Shareholders OK Liquidation of Burbank Photo Firm

Drewry Photocolor won’t be in the picture much longer as one of Southern California’s major photo processors.

At a special meeting Monday, shareholders approved a plan to liquidate Drewry. By the end of the year, the 42-year-old Burbank company is expected to be out of business.

The move comes in the wake of a decision by Drewry’s management to sell for about $5.7 million the company’s main photo processing facility in Burbank to Osco Drug. About 40% of Drewry’s sales are from a contractual arrangement with Osco to develop film and make prints. Now, the company plans to sell its three remaining photo processing facilities--in Tacoma, Wash., Denver, Colo., and in Hayward near San Francisco.

In documents sent to shareholders, the company said Osco is paying a fair price and that liquidation would allow shareholders a chance to cash out at a price that eventually could exceed $11 a share, about twice what the stock generally has traded at in recent years. Directors also noted that staying in the photo processing business is risky because it is a volatile industry.

Ironically, the decision to liquidate comes as the company is enjoying its most profitable year. For the nine months ended Jan. 23, the company earned $1.6 million, compared to $162,842 a year earlier, as sales climbed 10% to $24 million. The company attributes the improved results primarily to more aggressive marketing of photo processing by Osco and to cost cutting the past three years.

But directors were faced with two difficult problems that company executives contend make liquidation the best alternative.

Osco, which accounts for 70% of the orders processed by the Burbank plant, made it clear to Drewry that it wanted to own and operate its own processing facilities. Had Drewry not sold, the company would have been faced with losing its major customer, said Harold W. Ellis, Drewry’s vice president of finance.

The second problem was increasing competition from three sources: a new photo processing venture established by the industry’s two largest firms, Eastman Kodak and Fuqua Industries; the proliferation of one-hour film developing shops; and the move by drug chains such as Osco to own their own film labs.

“A lot of the regional photo finishers are going by the wayside,” Ellis said.

Drewry is a low-profile company that, despite being in the photo finishing business, historically doesn’t even put pictures in its annual reports.

The company was founded in 1946 by William W. Drewry Jr., now 79, who still sits on the company’s board of directors and controls 24% of the company’s shares. His son, William W. Drewry III, 50, who controls 6% of the stock, is the president and chief executive officer.

Although the stock trades publicly, few shares change hands because 45% of the stock is owned by officers and various Drewry family members. The stock, which climbed to as high as $12.50 after the disclosure of the sale of the photo lab to Osco, closed Monday at $9.25 a share.

Ellis said shareholders can expect a substantial payment before the end of the year. Some money, however, will be put into a trust for as long as three years while any tax and legal matters are resolved. After those issues are resolved, he said, whatever money is left will be paid to stockholders.