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Rawn, sounds like a plan. Of course you could always share information like "Deep Throat" did with Robert Redford in All the President's Men. Ye know, the "non-denial" denial?
LoL
OK, I briefly dug into the 6/30/08 10-Q. The better detail is in the 10-K's, but we won't see another one until March 2009.
Have a good one.
I hear what you're saying. From my point of view, Wal-Mart is a way for the vendor to legitimize operations. Many that put too many eggs in that basket tend to regret doing so.
Don't know about the specific VBDG vendor relationship. Feel free to reference my commentary if/when you speak to company officers.
Again, I'm not trashing Wal-Mart or VBDG, just sharing my experience.
Rawn, any idea what percentage of revenue is allocated from Wal-Mart?
While I agree that all vendors are not treated in the same way, I'll offer to three very likely scenario's. Wal-Mart has most vendors "bag and tag" (a Wal-Mart term) that refers to tagging the WM UPC sticker on the EXACT place that Wal-Mart demands on each product. This is done at the vendor level, and the product is placed in boxes ready for distribution.
Once the items reach the distribution center, they are spot inspected. If even one exception is discovered, they typically send ALL of the product back to the vendor.
If the product is accepted at distribution, the VENDOR manages Wal-Mart store inventory via Wal-Mart software known as Retail-Link.
Typical Wal-Mart payment terms are 60 days, yet they may typically takes credits for returns/broken product, etc. immediately.
In summary, I would expect Wal-Mart to ask the vendor to use vendor company staff to bag/tag Wal-Mart product. If there is a problem at distribution they will send everything back to the vendor. Credits might be taken quickly against cash receipts, obviously hurting cash flow.
Again, speaking from experience. Hopefully Vertical is treated differently (but I doubt that).
Rawn, thanks for the response. I'll look forward to reviewing the upcoming 10-Q.
I'm very familiar with the Wal-Mart vendor model, the distribution system, and how they treat the vendor. In the past, Wal-Mart asked me to speak before other vendors (which I agreed to do) at their HQ in Bentonville. I'd be very surprised if Vertical is selling anything profitably to Wal-Mart.
Anyway, take and congrats on an excellent AMSC option play.
Rawn, a few questions/comments regarding Vertical. A vendor relationship with Wal-Mart generally equates to zero gross profit, so I generally discard them from the equation.
I know there will be a new 10-Q filed in ten days, but in looking at the 6/30 filings year over year, they lost about $4 million in revenue, but managed G&A well enough to keep losses to a minimum.
The Cash flow statement shows that they have drawn on the line (no surprise).
A few questions...Will they continue to rent out those properties in NY & CT or are they looking to sell? How are the relationships with the subs (Yolo & Gateway)? Product lines D & E represent about 40% of company revenue, any idea what those products are? That appears to be a concentration of credit risk. Are they close to breaking bank covenants per the terms of the borrowing base (the 6/30/08 formula had them at 95%)?
Thanks in advance.
Anyone know of any banks/credit unions with decent CD rates? Looking for terms of between 3 and 12 months. I have too much cash sitting around at money market rates.
I may risk a bit on a corporate junk bond, if the yield can support the risk.
TIA
Update on ETF basket. No transactions since 10/20/08.
Overall, I'm down 1% after netting the gain/loss percentages below. Still 60/40 equity to cash ratio. YTD, I'm also at break even including the short selling. The goal is always to achieve a double digit positive return during any given year. I still have two months left.
EWZ 31.1%
GCC (5.7)%
VEU (2.8)
VGT (1.4) - 1st purchase
VGT 3.2 - 2nd purchase
VGT 3.3 - 3rd purchase
VNQ (11.3)
VWO (11.5)
IVV 7.7
MGC (1.2) - 1st purchase
MGC 7.6 - 2nd purchase
VBK 6.6
VGK (3.7)
VPL 0.2
Good luck, getting to ready to stand in a long voting line.
Nice work! I'm worried about what will happen tomorrow and Wednesday in the marketplace.
Holding pattern for me.
Very profitable business model. Neat industry.
EGLE - The revolver is with Royal Bank of Scotland.
http://www.sec.gov/Archives/edgar/data/1322439/000134100407002847/egle_8k.htm
EGLE, subsequent event note. Note the increase in the LIBOR margin to 0.95% from 0.80% depending on advances. This is a $1.6 billion revolver. Obviously, the health of the lender needs to be reviewed.
Long-Term Debt
On July 3, 2008, the Company entered into an Amendatory Agreement to its $1,600,000,000 revolving credit facility. Among other things, the amended facility provides us with an additional incremental commitment of up to $200,000,000 under the same terms and conditions as the existing facility, subject to satisfaction of certain additional conditions. The Company now also has the ability to purchase additional drybulk vessels in excess of 85,000dwt and over 10 years of age, but no more than 20 years of age, with certain limitations. The agreement also provides for the purchase or acquisition of more than one additional vessel en bloc or the acquisition of beneficial ownership in one or more additional vessel(s). The agreement amends the margin applicable over the Libor interest rate on borrowings to 0.95% for the next two years. Thereafter, if the advance ratio is less than 35%, the margin will be 0.80% per year; if the advance ratio is equal to or greater than 35% but less than 60%, the margin will be 0.95%; if the advance ratio is equal to or greater than 60%, the margin will be 1.05%. The agreement also amends the commitment fee on the undrawn portion of the revolving credit facility to 0.30%. In connection with this latest amendment, applicable arrangement fees will be incurred and these fees will be in proportion to the arrangement fees previously incurred when the revolving facility was increased to $1,600,000,000 in 2007. All other terms and conditions remain unchanged.
EGLE, to me this is the key current issue with this company. Their debt structure, the interest rate swaps (a derivative), LIBOR and foreign currency issues. Plenty of timing issues here, which will be easier to unravel with the 9/30/08 filing.
From the 6/30/08 10-Q....
Note 3. Long-Term Debt
At June 30, 2008, the Company’s debt consisted of $665,694,643 in net borrowings under the $1,600,000,000 amended revolving credit facility. These borrowings consisted of $283,343,310 for the 20 vessels currently in operation and $382,351,333 to fund the Company’s newbuilding program. During the six months ended June 30, 2008, the Company borrowed $68,451,753 to fund the progress payments for the newbuilding vessels.
For the six months ended June 30, 2008, interest rates on the outstanding debt ranged from 3.11% to 6.04%, including a margin of 0.80% over LIBOR applicable under the terms of the amended revolving credit facility. The weighted average effective interest rate was 5.46%. The Company incurs a commitment fee of 0.25% on the undrawn portion of the revolving credit facility. Interest costs on borrowings used to fund the Company’s newbuilding program are capitalized until the vessels are delivered.
Interest Expense, exclusive of capitalized interest, consists of:
Three Months Ended Six Months Ended
June 30,
June 30,
June 30,
June 30,
2008 2007 2008 2007
Loan Interest $ 3,377,560 $ 2,957,413 $ 6,650,973 $ 5,906,167
Commitment Fees 10,345 143,254 25,278 288,613
Amortization of Deferred Financing Costs 61,312 59,772 123,219 117,784
Total Interest Expense $ 3,449,217 $ 3,160,439 $ 6,799,470 $ 6,312,564
Cash interest paid, exclusive of capitalized interest, in the six month periods ended June 30, 2008 and 2007 amounted to $6,079,939 and $6,217,965, respectively.
Interest-Rate Swaps
The Company has entered into interest rate swaps to effectively convert a portion of its debt from a floating to a fixed-rate basis. Under these swap contracts, exclusive of applicable margins, the Company will pay fixed rate interest and receive floating-rate interest amounts based on three-month LIBOR settings.
7
--------------------------------------------------------------------------------
Table of Contents
The swaps are designated and qualify as cash flow hedges. As of June 30, 2008, the Company has the following swap contracts outstanding:
− Notional amount of $84,800,000 with a fixed interest rate of 5.24% and maturity in September 2009.
Upon maturity, this amount will commence a new swap with a fixed interest rate of 3.90% and matures in September 2013.
− Notional amount of $25,776,443 with a fixed interest rate of 4.90% and maturity in March 2010
− Notional amount of $10,995,000 with a fixed interest rate of 4.98% and maturity in August 2010
− Notional amount of $202,340,000 with a fixed interest rate of 5.04% and maturity in August 2010
− Notional amount of $100,000,000 with a fixed interest rate of 4.22% and maturity in September 2010
− Notional amount of $30,000,000 with a fixed interest rate of 4.54% and maturity in September 2010
− Notional amount of $25,048,118 with a fixed interest rate of 4.74% and maturity in December 2011
− Notional amount of $36,752,038 with a fixed interest rate of 5.22% and maturity in August 2012
− Notional amount of $81,500,000 with a fixed interest rate of 3.895% and maturity in January 2013
The Company records the fair value of the interest rate swaps as an asset or liability on its balance sheet. The effective portion of the swap is recorded in accumulated other comprehensive income. Accordingly, a liability of $12,223,412 and $13,531,883 has been recorded in Other Liabilities in the Company’s balance sheets as of June 30, 2008 and December 31, 2007, respectively.
Foreign Currency Swaps
The Company has entered into foreign exchange swap transactions to hedge foreign currency risks on its capital asset transactions (vessel newbuildings). The swaps are designated and qualify as cash flow hedges.
At June 30, 2008 and December 31, 2007, the Company had outstanding foreign currency swap contracts for notional amounts aggregating 11.28 billion Japanese yen swapped into the equivalent of $104,259,998.
The Company records the fair value of the currency swaps as an asset or liability in its financial statements. The effective portion of the swap is recorded in accumulated other comprehensive income. Accordingly, an amount of $4,263,882 and $932,638 have been recorded in Other Assets in the accompanying balance sheets as of June 30, 2008 and December 31, 2007, respectively.
EGLE - The last financial filing is a 10-Q at 6/30/08. The next one should be interesting and is due in about two weeks.
Cash position is fine, until you compare 6/30/08 to 12/31/07. The cash ratio has declined significantly, and I think this issue is a large watch item when the 9/30/08 is filed. So, where has the cash gone? If you look at the most important financial statement (cash flow), net bank borrowings are $6 million higher, a $3 million increase in accrued interest, and a $7 million increase in dividends. From my point of view, it appears that the company is borrowing to pay dividends, and sustaining an increase in interest cost as a result.
EGLE is an interesting one. I looked at a few of the competitors. Check out the one year chart on DRYS. Debt is the issue with this industry, and 13% short interest appears to be the norm. My guess is that some of these companies will fail, and those remaining will be reap the benefits. I'll open up the SEC filings later to see what kind of financing (due dates, etc.) EGLE has. Profitable business model, but capital and new build is the key.
See, now they have to CHANGE the one-liner. Now it goes from "Profit taking causes sell-off", to "GE kills an otherwise positive day".
Another bizarre day!
I hear you, I'm not beating up your logic. I'm annoyed with how 6.5 hours of trading is condensed into one line by "those who know" and the other talking media heads.
LoL
Could be, but I never really buy into the market "one-liners".
The profit taking is relative, since those who were selling late today really have no idea how things would go minutes after their sell execution.
So, if the DOW ends up 200 today, the one-liner is "bargain hunters step in", or the like.
To me it is just nonsense that can be built into the 30 second News-TV segments when they talk about "business".
Looks like a 300 point drop in the last 15 minutes of trading. I'm not sure what to make of that, but that is probably not a good sign.
I hear ya. Cut losses quickly and let the gains run. What is your call on the 4PM DOW number?
8800 for me.
Hold on now....You are bidding DOG at $70, when the market price is $78 or so. All things equal, you would need an 11% drop on the S&P today to get a fill.
That's not going to happen today. You may see a 3% decline. Your current bid is too low.
Greedy bastard!
LoL
The tight ranging makes sense right now, but I think a 50 basis point cut is built into the indexes.
So, I say the DOW ends at 8800 if a 50 basis point cut is announced.
At 2:15 PM Eastern today, you may see a fill.
For the six months ending Mid-October, I could do no wrong. Now, I don't have a feel for this, not as much confidence.
Anyway, I predict markets will tightly range until after the Fed announcement, then large swings over the last two hours of trading tomorrow.
So, I think SKF will be a nice play, but only if you are in/out within one hour tomorrow afternoon.
I'm staying out of the fray tomorrow.
I think there will be more to come (up and down).
I put up with that for seven months on UKPIX and UIPIX.
Torched the short term ceiling, no purchases or sales for me today.
Looks like the short term trading range is 1500-1580 on the Naz, and 8200-8600 on the Dow.
Nearing the high end of that range for DOG and QID possible trades.
You game?
LoL
While I understand the logic of this "bailout" the foreclosed homeowner stuff, I'm equally frustrated.
There is an unfair "disconnect" here.
Where is the reward for all of those that paid the mortgage timely, paid the credit card bills timely, and managed money and savings properly?
Where are those that think differently and logically? I'll vote for THOSE people!
That is exactly what I'm afraid of.
I'll show my Mississippi co-workers this when I fly there tomorrow.
What are you crying about? I thought purchased three short or ultra-short ETF's earlier in the day?
I like my daytrader friends!
Travelling to the Southeast part of the country this week, anyone leave in the neighborhood?
Tim, I agree 100%. Sarbanes did very little other than increase the burden on the company itself. For most, SOX is basically an internal control audit (performed by the company, and reviewed by outsiders).
So the public company deals with an external audit, an internal audit and a mountain of SOX testing templates that are reviewed by the external and internal auditors.
...and things will now get worse.
Duke of Marmalade as my sleeper pick in the Classic.
Playing some of the Breeders Cup races today. I'll check back later should we have any horse players here.
You watched a taped replay of Greenspan? Where do I send the case of beer and the gift certificate to Ruth Chris? You need to get OUT MORE OFTEN!