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Non-Tech : GRIN (Grand Toys International Inc)
GRIN 27.010.0%3:59 PM EST
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To: SoliRA who wrote (482)12/5/1999 2:04:00 PM
From: Frank McVerry  Read Replies (1) of 495
 
SoliRA,

<<I've only been short in this stock since this Fall. I noticed that the fourth quarter earnings in 1998 were
negative. I'd expect a toy company to have their best quarters just before Christmas. Can anyone tell me
what happened?>>

What happened was a weak Canadian dollar. The CAN$ experienced an almost unprecedented fall against
the US$ (remember those news stories from last year about US border residents going into Canada to buy-up
the bargains in Canada ?). This affected GRIN in several ways, but the most problematic for them was their
US$ line-of-credit which had to be paid by CAN$ from their Canadian customers. The line-of-credit
increased by about CAN$1M by the time they had received customer payments by year-end - effectively
wiping-out their net profit.

IMO this event cannot happen this year for two reasons:

(1) The CAN$ has recovered this year and is close to trading in its old 'traditional' range.

(2) The US$8M that GRIN received from their option exercise in August was used to buy their
Christmas inventory, so they entered the 4th quarter owning the inventory, rather than having it
on their US$ line-of-credit, so avoiding any currency risk.

FWIW,
Frank
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