Losses Halt Bid to Obtain PerfectData

Bishop Graphics Inc. of Westlake Village announced Monday that it has called off plans to buy PerfectData Corp., in part because of the Chatsworth-based company’s continuing losses.

Martin J. Salvin, president of Bishop Graphics, said he might eventually reopen negotiations with PerfectData, but not until that company’s financial standing improves.

Bishop Graphics, a manufacturer of supplies for designers of printed circuit boards, and PerfectData, which makes computer maintenance supplies and floppy disks, announced a preliminary acquisition agreement two months ago. Bishop Graphics was to buy PerfectData for an undisclosed amount of its own stock, creating a company with annual revenue of about $20 million.

Salvin said his goal was to use Bishop Graphics’ strong distribution network to sell PerfectData’s products.

Unexpectedly Large Loss

He said he decided to reconsider the deal, however, when PerfectData reported an unexpectedly large loss of $695,000 on sales of $1.3 million for its first quarter ended June 30. PerfectData posted a loss of $1 million on sales of $6 million in the fiscal year ended March 31.

Salvin said he also was troubled by certain investments made by PerfectData, but declined to elaborate. Besides, Salvin said, “some aspects of the floppy-disk business brought us too far apart.”

Although they expressed surprise that the acquisition agreement fell apart, analysts familiar with the negotiations said PerfectData’s joint venture in the floppy-disk business with Polaroid Corp. always was a stumbling block. The analysts, who asked not to be identified, said Bishop Graphics may have been reluctant to enter a market that has become increasingly competitive and beset by losses.

C. Paul Davis, PerfectData’s chairman, said he became reluctant to go through with the acquisition because of the decline in the price of Bishop Graphics’ stock, from $5 when the deal was announced to about $3.50 recently.

Door Still Open

Davis said, however, that “we have not slammed the door” on an acquisition in the future.

Last week, Bishop Graphics announced disappointing results for the third quarter ended June 30. The company said its profits were down 61% to $113,00 while its sales fell 19% to $3.3 million from the levels of the same period last year.

Bishop Graphics employs 139 workers, including 82 at its headquarters and plant in Westlake Village. PerfectData employs 60 people, including 50 in Chatsworth.