96.5 F
San Fernando
Thursday, Mar 28, 2024

Glendale Firm Learns Lesson From Trip Into Bankruptcy

Glendale Firm Learns Lesson From Trip Into Bankruptcy By JACQUELINE FOX Staff Reporter All they were trying to do was grow. Following a profitable year in 2000, Glendale-based Hoffman Video Systems launched three new subsidiaries in Northern California, Denver and Atlanta through partnerships with outside vendors. It seemed the 63-year-old video equipment firm could do no wrong. “We were coming off of a very strong year and we were looking to launch into new markets,” says Hoffman Chief Executive Rob Shepherd. But by late 2001 sales figures for the three new ventures failed to hit goal. The Northern California office lost roughly $1 million in just two years as expenses were said to be left unchecked and out of control. At the same time an outgoing employee at the Denver office is said to have taken a purchase order on his way out the door, igniting a lawsuit against Hoffman by its then largest competitor, Media Consultants Systems Integrators Inc. Meantime, a client owing Hoffman roughly $1 million for a project went belly-up. Legal fees, losses of roughly $4.8 million on revenues of $24 million in 2001 and a debt load of $7.4 million nearly shuttered the firm and there was no choice but to file Chapter 11, refocus and hopefully pull out from under the mess. The filing date was May 10, 2002. Three days later Hoffman brought in a new Chief Executive Officer, Mike Gavigan, who was charged with, as Shepherd puts it “getting his hands around the accounting and financial issues.” The three ancillary offices were immediately closed and the belt tightening in Glendale kicked into high gear. The company went from 138 employees to 60 and those that remained took pay cuts of up to 10 percent. Several administrative positions were transferred to the front lines, helping to streamline operations and beef up production and sales. What a difference a year makes. In April of this year, Hoffman emerged from bankruptcy and ended the year breaking even with just under $20 million in revenues. Getting contracts As bleak as the picture became, Hoffman did manage to retain two key contracts, signed even as the ink was drying on court documents: one for a state-of-the art broadcast and video training center at Orange Coast College, another to construct the new Loyola Law School courtroom complex. Both were completed by fall of 2002. In addition, Hoffman also completed construction of a $300,000 high-end conference center at the Inland Empire Utilities Agency (IEUA) and also managed to snag a General Services Administration contract that allows the firm to deal directly with U.S. government clients. All told, the company managed roughly $7 million worth of projects last year. “I started working with (Hoffman) as early as 1999 because we were going to build a new office in Ontario,” said Fred Mouat, manager of information services for the IEUA, who was completing the move into the new center June 13. “But at the time we didn’t have enough money to do that. So we put it on hold and said ‘We’ll stay with you. Just be patient.'” “I just had a lot of confidence in them because they had done some good things for others,” said Mouat. “We heard they were in Chapter 11, so of course as a state agency we had to be pretty cautious. But I had a lot of faith in them because I knew they knew what they were doing. They finished the project on time and on budget and it just knocked my socks off.” The belt tightening at Hoffman continues, said Shepherd, however, the company is beginning to consider building up again, this time, however, with a stronger focus on sales. “We’ve reduced overhead by combining functions, particularly in administration where we took our head count from about 15 to 7,” said Shepherd. “We are running more efficiently than we ever have before and putting a larger focus on marketing. We are doing more technology showcases and trying to provide more value to our customers.” According to Shepherd, former rival Media Consultants is now in Chapter 11 and struggling to keep a grip on market share, indicating a continuation of the roller-coaster ride for the industry. The strategy, says Shepherd, is to sharpen the company’s technological edge while ramping up the focus on customer care. “The industry is really in a state of flux right now,” said Shepherd. “So what we are going to do is keep a focus on what we do well, which is customer service. When we go out to install a project or take care of a service call, we go out there not to take any prisoners. We tell our people not to come back in until the job is done.”

Featured Articles

Related Articles