Vari-Lite International, Inc.

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Vari-Lite International, Inc.

201 Regal Row
Dallas, Texas 75247
U.S.A.
Telephone: (214) 630-1963
Toll Free: (877) 827-4548
Fax: (214) 630-5867
Web site: http://www.vlint.com

Public Company
Incorporated: 1981 as Vari-Lite, Inc.
Employees: 451
Sales: $91.53 million
Stock Exchanges: NASDAQ
Ticker Symbol: LITE
NAIC: 53249 Other Commercial and Industrial Machinery and Equipment Rental and Leasing; 335122 Commercial, Industrial, and Institutional Electric Lighting Fixture Manufacturing

Vari-Lite International, Inc. is a leader in the field of automated lighting systems. The company produces motorized lights that can be controlled with computers to change the direction, size, color, and pattern of light. Vari-Lite systems are used extensively by touring musical groups, Broadway shows, television and movie studios, and at corporate events. Prior to the year 2000, the company’s equipment was only available for rental. Now, however direct sales are offered to churches, amusement parks, regional theater groups, and other new markets. Vari-Lite went public in 1997, with the company’s founders and early investors (including members of the rock group Genesis) continuing to own slightly less than half its stock. Subsidiaries of VariLite International include Showco, which rents and operates concert sound systems, and IGNITION! Creative Group, which provides lighting for corporate events.

1970s: Formative Years

Vari-Lite’s roots go back to the late 1960s, when college friends Jack Calmes and Rusty Brutsche played in a Texas-based blues band. The seeds of a business were sown when they built a sound system for their shows that was so good, other acts began to rent it from them. In March 1970 Calmes and Brutsche joined with engineer Jack Maxson to incorporate Showco, the purpose of which was to provide sound systems for regional rock concerts. The company was started out of Maxson’s garage and initially consisted of two trucks and two sound systems. At this time, touring bands typically used different sound gear at every venue, which not infrequently led to technical snafus and disgruntled customers.

A few months into the company’s first year, Showco provided such impressive sound for a Three Dog Night concert in Dallas that the band asked for its help at other venues. This job led to others in which the company traveled with touring artists, setting up the sound system for each performance. Showco was soon working with such major acts as Led Zeppelin and James Taylor. In 1972 the company added lighting to its offerings when newly-hired Kirby Wyatt began to use industrial equipment such as lifts and trusses to rig lights above stages.

The company grew throughout the 1970s, though it often had little in the way of cash reserves. Several unsuccessful ventures, such as trucking and disco light businesses, also ate into earnings. Toward the end of the decade, with competition in the concert sound industry growing, the company began looking for a new way to compete. Of particular concern at this time was Showco’s now-outdated lighting gear, which the company could not afford to replace.

In 1980 a company engineer, Jim Bornhorst, built an experimental light that could be made to quickly change colors using a dichroic glass filter and a small motor. Not long after this, a casual remark by Jack Maxson at a company brainstorming session led to a conceptual breakthrough. The words, “two more motors and it moves,” sent the project in the direction of a color-changing, moveable light, a prototype of which was built over the next several months. However, there were no funds available to refine the concept beyond this stage, a situation that was made even worse when the company’s contract for a Led Zeppelin tour was cancelled when drummer John Bonham died.

Genesis Provides Support in the Early 1980s

Seeking backing, Bornhorst and company CEO Brutsche flew to London to meet with longtime clients Genesis, the British rock band. A demonstration was set up at a 500-year-old barn in the English countryside. Shown the capabilities of the new light, the band, their lighting director, and their manager were impressed enough to give Showco the funds to build 50 more for use on their next tour. In exchange for this backing, the rockers were given a sizable ownership stake in the company. Genesis manager Tony Smith came up with the name Vari-Lite, which would be given to both the equipment and the new company which was formed to market it.

The new lights, which were controlled by a computer, made it through the tour despite frequent technical glitches. At this stage they were still seen as a novelty, but when Texans ZZ Top toured using improved versions the following year, many in the industry took notice. Within a short period of time Vari-Lite was the system of choice for such stars as Paul McCartney and Billy Joel. The Vari-Lite VL1 spot luminaire, as it was christened, enabled the lighting operator to change the color, beam size, shape, position and intensity of the light, as well as create patterns (using pre-cut metal “gobos”), allowing for dynamic effects on stage that had heretofore been impossible with fixed lights. The new system also reduced the number of instruments required to light a show, since one moveable light could be programmed to provide the coverage of up to eight fixed ones. Although Vari-Lite equipment cost more to use, the savings in labor and setup time helped offset this.

The company was granted a patent for its new system in 1983 and received a number of others over the years. Vari-Lite hired workers to build the lighting instruments and computer controllers, using components purchased from outside suppliers. The company rented the gear to touring bands and supplied trained staff to program and run the shows, much as was being done with Showco’s sound systems. Vari-Lite equipment was not available for purchase, and it did not interface with standard lighting systems, relying as it did on proprietary technology.

In 1986 the company brought out a new system, the Series 200. The new VL2 and VL3 lights it used contained microprocessors which facilitated better communication with the redesigned computer control board. That same year Showco also introduced its PRISM integrated concert sound system, the first of its kind in the industry. Two years later a holding company, Vari-Lite International, Inc., was created to assume ownership of both Vari-Lite and Showco. The company had by now established offices in several major entertainment centers in the United States and abroad from which it could rent equipment and mount tours. Annual revenues were an estimated $20 million.

In 1989 Vari-Lite sued competitor Syncrolite, Inc., alleging patent infringement. Syncrolite had been founded by Jack Calmes, who had resigned as president of Showco in 1980. Calmes countersued, alleging that his former partners had hidden the development of the Vari-Lite system from him when he left, causing him to lose significant profits when he sold his stock. The situation was eventually resolved in Vari-Lite’s favor.

Moving Beyond Rock Concerts in the 1990sM

After the company’s success with touring rock bands, other entertainment sectors began to make use of Vari-Lite equipment. Broadway shows and television production companies were two early adopters of the new lights. Vari-Lite received a prime time Emmy award in 1991 for Outstanding Achievement in Engineering, in recognition of the Series 200 system. Noise generated by cooling fans on the lights, not a problem at rock concerts, still prevented some uses in these contexts, however. In 1992 the company introduced the Series 300 system and VL5 wash luminaire, which was smaller in size and utilized convection cooling to allow silent operation. This opened up further markets for the company, which was still renting rather than selling its lights. Vari-Lite gear was also being used widely for corporate events. The company’s entry into this field dated to Kirby Wyatt’s creation of Showco Creative Services in 1980, which later evolved into the Vari-Lite subsidiary IGNITION! Creative Group, Inc.

A new subsidiary, Irideon, Inc. was formed in 1994. Irideon targeted the architectural lighting market, which illuminated outdoor structures at night for dramatic effect. Other new businesses included Brilliant Stages, Inc., and Theater Projects Lighting Services Limited, both U.K.-based theater support companies acquired in 1994. Vari-Lite itself was now reaching a wider range of users than ever before. These included artist David Hockney, who integrated lighting effects into a painting, as well as the 1996 Atlanta Olympic Games and that year’s Republican and Democratic conventions.

In the mid-1990s the company also filed another patent infringement suit, this time against top competitor High End Systems, Inc. After several years, the issue was resolved out of court. The settlement reportedly required High End to pay a sum of cash and future licensing fees to Vari-Lite.

Company Perspectives:

Vari-Lite, Inc. was founded in 1981 on the belief that creative engineering can join with creative lighting to bring a new dimension to any performance or presentation. Inspired by the magic of moving light and changing color, we set about creating complete lighting systems that add subtle nuance or brilliant spectacle to any event. We offer designers the ultimate tool for creating lighting moments to remember. Since 1981, Vari-Lite has led the world in automated lighting technology; developing pioneering products with an unrivaled reputation. Today, lighting professionals in theater, television, concerts, motion pictures, corporate shows and advertising, look to Vari-Lite for inspiration.

The Late 1990s and Beyond

In 1997 Vari-Lite sold two million shares of stock on the NASDAQ exchange, which allowed it to retire almost half its debt. Some 47 percent of the company remained in the hands of Genesis and Vari-Lite management. Following the public offering, the company began to convert its rental offices into what it called Vari-Lite Production Services agencies. The main difference was that the company now offered conventional lighting gear along with programmable Vari-Lite equipment, enabling its customers to do “one-stop” shopping.

The following year the company purchased several overseas concerns which served as leasing agents for Vari-Lite: VLSC-Scandinavia AB of Stockholm, as well as VLB N.V. and EML N.V. of Brussels. The company also published a book of concert photographs by employee Lee Magadini, A Different Light, proceeds from which went to the Vari-Lite International Foundation. The Foundation was established to fund AIDS organizations in memory of Kirby Wyatt, who had died of the disease in 1995.

Near the end of 1998 Vari-Lite announced the sale of its Irideon architectural lighting subsidiary to Electronic Theater Controls. Irideon had never really taken off, and the company took a loss on the investment. Business in general for Vari-Lite had fallen off since the initial public offering, and other steps were soon taken to improve the bottom line. In early 1999 the company sold Brilliant Stages to a subsidiary of Tomcat Global Corporation, and it also parted with lighting operations in the Middle East and Australia later in the year. Battling another of its competitors, the company initiated a patent infringement lawsuit against Danish lighting company Martin Gruppen A/S.

Vari-Lite made another dramatic move in 2000 when it announced that it would begin selling a line of automated lights which worked with conventional systems. Heretofore, Vari-Light had only rented its equipment, and it was not compatible with industry standards. The company was optimistic that it would tap into markets that had not previously been reached, including regional theater groups, churches, amusement parks, and restaurants. Vari-Lite also expected to expand its distribution to new geographic areas in the process.

As it neared its 20th year in business, Vari-Lite was still completing changes which were expected to make it more competitive and profitable. The company’s reputation for quality and its established relationships with top entertainment and corporate clients put it in a strong position to succeed.

Principal Subsidiaries

Vari-Lite, Inc.; Vari-Lite Asia, Inc. (Japan); Vari-Lite Hong Kong, Ltd. (Hong Kong); Vari-Lite Europe Holdings, Ltd. (United Kingdom); Concert Production Lighting, Inc.; Showco, Inc.; IGNITION! Creative Group, Inc.

Principal Competitors

Audio Analysts USA, Inc.; Clair Brothers Audio Enterprises; Clay Paky SPA; Coemar SPA; Cooper Industries, Inc.; dB Sound, Inc.; General Electric Company; High End Systems, Inc.; Martin Gruppen A/S; Maryland Sound Industries, Inc.; Matthews Studio Equipment Group; Netter Digital Entertainment, Inc.; Production Resource Group PLC; Southern California Sound Image, Inc.

Key Dates:

1970:: Showco, Inc. is founded in Texas to provide concert sound systems.
1980:: First prototype of color-changing, moving light; rock group Genesis funds construction of 50.
1981:: Vari-Lite, Inc. founded as sister to Showco; lights debut at a Genesis rock concert.
1983:: Company receives its first patent for the original Vari-Lite system.
1988:: Vari-Lite International incorporated as holding company for Vari-Lite & Showco.
1991:: Vari-Lite wins its first Emmy award for Series 200 lighting system.
1997:: Vari-Lite goes public.
1998:: Company begins selling off several foreign rental operations as well as Irideon and Brilliant Stages units.
2000:: Vari-Lite begins offering lighting products available for purchase.