Cyrk (Company)
Encyclopedia
Cyrk was once one of the largest promotions companies in the world with over 2000 employes worldwide. The company's stock was listed on NASDAQ
under the ticker symbol CYRK.
From its earliest days as a public company and headquartered in Massachusetts, CYRK struggled with three significant gating factors in its public company business model: 1) customer concentration consisting primarily of Fortune 50 "Power Brands" 2) client disclosure restrictions imposed by the Power Brands which hindered CYRK's ability to provide quarterly forward looking guidance strongly demanded by Wall St. analysts and market makers and 3) volatility associated with the meteoric success of its consumer loyalty promotions totaling hundreds of millions of dollars over relatively short periods of time only to be followed in subsequent reporting periods by a resulting contraction in its sales base once the "Power Brands" marketing needs waned as consumers became engaged and increasingly loyal.
The bulk of CYRK's revenues were generated from the sale of custom promotional products employed as consumer rewards in points-based consumer loyalty promotions.
CYRK had three very successful public offerings between early 1993 and late 1994 underwritten by Montgomery Securities, all of which were oversubscribed.
CYRK revolutionized consumer loyalty programs by calling on its custom product expertise of design, manufacturing and fulfillment in concert with its in-house marketing agency expertise to deliver and enhance the brand equity of its clients in a consumer-facing loyalty program that drove market share as well as sustaining sales gains.
Notwithstanding high profile client success and the respect of its Power Brand clients, CYRK suffered from a public stock market in the mid and late 90's that primarily rewarded "New Economy", speculative dot-com companies of much less operating substance.
Ultimately, the flaws in CYRK's public company model during that period served as a drag on the company's stock price, frustrated investors and drove its board and management to pursue acquisition growth tactics in an attempt to diversify and address its struggles and investor pressures. The growth-oriented acquisitions included the ill-fated 1997 acquisition of Simon Marketing which led to a series of events in the ensuing years that undermined the company's focus, the loss of key managers at the parent company level and ultimately, the deterioration of the innovation that served the company's earlier success.
Yahoo biz calls CYRK a "true tragedy", a company brought down by the actions of a single employee who was employed at the wholly owned subsidiary, Simon Marketing based in Los Angeles, CA.
In 1997 the company, "already a significant player through its management of the Marlboro Gear
and Pepsi Stuff
continuity programs" acquired Los Angeles-based Simon Marketing, making it one of the largest agencies in the promotion industry. They were named Agency of the Year by Promo Magazine in 1998. Although CYRK lost the Pepsi Stuff account in 1998 as it moved to a Coca_Cola account that never rivaled the success with Pepsi, they boasted McDonald's
and Philip Morris
as their two top clients. They also did significant business with Beanie Babies-maker
Ty Inc.
While Philip Morris accounted for 90% of the companies' business in 1994 thru the acquisition of Simon, McDonald's alone accounted for 61% of the consolidated revenue in 1999. On March 31, 1997 Cyrk purchased Monroe, WA based Tonkin, Inc. At the time Caterpillar Inc. was Tonkin's largest account. The Tonkin acquisition was intended to allow CYRk to penetrate the business to business segment of the promtions industry and to serve as a further diversification initiative.
Although based in Gloucester, Massachusetts
, the company's marketing-arm from 1994 to 1999, was a New York-based operation called Integrated Marketing Solutions, with President Laurel Rossi, who left the company in February 1999 to move to Hill Holliday
Direct as executive VP and director of client services. In 1999, they had $988M in sales. Shlopak resigned in 1999 to join Louis Marx in an investment firm Equity Enterprises (later Brae Capital). Patrick Brady, who had joined the company in 1989 as a 50% owner of the then privately held company and was, in 1999, already president, was named CEO. At the end of that year, Yucaipa Companies with a $25 million investment, became a substantial-enough owner to replace Patrick Brady as chairman with its own Ronald Burkle
. However Patrick and Simon CEO Allan Brown were named as "co-chief executives" of Cyrk.
In late 1999, with the company's share price still well below the intrinsic value of the company, the board of directors launched a strategic initiative with DLJ (Donaldson, Lufkin & Jenrette later CS First Boston) intended to maximize its share price thru a plan that would divest certain legacy accounts and certain businesses acquired previously. The plan was consummated in the Spring of 2001. In Oct 2000, the company is described as consisting "...primarily of the Cyrk promotional products operation in Gloucester, the Los Angeles-based Simon Marketing...and a newly formed Internet division...." In the June of 2001 and upon the successful conclusion of its strategic initiatives, Cyrk co-founder Patrick Brady, EVP-CFO Dominic Mammola and Exec VP Ted Axelrod, all resigned. In or around May 2001, the company split into two pieces. The Corporate Promotions Group was sold "once worth $147 million, for a mere $14 million to investment group Rockridge Partners, Inc.", an investor group led by Gemini Investors, LLC. and the Cyrk name along with that. "Bob Siemering, a principal with Rockridge Partners, was COO of Marketing Incentives", a company acquired by Cyrk in 1998. Siemering became the CEO of the new company The remainder of the company changed its name to Simon Worldwide.
turned out to have been rigged fraudulently by Jerome P. Jacobson, the security officer at then-Cyrk-subsidiary Simon Marketing. Although arrests were announced on 22 August 2001, with convictions following, and only one Cyrk/Simon employee was charged, this did not stop McDonald's from voiding its agreement. Phillip Morris quickly followed suit, thereby together removing more than 70% of Simon Worldwide's revenue.
The fallout erased the benefits of the strategic divestitures and severely hurt the remaining business of Simon Worldwide; Ronald Burkle resigned from the board, and fourteen executives left to join Draft Worldwide (now called Draft FCB Group) in Chicago, part of the Interpublic Group, in forming a new unit called Premium Surge within their promotional marketing division Surge. Although initially maintaining an amicable relationship, there were still several unresolved issues between Cyrk and Simon. In May 2002, Simon Worldwide went into liquidation.
The Massachusetts-based portion had evidently been sold. On 20 May 2003, PPB Magazine reported that under new owners Sun Capital Partners, Inc., Gary Vonk had replaced Bob Siemering as CEO of Cyrk. In November 2004, Cyrk, now based in Monroe, Washington
appointed Alan Patrick
as CEO. Patrick quickly returned Cyrk to a break even position and with the Company poised for future growth, increased the client list with the addition of GM, developed Caterpillar's new direct to consumer web site, winning Cat's Platinum Licensee of the Year Award in 2005 and 2006 and managed an acquisition of a European and Asian subsidiary company. Alan Patrick, Cyrk CEO, left the company by mutual agreement in late 2007 to pursue other business interests back on the USA's east coast.
Following that, Cyrk introduced Jeffrey Werner as CEO and in January 2008 welcomed Frank Bakirdan as VP of Global Sales. At the same time, Cyrk's financial statements indicate that the cash benefits of layoffs and withheld supplier payments, instituted first by interim leadership and then continued by Werner. As Werner and Bakirdan attempted to formulate their own strategy, further layoffs were executed in a desperate attempt to conserve cash. By the end of October 2008, the bottom fell out of consumer confidence, and sales volumes fell further. Cyrk was forced in November 2008 to release all unessential personnel as well as global sales staff in an attempt to reduce costs, and to sell all business units and assets.
On January 22, 2009, an auction held at Cyrk's headquarters liquidated the company's assets.
Meanwhile, Simon Worldwide is still traded as on pink sheets.
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
under the ticker symbol CYRK.
From its earliest days as a public company and headquartered in Massachusetts, CYRK struggled with three significant gating factors in its public company business model: 1) customer concentration consisting primarily of Fortune 50 "Power Brands" 2) client disclosure restrictions imposed by the Power Brands which hindered CYRK's ability to provide quarterly forward looking guidance strongly demanded by Wall St. analysts and market makers and 3) volatility associated with the meteoric success of its consumer loyalty promotions totaling hundreds of millions of dollars over relatively short periods of time only to be followed in subsequent reporting periods by a resulting contraction in its sales base once the "Power Brands" marketing needs waned as consumers became engaged and increasingly loyal.
The bulk of CYRK's revenues were generated from the sale of custom promotional products employed as consumer rewards in points-based consumer loyalty promotions.
CYRK had three very successful public offerings between early 1993 and late 1994 underwritten by Montgomery Securities, all of which were oversubscribed.
CYRK revolutionized consumer loyalty programs by calling on its custom product expertise of design, manufacturing and fulfillment in concert with its in-house marketing agency expertise to deliver and enhance the brand equity of its clients in a consumer-facing loyalty program that drove market share as well as sustaining sales gains.
Notwithstanding high profile client success and the respect of its Power Brand clients, CYRK suffered from a public stock market in the mid and late 90's that primarily rewarded "New Economy", speculative dot-com companies of much less operating substance.
Ultimately, the flaws in CYRK's public company model during that period served as a drag on the company's stock price, frustrated investors and drove its board and management to pursue acquisition growth tactics in an attempt to diversify and address its struggles and investor pressures. The growth-oriented acquisitions included the ill-fated 1997 acquisition of Simon Marketing which led to a series of events in the ensuing years that undermined the company's focus, the loss of key managers at the parent company level and ultimately, the deterioration of the innovation that served the company's earlier success.
Yahoo biz calls CYRK a "true tragedy", a company brought down by the actions of a single employee who was employed at the wholly owned subsidiary, Simon Marketing based in Los Angeles, CA.
Rise
Founded in 1976 by Gregory Shlopak (born 1946) and Paul Butman (born 1949), Cyrk started as a company that did screen-printing of customized clothing. The company went public in 1993 and the stock price hovered around $40 per share. The company had several divisions although its consumer loyalty division was the company's cash flow engine.In 1997 the company, "already a significant player through its management of the Marlboro Gear
Marlboro
Marlboro is the name of various geographical locations, frequently named after the town of Marlborough in Wiltshire, England:United States*Marlboro, New York*Marlboro, Vermont*Marlboro, Virginia*Marlboro County, South Carolina; Ohio...
and Pepsi Stuff
Pepsi Stuff
Pepsi Stuff was a major loyalty program launched by PepsiCo, first in North America on March 28, 1996 and then around the world, featuring premiums — such as T-shirts, hats, denim and leather jackets, bags and mountain bikes — that could be purchased with Pepsi Points through the Pepsi Stuff...
continuity programs" acquired Los Angeles-based Simon Marketing, making it one of the largest agencies in the promotion industry. They were named Agency of the Year by Promo Magazine in 1998. Although CYRK lost the Pepsi Stuff account in 1998 as it moved to a Coca_Cola account that never rivaled the success with Pepsi, they boasted McDonald's
McDonald's
McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving around 64 million customers daily in 119 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by the eponymous Richard and Maurice McDonald; in 1948...
and Philip Morris
Philip Morris USA
Philip Morris USA is the United States tobacco division of Altria Group, Inc. Philip Morris USA brands include Marlboro, Virginia Slims, Benson and Hedges, Merit, Parliament, Alpine, Basic, Cambridge, Bucks, Dave's, Chesterfield, Collector's Choice, Commander, English Ovals, Lark, L&M, Players and...
as their two top clients. They also did significant business with Beanie Babies-maker
Beanie Baby
A Beanie Baby is a stuffed animal, made by Ty Warner Inc., which was later renamed as Ty Inc. in late 1993. Each toy has an inner "posable lining" and is stuffed with plastic pellets rather than conventional stuffing , giving Beanie Babies a flexible feel.The original nine Beanie Babies launched...
Ty Inc.
Ty Inc.
Ty Inc. is an American plush animal company based in Westmont, Illinois. By far their most famous line of products are the Beanie Babies, but Ty also manufactures other lines of stuffed toys...
While Philip Morris accounted for 90% of the companies' business in 1994 thru the acquisition of Simon, McDonald's alone accounted for 61% of the consolidated revenue in 1999. On March 31, 1997 Cyrk purchased Monroe, WA based Tonkin, Inc. At the time Caterpillar Inc. was Tonkin's largest account. The Tonkin acquisition was intended to allow CYRk to penetrate the business to business segment of the promtions industry and to serve as a further diversification initiative.
Although based in Gloucester, Massachusetts
Gloucester, Massachusetts
Gloucester is a city on Cape Ann in Essex County, Massachusetts, in the United States. It is part of Massachusetts' North Shore. The population was 28,789 at the 2010 U.S. Census...
, the company's marketing-arm from 1994 to 1999, was a New York-based operation called Integrated Marketing Solutions, with President Laurel Rossi, who left the company in February 1999 to move to Hill Holliday
Hill Holliday
Hill, Holliday is an American advertising agency. It is part of the world's third largest advertising conglomerate, IPG.It was founded as Hill, Holliday, Connors, Cosmopulos, Inc., in 1968 in Boston, by founding partners Jack Connors, Jay Hill, Steve Cosmopulos and Alan Holliday...
Direct as executive VP and director of client services. In 1999, they had $988M in sales. Shlopak resigned in 1999 to join Louis Marx in an investment firm Equity Enterprises (later Brae Capital). Patrick Brady, who had joined the company in 1989 as a 50% owner of the then privately held company and was, in 1999, already president, was named CEO. At the end of that year, Yucaipa Companies with a $25 million investment, became a substantial-enough owner to replace Patrick Brady as chairman with its own Ronald Burkle
Ronald Burkle
Ronald Wayne Burkle is an American business magnate and investor. A major political fundraiser, he is listed on the Forbes 400, with an estimated net worth of $3.2 billion in 2011.-Life and career:...
. However Patrick and Simon CEO Allan Brown were named as "co-chief executives" of Cyrk.
In late 1999, with the company's share price still well below the intrinsic value of the company, the board of directors launched a strategic initiative with DLJ (Donaldson, Lufkin & Jenrette later CS First Boston) intended to maximize its share price thru a plan that would divest certain legacy accounts and certain businesses acquired previously. The plan was consummated in the Spring of 2001. In Oct 2000, the company is described as consisting "...primarily of the Cyrk promotional products operation in Gloucester, the Los Angeles-based Simon Marketing...and a newly formed Internet division...." In the June of 2001 and upon the successful conclusion of its strategic initiatives, Cyrk co-founder Patrick Brady, EVP-CFO Dominic Mammola and Exec VP Ted Axelrod, all resigned. In or around May 2001, the company split into two pieces. The Corporate Promotions Group was sold "once worth $147 million, for a mere $14 million to investment group Rockridge Partners, Inc.", an investor group led by Gemini Investors, LLC. and the Cyrk name along with that. "Bob Siemering, a principal with Rockridge Partners, was COO of Marketing Incentives", a company acquired by Cyrk in 1998. Siemering became the CEO of the new company The remainder of the company changed its name to Simon Worldwide.
Fall
With the Simon Marketing entity as the principal remaining business in the wake of the earlier divestitures, the enormous reliance on income from McDonald's proved disastrously short-sighted when McDonald's Monopoly Best Chance GameMonopoly Best Chance Game
The McDonald's Monopoly game is a sweepstakes advertising promotion of McDonald's and Hasbro, which uses the theme of the latter's board game Monopoly. The promotion has been offered in the United States, Canada, Germany, Hong Kong, United Kingdom, France, Portugal, Spain, the Netherlands,...
turned out to have been rigged fraudulently by Jerome P. Jacobson, the security officer at then-Cyrk-subsidiary Simon Marketing. Although arrests were announced on 22 August 2001, with convictions following, and only one Cyrk/Simon employee was charged, this did not stop McDonald's from voiding its agreement. Phillip Morris quickly followed suit, thereby together removing more than 70% of Simon Worldwide's revenue.
The fallout erased the benefits of the strategic divestitures and severely hurt the remaining business of Simon Worldwide; Ronald Burkle resigned from the board, and fourteen executives left to join Draft Worldwide (now called Draft FCB Group) in Chicago, part of the Interpublic Group, in forming a new unit called Premium Surge within their promotional marketing division Surge. Although initially maintaining an amicable relationship, there were still several unresolved issues between Cyrk and Simon. In May 2002, Simon Worldwide went into liquidation.
The Massachusetts-based portion had evidently been sold. On 20 May 2003, PPB Magazine reported that under new owners Sun Capital Partners, Inc., Gary Vonk had replaced Bob Siemering as CEO of Cyrk. In November 2004, Cyrk, now based in Monroe, Washington
Monroe, Washington
Monroe is a city in Snohomish County, Washington, United States. The population as of 17,304 at the 2010 census.-History:The history of Monroe is intertwined with that of the Great Northern Railway which pushed over the Cascade Range at Stevens Pass and worked its way down the Skykomish River...
appointed Alan Patrick
Alan Patrick
Alan Patrick Lourenço, or simply Alan Patrick , is a Brazilian footballer who currently plays for Ukrainian club FC Shakhtar Donetsk and Brazil U-20.-Santos:...
as CEO. Patrick quickly returned Cyrk to a break even position and with the Company poised for future growth, increased the client list with the addition of GM, developed Caterpillar's new direct to consumer web site, winning Cat's Platinum Licensee of the Year Award in 2005 and 2006 and managed an acquisition of a European and Asian subsidiary company. Alan Patrick, Cyrk CEO, left the company by mutual agreement in late 2007 to pursue other business interests back on the USA's east coast.
Following that, Cyrk introduced Jeffrey Werner as CEO and in January 2008 welcomed Frank Bakirdan as VP of Global Sales. At the same time, Cyrk's financial statements indicate that the cash benefits of layoffs and withheld supplier payments, instituted first by interim leadership and then continued by Werner. As Werner and Bakirdan attempted to formulate their own strategy, further layoffs were executed in a desperate attempt to conserve cash. By the end of October 2008, the bottom fell out of consumer confidence, and sales volumes fell further. Cyrk was forced in November 2008 to release all unessential personnel as well as global sales staff in an attempt to reduce costs, and to sell all business units and assets.
On January 22, 2009, an auction held at Cyrk's headquarters liquidated the company's assets.
Meanwhile, Simon Worldwide is still traded as on pink sheets.