Rather unceremoniously, the final chapter in the story of what once was a promising high-tech manufacturer here played out in the cold, stark entryway of the Spokane County Courthouse in late December. There, an attorney invited opening bids in the auction on all of the remaining assets of Spokane Valley-based Output Technology Corp.for a packaged minimum bid of $50,000as two men watched and passersby shuffled past them, hardly sharing a glance.


There were no takers.


The scene was in marked contrast to Output Technologys glory days nearly 20 years ago, when it at times employed more than 200 people, operated a European subsidiary, and hit annual sales of more than $35 million. The company was founded in 1984 and made a name for itself in the computer printer industry by developing an innovative three-head dot-matrix printer that boasted ultrafast speeds for that time.


While its printers seemed to enjoy acceptance in the commercial niche market Output Technology sought, the company suffered through repeated swings of financial instability, operational problems, and even high drama in its executive offices. By early 1993, despite having sold more than 85,000 printers worldwide, the company filed for Chapter 11 reorganization in U.S. Bankruptcy Court.


Although Output Technology later emerged from bankruptcy with an uncommon plan to pay creditors 100 percent of what they were owed, the company never returned to its earlier prominence. Last fall, after years of declining sales, the company quietly closed its doors, with just a handful of employees remaining.


Decembers courthouse sale was a last-ditch effort on the part of four of Output Technologys former board members to find a buyer for the companys remaining assets, in hopes of recouping a loan they had made to the company. The four, Larry Stanley, Frank Storey, Wendell Satre, and Louis Sims, had lent the company $50,000 in 2006 to keep it alive, and were in first position to claim the companys remaining assets.


Sims was a major shareholder and former CEO of Output Technology, and Storey, a former banker, was a longtime board member. Both Satre, former CEO and chairman of Washington Water Power Co., and Stanley, founder of Empire Bolt & Screw Inc. here, were brought onto the board in 1993 to bring stability and credibility to Output Technology as it sought approval of its reorganization plan in Bankruptcy Court.


In an interview last week, Storey and Stanley spoke about the companys demise, and their final moves to salvage any of its remaining value.


The printer business nationally was declining, says Storey of the companys last few years in business. Manufacturers were going out of business. Distributors were going out of business.


That didnt mean, though, that nobody wanted Output Technologys products, he says. There was demand, even up till the end, but the company couldnt compete as a manufacturer, Storey says. It should have become a sales company, rather than a manufacturer, selling products made overseas and concentrating on where the higher margins existed, such as in ribbon and toner replacements and service contracts, he says.


I tried to convince everybody that nobody is making printers in the U.S. anymore, Storey says.


Stanley, who also once served on the board of Washington Water Power Co., now Avista Corp., says there was reluctance in the companys management to move away from manufacturing, and that there seemed to be an unwillingness to give up on products that no longer were profitable.


The board hung in there with managements game plan, though, because there was always some big prospect around the corner that would turn the company around, he says. There was always a carrot to stay the course.


In the waning years, Output Technology continued to sell printers to its most loyal customers, and likely would have been able to sustain such sales for some time, says Storey, but it received much of its income from the sale of supplies for and repairs of printers already out in the field.


That income, though, wasnt enough to cover overhead, and eventually there wasnt enough cash flow to keep the company alive, he and Stanley say.


Four or five years ago, there should have been a concentrated effort to go after a merger; to salvage whatever value there was, says Stanley.


Adds Storey, We told Steve (Benner, then CEO), Wed better sell this thing.


By early last year, the company was down to about 10 employees, the two men say, and by June, Benner went to part time. Operations had pretty much ceased by about October, and the board formally resigned the following month, they say.


With no other bidders at the December asset sale, Storey, Stanley, Satre, and Sims took possession of the remaining assets of the company, Storey and Stanley say. There still were more than 100 shareholders on the books at the time, but the companys stock at that stage was worthless, they say. They believe Banner Bank is still owed several hundred thousand dollars, but that debt is subordinate to their debt, so it likely wont get any of that money back, they say.


Jeff Supinger, a Spokane attorney who is representing Banner Bank in the matter, confirms that Output Technology still owes the bank money, but didnt readily know how much. All I remember is that they owed a lot of money and had no means of paying it, Supinger says.


Its really too bad. You hate to see a home-grown business fail, he says.


The four men who ended up with the assets recently had to pay Spokane Business & Industrial Park about $19,000 in back rent the company owed, just to get access to the remaining assets that still were stored at Output Technologys former quarters there. The space was empty by Feb. 15.


Theyve since sold some of those assets, but not nearly enough to cover even the back rent they paid, Storey and Stanley say. Theyre still hopeful, though, to find buyers for the remaining items, such as printer parts and toner, they now have in storage elsewhere, as well as such intangible assets as customer lists and goodwill potential for further printer and supply sales.


The real value lies in the intangibles, says Storey. We still hope to get our $50,000 back.


Had fought back before


If nothing else, Output Technology had been resilient.


In the two years leading up to its bankruptcy protection filing, the company was in near constant turmoil. Coming off of a string of years of big revenue gains and profitability, Its sales fell about 16 percent in 1991, when it posted its first loss since 1985. It suffered another loss in 1992, despite recovering revenues. Meanwhile, the company realized that a new product in which it had invested $4 million had missed its market window. The product, called BetterYet, was supposed to be an add-on to Hewlett-Packard LaserJet printers, but the product was obsolete before it reached the market.


Then, in a controversial management shuffle, Outputs board fired then-CEO Sims, and replaced him with Billy Anders, a former executive with Key Tronic Corp. and IBM. Under Anders watch, the struggling company sought to raise capital, and ended up borrowing nearly $1 million from two venture-capital firms in anticipation of a preferred stock sale. The sale never materialized, and as Output Technology was fighting for its life, the two venture-capital firms sought to take control of the company and liquidate it. Outputs shareholders rebuffed the effort.


About 10 months after he arrived, Anders was fired, and Sims was reinstated as CEO.


The company then took steps to right the ship, including by dumping the BetterYet product, cutting its overall work force by a third, and shutting down its European subsidiary.


Its reorganization plan filed in early 1994 was heralded by both the company and its creditors for its offer to pay creditors 100 percent of what they were owed. Prominent bankruptcy attorney J. Ford Elsaesser, who was representing the creditors committee, called the repayment plan exceedingly rare.


Storey said at the time, It may be legal to discount whats owed to unsecured creditors, but it isnt ethical.


At the end of the five-year reorganization plan, Output Technology had kept its promises to its creditors, but its financial condition wasnt improving. Its 1998 revenues were below $20 million, well short of the $48 million called for in its reorganization plan.


The company launched a new product, its first totally new line in nearly a decade, but the high-speed continuous-form laser printer, called the OTC6500, proved to be a disaster. It pulled the printer off the market for a time due to defects, then reintroduced it a year later, but the printer never attracted the market acceptance its other printers had.


We had a hard time getting rid of the 6500, says Storey. There was this unwillingness to admit it had no value.


By late 2000, the company was down to about 75 employees, and was relying on revenue streams from its old-guard product lines, as well as a printer called the PrintStation that was manufactured for it by an Italian company.


From then on, say Storey and Stanley, the companys decline was steady, as revenues gradually fell and overhead was cut accordingly. By early last year, the five-member board was no longer receiving directors fees, which they already had voted to reduce to $100 per meeting.


By last fall, estimates of the salvage value of Output Technologys assets ranged from roughly $25,000 to $100,000, they say. Whats left, they add, should be sold within the next six months.


Contact Paul Read at (509) 344-1262 or via e-mail at paulr@spokanejournal.com.