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Integrity Incorporated (ITGR) Message Board

  • gatechinvestor gatechinvestor Oct 23, 2000 8:43 PM Flag

    INSIDER TRADING

    A month or so ago, someone passed along a good
    site for tracking institutional trading on ITGR. That
    site has been helpful, but I've noticed that it hasn't
    been updated since 6/30/00. Does anyone know when they
    (the institutions)have to post the data for the period
    ending 9/30?

    By the way, I expected to see some
    messages before the teleconference tomorrow. Is everyone
    just holding their breath?

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    • Here's another possible AG Edwards recommendation
      to enhance shareholder value that I've been thinking
      about: a management led LBO. I realize this is unlikely,
      but on the conference call, although management
      indicated that they weren't going to sell the company, they
      didn't say they wouldn't BUY it!<G>

      Just
      for fun, let's look at some numbers. According to the
      Yahoo profile, insiders own 70% of ITGR. So let's
      assume they own 4.3 million of the 6.1 million fully
      diluted shares outstanding. That leaves 1.8 million in
      public hands, which appears close based on the most
      recent Proxy Statement.

      If management buys those
      1.8 million shares for double today's price, or $7,
      it would cost about $13 million. With EBITDA
      (including product master amortization) running about $12
      million this year, raising the debt to finance an LBO is
      clearly possible. I believe that a debt to cash flow
      ratio of about 5 is the upper limit in today's private
      placement junk bond market, so ITGR could leverage up even
      more if there was an opportunity to do so. Of course,
      $7 would be a steal for management to take this firm
      private and I think they'd have to offer more to get a
      deal done.

    • <<<$8.5 million-$9 million for the full
      year would be fine for 2000.>>>

      As I
      recall, management estimated EBITDA of $8.4 to $8.5
      million for this year using their guidance for the
      December quarter. This estimate was about $2 million
      higher than what they said 1999's EBITDA was ($6.5
      million), which appears to have excluded product masters
      amortization (PMA) of $3.5 million for 1999.

      If all the
      above is true, then EBITDA for 2000 including the PMA
      will be much higher than $8.5 to $9 million. Afterall,
      EBITDA including PMA for the 6-months through June was
      about $5.9 million. So it looks to me like EBITDA
      including PMA for 2000 could be around $12.2 million, or
      $2.00 per share. That means I bought more shares at 1.7
      times EBITDA this morning! This is very cheap given
      ITGR's healthy growth in cash flow and conservative
      balance sheet.

      I got the impression that they
      revised downward their estimates to be on the
      conservative side, and so there's a good chance they'll be on
      the high end of the guidance range. If so, cash flow
      will support leveraging up the balance sheet. I
      believe I caught a hint of this on the call. The most
      obvious reasons to increase debt would be (1) a share
      repurchase, (2) acquisition, or (3) significantly increase
      new product development. AG Edwards' analysis will
      help the board determine the best return on investment
      for shareholders, and I look forward to hearing the
      decision early next year. And if the balance sheet is
      leveraged via a junk bond private placement, I'm sure AG
      Edwards is hoping to win the business.

    • Rincon, As usual, I agree with most of what you
      say..........i believe the most likely "intermediate"
      value-enhancing move would be an offer to shareholders to buy
      back a slug of stock at some premium to current
      prices.That might explain management's cautiously optimistic
      tone and its apparent decision to pump up the PR early
      next year rather than look to boost the stock price
      right now in advance of such an offer.Just my opinion
      ,of course,but it would seem to make sense in a lot
      of ways.As for their calculation of EBITDA,I agree
      it needs to include amortization from product
      masters.But in any case,$8.5 million-$9 million for the full
      year would be fine for 2000.I would also be content
      with $.32 EPS for the full year based on a higher tax
      rate.And as for whether the good questions were from
      me---OF COURSE!!! ALL questions you believe are
      intelligent and well-thought out I will take credit for and
      any that you think are childish,irrelevant and poorly
      worded will of course be coming out of the mouth of
      someone other than me. Fair? RUDY

    • On the other hand, holders of this stock DIDN'T
      have the expectations that the numbers would be met.
      Last year we had a CD on the Billboard100 the entire
      quarter. There's expectations and informed expectations.

    • <<<By the way, I expected to see some
      messages before the teleconference tomorrow. Is everyone
      just holding their breath?>>>

      Could
      you (or anyone else) please post the time of
      tomorrow's call, telephone number and any code, if
      necessary? I'd like to listen in to the call. Thanks!

    • <<<...I've noticed that it hasn't been
      updated since 6/30/00. Does anyone know when they (the
      institutions)have to post the data for the period ending
      9/30?>>>

      I believe you're referring to:

      http://www.insidertrader.com/freestuff/ticker_summary.asp?search=1&criteria=itgr

      Institutions filing Forms 13G or 13F do so on a quarterly
      basis, which is why the latest data available is through
      June. I do not recall how long institutions have to
      file after the end of the quarter (my guess is 30 to
      45 days), but it shouldn't be too long. Some filings
      have begun to trickle in, though not yet for ITGR.

 

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