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  • patenright1 patenright1 Oct 23, 2013 6:29 PM Flag

    CASH BALANCE ANALYSIS

    PART1

    I think we all know Q3 was good based on the divvy and cash announcement but I believe it will be very strong based on that change in cash balance. yes many assumed this also from the cash balance but I thought I would try and estimate a reasonable profit range to give us more confidence with this assumption

    cashflow = profit minus use of cash and plus sources of cash all from operations, investing and financing activities

    thus when we know change in cash but not profit , to find profit = (change in cash) add use of cash and deduct source of cash ( the opposite of determining cashflow)

    1. change in cash = $111M for the period july 1 - October 4. reduce to approx. $106M for just 3 mths

    2. dividend was 14.5M (use of cash) - thus add that back to cash change

    3. first 6 mths of year (cashflow statement filed with SEC doesn't break down to just q2) saw a source of cash from financing of approx. $5M for income tax benefit for share based compensation - thus will deduct $3M for Q3 from change in cash figure

    4. depreciation/amortization and share based compensation (both non cash expense thus a source of cash ) of say $10M ( bit more than in q2 due to higher amortization due to synacthen deal ) - so deduct from cash change

    5. q1 and q2 saw cash raised from share issuance of approx. $7M ( stock options and grants I suspect) - don't have breakdown for just q2 as again cashflow statement uses just 6 month period but would assume it was bit higher in q3 than in either of q1 or q2 with the climbing stock price so lets use $5M for q3 ( this is very hard to estimate mind you ) - thus we deduct $5M from change in cash

    using all the above calculations PROFIT = $102.5M ( 106 + 14.5 - 3 - 10 -5 )

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