As of December 31, 2007 the Company’s cash and short-term investments were $175.6 million, which includes $129.9 million of investments in auction rate securities. These are high-grade (AAA rated) student loan, federal government-backed, auction rate securities issued by student loan funding organizations, which loans are 97% guaranteed under FFELP (Federal Family Education Loan Program). Historically these securities had been considered short term investments and were highly liquid as the interest rates generally reset every 28 days and allowed investors to either roll over their holdings or sell them at par. However, as has been reported in the press, earlier this month the auctions for auction rate securities backed by student loans failed. The auction rate securities continue to pay interest at LIBOR plus 1.5% and there has been no change in the rating of these securities.
As a result of the failed auctions, these securities are currently not liquid. While the Company remains confident it has enough cash to continue to execute its current business plans, it may not be able to access these funds until a future auction of these investments is successful or they are redeemed by the issuer or they mature. Maturity dates range from June 2030 to November 2047.
At this time, there is no evidence that these investments are impaired even though the market for these investments is presently uncertain. The Company will continue to monitor and evaluate these investments on an ongoing basis for impairment. If the credit ratings of the security issuers deteriorate or if normal market conditions do not return in the near future, the Company may be required to reduce the value of its investments through an impairment charge and reflect them as long-term investments on its March 31, 2008, and any future, balance sheets.
This should be very distubing to any investor in MOVE.
I am not sure what Mike Long and Lew belotte have accomplished during the last few years. The damage they inflicted is clearly demonstrated in the stock chart and all their failed initiatives. And now there is evidence of financial mismanagement. The board needs to act swiftly and terminate them both.
Yes it is. It doesn't matter how much money you make in operations if you squander it in bad investments! Over two-thirds of their "cash" was in auction rate securities? The CFO should be fired. Today. No, last month.