Chain Reaction (HMTT/SYQT)
Check out this snip from HMTT's 10-Q/A filing today:
freeedgar.com
"On November 2, 1998, SyQuest Technology Inc. ("SyQuest"), a customer, announced in a Form 8-K filed with the U.S. Securities and Exchange Commission that effective November 2, 1998, it had suspended operations and is considering alternatives, including filing of a Chapter 11 petition under the U.S. Bankruptcy Code. On September 30, 1998 in a Form 8-K, SyQuest disclosed that it was not in compliance with the financial covenants required by its loan agreement with its asset-based lender. The asset based lender waived the default and reduced the Company's credit line. As disclosed in the Form 8-K, SyQuest is seeking additional financing from other sources. As of September 30, 1998, the Company has approximately $4.4 million in accounts receivable due from SyQuest. Management is currently reviewing the condition and prospects of SyQuest and will closely monitor the status of these accounts receivables. While management believes that, at September 30, 1998, the Company's allowance for doubtful accounts was adequate, the ultimate collectibility of the SyQuest receivable is dependent upon SyQuest's ability to raise additional capital. If management determines, after further review or based on further developments at SyQuest, that these accounts receivable are not likely to be collected, the Company will need to take a charge for additional reserves to address the matter."
I guess if this has to happen, then it might as well occur in a quarter like this one where HMT is already expecting to take mega-restructuring charges. In addition, I imagine that HMT will incur additional charges for shutting down production. Perhaps a likely increase in Jaz media sales will help take a little sting out of the bite.
Regards - Dale |
