I read through the financials last weekend.

The thing that really struck me is that they basically were bailed out by about a $35 million (if memory serves, I didn't take notes) of what are essentially "progress payments" from (I assume) Uncle Sam. These are basically cash advances of contract expenses that have not yet been billed.

It would be interesting to know how many different contracts were involved and what their terms (i.e. duration) are.

While the inventory reduction over the past 9 months is highly commendable and also generated very very substantial cash flow, without the funds that apparently were forwarded, it seems to me that these guys could easily have gone over the edge.

It's been a long time since I've really spent any time on this name (ok, John Smith (respectfully remembered as "Lefty") was still CEO & Chairman and they were wildcatting for oil and gas) and David Hochenbrocht (did I get that right) was CFO). In any case, I've been monitoring Lawndale's pressure on the Board.

It seems to me that there is finally some decisive action being taken here. I was kinda sad to see the HQ move out of MI to Illinois.

Anyhow, one has to think that if they can earn say a 5% net income margin (a/t) on $200 million in revenue, then $10 million comes to more than $1 a share in earnings, and the stock should command at least 10x that since there is no debt (aside from the aforementioned government advance). Of course that advance will reverse out of cash flow as the contract is delivered, but at least 20% of it appears to have gone to fund inventory.

It won't happen overnight, but not an unreasonable 2 year target if the global economy cooperates.

Any thoughts, ladies and gentlemen?

aa