this OEM. I'd hate to think what would happen if that OEM started looking elsewhere for product. You know if I was a customer of Osicom and I accounted for 22.7% of their entire revenues I would use that leverage to negotiate pretty good pricing for the product I was buying. You see, I don't think FIBR has any special things to offer that couldn't be found elsewhere.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
One OEM customer accounted for 22.7% of net sales for the year ended January 31, 1997. Because the Company's OEM customers are generally not obligated to make minimum future purchases, or to provide the Company with binding forecasts of product purchases for any future period, the failure to achieve and maintain significant sales to OEMs or to offset any decline in sales to particular OEM customers would have a material adverse effect on the Company's business, results of operations and financial condition.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Excuses, excuses. FIBR needs to maintain almost 1/4 of it's total assets in inventories? Didn't FIBR just knock $5 million off it's books to allow for reserves? (from $26M to $21M) It's dangerous to have a lot of inventory on the books because inventory can become obsolete rather quickly and ASP's for networking equipment decline rapidly. Have you ever heard of inventory getting more valuable while it sits on the shelves? Nope. Nowhere for the value of this "asset" to go but down. I would much rather see cash on the books. FIBR has practically none.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The Company has historically maintained high levels of inventories to meet the output requirements of its customers and to ensure an uninterrupted flow of inputs from its suppliers. It is not the Company's standard policy to grant customers the right to return merchandise that performs according to specifications, nor is it the Company's standard policy to grant customers extended payment terms.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Looks like a majority of the money lent to FIBR is from "Coast". (The institution that FIBR gave warrants to). You give us some loans, we give you some warrants to buy our stock, badda bing, badda boom, blah, blah, woof, woof.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
At January 31, 1997, the Company had credit facilities of $24.1 million of which $15.7 million were utilized as of that date. These credit facilities include $16.0 million provided by Coast Business Credit ("Coast"), an asset based lender, collateralized by accounts receivable, inventory and equipment and $8.1 million provided by various financial institutions in the Far East collateralized by FED's leasehold land and buildings, fixed bank deposits, and inventories. (See Note E to the Consolidated Financial Statements contained in Part II herein).
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Your gonna love this one. Apparently (correct me if I'm wrong, I don't want to mislead anyone) FIBR has a subsidiary that generated $50 million in revenues last year that is based in Hong Kong. You know, Hong Kong! (Big trouble in little China these days). I WONDER HOW BUSINESS IS DOING IN HONG KONG THESE DAYS??
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
We did not audit the financial statements of a foreign subsidiary which statements reflect total assets of $26,689,000 as of January 31, 1997 and total revenues of $50,692,000 for the ten months then ended. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for such subsidiary, is based solely on the report of the other auditors.
BDO Seidman LLP
Los Angeles, California
April 15, 1997
~~~~~~~~~~~~~~~~~~~~~~~~~~
~~~~~~~~~~~~~~~~~~~~~~~~~~
Arthur Andersen & Co.
Certified Public Accountants
----------------------------
25/F., Wing On Centre
111 Connaught Road Central
Hong Kong
AUDITORS' REPORT TO THE SHAREHOLDERS OF
UNI PRECISION INDUSTRIAL LIMITED AND SUBSIDIARY
(Incorporated in Hong Kong with limited liability)
We have audited the accompanying balance sheet of Uni Precision Industrial
Limited and Subsidiary (the "Group), incorporated in Hong Kong, as of January
31, 1997 and the related statements of income and cash flows for the period
April 1, 1996 to January 31, 1997, expressed in Hong Kong dollars. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Group as of January 31,
1997, and the results of its operations and cash flows for the period April 1,
1996 to January 31, 1997 in conformity with generally accepted accounting
principles in the United States of America.
/s/ Arthur Andersen & Co.
- -------------------------
ARTHUR ANDERSEN & CO.
Hong Kong,
March 14, 1997 |
