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Author: geekytoo One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 13  
Subject: not so hidden trends for Caché Date: 1/21/2009 6:33 AM
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What a difference one letter can make. It's all Cachet vs. Caché.

I've combed through the 10-Qs for 2008 and suddenly, the Caché trends became blindingly obvious. What follows is a quick rundown.

Going back to the quarter ending March 31, 2007, the company's cash position has generally deteriorated. It went up nicely to $16.5 million in the quarter ending June 26, 2007 from $9.1 million the previous quarter.

Sadly, the quarter ending March 31, 2007 was the high water mark for cash. Since that time it has flowed, flowed away. The low point so far was reached with the quarter ending June 28, 2008, when cash and equivalents were down to about $1 million. They recovered a bit to $2 million for the quarter ending September 27, 2008.

Marketable securities got marketed away. Beginning with the quarter ending March 31, 2007, they fell from almost $52 million to $23.5 million for the quarter ending September 27, 2008.

The change in cash and marketable securities accounts for most of the change in total current assets for the company between March 2007 and September 2008. Total current assets dropped from $109.7 million to to $69.9 million. Of the $40 million drop, $35.5 million matches the drop in cash and marketable securities.

What did CACH do with all those assets?

One big investment was the purchase of company stock for $15 million. A good chunk, about $12 million, of that happened early in the year. That doesn't look so smart all of a sudden. I won't comment, because I need to learn more about this transaction.

Another big point is that the company's operations have been bouncing between operating profit and operating loss. Gross margins moved between 42% and 48%. At the same time SG&A has moved between 42% and 47%. The means operating margins fell between -5% and +4%. A slippery slope indeed.

At this point, the company is burning cash like mad. It is closing stores and making payments to do so.

If the closings are a one shot deal, they will hurt right now, but then cash flow should recover. While it isn't nice to have operating losses, the company may yet recover. I'm not making any guesses on sales though.
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