To: North Carolina ABC Boards; N.C. ABC Commission
From: Danny Whitford and Jim Hurd
CC: CDS & SCRC Staff Members; CDS & SCRC Vendors
Date: February 8, 2016

In a move driven by opportunities to leverage complimentary technologies and boost software development and support capabilities, Carolina Data Systems and SCRC have combined as one company. The merger increases the already substantial commitment by both companies to North Carolina’s ABC boards.

The primary operating unit of Carolina Micro Solutions, Inc., Carolina Data Systems (CDS) is headquartered in Fayetteville with field engineering offices in New Bern and Marion.

SCRC, Inc. (SCRC) will continue to operate out of its Statesville office, a full-service computer sales and support facility it has occupied for the past 40 years.
The transaction fortifies the combined company’s presence as the principle provider of computer and point-of-sale systems to ABC boards throughout the state. About 145 of the state’s 166 county and municipal ABC boards will be under the company’s service umbrella.

Terms of the agreement were not announced as both companies are closely-held, family-owned businesses.

HISTORY ON TOP OF HISTORY

The merger adds historical depth to the expanded company’s corporate profile. SCRC President & CEO Jim Hurd established his firm upon his departure from NCR Corporation in 1976, more than a decade before CDS Chairman and CEO Danny Whitford co-founded CDS with NCR veteran Joe Sullivan and programmers Laurie Lee and Scott Swanson in 1987.

Both firms sprang up in the early days of microprocessors and charted parallel growth paths as ABC boards adopted the technologies and then systematically upgraded over the decades to newer generations of computer equipment and software.

The ties established between Hurd and Sullivan during their parallel tenures at NCR in the 1960s and ‘70s played a key role in initiating the dialogue between Hurd and Whitford that ultimately led to the deal. Hurd and Whitford had their customers, their families and their employees in mind as they considered each other’s proposals.
“This merger will allow the two companies to combine resources, making a much more efficient company going forward,” said Hurd, who will occupy a position on the merged company’s Advisory Board. “I feel we can now better address the changes that ABC Boards are experiencing and be well-positioned for future changes as well. I would like to thank our loyal customers and assure them that SCRC will continue to service their system needs.”

Hurd’s wife, Ava, has also been appointed to the company’s Advisory Board. As SCRC’s Vice-President, she has been involved in all aspects of the firm’s administrative operations since its founding.

WHAT THE MERGER MEANS FOR CUSTOMERS

Whitford says significant impacts for customers will come in the form of broader product offerings, lower prices and more depth in the company’s ability to provide service and support.

“It’s a good marriage for all parties concerned,” said Whitford. “Two really good businesses that were built on service are coming together. The economics will help our company and our customers in a lot of ways as we coordinate and better organize the resources of both companies over the next year or two.”

The most immediate benefit for customers, observed Whitford, will be access to hardware and software products that were previously offered by CDS or SCRC, but not by both. Whitford identified a pair of examples of how this will present opportunities for customers.

“CDS’s Linux-based POSSix™ point-of-sale system is installed in more of the state’s ABC boards than all competitive products combined, but some of our customers have been asking for a Windows-based, touch-screen alternative in recent years,” Whitford said. “SCRC brings a proven Windows POS solution that satisfies that need and immediately plugs a gap in our product line.

“Conversely, CDS offers a proprietary, Windows-based inventory control system and a suite of excellent accounting modules hosted on hardware ranging from basic PCs to rack-mounted servers. The overall solution can be configured for the largest ABC boards or scaled down for small ABC boards. This will give SCRC’s customers access to alternate paths in the back office.”

COMPETITIVE ADVANTAGES

Both companies developed and own the complete sets of source code for their respective inventory control and point-of-sale systems, a distinction, Whitford maintains, that sets the solutions apart from the mix of hybrid and third-party software offered by competitors.

“This gives us important advantages that are beneficial to the customer in terms of support and customization,” said Whitford. “When there is a bug or when there is a request for program modifications or a special report, we don’t have to worry about nagging an outside vendor to help us address the issue. We have the ability to go to the root of the code and address it ourselves.”

CDS & SCRC: THE NEXT GENERATION

Whitford’s son, CDS President and COO Christopher Whitford, will continue in that role for the combined enterprise. Jeff Edmonds, step-son of SCRC owner Hurd, will be the company’s Vice-President of Sales with broad responsibilities, including direct oversight of the Statesville operation. The two will share executive sales duties across the state.

Both Chris Whitford and Edmonds were groomed over a number of years for management roles by their companies’ founders and will jointly carry out the integration of the two companies.

Sullivan, a CDS Advisory Board member, still serves as the company’s Vice-President Emeritus. He describes the deal as a generational leap forward that demonstrates the firms’ financial commitment to serve ABC boards for decades to come.

“Both companies began successful transitions to young leadership several years ago,” said Sullivan. “Christopher Whitford and Jeff Edmonds have already demonstrated they are up to the task. They’ve kept their companies on growth paths while managing the challenges of rolling out new technologies. That’s a complex set of responsibilities and they’ve managed it well.

“With the personnel skills and talents of both organizations at Christopher’s and Jeff’s disposal and with input from Danny and the advisory board, the company should continue to prosper and be in a position to invest more than ever into R&D and staffing. This should give ABC boards confidence that their needs will be met into the foreseeable future.”

After developing a friendly rapport and mutual respect as rivals over the last several years, the younger Whitford and Edmonds now look forward to collaborating for a common cause.

“I think this is a match made in computer and POS heaven,” said Chris Whitford, who worked his way up the CDS ranks after starting out with the company as a janitor as a teenager. “Jeff and I became friends and respected each other even when we were competitors. Now as one company, we can take advantage of the best qualities of both companies. Customers will have access to more products and more service personnel, but they will still be able to work with the same people they’ve worked with for years.”

Edmonds also grew up in his family’s business, progressing during his 29-year career through all phases of SCRC’s operations. He has been a catalyst in the firm’s rapidly growing presence among ABC boards, successfully cultivating new customers while overseeing the service relationships with existing customers.

“This partnership with CDS marks a major milestone for SCRC. It will enhance our presence with North Carolina’s ABC Boards and generate great opportunities for our employees and customers,” said Edmonds, whose technical background combined with his management and sales experience adds a new element of versatility to the merged company’s executive ranks.

Under the new organizational blueprint, SCRC will continue to conduct business under the name with which its customers are familiar even as the two organizations undertake the process of an integration plan. The strategy calls for all of the branch offices of both companies to maintain operations without interruption.

RED HOT VS. LUKEWARM

For ABC boards, Danny Whitford contends, the merger puts into sharp focus a primary difference between his company and its competitors.

“We have always been here for ABC boards and we are here to stay,” he said. “Other vendors, past and present, are tied to histories of ramping up their attention to North Carolina ABC boards and then diminishing their interest or cutting their direct ties when hurdles or other opportunities arise. They test the waters with ABC boards, but they are lukewarm over time because ABC boards are not their primary market. They can’t make up their minds if they want to be in or they want to be out.

“… Then there is us. We didn’t just test the waters, we jumped in head first decades ago and have grown with ABC boards ever since. Along the way, we have stepped in to help a long list of ABC boards when their vendors lost focus or headed in different directions. Ironically, some of those that were engaged in that volatile history are testing the waters again. … As for us, we’ve been here all along. We don’t get distracted by other vertical markets. We are red hot for ABC boards and always have been.

“Our history demonstrates it. This merger shows that our company intends to continue partnering with ABC boards for another generation even after Jim and Joe and I are put out to pasture.”