Decora Industries, Inc. History

Address:

One Mill Street
Fort Edward, New York 12828
U.S.A.

Telephone: (518) 747-0681
Fax: (518) 747-5089

Public Company
Incorporated: 1983 as Utilitech, Inc.
Employees: 926
Sales: $176.6 million (fiscal 1999)
Stock Exchanges: NASDAQ
Ticker Symbol: DECO
NAIC: 32611 Unsupported Plastics Film and Sheet (Except Packaging) Manufacturing; 32613 Laminated Plastics Plate, Sheet and Shape Manufacturing; 42183 Industrial Machinery and Equipment Wholesalers; 42261 Plastics Materials and Base Forms and Shapes Wholesalers

Company Perspectives:

Our market and product strategy is to increase sales in the well established markets, such as the U.S. and Europe, through better product merchandising, improved consumer communication and broader consumer awareness, while opening up new regions worldwide with the entire Con-Tact and d-c-fix product range.

Company History:

Decora Industries, Inc. is the world leader in the development, manufacture, and sales of consumer decorative products under the brand names Con-Tact in the United States and d-c-fix internationally for its self-adhesive surface coverings. It also manufactures and markets specialty industrial and commercial products. The company has production plants in Fort Edward, New York--also the site of corporate headquarters--and Weissbach, Germany.

Con-Tact Manufacturer: 1952-90

Decora Corp. got its start in 1945 and introduced the decorative vinyl self-adhesive covering it patented as Con-Tact in 1952. This was actually a film: printed, surface-treated, and specially adhesive-coated, then laminated in a paper backing. The marketing and distribution of this product, manufactured at Decora's plant in Fort Edward, was licensed to United Merchants & Manufacturers, Inc. (UM & M), a large vertically integrated firm that specialized in textiles and placed the product in the Comark Plastics Division of Cohn-Hall-Marx Co., a UM & M subsidiary. By the end of fiscal 1956 (ended June 30, 1956), Con-Tact was available in 22 colors and was being used as a wall and floor covering as well as a shelf liner. By 1960 Con-Tact was billed as the world's largest-selling self-adhesive decorative plastic.

UM & M purchased Decora Corp. in 1959 and began producing other specialized vinyl products in Fort Edward, especially the self-adhesive product trademarked as Kwik-Kover and a fabric known as "Comark" Patent Vinyl. Nylon multicolored flocked, foil, and printed Con-Tact designs, featuring more depth and texture, were introduced in the late 1960s. By 1970 the Con-Tact name had been licensed to several producers outside the United States. UM & M was calling it the world's most popular do-it-yourself home decorating aid, available in more than 200 patterns, washable, and easily applied to any surface. A chrome line was added in 1971. The Decora plant was enlarged, and new machinery was added.

The Arab oil embargo of 1973 interrupted the vinyl supplies needed by UM & M's Comark Plastics Division, since vinyl was produced from petrochemical raw materials. The Decora plant also sustained a seven-week strike. Despite these setbacks, Con-Tact commercials were introduced on daytime television over more than 200 CBS stations and affiliates. During fiscal 1975 the plastics division introduced a second generation of Con-Tact employing A-21, an innovative adhesive system permitting the product to be lifted and repositioned as it was being applied.

UM & M subsequently fell into bankruptcy and, to become solvent again, sold many of its operations. In 1981 it sold the Con-Tact brand name and some inventory to Carlan Inc., a company based in Stamford, Connecticut. Before the year had ended, however, Carlan had been acquired by Rubbermaid Inc. Rubbermaid introduced a totally new marketing program for Con-Tact, which, a company executive told a Wall Street Journal reporter in 1982, had a stodgy image as "something for 40- and 50-year-olds to hide something, like a burned countertop." By contast, Rubbermaid began trying to market Con-Tact to younger consumers, particularly upscale, two-income families, as a "self-expression," do-it-yourself product. A television ad urged viewers to "Brighten up a wall that's smart, even make a piece of art. Go from practical to whimsical."

Based in Statesville, North Carolina, Rubbermaid Specialty Products Inc. was established in 1983 by combining the shelf liner business of the company's Home Products Division with Con-Tact. The operation remained part of the Home Products Division. By the end of 1983 Rubbermaid had introduced 31 new patterns and colors to replace what it called "outdated designs." Eight more patterns and colors were introduced in 1984 and nine in 1985. In 1986, 29 new Con-Tact patterns were introduced, including Chalkboard, Gro-Chart, and Christmas patterns. The following year, Con-Tact introduced Letter Perfect, a lettering system featuring peel-off self-adhesive letters and numbers. In 1988 it introduced abstract patterns and became part of Rubbermaid's Housewares Products Division, headquartered in Wooster, Ohio.

A Broader Role in the 1990s

UM & M, which still owned and operated Con-Tact's Fort Edward production facility as its Decora division, sold the 230,000-foot plant in 1990 to Utilitech, Inc. In recent years Decora had been expanding its business into other areas of pressure-sensitive materials, including specialty tapes, roll-label stock, and siliconized release paper. Nevertheless, in fiscal 1991 (ended March 31, 1991), 87 percent of the $35.5 million in revenue earned by Decora Manufacturing Inc.--a subsidiary of Utilitech--came from its role as exclusive manufacturer of Con-Tact. In fiscal 1992 Con-Tact accounted for 96 percent of the Fort Edward operation's revenue of $40.8 million.

After Los Angeles-based Utilitech sold its Yorkville Industries Inc. lighting products subsidiary in 1992, it changed its name to Decora Industries, Inc. and moved its headquarters to Fort Edward. The manufacturing plant's operations became virtually the sole business of Decora Industries when it discontinued ComTel Inc., its telecommunications equipment manufacturing subsidiary, in 1994. By the end of 1992 Decora also was developing Wearlon, a new anticorrosive polymer used on the backing paper of Con-Tact sheets and based on its patented and proprietary A-21 and A-23 water-based adhesive systems.

Decora expanded its relationship with Rubbermaid in 1995, when the two companies signed a four-year agreement consolidating at Fort Edward manufacturing processes related to the Rubbermaid decorative covering business currently housed in Statesville. A Decora executive said the company had been fabricating certain Rubbermaid-marketed products--including Fibercraft wall coverings and Foam Cushion shelf liner as well as Con-Tact adhesives--in Fort Edward, then sending them to Statesville to be cut into consumer-sized rolls and packaged. These final two steps were now moved to Fort Edward. Decora also had by this time negotiated a licensing and technology development agreement with B.F. Goodrich Co. for its Wearlon line of specialty coatings.

In 1997 Decora expanded its operations significantly by acquiring a 73 percent interest in Konrad Hornschuch AG, one of the world's largest independent manufacturers and marketers of consumer self-adhesive products, including d-c-fix, developed in 1957 and similar to Con-Tact. Hornschuch also was manufacturing decorative and functional films for use by original equipment manufacturers in the automotive, building, furniture, handbag, shoe, and interior decoration markets. Decora paid $35.2 million for this German acquisition, which raised its sales from $41.1 million in fiscal 1997 to $98.4 million in fiscal 1998. Net income dropped from $3.6 million to $2.7 million, however. By the end of fiscal 1999 Decora had raised its share of Hornschuch to about 90 percent.

The relationship with Rubbermaid came to an end in 1998, when Decora purchased the company's Decorative Coverings Group for $55.1 million, with another $2.5 million held in escrow for payment depending on 1998 results. This Rubbermaid division had revenues of $70 million in 1997. Over the years, Decora had sold 90 percent of the Con-Tact it produced to Rubbermaid, but it had recently been adversely affected by a nine percent fall in Rubbermaid's decorative coverings sales in 1997 and by the company's decision to adopt a just-in-time inventory system. The acquisition consisted of, in addition to the Con-Tact product line, Rubbermaid's Shelf Liner light-adhesive line and Grip Line nonadhesive covering line, the latter being manufactured by a third party pursuant to the terms of an exclusive manufacturing agreement.

After the Rubbermaid acquisition, Decora established a sales office in the Cleveland area and began meeting with large domestic retailers such as Target Stores, Wal-Mart Stores, and Kmart, to assure them that Decora could distribute the acquired products without Rubbermaid's help. Company officials also indicated that they wanted to increase sales in nonhousewares sectors, such as arts, crafts, stationery, and do-it-yourself repairs. Specifically, the company was seeking greater exposure in Home Depot stores for refurbishing cabinets, counters, and windows.

With the Rubbermaid addition, Decora's net sales nearly doubled, to $176.6 million in fiscal 1999. After an extraordinary charge of $2 million, it registered net income of $1.7 million for the year. The company's long-term obligations came to $164.7 million at the end of the fiscal year, compared with only $18.8 million two years earlier.

In 1999 Decora acquired the assets of EtchArt Inc. of Orlando, Florida, manufacturer and marketer of "Wallpaper for Windows," a line of glass coverings to give windows the appearance of etched glass. EtchArt products were being sold mainly through do-it-yourself channels of distribution, including home and decorating center retailers and mail order catalogs.

Decora, which in 1998 had implemented a 1-to-5 reverse stock split to raise its share price and increase its appeal to institutional investors, bought back warrants held by a Textron Inc. trust in 1999 for stock and cash valued at about $3 million.

1945:Formation of Decora Corp.

1952:Development of Con-Tact self-adhesive covering.

1959:Sale of Decora to United Merchants & Manufacturers, Inc.

1981:Rubbermaid Inc. buys Con-Tact name and marketing rights.

1988:United Merchants sells Decora to Utilitech, Inc.

1992:Utilitech changes its name to Decora Industries.

1997:Decora purchases majority stake in Konrad Hornschuch AG.

1998:Decora buys Rubbermaid's Decorative Coverings Group.

This reduced Textron's holdings, counting warrants, in Decora from 19.4 percent to 3.5 percent.

Decora Industries in Fiscal 1999

The United States accounted for 37 percent of Decora's revenues in fiscal 1999, with Germany accounting for 29 percent and the rest of the world for the remaining 34 percent. Consumer products represented 69 percent of Decora's revenues. These branded, self-adhesive decorative and surface coverings were being marketed primarily under the Con-Tact and d-c-fix names for a wide range of applications, including shelf lining, glass covering, furniture and door repair and resurfacing, arts and crafts, and general surface protection.

Con-Tact was the leader in the U.S. consumer self-adhesive decorative market and was being sold primarily in the housewares departments of mass merchandisers in roll form, with a wide range of finishes, including functional coatings, printed patterns, solid colors, and clear and textured films. In its shelving category, Decora also was selling Con-Tact brand Shelf Liner and Grip Liner product lines, also as decorative and functional covering materials. Hornschuch's consumer decorative coverings d-c-fix products had been sold historically through the hardware and do-it-yourself markets rather than as housewares. Germany accounted for about one-third of d-c-fix's sales in fiscal 1999, with the remainder primarily in other parts of Europe, the Far East, and the Middle East.

Decora's commercial and industrial products accounted for the remaining 31 percent of net sales in fiscal 1999. In the United States, the company was marketing a range of proprietary industrial coatings under the Wearlon brand name for a range of specialized applications and various other industrial products, including commercial laminating, coating, and printing services and a line of high-quality hazardous marking tapes sold under the Cobra brand name. Hornschuch's industrial business was more important, accounting for 49 percent of its net sales in fiscal 1999. Most of these sales were of films processed specifically for the fashion, automotive, and laminate markets, with the former including synthetic leathers and other materials used in the manufacture of shoes, upholsteries, and handbags under the brand name Skai.

In addition to its owned plant and corporate headquarters in Fort Edward, Decora was leasing a small manufacturing/office facility in Longwood, Florida and an office facility in North Ridgeville, Ohio. Hornschuch owned a million-square-foot manufacturing and office facility in Weissbach, Germany.

Principal Subsidiaries: Decora, Incorporated; Decora Industries Deutschland GmbH (Germany, including about 90 percent of Konrad Hornschuch AG).

Principal Competitors: American Biltrite Inc.; Avery Dennison Corp.; Minnesota Mining & Manufacturing Co.

Decora Industries, Inc. History

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