The company has launched new programs to control costs and is still trying to broaden its distribution base, in part by cross-selling products within current channels. Plus, the company raised some prices in December and plans additional price increases on selected products during the first quarter of '98, which should boost the sagging gross margins. Gregory Benson, the company's CFO from 1992 to 1996, has returned until the company finds someone to replace Kevin McAleer, the CFO who resigned in November. The company has yet to make any announcement about renegotiating its revolving credit agreement, but the third quarter report expressed confidence that this shouldn't be a problem. Under profitable conditions, it generates ample cash to cover that expense.
Unprofitable conditions are a different story.
American Pad isn't a screaming bargain at 5.6 times book value. But when Ampad came on the scene, the reading public didn't think much of Herman Melville's book value either. If American Pad can put profits to paper in '98 as it did prior to its recent troubles, the stock could see a whale of a recovery. Copyright 1995-2000, The Motley Fool. All rights reserved.