Taylor Publishing Company Business Information, Profile, and History

Company Perspectives:

Taylor Publishing, a 60-year-old company, has strong brand recognition and loyalty and a solid reputation for high-quality products. The company is generally regarded as the technological leader in the industry. In addition, Taylor believes that significant growth can be obtained in the markets it now serves and new, untapped markets.

History of Taylor Publishing Company

Taylor Publishing Company is one of the leading publishers of yearbooks in the United States, producing them for more than 9,000 middle and high schools and 500 colleges and universities. Taylor also offers a range of specialty publications, including several popular series on the subjects of sports and gardening. Another Taylor business is reunion services, in which the company offers a complete package for high schools that includes planning the event and notifying alumni. Taylor recently was purchased by Castle Harlan Investment Partners III of New York for $93.5 million.

Beginnings

Founded in 1938, Taylor Publishing was built on the combined experiences of the three Taylor brothers, Herbert C. (known as H.C.), Edgar M. (E. M.), and J.W., Jr. (Bill). Working on his high school yearbook, H.C. had learned about book production and become intrigued with engraving. In 1923, he and E.M., who had been working as a salesman, joined with engraving salesman Roy Beard to buy a Houston company called Star Engraving. Star was restructured to produce diplomas, invitations, and announcements, and to sell class rings. Business thrived, and Bill, the youngest Taylor brother, joined Star as a traveling salesman in 1929, just before the Depression pulled the rug out from under the American economy. Luckily the Taylors' business stayed afloat, for even in hard times people valued school memorabilia.

While his brothers insisted on producing their goods using the costly photoengraving process, Bill began experimenting with a more affordable process called photo-offset lithography. Meanwhile, differences had caused the brothers to dissolve their partnership with Roy Beard. The Taylors sold their shares of the company and, in 1938, launched Taylor Engraving Company in Houston. Along with several lines of school jewelry, the company offered steel and copper plate engraving for diplomas and invitations. They had no equipment of their own, relying on Caudle Engraving in Dallas for production. The arrangement proved a good marriage.

In 1939, Taylor Engraving moved to Dallas and reorganized as a partnership of H.C. and E.M. The brothers opened a tiny 12- by 12-foot office and all three hit the road to woo customers. Soon E.M. tried peddling one of Bill's lithography yearbooks and was stunned at the positive response. All three brothers saw a new future for the business. Taylor Engraving slowly withdrew from announcements and jewelry and focused on lithographed yearbooks. Their first year in business, the company produced small cardboard-cover yearbooks and sold them to 35 schools. It was a modest but admirable beginning.

Buoyed by the success of their new product, the brothers took out a $1,500 loan, made a down payment on a Davidson press, rented a new office, and hired their first employee. The new employee labored as hard over the press as the brothers did at selling. The coming of World War II war brought hard times again, plus the rationing of paper and ink. Then E.M. had a brainstorm. If the company pitched memory books to the military, they could requisition paper and ink for military projects. These yearbooks for graduating cadets became a huge hit. By 1943, the company was prosperous enough to require another move. That same year, the brothers filed incorporation papers and became Taylor Publishing Company. They had ten busy employees.

By the end of the war, Taylor was selling $500,000 in cadet books a year. But peacetime meant shifting their focus again. As a transition they launched county military books, collecting the photos and military stories of servicemen within a given county radius, and publishing them. The books were popular and the blooming postwar economy gave them a push. At the same time, Taylor concentrated on building its school yearbook business. To this end, a full-time salesman was dispatched to the Southeast.

Bill Taylor returned home from the Air Corps and joined Taylor full-time in 1945. He hired and trained the growing sales force and, in 1946, hatched the company's next great innovation, called the 'Blue Book.' The Blue Book was simply a step-by-step storyboard that walked customers through the production of a yearbook. This powerful sales tool proved so useful that by 1959 it was the centerpiece of Taylor's new business of conducting seminars for student yearbook staffs. These seminars eventually became the core of an entire division of the company, the Seminar Division, and were still used in the 1990s.

Postwar Growth

Taylor grew quickly--sometimes too quickly--in the late 1940s and into the 1950s. By 1947 plant expansion had eaten up all the space at the company's existing location, so it bought land for a new plant. The operation was under one roof again by October 1948, but two years later facilities had more than doubled again. Despite the expanding production facilities, Taylor struggled to keep up with demand. Spring was invariably hell for the company, as graduation day deadlines pushed production. Eventually, Taylor devised a summer delivery that helped take pressure off of production and allowed the yearbooks to include year-end pictures such as proms, athletics, and graduation. Naturally, this idea was popular all around.

By the 1950s, growth necessitated innovation. In 1952, Taylor linked with L.G. Balfour Company, then a leader in the class jewelry business. Balfour began pitching Taylor yearbooks along with its product line, using its national sales force to introduce Taylor from New England to California. In 1953, typesetting replaced hand-lettering and freed up the art staff, who had been laboriously setting every ad by hand.

By its third decade, Taylor was ready to go public. Its first shareholders meeting as a publicly held company took place in the summer of 1960. Response was as strong as the company's sales, for Taylor was the leader in U.S. yearbook publishing. Capital infusions allowed acquisitions, including that of Joe Alexander Press of Austin, Texas; Newsfoto Publishing Company of San Angelo, Texas; and Yearbooks Inc. of Monrovia, California. Newsfoto was an especially important acquisition, for it had been a fierce competitor, known for quality and affordability.

Joe Alexander Press and Newsfoto operated as separate companies under Taylor's management. Yearbooks Inc. was made a branch of the parent company and provided a bridge into California's market. Yearbooks Inc. was renamed and struggled through peaks and busts until operations were shut down in 1982. In 1962, Taylor acquired American Beauty Cover Company (ABC) of Dallas, which had long supplied Taylor with yearbook covers. Sales volumes climbed to an all-time high in 1963, but Taylor was creaking from its own sudden growth. The order backlog was daunting and plant equipment and staff were severely taxed. Spring production in 1965 broke more records, and a new plant was slated for a 1967 opening.

Changes and Challenges: 1960s--80s

The mid-1960s saw crucial changes in the company's leadership and direction: Herbert C. Taylor stepped down as company chairman in 1965, though he remained on the board; E.M. moved from president to chairman; and Bill became president. At this time, the bulk of Taylor's business was school yearbooks, and the remaining ten percent of sales came from reprinting rare books and cattle sale catalogs, and miscellaneous commercial printing jobs such as specialty advertising brochures. By the late 1960s, Taylor had all the requisite charms of a prime acquisition target and had been approached by corporate giants such as RCA and Times-Mirror. Then the Connecticut-based International Silver Company--later Insilco&mdash⟩proached Taylor and proved compatible. The merger agreement went through in 1967. Randy Marston, a financial wizard with Insilco who helped hammer out the deal, went on to form a bond with Bill Taylor so close that Taylor named Marston his executive heir. Marston and his family moved to Dallas in 1969.

After the boom of the mid-1960s, Taylor was startled by sagging profits in 1968 and 1969. By 1970, Taylor had hit a low point. The company's problems were widespread and longstanding, a result of growth without modernization. One dominating crisis was in typesetting, where the company employed antiquated hot metal linotype machines. When the head of this production walked out one day, unable to bear the hard work and his chronically revolving staff, the company was forced to switch to the still-revolutionary cold type process within five months in order to make production. To cope with the backlog, Taylor brought in outside management consultants who worked for more than eight months to overhaul the production system. By 1972, Taylor's efforts were paying off and the company celebrated its best production season ever.

Business boomed between 1972 and 1976, and annual profits passed the $2 million mark for the first time in the early 1970s. The yearbook field had changed enough that Taylor's association with Balfour's sales force needed revising. Yearbooks had become a specialty, sufficiently complex that they needed a sales force of their own. In 1970, 80 percent of Taylor's yearbook sales came from combined sales offices. By 1989, it was less than 20 percent. Both delivery and sales were stable enough for Bill Taylor to retire in 1976. The baby boom had peaked, though, and student enrollments were already declining, a trend that would continue through the 1980s. Fifteen of Taylor's yearbook competitors went under. Taylor revved up its sales team and moved to even more high-tech solutions to production problems, to save on labor and time. The company managed to hang on to its market share and increase profits even though school enrollment declined 26 percent. In 1977, Taylor opened the doors of its first manufacturing venture in the north, a plant based in Pennsylvania. A Fine Books Division and a Publishing Division were created, growing by 1989 to account for 12 percent of Taylor's annual sales.

With the 1980s, technology brought its own revolutions. The company was offering videotaped 'yearbooks' as supplements to printed volumes and employing four-color scanners, continuous tone processors, and other new technologies. Taylor had broken ground in the mid-1970s by paginating its yearbooks with a computerized copy preparations system, which had yet to become the new wave in publishing. New online laser color scanners improved the quality of photos and Taylor also led the pack by using lithographed hard covers, broadening customers' creative choices. Taylor was well-poised, therefore, to take advantage of the almost daily innovations in computer-assisted publishing.

Diversification and Computerization in the 1990s

Taylor was also honing its specialty publications and began to focus on four topics: gardening, sports, cooking, and self-help/health books. This division produced such titles as Spirits of the Sky: The Airplanes of World War II and Antique Roses of the South in the fall of 1990. Taylor also was donating a portion of net proceeds from some of its self-help titles to relevant organizations, such as the National Coalition Against Domestic Violence, which received money from sales of The Battered Woman's Survival Guide. At the same time, Taylor was moving aggressively into distribution, representing 17 different presses and publishers in 1990, including Cybourg Communications, Story Line Press, and Mississippi River Publishing Company.

While Taylor was trotting to keep up with the technological advancements in publishing, Insilco--which had changed its name in 1969--had continued a buying blaze through the 1970s and 1980s, acquiring Rolodex Corporation, Signal Transformer, ESCOD Industries, and General Thermodynamics, among others. Its interests ranged from publishing to cable and wire assemblies, specialized connector systems, power transformers, and the metal tubing used in heat transfer applications and radiators. Insilco was growing at a speed that might have stunned the Taylor brothers.

The growth proved too much to manage, however, and in January 1991, Insilco filed for Chapter 11 bankruptcy. The company's troubles seemed not to impact Taylor Publishing too much. By April 1993, Insilco emerged from Chapter 11; by November of that same year, it was trading stock on the NASDAQ. During that same period, Taylor was implementing a new system for scanning photos and line graphics, printing more than ten million pictures a year in its yearbooks, and paginating more than 150,000 pages a week. Automated pagination and other new technologies that saved labor without sacrificing quality were key to Taylor's lead in the industry. The scanning system cut pagination costs by roughly half, improved image quality, reduced the annual consumption of film, and nearly eliminated the need for a copy camera and stripping department. The new system hit a few bumps before running smoothly, but the benefits were immense.

In 1993, Insilco's balance sheet was much improved, it had a new board of directors, and its net sales had increased from $578.5 million in 1992, to $615.1 million. Just more than a quarter of those sales were in Insilco's Technologies Group, mostly serving the telecommunications and electronic components end markets; another quarter was due to the Metal Parts Group, which included the two operating units Thermal Components and Steel Parts; and nearly 33 percent of its sales were in Office Products/Publishing Group. Taylor alone contributed about 16 percent of 1993 sales. In the summer of 1994, Taylor was awarded a patent for its Electronic Yearbook Publication System, which covered the digital processing of pictures for yearbooks. It had best-selling books about the Dallas Cowboys, Green Bay Packers, and Detroit Lions. Seeing that commemorative sports books were so popular, Taylor began negotiations with other teams. The digital picture publishing gave Taylor an edge over competitors and the company reported an increase in yearbook orders in 1994.

Insilco had maintained market position even during its bankruptcy and reorganization. Taylor did likewise, throughout its parent company's troubles. By 1994, it was marketing its yearbooks through 250 exclusive, commissioned sales representatives and producing about 30 percent of the country's yearbooks annually. The following year Taylor debuted its Positively For Kids book series. The 40-page hardcovers, which primarily consisted of photographs, profiled athletes who had overcome obstacles to rise to the top. The concept was a hit, with sales of 150,000 copies for the debut offering, a profile of Dallas Cowboys quarterback Troy Aikman.

The company filed suit against top competitor Jostens, Inc. in 1997, alleging that the country's dominant yearbook company was trying to monopolize the market. Although a jury found for Taylor and awarded it $25.3 million, the verdict was later overturned by a Federal District Court judge, a ruling that was upheld in the Fifth U.S. Circuit Court of Appeals.

In 1998 Taylor unveiled another technical innovation, Net Chek, which gave yearbook staffs online access to their book's galleys and allowed them to do instant markup and correction, saving much time and money in the process. By now an estimated 80 percent of the company's yearbooks were being created using desktop publishing software, three-fourths of which utilized Taylor's own proprietary UltraVision product.

A year later Taylor came up with another first for the industry, an online ordering system offered in conjunction with American School Directory, a web-based information service that covered the entire United States. Orders continued to be taken by the traditional methods of collecting money at schools or via mail, as well.

In December 1999, Insilco announced that it was selling Taylor Publishing to New York-based Castle Harlan Partners III, a unit of merchant bank Castle Harlan, Inc. The $93.5 million deal was completed the following year. Castle Harlan also owned Commemorative Brands, Inc. of Texas, a class ring manufacturer, and expected the two companies to complement each other.

After more than 60 years in business, Taylor continued to be a leader in the field of yearbook publishing, and it was still recognized as a technological innovator. The company also was finding success with specialty publications and reunion planning, but yearbooks remained its bread and butter, with more than 90 percent of its income derived from this area.

Principal Divisions:Reunion Services; Yearbooks; Fine Books; Trade Books.

Principal Competitors: Jostens, Inc.; Herff Jones, Inc.; Walsworth Publishing Co.

Chronology

• Key Dates:

• 1938: Taylor Engraving Company is founded.
• 1943: Company incorporates, changes name to Taylor Publishing.
• 1946: 'Blue Book' yearbook production guide is introduced.
• 1952: L.G. Balfour, class ring maker, begins to market yearbooks for Taylor.
• 1960: Taylor goes public, begins making acquisitions.
• 1967: Taylor is purchased by International Silver Co. (later known as Insilco).
• 1970s-80s:Taylor broadens range of publications, begins distribution of other publishers.
• 1999: Insilco sells Taylor to Castle Harlan Partners III.