Lanier Worldwide, Inc. Business Information, Profile, and History

Company Perspectives:

Lanier is among the world's largest global providers of document mana gement solutions. We specialize in products and services that help cu stomers improve productivity and reduce the cost of document creation , distribution, replication and retention.

History of Lanier Worldwide, Inc.

A subsidiary of Ricoh Corporation, Atlanta-based Lanier Worldwide, In c. supplies customers with copiers, fax machines, scanners, digital d uplicators, and printers, as well as parts and supplies and document management software. The Lanier Professional Services unit offers con sulting services, facilities management, systems integration, reprogr aphics services, and outsourcing. In response to a downturn in the co pier field Lanier has begun to develop market-specific applications f or industries such as healthcare and real estate.

Company Roots Dating to the 1930s

Lanier was founded by brothers Hicks, Sartain, and Thomas Lanier in N ashville, Tennessee, where the family settled after the three boys an d a sister were born. Fascinated with the new dictation machines, the Dictiphone brought out by Columbia Graphophone and Thomas Edison's E diphone, the brothers started The Lanier Company in Nashville in 1934 to serve as the southeastern distributor of Ediphone. They soon bega n producing their own dictation machines, as well as business forms. The business prospered and spread throughout the region, but growth w as interrupted by World War II, when the components they needed were commandeered by the military. As a result, the Lanier brothers were f orced to find a more suitable business for the times, intended merely as an interim measure.

Through a friend they learned about Oxford of Atlanta, which sold clo thing for men and boys. Despite knowing nothing about the apparel ind ustry, they bought a stake in the company in 1942, established themse lves in Atlanta, and took the lead in expanding the company. A year l ater Oxford acquired the Rome, Georgia-based Champion Garment Company , which they renamed Oxford Manufacturing Company, and before the war was over they added three more plants to the operation. In 1944 the Lanier brothers bought out their partners and became the sole owners of Oxford, which they no longer viewed as a temporary occupation. Hic ks Lanier, however, was never overly comfortable with the apparel tra de and its constant changes in fashion. After the war he decided to r eturn to his prior business, telling Sartain that apparel was too com plex: "I'm going back to the dictating machine, where customers only want one model, one size, and one color."

The major break for the Lanier Company, now based in Atlanta, came in 1947 when it revolutionized the dictation industry with the introduc tion of plastic discs that replaced the bulky wax cylinders that had been used for decades as the recording medium. The company entered th e new copier field in 1955, again embracing new technology when it be came an independent distributor for Minnesota Mining and Manufacturin g Company (3M) and its "thermofax" copiers, which relied on semi-tran sparent and heat-sensitive paper. An original was covered with the Th ermofax paper, placed under a glass contact frame and exposed to ligh t, which was absorbed by the black images on the original and heated up the Thermofax paper to create a copy. Offering just a single copy at a time, Thermofax copiers were crude by contemporary standards, ye t they were a godsend to offices at a time when carbon paper was an o ffice staple. They also established a lasting relationship between La nier and 3M that would benefit both companies over the decades.

Acquired by Oxford Industries in the 1960s

In 1960 Oxford Industries became a public company. Two years later Th omas Lanier was killed in a plane crash, leaving Sartain to run the a pparel business and Hicks to head what had become Lanier Business Pro ducts. In 1965 Gene Milner, who married into the Lanier family, took over as Lanier's president and would become known for his tough manag ement style. Three years later, in 1968, Oxford acquired Lanier Busin ess Products in a stock swap. It proved to be a good addition for Oxf ord, which saw its apparel sales decline due to inflation and a reces sion. With Oxford's backing Lanier grew into a national player in the 1970s, able to buy many of its key suppliers. However, less than ten years after acquiring Lanier, Oxford decided it was better off focus ing on apparel, and in July 1977 Lanier business products was spun of f as a public company listed on the New York Stock Exchange.

As Lanier regained its independence it also changed leadership, with Milner replaced by Wesley E. Cantrell, a man of opposite personality, described as warm and gregarious, who would head Lanier for the next 25 years. Milner's son, Hicks L. Milner, told Atlanta Business Jo urnal in 1998 that Cantrell "had more of a calmer approach" than his father, adding, "Dad would kick you in the pants, and Wes would c ome around and pat you on the back and tell you he loved you."

Cantrell was born in Georgia in 1935, the son of an itinerant Baptist minister who moonlighted as a school teacher or principal to help ma ke ends meet. A child of the Depression, Cantrell grew up with a well -ingrained work ethic and an abiding Christian faith. By the time he was 14 he had his own checking account and paid his expenses, working seasonally as a chicken catcher for a local poultry processor and an order picker at a drugstore. He dreamed of becoming an inventor and was determined, despite his modest circumstances, to attend college. After graduating as valedictorian of his high school class, Cantrell joined the Naval Reserves to help finance his studies at Southern Tec hnical Institute in Georgia, from which he graduated in electronics w ith honors in June 1955 after just two years. Cantrell was hired by I BM as a field engineer, but the job did not start until the fall and he looked for a summer job. He came across a Lanier ad at his school' s placement office and took a position as a repairman for the office equipment distributor. He was sent to work in Louisiana, where in add ition to repairs he began to work in sales. His personality was well suited to the task of building customer relations and he soon discove red the potential of commissions, realizing that the more products he sold the more money he could make. Not only was his job at IBM to be salary only, he noticed that a lot of young people were quickly movi ng up the ranks at Lanier, a fast-growing company after forging its a lliance with 3M. At the end of the summer, he decided to stay at Lani er and gave up the job offer at IBM and the life of a field engineer. Although his focus would shift to sales, for many years he carried a tool kit in his car in case a Lanier copier needed fixing.

Cantrell steadily moved up the corporate ladder at Lanier over the ne xt 20 years. He was named a district sales manager in 1962 and by 196 6 was made vice-president and sales manager for dictating products. F rom there he became an executive vice-president and national sales ma nager in 1972, and two years later secured a seat on Oxford's board o f directors. Although he took charge of Lanier after it was spun off in 1977, the company, which was generating sales of less than $10 0 million, remained very much influenced by the Lanier family, which continued to own a stake in the company through Oxford. Sartain Lanie r served as Oxford's CEO and chairman until his retirement in 1981, w hen he was succeeded by his son, John Hicks Lanier. Then, in 1983 Lan ier Business Products was acquired by Harris Corporation, an internat ional communications and electronics company, ending the Lanier famil y connection and also bringing with it a stricter environment. "I did n't like it at first," Cantrell told Atlanta Business Chronicle in a 1990 profile. "It was different. I wasn't sure I could get alo ng with these people. ... They didn't see the world from the same van tage point we did." According to the Chronicle, "Eventually, C antrell saw the advantages of working for a new boss. Today he calls the buyout by Harris 'one of the best things that ever happened to me .'"

Two years after acquiring Lanier, Harris opted to merge Lanier's unit that sold copiers, laser printers, and fax machines with 3M operatio ns to create a joint venture called Harris/3M Document Products Inc. Harris continued to control the Lanier business systems and Lanier vo ice products divisions, which sold dictating equipment, telephone sys tems, and document processing systems. The 3M venture lasted until Ma y 1989, when Harris bought out its partner. Two months later, Harris restructured its business products operations, housing them under a n ew wholly owned subsidiary called Lanier Worldwide, Inc. The $1 b illion company was divided into three product divisions: copying syst ems, fax, and voice products. Lanier would now be able to take advant age of the global sales network of 1,600 offices set up by Harris/3M to sell copiers, printers, and fax machines in order to sell dictatin g equipment around the world. Previously, just 5 percent of Lanier's dictating equipment sales were outside the United States.

Lanier was a major component of Harris Corporation, accounting for ab out one-third of its revenues at the start of the 1990s. Having the d eep pockets of a corporate parent also proved beneficial to Lanier's growth, as it was able to take advantage of Harris's research and dev elopment capabilities as well as its cash. According to Atlanta Bu siness Chronicle, Lanier grew its revenues 32.5 percent to $1 .3 billion and nearly doubled its earnings from $36.6 million in 1994 to $62.8 million in 1998. At this stage, the company generat ed about a third of its revenues overseas, from operations in more th an 100 countries. All told, Lanier employed 9,400 people around the w orld.

Cantrell announced in 1998 that he planned to retire in 2000. (Aside from approaching the mandatory retirement age of 65, Cantrell also ha d been diagnosed with prostate cancer, which he managed through lifes tyle changes such as adopting a vegetarian diet.) "There comes a time for the old guy to step aside and let the young guys run things," he told Atlanta Business Chronicle. Before leaving, however, he planned to reorganize the company to ensure it was able to make the a djustment to a shift in technologies, as the industry moved from anal og to digital. He named C. Lance Herrin as Lanier's first chief opera ting officer, positioning him as his successor. Structurally Cantrell wanted to organize the company by function and do away with the spli t between domestic and international operations. He wanted to negotia te global distribution rights from suppliers and be able to offer the same products around the world. As part of the effort to bolster its global business, Lanier in 1998 acquired an Australian company and l ater paid $162 million for the Agfa-Gevaert Group's copying syste ms business unit from Germany's Bayer Group, a deal that gave Lanier access to Canon, Minolta, and Xerox products in Europe. Lanier also b egan to target industries, including healthcare and the legal field, with products and services geared specifically for them. The company was also increasingly promoting multifunctional equipment rather than dedicated copiers, fax machines, and printers.

Late 1990s Spinoff

Cantrell's retirement plans were put on hold, however. In April 1999 Harris decided to spin off Lanier as a public company in the form of a tax-free dividend of Lanier stock. As part of the plan, Harris, whi ch would retain a 10 percent stake in Lanier, asked Cantrell to commi t to serving another two years as CEO and chairman. Since being the c hairman of a publicly traded Lanier had been his "last unfulfilled dr eam," Cantrell agreed. Splitting Harris and Lanier was believed to be in the best interests of both companies. Their value as two pure-pla y companies was expected to be greater because narrowly focused compa nies generally outperformed conglomerates. In exchange for gaining it s independence Lanier took on $700 million in debt, but because t he economy was booming and the global market for document imaging and management products was projected to enjoy strong growth, the compan y was not expected to have any difficulty in generating the cash it n eeded to repay its debt.

The joy of being a separate company was short-lived for Cantrell and Lanier, however. His cancer flared up once again, which he suspected was related to the pressures of splitting the company from Harris. In March 2000 he had the cancer removed and stayed away from the compan y for a month. "But back at Lanier," according to Atlanta Business Chronicle in a 2000 article, "the situation was deteriorating. T he copier industry is making a transition from the older analog techn ology to the newer digital technology, putting great pressure on pric es. Lanier buys the office machines it distributes from Japanese manu facturers, and a stronger yen has meant falling profit margins. Price increases are unheard of, and the entire industry is looking at decl ining revenues." In order to cut costs and remain competitive, Cantre ll eliminated some 500 jobs.

Although not close to going bankrupt, Lanier, saddled with heavy debt , found itself in a difficult situation. As a result, it was open to overtures from five companies who were interested in buying Lanier. C antrell decided he should at least listen to the offers and concluded that Japan's Ricoh Corporation's bid of $3 per share of stock, w hich at this point had plunged to the 50 cent range, was too good to pass up. In late November 2000, Ricoh paid about $260 million for Lanier and took on its remaining $650 million in debt. Lanier no t only gained financial security but was now tied to one of its chief manufacturer/suppliers.

Cantrell stayed on until January 2001, when Ricoh officially acquired the company and installed Nori Goto as the new chief executive offic er. A seasoned international businessman, Goto had been with Ricoh fo r nearly 20 years and had previously served as president of Ricoh Ger many GmbH. Under Goto, Lanier continued to pursue a strategy of devel oping market-specific applications. In 2002 the company introduced a slate of document management systems intended for healthcare organiza tions, such as encryption features to ensure that copying and faxing of patient records (protected health information or PHI) were secure. Also in 2002 Lanier unveiled a pair of products geared toward the re al estate market: Email-Enable Fax, to allow a home office to send le tters and contracts to agents in the field, and Color Print Tracking for Real Estate, an application that allowed brokers to produce full- color publications in-house. Lanier added to its healthcare applicati ons in 2003 with the introduction of PHI Release, an integrated, comp rehensive system for copying, filing, and retrieving sensitive docume nts. To help it develop more state-of-the-art document management sol utions, Lanier in 2003 opened the Atlanta Technology Center, a 10,000 -square-foot facility where customers and Lanier engineers could work together to conceive of and shape new product development from Lanie r and Ricoh. Although Lanier had once again given up its independence , it had always benefited from its relationship with corporate parent s. Its tie to Ricoh appeared to be yet another case in point.

Principal Subsidiaries: Lanier Professional Services.

Principal Competitors: Canon Inc.; Hewlett-Packard Company; Ko nica Minolta Holdings, Inc.

Chronology

• Key Dates:
• 1934: The Lanier brothers start The Lanier Company in Nashvill e to distribute dictation machines.
• 1942: Due to war shortages, Lanier becomes involved in the app arel business through Oxford of Atlanta.
• 1947: Lanier Company introduces plastic discs to replace wax c ylinders in dictation machines.
• 1955: Lanier begins distributing copiers.
• 1967: Oxford Industries acquires Lanier.
• 1977: Lanier is spun off.
• 1983: Lanier is acquired by Harris Corporation.
• 1989: Harris restructures the unit, creating Lanier Worldwide, Inc.
• 1999: Harris spins off Lanier.
• 2001: Ricoh Corporation acquires Lanier.