Monday, December 3, 2012

Accounting Games: Spectrum Brands and Harbinger Group Inc.

It’s the same game as it was back in 2005-2008 with Falcone and the related parties in Spectrum Brands.  I went back in the fillings and charted the revenue overlayed with net income for the 2nd chart, and the 1st chart is Goodwill and Intangibles.

I’ve written in previous entities about some of the ridiculous accounting gimmicks this concern uses to inflate revenue figures (capital expenditures).  Anyways what I want to display graphically is how it played out back in 2006, 2007, and 2008 where they started writing down the Goodwill and Intangibles they had been tacking on in years prior, then how the game was up in feb 2009 when they filled for bankruptcy and wiped out equity holders.

 Here is a chart I found of the bond ratings I thought was interesting to look at with the previous two.

The mergers and acquisitions I mentioned above which resulted in bogus accounting fluff (but not before insiders sold millions in stock), I figured i'd present a couple of the timelines here.

There’s no better indicator of the future than a study of the past.

Falcone and Co are on the buying spree right now and the deals are getting bigger and more aggressive.  They are trying to build and inflate this thing as big and high as possible before it all comes crashing down.  

Just look at the performance incentives granted to company management which just vested 2 weeks ago.  All they care about is inflating this thing by means of fraudulent accounting and acquisitions/joint ventures, terms of these deals just make my skin crawl.

Quiz:  How does the General Growth Properties bankruptcy case relate to certain aspects of the Stanley Black and Decker deal and business associated with that?

Donald Shekels

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