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Non-Tech : GRIN (Grand Toys International Inc) -- Ignore unavailable to you. Want to Upgrade?

To: Kevin Podsiadlik who wrote (460)	11/19/1999 3:31:00 PM
From: Frank McVerry	Read Replies (1) \| Respond to of 495

Kevin, <<Um, the 10-Q pretty clearly states a cash position of $280K, AFTER taking into account the $8 million from stock options. Care to make any other trivially refutable statements?>> The $14M cash position for GRIN was my year-end estimate, that is, the end of their Christmas 'inventory purchase - accounts received' cycle. That number is the only valid number for evaluating their cash position within a value estimate. Their intermediate cash positions at other times in this cycle are irrelevant to the calculation. The $8M option cash has not 'disappeared' but has been applied to inventory purchase, rather than creating an $8M short-term loan on their credit line - much more effective than putting the cash in a CD or T-bill (a personal example...if I have $1000 spare cash getting 1% in my check account and a credit card loan of $1000 at 19.9% which I can pay-off over 3-5 months from my cash flow, then it makes a lot of sense to pay the loan with the cash and replenish my cash with my cash flow). The LTD you mention is a proper offset for the same amount of year-end cash (thank you for keeping me right on that) and I estimate it would adjust my revised estimate of dako's normalized valuation by 40-45c, to $12.03 to $12.08. However,it would be a mistake to cast dako's sales/margin/multiplier estimates in stone - I think there are easy arguments for say $45M or more in 2000 sales, and slightly higher net margin and PE multiplier, pushing his low-end no-growth scenario to a logical floor above $14. It seems that the last few posts have been putting the low-end risk for GRIN under the microscope (and rightly so) but I am also interested in the upside possibilities and would be interested in your comments. Frank McV