Coalition research notes: “History of Smith-Corona Corp.”

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History of Smith-Corona Corp. ("the Company") [SCO on NYSE]:

Co. incorporated in 1985 in Delaware . Until 1986,the businesses
of the Company were operated by SCM Corporation ( in the
chemical, paper, food business, as well as the businesses of the
Company) . On March 31,1986, SCM Corp. was acquired by Hanson Plc,
which thus owned the businesses of the Company through various
subsidiaries. The typewriter and word processing operations of
the Company were managed as an integrated business within this
structure. On Aug.3,1989, Hanson Plc reorganized the structure,
and the Smith Corona Corporation issued a stock offering for the
restructured Company, which combined the electronic typewriter,
personal word processor, and office supply businesses under the
single parent entity: Smith-Corona Corp. The office supply
business is carried on by two wholly-owned subsidiaries: SCM
Office Supplies and Histacount Corp. The only other major
products of the Company are the portable and compact electronic
typewriter lines and the line of personal word processors.

Hanson Plc is a holding co. with HQ in London.It is a highly
diversified conglomerate which employs 131,000. (St.& Poor’s 90)
Hanson Plc owns 46.3% of outstanding stock of Smith-Corona Corp.

Smith-Corona Corp. HQ in New Canaan,Ct. (65 Locust Ave,New Canaan
06840, 203-972-1471,Pres & CEO G. Lee Thompsen) )

from Smith-Corona Corp. Annual Report & 10K,June 30,1989:

Net Sales: $493,077,000 ( up 25% from $393,587,000 in 1988)
Net Income: $41,994,000 ( up from $38,826,000 in 1988)
Operating Income: $88.2 million (up 31% from $67.1 million in 88)
Net Current Assets: $115,134,000 (up from $72,292,000 in 1988)
Total Assets: $246,335,000
Income Taxes: 1989:$16,294,000;

1988:$19,717,000;

1987:$22,087,000; [why are they going down? ]

Employment: Smith-Corona Corp.employed 4400 on Mar.31,89(Moody’s)
[Standard & Poor’s 1990 Register puts the number of
employees at 3500]
June 30,1989: employed approx.4800 (89 annual rept.)

Unions: Only the Cortland workers are non-unionized!
Manufacturing workers at SCM Office Supplies Inc are
represented by United Paperworkers International Union.
Histacount’s manufacturing workers are represented by
CWA- Printing Sector.
The Company’s Singapore manufacturing workers are
represnted by the United Workers of Electronic and
Electrical Industries.
management considers its employee relations to be good.

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Flexibility:

The company owns or leases space in Cortland, London, Toronto, &
Singapore (plus Ct.HQ). No mention of Mexican maquiladoras.
Co. owns 422,000 sq. ft. for manufacturing in Cortland, and
leases another 208,000 sq. ft. in Cortland for manufacturing &
warehousing.

The company leases land in Singapore from the government . Lease
expires April 30,2033. The company says the Singapore site 1s
used primarily for electronic typewriters and personal word
processor businesses. The company has "pioneer tax status" in
Singapore, and thus pays on taxes on unremitted Singapore

earnings.

Business Strategy:

Sales of personal word processors have been steadily increasing
(as a % of sales: 2.3% in 1987, 8.9% in 1988,16.2% in 1989),
while sales of portable and compact electronic typewriters have
been falling (61.9% in 1987,56.7% in 1988,52.6% in 1989).

Foreign sales have also been increasing faster than sales in US:

Net Sales: 1987 1988 1989
U.S. $334,981,000 $381,050,000 $479,069,000
Foreign $47,856,000 $79,609,000 $137,896,000

In 1989 Annual Report, Co. stated that it "may increase the

number of products that it manufactures abroad in the future."
The Co. indicated that "electronic reference products are
manufactured by independent contractors in the Far East." The
company wants to increase its sales in international markets.

It also notes that the typewriter/word processor business is
rapidly "maturing" with increasing price competition, which will
force it to cut product prices to avoid loss of market share. Thus
it is focusing on ways to cut manufacturing costs.

On Sept.5,1989, the company unveiled a new product: the PWP
7000LT laptop personal word processor, which sells for $899
including printer.

In the 1989 Annual Report, the Co. states:

"Today, we are a leading,global manufacturer and supplier of
portable and compact electronic typewriters, personal word
processors, and related accessories and supplies for use in the
home, school & office." The co, claimed that in 1989 it had
achieved "increased penetration of world markets."

Layoffs:
Alleging effects of Japanese competition, the company said

between 1984-86 it achieved a 50% reduction in worldwide
employment and reduced manufacturing costs. (1989 Annual Rept.)

Aug.11,1989: company decided to reduce the factory work force by

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approximately 450 people at Cortland & Singapore plants. (eee
Mar.30,1990 [Moody’s Industrial News Reports]: "The Smith tae
Corp. announced it will realign its current production leve peers
its Cortland,NY & Singapore manufacturing facilities. aaa

will result in an additional reduction of approximately Sard 450
employees at Cortland offset by an increase of approximately

employees in Singapore."

Lawsuits:

Sept.12,1989: Company named defendant in 17 class aun oiea tavaeed
shareholders arising from the Aug.3,89 stock one aches ee eats
announced Aug.11. Suits allege the company omitted ma jue

and made untrue statements of material facts relating at ope
company’s reduction in workforce levels in Cortland & Pape Tal at dy
Suits were brought Aug.15,89 in US District Courts in as paid
Connecticut, Southern District of New York,District o ge és bs
& Chancery Court of State of Delaware,New Castle County. .
NY federal actions have been consolidated in US District Cour

for the District of Connecticut. The co. denies the charges.

The co. is subject to investigations and lawsuits by NYSDEC &
USEPA (Environ.Prot.Ag.), regarding cleanup ofa closed ;
manufacturing facility and certain waste disposal sites in NY.
The co. believes if it has to clean up these sites the costs will
not be material. The co. has been named a third party defendent
in a 1983 lawsuit by NYS in US District Ct. for Northern District
of NY. Suit alleges the co. is liabke to clean up 2 waste

disposal sites in NY. Mgmnt. does not believe it disposed of any
waste at these sites & is mounting a "vigorous defense."
[J.Dangler--Groton,DEC negotiations about this site. S-C named as
a responsible party in Rosen dump--superfund site in Cortland]

The IRS wants to reallocate $13 million of income from Singapore
to US typewriter business for 1983,84 & 85. Co. is contesting
this.

Sept.8,1989: Franklin Computer Corp. named co. ina lawsuit in US
District Court in NJ about patent/copyright infringement & unfair
competition.

Foreign Trade Zone: talked to Tom Heckard, asst. to Boehlert,who
got this status for S-C. Purpose of program to allow firms to

stay in US with US labor & compete with Japanese, etc.Can import
components to Cortland without a tariff, & then either sell
finished product ( with Cortland "value added") in US ot re-
export for sale abroad with a lower export tariff. Not sure if
this just applies to certain items imported or to whatever co.
brings into Cortland (e.g. from Singapore) .He will find out & let
me know. Heckard: 202-225-36650 (800-235-2525/Utica) 71127
Longworth Bldg.DCc20515

Heckard said this is the only fed. assistance S-C has r i
; - ecei
except for normal tax rebates. ampam

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