Document aBeyNZ54LKjZkvKN350wG01v9

0^A.0'\\V>' V! ^V\>- e~<S<v ->*<'-^ - ^ae'fioVo^' V> 6L03B7A1 "99 * ' jw hA ? i? * V*' >j | ***' -S\* ' :/> irnes . . . ar/.' corporators, mar and all his institutions, must change with them. trial and military. In each market, SCM develops, To serve these four markets, SCM has clevel office equipment, foods, chemicals, coatings tronics, appliances and telecommunications. This repor| describes SCM on the threshold of the 1970'^, in terms of markets, organiza tion, facilities and policies for growth. And it tells about some of the people who will make further growth possible. Microphoto c|f am:* of tin- SCM s now Cju-.to ] .1. Ih<< [; llOhk rolCtlUtOr I : i Ctu i.w'ry <>nd MOS !'. i: i i , 1 .?C0 n;et.;[ ti>.ido io .\i fil DS3'7,f3 SERVING BUSINESS 21 Per Cent of SCM Sales One index to the size and potential of the business market is the growing number of individual business enterprises: over 225,000 were formed in 1968 alone. The sale of equipment to create, process, store and retrieve, copy and distribute business data constitutes one of America's most exciting growth markets. SCM serves this market with Smith-Corona Merchant Division typewriters, calculators, office copiers, and adding machines, Allied/Egry business forms, and land-mobile communications equipment and computer peripheral equipment from kleinschmidt. Office Copiers The office copier industry, one of the nation's great growth markets throughout the 1960's, is expected to continue growing in the 1970's at a rate of three to four times that of the U.S. Gross National Product. A total of five models of the SCM copier family have now reached the market; research into new and improved versions continues. In addition to manufacturing copying machines, the Smith-Corona Merchant Division produces a substan tial portion of the coated paper, toner and replenisher used in its copiers, in the areas of paper coatings and chemistry, the Smith-Corona Merchant Division has increasing assistance from both the Glidden-Durkee and Allied Paper Divisions, SCM copiers are sold and serviced by 2,500 com pany employees in the U.S. and eight foreign countries. A network of SCM distributorships markets the copiers in 70 other nations of the world. Calculators Total U.S. calculator sales are currently estimated at over $200 million per year, and growing at almost an eight per cent annual rate. This growth Is occurring during a period, of radical change for the industry. Electronic calculators, equipped with visual display or print-out mechanisms, are rapidly replacing rotary electrics, the mainstay of the industry for decades. Over the past two years, Smith-Corona Merchant has phased out production of electromechanical rotaries and has designed, built and brought to market a family of electronic, solid state calculators under the '`Marchant" and "Cogito" trademarks. The calculator industry requires the marriage of technology and marketing skill necessary to compete effectively in many areas of modern business. Such technological advances as MOS chip circuitry were used by SCM engineers to produce the first Americanmade, ultra-compact, solid state calculator. To capi talize on these advances, SCM employs 500 experi enced calculator salesmen and 1,500 SCM-trained servicemen in more than 300 U.S. locations. Abroad, sales and service are handled either by direct SCM locations or distributorships. SCM is not alone in its ability to produce electronic calculators. But only the top three firms--of which SCM is currently the strong number two--possess the orga nization and skills to provide back-up support in the customer's own office, and to his specific requirements. GLD3874A Office Typewriters In office typewriters, SCM has been especially suc cessful in designing intermediate-size machines for that portion of the office typewriter market where more expensive, heavy-duty typewriters are not required. Using design and production know-how gained through its development and large-scale manufacture of electric portable typewriters, SCM maintains a satisfactory position in the electric office typewriter market. Its compact office electric sells'for less than one-half the price of other electric units available. It is a desirable alternative for smaller businesses. A wide selection of full-size, full-duty office electric and manual typewriters also bears the "Smith-Corona" trademark. In terms of units, SCM is number two in the domestic production of all electric office typewriters. Business Forms U.S. sales of business forms more than doubled in the 1960's. Shipments are expected to exceed $1 bil lion in 1969, continuing the industry's average annual growth rate of about 10 per cent. Future growth will be assisted by the increasing complexity of office ma chines and paperwork processing and the economic need for even small businesses to automate routine work and procedures. Sales of continuous forms for electronic data proc essing reflect the phenomenal rise in business' reliance on computers for communications and administrative functions. SCM's Allied Paper Division is one of the nation's large producers of business forms and is concentrating much of its efforts in the development of further direct sales to the users of such forms. Land-Mobile Communications Rounding out SCM's service to the business market is a growing family of land-mobile communications equipment. The prototype product in this relatively new SCM category is Kleinschmidt Division's "TeleScripter," first designed for law enforcement purposes. The `'TeleScripter'' can receive a printed message at a rate of 75-words-per-minute in a moving automo bile, truck, train or boat, even when the receiver is unattended. It has many applications for professional people who must always have instant access to their home base. Kleinschmidt also serves the business market with data terminals and automatic switching centers used as communication input and data printout devices. Meiabs. SCM's newest acquisition, is well into mar keting its unique "Attache Phone," a telephone in a briefcase. The "Attache Phone" is especially valuable to contractors and others who must communicate from remote locations. GLD337A? 3 h r < 4 ---- ' ;---------- ------ ---------------------------- ------ ------ SERVING CONSUMERS 38 Per Cent of SCIW Sales Technology is not all rocket ships and teaching ma chines. Technology is also the means of producing new and better products that will make daily living more rewarding, it is, for example, food and flavor chemistry and techniques for food preservation. SCM has benefited from its ability to apply its tech nological skills to the consumer market. It is no coin cidence that the period of SCM's greatest growth has paralleled a dramatic rise in the American consumer's purchasing power. Consumer expenditures have risen ev ery year for more than 25 years, and will increase stilt more in the 1970's. Discretionary spending power--the amount remaining to individuals and families after their basic living needs have been met--has doubled in the past 10 years and is expected to double again by 1975. Abroad, tens of millions of peo ple are only now beginning to experi ence spend ing power of any kind. In well developed industrial economies spending power is of prime importance. Increased spending mates necessities out of luxuries and practical realities out of housewives' dreams of labor-saving devices. An affluent society not only opens upnew mar kets but duplicates present ones. What the two-car family did for Detroit, the two-house family and dupli cation of household purchases is doing for a host of other industries--including paint, portable typewriter and appliance manufacturers. But if the markets are big, so too is the competition. Today's buyer is well-educated, time-conscious and de manding. He reties heavily on recognized brand names and past performance. He welcomes a bargain but will not tolerate poor quality. He expects a company to stand behind the product if sells him. For SCM, sales to consumers around the world total more than $300 million annually. In 15 plants here and abroad, the company each day produces more than 2,000 portable typewriters, 3,000 vacuum cleaners; 11,000 irons, 5,000 coffee makers and 13,000 toasters. Along with these, go tens of thou sands of such other household appliances as blenders, ice crushers, ice cream makers, home adding ma chines, fruit juicers and ironing tables. These products bear names that are wel! known and well respected, including "Smith-Corona," "Mary Proc tor," "Sllex," "Lifelong" and "Shetland/Lewyt." From another dozen SCM plants come a vast number of Durkee food specialties. Packed under such brand GLD33746 names as "Durkee,'' "0 & C," "Dailey," "8. M. Reeves," and "Gretcfien Grant," they include spices, pickles, olives and other specialty-type foods, sauces, flavor ings, frozen hors d'oeuvres--and a host of others. Every day, another score of factories produces thou sands of gallons of Glicfden paints, lacquers and var nishes. Two-thirds are destined for the do-it-yourself handyman and painting contractor in whose behalf Glidden pioneered water-soluble paint. SCM lines hold strong positions in their specific product markets. In the U.S., 38 per cent of all portable typewriters sold are made by Smith-Corona. Despite the number of appliance manufacturers, ProctorSilex is number one in the U.S. toaster market and accounts for 43% of sales; it is number two in electric irons and accounts for 24% of total U.S. sales. In some food lines, Durkee is the world's largest pro ducer and packer; in others it is a major factor. Glidden is the fourth largest U.S. producer of consumer paints. In these as in all consumer industries, volume pro duction of quality products is the key to a company's economic health. Large-scale production lends itself to operating efficiences and economies that, in turn, can lead to excellent profit margins. It is difficult to foresee a time when consumers will have all of everything they want. The company that can determine and meet today's wants assures itself of cur rent sales. The company that can anticipate and meet the developing wants of on-coming generations, has laid the foundation for continuing success. In both areas, SCM consumer operations have proven capabilities. SID38?4? SERVING INDUSTRY 39 Per Cent ofSCM Sales American industry both produces and consumes goods at a phenomenal rate. The Federal Reserve Board's Index of Industrial Production shows the amount to be growing at about four per cent each year. Many industry categories within the index, of course, grow at rates considerably in excess of the all-industry average. SCM has made a conscious effort to direct its industrial business to the service of rapidly growing industries. Three SCM units serve one or more areas of the industrial market: Gtidden-Durkee, Proctor & Schwartz and Allied Paper. Chemicals, Coatings and Resins SCM's Glidderi-Durkee Division sells a wide variety of paints, lacquers, varnishes and resins to industry. Glidden is the fourth largest producer in the $2.5 billion market for these products, and about one-third of its output is used by manufacturers. Glidden prod ucts for industry cover the full range and include such advanced products as acid-resistant maintenance paints and materials for electrocoating (a process in which positively charged paint particles are fused with a negatively charged metal surface). Glidden's poly ester resins used in conjunction with fiberglass have created fabricating materials for boats, automobiles and building products far superior to traditional materials. As an illustration of SCM's orientation toward indus tries with good growth rates, since 1962 Glidden has captured some 40 per cent of the general metal fabri cating market for electrocoating materials. Economists estimate the demand for this product is growing at several times the rate for industrial coatings as a whole. Electrocoating Is rapidly gaining favor with the auto motive and metal furniture industries. Glidden also serves industry with inorganic chemi cals such as titanium dioxide and other pigments, and cadmium colors widely used in the paper, paint, rubber and plastics industries. The Division is one of the coun try's three leading producers of frits, the glass-like raw materials used in making ceramic glazes and porcelain enamels. The bright orange roof, trademark of hun dreds of Howard Johnson restaurants, owes its exist ence and continued lustre after years of service to Glidden products. An increasing variety of Glidden organic chemicals are sold to manufacturers of detergents, medicines, vitamins, perfumes, soft drinks and candy. These chemicals, the result of years of research into the synthesization of the essential oils that occur in nature, are among the fastest growing of all chemical prod ucts. The market for turpentine derivatives is growing at an annual rate of eight per cent or better, and SCM commands a thirty-eight per cent share of the market. Metal powders are used in increasing quantities by the automobile and appliance industries for compact ing Into complex gears and other parts. Metal powder parts are less expensive to fabricate and often have superior properties to metal parts manufactured by machining. Glidden-Durkee's Metals Group produces powdered metals at two plants in the U.S. GLD38748 Industrial Foods and Food Service Durkee is a leader in little known but important industrial food businesses. Durkee refines and proc esses vegetable oils into a wide variety of specialized materials for bakers, confectioners and cake mix man ufacturers. The largest independent supplier to this market, processes developed by its food chemists are used to make many new ingredients basic to modern food technologies. Durkee food products, specially prepared and pack aged for the food service market, are used by restau rants, schools, vending machine operators, caterers and other institutional food users. Products such as Proctor & Schwartz The entire output of Proctor & Schwartz' three plants in the U.S. and one each in Scotland and Australia is sold to industry. Most of the present production is custom-engineered industrial drying equipment and fiber processing equipment principally sold to the food, chemical, textile and tobacco industries. Because of Proctor's experience in heat creation and transfer for drying purposes, it is expanding into related areas. Proctor & Schwartz recently announced the de velopment of a drying unit equipped with a device of its own design that may have a significant contribution to make in the field of air pollution control. cooking oils, frozen portion-control meats and poultry, prepared main entrees, canned macaroni and tuna salads, hors d'oeuvres and many others are marketed through 1,200 independent food service distributors served by a trained Durkee sales force. Pulp and Paper Allied Paper's two pulp plants have an annual ca pacity of approximately 200,000 tons, and its four paper plants can produce 190,000 tons of paper a year. These plants are located in Jackson, Alabama and Kalamazoo. In addition to paper for business forms, Allied produces book papers, commercial printing papers, and tablet and colored construction papers. Of these, book papers are the most important, Allied is one of the nation's leading suppliers of paper for textbooks, encyclopedias, dictionaries and related ref erence and instruction materials; it is the leader in bible-weight papers used in dictionaries and similar reference works. Sales of books, directly related to the increased educational attainment of the population, are expected to exceed $2.6 billion in 1969. As we enter the 1970'S, for the first time over half of all adult Americans will have completed high school; 25 million will have had some college and 12 million will have completed col lege. Ir a recent 20-year period (1947-67), 30 million Americans graduated from high school and seven million from college. They provide a strong growth market for book manufacturers and their suppliers. GLD38749 7 ,*v SERVING GOVERNMENT AND THE MILITARY 2 Per Cent of SCM Sales Corporations can participate in the government/mili tary market in two principal ways: equipment sales and the performance of services, usually under research contracts. Two SCM operations are directly involved in both areas: Kleinschmidt Telecommunications Division and the Melabs unit of Smith-Corona Marchant Division. Government/military sales will probably remain under 10 per cent in the foreseeable future. qua lity of its equipment and the degree of its innovation. Today, Kleinschmidt is at work on a new generation of military teleprinters representing an important ad vance in utility and reliability. The new equipment will also provide the military with computer terminals that meet the severe requirements of reliability in the field. At FAA installations, Kleinschmidt equipment helps safeguard and control the nation's heavy commercial and private air traffic. In air terminals, it speeds pas senger reservations. Located in mobile trucks and vans and on the podiums, it expedited the coordination of news coverage at both 1968 major party conventions. Kleinschmidt reliability is best summed up in this Kleinschmidt Division -- For many years, Kleinschmidt has been a prime sup plier of telecommunications equipment to both the U.S. Army and the U.S. Air Force and during most of that period one of two suppliers to that market, the other being a subsidiary of the Bell System. The Kleinschmidt name has earned respect for the fact: over the most recent one-year period, 3,500 complex telecommunications installations produced no work or shipment stoppages due to unsatisfactory product quality and resulted in no unsatisfactory field reports from on-site government inspectors. A recent Kleinschmidt development is a mobile com pact electronic page printer, the 'TeleScripter," de signed for use byfleet vehicles, police cars and railroads. Melabs Melabs, an electronics research and engineering firm acquired early in 1969, is equally committed to high-technology markets. A part of the Smith-Corona Marchant Division, Melabs will provide electronics ex pertise to other SCM units. Melabs products and services are focused on four areas: radio communications, military systems, elec tronic engineering, and components and instruments. Melabs has designed and brought to market a supe rior portable radiotelephone. The "Attach^ Phone," teamed with the Kleinschmidt "TeleScripter," may create a communications systems capability for busi ness use rivaling those presently reserved to the military. Melabs is a leader in the development and manu facture of ferrite components, including isolators and isoductors. These are sold to users or may be combined with other devices to form larger components with a greater usefulness, such as filters and parametric amplifiers. GLD38751 SCM POLICY FOR GROWTH SCM is an operating company: Each of our five divisions is assigned full operating authority. This decentralized authority is balanced with centralized administration in several areas, and the establishment of three key points of control: careful budgeting, frequent inter-divisional meetings and painstaking reporting. SCM is marketing oriented: We are not afraid of new markets or new ways to serve old markets. We constantly seek ways of combining our varied resources to create new areas of opportunity. Research, manufacturing and acquisition policies are all aimed at providing a quick SCM response to the changing needs of the market place in the form of new and better products. SCM is opportunity oriented: The Company has passed what is expected to be the point of critical size needed to compete in the 1970's, but we do not discount the possibility of acquiring other firms should future conditions make it desirable and feasible. Wearealert to the existence of other companies whose unique capabilities, in combination with those internally generated, can build bridges between two or more existing SCM businesses. SCM is technology oriented: We recognize the impact of technology--our own as well as that of others--on the political, economic and social framework within which a modern business operates. Our search is for positions of technological leadership in growth industries. We realize that if we are to grow, we must do it by concentrating our resources in faster-growing markets and through development of proprietary, higher-technology products. SCM is future oriented: Over the next five years our goal is to increase sales by an average of 10 per cent a year. If we are successful, this will mean sales in fiscal 1974 of $1.3 billion. 10 GL038752 SCM: MANAGING FOR GROW! H 1 ilC: fast I , I- e of 1 nOde: n hns 111 a . and tin tin ,i for quick arc III.; h dec isio' i . Ill ; > a ( Olilp: -ti torn between oriip i:, . I.u r.oly . i 111 dirt Of ( far [|. a- tition lx: . . ( II tl, t i man,;. < i ne; i U. }\ < O! I ip. ill V con rise ; a fall <d m O- l sOldy' on t da b.r.ls of the quality o' ! , mas ; (meal SCM ;i .ole-. h ..-I to Ic.d dine a.lid la a lllalli- inf*, an c fu r.live i a'laeOlnan t h an line. i.el uv.it its crpaei . ..lion SC MS lie.'ich; uj.,il tCt s Ilia ! I a a a III (,) II 1 1 a Utti- mately n .o; is'! .U] for lli<- r (Ml i't r.y's ii (( S. ! loadqu,: tats n laaraaei it ;iv. pole y din e- tiorr, me. ; ..IK'S 0 iC>ho:ni(. pc ,f(m n.'inc e ai id tic ciclcs Hi aillO' ; ion of \n urn a and (..dpi! i! resourc. v/i 111111 p io c otiip;n r it alsci fin. !-. and opens ip - .-. ate.; d1 o! `e iowth 1(1! tli!.- bom( fit of 48,000 d 1 i roll. '1 Pints. OS.CK ){) , uiplOVi ( . and millions i : r ustoai If f V Within I lie cm :n dir Ur ii till a. C.V fl )o! Ido five SC!.' div'is'o ' l('> IV .1 l.tf ; cl, side unitail r(i mrinor.cn at est j ' rpl !' >0. [ h i I'f-an'od iiy a chief ( >' nti'.e v. or , l \ i : 1 pn .idald n ! S( To rind vrlit' at inn of 1 if .p i ( i . Ur fur fl ;a ' i." < C i .! a! 0|). t mi ! j\ c i;., s r i; t ! a 1 > t I otiv. Iliad have an i a im its 1 /Mj.vUrj i uf ! a . indi i dry and tiit: Intel - ill ' 1 V If) f r; .. ; ) n ! i 111 a i n a.-. (I nnuiir ( diti< ' j " 0 f 1. !! In. haiii lal) s 'Hie dor a fall.') .' 1 ' t; III illlr dan ini ia.i id a all; n iior man ana! It 1 Uii in t: .(; ah . skill SCM' Iosif!) sinn ehii ! i ;i .* o! ilrt in';': an ' anil am 1 (1 ./i .!r r m ? j, Hill , d In 111a Ik dlld that a l;e . a and II .r! < ( ill Ijp ii , C .in In ifi: Idly and off; lively i III . 'ih.-.t it r an : 1 the 1(11 v t an produce 1 . aber ; mops Am'1 II, d III i * a nan;/- irip, the i 1 i pflt i d 1' r of itiriiv idu d III.' a do Is of the orp.,v ;i/ation i i f oil Ctffo 1 tin ' m id11 io at urn limited r. pporlici i! / for por.-. Of*. ' dev; .-lofi meat Emerson E. Mead President end Chairman of the Board. Mr. Mead was elected chief executive officer in 1960 and has played the key role in transforming SCM into a major corporation. After operating his own electrical manufacturing business, Mr. Mead joined Kleinschmidt Lab oratories. He was executive vice president when Kleinschmidt was acquired by Smith-Corona in 1956. G. Robert Boiler Vice PresidentCorporate Development. Mr. Boiler exercises major responsibility for SCM's corporate development and acquisition program. He joined the company in 1964, having previously served as vice president, Hoover Worldwide, and vice president. Business International, New York. Mr. Bolter is a graduate of North western University and attended DePaul University Law School. George F. Bums President, SmithCorona Marchant Division. Mr. Bums has headed the Smith-Corona Marchant Division since 1967. His experience with the company en compasses more than 20 years In posts ranging from territory sales man to vice president--marketing. He attended Columbia University and is a director of Business Equip ment Manufacturers Association. Kleinschmidt Telecommunications Division. Mr. Cadamagnani has been associated with Kleinschmidt since Its formation In 1949. He was appointed vice president and gen eral manager in 1961 and presi dent, Kleinschmidt Division, in 1967. He is a graduate of Loyola University. Donald E. Erskine Vice PresidentController. Mr. Erskine previously served as Controller of The Glidden Company. Prior to joining Glidden in 1952, he was a member of the tax staff of Arthur Andersen & Co., an internationally-known public ac counting firm. Mr. Erskine is a grad uate of the University of Illinois where he also earned a law degree. George E. Hail Vice President and General Counsel. Mr. Hail joined SCM in 1961. Previously he had been associated with the New York law firm of Sullivan & Cromwell, and was an assistant counsel of Campbell Soup Company. He is a graduate of West Virginia Univer sity and Harvard Law School. Ward D. Harrison Chairman, Allied Paper Division. Dr. Harrison, who Is also Allied's chief executive officer, has gained national recognition for his pioneering and Innovative work in the field of paper technology . He is a graduate of Iowa State College and received his Ph.D from the Institute of Paper Technology. Richard B. LeVino Vice PresidentResearch. Mr. LeVino, a graduate of Pratt Institute, joined the Company in 1957 as director of product planning, and was named to his present post in 1960. Earlier he was with the U.S. Army Signal Corps Laboratories, where he was chief of the televisual branch. j ' t I 12 &LD38?54 William V. Cawley Treasurer. Mr. Cawley is one of a number of execufives of the Glidden Company assigned greater responsibilities following the 1967 merger of Glidden into SCM. A graduate of Fenn College and the Western Reserve University Law School, he joined Glidden in 1962 and served as tax manager before coming to SCM's corporate headquarters. Paul H. Ellcker Vice President-- Finance. Mr. Flicker has been SCM's chief financial officer since 1956. He became associated with the company in 1956 as treasurer, having previously served with Ford Motor Company and McKinsey & Co. A graduate of Yale University and Harvard Business School, he is a director of the American Managemeat Association. Paul W. Neidhardt President, Glidden-Durkee Division. A graduate of the University of Illinois, Mr. Neidhardt became president of Glidden-Durkee in 1968, following a 17-year career with that company. His early responsibilities were in the company's marketing and advertising functions. Later, he served as vice president for the Coatings and Resins Group, and executive vice president for all Glidden operations. Walter M. Schwartz, Jr. President, Proctor-Silex Division. Mr. Schwartz, who attended Princeton University, has been chief executive of ProctorSilex since 1960. Advancing from his first job of on-the-line production work, he carried out a wide variety of sales and executive re* sponsibilities. He became vice presidentofSCMin 1967 when ProctorSilex was made a division of SCM. Emerson E. Mead* Chairman. Elected to the Board and its executive committee 1956; chairman since March, 1968. Mr. Mead is president and chief executive officer, SCM. Richard C. Bond* Elected to the Board 1967. Mr. Bond is presi dent, board of trustees, John Wanamaker, Philadelphia. John T. Booth Elected to the Board 1965. Mr. Booth is a general partner, Eastman Dillion, Union Securities & Co. George F. Bums Elected to the Board 1968. Mr. Burns is presi dent, Smith-Corona Merchant Division; vice president, SCM. Lewis H. Durland Elected to the Board 1956. Mr. Durland is the treasurer of Cornell University and chairman, First National Bank and Trust Company, Ithaca, New York. Paul K. Elkker* Elected to the Board 1964. Mr. Eiicker is vice president-finance, SCM. George E. Hall Elected to the Board 1965. Mr. Hall is vice presi dent, general counsel and secretary, SCM. Ward D. Harrison Elected to the Board 1968. Dr. Harrison is chairman and chief executive officer of Allied Paper Incorpo rated, an SCM subsidiary; vice president, SCM. Wallace W. Knox* Elected to the Board 1958. Mr. Knox is senior partner, Knox, Goforth & Ricksen, Attorneys, Oakland, California. Paul W. Neidhardt Elected to the Board 1967. Mr. Neidhardt is president, GIWden-Durkee Division; vice president, SCM. Crocker Nevin Elected to the Board 1967. Mr. Nevin is president and chairman of Marine Midland Grace Trust Co. of New York. Walter M. Schwartz, Jr. Elected to the Board 1966. Mr. Schwartz Is president, Proctor-Silex Division,- vice president, SCM. James M. Symes* Elected to the Board 1962. Mr. Symes is former chairman of the Pennsylvania Railroad Company and serves as a director of Penn Central Company. George S. Warner Elected to the Board 1967. Mr. Warner is executive vice president, Glidden-Durkee Division. William I. Myers* (Emeritus) Elected to the Board 1950. Dr. Myers is an authority in economics and a former dean of the School of Agricuitureof Cornell University. * Member of executive committee GLD38755 13 Coatings and Resins Adhesives Industrial Foods Food Service Consumer Foods Pigments and Color Ceramics Metal Powders Organic Chemicals 34 Typewriters Calculators Electronics Copier Papers Office Copiers Home Electric Appliances Floor Care Products Industrial Process Equipment Ki f INSOMMMu ti i tCOMMUNIC/- ION' ! I 'IV'K ION Pulp and Paper School and Office Supplies Converted Specialty Products Business Forms Telecommunications Equipment Data Terminals GLD38756 SCM IN GROWTH MARKETS Product Portable Typewriters Copiers & Supplies Calculators Electric Office Typewriters Adding Machines Toasters Irons Coffeemakers Blenders Floor Polishers Vacuum Cleaners Industrial Drying Equipment Coatings Edible Fats & Oils Spices & Extracts Titanium Dioxide Copper Powders Iron Powders Porcelain & Ceramic Coatings Turpentine Derivatives Paper Business Forms * SCM estimates Total U.S. Market* (in Thousands) 2,100 units $1,000,000 275 units 800 units 1,100 units 6,300 units 9,200 units 7,000 units 5,500 units 950 units 6,500 units $60,000 880,000 gallons 9,500,000 pounds $95,000 800 tons 20 tons 130 tons 200 pounds 200 pounds 6,800 tons $1,000,000 U.S. Annual Growth Rate* 7% 15% 8% 8% 10% 5% -- 5% 5% -- 14% 8% 5% 4% 3% 6% 3% 9% 4% 8% 4% 10% SCM Sales (In Thousands) 1300 $40,000 35 65 225 2,700 2,200 800 375 285 750 $8,000 46,000 575,000 $12,500 60 5 13 50 75 190 $27,000 SCM % of Market* Market Position* 38% 1 4% 13% 2 ...... 2..... 8% 2 " 20% ...1 43% ...` 1 24% 2 11% 4 7% 6 30% 1 12% 4 13% 1 5% 4 6% 4 13% 2 8% 4 25% 2 10% 4 25% 2 38% 1 3% -- 3% 4 '' GLD38757 15 \ OPERATING FACILITIES Allied Paper Division United States Buena Park, Cal. Business forms. Catherine, Ala. Wood chipping. Chicago, III. Greetings cards, envelopes, stationery. Denison, Tex. Business forms. Jackson, Ala. Bleached pulp, printing and publication papers. Kalamazoo, Mich. (King Mill) Printing and publication papers. Kalamazoo, Mich. (Bryant Mill) Printing and publication papers. Kalamazoo, Mich. (Monarch Mill) Carbon tissue. Kansas City, Mo. Business forms. Leipsic, O. Business forms. Marion, Ind. School supplies, envelopes. Petersburg, West Va. Business forms. Glidden-Durkee Division United States Atlanta, Ga. Coatings & Resins. Baltimore, Md. Ceramics. Baltimore, Md. Titanium Dioxide. Baltimore, Md. Pigments & Color. Bell Gardens, Cal. Consumer Foods. Berkeley, Cal. Industrial Foods. Bethlehem, Pa. Consumer Foods. Brooklyn, N.Y. Consumer Foods. Carrollton, Tex. Coatings & Resins. Chicago, III. (North LeClarre Ave.) Coatings & Resins. Chicago, III. (South Normal Ave.) Coatings & Resins. Chicago, III. (Logan Blvd.) Industrial Foods. Chicago, III. (Iron St.) Industrial Foods. Chicago, III. (South Clinton St.) Consumer Foods City of Commerce, Cal. Coatings & Resins. City of Industry, Cal. Consumer Foods. Cleveland, 0. Coatings & Resins. Hammond, Ind. Metal Powders Huron, 0. Polymers. Jacksonville, Fla. Organic Chemicals. Johnstown, Pa. Metal Powders. Joliet, III. (Under construction) Industrial Foods, lakehurst, NJ. Ilmenite mine. Louisville, Ky. Industrial Foods. Maplewood, NJ. Food Service. Minneapolis, Minn. Coatings & Resins. Moosic, Pa. Food Service. Pittston, Pa. Food Service. Portland, Ore. Coatings & Resins. Port St. Joe, Fla. Organic Chemicals. Reading, Pa. Coatings & Resins. Saginaw, Mich. Consumer Foods. St. Louis, Mo. Coatings & Resins. San Francisco, Cal. Coatings & Resins. Scranton, Pa. Food Service. Wickliffe, 0. Adhesives. Wilmington, Del. Coatings & Resins. Wolcott, N.Y. Consumer Foods. Canada Bramalea, Ont. (Under construction) Coatings & Resins. Burnaby, B.C. Coatings & Resins. Montreal, Que. Coatings & Resins. Toronto, Ont. Coatings & Resins. Foreign Brugge, Belgium. Ceramics. Guayaquil, Ecuador. Coatings & Resins. Milan, Italy. Coatings & Resins. Panama City, Panama. Coatings & Resins. Tlalnepantla, Mexico. Coatings & Resins. Wuppertal (Dusseldorf), West Germany. (Not wholly owned) Coatings & Resins. Klelnschmldt Telecommunications Division United States Deerfield, III. Telecommunications equipment. Richland Center, Wis. Telecommunications equipment. Proctor-SIlex Division United States Altoona, Pa. Motor-driven household appliances. Baltimore, Md. Ironing tables and electric percolators. Cohoes, N.Y. Fiber processing equipment. Lexington, N.C. Industrial dryers. Mt. Airy, N.C. Electric toasters. Philadelphia, Pa. ironing pads and covers, typewriter covers. Philadelphia, Pa. Fiber processing equipment and industrial dryers. Canada Picton, Ont Toasters, irons, percolators, floor care products. Foreign Glasgow, Scotland. Fiber processing equipment. Mordialloc, Victoria, Australia. Fiber processing equipment. Smith-Corona Merchant Division United States Cortland, N.Y. (Huntington St.) Typewriters. Cortland, N.Y. (McLean Rd.) Typewriters. Geneva, N.Y. Type. Groton, N.Y. Typewriters. Libertyville, III. Office Copiers. Oakland, Calif. Calculators. Orangeburg, S.C. Calculators, typewriters, adding machines. Palo Alto, Cal. Communication electronics, components. Instruments. Phoenlxvllle, Pa. Office copier paper. Skokie, III. Office Copiers. South Cortland, N.Y. Typewriters. Canada Scarborough, Ont. Typewriters. Foreign Hamburg, Germany. Office Copiers. Port Madoc, Wales. Typewriters. West Berlin, Germany. Calculators. Wesf&romwich, England. Typewriters. 'i < #i GLD38758 GL038759 THE CHANGING PRODUCT MIX Part of SCM's growth was achieved through merger or acquisition, as the material below indicates, and a substantial portion was achieved through internal expansion. In the 1960's, SCM's growth was approximately threequarters a result of acquisition and merger, while one-quarter resulted from internal expansion. It is expected that these ratios will be reversed in the 1970's. The following is an account of the principal mergers and acquisitions i since 1956. The charts indicate the changing proportions of SCM operations engaged in the business, consumer, industrial and military/government mar kets over the period. August 3,1956; The company exchanged 70,000 of its shares for all of the stock of Kleinschmidt Laboratories, inc., makers of military teleprinters and data communication equipment. This acquisition expanded the company's horizons in the information processing market. June 30, 1958: Marchant Calculating Machine Co. was merged with Smith-Corona in return for 778,462 shares of Smith-Corona Marchant, inc., the company's new name. Marchant, the originator and world leader in rotary cal i culators, added strength to Smith-Corona's product line and marketing ability. June 30, 1966: The Proctor-Silex Corporation, world famous manufac turers of electric home appliances, and, through its Proctor & Schwartz Sub sidiary, of industrial drying equipment, was merged into SCM in exchange for 877,559 SCM shares. The appliance industry, in many ways similar to the manufacture and sale of portable typewriters, was a natural area of expansion for SCM. April 3,1967: The Shetland Company, makers of Shetland appliances and Lewyt vacuum cleaners and floor care products, was acquired by SCM in ex change for 83,770 shares of SCM stock. Shetland is now operated as part of the Proctor-Silex Division, reflecting the complementary nature of the product lines. if September 22,1967: The Glidden Company, manufacturers of specialty ! chemicals, coatings and resins and foods, was merged into SCM in exchange for 2,305,500 shares of SCM. Glidden, a high technology company with an ex cellent profit record, provided SCM with new strength in traditional product areas, as well as with an entry to other growth markets. December 31,1967: The business and assets of Allied Paper Corporation were acquired by SCM in exchange for 606,754 SCM shares. Allied is an inte grated paper and pulp manufacturer. Its business forms operation is a natural extension of SCM's interest in data handling. March 14,1969: SCM acquired Melabs, an electronics research and engi neering firm, in exchange for 180,187 shares of SCM stock. Melabs commu nications systems capability and electronics know-how will add to SCM's technology in these important areas. is Sates figures / fot te f*d> intt'catecf AN INVESTOR'S THUMBNAIL HISTORY OF SCM CORPORATION As a company grows and flourishes, a wide and intricate variety of changes in its capi tal structure occurs. The following is a chronological sequence of major capital changes in SCM.Corporation designed to be of interest and value to investors in the company. January 27,1903: L. C. Smith & Bros. Type writer Co. is formed in Syracuse, New York. October 30,1924: The company is incorpo rated in New York State as L. C. Smith and Brothers Typewriter Company, Inc., of Syra cuse, New York. December 31, 1926: The company com pletes its acquisition of Corona Typewriters, Inc. Later, Corona is merged into the com pany which becomes L.C. Smith and Corona Typewriters, Inc. July 10,1928: The outstanding capital stock of Miller Bryant Pierce Inc., of Aurora, Illinois, is acquired. October 15, 1953: The company's name is changed to Smith-Corona, inc. September 30, 1954: The company's au thorized capital stock is changed from 350.000 shares without par value to 600.000 shares of common stock with a par value of $10 each. December 20, 1955: Record date for 4% stock dividend payable January 30, 1956. August 1,1956: Kleinschmidt Laboratories, Inc., of Deerfield, Illinois, is acquired. December 20, 1956: Record date for 2% stock dividend, payable January 31, 1957. October 7, 1957: Record date for a two-forone stock split paid on October 13, 1957. The authorized capital stock is changed from 600,000 shares par value $10 per share to 1,600,000 shares par value $5 per share. November 1,1957: The company sells $4.2 million of 6% Convertible Subordinated De bentures in a rights offering. Record date for rights was October 31,1957. These de bentures were called for redemption on December 9, 1958, and over 99% were converted into common stock. June 30, 1958: Merchant Calculators, Inc. is merged into the company whose name is changed to Smith-Corona Marchant, Inc. Each Marchant share is exchanged for 1% shares of common stock. At year-end, there are 1,630,700 common shares outstanding. August 26, 1958: British Typewriters Ltd., of West Bromwich, England, is acquired in a cash transaction. August 15, 1958: Hamann Calculator, GmbH of West Berlin, Germany, is acquired in a cash transaction. January 15, 1959: Record date for rights. The company sells $7.4 million of 5%% Convertible Subordinated Debentures In a rights offering. These debentures were called for redemption on July 31, 1967, and over 96% were converted into common stock. At the close of fiscal 1959, there were 1,860,900 common shares outstanding. January 19,1962: Record date for 2% stock dividend, payable February 23,1962. October 11, 1962: Record date for rights. The company issues 240,000 shares of 5%% Cumulative Convertible Preferred stock ($50 par) in a rights offering. These shares were called for redemption on July 8,1965, and over 99% were converted into common stock at a ratio of 3.27 shares of common for each share of preferred. At the close of fiscal 1962, 1,978,000 common shares were outstanding. December 3,1962: Smith-Corona Marchant, Inc. becomes SCM Corporation. December 20, 1962: Record date for 3% stock dividend, payable January 18, 1963. December 20. 1963: Record date for 3% stock dividend payable January 17,1964. December 21, 1964: Record date for 5% stock dividend payable January 15,1965. December 20,1965: Record date for 2V4% stock dividend, payable January 17,1966. June 30,1966: Proctor-Silex Corporation is merged into SCM. The exchange ratio is 3 shares of Proctor-Silex for 1 SCM. At this date, there are 4,098,800 shares of SCM stock outstanding. September 20, 1966: Record date for 3% stock dividend payable October 15,1966. February 1,1967: The company sells $20 million of 5%% 20-year Sinking Fund De bentures and arranged $14 million of long term bank loans. April 3, 1967: The business and assets of the Shetland Company are acquired by SCM. September 22,1967: The Glidden Company is merged into SCM. The exchange ratio.is .46 shares of SCM for each full share of Glidden. In addition to these shares, SCM pays $66.9 million for an additional 2.15 million shares of Glidden, necessitating the three-part refinancing described below. At the close of fiscal 1967, there are a total of 6,855,900 SCM shares outstanding. October 2,1967: Record date for 3% stock dividend payable October 16, 1967. SCM raises its quarterly dividend to 15b per share. October 27, 1967: Record date for rights. The company sells 589,880 shares in a rights offering. This is the first part of the three-part financing referred to above. December 31,1967: The business and as sets of Allied Paper Corporation are ac quired by SCM. Allied shareholders receive .42 share of SCM for each full share of Allied. SCM arranges a $7 million long term bank loan. continued C-LD38761 19 TEN YEAR FINANCIAL REVIEW All amounts restated tor poolings ot Interests, except as noted. HUMBNAIL HISTORY mtinued prit 26, 1968: Record date for rights. The impany sells $41,489,000 of 5%% conrtible subordinated debentures due 1988 a rights offering. These debentures were itia fly convertible into common stock at 18.50 per share and interest is payable i May 1 and November 1 of each year. The ibentures are fully registered. This fitncing and that which follows completed e Glidden refinancing referred to above. ay 14, 1968: The company sells $20 miljn of m% 20-year sinking fund debenres due 1988. Interest is payable on May i and November 15 of each year, and the ibentures are fully registered. At the close fiscal 1968, outstanding shares number 297.000. Iy 23, 1968: The shareholders approve mination of preemptive rights which was quested by the company in order to raise :pital for European expansion and to in ease flexibility in domestic financing. On ne 30,1968, authorized capital stock is 1.000. 000 shares of common stock, par ilue $5.00 per share, and 500,000shares preferred stock, par value $50.00 per are. :tober 2,1968: Record date for 2% stock vidend payable October 23,1968. ibruary 19, 1969: Through SCM Overseas apital Corporation, the company sells $15 illion of 5V4% convertible subordinated bentures in Europe. (These debentures :re not offered to U.S. residents or na>nals.) arch 14, 1969: Meiabs, a Palo Alto, Calimia, electronics concern, is acquired by '.M. The exchange ratio is one share of IM for three of Meiabs. SALES AND INCOME (In Thousands) Net Sales Income Before Extraordinary Items As Reported As Restated As Reported 4s Restated Net Income 1968 $744,758 $744,758 $17,759 $17,759 $13,059 1967 640,064 705,160 23,623 25,076 25,076 1966 240,560 644,787 9,451 21,452 22,659 1965 149,657 558,393 3,815 15,361 15,764 1964 124,704 470,633 2,437 11,781 11,781 1963 117,343 453,126 1,656 10,878 10,878 1962 103,165 429,315 1,680 10,892 11,804 1961 96,476 392,970 302 6,224 6,139 1960 93,359 366,128 (455) 9,278 9,629 1959 90,411 353,330 551 7,815 8,110 STOCK STATISTICS (Pr Share) Income Before Extraordinary Items Net Cosh Stock Book As Reported As Restated Income Dividends Dividends Value 1968 2.22 2.22 $1.65 $.60 3% $25.22 1967 3.08 3.01 3.01 .40 3% 23.13 1966 2.24 2.68 2.83 .30 2m> 26.60 1965 1.32 2.04 2.10 -- 5% 25.52 1964 .76 1.53 1.53 -- 3% 25.53 1963 .56 1.45 1.45 -- 3% 24.64 _1962 .72 1.53 1.68 2% 24.00 1961 .13 .82 .81 --" '-- 23.01 1960 (.20) 1.33 1.38 -- -- 23.17 1959 .24 1.10 1.15 .82 -- 22.69 GL038762 BALANCE SHEET (In Thousands1 1968 Property Plant & Equipment-Net $148,152 1967 138,141 1966 108,680 1965 107,727 1964 104,028 1963 103,909 1962 107 652 1961 102,213 1960 107,703 1959 97,824 Working Capital $221,718 207,068 165,245 143,484 138,389 134,885 115,434 114,497 110,885 112,453 Depredation Net Capital and Depletion Expenditures $17,807 $27,818 15,384 36,116 12,835 22,435 11,821 14,701 11,484 11,631 12,042 6,876 10,795 16,235 11,989 6.198 10,699 20,572 9,847 14,412 OTHER STATISTICS 1968 1967 1966 Number of Employees 33,200 33,100 31,300 1965 29,900 1964 25,900 1963 1962 24,900 24,200 1961 1960 1959 22,900 22,200 21,500 Number ot Common Shareholders 47,500 45,600 47,000 42,500 37,500 37,200 41,400 37,700 38,600 36,800 Average Common Shares Outstanding 8,282,000 7,841,000 7,455,000 6,391,086 6,207,000 6,193,000 6,173,000 6,149,000 6,141,000 6,062,000 I As Restated i" 1 As Report 61.038763' NOTABLE SCM "FIRSTS" SCM takes pride in the technical achieve ments which the Company and its prede cessors have created and brought to market. A brief sampling of significant "firsts" shows the variety and depth of abil ity of the scientists and technicians who now make up the SCM research and de velopment team. SCM's Allied Paper Division was first to develop commercial base paper for electro static copying; to develop commercial base paper for electrostatic paper masters tor offset lithography; to install in the U S. a high-speed vertical paper forming machine. SCM's Ceramics Group (Glidden-Durkee Division) was first to introduce color in the finish of major appliances; to establish a laboratory to study porcelain enamels; to develop the concept of ceramic coil coat ing; to develop a ceramic glaze for acousti cal file. SCM's Coatings and Resins Group (Glidden-Durkee Division) was first to mar ket a water-reducible latex interior wall paint ("Spred Satin"); to produce an odor less, thixotropic interior alkyd enamel; to produce an epoxy-polyester,waterreducible block filler; to produce a totally synthetic polyester finish for coating quality metal products. SCM's Durkee Foods Group (GliddenDurkee Division) was first to market a com plete line of convenience sauce and gravy mixes; to sell frozen puff pastry hors d' oeuvres in supermarkets; to develop a process cake batter that can be frozen or chilled and effectively rebaked; to develop a shortening-emulsifier system; to use frac tional crystallization of fats and oils to pro duce food ingredients; to develop hard but ters similar to cocoa butters from domestic U.S. oils; to develop a method to impart "barbect/e"flavor to portion control chicken; to process and preserve tuna salad. SCM's Metals Group (Glidden-Durkee Di vision) was first to produce iron powder in the U.S. on a continuous basis; to com mercially produce in the U.S.A. iron powder for human consumption-, to offer commer cial pre-mixes; to produce a line of ferrous metal powders designed for use in elec tronic cores arid other magnetic devices; to produce a fully stabilized copper powder,- to produce copper brazing paste. SCM'sOrganic Chemicals Group (GliddenDurkee Division) was first to produce syn thetic camphor, menthol, Citral (citronella) and Geraniol (lemongrass oil} in commer cial quantifies; to convert alpha pinene into beta pinene. SCM's Pigments and Color Group (Glidden-Durkee Division) was first to pro duce a stable high solids aqueous disper sion of titanium; to produce cadmium sulfocelenide red pigments. SCM's Kleinschmidt Telecommunications Division was first to develop a complete line of tactical military telecommunications equipment; todevelop amobile pageprinter suitable for vehicular application; to de velop a high speed page printer and auto matic send/receive set suitable for data processing and militaryapplications; to cre ate a new classification of high-speed mili tary teleprinters for unequalled utility and reliability in the military field situation. SCM's Proctor-Silex Division was the first appliance manufacturer to bring to market appliances using the principle of snap together modules ("lifelong"); to develop a glass electric percolator; to create a glass vacuum coffee maker ("Silex"). SCM's Proctor & Schwartz operation (Proctor-Silex Division) was first to create a three-circulation drying system for carpet ing; to develop a spray nozzle system ca pable of handling viscous, concentratec pastes; to apply fluidic principles to spray drying; to create a thermal regenerative air purification system (TRAPS), that reduces fuel requirements in oxidization of organic waste products by 80%. SCM's Shetland Floor Care Products (Proctor-Silex Division) was first to create z home vacuum cleaner that picks up liquids as well as dirt; to introduce the first com bination water pick upfioor scrubber-ruc shampooer; to bring to market a light weight, inexpensive vacuum cleaner usinc disposable bags; to create a built-in dis penser system for waxes and liquids on floot polishers. SCM's Smith-Corona Marchant Divisior was first to initiate American manufacture of the office calculator and later, to produce an electric-powered calculator; to desigr and produce a desk-top electrostatic offia copier; to develop a low-cost compact elec trie office typewriter; to offer typewriter with such features as: a segment shift built-in tabulator, stencil cut-out, inter changeable platen, two-color ribbon, hah spacing, automatic margin setting an "Changeable Type"; to design and produc a portable electric typewriter. This image intensifier and converter tube "sees" ultraviolet tight. It is shown with computer continuous forms, representative of one important and growing SCM product area. GLD38765 This micrograph shows the surface of an experimental paper which develops an image under stimulation by electric current. The phe nomena associated with this process may find application in such areas as non-impact printing, facsimile systems and office copying. THE CONCEPT OF THE BREAKTHROUGH For SCM, continued growth in the 1970's will result from the accomplishment of three interrelated, medium-term objectives: Consolidation of the benefits of the company's rapid growth in the late 1960's. During that period SCM more than doubled in size through a program of rapid internal and external expansion. This objective will be accomplished through continuing efforts to maximize efficiency in all of the com pany's present businesses. _ _? ..Continued expansion of.these present businesses. In aliocating capital, priority will be given to rapid-growth areas. The cross-breeding of technologies within the company. This is the process that is most likely to result in breakthroughs to new product areas and new markets. A "breakthrough" can be an important new proprietary product. But, in the 1970's, after an unparalleled 25-year series of tech nical advances since World War II, K Is likely that breakthroughs will consist of success ful systems and techniques drawn from combinations of earlier scientific and tech nical advances, as in chemistry and elec tronics, for example. Areas in which SCM feels it has a better than remote chance to engineer break throughs include, but are not limited to, the following: Photocopy, a field of constant study by the SCM Research Center in Switzerland and by three SCM divisions. Organic chemicals, where recent de velopment of synthetic additives for insec ticides may create a new market for SCM In the field of agricultural pesticides and herbicides. Electronics, whose application to the office equipment industry promises to transform SCM's operations In that and other areas in the 1970's. Coatings and resins and foods, with SCM research efforts now centered In a new $6 million structure near Cleveland. Appliances, where the revolution in service-free and cordlesselectric household appliances is just beginning. SCM's multi-million dollar research effort involves over 1,000 people working in a score of research Centers in the U.S. and abroad. Because they are part of this broadbased effort, individual research teams working for SCM in specialized scientific areas are frequently able to draw on the knowledge and ideas of scientists working for SCM in other disciplines. This crossfertilization increases the possiblities of one or more breakthroughs in the 1970's. GLD38767 BBS SCM CORPORATION 299 PARK AVENUE NEW YORK, N.Y. 10017 !i i \ : .1 GLD38768