5501 American Blvd. West
Minneapolis, Minnesota 55437
Telephone: (952) 830-3300
Fax: (952) 830-3293
Web site: http://www.jostens.com
Incorporated: 1906 as Jostens Manufacturing Company
Sales: $807.2 million (2004)
NAIC: 339911 Jewelry (Including Precious Metal) Manufacturing; 511130 Book Publishers
Jostens, Inc. is best known as a manufacturer of high-quality class rings for high school and college students. For more than four decades, the company also has produced specially commissioned rings for contestants in the World Series, the Super Bowl, the NBA Championship, and the NHL Stanley Cup. Despite such high-profile coups and new ventures, the school products segment provided Jostens the lion's share of revenues. A promising educational software venture, for example, ended with disappointment and contributed to the interruption of a three-decade-long streak of earnings and revenue increases. Taken private in 2000, the century old company found itself being traded three times in the span of four years.
Begun in 1897 by Otto Josten, Jostens was originally a small jewelry and watch repair business located in Owatonna, Minnesota. In 1900 the founder began manufacturing emblems and awards for nearby schools and in 1906, the year of incorporation, Josten added class rings to his product line, to be sold to schools throughout the Midwest. The company remained small and relatively inconspicuous until Daniel C. Gainey, a former teacher and football coach, was hired in 1922 as the first full-time Jostens ring salesman. The rings at the time carried no gemstones and were all one size. Yet Gainey, with his dynamic and winning personality, secured sales of $18,000 within his first year. The amount was so large that he was forced to return to Owatonna to ensure personally that production demands could be met. By 1923 Gainey had enlisted four more sales representatives—all part-time—and revenues quickly rose to $70,000. Thus class rings became the central concern for the Jostens Manufacturing Company. In 1930 the watchmaking and repair business was sold and the capital was used to construct the company's first ring manufacturing plant. Three years later, with sales approaching the $500,000 mark, Gainey was elected chairman and CEO, positions he held until his retirement in 1968. According to several accounts, Gainey's greatest contribution to the company was his establishment and motivation of a nationwide sales force. Direct sales through independent representatives were the primary source for the company's virtually uninterrupted growth.
During World War II Jostens contributed to the war effort by adapting its plant and equipment to manufacture precision parts and other materials. Major expansion came following the end of the war. In 1946 the company added graduation announcements to its offerings; in 1950 Jostens launched the American Yearbook Company. Both moves further tapped the education market and made the company less dependent on seasonal sales from rings. In 1958 the company made its first acquisition, purchasing the Ohio-based Educational Supply Company, a manufacturer of school diplomas. Jostens went public the following year and a seemingly unending series of acquisitions, which fortified the company's dominance of the high school and college products markets, characterized the next ten years. Sales for 1962 totaled $26 million; three years later the company obtained its listing on the New York Stock Exchange. In 1968 the company expanded into the Canadian photography market with the purchase of Winnipeg-based National School Studios. By this time Jostens was the undisputed domestic leader in both class ring and yearbook sales. Gainey's retirement, however, coupled with Jostens' relocation to Minneapolis in 1969, triggered a tumultuous period that nearly shipwrecked the then nearly $100 million company.
Star Tribune columnist Dick Youngblood, reflecting back on this period, wrote: "Jostens had been in turmoil since the late 1960s, when company patriarch Daniel C. Gainey, a major stockholder, pretended to retire as CEO. The trouble was, Gainey remained active enough over the ensuing four years to force the resignation of three chairmen and a president, including his own son." In 1970, amidst the turmoil, a top-performing Jostens salesman and division manager was appointed executive vice-president and effectively became the company's chief operating officer. His name was H. William (Bill) Lurton. Unbeknownst to senior management, however, including Lurton, Gainey had begun negotiations with acquisition-hungry Bristol-Myers. Once Gainey's plan surfaced, several top Jostens officials tendered their resignations; Lurton was among the few who remained. Although Bristol-Myers halted negotiations after the management fallout, Jostens remained in peril under the leadership of replacement CEO Richard Schall. A former top official at General Mills and Metro-Goldwyn-Mayer, Schall, according to Corporate Report editor Terry Fiedler, "presided over Jostens for about 18 months before the advent of what amounted to a palace coup." An outsider with little knowledge of the business, Schall had brought in his own management team and radically disrupted the friendly, teamwork-oriented corporate culture and threatened to move the company too quickly into new, uncharted territory. "The Lurton-led old guard demanded that Schall leave, threatening to leave themselves if he didn't. The directors sided with the old guard and in February 1972 Lurton became CEO of Jostens."
Twenty-one years later, Lurton remained in the position, well-liked by his employees and greatly esteemed by his fellow Minnesota CEOs. During his early tenure he moved quickly to reestablish Jostens as a thriving, focused company. Diversification beyond educational products, thought to be the key to the company's future, was renewed only for a short time before being curtailed in large part. In 1974 Lurton divested Jostens of a greeting cards manufacturer and a men's accessories business. Five years later he also rid the company of interests in wedding rings and library supplies. Jostens Travel, first organized in 1972, also was dissolved before the end of the decade. Jostens did keep at least one peripheral acquisition, Artex Enterprises, for the long term. A manufacturer of custom-imprinted athletic and casual wear, the Artex label survived within the Jostens Sportswear division and was marketed primarily through mass merchants.
Aside from the aftermath of the Gainey debacle, Lurton's greatest challenge as a CEO came in the late 1970s and early 1980s, when demographic studies clearly showed that the last of the baby boom generation had graduated from high school and, therefore, beyond the core products line. According to Jackey Gold in Financial World , "Lurton's worry was that declining high school enrollments would shake Wall Street's faith in the company's ability to perform. Jostens' board of directors, too, became infected by such concerns and in August 1982 approved Lurton's proposal for a management buyout." The decision to go private was, for lack of financing, never realized; neither, however, was the company's forecasted decline.
Instead, Lurton launched a concerted campaign to impress Wall Street and counteract potential downswings in profits by boldly entering the proprietary schools business. Beginning in 1983, he acquired San Gabriel Colleges of California and Metridata Education Systems of Kentucky. Three additional private vocational schools were acquired in 1984. That same year Jostens also entered the audiovisual learning and educational software fields by acquiring the Educational Systems Division of Borg-Warner Corporation, which it later renamed Jostens Learning Systems. The new flurry of purchases carried sales to more than $400 million in 1985, when Jostens was accorded Fortune 500 status for the first time. In 1986 the company acquired Illinois-based Prescription Learning Corporation (PLC). A developer of customized computer hardware, software, and support services for the educational market, PLC was merged with Education Systems Corporation three years later to form Jostens Learning Corporation (JLC), a wholly owned subsidiary.
Meanwhile, to the consternation of several analysts, Jostens divested itself of its burgeoning list of proprietary schools, all 36 of them. The company sold the schools to CareerCom Corp. in 1987 for a sizable profit. As then Education Division spokesperson Gary Buckmiller explained, "We didn't view the sale as getting out of the proprietary school business, but rather as changing the way we're involved in the business." The involvement, through JLC, has become one of support and service for, rather than management of, instructors and curriculum. Jostens' one remaining non-educational venture, the Business Products Division, also was sold in 1987, for a gain of $40 million. Now 90 years old, the company had returned to its roots in its service emphasis. By this time Jostens boasted an employee workforce of some 9,000, in addition to an independent sales force numbering approximately 1,400.
Through tradition and technology, innovation and partnerships, Jostens continues to create powerful new ways for people to express their pride and mark life's biggest moments.
Jostens is a team of employees and independent business partners. Our aim is to be the world leader in providing achievement and affiliation products and to constantly deliver exceptional performance.
Jostens' nearly 27 percent average return on investment between the years 1983 and 1989 brought kudos from all corners for the CEO. Fortune magazine highlighted Jostens among its 500 in 1989 as one of the "Companies That Compete Best." In 1990 Lurton was accorded the honor of "Executive of the Year" by Corporate Report Minnesota ; further recognition came the same year from Industry Week , which celebrated Lurton as one of "America's Unsung Heroes." Until fiscal 1992 the news regarding Jostens and Lurton continued to be highly favorable. The 1990 purchase of Gordon B. Miller & Co. (the oldest recognition products company in North America) and Lenox Awards augured well for the company, as did its multimedia agreement with Western Publishing's Little Golden Books. Even the 1992 performance reports were respectable, considering the lingering effects of a recession: net sales increased 2 percent, while net income showed a 4 percent decline. The announced consolidation of jewelry manufacturing and photo processing operations were expected to contribute to a quick rebound. Jostens hoped that rising school enrollment, a strengthening economy, and a new management team for the Sportswear group would improve the company's performance.
Also fueling hopes for the future was JLC, the leader of the computer-based instructional technology field. Fiscal 1992 revenues for JLC totaled $172 million, or approximately 20 percent of all corporate gross income. JLC, operating in a marketplace that experts estimated as only 15 percent tapped, appeared poised for fast-paced growth, especially considering its August 1992 purchase of chief competitor Wicat Systems and its arrangement with Texas-based Dell Computer to market a Jostens line of 386 and 486 systems. Lurton expected to see an increase of about 25 percent annually. His goal was to return Jostens to "double-digit growth in sales and earnings."
Jostens posted a net loss of $12.1 million in fiscal year 1993. According to an April 1994 Youngblood article, about half of the loss was due to a "poorly managed" consolidation of the photography operation. Compounding problems, JLC missed some key changes in the market, including tightening school budgets and an accompanying shift in demand toward less expensive products and systems.
Lurton announced his retirement as chairman of the board and CEO in October 1993. Robert P. Jensen, a director since 1980, succeeded him as chairman. The combination of missed earnings projections, losses in the earnings column, and nose-diving stock prices had raised the ire of stockholders and Lurton's long, successful tenure ended on a sour note. Yet, under his leadership, the company had put together an enviable succession of sales and earnings increases even while the student population was shrinking.
Robert C. Buhrmaster, a Corning Inc. senior vice-president who came on board as chief of staff in December 1992 and moved into the president's post in mid-1993, succeeded Lurton as CEO and led a revamping of the company. In rapid order, the sportswear division was sold. Veteran executives were replaced. The photography division and JLC were downsized. The corporate culture itself changed as management layers were cut and divisions reported more closely to headquarters. The design and marketing of traditional products such as rings were also re-examined. But losses continued into a second year; underperformance by JLC contributed to the $16.2 million deficit.
Jostens sold JLC to a group led by Boston-based investment firm Bain Capital, Inc. in June 1995 for $90 million in cash and notes. Wicat Systems, the computer-based aviation training division, was sold separately. The sales marked the end of a two-year restructuring and turned emphasis back on traditional business areas of making and marketing class rings, yearbooks, and other recognition products.
Profits for fiscal 1995 improved in all areas but JLC and net income returned to the plus column with $50.4 million in earnings on $665.1 million in sales. The restructuring and other operational changes resulted in $11 million in cost savings, according to the Jostens annual report. Flush with cash from the JLC sale and the company restructuring, Jostens repurchased seven million shares of stock for $169.3 million in September 1995 through a Modified Dutch Auction tender offer. But the company failed to meet earnings expectations in the latter half of 1996, and Wall Street reacted negatively.
Buhrmaster continued to fine-tune Jostens in 1997. The company's 100th year in business was celebrated in part with a new logo and identity system. For the first time Jostens consciously worked to extend brand awareness and preference. The effort was part of the larger mission to transform the company from a "ring and yearbook" business to "one that people call upon to help celebrate their most important moments."
The company cut additional costs with the transfer of some ring production to Mexico. In addition, the purchase of the Gold Lance class ring brand from Town & Country Corporation in July 1997 gave Jostens a strong presence in the retail class ring business, which was dominated by companies such as J.C. Penney and Wal-Mart.
Although the retail market accounted for about 33 percent of all U.S. annual class ring sales, Jostens' name-brand appeal helped the company maintain a dominant market share. Scott Carlson wrote in a May 1998 St. Paul Pioneer Press article, "Industry observers and Jostens' competitors attribute the company's market strength to making quality products, providing reliable service to students and parents, and hiring enterprising independent sales representatives who build long-term relationships with schools and gain access for in-school marketing." But Jostens' trade practices had drawn fire as well as praise.
Dallas-based Taylor Publishing, one of only two national yearbook companies competing against Jostens (the other was Herff Jones), claimed that the Minnesota company had tried to monopolize the Texas yearbook market. In May 1998 Taylor won a multimillion-settlement, which Jostens planned to appeal. Jostens had been under the scrutiny of the attorney general's office of Minnesota in the mid-1990s in regard to "exclusive supply contracts" with schools. Although the company denied that its sales practices were monopolistic, Jostens agreed to avoid using any techniques that would imply that the schools were locked in long-term exclusive deals. Jostens had been revamping its sales operations as a part of the general company restructuring.
Buhrmaster, who added the company's chairmanship to his roles as president and CEO in the beginning of 1998, had returned the company to profitability. Yet growth continued to be a concern: total sales for 1997 were up only 4.8 percent. Jostens' mature school market had limited growth opportunities, but the company planned to make the most of those through products such as the "Millennium" ring collection, which capitalized on the interest in the new century. The smaller recognition segment of the business, which primarily served U.S. and Canadian corporations and businesses, directed its focus on the fans of professional sports teams for added sales. Additional plant consolidation and infrastructure improvements that continued into 1998 delayed the implementation of any major expansion plans. The success of Buhrmaster's tenure as the head of the century-old business would be measured by his ability to build markets for Jostens brand-name products while embarking on new business ventures.
During 1999, Jostens took a hit from Y2K computer problems. The computer glitches caused lost and missed deliveries and the possible loss of future business, according to Knight Ridder/Tribune Business News . These losses were not the company's only concern. Core ring and yearbook sales were falling below expectations.
Investcorp led a leveraged buyout of Jostens, Inc. in 2000. The deal was valued at approximately $950 million, according to Buyout . Charles Philippin, a member of Investcorp's management committee, said the investment group's interest in a company such as Jostens was linked to the growth potential for the commemorative school products sector. The number of people in the high school and college age-bracket was on the upswing.
"Investcorp will assist Jostens in a number of Internet initiatives, Philippin said, using technology to further the company's growth. For example, in the future, students will be able to order Jostens' products online, while customizing them to match their individual interests. Philippin said providing these services should increase the company's buy rate by making the products more readily available to its customers," Leslie Green wrote.
During late 2001, Jostens sold off its loss ridden recognition division and tightened its focus on school-based operations. The company also closed a distribution center in Tennessee and a manufacturing plant in Canada. The moves helped Jostens post earnings of $4.1 million versus an $18.7 million loss in 2000.
Investcorp and other equity owners, including MidOcean Partners LP (DB Capital Partners), First Union Leveraged Capital, and Northwestern Mutual Life Insurance Co., sold Jostens in the summer of 2003. DLJ Merchant Banking Partners, a unit of Credit Suisse First Boston (CSFB) acquired the country's largest school yearbook and ring company in a deal valued at about $1.1 billion, according to the Daily Deal . During 2002, Jostens' sales were $756 million: 42 percent from yearbooks; 27 percent from jewelry, primarily rings; and 24 percent from diplomas, announcements, caps and gowns.
But the Jostens roller coaster ride was not over. The company lost $25.8 million during the 2003 fiscal year on sales of $788 million. In the summer of 2004 another ownership change was launched. Kolberg Kravis Roberts & Co. (KKR) would come on as a new equity investor, and Jostens was to be combined with educational textbook publisher Von Hoffmann Corp. and sample product maker Arcade Marketing under a new holding company.
The deal prompted the early change in leadership. Jostens President Michael L. Bailey would succeed Buhrmaster as CEO, and Jostens would continue to operate independently under the new structure. Marc Reisch, senior KKR advisor and chair of Canada's Yellow Pages Group, would lead the holding company, 90 percent jointly owned by KKR and DLJ. The remaining 10 percent of the company would be held by Jostens' management and existing investors.
As the complex deal, valued at $2.2 billion, worked toward completion, Jostens began marketing rings to fantasy football leagues via Internet sites. U.S. fantasy sports games participants numbered about 15 million in 2003, according to a Providence Journal article. Jostens had produced rings for 25 out of 38 Super Bowl victors and was running with that connection. Each Jostens-made diamond studded ring cost the New England Patriots in excess of $15,000. Fantasy league rings fell in the $99 to $400 range. By comparison, high school students were paying from $270 to $1,155 for their keepsakes.
By September 2004, credit for Jostens Intermediate Holding Corp. (Jostens IH Corp.) and the recapitalization of Jostens, Von Hoffmann, and Arcade by KKR and DLJ was set in place. CSFB was an underwriter along with Bank of America and Deutsche Bank. In early October, the transactions required to create the new specialty printing, marketing, and school-related affinity products and services organization were completed. Jostens IH Corp. produced 2004 fiscal year sales of about $1.5 billion. Jostens sales contributed $807.2 million to the total, a year over year increase of 2.4 percent.
In February 2005, the combined company and holding company took on new names, Visant Corporation and Visant Holding Corp., respectively. In April, Jostens hit the sports news again, when it delivered World Series rings to the Boston Red Sox. At 500, it was Jostens' largest championship ring order ever. Given that the Sox' last victory came in 1918, just 21 years into Jostens' 108 year history, it was no wonder.
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—Jay P. Pederson
—update: Kathleen Peippo