Things are clearer in the light of day. The company has received a new credit facility at improved terms and for a larger amount. The earnings report does not contain any suprises and demonstrates an improved position.
My initial reaction was suprise as I was not aware of the company applying for an extension on the filing of the 10k awaiting new financing and I was also not happy about the lack of information regarding new contracts in the 10k.
Have a great day everyone.
The financial highlights from the 10k:
<Working capital increased by $2.7 million from $18.5 million in 1996 to $21.2 million in 1997 as a result of (i) an increase in inventory and accounts receivable of $11.5 million, offset by an increase in accounts payable of $5.7 million and an increase in short-term debt of $4.8 million (excluding debt assumed in the Merger); (ii) an increase in depreciation of $1.5 million as a result of capital additions over the last couple of years; and (iii) the increase in working capital components acquired in the Merger. The increase of $2.2 million in accounts receivable results from higher than normal sales in the month of December. The increase in inventory of $9.4 million resulted from a build-up of inventory on a major shelter contract that was delayed in 1997 and the start-up and tooling costs related to several major contracts that will come on stream in late 1998. As a result of these working capital increases, cash flow from operations were basically at break-even. Cash flow of $3.0 million used in investing activities was a result of (i) $1.8 million of normal sustaining capital expenditures and (ii) $1.2 million of capital expenditures made in connection with the Merger.
In March 1998, ATP received a commitment from a bank to refinance ATP's existing $39 million of credit facilities. These facilities are comprised of (i) a term loan of $12 million; (ii) a deferred obligation of $3 million; (iii) a combined revolving lines of credit of $23 million; and (iv) a capital expenditure line of credit of $1 million. The term loan and the deferred obligation will be replaced with a term loan of $18 million payable quarterly based on a seven-year amortization period. The combined lines of credit, which will be based on ATP's accounts receivable and inventory balances, will be replaced with a new $27 million revolving line of credit. The capital expenditure line of credit will be replaced with a $3 million line of credit. The total credit facility of $48 million will initially be in place for a period extending to December 31, 2000 . Interest rates will vary, based on performance of ATP, but should be favorable to the existing rates by at least one percentage point going forward.
At December 31, 1997, ATP's backlog of orders and long-term contracts was approximately $552 million compared to $283 million at December 31, 1996. The backlog includes scheduled or released orders of approximately $192 million compared to $120 million at December 31, 1996. The backlog includes both firm orders supported by customer purchase orders with fixed delivery dates and blanket orders against which customers issue production releases. The increase in the backlog reflects (i) a change in management's strategy, since acquiring the Brunswick Business in 1995, to obtain longer-term contracts than its predecessor; (ii) improved economic conditions in the aerospace industry; and (iii) the military's commitment to develop systems to combat chemical warfare.
The backlog is subject to customer rights of cancellation or rescheduling. However, in most contracts involving the military, ATP would be entitled to receive cancellation payments. Generally the backlog does not include future sales of commercial products since they are normally shipped on order and are not subject to long-term contracts.
ATP has a significant amount of unused manufacturing capacity and therefore generally does not anticipate large annual sustaining capital requirements although, there will be years when improvements or
expansions will be necessary. Also, ATP will be looking for opportunistic acquisition candidates that will enhance the current operations.
Management of ATP believes that cash flow generated from operations and the new $48 million credit facility are adequate to sustain ATP's current operating level and future short-term growth. >
Sergio |
