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Bishop Graphics Fights Against All That Went Wrong

September 15, 1987|GREGORY CROUCH | Times Staff Writer

Richard Drysdale says he should write a book about everything that's happened to his Westlake Village company, Bishop Graphics. Given Bishop's track record, it would not be another "In Search of Excellence."

"This is a textbook example of everything that could go wrong with a company," said Drysdale, who became Bishop's president in August, 1986.

In the last two years, seven employees sued Bishop for wrongful termination and sought damages of more than $20 million. It was a threat big enough to spur Bishop's accountant, Arthur Andersen & Co., to qualify its audit until the lawsuits are settled.

Also named in the suits is Drysdale's predecessor, Martin J. Salvin. In July, 1986, the board of directors fired Salvin, but he still walked out the door with a severance agreement of more than $500,000.

For the Record
Los Angeles Times Tuesday October 20, 1987 Valley Edition Business Part 4 Page 9B Column 1 Zones Desk 7 inches; 219 words Type of Material: Correction
A Sept. 15 article about Bishop Graphics contained several errors.
Four employees filed wrongful termination suits against Bishop Graphics, not seven employees as was reported. Bishop's former president, Martin J. Salvin, was named as a co-defendant in three suits. Three lawsuits have been settled for $84,500, not the $150,000 that was reported. Bishop's share of the settlement was $52,500; its insurance company paid $32,000.
Bishop Graphics' current, unused line of bank credit is $1 million, not $2.5 million as was reported.
Bishop Graphics' stock price, after adjusting for a stock split and stock dividend, hit a high of $15.50 in 1983, not $24.25 as was reported. Bishop first introduced computer-aided design software in 1985, not 1986. Since Richard M. Drysdale became Bishop Graphics' president, the company has sold one of its divisions, not several. Another fact, supplied by the company, turned out to be incorrect: 38 jobs have been eliminated at Bishop during Drysdale's tenure as president, not 25.
Based on information provided by the company, it was reported that Salvin received more than $500,000 in a severance agreement with the company and, that as part of that agreement, he was barred from ever again working for the company or owning its stock. In fact, Salvin received $334,000 in severance pay, plus some additional expenses and salary before the agreement was reached. The settlement did not bar Salvin from ever working again at the company. As part of the agreement, Salvin is prohibited from owning Bishop stock for 25 years.

Sales Falling

Meanwhile, Bishop's sales fell almost 20% between 1984 and 1986, while the company swung from a $1 million profit in 1984 to a loss of $538,000, or 23 cents a share, in fiscal 1986. The loss would have been double that had it not been for sizable tax write-offs.

The problems are continuing. Through the first nine months of 1987, Bishop has lost $497,000 more on sales of $7.28 million. Not surprisingly, its stock has fallen from a 1983 high of $24.25 to $2.25 on Monday.

Bishop's problems stem from its failure to react to the computerization of its industry.

Bishop supplies engineers and draftsmen with the materials they need to design circuit boards, the plates of wires and connectors that power everything from television sets to space vehicles.

To design a circuit board, draftsmen once relied on a blueprint with paper, as well as tape and symbols that would show where wires and connectors go. It worked much like a dress pattern. Bishop makes and sells the tapes and symbols.

But a couple of years ago, it became possible to design a circuit board on a computer. Bishop's executives, including Salvin, thought computer-aided design, or CAD, was a fad--or so says Salvin's replacement, Drysdale.

Computer-aided design was anything but a fad. By 1986, companies offering the software used to design circuit boards sold $651 million worth of products, according to Dataquest, a marketing research firm in San Jose. By 1991, Dataquest projects revenue for CAD companies of $916 million.

"The heart of our business was being replaced much more rapidly than the company thought it would," said Drysdale.

By the time Bishop decided to sell CAD software last year, rival California companies, including Personal CAD Systems in San Jose and PRO.LIB in Sunnyvale, already had established reputations.

20% of Clients Lost

Drysdale, 56, said the company has lost at least 20% of its clients, but he says that situation is only temporary. "We have a number of customers who write us every week saying they wish they could buy from us," he said.

In the past year, Drysdale has worked to make Bishop a cleaner, tighter ship. Of course it has to be--the company's excess cash flow for the first nine months of fiscal 1987 was a paltry $12,000.

Drysdale has tried to get the company moving in the right direction. He has eliminated 25 jobs, settled five of the seven lawsuits for $150,000, written down $75,000 worth of obsolete inventory and renegotiated more favorable contracts with suppliers. He says he intends to trim the number of worldwide brokers selling Bishop's products, and he has arranged for some of Bishop's operations to move into less expensive rental space.

Before taking over Bishop, Drysdale spent 10 years as president of several venture capital firms, earning a good reputation for planning and making acquisitions. For his efforts at Bishop, Drysdale is paid $85,000 a year. Salvin's former salary of $200,000 was "a ridiculous salary to take out of a company not making money," Drysdale said.

Drysdale has also sold or discontinued several of Bishop's divisions, including a Newport Beach art supply center. "Most of the walk-in business was coming in to get a piece of paper or a ruler, and that just doesn't pay," he said.

Push Begins Next Month

With what's left, Drysdale is organizing a full-scale push into the CAD market beginning next month when Bishop's new catalogues are released. He wants to sell everything from the software right down to the chair an engineer sits on. "We want to be the one-stop shopping place for the engineer and draftsman," he said.

On Wednesday, Bishop will begin selling Pathfinder, a CAD software program for the IBM PC. It already sells CAD software for the Apple Macintosh.

Analysts are decidedly skeptical. Bishop is late getting into the game. "I would be cautious in suggesting there is a vast opportunity in what they're planning," said Gary Hromadko, partner with the San Francisco investment banking firm of Robertson, Colman & Stephens.

Before things get better, Drysdale says, they will get worse. He says he expects sales for the 1987 fiscal year, to end this month, to be down again, with another sizable loss.

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