Mity Enterprises, Inc.

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Mity Enterprises, Inc.

1301 West 400 North
Orem, Utah 84057
U.S.A.
Telephone: (801) 224-0589
Toll Free: (800) 327-1692
Fax: (801) 224-6191
Web site: http://www.mitylite.com

Public Company
Incorporated: 1987 as Mity-Lite, Inc.
Employees: 506
Sales: $47.49 million (2000)
Stock Exchanges: NASDAQ
Ticker Symbol: MITY
NAIC: 33721 Office Furniture Manufacturing (Including Fixtures)

Mity Enterprises, Inc. designs, manufactures, and sells a variety of high quality institutional furniture. Its multipurpose line includes several sizes and shapes of lightweight but durable folding-leg tables and a variety of folding and stacking chairs. The company also sells cluster furniture for use in high-density settings, auditorium seating, dispatch seating, big and tall seating, healthcare seating, and a line of lightweight lecterns. Its customers include churches (its original market), hotels, call centers, police and emergency dispatch centers, schools, universities, government agencies, and nursing homes. Mity Enterprises sells products in the United States and other nations under the trade names Mity-Lite, Domore, D03, JG, Corel, CenterCore, and Broda. A public corporation, Mity has been featured in multiple years on the Forbes and Business Week lists of “Best Small Companies” and “Hot Growth Companies,” respectively.

Getting Started

Gregory Wilson, Mity-Lite’s founder, earned his undergraduate economics degree from Brigham Young University and then his M.B.A. in finance from Indiana University in 1973 before gaining experience with several companies. He worked for Ford Motor Company, Stereo Optical Company, Skyline Industries, Bridgers and Paxton Consulting Engineers, and Heath Engineering. He helped Little Giant Ladder Company design its products and commence manufacturing. Beginning in 1981, Wilson started and operated four furniture making companies that sold a variety of products such as boat seats and church pews.

In 1987 Wilson started Mity-Lite after a man from The Church of Jesus Christ of Latter-Day Saints asked him to design a new lightweight table for use in church cultural halls. The church purchasing agent, who had previously bought products from Wilson, said he was tired of buying particle board tables that had to be replaced frequently. He also said some Mormon women wanted lighter tables that would not cut their fingers.

Consequently, Wilson and his partner Wayne Swensen and designer Brent Bonham sought advice from the aerospace industry on how to build better folding tables. With that input, the newly organized Mity-Lite used high-impact ABS plastic, the same material used in football helmets and car bumpers, to start building light but durable tables. Its new tables weighed about half that of the competitors’ particle board and plywood tables. A company video showed Mity-Lite tables left unharmed after being jumped on and abused with sledge hammers, while competitors’ tables collapsed or were severely damaged.

Although Mity-Lite tables cost about twice as much as competitors’ models, the company in Orem, about 40 miles south of Salt Lake City, soon grew and prospered. From four employees in 1987, the firm by early 1990 had grown to a staff of 45 and claimed about five percent of the folding-table market. In 1990 Mity-Lite also started recording its international sales, then representing about $50,000.

Expansion in the 1990s

In April 1994 the company completed its IPO by selling one million shares to raise $5.3 million. The company in 1994 employed 90 workers at its 40,000-square-foot facility in Orem. There the firm produced 35 varieties of lightweight tables, along with table carts, table cloths, table skirting, and skirt clips. In 1994 Mity-Lite also began shipping its new Polyflex Stacking Chairs.

Mity-Lite in 1994 sold its products in all 50 states and several other nations, aided by a sales office in Swindon, England. Its customers included hundreds of local churches, all Utah colleges or universities, and the Hilton hotel chain. Forbes in its November 7, 1994 issue ranked Mity-Lite as number 12 in its annual listing of the nation’s top 200 small companies. At that time its five-year average return on equity was 39.8 percent, and its earnings per share had increased 71 percent over the past five years.

In 1997 Gregory Wilson spoke at a World Trade Association of Utah meeting about the challenges of expanding internationally. Wilson admitted that Mity-Lite was overconfident after its success in the United States and Canada. In its first effort outside North America, Mity-Lite faced some difficulties in England. For example, the firm had to change from a telephone contacting system that had proved successful in North America to using local distributors.

Cultural differences were part of the problem in expanding to England, said Stan Pool, Mity-Lite’s vice-president of sales and marketing. He reported that instead of relying on selling its products to American colleges and universities, in England the company learned to emphasize sales to small student clubs.

Acquisitions and Other Developments in the Late 1990s and Beyond

In 1997 Mity-Lite acquired 49.9 percent of the stock of DO Group Inc. for $750,000 cash and a loan of $1 million to a DO Group subsidiary. Located in Elkhart, Indiana, DO Group had initiated this deal when it approached Mity-Lite after its 1994 IPO. “An opportunity to work with a company like Mity-Lite is one we just could not pass up,” said DO Group Chairman Dennis Kebrdle in a March 6, 1997 Deseret News article. “We believe combining our well established Domore and D03 product lines with the dynamic business management systems at Mity-Lite will provide significant growth opportunities for both companies.”

The following year Mity-Lite announced that its partially owned affiliate DO Group had acquired some of the assets of Corel Corporate Seating, a producer of many kinds of chairs, and JG Auditorium Seating, a manufacturer of a wide range of auditorium seating and lecture products. DO Group said it would integrate both companies into its Elkhart, Indiana plant.

Also in 1998, Mity-Lite’s continued success earned it a Utah Best Practices Award from Arthur Andersen in the category of “exceeding customer expectations.” Founder Gregory Wilson said his company hired an independent research firm to track Mity-Lite’s customer satisfaction by conducting annual surveys of 500 customers. Between 96 and 98 percent of those responding said they were satisfied, and 92 percent said they would buy Mity-Lite products again. Word-of-mouth advertising from such satisfied customers really helped Mity-Lite, for Wilson reported in a October 7, 1998 Deseret News article that, “Fifty percent of our leads are from customer referrals, and they have a high closing rate.”

Mity-Lite again expanded in November 1998 by acquiring all outstanding stock of Broda Enterprises Inc. of Waterloo, Ontario, for $2.5 million. Broda made healthcare seating and accessories used mainly in nursing homes and other long-term facilities. Its main product was the 785 Tilt Recliner Chair that allowed many positions for the user while making it easier for care givers. These chairs provided some mobility to patients who otherwise would remain bedridden. The company in its 2000 annual report estimated that there were 28,000 nursing homes in the United States and Canada, the main markets for its Broda products.

In February 1999 Promus Hotel Corporation named Mity-Lite as a preferred supplier of folding tables and stacking chairs. This was a major contract, for Promus owned or managed over 2,000 American and international hotels, including Hampton Inns, Doubletree Hotels, Homewood Suites, Red Lion, Embassy Suites, and Harrison Conference Centers.

On April 9, 1999 Mity-Lite through two of its wholly owned subsidiaries acquired certain assets and debts of The CenterCore Group, Inc. in a bank foreclosure. For about $5.3 million, its C Core, Inc. subsidiary purchased CenterCore’s inventory, machinery, accounts receivable, and intellectual property rights. BOCCC, Inc., another Mity-Lite subsidiary, purchased CenterCore’s outstanding subordinated debt obligations for $500,000 cash.

A few months later Mity-Lite announced it planned to expand its 70,000 square feet of office and production space by another 30,000 square feet. With its growth rate averaging about 25 to 30 percent every year since its 1987 start, Mity-Lite definitely needed more room to expand.

The firm sold most of its products in the United States. International sales brought in just 7.8 percent, 11 percent, and 11.3 percent of total net sales in fiscal years 1998, 1999, and 2000 respectively. The exception to that pattern was that more than 50 percent of its healthcare seating products were sold in Canada. Mity-Lite also sold products in Mexico, Brazil, Venezuela, Peru, Argentina, Columbia, Dominican Republic, England, France, Jordan, United Arab Emirates, Hong Kong, China, Korea, Taiwan, Singapore, and Malaysia.

Company Perspectives:

The Company’s strategy for future growth includes continued penetration into the domestic and international niche markets, introducing complementary products such as stacking and folding chairs, staging, and partitions into its existing distribution system, as well as acquiring synergistic businesses, and cost effectively enhancing its manufacturing process.

On March 31, 2000 Mity-Lite announced its agreement to acquire the remaining 50.1 percent of DO Group’s stock in exchange for about $2.2 million in cash and 41,000 shares of Mity-Lite shares. DO Group’s customers, including police departments, 911 emergency centers, air traffic control operations, large corporations, the U.S. Postal Service, and the Federal Aviation Administration, purchased products sold with the Domore, D03, JG, and Corel trade names. Following the completed acquisition of the DO Group, Mity-Lite on April 6, 2000 merged its two wholly owned subsidiaries DO Group and C Core into a new subsidiary called DO Group, Inc.

Business Week recognized Mity-Lite’s success by listing it for the second year in the list of the “Hot Growth Companies.” The magazine ranked Mity-Lite number 99 in 1999 and number 93 in its 2000 listing. “Making the list for the second time in two years is a great honor,” said Mity-Lite CEO Gregory L. Wilson in a press release dated June 15, 2000. “Only 30 other companies repeated from last year’s list.”

On June 14, 2000 Mity-Lite introduced its new trademarked Summit Lectern Series. This line of five models of one-piece lecterns in several colors were lightweight, durable, easy to set up, and came with a 12-year warranty.

In 2000 Mity-Lite continued its good financial performance of the 1990s. Its net sales increased steadily from $9.9 million in fiscal 1994 to $15.4 million in 1996, $25.3 million in 1998, $29.5 million in 1999, and $47.5 million in fiscal 2000, ended March 31. The firm’s net income also grew, from $1.1 million in 1994 to $4.7 million in 2000. Mity-Lite’s annual report for 2000 stated the company had no long-term debt.

Mity-Lite’s growth was reflected in its new physical plant. In 2000 it constructed a 30,000-square-foot manufacturing and office building on nine acres of land purchased next to its Orem, Utah facility that had 70,000 square feet. With an annual growth rate of 25 to 30 percent since its start in 1987, Mity-Lite definitely needed the extra space.

With its acquisitions, new product lines, and a new building, Mity-Lite shareholders on August 17,2000 voted to approve the organization of Mity Enterprises, Inc. as a parent public company overseeing three wholly owned subsidiaries: Mity-Lite, Inc.; Broda, Inc.; and DO Group, Inc. Still under the helm of Gregory L. Wilson, its board chairman, president, and chief executive officer, the reorganized corporation seemed well positioned in late 2000 for future growth and contributions to the commercial furniture industry.

Principal Subsidiaries

DO Group, Inc.; Broda, Inc.; Mity-Lite, Inc.

Principal Competitors

Steelcase Inc.; Virco Manufacturing Corporation; Palmer-Sny-der, Inc.; McCourt Manufacturing, Inc.; Midwest Folding Products; Krueger International, Inc.; Falcon Products, Inc.; SICO; Southern Aluminum, Inc.; U.S. Industries, Inc.; Bevis Custom Furniture, Inc.; Globe Business Furniture; Artco-Bell Corporation; Shelby Williams Industries, Inc.; Clarin, a Greenwich Industries division; Meco Corporation; Technion; Interior Concepts; Hamilton Sorter; Haworth Inc.; Herman Miller, Inc.; Knoll Group Inc.; Kimball International, Inc.; Neutral Postures; Hon Industries Inc.; U.S. Prison Industries; Invacare Corporation; L.P.A. Medical Inc.; Graham-Field Inc.; Maple Leaf Wheelchair Manufacturing Inc.; Sunrise Medical Inc.; Hillenbrand Industries Inc.; Winco Inc.; Homecrest Industries Incorporated.

Key Dates:

1987:: Gregory Wilson starts Mity-Lite in Utah.
1994:: Mity-Lite completes its IPO on the NASDAQ.
1997:: Company acquires a minority equity interest in DO Group, Inc.
1998:: Company acquires Broda Enterprises Inc.
1999:: Mity-Lite acquires CenterCore; firm’s board of directors approves a three-for-two stock split; SwiftSet line of folding chairs is introduced; company delivers its one millionth table.
2000:: Company completes its acquisition of DO Group, Inc.; MLI Acquisition, Inc. is created as a wholly owned subsidiary; Mity Enterprises, Inc. is organized as a holding company.