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Monday, December 19, 2005

next batch of businesses

ADGR (sec), UK aluminum extrusions and manufactured parts, several subsidiaries. Assets are mostly AR, PP&E, and inventories. Extremely weak balance sheet, negative equity. Losing money.
not interested

ADSO (sec), no operations in the 10-K (had gone bankrupt). Acquired Tecknolaser in Jan 05.
not interested

ADY (already covered)

AEDU (sec), K-12, vocational, junior and community college educational software. Executives and directors own about 20% of the business. Assets are capitalized software and AR. PP&E almost totally depreciated. Balance sheet is ok. Losing money on increasing revenues due to even greater increasing SG&A. $700K positive free cash flow due to depreciation. 14 million shares. 3.6 million options. 0.5 million options remaining to be issued, so assume 18 million shares totally diluted. So perhaps 3 cents of real free cash flow in 2004.

Q3 2005: made a tiny profit in Q3, but a loss for the year so far. Only about $250K free cash flow so far this year. I get the sense from the numbers that this is a crappy "cigar butt" company. After looking at hundreds of companies, you start to see patterns. The stock is selling for 62 cents, so the market already knows what it's worth.
not intrested

AFPC (sec), "national health-care savings organization". They don't sell insurance. Looks like it's a collective bargaining system that tries to get group discounts. Assets are 2/3 cash, 1/3 AR. But the current ratio is terrible. Liabilities are nearly three times the assets.
not interested

AGIS (sec), customer relationship management (web, phone, help desk, multilingual). Mostly AT&T, Qwest, Trilegiant, Amex, and Cablevision. Revenues declined in 2004. They've had operating losses every year, the latest quarter, and the first 9 months of 2005.
not interested

AHOM (sec), another home respiratory business, mostly in places people move away from rather than into. Revenues have been fairly steady over the years. Operating loss in 2000, less of a loss in 2001, and profits in the next years. Huge cumulative effect of accounting principle loss in 2002 when equity fell into a black hole where it's still climbing the long way back out.

The largest asset is goodwill which is about half of all assets. The other half is PP&E and AR. The balance sheet ugly. $251 million long term debt and net income is $13 million. This seems to be a very capital intensive business. Net income is $13 million, cash flow from ops is $33 million, capex is $27 million and this pattern repeats in prior years. They paid down $11 million of the debt in 2004, but that's not much.
not interested

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