- 7 -
would seriously injure the reputation of the Wally Findlay Group
as a whole.
The French subsidiary suffered from a chronic insufficiency
of earnings. Between FY 1971 and FY 1984, the business was
profitable in only 2 years, FY 1973 and FY 1980. The success
achieved in the latter year was, in large part, attributable to
the patronage of Arab customers looking for ways to invest the
large cash balances that had been generated by a sharp rise in
oil prices. The emergence of this new clientele was cause for
optimism: WFGI's officer's hoped that the French subsidiary
would finally be able to sustain itself. But the high oil prices
proved unsustainable and Arab demand did not fulfill
expectations. After FY 1980 sales were uneven.
Sales by the French Subsidiary
FY FF
1980 10,878,545
1981 10,195,912
1982 6,849,060
1983 11,574,743
1984 6,177,305
The pattern of losses resumed in FY 1981. In FY 1982 the
subsidiary reported the largest loss in its history. The
subsidiary's accountants advised WFGI that in view of the large
loss experienced in FY 1982 it seemed unlikely that the deficit
in shareholder's equity would be eliminated in the next 2 years,
and warned that under these circumstances they were required by
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