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Technology Stocks : Identix (IDNX) -- Ignore unavailable to you. Want to Upgrade?

To: chaz who wrote (5736)	12/12/1997 11:04:00 PM
From: Hockeyfan	Read Replies (1) \| Respond to of 26039

A little Chaztising! OK Rookie. I am going to go easy on you, see? But remember, it is harder to learn when your lips are moving. Post #5697 - Sales, receivables and write-offs You can't compare receivables, an asset on the balance sheet, to one quarter's revenues on the income statement and draw informative conclusions. The type of information you are searching for is contained in the Statement of Cash Flows. Net cash provided by or used for operating activities indicates whether the companies core business is a net cash provider or net cash user. Identix's operation provided $3,648,000 in FY97 after using $5,230,000 in 1996 and $3,859,000 in 1995. Although $1,630,000 of cash was used in 1Q97 this number fluctuates from quarter to quarter. Although it is normal for acccount's receivable to rise with the general level of sales Identix has and will continue to have a relatively high level of receivables because of the government service work. Brad has already gone into this. Expect receivables to go up if we ship additional TP600's to the INS. Hopefully the INS will pay faster in this specific case. We all know they have the money. Also, some contracts have performance clauses that must be met before final payment is made. I couldn't find your $1.3 million number for bad debts and returns. It is my understanding that receivable write-offs run less than $500,000 or less than 1% of sales. I believe this is mostly due to the embyonic nature of the biometric business. The $688,000 allowance for doubtful accounts is not a write-off but a reserve cushion against future possible write-offs. Every seller of goods or services has an ADA account. Post #5702 - cash burn rate, bank financing, etc. The cash burn rate question was answered above. Why is bank financing the worst you can have? According to the 10Q Identix pays 8.5% on average on its revolving lines of credit (LOCs). Identix's cash balance fluctuates from negative to positive depending upon sales and collections. Why pay interest on a large permanent loan if you don't have to? LOCs provide dynamic liquidity on demand. Identix may have to raise additional capital if its business grows substantially faster than it is now. Is faster growth a bad thing? I wish all my companies hit that pothole. Identix could raise $25 million (50% of last year's sales) by increasing shares outstanding by 2.5 million (10%). They could raise $37.5 million if they had a good enough reason to issue that it got the share price to $15. If this additional capital gets us to $1.00 EPS faster I am all for it! Post #5708 - 2 cents EPS from 50% increase in revenues Identix's revenues have reached the point where fixed costs are covered. From this point on revenues are leveraged such that an increasing portion of each sales dollar goes to the bottom line (economies of scale). This is the best time to invest in a company - when it has started making a profit, sales are ready to explode at a high gross margin and you have NOLs from past losses to offset against future taxable income. This NOL usage allows IDX to retain more cash in the company rather than sending it to Uncle Sam. Bank diatribe gobbledegook is debunked above. As Brad has described Identix has no long-term debt only short-term, flexible, revolving LOCs. Who cares if Imperial bank goes under? We owe them money. They don't have our assets. Post #5736 - 3.8% sales returns What are you talking about? The $625,000 allowance for doubtful accounts is 3.3% of total accounts receivable and .8% of anticipated revenues of $80 million for FY98. General Electric's ADA was 2.7% of A/R @ 12/31/96 and .3% of total revenues in 1996. Identix's write-offs should go down on a percentage basis as sales increase. Again the ADA is not write-offs, but a reserve for potential future write-offs. Enough accounting excitement. Tune in Sunday night when I will expose some serious problems with NRID's biometric HA-API and why most biometric companies will be haapier without it. A little Chaztising. OK Rookie. I am going to go easy on you, see? But remember, it is harder to learn when your lips are moving. Post #5697 - Sales, receivables and write-offs You can't compare receivables, an asset on the balance sheet, to one quarter's revenues on the income statement and draw informative conclusions. The type of information you are searching for is contained in the Statement of Cash Flows. Net cash provided by or used for operating activities indicates whether the companies core business is a net cash provider or net cash user. Identix's operation provided $3,648,000 in FY97 after using $5,230,000 in 1996 and $3,859,000 in 1995. Although $1,630,000 of cash was used in 1Q97 this number fluctuates from quarter to quarter. Although it is normal for acccount's receivable to rise with the general level of sales Identix has and will continue to have a relatively high level of receivables because of the government service work. Brad has already gone into this. Expect receivables to go up if we ship additional TP600's to the INS. Hopefully the INS will pay faster in this specific case. We all know they have the money. Also, some contracts have performance clauses that must be met before final payment is made. I couldn't find your $1.3 million number for bad debts and returns. It is my understanding that receivable write-offs run less than $500,000 or less than 1% of sales. I believe this is mostly due to the embyonic nature of the biometric business. The $688,000 allowance for doubtful accounts is not a write-off but a reserve cushion against future possible write-offs. Every seller of goods or services has an ADA account. Post #5702 - cash burn rate, bank financing, etc. The cash burn rate question was answered above. Why is bank financing the worst you can have? According to the 10Q Identix pays 8.5% on average on its revolving lines of credit (LOCs). Identix's cash balance fluctuates from negative to positive depending upon sales and collections. Why pay interest on a large permanent loan if you don't have to? LOCs provide dynamic liquidity on demand. Identix may have to raise additional capital if its business grows substantially faster than it is now. Is faster growth a bad thing? I wish all my companies hit that pothole. Identix could raise $25 million (50% of last year's sales) by increasing shares outstanding by 2.5 million (10%). They could raise $37.5 million if they had a good enough reason to issue that it got the share price to $15. If this additional capital gets us to $1.00 EPS faster I am all for it! Post #5708 - 2 cents EPS from 50% increase in revenues Identix's revenues have reached the point where fixed costs are covered. From this point on revenues are leveraged such that an increasing portion of each sales dollar goes to the bottom line (economies of scale). This is the best time to invest in a company - when it has started making a profit, sales are ready to explode at a high gross margin and you have NOLs from past losses to offset against future taxable income. This NOL usage allows IDX to retain more cash in the company rather than sending it to Uncle Sam. Bank diatribe gobbledegook is debunked above. As Brad has described Identix has no long-term debt only short-term, flexible, revolving LOCs. Who cares if Imperial bank goes under? We owe them money. They don't have our assets. Post #5736 - 3.8% sales returns What are you talking about? The $625,000 allowance for doubtful accounts is 3.3% of total accounts receivable and .8% of anticipated revenues of $80 million for FY98. General Electric's ADA was 2.7% of A/R @ 12/31/96 and .3% of total revenues in 1996. Identix's write-offs should go down on a percentage basis as sales increase. Again the ADA is not write-offs, but a reserve for potential future write-offs. Enough accounting excitement. Tune in Sunday night when I will expose some serious problems with NRID's biometric HA-API and why most biometric companies will be haapier without it.