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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): April 8, 1997
HUNT MANUFACTURING CO.
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(Exact name of registrant as specified in its charter)
Pennsylvania 1-8044 21-0481254
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One Commerce Square
2005 Market Street
Philadelphia, Pennsylvania 19103-7085
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(Address of principal executive offices) (Zip Code)
(215) 656-0300
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(Registrant's telephone number, including area code)
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Item 5. Other Events
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The Company issued a press release on April 8, 1997 regarding the adoption of a
new strategy and restructuring plan. The information in such press release, a
copy of which is attached hereto as Exhibit 99.1, is incorporated herein by
reference.
In connection with the announcement of such restructuring plan, the Company is
filing herewith certain "Cautionary Statements" for the purpose of establishing
a readily available document which may be referenced pursuant to the "Safe
Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such
Cautionary Statements are attached hereto as Exhibit 99.2 and incorporated
herein by reference.
Item 7. Financial Statements and Exhibits
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(c) Exhibits.
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(99.1) Press Release dated April 8, 1997 regarding new strategy and
restructuring plan
(99.2) Cautionary Statements
2
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf of the
undersigned thereunto duly authorized.
Date: April 11, 1997
HUNT MANUFACTURING CO.
By: /s/ William E. Chandler
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William E. Chandler
Senior Vice President, Finance
3
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EXHIBIT INDEX
Exhibit No. Title
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(99.1) Press Release dated as of April 8, 1997 regarding new strategy
and restructuring plan
(99.2) Cautionary Statements
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE Contact: Dennis S. Pizzica
V.P., Treasurer
(215) 841-2300
www.huntmfg.com
Vince Powers
The Tierney Group
(215) 731-6301
HUNT MANUFACTURING ANNOUNCES RESTRUCTURING
TO SUPPORT AGGRESSIVE NEW STRATEGY FOR GROWTH
PHILADELPHIA, April 8, 1997 -- Hunt Manufacturing Co. (NYSE: HUN) announced
today the details of a new strategy for growth that requires a substantial
restructuring of parts of the Company. The Company plans to focus on three
business areas:
1.) Consumer Products, which includes the Company's highly successful
Boston brand pencil sharpeners and other office products, X-ACTO brand
knives and blades, and Bienfang brand commercial and fine art papers; the
Company expects to leverage its brand strength in this area.
2.) Presentation Graphics, which includes laminating and mounting equipment
and supplies for the fast growing large-format digital imaging market; the
Company expects revenues to triple for this area by year-end 2000.
3.) Substrates, which includes products, such as the Company's successful
Bienfang brand foam board, used for mounting images. Hunt expects revenues
to double for this area by year-end 2000.
The Company expects the strategy and restructuring, when fully implemented,
which should be by the end of 1997 or early in 1998, to result in revenue growth
of 10 to 15 percent and earnings growth from 15 to 20 percent into the next
century. Donald L. Thompson, Chairman and CEO, stated, "These three profit
centers will work together, leveraging Hunt's historic distribution strengths,
while our increasing focus on presentation graphics and substrates exploits the
high-tech growth potential of the digital imaging market. We believe this new
strategy will restore the higher levels of growth, profitability, and returns
that we expect and our shareholders deserve."
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RESTRUCTURING AND CORPORATE REORGANIZATION
As part of the implementation of the new strategy, the Company intends to divest
assets that do not directly support the strategy. This divestiture includes the
sales, on February 28, 1997, of the Company's Lit-Ning brand products and
facilities to ATAPCO Office Products Group, and of Hunt Data Products (MediaMate
and Calise brand products) to Esselte Americas, a division of Esselte AB,
Stockholm, Sweden. Although no decision has been reached, the Company is
currently considering the sale of its Bevis brand office furniture operation,
and has received indications of interest from several potential purchasers of
Bevis. If Bevis is sold, the divestiture of the three businesses would reduce
Hunt's revenues on an annualized basis by approximately $100 million.
Other significant restructuring is being implemented at the Company's
Statesville, North Carolina, manufacturing and distribution facilities.
Approximately 5,000 stock keeping units (SKUs) of slow-moving and nonstrategic
products will be eliminated from the nearly 7,000 current SKUs. This product
rationalization will allow reduction of the facilities sizes, simplification of
manufacturing processes, and improvement in productivity for the remaining
products. While this product rationalization is expected to reduce sales, it is
also projected to reduce overall operating costs, improve margins at the plants,
and improve inventory turns.
Restructuring of corporate administrative functions is also underway, including
the decentralization of corporate functions by moving them into the three profit
centers, as well as the outsourcing of subscale activities, such as payroll and
benefits administration. This is expected to result in cost savings and
reduction in administrative staffing.
In conjunction with the implementation of the restructuring plan, the Company
expects to record one-time pre-tax charges of $22 to $25 million in fiscal 1997.
These special charges will include employee severance costs, asset and inventory
writedowns, recognition of future lease obligations, relocation costs, and other
related costs. If Bevis is sold, the Company expects that net gains on business
divestitures should approximately offset these special charges. The Company also
expects that the loss of earnings through product rationalization and
divestitures will be more than offset by improved processes at the Statesville
facilities, by rationalization of distribution facilities, and by cost
reductions in marketing, selling, and administration.
COMPANY CHARACTERISTICS FOR THE FUTURE
"This is a bold strategy," said Thompson. "It will require courage and effort to
implement, and is not without risk, but the potential rewards are great. In the
past six months, we've made a beginning -- with the divestitures of Lit-Ning and
Hunt Data Products, the recently announced acquisition of Sallmetall BV, and the
first stages of a restructuring of the Company. We must do more -- much more --
to create the Company of our vision."
In describing the characteristics of the Company in the future, Thompson
continued, "The new Hunt we envision will be focused on a limited number of
businesses in which we have leadership positions. We expect to reach our goals
of having new products introduced within the preceding
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five years making up 25 percent of our sales each year, of increasing inventory
turns to twice our current rate, and of achieving a 98-percent fill rate while
linking electronically to our customers. And we believe we will have the
resources -- we already have the commitment -- to compete with the best
practices companies we admire."
FORWARD LOOKING STATEMENTS: Certain statements contained herein which are not
historical information or facts, including without limitation the anticipated
implementation and financial results of the Company's new strategy, are forward
looking statements. Such forward looking statements represent Management's
assessment based upon information currently available but are subject to risks
and uncertainties which could cause actual results to differ materially from
those set forth in the forward looking statements. These risks and uncertainties
include but are not limited to the Company's ability to successfully implement
its new strategic plan on a timely basis, the effect of general economic
conditions, technological and other changes affecting the manufacture of and
demand for the Company's products, competitive and other pressures in the market
place, and other risks and uncertainties set forth in the Company's filings with
the Securities and Exchange Commission.
Headquartered in Philadelphia, Hunt Manufacturing Co. is a leading manufacturer
and distributor of office, art, and presentation and display products for the
business, education, and consumer markets. International in scope, the Company
has operations in the U.S., Canada, the United Kingdom, Germany, Holland, and
Hong Kong.
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EXHIBIT 99.2
CAUTIONARY STATEMENTS
Information provided by Hunt Manufacturing Co. (the "Company") from time to time
may contain certain "forward looking" information, as that term is defined in
the Private Securities Litigation Reform Act of 1995, as the same may be amended
(herein the "Act") and in releases made by the Securities and Exchange
Commission ("SEC"). The following Cautionary Statements are being made pursuant
to the Act, with the intention of obtaining the benefits of the "Safe Harbor"
provisions of the Act. The Company cautions investors that any forward-looking
statements made by the Company are not guarantees of future performance and that
actual results may differ materially from those in the forward-looking
statements as a result of various factors.
The Cautionary Statements are being made and filed with the SEC in connection
with the Company's release of a detailed new strategy and restructuring plan
(the "Plan") for the Company. Success of the Plan depends upon the successful
completion of a number of actions which the Company expects will improve its
future financial performance. It is possible, however, that certain of these
actions may not be successfully completed on a timely basis or at all for a
variety of reasons and as a result, that future financial results could differ
materially from those anticipated by the Company. Among the risks inherent in
the Plan of which investors should be aware are:
- - While the underlying philosophy and basic aspects of the Plan have been
determined, a number of the specific details of its implementation have yet
to be worked out. Further, the Plan is subject to change in the future should
the Company determine that it is desirable to do so.
- - The Company plans to substantially reduce stock keeping units of slow-moving
and/or nonstrategic products from its Statesville, North Carolina
manufacturing and distribution facilities and decentralize its corporate
functions. These actions are expected to reduce the need for facility space,
simplify manufacturing processes, reduce employment levels, improve
productivity, and reduce operating costs. These actions are scheduled to be
completed on an accelerated timetable. If the Company is unable to complete
such actions within anticipated time frames, the full benefits of cost
reductions may not be realized as quickly as anticipated by the Company or
possibly may not be realized at all. Many factors could delay or materially
affect realization of the anticipated benefits of cost reduction initiatives,
including failure of Company personnel or of third parties to perform in a
timely manner, events of force majeure, and other internal or external
circumstances. Any material failure of the Company to reduce costs to the
extent anticipated by the Company (and/or within the time frames anticipated
by the Company) could have a material adverse effect on anticipated future
financial results.
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- - The Company is considering the sale of its Bevis brand office furniture
operation and has received indications of interest from several potential
third-party purchasers. The Company would anticipate receiving sufficient
proceeds from any such sale so that the net gain on the divestiture would
offset the anticipated one-time pre-tax charges of $22 to $25 million related
to the implementation of the Company's restructuring plan. Should the Company
not divest Bevis in fiscal 1997 or should it fail to realize disposition
proceeds in amounts anticipated by the Company, it could have a material
adverse effect on future financial results. (Bevis revenues for fiscal 1996
were approximately $63 million.)
- - The Company expects the strategy and restructuring, when fully implemented,
to result in significantly higher revenue and earnings growth rates than
those experienced by the Company in recent fiscal years. If the Company fails
to achieve anticipated market penetration in the areas in which the Company
currently expects to expand its sales, such event could have a material
adverse effect on future financial performance. Sales increases depend upon
many factors, including the effect of general economic conditions, the
strength of consumer demand for the products for which the Company sells (or
expects to sell in those markets), technological and other changes affecting
the manufacture of the Company's products, competition and other pressures in
the marketplace, and other factors which may negatively affect the Company's
anticipated performance in those markets.
- - The Company's goal is to have new products introduced within the preceding
five years will make up 25 percent of its sales each year. However, the
Company may prove unable to develop, manufacture, and successfully market new
products in the amounts anticipated, and this could have a material adverse
effect on future financial performance.
- - The Company's goal is to be able to double its current inventory turnover
rate and achieve a 98-percent fill rate of its customer orders. If the
Company fails to achieve these objectives, it could have a material adverse
effect on future financial performance.
Reference is made to other filings by the Company with the SEC for information
concerning other factors which could affect the Company's future performance.
