From the Atlanta Business Chronicle
Editor's Notebook
Lanier Worldwide's Wesley Cantrell perseveres amidst great challenges
David Allison
On June 13, Wesley E. Cantrell will celebrate his 45th year working for Lanier Worldwide Inc. You might expect the 65-year-old Cantrell, who is CEO of the Atlanta-based office machine distributor, to be ready to retire so he can spend more time with his 20 grandkids.
But Cantrell is far too busy these days to retire. The reason is that Lanier, one of the world's largest independent suppliers of copiers, fax machines and other office imaging equipment, is in the midst of the fight of its life -- the same industry downturn that recently cost Xerox Corp. CEO Richard Thoman his job.
"I wouldn't want to leave the company in tough times," said Cantrell.
Lanier's prospects looked good last November when the company, then a subsidiary of Harris Corp., was spun off as an independent, New York Stock Exchange-listed business. But things began to sour quickly.
Three and a half years ago, Cantrell was diagnosed with prostate cancer. It appeared to be slow-moving. But when Lanier began the process of spinning off from Harris, the pressure on Cantrell was hot and heavy, and the cancer flared up.
He wonders if there was a connection. "My gut feeling is that there was," he said. In March, doctors at Emory University removed the cancer. Cantrell took four weeks off work, disconnecting himself from Lanier.
He had time to think, plan and reassess things, to look at business with a different perspective. He found great hope and encouragement spending time with his grandchildren, and found tremendous confidence in his Christian faith. He resumed his full-time duties later in March.
But back at Lanier, the situation was deteriorating. The copier industry is making a transition from the older analog technology to the newer digital technology, putting great pressure on prices. Lanier buys the office machines it distributes from Japanese manufacturers, and a stronger yen has meant falling profit margins. Price increases are unheard of, and the entire industry is looking at declining revenues.
On April 27, Lanier announced that for the quarter ended March 31, revenues decreased 12.7 percent compared to the same quarter a year ago.
Profits all but disappeared. For the quarter ending March 31, Lanier earned just $52,000, compared to $15.6 million in the same quarter in 1999. Its stock (NYSE: LR), which opened last November at $4.75, has dropped to about $1.50.
The company has launched a worldwide restructuring program intended to improve its competitive position and lower costs, including eliminating 400 to 500 jobs.
An albatross around the neck of the company is that when it was spun off from Harris, it took with it more than $700 million in debt. Some $60 million has been repaid, but it is still carrying about $650 million. Rising interest rates are a threat.
Cantrell says he knew the industry was going into tough times, "but it's happened faster and it's more extreme than I realized it would be."
"It's almost as if you said, `What are all the things that could go wrong?' and they did," Cantrell said.
Cantrell says he takes some comfort in the fact that Lanier's challenges are part of an industrywide problem. Lanier still has the highest gross profit margins in its industry, and the company's done well reducing operating costs, he says.
He is focusing on core values -- customer satisfaction, employee satisfaction and ethical relationships with customers and suppliers. He is confident these will see the company through for the long term.
"This is still a very good company," he said. "I think we can be one of the companies that emerges from this industry problem in better shape than most. It may be that all will not survive."
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Here is an old news story from July 99. Interesting as background information for those of us just getting into LR now.From the Atlanta Business Chronicle
Lanier Worldwide set to fly solo
Jim Molis Staff Writer
Lanier Worldwide Inc. is poised to become one of Georgia's 30 largest public companies in September after its parent pushes the Atlanta company out of the nest.
Lanier, an office equipment company, will be spun off so that its parent, Harris Corp. of Melbourne, Fla., can concentrate on its communications business.
Harris, which generated $3.89 billion in sales in its fiscal year that ended July 3, 1998, will reduce its size by half with Lanier's initial public offering. Lanier accounted for $1.25 billion of those revenues.
Lanier would have ranked 29th among Georgia's public companies, according to Atlanta Business Chronicle research. Lanier has 10,000 employees worldwide, including almost 1,100 at its corporate headquarters and distribution operations in the Atlanta area.
Lanier and its subsidiaries form one of the world's largest independent suppliers of copiers, facsimiles and other related automated office imaging equipment. It has more than 1,600 sales and service centers in more than 100 countries. Lanier also provides outsourcing services such as copier management and document copying and indexing for legal operations.
In the years from 1994 to 1998, Lanier's revenues increased 32.5 percent and its earnings nearly doubled, from $36.6 million in 1994 to $62.8 million in 1998.
Harris Corp. will miss Lanier's contributions, said HCFP/Brenner Securities analyst Jim McIlree.
"Lanier has been one of the steady growth companies and better margin performers," McIlree said. "It will be a challenge for Harris to make up for that consistency that Lanier has demonstrated over the past five years."
Still, Harris and Lanier should perform better as separate entities, analysts said.
Lanier President and CEO Wesley E. "Wes" Cantrell said he is looking forward to running a public company. Lanier had been a public company between 1977, when its former parent company Oxford Industries spun it off, and 1983, when Harris bought it. Cantrell wanted the company to be independent again.
But he said he had doubted that Lanier would go public again before the end of his career there, which has spanned 44 years. Now, he plans to make the most of the opportunity.
"To get this right at the cusp of my career is very, very exciting," said Cantrell, who will be chairman and CEO of the new public entity.
`A very good parent'
Lanier was founded in Nashville, Tenn., in 1934 as The Lanier Co., a Southeastern distributor of "Ediphone" dictation machines. It moved to Atlanta in the 1940s and entered the copier business in 1955 as an independent distributor. Copiers now account for 65 percent of its business.
Lanier has grown considerably under Harris Corp., going from $389 million in revenue in 1983 to more than $1.2 billion in 1998.
"Harris has been a very good parent," Cantrell said.
In announcing the spinoff on April 13, Harris and Lanier officials said that the move would create shareholder value and position both companies for growth.
Harris shareholders will receive a dividend of one Lanier share for each Harris share (NYSE: HRS), according to a Securities and Exchange Commission (SEC) document filed by the company on July 6. Harris will retain 10 percent of Lanier after spinning off 90 percent to shareholders.
Harris has agreed not to sell any Lanier shares for at least six months, but plans to sell its shares within two years to finance acquisitions in the communications equipment industry, as well as for general corporate purposes.
Lanier's nine officers and directors will beneficially own 119,311 shares of the company's stock, according to its SEC filing. Cantrell will have the majority of those, with 74,692 shares.
The SEC filing did not contain an estimated value for the shares or Lanier stock in general. Nor would company officials or analysts predict an initial offering price.
Lanier and Harris stock will likely fare better individually than they have together, analysts said. Lanier has applied to the New York Stock Exchange for a listing of "LR."
"The separate pieces of Lanier and the communications company are going to be valued more highly as separate pure play companies than as a conglomerate," said Ted Wheeler, an analyst with Buckingham Research Group, a New York-based brokerage firm.
Narrow focus
Investors reward focus, analysts said.
"Generally speaking, when companies spin off these types of business units, both companies benefit," McIlree said. "Usually, companies that are focused on a narrower product line or market are perceived better in the financial markets."
That's because narrowly focused companies tend to perform better in terms of sales and earnings than conglomerates, McIlree said. This should prove true for Lanier, he said.
Lanier has benefited from a strong global economy, like the office-equipment industry in general, McIlree said. Lanier and the industry should do well as long as the world's overall economy remains strong, he added.
World market
The global market for document imaging and management products will increase from $75 billion in 1999 to about $97 billion in 2002, according to estimates cited in Lanier's July 6 SEC filing.
International sales account for about 35 percent of Lanier's overall revenues.
Cantrell attributed much of Lanier's growth overseas and domestically to acquisitions.
"We've been successful in acquisitions in terms of not just acquiring companies but folding them into Lanier and getting the revenue increase and accompanying profits that should come with a good acquisition," Cantrell said.
Acquisitions helped Lanier improve its financial condition through the first three quarters of fiscal 1999.
Through the first nine months of its 1999 fiscal year, Lanier's revenues rose 12.8 percent to $1.05 billion from $930.5 million in the same period the previous year. Net income increased 9.6 percent to $52.7 million for the first nine months of fiscal 1999. The company's third quarter ended on April 2.
Lanier has consistently generated cash, analysts said. That should help it repay $700 million of debt that it is assuming from Harris, they said.
Lanier should not have difficulty repaying it, analysts said.
"They're going to be a leveraged company compared to what they have been," Buckingham Research Group's Wheeler said. "[But] they've had a pretty steady earnings record and they generate cash, so I think it will be manageable."
Harris will release in mid-August Lanier's results for fiscal 1999, which ended July 1. Lanier will announce board members in coming weeks as well.
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One more from Sept 98:From the Atlanta Business Chronicle
Copying for the future
Lanier CEO Cantrell appoints successor at $1.3 billion firm
Zach Coleman Staff Writer
Forty-five years after he arrived at Lanier Worldwide Inc. fresh out of college, CEO Wesley E. Cantrell plans to retire in 2000.
But until then, Cantrell is focusing his attention on duplicating the principles he instilled as the leader of the $1.3 billion office-equipment giant. Lanier's president since 1977 and CEO since 1987, Cantrell is preparing for his departure by reorganizing its corporate structure and pushing the company to adapt to changing technology.
"There comes a time for the old guy to step aside and let the young guys run things," Cantrell said. "I'm very open with the employees about what I'm working on."
Lanier passed a milestone in the transition in August by appointing C. Lance Herrin the company's first chief operating officer, establishing him as Cantrell's designated successor. A 31-year company veteran, the 57-year-old Herrin has been executive vice president of U.S. operations and oversaw Lanier's sales grow at three times the industry's rate. In his new capacity, he has taken over responsibility for international operations as well.
Lanier is hardly recognizable as the company Cantrell joined as a service technician after graduating from Southern College of Technology in Marietta in 1955. The company then focused on dictating machines. Today, the company sells equipment that 40 years ago was considered the stuff of science fiction, such as color copiers and fax machines.
In the 1950s, Lanier rarely ventured outside the United States on sales calls. It now has sales operations in more than 30 countries and distributors in more than 100 countries; foreign sales account for 30 percent of revenue.
Cantrell worked his way up Lanier's sales side after his first years on the repair side, eventually succeeding Gene W. Milner as CEO.
Hicks L. Milner, Gene Milner's son and the company founder's grandson, said, "Wes went on to be an inspiration to many of the young executives, such as myself, that were trying to work our way up the ladder.
"Wes has had more of a calmer approach [than Gene Milner]," he said. "Dad would kick you in the pants, and Wes would come around and pat you on the back and tell you he loved you."
Explosive sales growth
In Cantrell's 20 years as president, sales have exploded from $93 million to $1.3 billion even as the company's ownership changed repeatedly. Melbourne, Fla.-based Harris Corp., Lanier's owner since 1986, paid Cantrell $703,100 in salary and cash bonuses in fiscal 1997, according to Harris Corp.'s proxy statement filed with the Securities and Exchange Commission (SEC).
Today, about 1,400 of Lanier's 9,395 employees worldwide work in Atlanta. Operating profits in the fiscal year that ended July 3 stayed flat at $129.2 million.
A main goal of Cantrell's new corporate structure is to end the split between domestic and international operations and, instead, organize the company by function. He is working to make Lanier's offerings uniform worldwide by making equipment leasing available overseas and insisting that Lanier's suppliers give it global distribution rights (accepting that most suppliers exclude their home turf in Japan.)
Cantrell said few of Lanier's rivals can match its ability to serve a multinational customer around the globe. Lanier now gets 27 percent of its sales from such major accounts.
Lanier beefed up its foreign operations by buying the Agfa-Gevaert Group's copying systems business unit from Germany's Bayer Group for $162 million on July 9. The deal will double Lanier's European sales and give it access to products from Canon Inc., Minolta Co. and Xerox Corp. The company also made a small acquisition in Australia earlier this year.
In addition to major accounts, Cantrell has focused sales efforts on the health-care and legal markets, with new products and services such as computer workstations for doctors.
Cantrell also has been improving the technology available to Lanier employees. He issued laptop computers to service technicians and salespeople to automate order entry and service call scheduling. New copiers include devices that "call" computers at Lanier to report usage so the company knows when it is time to offer toner or a tuneup.
Cantrell wants the devices to be able to diagnose and report problems, too. Another system under development will give management profit and loss information by customer and business line. To shepherd these efforts and Lanier's year 2000 work, Cantrell created a chief information officer position.
Lanier's products are changing, too. Instead of dedicated copiers, it is increasingly pushing multifunctional devices, which combine copier, fax machine and printer abilities in one unit. To keep up, Cantrell is working to increase the technological literacy of Lanier's salespeople.
"I believe we will do that better than most," Cantrell said.
A gadget guru
Cantrell has long collected electronic gizmos and toys, and now proudly shows off his Palm Pilot on which he reads his e-mail (he still dictates outgoing e-mail, though). He switched to a vegetarian diet after being diagnosed with prostate cancer two years ago and now says he is healthier than before he developed cancer.
In 2000, Cantrell will turn 65, Lanier's mandatory retirement age, and he looks toward retirement with some sadness.
"I'm going to get up in the morning and wonder where I am going to go," he said.
He plans to serve on more corporate and nonprofit boards of directors; his memberships now include First Union Corp.'s local board and the board of Impact Ministries. He plans to spend more time with his 18 grandchildren, 15 of whom are in the Atlanta area.
And he plans to speak more to Christian groups about the role of God and biblical principles in business and to management seminars about his experiences at Lanier. "They [young executives] like to hear the stories, and I've got a zillion of them," he said. |
