Professional Documents
Culture Documents
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The date was August 24, 1993, and Sarah Conner felt overwhelmed and more than a little
disoriented. Only two days ago, she had rushed from her office at Bendini, Lambert & Locke
(BLL), a well-known venture capital firm, to board the company jet for Knoxville, Tennessee,
where she would assume operating control of Astral Records, Ltd., North America (Astral, N.A.).
One week earlier, Astral, N.A.s president and chief executive officer, Sir Maxwell S. Hammer,
had been killed in a tragic hunting accident. As the owner of 60% of the company, BLL had felt an
immediate need to protect its investment. Accordingly, BLLs managing director, T.J. Lambert,
had asked Conner to run the company, while the firm planned its next moves. He had assured
Conner that she would be in Pigeon Forge, Tennessee, for at least a year.
Conner was the obvious choice for the appointment. After graduating from Wellesley
College in 1982 with a degree in classical music, she had gone to work for Galaxy Records, first in
marketing and later in production. In 1987, she was admitted to the Darden Graduate School of
Business Administration at the University of Virginia, where she was president of the
Entrepreneurs club, a Shermet scholar, and, upon graduation, a recipient of a faculty award for
academic excellence. Hoping to combine her love of music with her business acumen, she joined
BLL as assistant manager of its entertainment portfolio. That BLL was acquiring new musicindustry companies made it the perfect first choice among her several job offers.
Conner had progressed quickly during her four years at BLL. Nevertheless, she was rather
surprised at how quickly she had been asked to assume operating control of one of the fastestgrowing compact disc (CD) manufacturers in the world. In two weeks, she was scheduled to meet
with BLLs principals. They wanted a status report, a set of recommendations, and an action plan
for the next year. She knew that a number of important issues were likely to need her attention in
the wake of Sir Maxwells death.
This case was prepared by Lynn A. Isabella, Associate Professor of Business Administration, and Ted Forbes. It was
written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative
situation. Copyright 1993 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights
reserved. To order copies, send an e-mail to sales@dardenpublishing.com. No part of this publication may be
reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means
electronic, mechanical, photocopying, recording, or otherwisewithout the permission of the Darden School
Foundation. Rev. 8/94.
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UVA-OB-0443
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CD Industry
In principle, CD technology was an evolutionary refinement of records and tapes. Under the
old technology, music and voice were converted into electronic impulses that were then embedded
in a medium, such as vinyl or magnetic tape. Those impulses were then decoded and amplified to
reproduce the original music. CDs, however, represented a huge technological leap forward for the
industry. Sound was converted into digital code that could then be decoded by a laser to reproduce
the original digital information exactly.
CDs were produced in two steps. First, a master was made. An extremely flat, glass
master disc received an adhesive and a thin (0.12 micron) layer of light-sensitive photoresist on one
side. The photoresist was then exposed to a 100-milliwatt laser beam that applied the sequence of
coded digits in real time to the photoresist. After an alkaline bath removed unwanted resist, a
pattern of micropits was left behind. A nickel impression, known as the father, was made from
the glass master. The positive mothers that were produced from the negative father were used to
make the stampers of the polycarbonate substrate.
Because the photoresist was damaged when it was developed, the exposed glass master
could normally be put to use only once. Four or five nickel mothers were usually made from a
single father. Another four or five stampers could be sputtered in metal from each mother, for a
total of up to 25 stampers from the single master disc. The master could thus become the source of
up to 10,000 discs per stamper, or 250,000 CDs.
In the second step, a mold received polycarbonate resin that was stamped to make the hard,
transparent CD wafer. A vaporized metal layer, usually aluminum, was applied in a vacuum
chamber as the surface that reflected the laser beam for player reading. Then came another hard,
protective resin layer, the printed label, automatic inspection, and packaging.
CDs were first mass-produced in 1980. Since then, CD technology had seen mostly
refinements rather than breakthroughs. For example, in 1989 CD-production cycle times were 13
seconds; now those times were less than 7 seconds, and some leading-edge technology produced
CDs in less than 5 seconds. The machinery was more efficient and less expensive than the old
equipment, with the cost of a new small plant in the range of $8 million to $10 million.
Although industry dynamics had stabilized in recent years, predicting volume and designing
appropriate capacity were as much art as science. Correct capacity, either annually or monthly, is
like an Indiana spring. Its only two or three days a year. Youre either over- or under-capacity. If
we werent talking about being over-capacity, wed be talking about a shortage; its never correct
very long, stated Robert McGee, executive director of ComDisc, a trade association.
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Quality had improved dramatically over the past 10 years. In most plants, quality control
was completely automated. The implementation of statistical process controls had a tremendous
impact. In 1986, industry reject rates were approximately 12%. By 1993, rates were as low as 1.5%.
The discs coming off the machines today are simply better quality. Because of our knowledge and
machine consistency, inspection is made easy, said Billie Holliday, director of quality for Celestial
Records.
As the technology matured, producers discovered that cover art was increasingly important
in selling CDs. Many CD replicators now had 5-color capacity. Most CD producers used silkscreen printing, and the large operations used offset printing. Over the years, packaging was
standardized around the jewel box, a hard, plastic case used to hold both the CD and
accompanying liner notes. Efforts to move toward environmentally friendly packaging had not
succeeded.
Wholesale prices for finished product averaged $1.30. Packaging costs were approximately
23 cents per disc and the finished disc itself cost approximately 90 cents. Industry analysts asserted
that price competition among disc replicators had come down to pennies and half pennies, as
opposed to differences of 15 cents to 25 cents in the late 1980s. When the business is soft and you
establish a price, its very difficult to establish a higher price once business picks up. The gross
margins on CDs have eroded tremendously over the past five years. I dont see theres any more
maneuvering left on the price, said Eleanor Rigby, record-industry analyst with Sergeant and
Pepper Investments.
Record labels contracted with manufacturing facilities to produce the finished product. The
labels then sold, either directly or through a distributor, to the retail outlets. Sales from
label/distributor to retail outlets were on a consignment basis. Continued Rigby,
Although quantity discounts are available, most labels are placing smaller orders
and then reordering on a more frequent basis to keep inventory at manageable
levels. There are only so many returns a label can take and still turn a profit, so
were seeing labels be a bit more cautious about their opening orders and then
coming back for more in a shorter turnaround period than before.
Recent advances in laser technology had opened up the market in both the computer and
video arenas. Because the technologies were essentially the same, audio CD manufacturers could
easily produce CD-ROM discs for computers or laser discs for video. Sam Cooke, vice president of
marketing and sales for Galaxy Records, asserted:
Quality of the CD in the industry is fairly standard now. A disc we stamp is the
same quality as any of the other major houses. What might set a company apart,
though, is what we do on the terms of fulfillment services, packaging and design,
and drop-shipping. Customer service has definitely become the buzzword among
replicators for the 90s.
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Company History
Astral Records was founded in 1967 in Wollaston-on Heath, England, by Count Francisco
Smirnov, a Franco-Russian nobleman. Smirnov was a professional musician who had a vision of
building a new kind of record company. Appalled by the quality of records at that time, Smirnov set
out to construct a studio whose sole purpose would be to produce classical-music record masters of
a quality greater than that of any other company in the world. The count had been disappointed to
learn that the long-playing records made from his masters were little better in sound quality than
most others on the market. Undaunted, he decided to move into manufacturing.
Smirnovs vision was of a utopian musical village, where classical musicians and company
directors would reside in luxury and elegance. The count wanted nothing to impede the creative
process: Beautiful music can only happen in beautiful surroundings. If society continues to ignore
the high arts, then society will be led into a barbarian condition.
In 1975, Astral purchased a 50-room Georgian mansion on 187 acres near the top of the
Cynwyr valley, not far from Wales, England. Each step in the production process would be carried
out on site. The ballroom was turned into one of the most elegant recording studios in the industry.
The count and five of the seven managing directors continued to live the vision, residing in the
exquisitely furnished headquarters and taking all their meals together. Key business decisions were
often made casually over lunch or dinner. Recording musicians were invited to live on the grounds
for as long as they needed to complete their projects.
Astral Records might well have continued to operate in that idyllic setting, but for a major
technological breakthrough. The count was captivated by the emerging compact disc technology.
He immediately saw the mediums potential for producing virtually flawless recordings. The
combination of pure digital sound and laser technology became the counts obsession, even though
he would be going up against the industry giants.
Instead of simply licensing CD technology from the larger manufacturers, the count and his
researchers decided to develop their own process. In eight months, they developed production
capabilities that not only saved them millions in royalty fees, but also won them a queens award
for technological achievement. Astral Records was the first company in the United Kingdom to
produce CDs, two years ahead of its major competitors. By the mid-1980s, more than 50 record
labels were using Astrals facilities to record, produce, and manufacture CDs. Astrals own labels
constituted a mere 10% of the companys sales.
Astrals bold, yet whimsical, business decisions had been wildly successful. In 1980, Astral
Records, Ltd., U.K., (Astral, U.K.) employed 27 people and grossed (British pounds) GBP600,000.
By 1992, the company had 500 employees and turned a pretax profit of GBP2.7 million on sales of
GBP20 million.
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DardenBusinessPublishing:210348
-7Exhibit 1
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
FROM:
DATE:
SUBJECT:
Staff meeting
Please join me for high tea in the boardroom on August 24th at 3:00 p.m.
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UVA-OB-0443
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Exhibit 2
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Exhibit 3
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Exhibit 4
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
Bart OReilly
V.P. Operations
Astral, N.A.
CC:
FAX:
804-555-1234
FAX:
212-458-0000
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UVA-OB-0443
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Exhibit 4 (continued)
I proposed to the plant manager and QA manager that the plant work overtime on Monday and
Tuesday, sorting the products on electrical properties conformance. The purchasing people at
Republic said they would be willing to accept sorted product. Moreover for this one order, they
would allow off-specification occurrences for the color schemes on the various outside graphics.
(We will have to process all the 8000 units through the certifier to sort good from bad on electrical
properties. There are 9 critical electrical-performance attributes that must meet specifications.)
Then the color consistency must be checked visually by our people. This visual check is a manual
process and will take a lot of labor, particularly since the visual check requires a tricky disassembly
step to remove the protective shield covering the minted surface.
So, I can get the purchasing people at Republic off my back with this one-time stopgap sort and yet
the plant manager refuses to schedule the overtime. He says that my proposal and the plants total
quality management (TQM) initiative dont go hand-in-hand. Their TQM activities have been
underway for eight months, so I dont see how the actions would impact his TQM implementation.
We need to be more customer-focused at Astral.
Please call me later today and give me some help on this one. Thanks.
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Exhibit 5
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Exhibit 6
ASTRAL RECORDS, LTD., NORTH AMERICA
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Facsimile Transmission
TO:
Sarah Conner
Astral Records, N.A.
DATE:
Sarah:
Welcome to Astral. Hope your flight on the Lear was enjoyable. Just wanted to let you
know once again that we are expecting great things from you. This Astral Records affair has cost us
a great deal more money than we anticipated. Arthur and I know that you will work your magic on
Astral in short order. Lets get this company straightened out.
As we set up before you left, Arthur, Helen, and I will be coming to Astral on September
7th to meet with you. Please arrange appropriate accommodations for us. You know what we like.
By the way, we have been unable to locate the financial model you built for the TechnoWiz
deal. As I recall, this was an extremely complex spreadsheet. Celia, your former secretary, left
unexpectedly last Friday and no one can find that file. Can you build it again for us by the end of
this week as we hope to complete this deal immediately?
Look forward to seeing you in two weeks. Best of luck.
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Exhibit 7
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
FROM:
J. Cash
Accounts Receivable Manager
DATE:
August 9, 1993
SUBJECT:
Overdue account
This is to notify you that Astral Records, North America, is more than 90 days overdue in its
payment to us. You currently owe us $27,914.22.
If payment is not received by August 26, 1993, we will not deliver the next shipment of resins.
Thank you for your prompt attention in this matter.
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Exhibit 8
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Exhibit 9
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
Sir Max
CC:
Bart OReilly
Vice President, Manufacturing
CC:
Safety Committee
FROM:
DATE:
As you may know, the September 1993 Safety Day plans are almost finished. We had a
chance to see the last working document that was prepared by the Plant Safety Committee. We are
really upset and want to see you ASAP. Can we schedule ourselves for one of your open-door times
later this week?
For the fourth year in a row, there will be a Safety Day exhibition on home safety. We
applaud home safety as one of the key themes. However, this years focus on, Construction of a
Deer Stand: Safety and Safe Hunting, is offensive to many of us. First, it is a fact that 38% of our
plant employees are female, and they have no interest in hunting, particularly shooting deer from a
stand placed off the ground in the trees somewhere on the companys property. Certainly, you can
understand this point personally. Second, we think it is time to step up to the environmental issues
and get our employees involved with recycling (newspapers, aluminum cans, plastic bottles, glass,
etc.). Cant you order the Safety Committee to drop the deer stand construction exhibit? After all,
we think productivity and quality suffer at the opening of deer season every year, along with the
rampant absenteeism the company experiences. It is time, we think, to de-emphasize hunting and
get people to stay focused on what they are paid to do.
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Exhibit 10
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
Sir Max
CC:
G. Scott Herron
VP, Marketing and Sales
FROM:
DATE:
SUBJECT:
Harris Sound Machine, the largest chain of retail music stores in New York City, has informed me
they intend to return 1,252 CDs with the title, Buddy Hollys Greatest Hits, and are asking for a
full refund. They claim the CDs arrived damaged. The one they sent me looks like it was cut with
the kind of knife usually used to open shipping cartons. Since this is a slow seller, I am somewhat
doubtful about how the CDs were damaged. Please let me know what to do.
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Exhibit 11
ASTRAL RECORDS, LTD., NORTH AMERICA
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YURBANK
Serving Pigeon Forges Families and Businesses since 1929
2300 Main Street
Pigeon Forge, Tenn.
TO:
FROM:
C. Hewitt Farmington
Senior Relationship Manager
YurBank
DATE:
July 1, 1993
SUBJECT:
Sir Max, this is to remind you that your revolver with the bank is due for review and renewal at the
end of this month. As it currently stands, the bank is committed to lend you up to $500,000 at
LIBOR + 1% (London Interstate bank offered rate) with a 0.5% fee on the unused portion of the
commitment. In light of the growth of last years sales and your expectation of future growth, I
recommend that we increase the commitment to $600,000. I do not expect the pricing structure to
change before the end of this month.
Our understanding is that the line is used for seasonal working capital needs and as such your
company will be out of the bank loan for at least 45 days during the next 12 months. Part of the
purpose of the review is to see if the financial condition of the company has changed substantially
since last year. Historically, your peak loan needs have occurred from September through
December. My back-of-the-envelope calculations show that increasing the revolver will not violate
the debt-to-equity covenant of the term loan unless equity is unexpectedly low prior to or during
your peak seasonal need.
Is the early part of next week too early for your people to get the financials prepared, so we can
discuss things? Ill check back with you in a day or so to confirm.
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Exhibit 12
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Exhibit 13
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
Sir Max
CC:
G. Scott Herron
VP, Marketing and Sales
FROM:
DATE:
SUBJECT:
Mississippi See Dees has a fast-growing collection of Delta Blues. They own the rights to much of
John Lee Hookers, Jimmy Reeds, and Lightnin Hopkins titles.
Larry Johnson, their purchasing agent, says he is willing to increase our share of their business from
15% to 20% if we can guarantee 2-week delivery of titles and to reduce prices by 5%. I think this is
a great opportunity to increase sales.
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Exhibit 14
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
CC:
Sir Max
Bart OReilly, Vice President, Manufacturing
FROM:
Maggie May
DATE:
Will you two get off it! Who do you think you are suggesting that women dont enjoy
hunting. Ill have you know Ive been hunting since I was six when my daddy let me load his gun. I
wont miss deer season and, believe me, those safety reminders are important. Not all women want
to join your sewing circle, Emma. So stop writing memos to the VP and accusing us of not doing
our work. If you are writing memos, how can you be doing your own jobs!
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Exhibit 15
ASTRAL RECORDS, LTD., NORTH AMERICA
Phone Message from the E.P.A.
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Exhibit 16
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
Sir Max
CC:
FROM:
DATE:
SUBJECT:
As you know, our packaging costs are substantial. I have a new plastic supplier who can cut our
total cost of goods sold (COGS) by 20%. Eventually, costs might be even lower.
The advantage of this companys new formula is that it is completely biodegradable in 10 years.
The disadvantage is that the package will no longer be serviceable after three to five years of
normal usage. Should we pursue this project?
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Exhibit 17
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
FROM:
DATE:
July 3, 1993
SUBJECT:
Below (Exhibit 18) is a summary of the analysis we have been conducting on some new packaging
equipment. Based on a discounted cash flow analysis, we estimate that the $1 million investment
will increase firm value by $200,000. If we order by the end of this month, we should have the
equipment installed and running in time for the increase in production that always occurs around
October. The supplier will accept installment payments of $400,000, $300,000, and $300,000 over
the next three months as payment. Since we are currently out of the bank, we could use the revolver
line to make the $400,000 initial payment.
I hope the numbers on the attached sheet help show the merits of the new system Frankly, Sir Max,
it is rare that such a good opportunity comes around. The sooner we start using it, the better.
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Exhibit 18
ASTRAL RECORDS, LTD., NORTH AMERICA
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Initial investment:
Projected annual savings:1
Corporate tax rate:
Economic/depreciable life:
$1 million
$160 million
34%
7 years
$106
143
$106
143
$106
143
$106
143
$106
143
$106
143
$106
143
$248
$248
$248
$248
$248
$248
$248
$(1000)
$(1000)
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Exhibit 19
ASTRAL RECORDS, LTD., NORTH AMERICA
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YURBANK
Serving Pigeon Forges Families and Businesses since 1929
2300 Main Street
Pigeon Forge, Tenn.
TO:
FROM:
C. Hewitt Farmington
Senior Relationship Manager
YurBank
DATE:
SUBJECT:
Things have changed. The credit review committee has put your company on its credit watch list,
because of our increasing exposure and the growth-induced strain on your balance sheet. The
committee does not want to renew the revolver, unless you can give us some sort of indication of
how you plan to manage the growth of the firm going forward. Frankly, there is a general concern
that your company is quickly growing beyond its financial capabilities and that we might find
ourselves with a bad term loan with very little usable collateral.
I spent the better part of an hour arguing with the credit committee, and I can tell you that these
people are serious. This is all part of the tightened credit standards that were instituted following
the S&L crisis. The only way I can see us doing business in the future is for you to strengthen the
balance sheet with an equity infusion. The investment banking folks here would be very interested
in helping you take the company public. I think you should consider it. The equity markets are very
strong these days, and you may not be able to get a better price in the near future if this bull market
turns bearish.
Sorry to catch you with this news with such little notice, but there was nothing I could do. I will
meet anytime you are available. Obviously, time is of the essence.
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Exhibit 20
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
FROM:
Abby McDeere
Chief Legal Counsel
DATE:
SUBJECT:
Please be advised that MasterVision Associates of Burbank, California, has filed suit in the Los
Angeles Superior Court against us. They are a worldwide optical-disc licensor. They charge that
some of our CD-manufacturing equipment infringes on their patents. They are seeking unspecified
substantial damages, and note that there is still litigation pending from 1988 when they accused
us of two other optical-disc patent violations.
The resolution of these charges is uncertain. I will keep you advised.
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Exhibit 21
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
Sir Max
FROM:
Sandy Bien-Fait
Human Resource Manager
DATE:
SUBJECT:
Hiring
Sir Max:
We cant afford to lose any more time addressing the issue of hiring. The increase in
production has strained the existing shift personnel. And, as I mentioned last week at our weekly
tea, the surrounding area just doesnt have the numbers of workers we need. Either we have to pay
more or get them from somewhere else. I need authorization to hire 20 shift workers immediately.
Also, Sir Max, I think it is time to eliminate playing a musical instrument as a hiring
criteria. We have simply run out of musicians in the community.
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Exhibit 22
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
Sir Max
FROM:
Margaret Lee
Public Relations
CC:
Bart OReilly
VP, Operations
DATE:
March 7, 1993
SUBJECT:
CD Rot
There have been an increasing number of articles in the trade press describing a phenomenon
known as CD Rot. If the CD Rot stories are true, certain CDs may begin to self-destruct within 8
to 10 years, because the ink used for labeling begins to eat into the protective lacquer coating. This,
in turn, oxidizes the aluminum layer resulting in an unplayable CD.
Although we have not yet had any inquiries or returns due to CD Rot, we should nevertheless be
prepared to respond to this possible crisis.
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Exhibit 23
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
Sir Max
FROM:
DATE:
SUBJECT:
Project FutureVision
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Exhibit 24
ASTRAL RECORDS, LTD., NORTH AMERICA
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Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions.
TO:
FROM:
Abby McDeere
Chief Legal Counsel
DATE:
SUBJECT:
On August 7th, I met with Richard Milhous, chief legal counsel for MasterVision. After protracted
discussion and negotiation, they have offered a settlement for all litigation pending against us.
They have offered to settle for either a one-time cash payment of $5 million or a 4 cent per-disc
royalty over the next 10 years of production.
We must respond by the 24th of August. Please advise me of your decision.
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Exhibit 25
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
Sir Max
FROM:
Bruce Park-Asbury
Shift Supervisor
CC:
Sandy Bien-Fait
Human Resource Manager
DATE:
SUBJECT:
Employee reprimand
This is the 3rd time that I have had to reprimand Sonny Barger for being insubordinate. I am at my
wits end with him and dont know what to do.
On February 7, Barger refused to clean up his work area, and I gave him a formal reprimand. On
March 23, Barger was found taking an unauthorized cigarette break and was again reprimanded.
On August 16, Barger left his station 15 minutes before quitting time to run to his car to turn on the
air conditioning, I suppose so it would be cool when he got out. I wrote him up for this incident. He
told me to watch out, that he was going to get me and the whole damn company.
I honestly believe that Barger is trying to undermine my authority as shift supervisor. If something
doesnt change, I may have to leave Astral.
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Exhibit 26
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
Sarah Conner
FROM:
Janet Young
SUBJECT:
DATE:
I wanted to make sure that you were aware of the planning meeting to discuss our audit of
Astrals financial statements for the fiscal year ended December 31, 1993, that is scheduled for
10:00 a.m. on Friday, September 10th. We hope to begin our preliminary audit work on Monday,
September 27th.
Please be advised that we intend to continue our discussion about Astrals contingent
environmental liabilities. We told Sir Max last year that the 1993 financial statements would likely
contain at least footnote disclosure of environmental issues and, perhaps, even reflect actual
environmental liabilities. Please be prepared to bring us up to date on all environmental matters.
Also, we just heard about the CD Rot problem. This could have a material effect on Astrals
financial statements. We are anxious to learn more about it from your production personnel.
Finally, we will need current information about actual and pending litigation. What is happening
regarding the MasterVision case?
I look forward to meeting you. If you need to reschedule our meeting, thats OK, but we
dont have a lot of flexibility. Please let me know ASAP.
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Exhibit 27
ASTRAL RECORDS, LTD., NORTH AMERICA
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TO:
Sir Max
FROM:
Ed Heath
Foreman, Waste Disposal Unit
SUBJECT:
Equipment maintenance
DATE:
The PCB filtration actuators are breaking down regularly these days. We really need to replace
these units. I know replacements are very expensive, but this stuff is really toxic and these units are
almost to the end of their serviceable life. It wont take much to cause a major problem. In fact, just
yesterday, one of our technicians knocked the master value loose, and it took us almost three hours
to clean up the spill.
Ive talked with the finance people a number of times about getting replacements, but I cant seem
to get an answer. We need to move on this soon.
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Exhibit 28
ASTRAL RECORDS, LTD., NORTH AMERICA
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DECEMBER
Sir Max:
DECEMBER is thrilled that Astral Records is interested in placing them under contract. Plans are
well underway for the signing party and free concert in Pigeon Forge on the 26th.
I know this will be the beginning of a successful relationship. Attached is our sketch for the cover
art of our first CD.
Regards,
Matthew D. Booth
Business Manager, DECEMBER
Attachments: 1
Page 35 of 38
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Exhibit 28 (continued)
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UVA-OB-0443
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Exhibit 29
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Exhibit 30
ASTRAL RECORDS, LTD., NORTH AMERICA
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Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions.
TO:
Sarah Conner
FROM:
DATE:
SUBJECT:
In response to your request, I am summarizing Astrals current financial structure below. Note that
the line of credit and 5-year term-loan are with YurBank and that the 15-year subordinated debt is a
loan obtained at a favorable rate from BLL in 1987. As you can see, we have just about reached our
debt limit. We probably should discuss this at your convenience. However, the sooner the better.
Capital Structure
($ millions)
Line of credit
Term loan
Subordinated debt
Equity
Total
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0.5
3.0
10.0
6.50
20.0