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To: Skeeter Bug who wrote (46494)	6/21/1999 2:59:00 PM
From: Carl R.	Read Replies (1) \| Respond to of 53903

They have a positive cash flow from operations, but they also have an aggressive purchase program for new equipment this year in order to achieve their goal of .18µ by the end of the year. If equipment purchases exceed cash flow, then cash balances decline. I don't have the balance sheets in front of me, but I also assume that inventories and AR have grown over the last year, which is typical of growing companies. This too uses cash. However cash used to fund working capital and cash used for new equipment is separate from cash flow from operations. The cash they will have available to spend on equipment over the next year or two includes the cash that they have on hand, and also the cash from operations. To the extent that new equipment purchases continue to exceed cash from operations, the cash balance will continue to decline, and if it declines far enough, they might eventually have to reduce equipment acquisitions to a level that they can fund from operations. Carl