Hi Don, and all
Don, I'm with you 100% on your views of this company. I was betting big on Novell to make a turn until late 1996, however until now there has been no sign of stopping the red ink without cooking the books.
While reading one of your recent posts I had a flashback about a Bausch & Lomb article I read a couple of years ago. It took some effort to find but think you might find it interesting and informative
as to how much Novell might owe the shareholders and the SEC if indeed they lose the pending lawsuits.
The similarities are striking, right down to the company Jet and the new buildings.
The first article is lengthy so I snipped out enough pieces for any who don't desire to read the whole thing, but it is still long.
magazines.enews.com
BLIND AMBITION--How the pursuit of results got out of hand at Bausch
& Lomb
>>snip
Trouble was, in recent years, some of the reported sales were fake. Under heavy pressure to maintain its phenomenal record, sources allege, the Hong Kong unit would pretend to book big sales of Ray-Ban sunglasses to distributors in Southeast Asia. But the goods would not be shipped. Instead, the secret ba dan invoices, which B&L headquarters never saw, would instruct staffers tosend the goods to an outside warehouse in Hong Kong. Later, some B&L's sales managers would try to persuade distributors to buy the excess. And some of the glasses, sources suspect, may also have been funneled into the gray market; buyers could profit by shipping them to Europe or the Mideast, where wholesale prices were higher.
>>snip
Meanwhile, in late 1994, the Securities & Exchange Commission started combing through the books at another B&L unit, its U.S. contact-lens division. The SEC investigation was triggered by a BUSINESS WEEK article (Dec. 19, 1994), which revealed that the lens division might have improperly inflated sales and profits in 1993 by shipping huge quantities of unwanted lenses at yearend to its distributors, while assuring many they wouldn't have to pay until they sold the lenses.
>>snip
The double-barreled problems lay behind B&L'S swift fall from financial grace: After 12 straight years of double-digit growth in sales and earnings from continuing operations (excluding one-time
events), B&L blandly announced that excess distributor inventories would slash 1994 profits.
>>snip
With success, Gill (B&L CEO) took on the trappings of a big-company executive. B&L bought a three-plane fleet and later erected a nicely appointed private terminal at the Rochester (N.Y.) airport. By 1989,Gill obtained a security consultant's report recommending that top B&L execs use the company fleet for all travel, including personal trips. B&L declines to comment. Gill began using company planes to reach his home in Florida and a private fishing club in Canada; the value of such trips is included in his income. And Gill commissioned a sparkling new $70 million headquarters building set to open this month.
>>snip
The worst was yet to come. In mid-December, 1993, according to more than a dozen sources, Johnson called about 30 of B&L's U.S. distributors to a meeting. He told them they were expected to take huge new stocks of older Optima lenses--up to two years' worth--and he threatened to sever their distributorship ties if they refused. However, many distributors were assured verbally that they wouldn't have to pay for the lenses until they sold them. All but two agreed, allowing Johnson to book an extra $23 million in sales in the final days of 1993. But not long into 1994, almost all of the unwanted multifocal lenses came back to B&L. And the distributors refused en
masse to pay for the huge unwanted Optima inventories. Now, the division's actions are at the core of an SEC investigation into possible accounting irregularities.
>>snip
Gill and other top B&L executives blame poorly executed marketing plans...
>>snip
B&L's internal financial documents clearly show the strain of efforts to pump up sales. Receivables rose about 25% in 1993 to hit $506 million. That equaled 90 days of sales, which accounting experts say is higher than the 45 to 60 days they'd expect.
>>snip
After B&L auditors started the in-depth probe, they found about a half-million sunglasses worth roughly $12.5 million piled up in a
rented warehouse. How they got there remains in dispute. Gill says that in the face of a weakening economy, Chan simply sold too much inventory to distributors starting in late 1993, then decided--without company approval--to take back large amounts in September, 1994.
>>snip
As for Dan Gill, he still sits in the chairman's office in Rochester, awaiting a move to his sparkling new headquarters. One former executive remembers a videotape presentation featuring Gill that
was sent out to remote locations after the SEC investigation and B&L's disastrous 1994 results were announced. In the video, this executive recalls, Gill blamed the problems on poor decisions by individual division presidents and said the divisions needed closer monitoring. ''It was like slapping the hands of children,'' says this executive, ''when they were really acting on Daddy's
orders.''
>>snip
nando.net
Eyeglass maker pays shareholders $42 million
Copyright c 1997 Nando.net
Copyright c 1997 The Associated Press
WASHINGTON (November 17, 1997 3:35 p.m. EST nando.net) -- Bausch & Lomb Inc. settled federal regulators' allegations that the eyeglass maker overstated its 1993 earnings and agreed to pay $42 million to shareholders who had sued the company, it was announced Monday.
>>snip
oag.state.ny.us
B&L Pays States $1.7 Million To Settle Misleading Sales Claims
Tuesday, August 19, 1997
Attorney General Dennis C. Vacco today announced that Rochester-based Bausch & Lomb, Inc., will pay $1.7 million to 17 states to settle claims concerning misleading contact lens sales tactics.
>>snip
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