Thanks, I see.
And no placement is in the make?
14M of the 23M cash decrease have been used in purchases of own stock.
11M was used for acquisitions. They had positive operating cash flows and a decent quarter, overall, compared to many money losing techs.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2001, the Company had $3.1 million in cash and equivalents,
which represented a decrease of approximately $24.0 million from December 31,
2000. During the first quarter of 2001, the Company expended approximately $14.1
million to repurchase shares of the Company's Common Stock. In addition, on
January 26, 2001, the Company paid cash of approximately $10.6 million plus
acquisition and integration costs to purchase certain assets of Convergent. $7.9
million of this total is currently held in escrow, against which Inter-Tel has
made claims of $7.8 million to date. The Company maintains a $25 million
unsecured revolving line of credit with Bank One, Arizona, NA. This credit
facility is annually renewable and is available through June 1, 2002. Under the
credit facility, the Company has the option to borrow at a prime rate or
adjusted LIBOR interest rate. Historically, the Company has used the credit
facility primarily to support international letters of credit to suppliers. The
remaining cash balances and credit facility may be used to further develop
Inter-Tel.NET and for potential acquisitions, strategic alliances, working
capital, stock repurchases and general corporate purposes.
Net cash provided by operating activities totaled $3.9 million for the three
months ended March 31, 2001, compared to cash used in operating activities of
$1.2 million for the same period in 2000. Cash provided by operating activities
in the first quarter of 2001 was primarily the result of cash generated from
operations including non-cash depreciation and amortization charges, which was
partially offset by increased accounts receivable, inventory, prepaid expenses
and restricted funds associated with the acquisition of Convergent. The Company
expects to expand sales through its direct sales office and dealer networks,
including those acquired in the Convergent acquisition. The Company expects this
sales expansion to require working capital for increased accounts receivable and
inventories.
Net cash used in investing activities totaled $14.6 million for the quarter
ended March 31, 2001, compared to cash provided by investing activities of $2.0
million for the quarter ended March 31, 2000. During the first quarter of 2001,
net cash used in acquisitions totaled approximately $11.5 million, $10.6 of
which was attributable to the Convergent acquisition. Capital expenditures
totaled approximately $3.1 million for the same period. Cash provided by
investing activities in the comparable period of March 31, 2000 benefited from
$6.6 million in cash received from the disposition of the manufacturing
operations of Executone. The Company anticipates additional capital expenditures
during 2001, principally relating to expenditures for equipment and management
information systems used in its operations, for facilities expansion and
Inter-Tel.NET operations.
Problems with convergent looming:
CONVERGENT. On January 26, 2001, the Company acquired certain assets of
Convergent Technologies, Inc. ("Convergent") for cash plus the assumption of
various specific liabilities and related acquisition costs. Generally, Inter-Tel
acquired segments of the voice customer base, accounts receivable, specified
inventory and fixed assets along with assumption of liabilities for warranty,
maintenance and specified leased premises costs. The Convergent transaction was
accounted for using the purchase method of accounting.
The purchase price paid by the Company in the Convergent transaction is subject
to adjustment based on the final balances of the specified assets and
liabilities, and in particular, actual collected accounts receivable. The
acquisition agreement provides that all accounts receivable not collected within
the 90-day period following the closing of the transaction are guaranteed by
Convergent, and reserves of approximately $7.9 million are held in escrow for
claims relating to uncollected accounts receivable and for breaches of
covenants, representations and warranties contained in the acquisition
agreement. To date, the Company has filed a claim with the escrow agent for
return of $7.8 million of the funds held in escrow, based on uncollected
accounts receivable and adjustments to acquired assets and liabilities.
As of April 2001, Convergent and its parent corporation, Convergent
Communications, Inc. filed for protection under Chapter 11 of the U.S.
Bankruptcy Code. As a result of this bankruptcy filing, Inter-Tel must now
conclude its transactions with Convergent and its representatives, including
matters relating to accounts receivable, inventory, maintenance and customer
relations issues through bankruptcy court petitions and other complex means. In
addition, to the escrow claim, the Company has also filed a petition with the
bankruptcy court to set aside funds of Inter-Tel held by Convergent pursuant to
the terms of the acquisition agreement regarding the collection of accounts
receivable within 90 days of closing. We will be adversely affected to the
extent that the completion of these contractual matters will require increased
time and expense, or result in protracted legal proceedings to conclude the
contractual agreement between the parties.
I see that they have a load of AR, DSO = 62, and I have no idea about the credit quality of the clients. |
