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from Outstanding Investor Digest's December 31, 1996 Edition

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CENTURY MANAGEMENT'S
ARNOLD VAN DEN BERG

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OID: What can you tell us about their management?
Van Den Berg: They're honest, hard working and competent. But they're not the focused kind of management that's totally shareholder-oriented. If they were, they could probably realize the $45-50 value that I've mentioned.
They're extremely conservative though. For example, when we ask them about the real estate - why they don't sell it and redeploy the capital into the business - they say, "Well. Yeah. It's good real estate. But why sell it and have to pay taxes? And the excess pension? Yeah. That's true. But we used the pension when we needed money to fund our R&D and our sales growth."
So they're not really driven to move their stock.

OID: What are they driven by?
Van Den Berg: This management is engineers through and through. And what they're driven by are engineering-related considerations - in other words, by their desire to do research and produce quality products.

OID: Still, how much of Moore's subpar margins have been a result of subpar management or other factors?
Van Den Berg: As I mentioned, they just completed a tremendous surge in their spending on R&D.
Sales, on the other hand, didn't go up that much during those years. So part of their subpar returns have been a result of heavier expenditures on R&D - which we believe, and which they believe, will be trending down once their new line is funded.
But if you look at their margins, you can also see a deterioration in their pretax margin outside of the difference in R&D spending. And that's just because SG&A expenses increased relative to sales.
So part of the lower margins and returns may be due to management not being quite as cost conscious as they might be. In other words, if a shareholder-oriented fanatic were running Moore, he'd probably be able to fine tune their operation and make it achieve the kind of margins that it's earned historically.

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