By Agnieszka Opalka
Futurelogic, Inc. is a leading designer and developer of customized small format embedded thermal printer solutions. Headquartered in Glendale, CA, the company customizes its products to meet the specific demands of its customers in a variety of end markets, including cashless slot machines, medical devices, and gas dispensers and is currently working on applications in the vending and lottery machines and produce labeling market segments. The company has been exceptionally successful in the gaming market, where it dominates with its best selling printer, considered the industry's standard.
Unlike traditional ink or laser toner printers that print by moving from side to side across the paper and rely on ink and toner consumables, thermal printers print an image onto thermal paper using an array of heating elements, or dots, to produce a sharp image across the paper. With fewer moving parts and no need for ink or toner, thermal printers offer a compact, economic, and reliable alternative to impact printers while delivering much higher quality printouts. Thermal printing is preferred particularly for small format (less than four inches), unattended printing where the size requirements and failure rates of traditional ink or laser toner printing are not suitable.
The thermal printing industry has experienced recent growth due to the numerous benefits it provides and its ability to outperform large inkjet and toner printers in the area of small format printing. Thermal printers continue to gain popularity in the marketplace due to their ability to provide high quality and resolution, consistent darkness of print, fast print speed, mechanical reliability and simplicity, quiet operation, fewer paper jams and extremely low failure rates due to few mechanical components. These recognized beneficial features have caused numerous industries that require small format printing to turn to thermal printing rather than laser toner and inkjet printing. A major end user of thermal printers, the gaming market, is experiencing a trend towards conversion of traditional slot machines to cashless slot machines that don't employ cash, but rather tickets and vouchers.
In a December 18, 2002 transaction, Futurelogic, Inc. was acquired by ClearLight Partners, a $300 million private equity fund based in Newport Beach, CA. In support of the buyout, American Capital Strategies Ltd. (Nasdaq: ACAS) provided $27 million in financing, including a revolving credit facility, senior term notes, senior subordinated debt, junior subordinated debt and common equity. ClearLight Partners and Futurelogic's management have jointly invested in the equity.
"American Capital is backing a leading company that continues to address the needs of niche markets with its customized thermal printer solutions," said American Capital Managing Director and Principal Jeri Harman. "With a history of steady revenue growth, strong relationships with major players in each of its markets, promising growth prospects in the end markets it serves, and a dedicated management, we foresee the company continuing to grow."
"Futurelogic's gifted management has established the company's technological leadership and dominant market share by leveraging significant barriers to entry: high regulatory thresholds; the need for uniformity in a complex environment within their customer base; and the consistent production of reliable, maintenance free printers," said American Capital Managing Director and Principal Jeri J. Harman. "This was our first opportunity to close a transaction with ClearLight Partners and we look forward working with ClearLight more in the future."
"American Capital's ability to invest at all levels of the capital structure was critical to the success of this transaction," said ClearLight General Partner Rob Healy. "We look forward to helping Futurelogic capitalize on its strong historical growth."
Futurelogic was founded in 1983 by current Vice President of Manufacturing/Quality Control, Mark Meyerhofer. Originally an electronic design consulting business, the company turned its focus to specialized thermal printer design and manufacturing and began serving OEMs and companies that required thermal printers to be embedded and integrated into larger product designs. By identifying a promising market opportunity and addressing the needs of neglected niche markets, Futurelogic has continued to succeed since its inception.
With nearly 20 years experience, Futurelogic has secured its position in the industry by strategically differentiating itself from competitors, specifically large printer companies. Large printer companies, which focus on mass production of standard printer solutions, are unsuitable options for many companies and OEMs that seek small, specialized solutions. Through collaboration with its customers, Futurelogic is able to develop products that meet the specific needs of each of its customers, thereby ensuring quick development of new product designs and complex solutions between the printer and OEM product. This distinct, specialized approach, along with its recognized high quality and advanced software technology, has enabled the company to establish long-lasting relationships with key customers in all markets it serves, including cashless slot machines, medical devices, gas dispensers, vending and lottery machines and produce labeling. Moreover, Futurelogic's unique ability to understand the bridge between the printing machinery and the firmware technology required to operate it enable the Company to stay abreast of any changes in technology, and thereby continue to outperform its competition.
In addition to its competitive advantages, Futurelogic has been exceptionally successful in the gaming market by capitalizing on the market's barriers to entry and thereby solidifying its dominant market position. As a highly regulated industry, it is required that all components of cashless slot machines undergo rigorous testing for approval, thereby making it highly unlikely that a product will be replaced due to the associated high switching costs. As all printers have different firmware, printers from multiple manufacturers would not operate together on the same system. This has resulted in a recent trend amongst casinos to move toward a universal print solution in order to ensure efficiency and minimize operating costs.
With strong relationships with key players in all end markets it serves and recognized technological leadership, Futurelogic is in an excellent position to expand its customer base as it enters more niche markets and continues to develop new, customized printing solutions.
