Reprographics 101

Reprographers; are you incurring increased costs?; are you passing along those increased costs?

March 2, 2011

It has been my observation, over the many years I’ve been in and around the reprographics industry, that most reprographers are “very shy” when it comes to “price increases.”

One of my reprographics industry friends mentioned, in an e-mail to me today, that it is highly likely that the industry’s material suppliers will increase their prices for the materials they sell, considering the fact that they, the material suppliers, will be incurring increased costs. One could go further with this and assume (and I think this would be an accurate assumption) that virtually all reprographers who pay for the “shipping costs” associated with materials shipped to them – – and that all reprographers who operate “delivery” cars and trucks will incur, if they are not already incurring, increased costs for operating their delivery cars/trucks.

I can easily remember “days gone by” when we used to “give away” pick up and delivery services. “FREE PICK UP, FREE DELIVERY.” Most reprographers, if not all, use to advertise that. Well, I guess that, when gas was $.35 / gallon, we (reprographers) were not all that concerned about what we were giving away for free. But, later, most reprographers “wised-up” and began charging for delivery and some reprographers even implemented charges for pick up.

When business is “down”, and that certainly applies “today”, given the ugly recession virtually everyone in the industry is experiencing, “demand” is down and reprographers, quite naturally, would approach “price increases” very gingerly, if consider them at all. Here’s how that would go, “OMG, I need to increase my prices because my costs are increasing, but, if I do, the competition might take my customers away from me!” I’m only sharing with you the same thought that ran through my mind, many years ago.

Certainly, there are sometimes differences between “theory” and “reality.” Theory would cause a reprographer to think that, if he/she raised prices to offset costs, that, by doing so, he/she would risk having his/her customers “picked-off.” Reality-wise at least in my opinion and experience (in other words, I’ve been there, done that, so to speak), if you are doing a great job servicing your customers (if your company excels in providing superior customer service and quality and is reliable and dependable) seldom will customers leave you over a minor change in (an increase in) price. How do I know that (or, maybe I should say, how can I form such an opinion)? Well, like I said, “I’ve been there, done that.”

The other way a reprographer might want to look at this is to consider that “all” reprographers, across the board (even the big guys/gals) are already, or will be, hit with cost increases. YOU ARE NOT ALONE! My experience with this “tells” me that when one starts, others will quickly follow (at least the ones that have an ounce of brain.) So, when you increase your prices, whether those price increases be for reprographics services you provide, or for delivery/pick-up services you provide, or, better yet, for both, don’t worry yourself to death about doing it; as Nike would put it, “just do it.” You AND your competitors will benefit from it. For the reprographics industry to remain alive, and for your business to survive and be profitable, you need to constantly reassess what you are charging, and when cost increases impact you, you had better figure out how to pass those increased costs along and then “implement that.”
Standard & Poor’s assigns “BB-“ corporate credit rating to American Reprographics Co (ARC)

March 2, 2011

I found this on Reuters.com the day before yesterday….

Feb. 28, 2011–Standard & Poor’s Ratings Services today affirmed its ‘BB-‘ corporate credit rating on Walnut Creek, Calif.-based reprographics and printing company American Reprographics Company (ARC).

“We removed this rating, along with all related issue-level ratings on the company’s debt, from CreditWatch, where we placed it with negative implications on Oct. 22, 2010. The rating outlook is negative.”

“At the same time, we assigned our ‘BB-‘ corporate credit rating to parent company American Reprographics Company.”

“The ‘BB-‘ rating reflects our expectation that ARC’s revenue and cash flow will remain highly cyclical and could take some time to recover from the current protracted real estate downturn,” said Standard & Poor’s credit analyst Tulip Lim.”

“We estimate that revenue will decline at a mid-single-digit percentage rate and EBITDA will decline at a low-double-digit to low-teens percentage pace. We regard ARC’s business risk as weak given its dependence on U.S. construction spending. We view the company’s financial risk profile as aggressive, given its somewhat high debt leverage.”

“ARC has a leading market position in the fragmented reprography market and has significant cost advantages from its nationwide presence. However, we consider its business profile to be weak because its end markets are highly concentrated (more than 75% of net sales are derived from printing for the architectural, engineering, and construction (AEC) segments) and the company has a high geographic concentration in California. ARC’s operating performance is linked to the U.S. construction market, particularly that of nonresidential construction (approximately 70% of ARC’s total revenue is nonresidential related), which we expect to remain weak over the near term.”

Just a quick comment:

As most reprographers, who follow ARC, know, ARC successfully refinanced its debt sometime around Dec 1, 2011. ARC issued $200 million in unsecured notes. (It also entered into a new secured-debt arrangement with Wells Fargo for (I think it was) an additional $50 million in financing. The notes ARC sold were rated BB- (which I previously pointed out is “junk bond” status), and the interest (coupon) rates on those notes was somewhere around 11%. Just my own personal opinion about this, but that’s a pretty high interest rate for a company that well-manages its operations and cash flow. And, knowing the people who run ARC, it is very unlikely (at least it is to me) that anyone who bought these notes will have a problem getting paid. I checked with a broker to find out if I could buy some of those notes; he could not find them listed anywhere (he said I need the “CUSIP” number for him to find them). I’d trust Suri, Dilo and Jonathan to pay me back; how about you?

Comments/thoughts about Service Point Solutions’ Results and a few comparisons with ARC’s Results

March 2, 2011

First, let’s take a look at SPS’ Sales for 2010 vs. 2009, country-by-country:

				Using EUR/USD exch
Service Point Solutions				rate on Jan 1 (1.34)
Sales by Country	2010	2009	% change	2010	2009
Spain	12.291	14.057	-12.56%	16.470	18.836
United States	16.428	19.201	-14.44%	22.014	25.729
United Kingdom	54.113	54.538	-0.78%	72.511	73.081
Netherlands	62.841	67.927	-7.49%	84.207	91.022
France	12.744	14.336	-11.10%	17.077	19.210
Germany	10.763	12.712	-15.33%	14.422	17.034
Norway	33.566	31.017	8.22%	44.978	41.563
	202.746	213.788	-5.16%	271.680	286.476
	MIL Euros	MIL Euros		MIL USD	MIL USD

On February 28, 2011, Service Point Solutions, apparently, issued “guidance” for 2011. If my interpretation (translation) of the Spanish language document (that put forth these projections) was accurate, then here’s what SPS evidently said about 2011:

· Service Point projected Sales between € 216m and € 220m (Euros)

· EBITDA between € 18m and € 20m (Euros)

In that same document, Service Point said that the acquisition of Holmbergs (Sweden) is expected to, in 2011, contribute (I guess approximately) € 15m (Euros) to SP’s overall Sales and will contribute (I guess, approximately) € 2m (Euros) to SP’s overall EBITDA.

So, if we take into consideration what Service Point said about the incremental sales that the acquisition of Holmbergs will generate for SPS in 2011, it looks like SPS, where it projected that total SPS sales for 2011 will range from € 216m to € 220m, is projecting that its 2011 total sales, without taking Holmsberg into account, will range from a decline of 1.746m Euro (a decline of less than 1%) to an increase of 2.254m Euro (an increase of slightly more than 1%). So, continuing this wordy paragraph, SPS is, apparently, projecting that its 2011 Sales, without considering Sales added by the Holmsberg acquisition, will be pretty much flat, when compared to its 2010 Sales.

Apparently (and I say ‘apparently’ only because it is not easy to translate the Spanish to English), SPS incurred a “Net Loss” in 2010 of € 14.151m (Euros). For 2009, SPS incurred a “Net Loss” of € 8.429m (Euros).

So, comparing SPS’s results for 2010 compared to 2009, SPS’ Sales declined € 11.042m (Euros), only a 5.2% decline, but SPS’ Net Loss increased € 5.722m (Euros).

In SPS’s Income Statement, SPS does point out that certain expenses incurred in 2010 are “non-recurring” expenses. SP also said that about certain of its expenses in 2009. All I have to say about that is that ‘whatever the case’, those expenses cost SPS money, whether or not they were non-recurring or not.

Okay, let’s take just a minute to compare ARC’s results, 2010 vs. 2009 with SPS’ results, 2010 vs. 2009.

	in $USD	In $USD
	ARC	SPS
Sales -2010	441.639	271.680
Net Income (Loss) – 2010	(27.502)	(14.151)

Sales – 2009	501.549	286.476
Net Income (Loss) – 2009	(14.885)	(8.429)


Change in Sales, Y-O-Y	-11.94%	-5.16%
Change in Earnings (Loss)	$12.617	$5.722

adjusting for only
“Goodwill Impairment”
– Net Income (Loss) – 2010	($27.502)	($14.151)
Add: Goodwill Impairment	$38.263	$0.000	Note
Approx Net Income, adjusted*	$10.761	($14.151)

– Net Income (Loss) – 2009	($14.885)	($8.429)
Add: Goodwill Impairment	$37.382	$0.000	Note
Approx Net Income, adjusted*	$22.497	($8.429)

*Not giving effect to income
tax changes

Note – I did not see any “Goodwill Impairment” charges on SPS’ Income Statement, but that does not mean that SPS financial results were not impacted by “goodwill impairment” charges; it just means that I could not find any goodwill impairment charges on SPS’ Income Statement. If someone can correct me on this, I will update this post to reflect SPS’ goodwill impairment charges.

Without the substantial “Goodwill Impairment” charges ARC took in both 2010 and 2009, it looks like ARC would have earned a bottom-line (“net income”) profit in both 2010 and 2009. That does not appear to be the case for SPS. SPS, evidently, incurred a bottom-line (“net loss”) in both 2010 and 2009.

As to the Sales numbers and changes – ARC’s Sales are more reliant on reprographics services revenues from A/E/C customers. SPS is not as reliant on A/E/C business as ARC is. SPS’ operating companies’ customer bases are more diverse than is the case with ARC’s operating companies’ customer bases. This difference likely accounts for most of the reason why ARC’s Sales declined 11.94%, whereas SPS’ Sales declined only 5.16%.

However, in spite of the fact that ARC’s Sales decline (%age-wise) was more than double the Sales decline that SPS experienced, ARC, excluding the impact of the “Goodwill Impairment” charges, would have reported a bottom-line (net) profit for 2010, whereas SPS reported a fairly substantial bottom-line (net) loss for 2010. This must have something to do with operating margin differences and changes, and, considering the fact that both companies implemented “right-sizing” changes to reduce costs, the only thing I can reasonably conclude is that SPS has been more aggressive on pricing than has been the case with ARC.

It is certainly possible that I’ve made a few errors in copying and compiling the numbers I saw in both companies’ financial statements. Admittedly, it was not easy for me to understand SPS’ financial statements, since I only had Spanish-language versions to work with. Anyway, for the “real” numbers, please refer to the financial statements that both companies issued.

Reprographics 101 had a record number of visitors, past 24 hours

March 2, 2011

Yesterday’s announcement by Xerox generated a lot of traffic for “Reprographics 101”.

Google Analytics (which compiles statistics for visits to Reprographics 101), reported the following:

(Note: names of “service providers” are “in quotes”)

· 17 visits to the blog from “OCE USA Inc”

· 11 visits to the blog from “Xerox Corporation”

· 5 visits to the blog from “Fuji Xerox Australia pty”

· 4 visits to the blog from “International Paper”

· 4 visits to the blog from “alco capital resources” (this is probably IKON / Ricoh)

· 3 visits to the blog from “imagistics international”

· 2 visits to the blog from “OCE technologies, b.v”

· 2 visits to the blog from “shaw communications”

· 1 visitor to the blog from “Exxon mobil corporation” spent more than 26 minutes on his/her visit

· All in all, there were 213 visits from 12 countries

· Of those 213 visits, 158 were “unique” visitors (meaning that occasionally someone visited more than once yesterday)

· Yesterday’s blog-visitor activity set a record for “one day” activity for Reprographics 101!

· Reprographics 101 has still not had a visitor from South Dakota, but, by now, has had visitors from all other states in the U.S. (and from Washington, DC.)
How Will Xerox’s Decision to Discontinue “Wide-Format” Impact Reprographers, Xerox Wide-Format Dealers, and Other Wide-Format Manufacturers?

March 2, 2011

This is an “update” to this post, having just realized that I typed “Xerox” instead of typing “OCE” in the last paragraph of the post. So, the following paragraph is the “corrected” paragraph:

“There is another issue as well. This one’s an interesting, if not an intriguing, one. There are reprographers “out there” who have been doing quite a lot of business with Xerox (wide-format) because their relationships with OCE and/or KIP ran amuck. Sometimes because of “terms”, sometimes because of “price” and sometimes because OCE or KIP did not like how those reprographers were paying (or, I guess I should say, not paying) their bills. Those reprographers may realize the biggest adverse impact from Xerox’s decision.”

How Will Xerox’s Decision to Discontinue “Wide-Format” Impact Reprographers, Xerox Wide-Format Dealers, and the Reprographics Industry’s Other Manufacturers of Wide Format? Blog author’s commentary and opinions.

Overall comments.

Yesterday’s announcement from Xerox Corp that it had made a decision “to stop taking orders for wide-format products in the U.S. and Canada in 2011 (with specific timing based on inventory levels)” was an interesting and, I believe, a very significant development. In the e-mail I received from Xerox Corp’s Director, Business Groups, Public Relations, Ms. Patty Quinn (and that e-mail carried Scott Frame’s name as well (Scott is VP of Wide-Format, Xerox), Xerox also said, “Xerox has opted not to invest in wide-format product engineering in 2011.”

Xerox did not say that it was discontinuing its wide-format business forever. And, Xerox did not say that it would not resume investing in wide-format at some point in time after 2011. But, while Xerox did not release a statement saying that it will be out of the wide-format business forever, it will likely prove difficult for Xerox to resume its wide-format business, even if it makes a decision, at some point down the road, to resume its wide-format business. The decision that Xerox made had to have been an extremely difficult decision for Xerox to make. For it was Xerox who first introduced “plain paper” toner-based copying systems to the reprographer marketplace. I fondly recall our first Xerox 1860 (cost was around $115,000, and, yes, we bought the Xerox 1860, we did not rent it), followed by our first Xerox 2080 (cost was around $125,000. After the Xerox 2080 was introduced, it was followed by Shacoh’s first large-format plain-paper system, the Shacoh 920, and the introduction of the Shacoh 920 did have a big impact on Xerox’s market share (not to mention Shacoh’s growth in subsequent years, as it morphed into KIP and became the reprographics industry’s #2 vendor of choice.) Our first “electrostatic” plotter was a Xerox wide-format product. We built our “plotting service bureau” business around that plotter. Xerox’s introduction of the Xerox 8845 represented the first “fairly fast” digital printing system. But, not long after that, OCE introduced one of the most remarkable wide-format printing systems to ever hit the reprographics marketplace, the OCE 9800 (which did revolutionize the reprographics business and industry.) The OCE 9800 had a very dramatic effect on Xerox’s share of the wide-format equipment business. Xerox’s market share fell significantly; at one point, we learned that Xerox was trying to sell its wide-format equipment business; word had it that they could not find a buyer, which, I guess, is why the kept it and continued on. There was also a time when Xerox began to use KIP equipment for the print-engines of at least some of Xerox’s wide-format systems, with Xerox adding its own software to those systems. During the ten year period ,1997-2007, KIP gained market share over Xerox (at least that was the case in the reprographics marketplace), OCE continued gaining market share; both of these led to further decline in Xerox’s market share in the U.S. And, then, the reprographics industry and its vendors got hit by this ugly “Great Recession” (which I refer to as a depression, not a recession.) From my perspective, it is very, very sad to see one of the reprographics industry’s most prolific and innovative equipment vendors -a vendor with one of the most recognizable brand names in the world, withdraw from the wide-format segment of the imaging-equipment marketplace. While I want to say “thank you” to Xerox for being an integral part of the reprographer marketplace and that “I’m sorry to see you bow out,” one never knows what the future holds. Perhaps someday Xerox will renew its R&D and manufacturing of Xerox-branded wide-format equipment.

How will Xerox’s decision affect the other companies in the industry who develop, manufacture, sell and distribute wide-format printers and systems?

OCE will benefit from Xerox’s decision. But, inasmuch as reprographers have been mired in an ugly recession for at least a couple of years by now, I don’t think that OCE will immediately benefit from Xerox’s decision. Reprographers are doing their best to avoid having to purchase new systems to replace older ones. Wide-format color printers are gaining in proportion to wide-format b/w printers (and Xerox never* produced a fast color wide-format printer for the A/E marketplace), so the fact that Xerox will, at some point in 2011, “stop taking orders” for its wide-format b/w printers, will not, in the near term, provide the same huge benefit to OCE that would have been the case had Xerox made this same decision five, six or seven years ago, when reprographers were investing significantly in wide-format b/w printers. (* Yes, I am aware that Xerox, years ago, introduced the Max200 “spot/red” wide-format printer, but that system proved to be a complete flop, much to the chagrin of reprographers who acquired that model.) As the reprographics business comes out of the recession, OCE will benefit. But, secular (whatever that means) challenges may take some of the wind out of the benefits OCE will reap from Xerox’s decision (I don’t think anyone in the reprographics industry is not concerned about A/E/C customers finding ways to avoid printing as much as they used to print “per project”.) I bought shares in Canon yesterday. (Canon owns OCE.) (That’s generally the kiss of death to a stock, for “when Joel buys, it is time to sell.”)

KIP will also benefit from Xerox’s decision. However, I’m guessing that KIP has not faired well during the recession, in spite of the fact that it has some very decent wide-format systems. KIP is not in the “small-format” equipment business. Being not-at-all-diversified, the recession has to have had a very negative effect on KIP’s business. My former company (NGI) was a “servicing dealer” for both OCE and KIP. We had great success with both brands. We sold, leased and FM’d both OCE and KIP. During my entire time at NGI (10+ years), we only acquired one Xerox wide-format system, and that was at the request of the customer we provided that particular FM for. So, while I do think that KIP will benefit from Xerox’s decision, the effect will not be significant until this recession is over and done with.

Ricoh and other companies who manufacture and sell wide-format printers will also benefit, but I think that OCE and KIP will be the major beneficiaries of Xerox’s decision.

With reduced competition (Xerox pulling out of the market and competition for wide-format printer/system placements), one could expect “price to rise”. But, it is not assured that that will happen, especially in the near-term.

How will Xerox’s decision affect dealer/distributors of Xerox wide-format printers and systems?

Quite a number of the reprographers who are wide-format equipment dealer/distributors and quite a number of the companies who are not reprographers but who do distribute wide-format equipment are dealers for more than one brand. For those companies, I don’t think that Xerox’s withdrawal from the wide-format business is going to cause any problem. Hopefully for them, they will find a way to quickly clean-out their Xerox wide-format equipment inventories; they will then be able to concentrate on the remaining brand (or, in the plural, their remaining brands). For equipment dealers who are only dealers for Xerox wide-format, Xerox’s announcement may, going forward, have an adverse impact on their business … if they are unable to convince KIP and/or OCE to approve them for dealerships.

Right after I published Xerox’s announcement on my blog, a reprographer who exclusively sells OCE wide-format e-mailed me to say, “this is good news for us, since we are an OCE dealer” (they are not a Xerox dealer.) Shortly after that, I received an e-mail from a long-standing, large Xerox dealer, and he said, “Having been involved with the launch of the Xerox 2510 program this is truly like the end of an era.”

Just a few quick “profiles” of some of the companies who are Xerox wide-format equipment dealers:

RS Knapp / Napco – is the #1 Xerox (wide-format) dealer in the NY/NY/Conn area and is the #3 Xerox (wide-format) dealer in the U.S. Fortunately for RS Knapp / Napco, they are also an OCE wide-format dealer.

RPG (Reprographics Product Group) – is a significant Xerox (wide-format) dealer in the Washington/Baltimore Greater Common Market area. Fortunately, RPG is also an OCE wide-format equipment dealer (when I visited RPG’s web-site this morning, I found that they were an OCE dealer, but I only saw OCE’s wide-format “color” systems (ColorWave 600 and ColorWave 300) advertised on RPG’s web-site.)

Xact Supply Co – is a significant Xerox (wide-format) dealer in the Florida market. But, like RS Knapp / Napco and RPG, Xact is also an OCE wide-format equipment dealer.

Certified Reprographics & Engineering Systems, a company based in Salt Lake City, UT, with offices also in Las Vegas, NV – is reportedly one of the largest, if not the largest, Xerox wide-format systems dealers in the U.S. I don’t think Certified is an OCE wide-format dealer, so, long-term, Xerox’s decision may have an adverse impact on Certified Reprographics’ business. A few years ago, I attended an “FM Sales School” hosted by The PEiR Group in Las Vegas, and, at that “sales school” (we attended that school to learn how to sell FM’s!), I remember one of Certified Reprographics guys (one of the owners, and, sorry, I don’t recall his name) say that Certified was the “largest Xerox” dealer in the nation and that Certified, at that point in time, had around 500 systems in the field. 500! Lots of sales, leases and FM’s!

Mastergraphics – is a significant Xerox (wide-format) dealer in the Wisconsin marketplace. When I visited Mastergraphics’ web-site, I did not find that they are an OCE wide-format dealer. So, like Certified Reprographics, Xerox’s decision may have an adverse impact on Mastergraphics’ equipment business.

It will certainly be interesting to see how both OCE and KIP deal with the heretofore-only-Xerox equipment-dealers who will now turn to OCE and KIP (and plead their case) for dealerships for OCE and KIP equipment. OCE and KIP will both be in a stronger position to deal with those newly seeking dealerships from them. Quotas!

How will Xerox’s decision affect reprographers who have, in the past, committed significant investments in Xerox wide-format?

I believe that Reprographers who primarily use Xerox wide-format equipment in their production operations and at FM sites will, over the near-term and long-term, be adversely impacted by Xerox’s decision. Speaking as a “former” reprographer, if I had only (or mostly) Xerox wide-format equipment at my production centers, Xerox’s announcement would have given me a horrible case of indigestion and heartburn last night. At NGI, we operated multiple production centers and operated a lot of FM sites. If the wide-format equipment we had at those locations was all Xerox brand, I would be worried that my competitors would be out, en-masse”, to tell my customers that “the equipment NGI uses at its production centers and at its FM sites is “obsolete”, Xerox has pulled out of the wide-format business. I’d then have to run around and waste time assuring my customers that “there’s not going to be a problem, it’s no big deal, don’t worry about it, we’ll continue to take care of you as we always have.” I don’t like to waste time.

“Expected life” is an issue for reprographers. When any reprographer has to make a decision “what should I buy, which brand, which model?,” a reprographer is, of course … and absolutely …. going to consider, “how long will this machine last, how long will I be able to keep it in service and make money off of it?” I remember when the OCE 9800 was first introduced. A “very big” question was, “how long will this machine last, how long will I be able to keep it in service?” No one knew, no one had any experience. The OCE 9800 later proved to be an exceptional machine and one that reprographers could rely on for many years, not just for a few years. It was not uncommon to find reprographers using OCE 9800’s for ten years! That was unexpected. And, it was an expected delight! But, consider, now, a reprographer who is faced with the decision, “what to buy”, a reprographer who, because of the recession, has held off replacing his/her wide-format b/w equipment that would normally have been replaced two or three years ago. Let’s assume that this reprographer only (or mostly) used Xerox wide-format equipment at his/her production centers. Will it be likely that this reprographer will again buy Xerox wide-format? In the e-mail I received yesterday from Xerox, Xerox did say, “Customers will continue to have access to service support, supplies, media and parts from Xerox for their existing equipment for a minimum of five years from the last install of a particular product line.” So, perhaps that statement will remove some of the worry for reprographers who are, or will be, interested in staying with Xerox equipment. But, perhaps not. I’m not going to tell you what I would do. What I would do is irrelevant.

There is another issue as well. This one’s an interesting, if not an intriguing, one. There are reprographers “out there” who have been doing quite a lot of business with Xerox (wide-format) because their relationships with OCE and/or KIP ran amuck. Sometimes because of “terms”, sometimes because of “price” and sometimes because OCE or KIP did not like how those reprographers were paying (or, I guess I should say, not paying) their bills. Those reprographers may realize the biggest adverse impact from Xerox’s decision.

– – – – – – – –

I’ve long been of the opinion that competition is healthy for the marketplace; this applies to reprographics services and to supplies, consumables and equipment in the reprographics marketplace. I am sad to see Xerox bow out of the wide-format business in the U.S., simply because that will reduce competition and could, in the long term, increase the costs that reprographers incur to provide the services (and equipment) they offer.

Your opinions and comments are invited.
SERVICE POINT SOLUTIONS RELEASES FINANCIAL RESULTS FOR YEAR 2010 and PROJECTIONS FOR 2011

March 2, 2011

Just a quick highlight:

Sales of Service Point Solutions’ US Division

FY 2009 – 19,201 mil Euro

FY 2010 – 16,428 mil Euro

= 14.5% off

Sales for all of Service Point Solutions (the entire company)

FY 2009 – 213,788 mil Euro

FY 2010 – 202,746 mil Euro

= 5.2% off

I will likely make comments about SP’s results, after I’ve studied them. But, I will do that in a later post, not in this one.

Okay, let’s get on with the rest of this post …..

I could have used another lesson in Spanish before I sat down tonight to research the information I found on Service Point Solutions’ web-site and on the web-site of the Bolsa (Spanish) Stock Exchange. (MK, where are you when I really need you!)

Buenas tardes, senors, senoras and senoritas. Hola! Como Estas?

Okay, pardon my late-at-night humor.

This evening, I found the most recent financial reports for Service Point Solutions, along with other information as well. These reports will show you how Service Point’s business performed in 2010. In addition, I found a file that shows the information that was apparently presented at a Meeting of Shareholders that took place last week. And, I found another file that provides SPS Management’s guidance for 2011. And, I found yet another file that, I think, contains information about a public offering of additional SPS shares. I hope your Spanish language skills are better than mine.

Unfortunately, I could not find, on SP’s web-site, any English language versions of these reports and documents. I would imagine that SPS will, at some point, post English language versions of these reports and documents on its web-site. Until they do that, you’ll have to live with the Spanish language versions. I hope you either read Spanish or know someone who’s fluent in Spanish who can help you!

Below, you will find several reports/documents mentioned. You will first see the Spanish language name of the document or report. Followed by the name of the report in English, after I ran the Spanish through “Google Translate”.

1. INFORME FINANCIERO SEMESTRAL CORRESPONDIENTE AL AÑO

which Google Translate translated to….

1. SEMI-ANNUAL FINANCIAL REPORT FOR THE YEAR

For some reason, I can’t provide you a click-on link to this report, but here’s how you get to it:

Step 1 – go to http://www.servicepoint.net/SPSG/bolsa.html

Step 2 – on the right side of that web-page, click on CNMV Information

Step 3 – on the right side of that web-page, click on “Informacion financia intermedia”

Step 4 – at the top of the list (in blue) on that web-page, click on 25/02/2011

Step 5 – on the left side of that page, click on “Informe semestral”

If you think it was difficult for you to get to that damn file, think of what I had to go through to find it and then explain how to get there! I.E. Don’t complain!

2. ESTADOS FINANCIEROS SEMESTRALES RESUMIDOS CONSOLIDADOS Y NOTAS EXPLICATIVAS CORRESPONDIENTES AL EJERCICIO ANUAL TERMINADO EL 31 DE DICIEMBRE DE 2010

which Google Translate translated to….

2. HALF-YEARLY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES FOR THE YEAR ENDED DECEMBER 31, 2010

The above mentioned file can be viewed by clicking on this link:

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B81al4kFAU9JMzA2MjdkYzItMmZhMy00ZjhkLTk4NDUtNWFmYjNhOTY1Yjdh&hl=en&authkey=CM-LroAB

3. RESULTADOS 2010

which Google Translate translated to….

3. RESULTS 2010

The above mentioned file can be viewed by clicking on this link:

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B81al4kFAU9JYjgyNzY2MzgtMzgwOC00OTk1LTljNDQtNTI0NDZlYjc1NDRk&hl=en&authkey=CP_mouYG

4. JUNTA GENERAL ORDINARIA Y EXTRAORDINARIA DE ACCIONISTAS DE SERVICE POINT SOLUTIONS, S.A.

which Google Translate translated to….

4. ORDINARY AND EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS OF SERVICE POINT SOLUTIONS, SA (This appears to be the order of business to be conducted at the meeting and, I think, mentions the share issuance to raise additional capital.)

The above mentioned file can be viewed by clicking on this link:

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B81al4kFAU9JZDk3ZTU5MzctOWE4Ni00YWQ2LWI3Y2EtMzljZjM5YjI5M2M4&hl=en&authkey=CJHbnK8D

5. JUNTA GENERAL ACCIONISTAS 21 DE FEBRERO 2011

which Google Translate translated to….

5. SHAREHOLDERS GENERAL MEETING FEBRUARY 21, 2011 (PRESENTATION FILE)

The above mentioned file can be viewed by clicking on this link:

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B81al4kFAU9JZTk2N2EyZWQtZGNiZS00MzkwLWFjYmYtMzhiNTQ1MGRlYzY2&hl=en&authkey=CKSzwpkB

I think these last two documents have something to do with an additional offering of Service Point shares. Service Point recently issued a Press Release to announce that it had completed a restructuring and extension of its debt-financing. But, I also recall hearing that Service Point was going to sell additional stock in order to raise cash for acquisitions. Service Point Solutions recently announced that it was going to acquire Holmbergs, a Swedish company. Even prior to that announcement, SPS said that it was looking at additional acquisitions.

6. INFORME ELABORADO POR EL CONSEJO DE ADMINISTRACION DE LA COMPANIA EN RELACION CON LAS PROPUESTAS DE MODIFICACION DE ESTATUTOS Y OTROS ACUERDOS A SOMETER A LA JUNTA GENERAL DE ACCIONISTAS DE 20 Y 21 DE FEBRERO DE 2011, EN PRIMERA Y SEGUNDA CONVOCATORIA RESPECTIVAMENTE

which Google Translate translated to….

6. REPORT PREPARED BY THE BOARD OF DIRECTORS OF THE COMPANY IN CONNECTION WITH THE PROPOSED AMENDMENTS TO CONSTITUTION AND OTHER AGREEMENTS TO BE SUBMITTED TO THE SHAREHOLDERS OF 20 AND 21 FEBRUARY 2011, IN FIRST AND SECOND CALL RESPECTIVELY

The above mentioned file can be viewed by clicking on this link:

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B81al4kFAU9JZmQ2NjAwNjctYjQzNC00YTUzLWFiOTQtZGIwZDgxNjcwNzkw&hl=en&authkey=CLP1qpsM

And…..

7. ANNOUCMENT OF MEETING TO SHAREHOLDERS

The above mentioned file can be viewed by clicking on this link:

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B81al4kFAU9JYmNmNGQxNDctZWFiZi00ZGFjLWJhM2MtOGU1OGFlOTMwZWE1&hl=en&authkey=CIKJ5I4L

Finally, I received an e-mail, dated Feb 28, 2011, from SPS’ media relations people (I’ve signed up, so I automatically receive these e-mails.) This one looks like an announcement of projections for 2011 (Sales and EBITDA) and an announcement that the acquisition of Holmbergs was completed.

Here’s the Spanish language version of the e-mail:

28 de Febrero 2011

Service Point proyecta obtener ingresos entre €216m y €220m y un EBITDA entre €18m y €20m en 2011

La integración de Holmbergs en Suecia que se completara dentro del marco de su ampliación de capital de €14.5m permitirá incrementar en €15m los ingresos y en €2m de EBITDA sus objetivos en 2011 por lo que contempla obtener ventas por encima de €230m y un EBITDA consolidado entre los €20m-€22m en 2011.

Las claves para la consecución de dichos objetivos son: (i) La reactivación del entorno y actividad económica en los países donde actúa y sus clientes, (ii) los resultados obtenidos al plan de restructuración de las operaciones que permiten mantener costes planos durante los próximos 3 años y (iii) su especialización y captura de clientes en los sectores financiero, educación y publishing y en actividades on-line donde ocupa posiciones de liderazgo.

which Google Translate translated to….

February 28, 2011

Service Point projected income between € 216m and € 220m and an EBITDA between € 18m and € 20m in 2011

Holmbergs integration in Sweden was completed as part of its capital increase of € 14.5m will increase revenue by € 15m and € 2m in 2011 EBITDA objectives as provided for obtaining sales over € 230m and Consolidated EBITDA between € 20m-€ 22m in 2011.

The keys to achieving these objectives are: (i) The recovery of the environment and economic activity in the countries where it operates and its customers, (ii) the results achieved in the restructuring plan of operations that keep costs flat over the next 3 years and (iii) capture their expertise and clients in the financial, publishing and education and on-line activities where he held positions of leadership.
LOL – a compliment ???

March 2, 2011

So, tonight I got this e-mail from a young reprographer who visits my blog. (Just to qualify what I just said; anyone who is younger than me is young. Anyone who is my age is old.)

Here’s the first part of the e-mail he sent me:

“Hey Joel,

I want to say is that your blog is worth the price of admission.

We don’t hear hardly any of the stuff you are sharing.”

When I read, for the third time, the statement, “your blog is worth the price of admission” …. I stopped and said to my wife, “honey, does that mean that, since it costs zero to read my blog, that my blog is worth zero?”
Is Xerox discontinuing its involvement in the wide-format, black & white equipment business?

March 1, 2011

FURTHER UPDATE ….. AND BREAKING NEWS !!!!

From: Quinn, Patti

Subject: Xerox’s Wide Format Statement

Date: March 1, 2011 4:10:56 PM EST

To: Joel Salus

Joel, per your request, here is Xerox’s statement regarding Wide Format:

Xerox will stop taking orders for wide format products in the U.S. and Canada in 2011, with specific timing based on inventory levels.

Xerox’s European and Developing Market operations will continue selling wide format products and will source new products.

Xerox prioritizes each investment, allocating research and development dollars to areas where the company can deliver the best value to the marketplace. As a result of this practice, Xerox has opted to not invest in wide format product engineering in 2011.

Customers will continue to have access to service support, supplies, media and parts from Xerox for their existing equipment for a minimum of five years from the last install of a particular product line. Customers with questions can contact their Xerox Account Manager.

Scott Frame, vice president, Wide Format, Xerox Corporation

Patti Quinn

Xerox Corporation

Director, Business Groups Public Relations

100 South Clinton Avenue – XRX2 004

Rochester, NY 14644

585-264-2842

patti.quinn@xerox.com

_______________________________________________________________

THIS IS AN “UPDATE” TO THE “ORIGINAL” POST BELOW:

I just heard from another Xerox wide-format dealer, via e-mail. He said the news is true, that Xerox is pulling out of the wide-format b/w equipment business. Apparently, there was some sort of conference call today with Xerox wide-format equipment dealers.

And, I just received another e-mail, this one from a person who is with one of the industry’s “other” wide-format equipment vendors. This person confirmed that he’d heard the same thing

HOWEVER, I don’t think that anyone should consider this “news” to be “real” until Xerox confirms that it is real.

I can still recall how enamored i was with our first Xerox wide-format plain-paper copier, the Xerox 1860 [which none of you younger people have ever heard of, so, yes, showing my age (and am damn proud of that.)] We purchased that system for $115,000. It was as slow (maybe even slower) than molasses. But, over the years, we ALL made a lot of money with Xerox wide-format equipment.

THIS WAS THE ORIGINAL POST:

Early this afternoon, I received an e-mail from one of my blog visitors; the only thing in that e-mail was this question:

Subject: any word on Xerox bailing out on wide format gear?

Afterwards, I sent this e-mail to the person who asked me that question:

Hi _______,

Would I be correct in assuming that you got my e-mail address from my blog? (Reprographics 101)

I haven’t heard any news about Xerox discontinuing wide-format. I would actually be surprised if Xerox did that, but not totally shocked.

Prior to this recession kicking in, the brands (in terms of wide-format b/w toner-based equipment placements) were ranked OCE, KIP and Xerox, in the U.S. market. That’s not the same in Europe, where OCE ranks #1 and Xerox ranks #2 (KIP is a distant 3rd in Europe.) I don’t think the recession has changed this all that much, except that KIP has probably gotten hurt the worst overall, since KIP is only wide-format and since OCE and Xerox are more diversified, given their small-format products

If you do hear news that Xerox is bowing-out of the wide-format marketplace, I’d love to hear about it

Where did you hear that?

Regards,

Joel

And, this was the reply:

Hi Joel-

I do not have any details other than an announcement was made this morning via conference call that the wide-format line is being discontinued when inventory is depleted.

All direct reps and dealer channel (4) reps are gone as of 3/1/11.

I was not involved in the call but heard brief details from a dealer/friend.

This certainly is disappointing for dealers that were exclusively Xerox W-F dealers.

Your contacts in the business might be able to provide more detail.

I did get your name from your blog and enjoy reading an accurate analysis of this industry and business climate.

Best regards – _________

____________________________________________________________________________________________

Which brings me to this question, directed to reprographers who are Xerox wide-format equipment dealers (and to OCE and KIP people), ….. is Xerox discontinuing its involvement in the wide-format, black & white equipment business?
OCB Reprographics and Consolidated Reprographics both begin operating under the ARC brand name

March 1, 2011

Yesterday, I noticed an article in the Orange County Register (newspaper, the on-line edition) about the “name change” of two ARC-owned companies, OCB and CR.

For those of you who haven’t seen this news, here’s the article:

Two Orange County printers, OCB Reprographics and Consolidated Reprographics, are changing their names to their parent company, American Reprographics Co., or ARC for short.

The name change is effective immediately but will be introduced throughout the year. Both companies will continue to serve Orange County, said ARC senior regional vice president Roger Lackey, who started his career working on OCB’s production floor.

ARC is a publicly traded company based in Walnut Creek.

Irvine-based OCB was founded in 1926 and has locations in Irvine, Costa Mesa and Orange. Costa Mesa-based CR was founded in 1966 and has locations in Tustin, Costa Mesa and Anaheim.

OCB joined ARC in 1993, and CR joined the larger company in 2002.

“We’re taking on the name of the company we’ve helped build,” Lackey said. “OCB and CR were built from the ground up here in Orange County. ARC offered both companies a chance to take it a step further, and we all jumped at the opportunity.”

Historically, reprographics has been a niche business serving the construction industry and printing large format documents such as blueprints for architects, engineers and builders. More recently, reprographic companies have taken on small-format documents, color imaging and software for a variety of industries.

Joel’s comment:

This isn’t new news. It’s my understanding that this news was issued as a “Press Release” over a month ago, even though it may not be published on www.e-arc.com.

As most reprographers are aware, OCB [owned by David Hayes and his brother before it was sold to ARC (and, after ARC acquired OCB, it was run by Chuck Hayes, David’s step-son, until he passed away)] and Consolidated Reprographics (CR) [which was, prior to ARC’s purchase, owned by Lason Corp, who purchased CR from Greg Lundeen and partners (after the business was purchased by them from Phil Siegel)] are both very large, well-established players in the Southern, CA marketplace. Prior to ARC’s acquisition of OCB and CR, they were very keen competitors, but, in spite of the competition, both managed to grow large and quite profitable. ARC maintained the “separate” brand names (and operations) of each for years beyond ARC’s purchase of the companies. I would venture to guess that ARC’s decision to “consolidate” the two companies under one name, the ARC name, was driven mostly by the cost savings that will be derived from the consolidation of the two businesses. C2 Repro competes in that same market, and, rumor has it, that C2 Repro is expanding and doing quite well, in spite of the recession and in spite of the fact that ARC (OCB/CR) is a very formidable competitor.

Prior to the consolidation, A/E/C firms in the Orange County market basically had three “major” brands to choose from, OCB, CR or C2. Now A/E/C firms will have only two, ARC and C2.
(Print) Volumes Shrinking, (Print) Volumes Shifting – To Where?

February 28, 2011

The “Photizo Group” is involved in the MPS (managed-print-services) business, and, since the MPS business is of interest to reprographers, the IRgA has, again this year, arranged for Ed Crowley, CEO of The Photizo Group”, to present at the upcoming IRgA Convention.

This is the title of the “breakout session” that Ed will be presenting:

“MPS – Why This Is Key to the Growth of Your Firm”

Today, I found an article at “mpsinsights.com” (which is operated by the Photizo Group) that I think reprographers would be interested in reading, especially those who are interested in “MPS.”

This is the title of the article:

“Volumes Shrinking, Volumes Shifting – To Where?”

By: Rob Sethre | February 28th, 2011

And, here are the two “lead in” paragraphs:

“Most imaging experts agree that overall output volumes are declining. But for several reasons (see previous blogs), this is not the end of the world – or even the end of the industry. In its most straightforward version, MPS is the key strategy to capture a bigger piece of a smaller pie – actually, the whole pie. Also, MPS offers additional new revenue streams in the software and services space to compensate for dwindling revenues in the core business area.”

“But there is still another aspect. While MPS has traditionally concentrated on unifying the printer and copier/MFP worlds, the central print room (CRD) is still often overlooked.”

You can access the complete article at this link:

http://www.mpsinsights.com/our-insights/volumes-shrinking-volumes-shifting-to-where/

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