Standards for exposure to beryllium are under review by the
United States Occupational Safety and Health Administration(OSHA) and by other governmental and private standard-setting organizations. One result of these reviews will likely be more stringent worker safety standards. Some organizations, such as the California Occupational Health and Safety Administrationand the American Conference of Governmental Industrial Hygienists, have adopted standards that are more stringent than the current standards of OSHA. The development, proposal or adoption of more stringent standards may affect the buying decisions by the users of beryllium-containing products. If the standards are made more stringent and/or our customers or other downstream users decide to reduce their use of beryllium-containing products, our results of operations, liquidity and financial condition could be materially adversely affected. The impact of this potential adverse effect would depend on the nature and extent of the changes to the standards, the cost and ability to meet the new standards, the extent of any reduction in customer use and other factors. The magnitude of this potential adverse effect cannot be estimated. There was one chronic beryllium (CBD) case outstanding against us as of the end of the third quarter 2013. This case was filed in 2012. A loss reserve of $0.1 millionwas recorded for this case as of the end of the third quarter 2013, unchanged from year-end 2012. No other CBD cases have been filed or settled during the first three quarters of 2013. However, in the fourth quarter 2013, we were served with a complaint relating to one new CBD case.
Net cash provided from operations was
$38.5 millionin the first nine months of 2013, as net income, the effects of depreciation, amortization and stock compensation expense and other items offset the decrease in accounts payable and accrued items (which was partially due to the payment of the 2012 incentive compensation to employees during the first quarter 2013). Cash provided from operations in the third quarter 2013 was a strong $20.4 million.
Accounts receivable of
$122.0 millionas of the end of the third quarter 2013 were $4.5 million, or 4%, lower than the receivable balance of $126.5 millionas of year-end 2012. The decline in the receivable balance was largely due to the lower sales in the third quarter 2013 than in the fourth quarter 2012. This reduction was offset in part by a slow down in the average collection period as the days sales outstanding (DSO) slowed from 37 days as of year-end 2012 to approximately 40 days as of the end of the third quarter 2013. This slower collection period was within our normal operating range. We continue to aggressively monitor and manage our credit exposures and the collectability of our receivables. We will adjust our credit terms, including requiring cash in advance, when warranted. The bad debt expense in the first nine months of 2013 was immaterial. Inventories totaled $212.8 millionas of the end of the third quarter 2013, an increase of $6.7 millionsince year-end 2012. The inventory turnover ratio, a measure of how effectively inventory is utilized, slowed down from the year-end 2012 level and roughly the level from the first two quarters of 2013, but was in line with the ratio from the third quarter 2012.