I am looking at gfi. The first thing I noticed was that the revenues increase 35% while the expenses increase 53%. If one looks closely at the current balance sheet, one sees the following negatives- a decrease of cash, an increase of accounts receivable, a decrease of current assets , a decrease of stockholders equity, an increase in costs and expenses. The reduction in liabilities is positive as well as the announcement of cost cutting and profitability in 99. The 3,000,000 wasted on Irwin is unfortunate (Will he dump the million shares he apparently still owns?). *
The Separation Agreement provides for (i) the continuation of Mr. Selinger's (a) base salary of $550,000 through July 31, 1999, (b) healthcare and insurance benefits through July 8, 2001, and (c) automobile lease payments and associated automobile expenses through July 8, 2001, (ii) the forgiveness of Mr. Selinger's $2.2 million loan in consideration of Mr. Selinger's repayment of $500,000 on June 30, 1999, (iii) a three (3) year non-competition agreement, (iv) the continuation of Mr. Selinger's split dollar life insurance policy in accordance with the terms of Mr. Selinger's divorce judgment, (v) a non-disparagement agreement, (vi) mutual releases, and (vii) the continuation of the Company's indemnification provisions for Mr. Selinger. The Company has recorded a charge of $3,348,000 in the quarter ended September 30, 1998, to reflect the financial effects of the Separation Agreement.
The cheap price of the stock may have discounted all the above. If the company does get its act together, the stock certainly could move higher. The company does have revenues momentum, 16,000 customers , 48.000 products, high book value of $7.62, high sales per share value ($13).
* How is it possible that Irwin could be so wonderfully rewarded over the years with so much money. Under his stewardship this year the company lost 83% of its value or about $400,000,000 in market capitalization. If a normal worker performed so poorly, he would have been fired in 3 days and made to pay for his own divorce. |
