Assets For Cash? You Betcha!

Ever since YTB started selling off some of their assets, people have been wondering if they have been doing it because they are in need of “quick” cash. They have sold some real estate at a loss of $350,000 and are selling their much touted jet that has been owned for less than a year for a loss of $400,000. Sounds to me like they’re trying to pump up their cash on hand before the end of year report comes out.

Now, this past weekend, the 3Q report was released, and as expected, it wasn’t that great. Granted, there was a profit made, but not that much of one. $287,999 for 3 months. With a sales force of just over 114,000 people. That averages out to $2.51 per person. Now, I know all the arguments…..not everyone sells (well, get rid of the deadwood and stop propping up the sales force figures), the economy is bad (but doesn’t YTB advertise itself as recession proof?), etc. For YTD, the company is in the RED $3,429,229. If this past quarter is indicative, one has to wonder if 4th quarter earnings will be enough to turn that red number to black.

This brings us to the question of selling off more assets to raise more capital. The company itself has said that they are evaluating the possibility of this, along with other measures to try to stop the bleeding. Of course, those on the pro YTB side don’t want to believe that this could possibly be, and have questioned whether this information is factual, or just a figment of our collective imaginations. Well, my friends, I hate to tell you, but it is factual. It says so, right in the report, despite all those saying that it has yet to be found.

I found it. Quite easily, I might add, if one were to read the entire 10Q, and not just what is found on Yahoo Finance. It is on Page 9, in the Notes To Condensed Consolidated Financial Statements, Note 2. Paragraph 8, which deals with the incurred losses, and how the company plans on counteracting the losses. They talk about how the company has instituted a cost reduction program and more efficient management techniques. The 3rd to last sentence says: 

"The company is also evaluating the sale of certain non-core assets and raising new capital for future operations." 

Paragraph 8 goes on to say:

"However, there can be no assurance that the Company will be successful in achieving its objectives."

Paragraph 9 is interesting as well. It states (emphasis is mine):

"The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Our ability to continue as a going concern is substantially dependant on the successful execution of many of the actions referred to above, on the timeline contemplated by our plan. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and reclassification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern."

Of the "actions referred to above", they state that they have already instituted them (the reduction in labor and fringe costs, reduction of discretionary expenditures, more efficient management techniques), so the only thing left for them to do is to sell assets.

So, there you have it, ladies and gentlemen. Straight from the horses mouth. The question now truly is, to sell or not to sell.