Roll International Corporation
Roll International Corporation
Sales: $1.57 billion (1998)
NAIC: 551112 Offices of Other Holding Companies
Roll International Corporation, a private company, is made up of a collection of companies owned by husband-and-wife team Stewart and Lynda Resnick. The biggest and best known of the operations are the Franklin Mint, the world’s largest collectibles company, and Teleflora LLC, the world’s largest florist network. The other Roll subsidiaries are pistachio producer Paramount Farming Co., citrus grower and packer Para-mount Citrus, processor and marketer Paramount Farms, and Bundy Properties, which owns and manages commercial properties in Los Angeles and Pennsylvania.
Forming a Holding Company in the 1960s
The Resnicks started their empire by buying Teleflora, a flowers-by-wire company. They then bought American Protection Industries Inc. (API), a security company. API Alarm Systems, which started in the 1960s, provided both patrols and alarm systems. The alarms, installed in retail, office, and indus-trial buildings as well as in houses, were connected to monitoring centers. If an alarm went off, an operator at the center could summon the closest police or fire department. By 1987, it was the largest alarm company in California.
The Resnicks made API their holding company, with API Alarm Systems another subsidiary. In 1989, they sold the subsidiary to the British company Automated Security Holdings plc (ASH) for $105 million. At that time, API Alarm Systems served some 21,000 customers and had seven central stations. The Resnicks, however, kept the API name. In 1993 they renamed their holding company Roll International after an agri-cultural company they had acquired.
Late 1970s Addition of Teleflora LLC
Sending out-of-town flower orders by wire began in 1910 when two U.S. florists agreed to telegraph each other orders and then settle up on costs. Thus was born Florists’ Trans world Delivery Association (FTD). In 1934, attorney Edwin S. Douglas founded a rival service. Originally called Telegraph Delivery Service, the name was changed to Teleflora. The Res-nicks bought the California-based company in 1979 after it had changed hands several times.
A year after the purchase, Lynda Resnick introduced the concept of keepsake containers and revolutionized the floral delivery business. Instead of just wiring a flower arrangement or a dozen flowers, people could order their flowers in a special vase or basket that the receiver could use after the flowers died.
In 1987, the company set up its Teleflora Technologies division, providing retail members a computer system with software specifically designed for florists, and Creditline, which allowed members to process credit card purchases immediately. The company also published an award-winning magazine for the retail floral business.
But by the early 1990s customers had options other than wire services for out-of-town orders. Toll-free telephone numbers were the biggest competition, although catalogs and online delivery services added to the problem. In 1993, Roll made the first of its three bids for FTD. A year later, the FTD board rejected Roll’s final bid of $175 million, which consisted of $140 million in cash and taking over FTD’s debt of $35 million. The merger would have positioned Roll to dominate the industry, but FTD announced it would instead accept a lower bid from Perry Capital Inc. The nonprofit florist cooperative became essentially a trade group representing member florists. The business ventures be-came part of FTD Inc., a for-profit corporation. One of the first initiatives of the new owners was the establishment of FTD.com, an online service for order flowers.
Teleflora continued to look for acquisitions. In 1997, the company became the largest florist network in the country with the purchase of Redbook Florist Services. The next year it acquired Daisy Systems, which provided computerized shop-management systems to retailers. Building on those systems, Teleflora introduced its “Teleflorist Online” service in October 2000. The new service offered Teleflora’s 27,000 members professionally de-signed and managed web sites with e-commerce support such as credit card processing, e-mail gift reminders, and an online ad-dress book for customers. Unlike competitor FTD.com, Teleflora’s approach was to help its members establish their own online businesses (with their own web sites) and to keep their own customers along with 100 percent of their revenue.
1980s Entry into Agricultural Subsidiaries
The Resnicks moved into agribusiness in the mid-1980s. They first bought a citrus growing and processing operation near Bakersfield, California, which became Paramount Citrus Association. Paramount Citrus grew and packed fruit for both the retail and wholesale markets, selling oranges, lemons, apples, and grapefruit. The company sold much of its juice as Alpha-Beta.
In 1986, they purchased Apex Orchards from Mobil Oil for $30 million. The 12,000-acre pistachio and almond farm near Bakersfield was renamed Paramount Farming Co. The next year the Resnicks bought Texaco’s central California farming operations, adding some 77,000 acres of farmland, also in the San Joaquin Valley.
In 1989 the Resnicks formed Paramount Farms, a processing and marketing group that sold pistachios and almonds under its own label as well as wholesale. Paramount Farms’ nuts were soon selling across the country and internationally, primarily to cereal and candy manufacturers, including Cadbury, Nestle, Hershey, Carnation, and Kellogg. Over the years, Paramount Farms expanded its processing and marketing operations to include citrus, olives, and pomegranates. In 1993, Paramount Farms and the Pistachio Producers of California (PPC) formed a marketing co-op called Cal-Pure Pistachios and began offering pistachios under the Sunkist name. By 1996, Paramount Farms was the largest grower, processor, and marketer of almonds and pistachios in the world.
By the late 1990s, Paramount Citrus had become one of the state’s largest citrus producers. In 2000, the company bought 3,912 acres and several packing houses from Dole Food Co. for $55 million. The purchase, which brought its total acreage of citrus to nearly 27,000, made Paramount Citrus the largest grower, packer, and marketer of fresh citrus in the country.
Addition of The Franklin Mint
In 1964, Joseph Segal founded General Numismatics, a company devoted to producing and marketing commemorative coins, medals, and other metal objects. The company’s first coin was a commemorative of General Douglas MacArthur. Segal, who paid a medal manufacturer $10,000 to make the MacArthur coin, advertised his product in collectors’ magazines and was soon making $10,000 a month. Segal set up his own production facility and in 1965 took the company public and changed the company’s name to Franklin Mint. Within two years, Segal had built a new headquarters and a modern mint and foundry near Media, Pennsylvania, a Philadelphia suburb. When Segal re-tired in 1973, Franklin Mint had sales of nearly $113 million and earnings of over $9 million as well as its own post office. Sales during the 1970s peaked in 1975 at $233.9 million. After that, sales dropped, although they remained in the $150-$200 million range throughout the decade.
Warner Communications (now Time Warner) purchased The Franklin Mint and its Franklin Mint Museum in 1981, paying some $250 million for the operation. At that point, Franklin Mint became a subsidiary of Warner. In 1984, Warner sold a majority interest (70 percent) to the Resnick’s American Protection Industries for $167.5 million. It retained the administration building, minting facilities, library, mailing center, and a retail store. Stewart Resnick became chairman and Lynda vice-chairman. In its first year of operation under the Resnicks, Franklin Mint had sales of about $250 million, but it lost money from 1988 through 1990. In 1991 it earned $9.1 million, about what its profits were when Segal retired in 1973.
As the Resnicks expanded Franklin Mint’s offerings, they also set about making Franklin Mint Museum a tourist destination. The museum, which opened in 1973, contained about 7,000 square feet of exhibit space. A visitor could find the major items from the Franklin Mint offerings and trace popular tastes—pewter during the American Bicentennial, the growth of fantasy, and dolls, dolls, dolls. In the museum’s gift shop, visitors could buy any of the items they had just viewed.
In 1992, the Resnicks were considering taking Franklin Mint public. They hoped to raise $100 million and use most of it to repay bank debt and interest owed to Time Warner. However, the stock sale was canceled. Allan Sloan, writing about the proposed public offering in The Washington Post, noted that Franklin Mint spent $140 million to make its products in 1991 and $184 million to market and promote them. Sales for 1991 were $538 million, more than 250 percent over its cost of goods.
- Stewart and Lynda Rae Resnick buy Teleflora, LLC; Resnicks buy American Protection Industries and set it up as holding company.
- Resnicks buy Franklin Mint from Warner Communications Inc.
- Resnicks begin adding agriculture subsidiaries Par-amount Citrus and Paramount Farming.
- Resnicks sell API Alarm Systems; form Paramount Farms.
- Resnicks rename holding company Roll International Corporation.
The company the Resnicks proposed taking public was very different from the one they had bought from Warner Communications. It now manufactured collectibles, not commemoratives. In 1993 it promoted over 950 products: jewelry, Christmas ornaments, plates, dolls, games, religious sculptures, miniature cars, Arthurian swords, Faberge-type eggs, scale model replicas of the Harley-Davidson Heritage Softail. There was also a magazine for collectors, Almanac. Coins represented less than three percent of the company’s total business. Franklin Mint retail stores were opening and there were plans for catalogs, clothing, cosmetics, and perfume. By 1994, Franklin Mint had expanded to a 187-acre campus, and was housed in a facility larger than ten football fields. It also had employees in 20 countries.
The 1990s and Beyond
While Stewart Resnick was seen to be the financial and organizational genius behind the transformation of Franklin Mint, Lynda Resnick was acknowledged as the marketing and aesthetic genius. Art collectors themselves, the Resnicks under-stood that people are passionate collectors. What they learned from their experience at Franklin Mint is that people collect by theme, such as wildflowers or dogs or movie stars, and by form—dolls, plates, games. With that knowledge, they saw the potential for crossover sales.
Lynda Resnick also had a keen feel for cultural trends, which she augmented with equally talented staff around the world. In the mid-1990s she began establishing licensing agreements, first with museums, including the Vatican Museum and the Louvre, and then with celebrities (or their estates), including Elvis. She added fashion designers, then moved to agreements with corporations, including Coca Cola, Campbell Soup, and Parker Bros., as well as movie companies. One reason the corporations found an agreement with Franklin Mint attractive was the company’s advertising budget ($120 million in 1995) and range. Their ads in Parade, TV Guide, and USA Weekend magazines reached more than 70 million households each week.
However, collectible sales were beginning to shift from direct marketing to retail and TV shopping. In 1995, top management from several companies left the collectible business. This included Tom Dorovsik, president of Franklin Mint, who joined U.S. Healthcare. Sales were strong but profits were weak and there appeared to be a need for more products.
Lynda Resnick’s response was to buy Jackie Kennedy Onassis’ faux pearls for $211,500 when Southeby’s auctioned the former first lady’s possessions in 1996. At the Franklin Mint, a replica of the pearls sold for $195 and was an immediate hit. Resnick also bought one of Princess Di’s evening dresses, and displayed it in the museum. A version of the gown clothed the Mint’s Princess Diana porcelain doll, which also sold for $195. As Resnick explained to David Richards in his 1998 article in The Washington Post, “Nothing lasts. What the Franklin Mint does is create a permanence about the memories we have of the past.” Meanwhile, the company had expanded its retail operations to 50 stores.
Franklin Mint began having some problems in 1997, when Tiger Woods sued the company after it produced a commemorative medal of his win in the 1997 Masters tournament. Franklin Mint paid Woods an undisclosed amount of money to settle the case. In May 1998, the estate of Princess Diana filed a lawsuit to keep Franklin Mint from profiting from the sale of commemorative Princess Di merchandise. In addition to the Diana porcelain doll and a commemorative plate, Franklin Mint sold a jeweled tribute ring and a diamond pendant. The case was not settled until January 2000, when the judge ruled in favor of Franklin Mint. In reality, Franklin Mint had donated over $4 million to charities supported by the late princess. The legal battles led to rumors that the Resnicks were considering selling Franklin Mint. The company quickly denied the reports.
For over 30 years, the Resnicks have been buying and building companies. In almost each case, their purchase has become the nation’s or the world’s largest operation in its specific field—pistachio production, processing and marketing; manufactured collectibles; flowers by wire; citrus production. With such an amazing record, Roll International was poised for continued success at the start of the new century.
The Franklin Mint; Paramount Farms; Paramount Farming Company; Paramount Citrus Association; Teleflora LLC; Bundy Properties.
Collections; Bradford Exchange; Danbury Mint; FTD Inc.; 1-800-FLOWERS Inc.
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—Ellen D. Wernick