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Technology Stocks : Semitool

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To: Perry who wrote (6)	11/26/1996 5:30:00 PM
From: Dick Roy	of 75

I have had the experience both of managing a line dept for a large multinational and managing a small co. From just eyeballing SMTL's condensed financials, their cash position has very much declined but note that their receivables are going up substantially. This is cash in effect. Their cash has apparently gone to finance inventory including work in progress. They have significant increase in sales between 95 and 96. An expanding business has a voracious appetite for cash. Shortage of cash is annoying but I can think of worse problems to have as long as sales are growing with good margins. Based on their assets and performance one would think they can expand credit if necessary. So, should check on their financing arrangements and available credit. Anyone have access to a Dun and Bradstreet report? One can check how they are handling payables. Stretched out payments are a signal of low cash. This isnt always bad. If co is sound and business is expanding suppliers may be a bit flexible. This is another way to raise cash. We used to do this to avoid borrowing from banks! In our small co our cash kept see-sawing up and down depending on timing of receivables, even though overall performance and margins were good. Anyhow a good point to raise with them

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