Imaging Technologies Unveils Updated Business Strategy
Press release from the issuing company
Acquisitions Position Company as Comprehensive Business Services Provider to Small- and Medium-Size Businesses
SAN DIEGO, Nov. 19 -- Imaging Technologies Corporation, in light of its recent acquisition of SourceOne Group, today unveiled details of its business strategy.
ITEC has been a developer and distributor of advanced digital imaging solutions. In the 1980's, ITEC began developing core technologies related to the design and functionality of non-impact printers, multi-function peripheral devices and software. ITEC's ColorBlind software provides color management to improve the accuracy of color reproduction.
Recently ITEC has discontinued its non-profitable hardware development and manufacturing operations in order to concentrate on its core competencies in software and office products marketing and support. Additionally, ITEC is committing resources to its emerging Internet-based businesses, www.dealseekers.com and www.color.com .
ITEC management has studied the issues surrounding office productivity for some time. The Company has concentrated on systems solutions, providing hardware and software products to assist in the creation and management of documents. The Company's strength is its ability to integrate a variety of imaging and document management products into a seamless solution for our business customers.
"In order to capitalize on our existing systems integration expertise,'' said Brian Bonar, CEO, "ITEC has embarked on an expansion program to provide more services to help with tasks that have negatively impacted the business operations of our exiting and potential customers. To this end, we have begun a program of strategic acquisitions in personnel and employment practice management. We believe that there is considerable synergy between providing office systems solutions with administrative services.''
Office Products and Systems
The office products and systems industry is undergoing a fundamental transformation characterized by a transition from analog to digital systems, management of publishing and printing over the Internet, reliance on outsourcing and the rapid transition to color output.
The worldwide document/imaging market is expected to grow to $209 billion by 2003. The global office market is forecast to increase to $43 billion in 2003. In-house color document production is expected to grow at a compound annual rate of 40% over the next few years.
ITEC's office products and systems operations integrate a variety of products, including printers, plotters, copiers, and software, into a seamless networked solution for clients who are generally small to medium sized businesses. Hardware, software, supplies, service and facilities management are bundled together as a systems solution.
ITEC's e-commerce initiatives, www.dealseekers.com and www.color.com , provide sales and service support for consumables such as inks, toner, and paper, and for color education and software products.
"Through strategic acquisitions of existing office products resellers,'' said Bonar, "ITEC has been able to assemble an infrastructure of competent sales and support personnel. This acquisition strategy has the potential to leverage our access to capital and customers throughout the world, with the local expertise of small value-added resellers who find it difficult to grow their businesses when competing with larger companies.''
Personnel Management Systems
As ITEC changes its focus from development and manufacturing to providing business services, management identified the opportunity to expand into personnel and facilities management. ITEC hopes to leverage its office products and systems expertise with that of offering professional employer organization (PEO) services.
The first such acquisition for ITEC was SourceOne Group, Inc., a regional PEO, that provides small to medium-sized comprehensive human resource services such as payroll administration, employee benefits, human resource compliance and administration, and other human resource management services.
For the six months ended September 30, 2001, SourceOne had revenues of approximately $25 million. SourceOne is now a wholly-owned subsidiary of ITEC.
The PEO business provides a broad range of services associated with staff leasing and facilities management. Competitors include Administaff, Inc. and TeamStaff, Inc.
"The PEO industry is growing rapidly,'' explained Bonar. "Profitability depends on (1) economies of scale leading to greater operating efficiencies; and (2) value-added services such as facilities management, training, education, Internet support, and product sales such as those offered by ITEC.''
Employment Practice Management
As ITEC fully integrates its office products and PEO operations, management plans to provide employment practice management services on the Internet. ITEC will serve as an applications service provider (ASP) through which the Company will provide human resources administration and workflow management, outsourcing of facilities management, staff, ancillary HR services, and payroll services.
"This e-business model represents a comprehensive strategy designed to add new revenue streams and to extend the Company as a full-service provider of services that reduce drag on productivity and profitability for our clients,'' said Bonar.
ITEC's transformation from a developer/manufacturer to a marketing/services organization has been evolving over the past 12 months. The long-term viability of the ITEC business plan depends upon its ability to leverage its expertise in imaging products and services. To that end, ITEC, through strategic acquisitions, has been able to expand its market to that of providing imaging products and services.
The reliance upon the purchase and sale of hardware products such as printers, copiers, plotters, scanners, and other imaging devices rather than the exclusive sales of ITEC-branded products, has served to broaden the customer base of the Company, while increasing gross margin and reducing operating expenses.
The use of ITEC's expertise in imaging products design and development in both hardware and software is being leveraged to provide service and support to companies who need hardware/software integration services, color management, and training. The service and training components of ITEC solutions is expected to contribute to higher margins, repeat business (particularly for consumables), and better customer retention.
In order to grow the Company more rapidly, ITEC has identified an opportunity to serve its target markets (small to medium sized businesses) by providing certain administrative services. The personnel services (PEO) industry is large and growing. The PEO industry offers ITEC a way to leverage its office products and services to a large customer base. And, a PEO can leverage ITEC products and services to improve services, customer retention, and profits.
Moving forward, ITEC plans to further expand its administrative services onto the Internet through an ASP structure. Providing products and services on the Internet has proven to be efficient and profitable, especially if used as an extension of the core business. All of the basic products and services offered by ITEC can be provided in an automated, on-line environment.
ITEC shareholders and investors are urged to read ITEC's SEC filings on Form 10-Q and 8-K, which will include further details of the SourceOne acquisition.
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