Just looked at JM Dutton's forecast for WHAI. They have "other income" for FY05 as coming in around 2.3MM. I assume this is the non-cash income that gets recorded for the warrant liability.
Tax rate is assumed to be 11%, with FD shares around 46MM.
I'll do my usual adjustments for eps.
Something struck me as odd. In the Q1 PR, the company said the following:
"The Company estimates that it generated $4.6 million in earnings before interest, depreciation and amortization in the first quarter of 2005. The majority of that cash flow was used to reduce the Company's current debt and invest in organic growth opportunities through new business units. During the first quarter, the Company also lowered its short-term debt by approximately $6.1 million and established permanent financing, reducing overall interest charges by 6% from the fourth quarter of 2004. "
The Dutton report also uses this methodology:
"Cash Flow
In the first quarter, the Company generated $2.8 mn of free cash flow. This is important as it puts to rest concerns about
ability to generate cash to manage outstanding debt and continue to grow the business.
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This seems a bit misleading to me, because cash flow from operations was negative during Q1. (-$1.4MM, from the company's 10Q) I don't see how they are getting to positive free cash flow. They must be ignoring the impact of the change in A/R, which was very negative during the quarter (-5MM).
What are your thoughts on this?
AI
