Post by
Goldbuggy1 on Mar 29, 2016 7:13pm
Goodwill???
Last year LIQ lost $130 M in Goodwill. We all know this is a Company Asset but it actually is not money out of the pocket, so who cares? Or is it? So what is Goodwill and how important is Goodwill to this company? Here is a recent example of that and what I am talking about. On January 4, 2016, the Company acquired a 51% ownership interest in Birchfield Ventures LLC and the right to acquire the remaining 49% interest at prenegotiated terms. Birchfield Ventures LLC operates two stores in New Jersey under the banner Joe Canals Discount Liquor Outlets. This company paid USD $15 M to do this plus or minus the Working Capital on closing. So from this USD $15 M cost about USD $0.538 M was Working Capital, and another USD $0.848 M was property and equipment. So at total of USD $1.4 M in Inventory, Property and Equipment, leaving USD $13.6 M. They also got Intangible Assets from this purchase and the biggest being the 2 Liquor Licenses. They can go for quite a high price because of the restrictions set in place in New Jersey, but I think USD $1.3 M each would be a very good price. Or USD $2.6 M for both. So subtract that from the USD $13.6 M and you end up with USD $11 M. Or about $14.5 M CAD. So what did this company spend this on? They spent this $14.5 M on Goodwill! They bought stores in Alaska to and also spend huge money on Goodwill to get them. In 2014 the Goodwill in the Alaskan Stores was $10.989 M or about $11 M. In 2015 the Goodwill in these Alaskan Stores are now Zero. So even though you won't see this $11 M loss come out of there pockets right now, it is still a loss and in this case a loss of money. This is also why you see a Minus (-) $3.64 Earning per share this year. So if next year the Goodwill in New Jersey were to drop by $10 M, again next year you won't see this come out of there pockets. But they will still lose this $10 M by paying that much more now for this Goodwill to begin with. Can't these guys do anything right? Maybe the Liquor Business is in better in the hands with Mom & Pop. They may not know the best Imported Wines, or have a Oak Shelves to put them on, but at least they can sell you a bottle of Jack Daniels at a far price and they don't have to worry about a new Minimum Wage Hike coming this year.