The Goldfarb Corporation announces third quarter results



    TORONTO, Nov. 29 /CNW/ - The Goldfarb Corporation (the "Corporation")
today announced its third quarter results.
    As announced on August 17, 2007, the Corporation is holding three
separate matured asset-backed commercial papers totaling $17.1 million that
have not been paid out and remain outstanding. All of these securities are
administered by Coventree Capital Group Inc. and were rated R-1 High by the
Dominion Bond Rating Service Limited at the time of purchase. From August 16,
2007, these investments have been rated R-1 High, Under Review with Developing
Implications. The balance of the Corporation's investments of approximately
$9.4 million is invested in highly rated liquid instruments. As required by
generally accepted accounting principles, the Corporation estimated the fair
value of these securities at September 30, 2007 and recorded a charge of $2.6
million. In subsequent periods, actual fair values may change materially from
the estimated fair values. The Corporation will continue to closely monitor
the asset-backed commercial paper market and evaluate its options with the
papers that have not been redeemed. Should conditions or options change, the
Corporation will make further announcements.
    Revenues from operations for the third quarter of 2007 were $298,000
compared to $487,000 in 2006, a decrease of $189,000. The net loss for the
Corporation in the third quarter of 2007 was $2,675,000 or $0.45 per share
compared to a net loss of $158,000 or $0.03 per share in 2006.
    For the nine-month period ended September 30, 2007, the Corporation's
revenues were $1,081,000 compared to $2,484,000 in 2006, a decrease of
$1,403,000. The net loss for the first nine months of 2007 was $2,970,000
($0.50 per share) compared to net income of $649,000 ($0.11 per share) in
2006.
    The accompanying eight pages of unaudited interim financial statements
have been prepared by and are the responsibility of the Corporation's
management. The Corporation's auditor has not performed a review of these
interim financial statements.


    
    Statement of Income (Loss), Comprehensive Income (Loss) and Deficit
    -------------------------------------------------------------------------
    (unaudited)               Three Months Ended          Nine Months Ended
                                 September 30                September 30
                              2007          2006          2007          2006
    -------------------------------------------------------------------------
    (thousands of dollars        $             $             $             $
     except per share
     information)
    Interest revenue           298           487         1,081         2,484
    Administrative expenses     91           632           683         1,603
    -------------------------------------------------------------------------
                               207          (145)          398           881
    Depreciation                (4)           (4)           (9)          (11)
    Foreign exchange loss     (313)           (9)         (794)         (221)
    Impairment charge on
     long-term investments
     (note 2)               (2,565)            -        (2,565)            -
    -------------------------------------------------------------------------
    Net Income (Loss) and
     Comprehensive Income
     (Loss)                 (2,675)         (158)       (2,970)          649
    Deficit, beginning
     of period             (23,521)      (11,706)      (23,226)      (12,513)
    -------------------------------------------------------------------------
    Deficit, end of period (26,196)      (11,864)      (26,196)      (11,864)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and Diluted
     Income (Loss)
     per Share               (0.45)        (0.03)        (0.50)         0.11
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average
     number of shares
     outstanding         5,936,660     5,936,660     5,936,660     5,936,660



    Cash Flow Statement
    -------------------------------------------------------------------------
    (unaudited)               Three Months Ended          Nine Months Ended
                                 September 30                September 30
                              2007          2006          2007          2006
    -------------------------------------------------------------------------
    (thousands of dollars)       $             $             $             $
    Operating Activities
    Net income (loss)       (2,675)         (158)       (2,970)          649
    Add (deduct) items
     not involving cash:
      Depreciation               4             4             9            11
      Foreign exchange
       loss                    313             9           794           221
      Impairment charge
       on long-term
       investments
       (note 2)              2,565             -         2,565             -
    -------------------------------------------------------------------------
                               207          (145)          398           881
    Changes in non-cash
     working capital
     balances (note 5)          80            15            54           (34)
    -------------------------------------------------------------------------
    Cash provided by
     (used in) operating
     activities                287          (130)          452           847
    -------------------------------------------------------------------------
    Financing Activities         -             -             -             -
    Investing Activities
    Repayment of notes
     receivable                  -           433         2,545         9,748
    Redemption of
     short-term investments      -             -        21,871        17,332
    Acquisition of
     short-term
     investments            (9,375)      (21,584)       (9,375)      (21,584)
    Acquisition of
     long-term investments (17,100)            -       (17,100)            -
    -------------------------------------------------------------------------
    Cash provided by
     (used in) investing
     activities            (26,475)      (21,151)       (2,059)        5,496

    Foreign exchange gain
     (loss) on cash held
     in foreign currency      (217)           15          (543)           (1)
    -------------------------------------------------------------------------
    Increase (decrease)
     in cash and cash
     equivalents for the
     period                (26,405)      (21,266)       (2,150)        6,342
    Cash and cash
     equivalents,
     beginning of period
     (note 5)               30,924        39,478         6,669        11,870
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end of
     period (note 5)         4,519        18,212         4,519        18,212
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Balance Sheet
    -------------------------------------------------------------------------
    (unaudited)                                   September 30   December 31
                                                      2007          2006
    (thousands of dollars)                                   $             $
    -------------------------------------------------------------------------
    ASSETS
    Current Assets
    Cash and cash equivalents (note 5)                   4,519         6,669
    Short-term investments (note 2)                      9,375        21,871
    Accounts and other amounts receivable                  135           314
    Current portion of notes receivable (note 3)             -         2,545
    Income taxes recoverable                                34            34
    -------------------------------------------------------------------------
    Total Current Assets                                14,063        31,433
    -------------------------------------------------------------------------
    Long-term Investments (note 2)                      14,535             -
    -------------------------------------------------------------------------
    Notes Receivable (note 3)                            1,441         1,692
    -------------------------------------------------------------------------
    Capital Assets                                          17            26
    -------------------------------------------------------------------------
                                                        30,056        33,151
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current Liabilities
    Accounts payable and accrued liabilities                63           188
    -------------------------------------------------------------------------
    Total Current Liabilities                               63           188
    -------------------------------------------------------------------------
    Shareholders' Equity
    Capital stock (note 4)                              55,736        55,736
    Contributed surplus                                    453           453
    Deficit                                            (26,196)      (23,226)
    -------------------------------------------------------------------------
    Total Shareholders' Equity                          29,993        32,963
    -------------------------------------------------------------------------

    Contingencies (note 9)
    -------------------------------------------------------------------------
                                                        30,056        33,151
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Notes to Interim Financial Statements
    For the period ended September 30, 2007 (thousands of dollars)
    (unaudited)

    1.  Significant Accounting Policies

    The disclosures contained in these unaudited interim financial statements
    do not include all requirements of generally accepted accounting
    principles for annual financial statements. The unaudited interim
    financial statements should be read in conjunction with the annual
    financial statements for the year ended December 31, 2006.

    The unaudited interim financial statements are based upon accounting
    principles consistent with those used and described in the annual
    financial statements, except that effective January 1, 2007, the
    Corporation adopted three new Handbook Sections issued by the CICA
    relating to financial instruments: Section 3855 ("Financial Instruments-
    Recognition and Measurement"), Section 1530 ("Comprehensive Income") and
    Section 3865 ("Hedges"). As a result, the Corporation has classified its
    cash and cash equivalents and investments as held-for-trading, notes
    receivable as held-to-maturity, accounts and other amounts receivable as
    loans and receivables and accounts payable and accrued liabilities as
    other liabilities. Held-for-trading assets are recognized at fair values
    with gains and losses arising from changes in fair values being recorded
    in earnings. Held-to-maturity, loans and receivables and other
    liabilities are initially recognized at fair value and subsequent thereto
    at amortized cost, using the effective interest method. The impact of the
    adoption of these standards as at January 1, 2007 did not have a material
    impact on the Corporation's financial statements.

    The CICA has issued a further two new Handbook Sections that will become
    effective January 1, 2008: Section 3862 ("Financial Instruments -
    Disclosures") and Section 1535 ("Capital Disclosures"). These sections
    will require the Corporation to provide additional disclosures relating
    to its financial instruments and about the Corporation's capital.
    Management is currently evaluating the impact of these new Handbook
    Sections on the Corporation's financial statements.

    The unaudited interim financial statements reflect all adjustments,
    consisting only of normal recurring accruals, which are, in the opinion
    of management, necessary to present fairly the financial position of the
    Corporation as of September 30, 2007 and the results of operations and
    cash flows for the periods ended September 30, 2007 and 2006.

    2.  Asset-Backed Commercial Papers

    The Corporation is currently holding three separate matured asset-backed
    commercial papers totaling $17.1 million that have not been paid out and
    remain outstanding at September 30, 2007. Aurora Trust, ($5.0 million)
    Structured Investment Trust III ($5.0 million) and Structured Asset Trust
    (7.1 million) did not redeem on their maturity date of August 13, 2007.
    All of these securities were issued by conduits that are administered by
    the Coventree Capital Group Inc. who announced on August 13, 2007 that it
    was experiencing market disruption and as a result was unable to meet its
    repayment obligations until its liquidity providers fund such repayments.
    Dominion Bond Rating Service Limited had rated these investments as R-1
    High at the time of purchase. From August 16, 2007, the investments have
    been rated R-1 High, Under Review with Developing Implications. The
    balance of the Corporation's investments totaling $9.4 million are
    invested in highly rated liquid instruments.

    The Corporation continues to investigate these market issues which appear
    to be related to the lack of liquidity for Canadian third party asset-
    backed securities. Currently, the conduits are subject to a standstill
    agreement which expires on December 14, 2007. At that time, it is
    expected a proposal will be made to restructure the conduits by
    converting the securities into floating rate notes with terms that match
    the duration of the underlying assets. However, no definitive proposal
    has been made and there is no certainty that any proposal will be
    accepted. The Corporation is not a participant to this agreement.
    Currently, the market for these securities is inactive.

    There is currently significant uncertainty of the outcome of the
    restructuring proposal being considered for these securities.
    Additionally, there is significant uncertainty in estimating the amount
    and timing of cash flows from any restructuring. As a result, the
    Corporation has used its best judgment to assess the market conditions
    at September 30, 2007 and following a probability weighted approach has
    estimated the fair value of these securities. The valuation of each
    conduit has been limited by a lack of information about the underlying
    assets of each of the conduits as this information has not been made
    available by the conduits. As a result, an impairment charge of
    $2.6 million has been recorded in the period ended September 30, 2007 for
    the estimated change in fair values. In subsequent periods, the recorded
    fair values may change materially from the estimated fair values.
    Interest has been accrued from the maturity date, August 13, 2007, and
    fully provided against due to the uncertainty about these investments.

    The Corporation's activities have not been impacted by this event.
    Currently, it has sufficient cash available to maintain its operations
    while the restructuring of asset-backed commercial paper is completed.

    3.  Notes Receivable

    The following notes represent the Corporation's pro-rata share (48.4%) of
    the promissory notes issued by SMK Speedy International Inc. ("Speedy"):

                                                  September 30   December 31
                                                      2007           2006
                                                  ---------------------------
                                                             $             $
    T-Note (US $1,453; 2006-US $3,633)                   1,441         4,237

    Less: Amount due within one year                         -         2,545
                                                  ---------------------------
                                                         1,441         1,692
                                                  ---------------------------
                                                  ---------------------------

    T-Note

    The note has terms and conditions that match the note that Speedy
    received from the purchaser, Tuffy Associates Corp. (the "Purchaser"),
    upon the sale of its Car-X business in 2002 and is comprised of:

        a. A note in the amount of US $1,453 bearing interest at US prime
        plus 3%, payable quarterly, with the principal due July 8, 2007 or at
        an earlier date under certain circumstances.

        b. A further note in the amount of US $2,906 bearing interest at US
        prime plus 2% payable quarterly, with US $484 of principal payments
        due on July 8 in each of the years 2007 through 2009 with the balance
        of US $969 due on July 2, 2010.

    These notes are collateralized by the assets of the Purchaser and its
    subsidiary, Car-X Associates Corp. The note bearing interest at U.S.
    prime plus 3% is further collateralized by a guarantee of the Purchaser.
    The Corporation is entitled to receive interest and principal payments
    only to the extent that such amounts are received from the Purchaser and
    has no further recourse against Speedy.

    In February 2007, the Purchaser renegotiated certain terms and conditions
    of the note which resulted in an immediate prepayment of all principal
    amounts due in 2007 and 2008 plus related accrued interest (US $2,219).
    The maturity date of the remaining principal of US $1,453 is now July 8,
    2009. The Purchaser has guaranteed the remaining principal balance. The
    noteholders have agreed to subordinate the remaining outstanding
    principal to new increased senior bank financing of the Purchaser.

    Acquisition Note

    The Acquisition Note, which was repaid in May 2006, was originally
    repayable over 5 years to 2009. On the $9,202 principal amount, the total
    yield was 14% per annum of which 8% per annum was calculated and payable
    quarterly in arrears. The remaining 6% per annum accrued and compounded
    annually, and was due in full on the date that the promissory note was
    paid in full. The Corporation accrued the 6% interest and fully provided
    against it because of the timing of payment.

    On May 15, 2006, the note and interest was repaid. The Corporation
    received $10,067 representing full and early repayment of the Acquisition
    Note together with accrued interest, partial deferred interest plus
    transaction fees. The reduction in deferred interest of $857 was
    partially offset by transaction fees of $218. No further payments will be
    made on the notes.

    4.  Capital Stock

    The Corporation's authorized capital stock is as follows:

    -   Unlimited number of Preference Shares, issued in series;

    -   Unlimited number of Class A Subordinate Voting Shares;

    -   182,000 Class B Shares carrying 15 votes per share, convertible into
        Class A Subordinate Voting Shares on a one-for-one basis. In certain
        prescribed circumstances, additional Class B Shares as may be
        required to effect the conversion of Class A Subordinate Voting
        Shares into Class B Shares.

    The issued share capital is summarized as follows:

                                                  September 30   December 31
                                                      2007           2006
                                                             $             $
                                                  ---------------------------
    5,754,660 (2006-5,754,660) Class A
     Subordinate Voting Shares                          55,523        55,523
    182,000 Class B Shares                                 213           213
                                                  ---------------------------
                                                        55,736        55,736
                                                  ---------------------------
                                                  ---------------------------

    At December 31, 2006, the Corporation had 140,000 stock options
    outstanding all of which expired on April 1, 2007.

    Diluted income per share for the periods ended September 30, 2007 and
    2006 have not been adjusted since the effect of any exercise of
    outstanding stock options is anti-dilutive.

    5.  Supplementary Cash Flow Information

    a) Changes in non-cash working capital balances

                              Three Months Ended          Nine Months Ended
                                 September 30                September 30
                              2007          2006          2007          2006
                                 $             $             $             $
                      -------------------------------------------------------
    Decrease  in
     accounts and
     other amounts
     receivable                 57            65           179            29
    Increase (decrease)
     in accounts payable
     and accrued
     liabilities                23           (50)         (125)          (63)
                      -------------------------------------------------------
    Changes in
     non-cash working
     capital balances           80            15            54           (34)
                      -------------------------------------------------------
                      -------------------------------------------------------

    b) Cash and cash equivalents

    Cash and cash equivalents consist of cash on hand and with banks, and
    short-term investments in highly liquid instruments with original
    maturities of 90 days or less. Cash and cash equivalents included in the
    cash flow statements comprise the following balance sheet amounts:

                                                          September 30
                                                       2007          2006
                                                  ---------------------------
                                                             $             $
    Cash on hand and with banks                            167            31
    Short-term investments                               4,352        18,181
                                                  ---------------------------
                                                         4,519        18,212
                                                  ---------------------------
                                                  ---------------------------


    c) Income taxes recovered

    There were no income tax payments or recoveries during the periods ended
    September 30, 2007 and 2006.

    6.  Income Taxes

    At December 31, 2006, the Corporation had non-capital losses available to
    reduce future taxable income of approximately $6.2 million that begin to
    expire in 2009. At December 31, 2006, the Corporation had capital losses
    available to offset future capital gains of approximately $27 million.
    These capital losses do not expire.

    7.  Segmented Information

    The Corporation's sole business segment is an investment holding company.
    The Corporation's operations reside entirely in Canada.

    8.  Litigation Settlement

    In the fourth quarter of 2006, the Corporation settled the $110 million
    claim that had been filed against the Corporation and certain of its
    officers by the purchaser of Goldfarb Consultants, the market research
    and consulting business sold by the Corporation in 1998. The settlement
    was in the amount of $12 million. The Board of Directors of the
    Corporation appointed a committee of independent directors to represent
    the Corporation's interest in this litigation.

    Amongst other things, the committee approved the payment of the
    settlement and applicable expenses of all defendants, being the
    Corporation's Chairman, Secretary, its former Executive-Vice President
    and its former Chief Financial Officer. The Corporation, on behalf of the
    defendants, is seeking reimbursement of a portion of the settlement from
    the insurer of the Corporation's directors and officers. The amount of
    recovery from the insurance company is not currently determinable. Any
    recovery will be recognized as income upon resolution.

    9.  Contingencies

    An action was filed against the Corporation in connection with the
    bankruptcy of a former subsidiary of the Corporation, Fleming Packaging
    Corporation ("Fleming"), seeking damages arising from the February 10,
    2003 amendment of Fleming's loan agreements with its bankers and the
    subsequent payment of $900 to the Corporation on September 4, 2003. The
    claim is currently expressed in the amount of $900 with potential
    additional liability undefined in the claim. Initial depositions have
    been completed. Mediation occurred in December 2006 without successful
    conclusion. The Corporation is preparing for further depositions. The
    Corporation continues to be of the view that it has meritorious defences
    and is vigorously defending the claim.

    In 2004, the Corporation received a notice of withdrawal liability
    assessment and demand for payment of US$900 from the GCIU-Employer
    Retirement Fund in connection with the unionized employees' pension plan
    of Fleming. A claim has been filed in connection with this notice. The
    Corporation is of the view that the Corporation has meritorious defences.
    The Corporation will vigorously defend itself if and when required.

    No amounts have been accrued in the financial statements in connection
    with any of the claims or possible claims.
    

    The Goldfarb Corporation trades on the NEX Board of the TSX Venture
Exchange under the symbol GDF.H.

    %SEDAR: 00002535E




For further information:

For further information: Karen Killeen, Chief Financial Officer, at
(416) 928-3710, Toronto or info@goldfarbcorp.com

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GOLDFARB CORPORATION

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