Incorporated: 1981
NAIC: 333293 Printing Machinery and Equipment Manufacturing
SIC: 3555 Printing Trades Machinery
Based in Bloomington, Minnesota, Delphax Technologies Inc. is a leading digital printing equipment manufacturer. The company's digital printing presses, which rely on its patented electron-beam imaging (EBI) technology, are sold in approximately 50 countries worldwide. According to Delphax, its presses deliver "continuous roll-fed and cut-sheet throughput for publishers, financial and form printers, direct mailers and other commercial printers."
Early Struggles
Delphax Technologies got its start in January 1981 when data card engineers Jack Drillick, Roger McCumber, and Burt Quint established Check Technology Corp. (CTC) in Eden Prairie, Minnesota. With McCumber serving as the company's first president, CTC set out to sell machines that banks could use to print their own checks, thereby adding a new revenue source. The idea seemed good, but it was not well received in the market.
As Todd Nissen wrote in the November 1989 issue of Corporate Report Minnesota, "Many banks already had check printing contracts with market giants such as Deluxe Corporation of St. Paul and John H. Harland Company of Decatur, Georgia, and were reluctant to change. ... Check Tech's high-speed machines were models of efficiency, but the company's first systems could only print the checks; collating and binding them into booklets had to be done elsewhere. The $200,000 price tag also did not make sales easy. After three years of trying, Check Tech had sold only one of its check printers to a U.S. bank."
The same Corporate Report Minnesota article provided a detailed description of the company's equipment during the 1980s, explaining: "The machines combine non-impact alphanumeric printers that produce letters, numbers, logos, and signatures with impact printers that produce two kinds of machine-read code lines: magnetic ink character recognition (MICR) or optical character recognition (OCR). (MICR and OCR figures are used by banks and the Federal Reserve to monitor check flow. Because of this, the quality of the codes is crucial, and groups such as the American Banking Association and the American National Standards Association have only approved codes printed with impact printers.)"
After shipping the first Checktronic system in 1982, CTC relocated its headquarters to Eagan, Minnesota, in 1983. The company's machines were received warmly overseas, where banks in France and Great Britain printed smaller check runs. Global expansion began in 1983 with the formation of Check Technology Ltd. (United Kingdom). In 1984, McCumber was succeeded as president by Everett Carter.
Finding a Global Market
Following a net loss of $1.7 million in 1986, 43 percent of CTC's stock was acquired by investor Craig-Hallum Inc. The following year, the company's international footprint expanded via the formation of Check Technology Espana S.A. (Spain), Check Technology France S.A., and Check Technology Pty. Ltd. (Australia). It also was in 1987 that CTC established two new companies: GTI Holdings and GTI Ventures. CTC recorded its first profit in 1987, netting $664,000 on sales of $13.1 million. For the 1988 fiscal year, CTC lost $2.4 million on sales of $12.9 million.
During the late 1980s some of the company's poor financial performance was tied to encoded financial document joint ventures that never developed as expected. The ventures, formed in tandem with De La Rue Company plc, I.C. Security Printers, and MarTech Corp., produced "encoded" financial documents such as accounts payable and insurance claim checks that included magnetically readable numbers on them. Ventures such as these generated a $439,000 loss for CTC in 1988, according to Corporate Report Minnesota.
CTC's early years were marked by frequent leadership changes. In June 1989, Chief Financial Officer Jay Herman, a former Gelco executive, was named as the company's fifth president and CEO, succeeding Frederic Sweeny. Sweeny had succeeded William Adams only a year before. The company ended the 1980s with foreign sales representing some 76 percent of total sales, which totaled nearly $17.6 million in 1989.
Seeking Profitability
By May 1990 CTC had recorded six profitable quarters in a row, and was focusing on new products such as a continuous-form check printer, which expanded the capabilities of its equipment beyond sheet-fed printers and presented the company with new market opportunities. A stitching and binding machine that allowed for the creation of finished checkbooks also was introduced at this time.
CTC continued to introduce a wide array of computer-controlled coupon- and check-printing equipment during the mid-1990s. The Model 400 Foliotronic and Model 300 Foliotronic Mark II printers were introduced in 1994. In April of the following year, CTC inked a deal with Delphax to use the latter's Gemini digital technology in the new Imaggia MG20 line of check printing systems it was developing. That year, CTC relocated again to Minnetonka, Minnesota.
After successfully completing beta testing in 1996, CTC shipped its first Imaggia MG20 system to Paris, France-based François-Charles Oberthur in 1997. A sale to Davis+Henderson Intercheques, Canada's largest check printer, followed in 1998. The company began doing business with its 48th country--the People's Republic of China--in 1997 when it sold a Checktronic 450OX document production system to the Beijing Banknote Printing Co.
A stock buyback initiative, authorizing the company to repurchase 500,000 shares of its common stock, was announced in September 1999. CTC ended the 1990s with a net loss of $1.6 million on sales of $22.3 million, down from a profit of $199,000 on sales of $23.7 million in 1998.
Developments at the Start of the 21st Century
CTC ushered in the new millennium by securing its first major multisystem order of Imaggia MG20 systems. In 2001, a prototype of CTC's Imaggia II--which the company claimed was the fastest digital cut-sheet printer available, capable of printing 300 pages per minute--as introduced at an industry trade show.
A number of other important developments occurred in 2001. In September, the company closed its Australian subsidiary. The following month, President and CEO Jay Herman was named chairman. By this time the company had some 430 printing systems in place in 50 countries. For the fiscal year ending September 30, CTC reported that its revenues had increased 49 percent from 2000, reaching $42.8 million, and net income totaled $2.1 million, compared to a net loss of $290,000 the previous year.
On December 20, 2001, CTC finalized what Herman called one of the "most significant events in our company's history," when it acquired Toronto, Ontario, Canada-based Delphax Systems in a $14 million deal with Xerox Corp.
In a December 3, 2001, PR Newswire release, Herman elaborated on the deal, commenting: "It not only strengthens our position in our served markets, but it represents a giant step in implementing our strategic plan for increasing our opportunities for market penetration beyond the check and financial document segment and enlarging our revenue base.
"A major element of our business plan is to increase our installed equipment base and generate a steady and growing stream of service revenue that, over time, will far outweigh revenue from the sale of equipment itself. The combination with Delphax will move us much closer to that objective, while fundamentally strengthening our position as a global provider of digital imaging solutions for specialized printing and publishing."
Delphax Systems Corporate Roots
Delphax Systems had formed in 1980 as a joint venture between Avery Dennison Corp. predecessor Dennison Manufacturing Co. and Canada Development Corp. (CDC). Four years later, CDC was bought out of the venture by Xerox Corp. Then based in Westwood, Massachusetts, Delphax embarked upon a path of international expansion in 1986, at which time the company established a European arm in Wiesbaden, Germany.
Delphax began the 1990s by opening another international office in London. At that time, Olympus Corp. secured an ownership stake in the company, joining Avery Dennison and Xerox. The following year, Delphax introduced EBI, which became the main marking technology used by its printers.
The early 1990s were filled with a number of other significant developments at Delphax. Avery Dennison's Imaging Systems Division was acquired in 1991, adding the Presidax line of high-speed on-press printing systems to the company's product base. A direct sales organization was also formed that same year when Delphax struck a deal with Bull HN Information Systems to buy Bull Printing Systems' large printing systems assets. Delphax ended the year by relocating to Canton, Massachusetts.
Delphax introduced the ImageFast Series 850 LE in 1993, which was recognized as the fastest roll-fed electronic printing system in the world. That same year, international expansion continued with the formation of a sales and service office in Helsinki, Finland, to serve the Scandinavian market, along with a new subsidiary in Paris, France. By this time the company claimed to have garnered a quarter of the market for telecommunications billing.
Prior to being acquired by CTC, Delphax recorded several other achievements. These included the introduction of Gemini, which the company called the fastest 600 dpi digital print engine on the market. (DPI is short for dots-per-inch, and is a measure of how many dots of ink a printing press can reproduce in one square inch. More dots result in a picture that is of higher quality or resolution.) One final development was the introduction of a system called the Publishing Factory, which marked Delphax's entrance into the print-on-demand industry.
Moving into the Future as Delphax Technologies
In keeping with its broader focus, CTC changed its name to Delphax Technologies Inc. in April 2002. The company set out to capture a share of Canada's $6.4 billion printing market via a distribution and service agreement with DocuPartners Inc., and ended the year by consolidating North American manufacturing and engineering operations, which were all relocated to Mississauga, Ontario. Delphax ended the 2002 fiscal year with sales of $52.4 million, a 22 percent increase from the previous year.
What Delphax billed as "the world's first fully integrated solution for digital book-on-demand production," was selected, in April 2004, by Muller Martini for use in its digital publishing system; according to a PR Newswire release, the system could perform everything from printing to binding. The following year, Delphax's line of CR Series Digital Web Presses were accredited by the Association of Payment and Clearing Services, an organization overseeing payment industry standards. The development allowed the equipment's use for financial document printing.
In April 2006 Delphax's client base grew with the addition of printing giant R.R. Donnelley, which added the company's CR2000 digital roll-fed press to its Financial Services Business. The following month, Dieter P. Schilling was named as Delphax's new president and CEO, succeeding Jay Herman, and Kenneth E. Overstreet was named chairman.
In the wake of declining sales, Delphax announced plans to trim its workforce by 15 percent in September 2006, resulting in the elimination of 52 jobs. A year later, in November 2007, the NASDAQ notified Delphax that it was in noncompliance with listing requirements after the minimum bid price of the company's common stock stayed below $1 per share for 30 consecutive days. The NASDAQ gave Delphax until April 28, 2008, to correct the situation. In a November 2, 2007, PR Newswire release, CEO Dieter Schilling expressed hope that new long-term financing and sales staff would enable the company to improve.
A positive development in 2007 was the introduction of the company's new CR2200 digital press, which Delphax said had a production capability of 500 feet per minute, a new speed standard for toner-based digital printing presses.
Delphax began 2008 by announcing that its customers had produced 10 billion feet of printed material with the Imaggia Digital Print System since it was first introduced, an amount equivalent to 1.9 million miles. The milestone was a noteworthy accomplishment for Delphax as the company prepared for the 21st century's second decade.
Principal Subsidiaries
Delphax Technologies Canada Ltd.; Delphax Technologies Ltd.; Delphax Technologies S.A.S.; Check Technology Pty Ltd.
Principal Competitors
International Business Machines Corporation; Océ North America Inc.; Xerox Corporation.
Further Reading
"Check Technology Announces Agreement to Acquire Delphax Systems from Xerox; Transaction Will Provide Ownership of Key Technology and Entry to New Markets," PR Newswire, December 3, 2001.
"Delphax Technologies' Imaggia Digital Print System Reaches Production Milestone of 10 Billion Feet of Output," PR Newswire, January 9, 2008.
"Muller Martini Partners with Delphax for Fully Integrated Book-on-Demand Printing Solution; First-of-a-Kind System Will Be Unveiled Next Month at the World's Largest Print Industry Trade Show," PR Newswire, April 29, 2004.
Nissen, Todd, "A Checkered Past, Another Chance," Corporate Report-Minnesota, November 1989.
— Paul R. Greenland
