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To: Kathleen capps who wrote (25252)	12/15/1997 2:24:00 AM
From: S. maltophilia	Respond to of 53903

I thought this was the note issue with the delayed interest payments. From the SEC archives: sec.gov Interest on the Notes is payable on January 1 and July 1 of each year, commencing January 1, 1998. The Company has the right to defer payment of interest on the Notes at any time or from time to time for a period not exceeding 4 consecutive semi-annual interest payment periods with respect to each deferral period (each, an "Extension Period"), provided that no Extension Period may extend beyond the stated maturity of the Notes. Upon the termination of any such Extension Period and the payment of all amounts then due on any Interest Payment Date (as defined), the Company may elect to begin a new Extension Period subject to the requirements set forth herein. During an Extension Period, interest on the Notes will continue to accrue and holders of Notes will be required to accrue interest income for United States federal income tax purposes. See "Description of Notes--Option to Extend Interest Payment Period" and "Certain Federal Income Tax Considerations--Interest Income and Original Issue Discount". The Notes will not be subject to redemption prior to July 2, 1999 and will be redeemable on and after such date.........

To: Kathleen capps who wrote (25252)	12/15/1997 8:28:00 AM
From: mike iles	Read Replies (1) \| Respond to of 53903

Hi Kathleen, No, my numbers are operating income so they don't take interest expense/income or taxes into account. I'm fuzzy on the details of the converts but I remember they're allowed to miss payment several times without it putting them into default. I think they pay twice yearly so the January amount would be $17.5 million. Yes, I do think they will skip payment this time. This is based on my theory that they will acknowledge reality this quarter (Lehi, inventory, restructuring) and preserving cash will be part of that. I've criticized managemment and the board for not raising equity in the salad days and actually they sort of half-ass did with the convert issue. You're really buying equity when you buy that issue (i.e. you assume the risk of an equity holder) and if they get into serious financial trouble I expect that debt will be converted into equity, probably at something like $10/share, not the $67.44 sticker price. So I have to modify my criticism, they didn't raise enough equity and they didn't take advantage of the high prices that were there as recently as August. (potato Head's influence?) regards, Mike