Presstek, Inc.

views updated

Presstek, Inc.

9 Commercial Street
Hudson, New Hampshire 03051
U.S.A.
Telephone: (603) 595-7000
Toll Free: (888) 627-6777
Fax: (603) 595-2602
Web site: http://www.presstek.com

Public Company
Incorporated: 1987
Employees: 260
Sales: $54.96 million (1999)
Stock Exchanges: NASDAQ
Ticker Symbol: PRST
NAIC: 333293 Printing Machinery and Equipment Manufacturing

Headquartered in Hudson, New Hampshire, Presstek, Inc. is a leading developer and international marketer of non-photographic, non-toxic, digital imaging (DI), and printing-plate technologies for the graphic arts, publishing, and printing industries. Robert and Lawrence Howard founded Presstek, Inc. in 1987 to explore new ways of making the printing press a computer peripheral able to produce color-offset printing. Presstek’s products and applications incorporate its proprietary PEARL and DI technologies and use PEARL consumables for computer-to-plate and direct-to-press applications. The company’s patented PEARL and DI thermal laser diode family of products enable its worldwide customers to produce high-quality, full-color lithographic printed materials more quickly and at less cost than is possible with traditional methods. Other advantages include faster turnaround time, increased productivity, and significant reduction of chemical waste effluents that damage the environment. Presstek’s business development plan involves entering into strategic alliances, partnerships, licensing agreements, and joint development projects with major corporations in the graphic arts and printing industries. The company works with a worldwide network of dealers that sell, market, and support its products. Presstek is also engaged in the manufacture of products and applications that incorporate the use of its proprietary technologies, including polymer-based dry and/or wet printing plates, aluminum-based dry and/or wet printing plates, and stand-alone platesetters used for off-press imaging of printing plates. The company owns over 300 issued and/or pending patents throughout the world and has received numerous awards for the excellence of its products and its innovative impact on the printing industry.

1987-89: Pressing On After Gutenberg

In the 15th century, Johannes Gutenberg was reputedly the first European to use movable type. Five centuries later, American entrepreneur Robert Howard invented the dot-matrix printer for computers. In 1969 he founded Centronics Data Corporation to manufacture computer-related printing devices, and in 1984 he founded Howtek Inc. in Hudson, New Hampshire, to develop a color hard-copy printer based on the company’s new Thermo-Jet, solid-ink-jetting technology. Howtek introduced the Pixelmaster solid-ink-jet color printer in 1986; that same year Howtek also launched the first set of products that created a new industry: the Desktop Scanning Market. Howtek developed one of the largest installed bases of desktop-drum scanners for the graphic arts market as well as scanners for the life sciences and medical X-ray markets. The public company remained an industry leader.

In 1987 Robert Howard and his son—Dr. Lawrence Howard—founded Presstek, Inc. for the purpose of designing and developing a proprietary Direct Imaging (DI) Technology capable of accepting digital files of fully composed pages from a variety of color electronic prepress and desktop publishing systems. They believed that a DI Technology could image (burn) color-separated pages directly onto waterless printing plates. This simple one-step process, they thought, would require none of the photographic processes and chemistry associated with traditional plate-imaging technologies. Thus, DI technology would simplify and eliminate many of the time-consuming and complex steps associated with printing plates and color printing—and produce no chemical wastes to pollute the environment.

In September 1988 Presstek completed its first direct-imaging press. This prototype press was based on a spark-discharge technology: at the discharge of an electric spark, data was directly imaged, or etched, onto Presstek’s proprietary printing plates. This first DI press relied on a complex system of software and hardware, and in 1989 it was viable enough for Presstek to win a development agreement with Germany-based Heidelberg Druckmaschinen AG, the world’s largest manufacturer and marketer of printing presses.

1990-94: Pressing to Improve an Industry

Included in the initial and subsequent Heidelberg agreements was the stipulation that Presstek would supply that company with “kits” containing all that was needed to install the DI Technology on Heidelberg’s GTO press, regarded as the finest small-format printing press. Heidelberg produced the Heidelberg GTO-DI, based on Presstek’s spark-discharge technology, and received the “Best of Print ’91 Award” for it at the Print 1991 trade show.

Since its inception in 1987 and through most of 1991, Presstek functioned as a development-stage company, generating limited revenues. The company’s activities consisted primarily of product design, development, testing and refining, market analysis, and the development of strategic alliances. Not until the fourth quarter of 1991 did the company begin to make commercial shipments of its manufactured products, such as Direct Imaging Kits and Presstek DI printing plates and inks. “In 1992, after four years as a development-stage company, Presstek successfully made the transition into a manufacturing company, with revenues of $12,558,000, yielding a net profit of $3,606,000,” wrote Presstek Chairman of the Board Robert Howard in the company’s 1992 annual report.

Sensitive to the market’s demand for higher-quality printed materials, even in short-run markets, in 1993 Presstek continued to develop its proprietary DI technology and created PEARL: a direct imaging technology that used an infrared semiconductor laser instead of a spark discharge to burn away the surface of the plate material and produce graphic-arts quality color prints. Thus, with PEARL—the world’s first filmless, thermal-digital printing technology available for color printing—Presstek closed the gap between prepress (electronic-page preparation) and the printing press. PEARL DI constituted a daylight-safe, filmless, chemical-free technology that eliminated photosensitive materials and their accompanying toxic by-products. PEARL’s one-step exposure process, its level of quality, and its freedom from environmental damage represented an important break-through in the computer-to-plate/press market.

Presstek patented PEARL, and in September 1993 shipped to Heidelberg the kits needed to install PEARL on the GTO-DI. Presstek discontinued its spark-discharge technology and concentrated on developing PEARL, a technology not hampered by technical limitations. The cost of the changeover had a negative effect on revenues and net income but the company was able to maintain its profitability despite the resulting drop in product sales, a write-off of $1.95 million for spark-discharge assets and inventory, and start-up costs for PEARL.

In 1994 Presstek announced a five-for-four stock split and doubled its manufacturing facility in Hudson, mainly to accommodate Heidelberg’s growing demand for laser-diode imaging modules, orders for new computer-to-plate systems, and expected increases in the use of Presstek’s pollution-free printing plates. In February Heidelberg began full production of GTO-DI presses integrated with PEARL imaging technology and using Presstek’s PEARL consumable aluminum-printing plates. Commercial printers, color service bureaus, digital on-demand print shops and corporate in-house plants—among others—responded well to the GTO-DI, which gained international customers. Presstek’s revenues for fiscal 1994 totalled $16.52 million, up over 41 percent from 1993, while profits increased 92 percent to $1.84 million, compared to 1993 profits of $960,000.

1995-97: High Visibility and Profitability

At DRUPA ’95, the world’s largest graphic arts trade show, Heidelberg demonstrated its Quickmaster DI 46-4, the first fully automated digital offset lithographic printing press integrating PEARL DI technology and thermal ablation printing plates. (The words thermal ablation refer to controlled thermal detachment and/or vaporization of debris from a printing plate.) Key ingredients of the Quickmaster DI, which replaced the GTO DI, were PEARL’s polyester-based waterless plate material and Presstek’s automated plate-changing cylinder. A roll of the plate material capable of handling 35 separate printing jobs was loaded into the plate cylinder. At the push of a button, in less than 20 seconds, each of the four plates (one plate for each of the three process colors—cyan, magenta, yellow—and one for black) was automatically changed and imaged in exact register with each other. Within minutes the inking system was color-balanced to produce brilliant, perfect, offset lithographic images.

The Quickmaster DI could produce runs of as few as 200, or more than 20,000, sheets. The Graphic Arts Technical Foundation (GATF) awarded its InterTech Technology Award to the new press for innovative excellence. Presstek also received the National Association of Printers and Lithographers Award for contributing DI technology to the printing industry. Quickmaster DI was positioned to become a market leader.

Company Perspectives:

Presstek, Inc., founded on the principles of combining innovative, market-driven technologies with Deming’s “customer satisfaction through quality” concept, holds a leadership position in the worldwide direct-to-press and computer-to-plate printing and publishing markets. The company is dedicated to providing new, environmentally friendly, direct imaging technology to the printing and publishing industries; to offering a workplace that is conducive to the growth and development of its people; and to providing its customers with products that exceed their expectations.

During the trade show, one of the first manufacturers to show serious interest in acquiring Presstek’s technology was Czech Republic-based Adast Adamov Company, a manufacturer of offset sheet-fed presses. A mutual agreement with Presstek led to Adast’s becoming a licensee of PEARL DI technology and creating a larger-format (19 by 26 inch) multicolor press known as the 705C DI. Adast sold its presses to North Carolina-based Omnitrade Industrial, which then marketed them in North America, under the name of the Omni-Adast 705C DI series.

Presstek gained further visibility at DRUPA by introducing the PEARLsetter computer-to-plate system, an application of the company’s PEARL DI technology and consumables. The PEARLsetter was a computer-to-plate (CTP) imaging device that could image both of Presstek’s wet and dry offset plates. The PEARLsetter directly accepted a PostScript file from a prepress system. PEARL technology used a high-powered semiconductor laser diodes that pulsed on and off in response to the bitmap signal defined by the raster-image processor to generate a printer’s dot. The laser passed through a fibers’ optic coupler to a lens assembly which then focused the energy to a fine spot for plate imaging. The imaged plates required no processing other than the wiping of debris ablated from the plates, which could then be immediately mounted and registered on the press. Thus, the PEARLsetter gave CTP users a chemical-free and daylight-safe imaging product; high quality output; easier make-ready; lower production costs; and a higher level of productivity. Electronic Publishing, an industry periodical, gave its Hot Product Award to Presstek in recognition of PEARLsetter’s combination of leading-edge technology and industry impact.

Presstek’s thermal ablation-based printing plates, the first major change in printing-plate technologies in many years, were an important ingredient in building market share for the company. The company’s PEARLdryABL plate had a longer press life, was more durable and scratch resistant, and gave the press operator increased visibility between image and non-image areas. PEARLdry plates were used on the Quickmaster DI, the GTO, and the Adast 705C DI, to name but a few presses based on PEARL DI technology.

Already on the way to establishing a strong patent portfolio to protect its intellectual property, Presstek realized that proprietary manufacturing technologies were also needed to assure the lowest possible cost for its quality products. To this end, Presstek bought 90 percent of the stock of Catalina Coatings, Inc. (later renamed Delta V Technologies, Inc.), an Arizona corporation engaged in the development, manufacture, and sale of vacuum-deposition-coating equipment as well as the licensing and sublicensing of patent rights. Presstek’s thermal-plate technology, combined with Delta V’s advanced plate manufacturing, enabled the company to offer the graphic arts industry quality plates at a lower cost.

In July 1996 Nilpeter A/S of Denmark announced production of a high-speed rotary label printing press integrated with a special PEARL-based DI system that imaged Presstek’s thermal plates directly on the press-plate cylinder. For fiscal 1996 Presstek announced record revenues of $48.63 million and net income of $7.12 million.

In May 1997 Presstek shipped its 500th Quickmaster DI 46-4 PEARL imaging kit to Heidelberg and announced a two-for-one stock split. By the end of September the company had shipped an additional 250 kits. Presstek worked with Imation Corp. to develop a new method for the production of true half-tone “dot-for dot” color-press proofs. The companies integrated a modified version of Presstek’s CTP imaging system with Imation’s Matchprint Laser Proof materials and created the PEARLhdp, a thermal halftone digital CTP imaging system.

During May Presstek also introduced PEARLgold, a second-generation thermal lithographic printing plate that enabled run lengths of more than 100,000 impressions. Presstek’s PEARLgold plate was the world’s first process-free thermal printing plate and was designed for offset printing presses equipped with dampening systems. The PEARLgold thermal printing plate was digitally imaged, placed on the press, and run. Since no additional steps or processes were needed before or after imaging, the plate functioned very efficiently and produced no toxic byproducts. PEARLgold was a major advance in digital-plate technology because it required no pre- or post-exposure processing, baking procedure, or intermediate cleaning. It was a truly process-free, commercial-quality CTP plate that could be imaged on a broad range of available thermally based computer-to-plate systems, such as the PEARLsetter product line. PEARLgold won the 1997 GATE InterTech Technology Award, the Publish Magazine Impact Award, and the Seybold Editors Choice Award.

Among Presstek’s licensees during 1997 was Alcoa Packaging Equipment, a division of the Aluminum Company of America, which based itself on Presstek’s direct-imaging technology and thermal ablation printing plates to develop a new method of printing halftone-images on beverage cans. The modified PEARLsetter, dubbed PEARLhdp, used proofing materials supplied by Imation. The halftone proofing system enabled the user to make proofs that replicated the dot structure used for imaging plates. Both Presstek and Imation worked jointly to market the product. Presstek also signed a long-range Development and Sales Agreement with Japan-based Fuji Photo Film, Ltd., one of the world’s leading suppliers to the graphic communications industry.

Key Dates:

1987:: Presstek, Inc. is founded by the Howards, a father and son team.
1988:: Company completes its first direct imaging press, based on spark-discharge technology.
1989:: Presstek begins trading on the NASDAQ exchange.
1991:: Presstek signs a master agreement with Heidelberger Druckmaschinen AG to introduce the GTO DI press, based on Presstek’s spark-discharge technology.
1993:: Presstek patents PEARL technology, the first film-less, thermal-digital printing technology available for color printing, and installs PEARL technology on the GTO DI.
1995:: Company demonstrates the PEARLsetter, the first computer-to-plate system.
1997:: Presstek introduces PEARLgold, the world’s first process-free thermal printing plate designed for offset printing presses.
1998:: Robert W. Mailman is appointed CEO, succeeding Richard A. Williams, who is appointed Chairman of the Board.

During fiscal 1997, revenues grew 88 percent to $91.56 million, compared to $48.63 million for 1996; net income increased 102 percent to peak at $14.37 million, compared to 1996 income of $7.12 million. It was noteworthy that Presstek’s proprietary consumable thermal plates accounted for 20 percent of total revenues.

1998-2000: Pressing Forward Despite Financial Setbacks

To increase its patent portfolio, in January 1998 Presstek acquired Seattle, Washington-based Heath Custom Press, Inc., a company owning many patents for the design and manufacture of custom printing presses. In a news release, Heath President Ross Peterman was quoted as saying that there were “numerous applications for specialty presses and equipment which could utilize Presstek’s thermal imaging systems and plate products.” Obviously, Presstek was of the same opinion.

In September 1998, Robert W. Hallman was appointed Presstek’s Chief Executive Officer. He replaced former CEO Richard A. Williams, who was appointed Chairman of the Board, following the retirement of Robert Howard, Presstek Chairman Emeritus. Hallman, an established expert in plate and prepress technologies, was recognized in the industry as one of the world’s top graphic-arts technologists for his work in non-silver and related environmentally safe media. He was the holder of over 30 patents. Upon the retirement of President and Chief Operating Officer Robert E. Verrando in January 1999, Hallman assumed the duties of president and chief scientific officer (CSO).

For fiscal 1998, Presstek reported revenues of $84.39 million, down eight percent from 1997, and a net loss of $2.69 million in net income. Presstek President and CSO Robert Hallman, in a 1998 press release, commented that the shortfall in revenues was due in part to a decrease of 43 percent in sales to Heidelberg. “This revenue reduction, together with the nonrecurring or unusual charges,” said he, “essentially accounts for most of the negative impact on operating income.” He noted, however, that revenues from sources other than Heidelberg increased 136 percent in 1998 and sales of consumable plates increased 63 percent over those of 1997. “Although over-all revenues declined $7.2 million, we made good progress in broadening our revenue base in 1998,” Hallman explained.

During 1999 Presstek intensified development of new products for introduction at DRUPA 2000, the international trade show to be held in May 2000. Consequently, during this “pre-DRUPA” year, development expenditures remained at elevated levels. Presstek also pursued business opportunities available all over the world. For example, with Imation Corp.—a $1.3 billion technology company with offices in 60 countries—Presstek signed a sales and marketing agreement granting Imation exclusive worldwide distribution rights to Presstek’s PEARLhdp product line. The companies also signed a service-and-support agreement allowing Imation to provide worldwide service and support for the PEARLsetter and PEARLhdp. In September Presstek and Akiyama Printing Machinery Manufacturing Corp. of Tokyo announced a joint development program to create a DI version of Akiyama’s J Print press, which permitted one-pass, multi-color printing on both sides of the sheet in one pass. The goal was to create the first DI press for the book-printing market.

Then, in order to focus more directly on its core products, Presstek divested its subsidiary, Delta V Technologies, Inc., which was an equipment-only business. At about the same time, Presstek granted 3M—a $15-billion global manufacturing company—a semi-exclusive license for Presstek’s intellectual property relating to vacuum-deposited polymer multilayer technology (VDPML). Presstek, however, retained exclusive rights to VDPML technology applied to manufacturing printing plates. Presstek’s President and CSO Robert Hallman said that VDPML technology would “provide significant cost reductions in current plate designs and offer potential for additional novel plate structures.”

Although total revenues for fiscal 1999 dropped to $54.96 million, during the fourth quarter revenues grew 20 percent to $17.03 million, compared to $13.80 million for the same quarter in 1998. Presstek had returned to profitability in its core business and expected continuing revenue growth throughout 2000, according to the company’s news release of February 14, 2000.

Presstek received the next confirmation of a possibly profitable future in February when it signed a non-binding Memorandum of Understanding that outlined intent to form a strategic alliance with Xerox Corporation. The integration of Xerox’s DigiPath technology and Presstek’s DI technology was to enable the design of products to answer the “ink-on-paper” needs of the graphic and related markets. The companies expected to launch some of their initial products at DRUPA 2000 in May.

Presstek celebrated its tenth anniversary in 1997, the year of its record revenues and net income. The following two years of financial losses did not deter the young company from the adjustments needed to establish new relationships, introduce new products of the highest quality, and continue to build up its core business: proprietary printing-plate technologies for the graphic arts, publishing, and printing industries. It is noteworthy that Presstek continuously broadened the revenue base of its core business during a transition to its goal of being a long-term provider of process-free, thermal ablation plates and products. At the beginning of a new century—judging from Presstek’s ability to “Press on, and Forward”—it was likely that the company was on the way to many more years of creative innovations and profitable operation.