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Palm Coast Data Parent Warns Grimly: Don’t Expect “Profitability in Near Term Or at All”

| September 17, 2013

Desperate  for renewals. (© FlaglerLive)

Desperate for renewals. (© FlaglerLive)

Palm Coast Data’s parent company—Princeton, N.J.-based Amrep Corp.—is past sugar-coating its message to investors. Its latest annual report is blunt, sobering and, for anyone employed at Palm Coast Data, which at one time was the city’s largest private employer (Florida Hospital Flagler now has that distinction), worrisome.

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Three factors undermine the company’s long-term viability: debt, recurring losses, and intense competition in a rapidly evolving field it’s having difficulties keeping up with.

“The Company has incurred significant historical losses and cannot assure shareholders that the Company will be profitable in the near term or at all,” the latest annual report states, capping three years of net losses totaling $11.5 million, including $2.84 million in the fiscal year that ended in April 2013. The company has two mainstays: media services centered largely on Palm Coast Data’s subscription fulfillment operation and newsstand distribution, and a real estate subsidiary in New Mexico.

The company cites “highly competitive conditions in the Media Services businesses and the absence of meaningful real estate development and building activity after 2008” for its diminishing fortunes. “The Company cannot assure shareholders that the economic or operating conditions affecting either of its principal businesses will improve,” it states in the report.

The report’s assessment came despite the company’s acquisition in January of FullCircle Inc., a Denver-based company that provides marketing, call-center services and product distribution. To stem losses experienced by the diminishing number of printed magazines, Palm Coast Data has been moving toward more digital models. The acquisition is now part of Amrep’s Media Services operations, along with Palm Coast Data. The acquisition helped edge the division’s revenue up slightly—a rarity in the last several years—to $20.3 million in the latest quarter, from $19.6 million in the same period a year ago, a $700,000 improvement.

But FulCircle’s revenue by itself was $1.4 million, suggesting that, absent FulCircle, underlying revenue losses at the subscription fulfillment operation, which represent 70 percent of media services revenue, continue.

According to Amrep, Palm Coast Data performs subscription fulfillment services for approximately 422 different magazine titles for approximately 96 clients and maintains databases of approximately 39 million active subscribers for its client publishers and membership organizations. In a typical month, Palm Coast produces or provides data for approximately 39 million mailing labels for its clients and also processes over 13 million pieces of outgoing mail for these clients.

Falling Fortunes

“There are a number of companies that perform subscription fulfillment services for publishers and with which Palm Coast competes, including one that is larger than Palm Coast,” the report states. “Since publishers often utilize only a single fulfillment company for a particular publication, there is intense competition to obtain subscription fulfillment contracts with publishers. Competition for non-publisher clients is also intense. Palm Coast has a sales staff whose primary task is to solicit subscription fulfillment business.”

Palm Coast Data at one point, before 2008, employed upwards of 1,000 people. That year it entered into an arrangement with Palm Coast government—which sold it a 70,000 square foot building for $3 million and provided other jobs incentives—as the company consolidated operations from other states into its Palm Coast operation. At the time, it was promising to add 700 jobs over three years and expand its Palm Coast campus further. Neither happened.

The company has consistently refused to provide the number of employees in Palm Coast. But as of July 1, all of Amrep Corp. had about 1,200 full time employees, including 370 temporary employees of the Company’s staffing business, according to its annual report. Those employees include its offices in New York, New Jersey, its magazine distribution operation, its product packaging and fulfillment services that operate from a 191,000 square foot facility in Fairfield, Ohio, a customer service office in Mt. Morris, Illinois, and its real estate operation in Rio Rancho, New Mexico.

Credit Woes

Both the media services and real estate divisions have been operating through two revolving credit arrangements, one of which matures in May 2015, the other in December 2017. The latter (for the real estate division) does not allow for additional borrowing. “If the Company’s Media Services businesses are unable to extend or renew on similar terms the Media Services Credit Facility that expires in May 2015, the Media Services businesses would be obligated to repay the outstanding balance of the Media Services Credit Facility,” the report notes. Same issue with the loan to the real estate division.


“If this occurs,” the report warns, “the Company’s Media Services businesses or AMREP Southwest, as the case may be, may not be able to fund in full or refinance these obligations at such time absent the Company obtaining additional debt or equity funding or raising capital through the sale of assets. Such additional funding may not be available on acceptable terms or at all at such time. Any failure in this regard could have a material adverse effect on the Company’s business, financial condition and results of operations.

More bad news for the division that includes Palm Coast Data: “the Company’s Media Services businesses have operated with negative working capital ($25,752,000 at April 30, 2013) primarily through liquidity provided by one significant customer contract that expires June 2014. The negative working capital of the Company’s Media Services businesses represents the net payment obligation due to this customer and certain other third parties.”

A Vital Customer Drops Out

In May, the company got word that its key customer—in the newsstand distribution arm of the company, not Palm Coast Data–would not be renewing its contract come June 2014. That will leave a substantial debt obligation on the company’s hands. “Any failure to obtain capital to pay such obligation or to obtain other sources of working capital could have a material adverse effect on the Company’s business, financial condition and results of operations,” the report warns; “these circumstances could also trigger a default under the Company’s Media Services Credit Facility.”

In essence, the company’s media services division that includes Palm Coast Data has been subsidizing both the parent company and its real estate operations, raising yet another warning: “If the cash available for distribution by Media Services were insufficient to fund the Company’s consolidated operations and the Company was not able to provide the funding needed by AMREP Southwest, the Company would be forced to seek either replacement financing or other sources of capital, such as by selling assets or issuing equity, which replacement financing or other sources of capital might not be available on acceptable terms (or at all).”

The company is also facing heavy financial burdens from an underfunded pension plan.

Burdens of Competition

And that’s before the analysis of current market conditions kick in—the rapidly vanishing print products that once burnished Palm Coast Data’s fortunes, technological changes, the migration of advertisers to the Web, and so on. “The Company’s failure or inability to adapt to emerging technologies and changes in consumer behavior could have a significant adverse effect on the Company’s competitive position and its businesses and results of operations,” Amrep notes.

That requires enormous investments in operations such as Palm Coast Data. That investment may not be readily available. Amrep and Palm Coast Data bluntly admit that some of their competitors “have financial resources that are substantially greater” than their own.

“There are substantial uncertainties associated with the Company’s efforts to develop new technologies and services for the subscription fulfillment and newsstand distribution markets the Company serves,” the annual report states, “including the Company’s lack of financial resources. Particularly in the Subscription Fulfillment Services business, the Company would need to make substantial capital investments in order to convert the Company’s business to newer digital and internet-based technologies. Some of the Company’s competitors have already adjusted their businesses for the growing digital market and any improvements the Company makes may not be developed until it is too late to compete effectively.

“Additionally, the cost and expertise needed to develop these new digital and internet-based technologies may be prohibitive for the Company, and even if the Company makes significant investments in new information processing technologies and services in these or other areas, they may not prove to be profitable. The failure or inability to successfully develop or employ new technologies and services could have a material adverse effect on the Company’s competitive position and its businesses and results of operations. Even if these developments are profitable, the operating margins resulting from their application would not necessarily equal, or result in an improvement over, the Company’s historical margins.”

A few weeks before that grim report was issued, Mike Duloc, who heads the media services division, invited local media to have a rare look at Palm Coast Data from the inside, and to listen to Duloc’s rosy predictions for the company. Ironically, only print media were invited. And if Duloc spoke word of the company’s more objective analysis of its future, those words never made it into print.

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28 Responses for “Palm Coast Data Parent Warns Grimly: Don’t Expect “Profitability in Near Term Or at All””

  1. Putter says:

    Maybe now the City can get their City Hall back…..the City ought to be able to buy it back CHEAP! The City knew what they had up their sleeve when they gave PCD the bargain of a lifetime.

  2. Nancy N. says:

    I personally know of a pair of large publications that are served by PCD that are ceasing print publication with their Dec issues and going digital. Paper publications are dropping like flies. PCD is the equivalent of a buggy maker after the invention of the car. It’s only a matter of time….

  3. Random Citizen says:

    Has anyone ever talked to an independent home data entry person who works for Palm Coast Data?

    Some of them are earning as little as $2.00 to $3.00 an hour by being classified by Palm Coast Data as independent contractors to avoid minimum wage. It’s not right bu people are desperate for any money they can earn in these tough times.

  4. blondee says:

    Hardly a news flash. PC Data has been in the crapper for years now.

  5. yikes! says:

    Do you suppose they watch “Leave it to Beaver”, “The Brady Bunch” and “Andy GRIFFITH” ? itYes Dear, Dothe jello has marshmallow s!!! “OH! I feel giddy!:-):-)”

  6. Misty says:

    Perhaps the city can buy it and sell golf vacations out of it !

  7. Geezer says:

    They have lasted longer than I thought.
    When they lost the NRA call center I knew they were dead meat.

    I feel bad for the underpaid workers who toiled there for so long,
    for so little money. The poor customer service reps….to go to the bathroom
    they had to hold up a red-tipped paint stirrer, to be allowed to leave their desk
    to relieve themselves-many times to be told “NO.”

    What stories I can tell of ineptness, favoritism, nepotism, racism and just plain old
    scumbaggedness by management.

    • pcdworker says:

      Everyone has a story about PCD until you worked there don’t knock it, I made 36,000.00 dollars as a customer service rep . Never had to hold a stick up to go to the bathroom. Please get your stories correct before you write . Thank you.

      • Geezer says:

        Esteemed pcdworker:

        I worked at Palm Coast Data during the Dimac days.
        I left in 2002.

        There was a “Jean D” supervising the call center
        and sure enough there were paint sticks used as
        “I need to go potty signs.”

        You made $36.000, and you’re bragging?
        I knew some reps from management pulling in $100.000.
        They all started losing their jobs as the publications dropped PCD
        to go to a Colorado-based fulfillment company.

        Do you remember the anthrax scare?
        There was an isolated trailer for for employees to process mail during that time.
        Management never entered that trailer.
        PCD loves its minimum wage workers!

        Take a tissue to that nose of yours – it’s got brown detritus on it.

        PS: you’re welcome.

  8. say it isn't so says:

    The merger with Kable was supposed to create new jobs and new opportunities. Kable Mt Morris division owned the buildings it was operating in, the other two divisions (former NeoData in CO and former FCA in OH) had already downsized to smaller buildings and had cut budgets. All three of these locations had extremely loyal clients. NeoData clients agreed to stay with the company as the Kable system upgraded to meet their needs. KABLE was a company that had been investing in its system to make it more web based and customer friendly. When the move to the PCD system happened customers jumped ship once they saw how antiquated and stagnant the PCD system was. PCD is now trying to bring itself up to the level that its former Kable partners were at when their systems were shut down. All because they thought they could save money. The writing has been on the wall – I feel sorry for the community as we are the big losers here.

  9. MrMan32 says:

    I think the best part of the article is that its the impression it is palm coast data, in reality it is the distribution portion of AMREP. Palm Coast Data is the only company that makes AMREP any money, and yes the revenue has decreased, however, PCD is STILL employing people here with a decent wage AND affordable benefits. Yes people may have their own impressions of the company but as a whole, where else can people work here? Since i am a current employee, i would like to say, i hope they hang on as long as possible. As far as some of the comments – RANDOM Citizen- really $2-3 dollars per hour, really, if you are going to bash something get your facts straight. Geezer – you are referring to a time that was back in the 1980’s when the call center had 25 people. Rather than downing and making false statements, why not offer suggestions on how to make the company last to start to employ more people. Just a thought.

  10. maniac says:

    I agree with MrMan. If more people posted favorable comments, it might draw high quality people. Some people posting here have no idea what really goes on in side PCD. Random Citizen, show us the facts.
    Gezzer, tell us your stories. Has this economy not affected all of us? Have you not had to cut back somewhere? Less eating out? Less pleasure driving? Less vacation? Here is a company that is striving to keep going, and keep our local people working. Most of you bitch about PCD and what they are trying to do to keep our local population working. Are you the same people that will bitch if PCD closes and people have to go on assistance? Probably. Perhaps you would prefer 10 more fast food joints to employ the people that would have to look for employment if PCD closes. Would you like Fries with that?.

  11. Perriwinkle says:

    Really?? Talk is that they’re getting more publications. I’ve seen their ad in the Penny Saver for hiring customer service reps for about the past 4 weeks. Also, the morning after Flagler Live posted this article, employees got notice that they are going to have a Christmas Party! But, employees must pay to attend.
    Listen, PCD will be around forever. They’ll find money from some source. Perhaps the good old state of FL will give them 3 million or perhaps Flagler County? Or they’ll lay off a bunch of people & make the remaining employees work 18 hour shifts 7 days a week.

    To MrMan32…. perhaps your one of the “chosen”. Many people in the call center haven’t seen a raise in years, the criteria to achieve that goal is unattainable no matter how hard they try. It’s a grueling job. Oh, perhaps this didn’t pertain to “you” but reps could not use the restroom or leave their desks without permission, that’s a fact that has been enforce. Are you going the Christmas party that the employees will have to pay in order to attend? I’ve heard it’s 30+ dollars to go. Do you honestly know what the data entry people make? Have you checked? You better!

    • pcdworker says:

      Perrrywine do you know how much they make. You keep asking questions in your message Iknow it is 8.00 to start. And why shouldn’t you have to pay for your Christmas Party. another person who hasn’t worked for PCD and has alot to say.

  12. NYplus says:

    I’m still stuck on that $36,000 Customer Service Rep ‘pcdworker’!!!! WTF, I’ve been here for several years, in what I THOUGHT was a higher paying position and I don’t make that much money! How in the world can customer service be paying that much, or is ‘pcdworker’ throwing around a bunch of BS!?!?! I am going to do the smart thing, move to Jax and make a more respectable salary!

  13. Geezer says:

    Russ Sanders – where have you gone?

  14. MrMan32 says:

    To Perriwinkle.. I have worked at this company for 7 years and in all those years never ONCE did you need to ask for permission to use the bathroom in customer service. There is a difference between going to the bathroom for the 5 minutes it takes, vs. saying your going to the bathroom and then going and talking to people. So whomever told you that may fall into the second category. Also – The Christmas party is an event that the reps themselves organize, the department does not do that. There is just no reason to bash the company since it is a job for people, it may not be the best, but it is paying their bills, more than unemployment would. :)

  15. Perriwinkle says:

    pcdworker has to be joking!! HAHAHAHAHA.. I happen to know several people who work there (over 7 years) & they certainly don’t make that much money & they work full time.

  16. exemployee says:

    Sure, Mike Duloc can paint a rosy picture. His father in law owns the company. Daddy will just find him another hobby to move on to when the dust settles. He has no worries. They have taken away the livelihood of entire families who have lost homes, etc, in a effort to keep the top dogs fat and happy. I hope for the sake of those who have survived the ongoing massacre that they will manage to stay afloat. I would not want to be one of the 700 people looking for work if the place closes.

  17. lmfao says:

    All this talk about the phone people the real problem with PCD is the lettershop and the sorting area. sure they get new clients but the real problem is all the machines are 1970s technology. they take so many steps to make a simple letter. the management push the impossible and rig the machines to do what they cant. ive seen so many screw ups and the operators don’t care they just throw away bills and statements just because they dont give a crap about quality. and it seems every time time they get a big job its messed up and people have to work overtime just to get it out and its still no good and the client gets pissed. we called Saturday and Sunday upper management day cuz they would come in and run machines to try to get the mail out by the deadline and its always a failure. Well when you have 150kplus managers trying to cover there butts you will have problems. So to Liz Tim and Mo I wish you the best of luck cuz your going to need it. Also did i mention all the 10 dollar a hour operators are bullied everyday by MK. PCD is done Good Luck to the real employees that actually give a crap>

  18. Lisa says:

    Well I have been at PCD for well over 10 years. The place has really gone down hill. Company gives out 10 cent raises….big deal. Then they raise our health insurance costs. The letter shop makes so many mistakes. Jobs are run then have to be taken apart and re-done again. This happens over and over again. We have 3 buildings….I don’t know why. Building 2 has only a handful of employees working in it. They could all be moved to building 1 and 3 to save the company some money. I really think the company is going to sell off their contracts and buildings and close up shop. There has been a lot of work on the outside grounds of all the buildings…..maybe making the building look really nice so they can be put up for sale????

  19. Matt says:

    I was on Employ Florida Marketplace web site & happened to find that PCD is hiring & they’re offering FULL TIME employment with all the benefits. Just boggles my mind, if the company is crying that they’re broke??

  20. Former Kable Employee says:

    It’s all good …. If the company stay in Colorado it will stay in business for a little longer, but they believe the CEO in Florida they forgot the plam coast data already bankruptcy once or twice before merger with kable… So who care let’s it down the drain…..

  21. Jeremy says:

    The developments in technology are severely against this dinosaur.
    And that is unstoppable.

  22. ElPyroLoco says:

    I worked for this company for almost 7 years. 3.5 years in the Call Center and 3.5 in Operations.

    First of all the paint sticks when I was there were if you needed a “supervisor” or help with a call. Not to go to the bathroom. I don’t know where that story came from but I never needed “permission” to go to the bathroom and if they ever required permission I’d tell them where they could go.

    When I worked in the call center I think I was treated pretty fairly even if very poorly paid. When I worked in operations it was very much run on the favortism aspect others here have mentioned. I don’t believe I was treated fairly there and thats why I ultimately decided to leave. I can see from the articles I’ve read online it was THE BEST decision I ever could of made.

    I left palm coast and palm coast data and now I’m pulling in close about 60K a year in the airline industry. Not to mention the $$$ saved on flying free.

  23. Former Neodata employee says:

    Bonnier Corporation is leaving Palm Coast Data for CDS-Global in Des Moines, that’s not a good sign…

  24. Summergirl says:

    Palm Coat data is laying off tons of people again. Just before Christmas, they took away all of our “vacation” time and moved into “paid time off”. However if we got laid off, we would “LOSE” all that time. Should have guessed after that happened that the company would start getting rid of people. The company is going down the tubes big time.

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