SMITH CORONA CORP, 10-K, 1994-10-06

SMITH CORONA CORP
10-K, 1994-10-06
OFFICE MACHINES, NEC

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 1994

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-10281

SMITH CORONA CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 51-0286862
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

65 Locust Avenue, New Canaan, Connecticut 06840
(Address of principal executive offices)(Zip Code)
(203) 972-1471
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
Common Stock, $.01 par value New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

The aggregate market value of the voting stock of the registrant held
by non-affiliates of the registrant as of August 26, 1994: $68,130,558.

Number of shares of Common Stock outstanding as of August 26, 1994:
30,250,000 shares.
Documents Incorporated by Reference
Document Part of Form 10-K
Portions of the Annual Report to Security Holders
for Fiscal Year Ended June 30, 1994 Part I, II & IV
Portions of the Proxy Statement relating to
registrant's 1994 Annual Meeting of Stockholders,
to be filed with the Commission within 120 days
after the close of the registrant's fiscal year Part III

<PAGE>
TABLE OF CONTENTS

PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . .1
Products . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Marketing, Sales and Distribution. . . . . . . . . . . . . . . .2
Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Seasonality. . . . . . . . . . . . . . . . . . . . . . . . . . .3
Foreign Operations . . . . . . . . . . . . . . . . . . . . . . .3
Competition. . . . . . . . . . . . . . . . . . . . . . . . . . .4
Patents, Trademarks and Licenses . . . . . . . . . . . . . . . .5
Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Research and Development . . . . . . . . . . . . . . . . . . . .5
Raw Materials. . . . . . . . . . . . . . . . . . . . . . . . . .6

Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . .7

Item 4. Submission of Matters to a Vote of Security Holders. . . . . . .9

Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . .9

PART II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . . . . . 11

Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . 12

Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . . . . . 12

Item 8. Financial Statements and Supplementary Data. . . . . . . . . . 12

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . . . . . 12

PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Item 10. Directors and Executive Officers of the Registrant . . . . . . 12

Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . 12

Item 12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Item 13. Certain Relationships and Related Transactions . . . . . . . . 13

PART IV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Index to Consolidated Financial Statements and Financial
Statement Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . 19

PART I

Item 1. Business
The Company
General

Smith Corona Corporation (the "Company") designs, manufactures and
sells portable and compact electronic typewriters, personal word
processors, printers and related accessories and supplies. These
products are generally used in the home, at school and in small
offices. The Company also manufactures and sells customized
printed products.

The Company was incorporated in 1985 in the State of Delaware.
Prior to 1986, the businesses of the Company were operated by SCM
Corporation ("SCM") which was acquired by Hanson PLC ("Hanson") in
March 1986. At the time it was acquired, SCM consisted of a number
of businesses, including the current businesses of the Company and
businesses in the chemical, paper and food industries. Although
Hanson owned the businesses of the Company through various
subsidiaries, the typewriter and personal word processor operations
were managed as an integrated business. On August 3, 1989, the
Company completed a registered public offering of 14,750,000 shares
of common stock, par value $.01 per share (the "Common Stock"), in
the United States and abroad (the "Offerings"). In connection with
the Offerings, Hanson initiated a series of transactions to combine
the electronic typewriter, personal word processor and office
supplies business under a single parent entity being the Company
(the "Reorganization").

History of the Business

The Company's typewriter and personal word processor business
traces its origins back to the 1880's with the development of
office typewriters. The Company introduced the world's first
portable electric typewriter in 1957 and, for the next decade, the
Company had the only portable electric typewriter available in the
marketplace. In 1973, the Company introduced its revolutionary
cartridge ribbon system, which is still used today. Beginning in
1979, the Company moved into electronics with major research and
development efforts and, in 1981, introduced its first electronic
product to the marketplace.

During the early 1980's, as the market shifted to electronic
typewriters, Japanese manufacturers became a significant factor in
the world marketplace. In order to compete effectively, between
1984 and 1986 the Company developed and implemented a major
business restructuring of its typewriter operations which resulted
in substantially reduced manufacturing costs, a streamlined product
line, a 50% reduction in worldwide employment and the consolidation
of certain of its United States operations.

In 1985, the Company developed and introduced the industry's first
personal word processors, and, in 1989, the Company introduced the
industry's first laptop personal word processor.

On July 5, 1994 the Company sold substantially all the assets and
liabilities of SCM Office Supplies, Inc., its wholly-owned
subsidiary. The results of operations, provision for loss on sale
and net assets and liabilities related to SCM Office Supplies, Inc.
are presented as discontinued operations in the 1994 financial
statements incorporated herein by reference. As a result, the
Company currently consists of one business segment, typewriters and
word processors.

Products

The Company designs, manufactures and sells, domestically and
internationally, portable and compact electronic typewriters,
personal word processors and related accessories and supplies for
use in the home, at school and in small offices. These products
are developed with focus on meeting the major desires of
purchasers: ease of use, incorporation of monitors or displays,
full array of word processing features including dictionary spell
checkers and grammar features. The Company's installed base of
typewriters and personal word processors results in a substantial
accessories and supplies business.

The Company also manufactures and sells customized printed
products. During the fiscal year, the Company began selling
various other products for use in the home, at school and in small
offices. These items include facsimile machines, laminators,
calculators, home office furniture, product labelers and envelope
printers.

The only products or classes of similar products that accounted for
10% or more of net sales of the Company in any of the Company's
last three fiscal years were (i) portable and compact electronic
typewriters, which accounted for 37.3%, 38.5% and 53.6% of net
sales in the fiscal years ended June 30, 1994, 1993 and 1992
respectively, and (ii) personal word processors, which accounted
for 34.0%, 32.4% and 21.3% of net sales in the fiscal years ended
June 30, 1994, 1993 and 1992, respectively.

Marketing, Sales and Distribution

Domestically, the Company extensively advertises, markets and
promotes its electronic typewriters and personal word processors
through national print media, both consumer and trade.
Advertisements focus on the key features and benefits of the
various product lines. The Company also supports local advertising
campaigns of its customers, if the campaigns comply with certain
standards set by the Company.

The Company makes available for use, at retail store locations,
various point-of-sale materials and other in-store visual supports.
In addition, the Company provides training support for its
customers' sales staffs conducted by Company field-based marketing
support representatives.

In the United States, the Company distributes its products through
over 15,000 outlets in all major channels of distribution,
including (i) national retail chain stores, such as K-Mart,
Montgomery Ward, Sears and Wal-Mart; (ii) department stores and
department store chains, such as Federated Department Stores & May
Co; (iii) catalog merchandisers, such as Best Products, and Service
Merchandise; (iv) national television and appliance dealers, such
as Best Buy and Circuit City; (v) office superstores, such as
Staples, Office Max and Office Depot; (vi) office equipment
dealers; (vii) regional discount stores, such as Bradlees and
Caldor; and (viii) the United States military exchanges. The
Company does not enter into long-term contracts with its customers
and, accordingly, there can be no assurance that the Company will
continue to receive sales revenues from any particular source.

The Company offers various derivative product lines for each of its
major channels of distribution. In addition, the Company supplies
private label products to K-Mart, and private brand products (which
identify only the retailer brand name) to Singer and Metro.

The Company also conducts sales activities in Canada, the United
Kingdom, Australia, the Benelux countries, France, Germany and in
other international markets. The channels of distribution in the
international markets are similar to those in the United States
market and include national retail chains, catalog merchandisers,
department stores, office equipment dealers, discount stores,
stationers and direct mail accounts. In other international
markets, the Company currently has over twenty-two distributors
serving the Far East, Latin America, Europe and the Caribbean.
Reference is made to Note 9 to the Consolidated Financial
Statements (see index on page 19 of this Form 10-K Annual Report)
for information regarding the Company's business operations within
and outside the United States.

Payment terms granted to customers reflect general practices in the
industry. Terms vary with product and competitive conditions, but
generally require payment within 30 to 90 days. Historically, bad
debts have been insignificant. Sales to the Company's largest
customer, Wal-Mart Stores, Inc., amounted to 11.4%, 11.4% and 6.0%
of consolidated net sales during 1994, 1993 and 1992, respectively,
and was the only customer responsible for more than 10% of net
sales.

Service

The Company's typewriter and personal word processor products are
serviced in the United States by Smith Corona Factory Service
Centers and at Factory-Appointed Service Stations. These Service
Centers and Stations employ trained technicians, maintain parts
inventory and perform warranty and other repairs.

Seasonality

The Company believes that its business in the aggregate is not
seasonal; however, certain of its products sell more heavily in
gift-giving seasons such as the Christmas and school graduation
seasons.

Foreign Operations

The Company phased the relocation through the initial move of
assembly line operations in the third and fourth quarters of fiscal
1993 into a temporary Mexico location while site selection
activities for the permanent facility were undertaken. The
relocation plan, originally anticipated to take approximately one
year to complete, was delayed as a consequence of heavy spring 1993
rainfall in Baja California together with a reevaluation of lease
versus purchase of the facility. By the end of fiscal 1994, the
Company had essentially completed the relocation of the entire
manufacturing operation into the permanent Mexico facility. The
annual savings resulting from the restructuring originally
anticipated in 1994 were not realized as cost of sales continued to
reflect the higher Cortland manufacturing labor costs.

The Company's foreign manufacturing operations are in Mexico,
Singapore and Indonesia. Reference is made to Note 14 to the
Consolidated Financial Statements (see index on page 19 of this
Form 10-K Annual Report) for additional information. The Company's
foreign manufacturing operations are in Mexico, Singapore and
Indonesia. The Company also sells a portion of its products
internationally and expects to sell more products in international
markets in the future. As a result, the Company's results of
operations are subject to the risks of doing business abroad,
including currency exchange rate fluctuations, nationalization,
expropriation, limits on repatriation of funds and other risks
associated with economic or political uncertainty in countries in
which significant sales are made or manufacturing operations are
located. Reference is made to Note 9 to the Consolidated Financial
Statements (see index on page 19 of this Form 10-K Annual Report)
for financial information regarding the Company's business
operations within and outside the United States.

Competition

The portable and compact electronic typewriter and personal word
processor business is highly competitive. Competition focuses on
price, product features and product quality. The Company faces
competition from various Japanese and other companies which
manufacture portable and compact electronic typewriters and
personal word processors, some of which may have greater financial
resources than the Company. It also faces competition from
companies which manufacture office typewriters and word processors,
though these manufacturers currently serve a somewhat different
segment of the industry than the Company. The Company believes
that its products have significant competitive advantages,
including low-cost production, numerous product features, ease of
use, the Company's brand name and availability in all major
channels of distribution. As the portable and compact electronic
typewriter and personal word processor market has continued to
mature, competition has increased. To remain competitive, the
Company has been required to reduce the prices of its typewriters
and personal word processors. Unless these price reductions are
offset by corresponding reductions in manufacturing and other
costs, the Company's results of operations will continue to be
adversely affected.

Patents, Trademarks and Licenses

The Company owns or licenses a number of patents and patent
applications which are valuable to its business but are not
material to the business of the Company as a whole. The Company is
the owner of a number of trademarks and U.S. and foreign
registrations thereof, the most important of which is the
trademark, "Smith Corona."

Employees

As of June 30, 1994, the Company employed approximately 3,000
people. The manufacturing workers of Histacount Corporation, a
wholly-owned subsidiary, are represented by the Communication
Workers of America-Printing Sector. The Company's Singapore
manufacturing workers are represented by the United Workers of
Electronic and Electrical Industries, a trade union registered
under Singapore law. Management considers its employee relations
to be good.

Research and Development

The Company's expenditures for research and development activities
were approximately 4.1% - 5.7% of typewriter and personal word
processor sales in each of its last three fiscal years. Research
and development expenses are concentrated primarily in improving
product manufacturing integration of products/technology to the
Company's product lines and development of new products such as
labelers, envelope printers and software architecture for personal
word processors.

<PAGE>
Raw Materials

The Company's products are manufactured from a wide variety of
electronic components, plastics, metals, paper and other materials.
The Company generally is not dependent on any one source for the
materials or purchased components essential to its business and
believes that such materials and components will be available from
a variety of sources in adequate quantities to meet anticipated
production schedules.

Item 2. Properties

As of June 30, 1994, the Company utilized approximately 1,426,000
square feet of space, of which about 837,000 square feet is in the
United States and the remaining 589,000 square feet is outside the
United States, primarily in Singapore and Mexico. Of the total of
1,426,000 square feet, approximately 619,000 square feet is owned
and 807,000 square feet is leased. The Company believes that its
properties are adequate for its needs and in good condition.
Information with respect to the principal facilities used by Smith
Corona is set forth below:
<TABLE>
<CAPTION>

Square Owned/
Location Primary Use Footage Leased
<S> <C> <C> <C>
New Canaan, CT.... Headquarters 27,000 Leased
Cortland, NY...... Manufacturing/Office 422,000 Owned
Cortland, NY...... Warehousing 178,000 Leased
Singapore(1)....... Manufacturing 197,000 Owned
Batam, Indonesia.. Manufacturing 99,000 Leased
Melville, NY(2)... Manufacturing/Whse/Office 100,000 Leased
Toronto, Canada... Warehousing/Sales 27,000 Leased
Tijuana, Mexico... Manufacturing 252,000 Leased
San Diego, CA..... Warehousing/Office 64,000 Leased
1,366,000
All other locations.Warehousing/
Sales/Service 60,000 Leased

Total............. 1,426,000

SCM Office Supplies, Inc. properties, which were sold July 5, 1994,
consist of manufacturing, warehouse and office space of which
66,000 square feet are owned and 149,000 square feet are leased.

(1) The Company leases the land on which this facility is located
from the Housing and Development Board, an agency of the
Singapore government, for a term of 60 years ending April 30,
2033.

(2) HM Holdings Inc., an indirect wholly-owned subsidiary of
Hanson, leased the Company's Melville, New York facility to
Histacount Corporation for rent of $75,000 per year, payable
monthly, for a term ending on September 30, 1995. The rent
charged under the lease is substantially below market.

</TABLE>

<PAGE>
Item 3. Legal Proceedings

Certain past practices of the Company regarding hazardous
substances and/or hazardous wastes are the subject of investigation
by federal and state regulatory authorities, or are the subject of
lawsuits filed by such authorities. At June 30, 1994 and 1993, the
Company has recorded approximately $3.3 million and $5.0 million,
respectively, related to environmental matters, of which $.6
million and $2.5 million, respectively, are classified as a current
liability in the consolidated balance sheets. Certain estimated
costs of performing environmental remediation were discounted at a
rate of 5% per annum based on the estimated timing of such
payments. Because of the uncertainties associated with assessing
environmental matters, the related ultimate liability is not
determinable. However, based on facts presently known, management
does not believe that these investigations or lawsuits, if resolved
adversely to the Company, would individually or in the aggregate
have a material adverse effect on the Company's financial position
or results of operations.

The Company is involved in proceedings with the New York Department
of Environmental Conservation (DEC) and the United States
Environmental Protection Agency regarding the clean-up of a now-
closed manufacturing facility and certain waste disposal sites in
upstate New York. The remedial investigation and feasibility study
of the now-closed manufacturing facility site has been completed.
The feasibility study report has been approved by the DEC and the
record of decision has been finalized. On March 31, 1993, the
Company executed a final signed consent order from the DEC and
remedial actions commenced. Remediation activities at the site
have been delayed as a result of an extension of the public comment
period to address the remediation plan approved by the DEC.
Management believes that the Company has made adequate provision
for the approved remediation activities.

In June 1992, the Company was served with a summons and complaint
in a private contribution action. The action, which lists the
Company as a defendant with fourteen other defendants, seeks
contribution for response costs incurred to date, and to be
incurred in the future, for the remediation of a site in Cortland,
New York. Management does not believe it disposed of any hazardous
substances at this site and is vigorously contesting this matter.

On April 18, 1991, an antidumping proceeding was commenced against
the Company at the Department of Commerce (Commerce) and before the
International Trade Commission, concerning portable electric
typewriters imported from Singapore. Subsequently, on June 22,
1993, the Company and Commerce signed a suspension agreement,
suspending the antidumping investigation and calling for the
Company to monitor its international prices. On February 4, 1994,
all of the parties signed a settlement agreement covering the
antidumping investigation and related litigation. Under the terms
of the agreement, the petitioner withdrew its petition against the
Company's Singapore imports and the Company sought revocation of
various antidumping duty orders against typewriters and word
processors from Japan. Pursuant to the agreement, the antidumping
proceedings have been terminated.

On June 8, 1990, the Company filed suit in the United States
District Court for the District of Tennessee against Pelikan, Inc.
alleging patent infringement and false advertising. On February
24, 1992, the Court entered a judgment awarding the Company
approximately $3.1 million plus post-judgment interest. Pelikan
filed an appeal, petitioning for a rehearing by the Court of
Appeals, and subsequently offered to pay to the Company a portion
of the judgment aggregating approximately $1.9 million. The $1.9
million portion of the judgment was reflected in the June 30, 1993
financial statements. Pelikan's petition for rehearing was
subsequently denied and on August 9, 1993, the Company and Pelikan
entered into an agreement pursuant to which Pelikan agreed to pay
$.5 million to the Company for fees, expenses and costs incurred in
the suit along with the remaining $1.2 million judgment. On August
11, 1993, Pelikan paid the settlement amount to the Company and
satisfied the judgment, including interest.

The Company is also a defendant or plaintiff in various other legal
actions which have arisen in the ordinary course of its business.
It is the opinion of management, based on advice of counsel with
respect to legal matters, that the ultimate resolution of these
matters and the environmental matters discussed above will not have
a material adverse effect on the Company's financial position or
results of operations.

<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders

None.

Executive Officers of the Registrant

The officers of the Company are elected by and serve at the
pleasure of the Board of Directors. The executive officers of the
Company and their respective positions, ages at September 14, 1994
and backgrounds are as follows:

<TABLE>
<CAPTION>
Name Position Age
<S> <C> <C>
G. Lee Thompson ............ Chairman of the Board and Chief
Executive Officer 61
William D. Henderson ....... President and Chief Operating
Officer 48
Thomas C. DeFazio .......... Executive Vice President/Chief
Financial Officer 53
John F. Bendik ............. President, Histacount Corporation 43
John A. Cutrone ............ Senior Vice President/Marketing
and Sales 40
Jerry L. Diener ............ Senior Vice President/Sales 58
W. Michael Driscoll ........ Vice President/Operations and
Engineering 48
Manfred J. Eckhardt ........ Vice President/Treasurer 66
Doris J. McRae ............. Vice President/Product Marketing 43
John A. Piontkowski ........ Vice President/Controller 40
Alfred N. Scallon .......... Vice President/International
Operations 43
David P. Verostko........... Vice President/Human Resources 51
</TABLE>

Mr. Thompson was elected as Chairman of the Board of the Company in
June 1989. Mr. Thompson served as President of the Company from
1986 until July 1, 1990 and has served as Chief Executive Officer
of the Company since 1986. Prior to that time, he was President of
SCM/Consumer Products, the division of SCM that manufactured and
sold Smith Corona typewriters and Durkee Famous Foods products, for
two years from 1984 to 1985.

Mr. Henderson has served as President and Chief Operating Officer
since July 1, 1990. Previously, he spent nine years as an
executive officer and group vice president of Hanson Industries.
He has also served as President and Chief Executive Officer of
Durkee Famous Foods and as an executive at FMC Corp.

Mr. DeFazio has served as Executive Vice President and Chief
Financial Officer of the Company since April 1, 1991. Prior to
joining the Company, Mr. DeFazio served as an officer of General
Instrument Corporation from 1986 to 1990, most recently as Vice
President-Finance, Chief Financial Officer and Treasurer.

Mr. Bendik has served as President of Histacount since September
1986.

Mr. Cutrone has served as Senior Vice President/Marketing and Sales
since November 1993. He previously served as Vice President, New
Product Development since May 1993. Prior to joining the Company,
Mr. Cutrone served as President of Vertical Marketing Corporation,
a consulting firm for consumer electronics companies, from 1989 to
1993. From 1990 to 1992, Mr. Cutrone served as President of Faxnet
Corporation ("Faxnet"), a company which provided public telecopying
facilities. In November 1991, while Mr. Cutrone was President of
Faxnet, Faxnet filed for bankruptcy under Chapter 7 of the United
States Bankruptcy Code. In July 1993, Mr. Cutrone filed for
personal bankruptcy under Chapter 7 of the United States Bankruptcy
Code.

Mr. Diener has served as Senior Vice President/Sales since January
1, 1992. Prior to that time, he served as Vice President/Sales of
the Company and its predecessor, SCM/Consumer Products, since 1978
and as Secretary of Smith Corona International since July 25, 1989.

Mr. Driscoll was named Vice President/Operations and Engineering on
July 1, 1992. He served as Director of Materials from February 17,
1992 to July 1, 1992. Prior to joining the Company, Mr. Driscoll
was president and a director of Code-A-Phone, a telephone sales
company, from February through August, 1991 and was chief executive
officer and a director of Technology Applications, Ltd., an
electronic and telecommunications manufacturing company from
November, 1986 through August, 1991.

Mr. Eckhardt has served as Vice President/Treasurer since September
1989. Prior to that time, from October 1988 to September 1989, he
served as Vice President/Treasurer and Chief Financial Officer of
HM Anglo-American Ltd., a Hanson holding company, and from January
1986 to October 1988, he served as Group Controller for Hanson
Industries. For the 21 years prior to 1986, Mr. Eckhardt served in
various positions with SCM, most recently as Director of Budgets
and Financial Analysis from 1980 to 1986.

Ms. McRae was named Vice President/Product Development on July 1,
1994. Prior to that time, she served as Vice President/Product
Marketing of the Company from July 1, 1993 through June 30, 1994
and as Vice President/Product Development from May 1991 through
June 1993. She served as Staff Vice President, Advanced Product
Development from December 1990 through April 1991. Prior to that
time, Ms. McRae was Director, Strategic Planning and Advanced
Product Development from February 1987 through November 1990.

Mr. Piontkowski was named Vice President/Controller of the Company
on July 1, 1993. He previously served as Director of Accounting
and Financial Reporting since December 1991. Prior to joining the
Company, Mr. Piontkowski was Chief Financial Officer of Pyramid
Management Group, a shopping mall management company, from 1989
through 1991, and was Senior Vice President and Chief Financial
Officer of Addis & Dey's, a department store, prior to that time.

Mr. Scallon has served as Vice President/International Operations
of the Company since 1987. Prior to that time, he served as
Director of Private Brand Sales for the Company for three years.

Mr. Verostko was named Vice President/Human Resources of the
Company on January 1, 1992. He served as Corporate Director/Human
Resources from September 1, 1990 to January 1, 1992. Prior to that
time, Mr. Verostko was Director, Employee Relations for 7 years.

PART II

Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters

The Common Stock of the Company (NYSE symbol: SCO) commenced
trading on the New York Stock Exchange on July 28, 1989. Prior to
that time, there was no market for the Common Stock of the Company.
The following table sets forth the range of high and low sale
prices of the Company's Common Stock on the Exchange during the two
most recent fiscal years.

<TABLE>
<CAPTION>
Fiscal 1994 Fiscal 1993

High Low High Low
<S> <C> <C> <C> <C>
First quarter. . . . . . . . . . . . . . .$5 5/8 $4 1/8 $8 1/2 $6 1/4
Second quarter . . . . . . . . . . . . . $6 1/2 $4 5/8 $7 1/4 $6 1/8
Third quarter. . . . . . . . . . . . . . $6 1/2 $5 1/8 $7 1/4 $5 1/8
Fourth quarter . . . . . . . . . . . . . .$5 1/2 $4 3/8 $5 3/4 $3 7/8
</TABLE>

As of July 6, 1994, there were approximately 1,081 holders of
record of the Common Stock.

For each of the four quarters of fiscal 1994 and fiscal 1993, the
Company declared cash dividends of $0.05 per share of Common Stock.
On August 18, 1994, the Board of Directors declared a quarterly
cash dividend of $0.05 per share of Common Stock payable on October
5, 1994 to holders of record as of September 20, 1994.

The Company intends to continue to declare and pay quarterly cash
dividends on its Common Stock. The declaration and payment of
dividends is at the discretion of the Board of Directors of the
Company and subject to certain limitations of the Delaware General
Corporation Law. The ability to pay dividends is further limited
by covenants under the Company's bank indebtedness which provide,
among other things, that dividends may not be paid if the Company
is in default under such indebtedness and that the Company must
maintain certain minimum levels of net worth, interest coverage and
debt-equity ratios. Under the most restrictive of these
provisions, the minimum consolidated net worth will increase by
50% of net income. The timing and amount of dividends (if any)
will be dependent, among other things, upon the Company's results
of operations, financial condition, cash requirements and other
factors deemed relevant by the Board of Directors. Accordingly,
there can be no assurance that the Board of Directors will declare
and pay dividends.

The calculation of the number of shares of Common Stock held by
non-affiliates shown on the cover of this Form 10-K Annual Report
was made on the assumption that there were no affiliates other than
the executive officers and directors of the Company and Hanson.

Item 6. Selected Financial Data

The information required by this item is incorporated by reference
from the table entitled "Selected Five-Year Financial Data"
contained in the Company's Annual Report to Security Holders for
the fiscal year ended June 30, 1994.

Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition

The information required by this item is incorporated by reference
from Management's Discussion and Analysis of Financial Condition
and Results of Operations contained in the Company's Annual Report
to Security Holders for the fiscal year ended June 30, 1994.

Item 8. Financial Statements and Supplementary Data

The information required by this item relative to the Consolidated
Financial Statements is incorporated by reference from the
Company's Annual Report to Security Holders for the fiscal year
ended June 30, 1994.

See Index to Consolidated Financial Statements and Schedules which
appears on page 19 of this Form 10-K Annual Report.

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure

None.

PART III

Item 10. Directors and Executive Officers of the Registrant

The information required by this item (except for information
regarding the Company's executive officers, which appears in Part
I of this Form 10-K Annual Report) is incorporated by reference
from the Company's definitive Proxy Statement for the 1994 Annual
Meeting of Stockholders, to be filed with the Securities and
Exchange Commission on or about October 10, 1994.

Item 11. Executive Compensation

The information required by this item is incorporated by reference
from the Company's definitive Proxy Statement for the 1994 Annual
Meeting of Stockholders, to be filed with the Securities and
Exchange Commission on or about October 10, 1994.

Item 12. Security Ownership of Certain Beneficial Owners and
Management

Item 13. Certain Relationships and Related Transactions

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K

(a)(1) Financial Statements. See Index to Consolidated
Financial Statements and Schedules which appears on page 19 of this
Form 10-K Annual Report.

(a)(2) Financial Schedules. See Index to Consolidated
Financial Statements and Schedules which appears on page 19 of this
Form 10-K Annual Report. All other schedules are omitted because
they are not applicable or the required information is shown in the
financial statements or notes thereto.

(b) Report on Form 8-K. One Current Report on Form 8-K was
filed with the Commission during the last quarter of the Company's
1994 fiscal year.

1. The Form 8-K Current Report dated June 9, 1994 reported
a press release under Item 5 announcing the Company had
entered into an agreement to sell substantially all the
assets and liabilities of SCM Office Supplies, Inc.

3.1 Amended and Restated Certificate of Incorporation of Smith
Corona Corporation (incorporated by reference to Exhibit
3.1 to the Company's Registration Statement on file with
the Commission (Registration No. 33-29101)).
3.2 By-Laws of Smith Corona Corporation (incorporated by
reference to Exhibit 3.2 to the Company's Registration
Statement on file with the Commission (Registration No. 33-
29101)).
4.1 Form of Common Stock Certificate (incorporated by reference
to Exhibit 4.1 to the Company's Registration Statement on
file with the Commission (Registration No. 33-29101)).
10.1 Lease Agreement between Cherry Street Associates and Smith
Corona Corporation dated March 13, 1992 (incorporated by
reference to Exhibit 10.1 to the Company's Form 10-K Annual
Report for the fiscal year ended June 30, 1992, which is on
file with the Commission).
10.2 Lease between REBA Properties, Inc. and SCM Corporation
dated June 15, 1970 (incorporated by reference to Exhibit
10.1b to the Company's Registration Statement on file with
the Commission (Registration No. 33-29101)).
10.3 Lease between the Housing and Development Board and Corona
Manufacturers (PTE) Limited dated April 18, 1975
(incorporated by reference to Exhibit 10.1e to the
Company's Registration Statement on file with the
Commission (Registration No. 33-29101)).
10.4 Tenancy between Jurong Town Corporation and Smith Corona
(Private) Limited dated February 16, 1989 (incorporated by
reference to Exhibit 10.1f to the Company's Registration
Statement on file with the Commission (Registration No. 33-
29101)).
10.5 Lease between HM Holdings, Inc. and Histacount Corporation
dated June 1, 1989 (incorporated by reference to Exhibit
10.1g to the Company's Registration Statement on file with
the Commission (Registration No. 33-29101)).
*10.6 Memorandum dated August 11, 1994 evidencing Lease Extension
between HM Holdings, Inc. and Histacount Corporation dated
June 1, 1989.
10.7 SCM Office Supplies, Inc. Salaried Employees' Retirement
Plan as amended and restated as of January 1, 1989
(incorporated by reference to Exhibit 10.9 to the Company's
Form 10-K Annual Report for the fiscal year ended June 30,
1992, which is on file with the Commission).
10.8 Smith Corona Corporation Retirement Savings and Investment
Plan adopted effective July 1, 1989, as amended through
April 5, 1993 (incorporated by reference to exhibit 10.8 to
the Company's Form 10-K Annual Report for the fiscal year
ended June 30, 1993, which is on file with the Commission).
10.9 Histacount Corporation Retirement Savings and Investment
Plan adopted effective July 1, 1989, as amended through
March 9, 1992 (incorporated by reference to Exhibit 10.11
to the Company's Form 10-K Annual Report for the fiscal
year ended June 30, 1992, which is on file with the
Commission).
10.10 Histacount Corporation Salaried and Non-Union Hourly
Employees' Pension Plan as amended and restated effective
October 1, 1989 (incorporated by reference to Exhibit 10.12
to the Company's Form 10-K Annual Report for the fiscal
year ended June 30, 1992, which is on file with the
Commission).
10.11 Smith Corona Corporation Supplemental Executive Retirement
Plan as restated and amended as of July 28, 1989, through
November 17, 1992 (incorporated by reference to Exhibit
10.11 to the Company's Form 10-K Annual Report for the
fiscal year ended June 30, 1993, which is on file with the
Commission).
10.12 Smith Corona Corporation 1990 Stock Option Plan, effective
as of December 1, 1989, amended through November 16, 1993
(incorporated by reference to Exhibit 10.12 to the
Company's Form 10-Q Quarterly Report for the quarter ended
December 31, 1993, which is on file with the Commission).
10.13 Trust Agreement between SCM Corporation, The Chase
Manhattan Bank, N.A. and Kwasha Lipton dated October 7,
1985 (incorporated by reference to Exhibit 10.8 to the
Company's Registration Statement on file with the
Commission (Registration No. 33-29101)).
10.14 Smith Corona Corporation Short Term Incentive Compensation
Plan (incorporated by reference to Exhibit 10.17 to the
Company's Form 10-K Annual Report for the fiscal year ended
June 30, 1992, which is on file with the Commission).
10.15 Export Enterprise Certificate No. 156 granted to Smith-
Corona Private Limited by the Ministry of Trade and
Industry, Republic of Singapore, dated May 12, 1981
(incorporated by reference to Exhibit 10.15 to the
Company's Registration Statement on file with the
Commission (Registration No. 33-29101)).
10.16 Pioneer Certificate No. 942 granted to Smith Corona PTE
Ltd. by the Ministry of Trade and Industry, Republic of
Singapore, dated March 23, 1987 (incorporated by reference
to Exhibit 10.16 to the Company's Registration Statement on
file with the Commission (Registration No. 33-29101)).
10.17 Stockholders' Agreement between Smith Corona Corporation
and HM Holdings, Inc. dated as of June 2, 1989
(incorporated by reference to Exhibit 10.17 to the
Company's Registration Statement on file with the
Commission (Registration No. 33-29101)).
10.18 Memorandum of Sale dated May 22, 1991 between HM Holdings,
Inc. and Hanson Natural Resources Company; Consent and
Amendment Agreement dated May 21, 1991 between Smith Corona
Corporation and HM Holdings, Inc.; and Letter of George H.
Hempstead III to G. Lee Thompson dated May 28, 1991
(incorporated by reference to Exhibit 10.17 to the
Company's Form 10-K Annual Report for the fiscal year ended
June 30, 1991, which is on file with the Commission).
10.19 Amended and Restated Cross-Indemnification Agreement
between Smith Corona Corporation and HM Holdings, Inc.
dated as of July 14, 1989 (incorporated by reference to
Exhibit 10.18 to the Company's Registration Statement on
file with the Commission (Registration No. 33-29101)).
10.20 Amended and Restated Tax Sharing and Indemnification
Agreement between Smith Corona Corporation and HM Holdings,
Inc. dated as of June 2, 1989 (incorporated by reference to
Exhibit 10.19 to the Company's Registration Statement on
file with the Commission (Registration No. 33-29101)).
10.21 Stock Purchase Agreement by and among Smith Corona Overseas
Holdings, Inc., SCM Industries Limited and Smith Corona
Corporation dated as of June 2, 1989 (incorporated by
reference to Exhibit 10.21 to the Company's Registration
Statement on file with the Commission (Registration No. 33-
29101)).
10.22 Retention Agreement for Pension Consulting Services between
Smith Corona Corporation and Hartland & Co. dated March 31,
1992 (incorporated by reference to Exhibit 10.25 to the
Company's Form 10-K Annual Report for the fiscal year ended
June 30, 1992, which is on file with the Commission).
10.23 Employment Agreement between Smith Corona Corporation and
William D. Henderson, dated as of May 22, 1990
(incorporated by reference to Exhibit 10.29 to the
Company's Form 10-K Annual Report for the fiscal year ended
June 30, 1990, which is on file with the Commission).
10.24 One year extension, effective June 30, 1992, of Employment
Agreement described in 10.29 (incorporated by reference to
Exhibit 10.30 to the Company's Form 10-K Annual Report for
the fiscal year ended June 30, 1993, which is on file with
the Commission).
10.25 Two year extension, effective June 30, 1993, of Employment
Agreement described in 10.29 (incorporated by reference to
Exhibit 10.31 to the Company's Form 10-K Annual Report for
the fiscal year ended June 30, 1993, which is on file with
the Commission).
10.26 Severance Letter between Smith Corona Corporation and G.
Lee Thompson, dated as of June 1, 1990 (incorporated by
reference to Exhibit 10.30 to the Company's Form 10-K
Annual Report for the fiscal year ended June 30, 1990,
which is on file with the Commission).
10.27 Employment Agreement between Smith Corona Corporation and
Thomas C. DeFazio, dated as of January 23, 1991
(incorporated by reference to Exhibit 10.30 to the
Company's Form 10-K Annual Report for the fiscal year ended
June 30, 1991, which is on file with the Commission).
10.28 Two year extension, effective June 30, 1993, of Employment
Agreement described in 10.33 (incorporated by reference to
Exhibit 10.34 to the Company's Form 10-K Annual Report for
the fiscal year ended June 30, 1993, which is on file with
the Commission).
10.29 Severance Letter between Histacount Corporation and John F.
Bendik dated as of June 1, 1990 (incorporated by reference
to Exhibit 10.38 to the Company's Form 10-K Annual Report
for the fiscal year ended June 30, 1992, which is on file
with the Commission).
10.30 Two year extension, effective June 30, 1993, of Employment
Agreement described in 10.35 (incorporated by reference to
Exhibit 10.36 to the Company's Form 10-K Annual Report for
the fiscal year ended June 30, 1993, which is on file with
the Commission).
10.31 Severance Letter between SCM Office Supplies, Inc. and John
Noblitt dated as of June 1, 1990 (incorporated by reference
to Exhibit 10.39 to the Company's Form 10-K Annual Report
for the fiscal year ended June 30, 1992, which is on file
with the Commission).
10.32 Two year extension, effective June 30, 1993, of Employment
Agreement described in 10.37 (incorporated by reference to
Exhibit 10.38 to the Company's Form 10-K Annual Report for
the fiscal year ended June 30, 1993, which is on file with
the Commission).
10.33 Memorandum evidencing severance agreement between Smith
Corona Corporation and Manfred J. Eckhardt (incorporated by
reference to exhibit 10.31 to the Company's Form 10-K
Annual Report for the fiscal year ended June 30, 1991,
which is on file with the Commission).
10.34 Smith Corona Corporation Salaried Employees Retirement
Plan, as amended and restated as of January 1, 1989
(incorporated by reference to Exhibit 10.36 to the
Company's Form 10-K Annual Report for the fiscal year ended
June 30, 1991, which is on file with the Commission).
10.35 Supplemental pension benefit arrangement between Smith
Corona Corporation and William D. Henderson dated November
19, 1992 (incorporated by reference to Exhibit 10.40 to the
Company's Form 10-K Annual Report for the fiscal year ended
June 30, 1993, which is on file with the Commission).
10.36 Supplemental pension benefit arrangement between Smith
Corona Corporation and Thomas C. DeFazio dated November 19,
1992 (incorporated by reference to Exhibit 10.41 to the
Company's Form 10-K Annual Report for the fiscal year ended
June 30, 1993, which is on file with the Commission).
*10.37 Memorandum dated January 14, 1994 evidencing retention
agreement between John R. Noblitt and Smith Corona Corporation.
10.38 Credit Agreement dated as of June 25, 1993 among Smith
Corona Corporation, the lenders party thereto and Chemical
Bank, as Agent (incorporated by reference to Exhibit 10.42
to the Company's Form 10-K Annual Report for the fiscal
year ended June 30, 1993, which is on file with the
Commission).
10.39 Lease Agreement between City of Marion, Indiana and SCM
Corporation dated as of March 1, 1971 (incorporated by
reference to Exhibit 10.44 to the Company's Form 10-K
Annual Report for the fiscal year ended June 30, 1993,
which is on file with the Commission).
10.40 Lease Agreement between Inmobiliarian Mex-Hong, S.A. De
E.V. and Smith Corona De Mexico, S.A. De C.V. dated
November 24, 1992 (incorporated by reference to Exhibit
10.47 to the Company's Form 10-K Annual Report for the
fiscal year ended June 30, 1993, which is on file with the
Commission).
10.41 Lease Agreement between Inmobiliarian Mex Hong, S.A. De
E.V. and Smith Corona De Mexico, S.A. De C.V. dated June 4,
1993 (incorporated by reference to Exhibit 10.48 to the
Company's Form 10-K Annual Report for the fiscal year ended
June 30, 1993, which is on file with the Commission).
10.42 Lease Agreement between Turnberry Associates and Smith
Corona Corporation dated May 5, 1993 (incorporated by
reference to Exhibit 10.49 to the Company's Form 10-K
Annual Report for the fiscal year ended June 30, 1993,
which is on file with the Commission).
10.43 Asset Purchase Agreement, dated as of June 8, 1994, among
Ampad Corporation (the "Purchaser"), SCM Office Supplies,
Inc. (the "Seller") and Smith Corona Corporation (the
"Stockholder") (incorporated by reference to exhibit 1 to
the Company's Form 8-K Current Report dated July 19, 1994,
which is on file with the Commission).
*13 Pages 14 through 30 of the Smith Corona Corporation Annual
Report to Security Holders for the year ended June 30, 1994
*21 Schedule of Subsidiaries of the Registrant
*23 Consent of Deloitte & Touche LLP
*27 Financial Data Schedule

* filed herewith

Stockholders may, upon payment of a fee therefore, obtain copies
of any of the exhibits to this Form 10-K annual report by writing
to the Secretary, Smith Corona Corporation, 65 Locust Avenue, New
Canaan, Connecticut 06840.

<PAGE>
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

SMITH CORONA CORPORATION

October 6, 1994 By /s/ G. Lee Thompson
G. Lee Thompson
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ G. Lee Thompson
....................... Chairman of the Board, Chief October 6, 1994
(G. Lee Thompson) Executive Officer, and
Director (principal
executive officer)
/s/ William D. Henderson
....................... President and Chief Operating October 6, 1994
(William D. Henderson) Officer (principal operating
officer)
/s/ Thomas C. DeFazio
....................... Executive Vice President/ October 6, 1994
(Thomas C. DeFazio) Chief Financial Officer
(principal financial officer)

/s/ John A. Piontkowski
........................ Vice President/Controller October 6, 1994
(John A. Piontkowski) (principal accounting officer)

/s/ David H. Clarke
........................ Director October 6, 1994
(David H. Clarke)

/s/ John G. Raos
........................ Director October 6, 1994
(John G. Raos)

/s/ George H.Hempstead,III
........................ Director October 6, 1994
(George H. Hempstead,III)

/s/ Craig C. Sergeant
........................ Director October 6, 1994
(Craig C. Sergeant)

/s/ Robert Van Buren
........................ Director October 6, 1994
(Robert Van Buren)

/s/ Robert J. Kammerer
........................ Director October 6, 1994
(Robert J. Kammerer)

/s/ Richard R. West
........................ Director October 6, 1994
(Richard R. West)
</TABLE>

Index to Consolidated Financial Statements and Financial Statement
Schedules

Page

Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . .20

Consolidated Balance Sheets as of June 30, 1994 and 1993 . . . . . . . . *

Consolidated Income Statements for the Years Ended June 30, 1994, 1993
and 1992. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *

Consolidated Statements of Changes in Stockholders' Equity for the Years
Ended June 30, 1994, 1993 and 1992. . . . . . . . . . . . . . . . . . *

Consolidated Statements of Cash Flows for the Years Ended June 30, 1994,
1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . *

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . *

Consolidated Supplemental Financial Statement Schedule for the Years
Ended June 30, 1994, 1993 and 1992

Schedule X -Supplementary Income Statement Disclosure. . . . .21

* The information required is incorporated by reference from the
Company's Annual Report to Security Holders for the fiscal year
ended June 30, 1994.

INDEPENDENT AUDITORS' REPORT

SMITH CORONA CORPORATION:

We have audited the consolidated financial statements of Smith Corona
Corporation and its subsidiaries as of June 30, 1994 and 1993 and for each
of the three years in the period ended June 30, 1994 and have issued our
report thereon dated July 27, 1994; such consolidated financial statements
and report are included in your 1994 Annual Report to Security Holders and
are incorporated herein by reference. Our audits also included the
consolidated financial statement schedule of Smith Corona Corporation and
subsidiaries listed on page 19 of this Form 10-K Annual Report. This
consolidated financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits. In our opinion, such
consolidated financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.

\s\ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Stamford, Connecticut
July 27, 1994

SCHEDULE X

SMITH CORONA CORPORATION
SUPPLEMENTARY INCOME STATEMENT DISCLOSURE
For the years ended June 30, 1994, 1993 and 1992
(In thousands)
<TABLE>
<CAPTION>
Charged to Costs and Expenses

1994 1993(1) 1992(1)

<S> <C> <C> <C>
Maintenance and repairs................... $3,570 $4,096 $4,109

Advertising............................... $3,239 $7,466 $7,751

(1) Amounts have been reclassified to exclude those amounts related to the
discontinued operations of SCM Office Supplies, Inc.

</TABLE>

EXHIBIT INDEX

EXHIBIT #

10.6 Memorandum dated August 11, 1994 evidencing Lease Extension
between HM Holdings, Inc. and Histacount Corporation dated
June 1, 1989

13 Pages 14 through 30 of the Smith Corona Corporation Annual
Report to Security Holders for the year ended June 30, 1994

21 Schedule of Subsidiaries of the Registrant

23 Consent of Deloitte & Touche LLP

27 Financial Data Schedule

10.37 Memorandum dated January 14, 1994 evidencing retention
agreement between John R. Noblitt and Smith Corona
Corporation

EXHIBIT 10.6

August 11, 1994

Mr. John Raos
President and Chief Operating Officer
Hanson Industries
99 Wood Avenue South
Iselin, NJ 08830

Dear John:

I just wanted to send you a note to confirm your agreement to
extend our lease at the Histacount facility until September 30,
1995 at an annual rental of $75,000.

Sincerely,

\s\ Thomas C. DeFazio

Thomas C. DeFazio
Executive Vice President
and Chief Financial Officer

TCD/vw

Confirmed: \s\ John G. Raos
President and Chief Operating Officer

EXHIBIT 13

Smith Corona Corporation
SELECTED FIVE-YEAR FINANCIAL DATA
<TABLE>
<CAPTION>

(Dollars in thousands, For the year ended June 30,
except per share amounts) 1994 1993(1) 1992(1) 1991(1) 1990(1)
<S> <C> <C> <C> <C> <C>
Net sales $278,636 $253,823 $316,741 $324,483 $396,929
Gross margin 64,556 66,067 93,486 93,934 115,362
Operating income (loss) 9,917 (12,354)(2) 32,685 31,289 49,524
Income (loss) from
continuing operations 6,078 (8,297) 21,253 18,999 29,839
Discontinued operations
(net of income taxes):
Income (loss) from
operations 1,249 (725) 830 587 3,704
Provision for loss on
disposal of
discontinued
operations (2,200) - - - -
Net income (loss) $5,127 $(9,022) $22,083 $19,586 $33,543
Earnings per common
share(3) -
Income (loss) from
continuing operations $.20 $(.28) $.70 $.63 $.99
Discontinued operations:
Income (loss) from
operations .04 (.02) .03 .02 .12
Provision for loss on
disposal of
discontinued
operations (.07) - - - -
Net income (loss)
per share $.17 $(.30) $.73 $.65 $1.11
Working capital $85,136 $93,586 $88,936 $93,544 $115,540
Total assets 195,034 191,967 185,295 179,093 215,312
Bank loans 20,002 18,669 9,899 33,276 70,603
Stockholders' equity 75,722 76,645 91,717 80,684 67,148
Cash dividends declared
per common share $.20 $.20 $.20 $.20 $.45

(1) Amounts have been reclassified, where applicable, to reflect the
discontinued operations of SCM Office Supplies, Inc.
(2) Includes a $16.5 million provision for restructuring costs.
(3) Based on 30,250,000 shares of common stock.
</TABLE>

<PAGE>
Management's Discussion
and Analysis of Results of Operations
and Financial Condition

On July 5, 1994 Smith Corona Corporation (the "Company") sold
substantially all the assets and liabilities of SCM Office
Supplies, Inc. (see Note 11). Accordingly, the income statements
reflect their operating results and provision for loss on sale as
discontinued operations and the balance sheet segregates the net
assets and liabilities of discontinued operations. The following
discussion of results of operations and financial condition is
presented for continuing operations only and should be read in
conjunction with the consolidated financial statements and notes
thereto, contained in this annual report.

Fiscal 1994 Compared to Fiscal 1993

Results of Operations
Net sales increased by 9.8 percent or $24.8 million to $278.6
million in fiscal 1994 compared to fiscal 1993. Increased unit
sales of personal word processors and typewriters in both domestic
and international markets accounted for approximately $39.0 million
of the increased sales growth while lower pricing, principally in
the domestic market, offset approximately 50 percent of the unit
sales gains. New products, introduced late in fiscal 1993,
accounted for approximately $7.4 million of the increase in net
sales. As noted above, domestic unit sales outpaced revenue
increases as lower pricing impacted sales growth and gross margins.
Internationally, unit sales increased substantially as the Company
continued to increase its market share in Europe as well as other
geographic areas. Price pressures, while less than in the U.S.
market, nevertheless hindered net sales increases for the year.

Operating income of $9.9 million in fiscal 1994 compared
favorably to a $12.4 million loss in fiscal 1993 due principally to
lower advertising, administrative and research expenses in fiscal
1994, and the 1993 pretax restructuring charge of $16.5 million.
Payments of approximately $1.8 million from Pelikan, Inc. for
satisfaction of a judgment won by the Company for patent
infringement and misleading advertising litigation are included as
reductions in cost of goods sold in both fiscal 1994 and 1993.

In fiscal 1993, the Company announced a plan to phase out
the Company's manufacturing operations in Cortland, New York and
move them to a new facility in Mexico. The pretax charges related
to this move were $16.5 million in fiscal 1993, equivalent to $10.1
million after tax, or $.33 per share. The move to Mexico was
substantially completed by the end of the first calendar quarter of
1994. The annual savings, resulting from the restructuring,
originally anticipated in 1994 were not realized as cost of sales
continued to reflect the higher Cortland manufacturing labor costs.
Cost of sales in fiscal 1995 is expected to reflect the full
benefit of the lower manufacturing costs.

Financial Condition
The Company's primary sources of liquidity and capital resources,
on both a short- and long-term basis, are cash flows generated from
operations and borrowings under its Credit Facility. During the
year ended June 30, 1994, the Company's operating activities
provided cash of $9.2 million, largely a result of the increased
net income and lower inventories offset in part by increased
accounts receivable. Accounts receivable increased $16.6 million
over the prior fiscal year as a result of increased sales late in
the fourth quarter. The reduction in inventories reflects the
Company's continued focus on controlling inventory levels. Accrued
restructuring costs decreased principally due to the pay- out of
severance and other personnel related liabilities during fiscal
1994. The balance of accrued restructuring costs at June 30, 1994
is expected to be paid in the next fiscal year. Capital
expenditures in the year ended June 30, 1994 were $11.7 million
compared to $5.3 million in the prior year increasing primarily as
a result of relocating manufacturing operations to Mexico. The
Company had no material commitments for capital expenditures at
June 30, 1994 and anticipates capital expenditures in fiscal 1995
to return to pre-fiscal 1994 levels.

The Company has a Credit Facility in the amount of $32.0
million expiring June 25, 1996. As of June 30, 1994, the Company
was in compliance with all covenants of the Credit Facility.
Management believes that it has adequate flexibility under these
covenants and that the covenants should not impose undue
restrictions on the operations of the Company. The Credit Facility
provides for interest at the Company's option at variable rates,
ranging from London Interbank Offering Rate (LIBOR) plus 0.5
percent to the prime rate of interest. The Company also has an
uncommitted line of credit arrangement for $20.0 million which
bears interest at a rate which changes daily based on money market
rates. At June 30, 1994, the interest rate on combined borrowings
was 5.63 percent per annum. The proceeds from the sale of SCM
Office Supplies, Inc. of approximately $13.0 million were used to
pay down the bank loans subsequent to year-end.

The Company's Singapore operations had been granted "pioneer
tax status" until February 1994 and as a result, have paid no
Singapore income tax on unremitted Singapore earnings up to that
date. Since the expiration of the "pioneer tax status," the
Singapore operations have been subject to a tax of approximately 27
percent. The impact of the change in tax status, which serves to
increase the effective income tax rate, was not significant in
fiscal 1994.

The Company believes that its funds generated from
operations together with its borrowing capabilities will be
sufficient to meet its operating cash and capital expenditure
requirements in the foreseeable future.

Fiscal 1993 Compared to Fiscal 1992

Results of Operations
Net sales declined $62.9 million, or 19.9 percent, to $253.8
million in fiscal 1993 compared to fiscal 1992, 80 percent of which
was attributed to decreased unit volume. Personal word processor
sales increased both domestically and abroad, while total unit
sales declined. Domestic sales continued to be hurt by a sluggish
consumer spending environment and by intense price competition
across our product line. In addition, the new model year product
launch, initiated in the fourth quarter of fiscal 1992, began in
the first quarter of fiscal 1994. The severe recessionary climate
in the U.K., Canada and Europe impacted sales and international
sales declined substantially in the fourth quarter and for the
year. Development of direct marketing in continental Europe
continued. However, European sales were down markedly as compared
to the prior year, when there were sizable shipments to a large OEM
European distributor. Operating income declined from $32.7 million
in fiscal 1992 to a $12.4 million loss in fiscal 1993, primarily
due to lower sales volumes and gross margins and the fiscal 1993
$16.5 million pretax charge for the move of the Company's Cortland,
New York manufacturing facility to Mexico. Selling, administrative
and research expenses increased as the Company launched its direct
marketing in continental Europe.

Over the past few years, the Company has faced intense
competition from foreign producers. In July 1992, in order to
maintain its leadership as the low-cost producer in a highly
competitive worldwide business, the Board of Directors approved and
the Company announced a plan to phase out the Company's
manufacturing operations in Cortland, New York and relocate them to
a new facility in Mexico. As a result of this decision, during
fiscal 1993, the Company provided $16.5 million in restructuring
charges, of which approximately $3.0 million was non-cash in
nature. Once the Mexico facility is fully operational, this action
is expected to result in lower manufacturing costs of approximately
$15.0 million annually, primarily due to lower labor costs in
Mexico. The restructuring charge included $8.3 million relating to
severance of employees, $3.3 million relating to asset redeployment
costs, $3.0 million for the write-down of impaired equipment and
other assets predicated on management's decision to close the
facility and $1.9 million of other costs, primarily costs
associated with site selection and outside consulting fees. The
cash portion of the charge is expected to be fully expended by the
end of fiscal 1995.

In the first quarter of fiscal 1993, $9.0 million was
recorded for employees' severance liabilities and asset impairments
stemming from the restructuring decision to close the Cortland
manufacturing facility. Additional direct costs of $1.3 million
associated with the relocation to the Mexico facility were charged
to restructuring during the second and third quarters of fiscal
1993. In the fourth quarter, the Company provided an additional
$6.2 million, $2.5 million for asset redeployment costs, $1.9
million for the value of additional fixed assets which became
impaired, and the balance principally for consulting and other
costs associated with site selection activities. The fourth quarter
provision of $2.5 million for asset redeployment costs consisted
primarily of incremental personnel costs, travel and lodging for
39 employees responsible for the set-up and establishment of the
equipment in the Mexican facility. The employees responsible for
the set-up and establishment were notified of their termination and
subsequent temporary assignment.

As a consequence of final site selection in the fourth quarter,
certain additional fixed assets were identified which would not be
relocated to Mexico and the associated impairment of value was recorded.

Interest expense of $.4 million in fiscal 1993 was lower
than fiscal 1992 due to the reduction in average outstanding
borrowings and lower interest rates. As discussed in Note 2 to the
Consolidated Financial Statements, effective July 1, 1992, the
Company adopted Statement of Financial Accounting Standards (SFAS)
No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," SFAS No. 109, "Accounting for Income Taxes," and
SFAS No. 112, "Employers' Accounting for Postemployment Benefits."
The cumulative effect of adopting these accounting changes in
fiscal 1993 was a reduction in earnings per share of $.01.

At June 30, 1993, loans payable were $18.7 million, up from
$9.9 million at June 30, 1992. Stockholders' equity was $76.6
million, and the ratio of loans payable to total invested capital
was 19.6 percent at June 30, 1993.

<PAGE>
Smith Corona Corporation
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30,
(Dollars in thousands) 1994 1993
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $6,472 $13,800
Accounts receivable (net of allowance
for doubtful accounts of $1,563 and
$1,390 for 1994 and 1993, respectively) 49,343 32,744
Inventories 64,247 77,008
Prepaid expenses and other current
assets 3,794 2,203
Deferred income taxes 10,131 12,688
Net assets of discontinued operations 14,780 15,584
Total current assets 148,767 154,027
Property, plant and equipment-net 38,090 31,801
Deferred income taxes 4,471 3,714
Other assets 3,706 2,425
Total $195,034 $191,967
Liabilities and stockholders' equity
Current liabilities:
Trade payables $28,219 $24,190
Accrued liabilities 28,899 30,198
Income taxes payable 5,001 4,541
Dividends payable 1,512 1,512
Total current liabilities 63,631 60,441
Bank loans 20,002 18,669
Postretirement benefits 12,650 12,703
Pension liability 20,361 21,039
Other long-term liabilities 2,668 2,470
Total liabilities 119,312 115,322
Stockholders' equity:
Common stock- 30,250,000 shares issued
and outstanding 303 303
Additional paid-in capital 44,697 44,697
Retained earnings 30,722 31,645
Total stockholders' equity 75,722 76,645
Total $195,034 $191,967

See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>
Smith Corona Corporation
Consolidated Income Statements
<TABLE>
<CAPTION>

(Dollars in thousands, For the year ended June 30,
except per share amounts) 1994 1993 1992
<S> <C> <C> <C>
Net sales $278,636 $253,823 $316,741
Cost of goods sold 214,080 187,756 223,255
Gross margin 64,556 66,067 93,486
Selling, administrative and
research expenses 54,639 61,921 60,801
Restructuring costs - 16,500 -
Operating income (loss) 9,917 (12,354) 32,685
Interest expense 708 417 1,431
Income (loss) from continuing
operations before income taxes 9,209 (12,771) 31,254
Income taxes (benefit) 3,131 (4,474) 10,001
Income (loss) from continuing
operations 6,078 (8,297) 21,253
Discontinued operations (net of
income taxes):
Income (loss) from operations 1,249 (725) 830
Provision for loss on disposal
of discontinued operations (2,200) - -
Net income (loss) $5,127 $(9,022) $22,083

Earnings per common share -
Income (loss) from continuing
operations $.20 $(.28) $.70
Discontinued operations:
Income (loss) from operations .04 (.02) .03
Provision for loss on disposal
of discontinued operations (.07) - -
Net income (loss) per share $.17 $(.30) $.73

See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>
Smith Corona Corporation
Consolidated Statements of Changes in Stockholders' Equity
For the years ended June 30, 1994, 1993 and 1992
<TABLE>
<CAPTION>
Additional
(Dollars in thousands, Common Paid-in Retained
except per share amounts) Stock Capital Earnings Total
<S> <C> <C> <C> <C>
Balance, June 30, 1991 $303 $49,697 $30,684 $80,684
Net income - - 22,083 22,083
Dividends declared
($.20 per share) - - (6,050) (6,050)
Partial return of
proceeds from initial
public offering - (5,000) - (5,000)
Balance, June 30, 1992 303 44,697 46,717 91,717
Net loss - - (9,022) (9,022)
Dividends declared
($.20 per share) - - (6,050) (6,050)
Balance, June 30, 1993 303 44,697 31,645 76,645
Net income - - 5,127 5,127
Dividends declared
($.20 per share) - - (6,050) (6,050)
Balance, June 30, 1994 $303 $44,697 $30,722 $75,722

See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>
Smith Corona Corporation
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the year ended June 30,
(Dollars in thousands) 1994 1993 1992
<S> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss) $5,127 $(9,022) $22,083
Adjustments to reconcile net income
(loss) to net cash provided by
continuing operating activities:
Discontinued operations 951 725 (830)
Depreciation and amortization 5,576 6,697 7,494
Restructuring costs - 16,500 -
Deferred income taxes 1,800 (6,421) 4,442
Other noncash items 72 303 192
Changes in assets and liabilities:
Accounts receivable (16,599) 21,742 (1,323)
Inventories 12,761 (13,480) (10,566)
Prepaid expenses and other
current assets (1,591) 411 27
Other assets (1,557) 1,461 663
Trade payables 4,029 (10,023) 8,858
Accrued liabilities and income
taxes payable (839) (5,257) 4,828
Postretirement benefits and
pension liability (731) 1,313 419
Other long-term liabilities 198 470 -
Net cash provided by continuing
operations 9,197 5,419 36,287
Net cash provided by (used in)
discontinued operations (147) (1,421) 92
Net cash provided by operating
activities 9,050 3,998 36,379

Cash flows used in investing
activities:
Capital expenditures (11,661) (5,259) (5,475)

Cash flows from financing
activities:
Bank loans (repayments), net 1,333 8,770 (23,377)
Partial return of proceeds from
initial public offering - - (5,000)
Dividends paid (6,050) (6,050) (6,050)
Net cash provided by (used in)
financing activities (4,717) 2,720 (34,427)

Increase (decrease) in cash and
cash equivalents (7,328) 1,459 (3,523)
Cash and cash equivalents at
beginning of year 13,800 12,341 15,864
Cash and cash equivalents at
end of year $6,472 $13,800 $12,341
Cash paid during the year for:
Interest $842 $576 $1,720
Income taxes $2,077 $3,269 $3,271

See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>
Smith Corona Corporation
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share amounts)

1. Significant Accounting Policies
Basis of Consolidation: The consolidated financial statements
include the accounts of Smith Corona Corporation and its wholly-
owned subsidiaries (the "Company"). All significant intercompany
accounts and transactions have been eliminated.

Cash Equivalents: All highly liquid investments purchased with a
maturity of three months or less are considered to be cash
equivalents.

Inventories: Inventories are stated at the lower of cost or
market. Cost is determined principally by the first-in, first-
out (FIFO) method. Inventories valued using the last-in, first-
out (LIFO) method at June 30, 1994 and 1993 are $1,903 and
$1,724, respectively.

Property, Plant and Equipment: Property, plant and equipment are
stated at cost. Depreciation is provided on the straight-line
basis at rates based on estimated useful lives. Lives used in
computing depreciation range from two to twelve years for
equipment and forty years for buildings. Leasehold improvements
are amortized over the lease term. At the time properties are
disposed, the property and related accumulated depreciation
accounts are relieved of the applicable amounts and any profit or
loss is included in operations.

Maintenance and repairs are charged against operations as
incurred. Expenditures that materially increase capacities or
extend useful lives of property, plant and equipment are
capitalized.

Retirement Plans: Substantially all domestic employees
participate in the Company's retirement plans for salaried and
hourly employees. The cost of United States pension plans is
accrued in amounts equal to the normal cost of current service
under the plans together with amortization of prior service
costs. Outside of the United States, costs are accrued and paid
in accordance with local requirements.

Postretirement Plans: The Company provides for the expected cost
of postretirement benefits over the employee's years of active
service.

Research and Development: The Company's product development
costs are expensed as incurred. Research and development expense
was $7,966, $10,064 and $11,026 for the years ended June 30,
1994, 1993 and 1992, respectively.

Goodwill: The excess of the allocated acquisition cost over the
fair value of net assets of businesses acquired is included in
other assets and is being amortized by the straight-line method
over forty years.

Foreign Currency: The functional currency of the Company's
foreign operations is deemed to be the United States dollar.
Consequently, all translation gains and losses are included in
income.

Forward Foreign Currency Contracts: From time to time, the
Company may enter into forward foreign currency contracts to
hedge against foreign currency fluctuations. Gains and losses on
these contracts were recorded in net income in the period in
which the exchange rate changed. During the year ended June 30,
1993, forward foreign currency contracts were in place to reduce
the impact of foreign currency fluctuations on transactions
designated in a currency other than the U.S. dollar. At June 30,
1993, there were no outstanding forward contracts. There were no
such contracts in effect during fiscal 1994 or 1992.

Income Taxes: Deferred income taxes are determined based on the
difference between the financial statement and tax bases of
assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse.

Earnings Per Share: Earnings per share have been calculated
based upon 30,250,000 shares of common stock outstanding.

Reclassifications: Certain reclassifications have been made to
the prior years' financial statements to conform with the 1994
presentation. In addition, amounts in prior years' financial
statements have been reclassified to reflect continuing
operations (see Note 11).

2. Changes in Accounting Principles
Effective July 1, 1992, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," SFAS
No. 112, "Employers' Accounting for Postemployment Benefits," and
SFAS No. 109, "Accounting for Income Taxes." The sum of the
accounting changes in fiscal 1993 amounted to $10.

SFAS 106 requires the accrual method of accounting for
the expected costs of postretirement benefits other than pensions
during the years of an employee's service. The cumulative effect
of this accounting change was a decrease to fiscal 1993 net
income of $3,507, or $.12 per share. In addition, the effect of
adopting this statement in fiscal 1993, exclusive of the
cumulative effect, was a decrease to net income of $265.

SFAS 112 requires the accrual method of accounting for
benefits to former or inactive employees after employment but
before retirement. In prior years, the expense was recognized
when claims were paid. The cumulative effect of this accounting
change in fiscal year 1993 was a reduction in net income of $183
(less than $.01 per share).

SFAS 109 requires the liability method of accounting for
income taxes rather than the deferred method previously used.
The cumulative effect of this accounting change was an increase
to fiscal year 1993 net income of $3,700, or $.12 per share.

3. Inventories
A summary of inventories, by major classification, is as follows:
<TABLE>
<CAPTION>
June 30,
(In thousands) 1994 1993
<S> <C> <C>
Raw materials and supplies $ 2,612 $ 3,478
Work-in-process 27,796 20,566
Finished goods 34,190 53,213
Total 64,598 77,257
LIFO reserve (351) (249)
Total $64,247 $77,008
</TABLE>

4. Property, Plant and Equipment
A summary of property, plant and equipment, by major
classification, is as follows:
<TABLE>
<CAPTION>
June 30,
(In thousands) 1994 1993
<S> <C> <C>
Land $ 1,703 $ 1,634
Buildings and improvements 17,122 13,081
Machinery and other equipment 59,919 53,175
Total 78,744 67,890
Accumulated depreciation (40,654) (36,089)
Total $38,090 $31,801
</TABLE>

5. Accrued Liabilities
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
June 30,
(In thousands) 1994 1993
<S> <C> <C>
Accrued restructuring costs $ 4,132 $11,779
Payroll and related expenses 9,064 6,766
Accrued promotional expenses 6,471 4,094
Other 9,232 7,559
Total $28,899 $30,198

</TABLE>

6. Leases
The Company leases certain facilities, equipment and vehicles for
various periods through 2009 under non-cancelable operating
leases. Rental expense under these operating leases was $6,954,
$6,507 and $6,262 for the years ended June 30, 1994, 1993 and
1992, respectively.

The future minimum rental commitments for the operating
leases are as follows:

<TABLE>
<CAPTION>
Year Ended Amount
June 30, (In thousands)
<S> <C>
1995 $ 5,359
1996 4,318
1997 3,934
1998 2,590
1999 1,036
Thereafter 3,128
Total $20,365
</TABLE>

7. Bank Loans
The Company has a revolving credit agreement (the "Credit
Facility") with two banks for $32,000 expiring June 25, 1996, the
use of which is generally to satisfy its working capital
requirements. Aggregate borrowings under the Credit Facility
amounted to $750,548, $699,950 and $1,461,385 for fiscal 1994,
1993 and 1992, respectively, while aggregate repayments were
$749,215, $691,180 and $1,484,762 for fiscal 1994, 1993 and 1992,
respectively. Payment of dividends is limited by the terms of
the Credit Facility, under which the Company is obligated to
maintain minimum consolidated net worth of $68,479 at June 30,
1994, with increases equal to 50 percent of net income subsequent
to June 30, 1994. The required minimum interest coverage ratio
is 2.25 and the maximum leverage ratio is 55 percent. As of June
30, 1994, the Company was in compliance with all covenants of the
Credit Facility. The Credit Facility provides for interest at
the Company's option at variable rates, ranging from LIBOR plus
0.5 percent to the prime rate of interest. The Company also has
an uncommitted line of credit arrangement for $20,000 which bears
interest at a rate which changes daily based on money market
rates. At June 30, 1994, the interest rate on combined
borrowings was 5.63 percent per annum. The carrying value of the
Company's bank loans approximates fair value, which was estimated
based upon the current rates offered to the Company for debt with
similar remaining maturities.

8. Stockholders' Equity
Authorized capital consisted of 90,000,000 shares of common stock
and 10,000,000 shares of preferred stock, both having $0.01 par
value per share. As of June 30, 1994 and 1993, there were
30,250,000 shares of common stock and no shares of preferred
stock outstanding. During 1992, the Company recorded a $5,000
charge to paid-in capital as its share of the settlement of the
shareholders' litigation.

Under the Company's stock option plan, as amended,
3,900,000 shares of common stock were reserved for issuance to
officers and key employees at June 30, 1994. Options are granted
at the fair market value of the stock at the date of grant. The
options become exercisable beginning three years from and expire
ten years from date of grant.

A summary of the stock option activity is presented as follows:
<TABLE>
<CAPTION>

Price Range Number of Shares
<S> <C> <C>
Outstanding June 30, 1991 $5.63 - 12.50 871,500
Granted 6.88 - 9.25 498,000
Canceled 6.00 - 12.50 (38,000)(1)
Outstanding June 30, 1992 $5.63 - 12.50 1,331,500
Granted 4.88 - 7.31 1,020,500
Canceled 6.00 - 12.50 (55,500)(1)
Outstanding June 30, 1993 $4.88 - 12.50 2,296,500
Granted 5.13 - 6.44 528,500
Canceled 5.75 - 12.50 (293,000)(1)
Outstanding June 30, 1994 $4.88 - 12.50 2,532,000
Exercisable June 30, 1994 $5.63 - 12.50 744,000

(1)Cancelations result from employees' termination.
</TABLE>

9. Geographic Area Information
The Company operates in one industry segment which includes
design, manufacture and distribution of typewriters, personal
word processors and related accessories. The Company also
manufactures and markets forms and customized printed products.
The Company manufactures its products principally at its
facilities located in Mexico and Singapore and distributes its
products through a variety of distribution channels, domestically
and internationally. Information regarding the Company's
operations in different geographic locations is shown below:

<TABLE>
<CAPTION>
For the year ended June 30,
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
Net sales to customers:
United States $232,869 $217,782 $249,732
Singapore 4,950 6,365 33,677
Other Foreign 40,817 29,676 33,332
Total $278,636 $253,823 $316,741

Inter-area transfers:
United States $22,033 $16,728 $18,869
Singapore 72,193 73,210 94,549
Other Foreign 7,398 1,081 -
Total $101,624 $91,019 $113,418

Operating income (loss):
United States $17,434 $(2,486) $22,056
Singapore 5,422 4,274 24,460
Other Foreign (7,295) (11,477) (6,327)
Corporate (5,617) (5,270) (5,687)
Eliminations (27) 2,605 (1,817)
Total $9,917 $(12,354) $32,685

Identifiable assets:
United States $133,845 $138,484 $126,834
Singapore 26,250 34,960 42,042
Other Foreign 34,939 18,523 16,419
Total $195,034 $191,967 $185,295
</TABLE>

Transfers between geographic areas are generally priced to
recover cost plus an appropriate markup for profit. In fiscal
1994, the Company presented its geographic information based on
revenues derived from geographic locations; 1993 and 1992 data
have been restated to reflect this change in presentation.

Sales to one of the Company's largest customers amounted to
11.4%, 11.4% and 6.0% of consolidated net sales during 1994, 1993
and 1992, respectively, and was the only customer responsible for
more than 10% of net sales.

10. Pension Plans and Postretirement Benefits
The plans covering salaried employees generally provide pension
benefits that are based upon formulas that reflect all service
with the Company and its predecessors and the employee's
compensation during the employee's highest five consecutive years
of service before retirement. Plans covering hourly employees
generally provide benefits of stated amounts for each year of
service. The Company's funding policy is to make annual
contributions in an amount which is not less than that required
by the Internal Revenue Service regulations.

The net periodic pension cost for the years ended June 30,
1994, 1993 and 1992 is comprised of the following components:

<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
Service cost $1,979 $1,829 $1,075
Interest cost 5,396 5,278 5,009
Return on plan assets:
Actual 143 (5,863) (6,871)
Unrecognized (gain) loss (5,687) 516 1,754
Amortization of deferred
costs and actuarial (gains)
and losses (494) (676) (430)
Pension cost $1,337 $1,084 $ 537
</TABLE>

The assumptions used in the development of these amounts were:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Discount rate 8.00% 8.50% 8.50%
Rates of increase in
compensation levels 5.50% 5.75% 5.75%
Rate of return on
plan assets 9.25% 9.25% 9.25%
</TABLE>

The following tables set forth the funded status and amounts
recognized in the Company's consolidated balance sheets:
<TABLE>
<CAPTION>
June 30, 1994
Over- Under-
Funded Funded
(In thousands) Plans Plans Total
<S> <C> <C> <C>
Actuarial present value
of benefit obligation:
Vested benefit obligation $33,796 $30,898 $64,694
Accumulated benefit obligation $34,783 $31,311 $66,094
Projected benefit obligation $39,727 $31,951 $71,678
Market value of assets
(principally publicly traded
securities) 34,812 26,869 61,681
Funded status 4,915 5,082 9,997
Unrecognized gains 5,207 5,157 10,364
Net accrued pension liability $10,122 $10,239 $20,361
</TABLE>

<TABLE>
<CAPTION>
June 30, 1993
Over- Under-
Funded Funded
(In thousands) Plans Plans Total
<S> <C> <C> <C>
Actuarial present value of
benefit obligation:
Vested benefit obligation $34,145 $28,767 $62,912
Accumulated benefit obligation $35,730 $28,963 $64,693
Projected benefit obligation $41,151 $28,963 $70,114
Market value of assets
(principally publicly traded
securities) 38,816 26,466 65,282
Funded status 2,335 2,497 4,832
Unrecognized gains 9,351 6,856 16,207
Net accrued pension liability $11,686 $9,353 $21,039
</TABLE>

The Company also has defined contribution savings plans
covering its domestic and certain of its foreign employees, under
which the Company matches a portion of the contributions made by
participating employees. The Company's costs for matching
contributions under savings plans totaled $733, $938 and $901 for
the years ended June 30, 1994, 1993 and 1992, respectively.

The Company has a non-qualified supplemental pension plan
covering certain employees which provides for incremental pension
payments from the Company's funds. The net accrued pension
liability related to the unfunded plan was $1,458 and $1,034 at
June 30, 1994 and 1993, respectively. Pension expense for the
plan was $450, $260 and $120 in fiscal 1994, 1993 and 1992,
respectively.

The Company also provides health care and life insurance
benefits for certain retired employees. Substantially all of the
Company's domestic employees, and certain employees in foreign
countries, may become eligible for such benefits if they reach a
specified retirement age while working for the Company.

Summary information on the Company's postretirement benefit
plans, which are unfunded, is as follows:

<TABLE>
<CAPTION>
Year ended June 30,
(In thousands) 1994 1993
<S> <C> <C>
Financial status of plans:
Accumulated postretirement
benefit obligation (APBO):
Retirees $ 6,135 $ 6,273
Fully eligible, active
plan participants 3,142 3,660
Other active plan
participants 2,411 2,770
Unrecognized gains 962 -
Accrued postretirement
benefit cost $12,650 $12,703
</TABLE>

The components of net periodic postretirement benefit
cost are as follows:

<TABLE>
<CAPTION>
Year ended June 30,
(In thousands) 1994 1993
<S> <C> <C>
Service cost, benefits attributed to
employee service during the year $ 202 $ 216
Interest cost on accumulated
postretirement benefit obligation 904 956
Amortization of gains (17) -
Net periodic postretirement benefit
cost $1,089 $1,172
</TABLE>

In 1992, the Company expensed $750, representing the amount
of claims paid.

The discount rate used in determining the APBO was 8.0% in
1994 and 1993. The assumed health care cost trend rate used in
measuring the accumulated postretirement benefit obligation was
11% in 1994 and 12% in 1993, declining to an ultimate rate of 6%
over approximately sixty years.

If the health care cost trend rate assumptions were
increased by 1%, the APBO as of June 30, 1994 would be increased
by 3%. The effect of this change in health care cost trend rates
on net periodic postretirement benefit cost of 1994 would be an
increase of 15%.

11. Discontinued Operations
On July 5, 1994 the Company sold substantially all the assets and
liabilities of SCM Office Supplies, Inc., a wholly-owned
subsidiary. The sale proceeds of approximately $13,000 were used
to reduce the Company's debt. Accordingly, the income statements
reflect SCM Office Supplies, Inc. operating results and provision
for loss on sale as discontinued operations and the balance sheet
segregates the net assets of discontinued operations.

Net assets and summary operating results of discontinued
operations are as follows:

<TABLE>
<CAPTION>
June 30,
(In thousands) 1994 1993
<S> <C> <C>
Current assets $12,902 $13,221
Non-current assets 7,521 8,301
Total liabilities (5,643) (5,938)
Net assets $14,780 $15,584
</TABLE>

<TABLE>
<CAPTION>
Year ended June 30,
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
Net sales $68,045 $59,791 $60,684
Income (loss) from operations
before income taxes $ 1,893 $(1,115) $ 1,221
Income taxes (benefit) 644 (390) 391
Net income (loss) from
operations 1,249 (725) 830
Provision for loss on
disposal of assets (net
of taxes of $297) (2,200) - -
Net income (loss) $ (951) $ (725) $ 830
</TABLE>

12. Income Taxes
The components of income (loss) from continuing operations
before income taxes are as follows:

<TABLE>
<CAPTION>
Year ended June 30,
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
United States $4,218 $(15,527) $6,914
Foreign 4,991 2,756 24,340
Total $9,209 $(12,771) $31,254
</TABLE>

The components of income tax expense consist of:

<TABLE>
<CAPTION>
Year ended June 30,
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
United States:
Current $ 203 $ 274 $ 3,196
Deferred 1,339 (4,948) 3,226
Foreign 165 934 2,996
State 1,771 (1,124) 974
Total $3,478 $(4,864) $10,392
</TABLE>

Income tax expense is included in the financial statements as
follows:

<TABLE>
<CAPTION>
Year ended June 30,
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
Continuing operations $3,131 $(4,474) $10,001
Discontinued operations 347 (390) 391
Total $3,478 $(4,864) $10,392
</TABLE>
The components of the net deferred tax assets were as follows:
<TABLE>
<CAPTION>
June 30,
(In thousands) 1994 1993
<S> <C> <C>
Deferred tax assets:
Accounts receivable $ 1,226 $ 1,399
Inventory 749 788
Postretirement benefits
other than pensions 4,828 4,954
Pension 7,688 8,205
Manufacturing relocation
to Mexico 1,580 4,593
Other liabilities 6,959 5,568
Net operating loss carryforwards 12,124 7,289
Capital loss carryforwards 10,955 -
Miscellaneous 7 396
Valuation allowances (21,320) (5,650)
Total deferred tax assets $24,796 $27,542

Deferred tax liabilities:
Property, plant and equipment $3,240 $3,279
Miscellaneous 6,954 7,861
Total deferred tax liabilities 10,194 11,140
Net deferred tax assets $14,602 $16,402
</TABLE>

The valuation allowances pertain to foreign and state net
operating loss carryforwards and capital loss carryforwards that
are not expected to be realized.

The provisions for income taxes differ from the amounts
computed by applying the federal income tax statutory rate. The
following is a summary of the reasons for these differences:

<TABLE>
<CAPTION>
Year Ended June 30,
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
Income (loss) from continuing
operations before income taxes $9,209 $(12,771) $31,254
Statutory tax rate 34% 34% 34%
Tax computed at statutory rate 3,131 (4,342) 10,626
Increase (reduction):
State income taxes,
net of federal benefit 901 (687) 582
Effect of foreign earnings (991) 481 (1,188)
Other adjustments 90 74 (19)
Total $3,131 $(4,474) $10,001
</TABLE>

The Company's Singapore operations had been granted
"pioneer tax status" until February 1994 by the Singapore
government and, as a result, have paid no Singapore taxes on
unremitted Singapore earnings to that date. The impact of the
change in status was not significant in fiscal 1994. No U.S.
federal income taxes have been provided on unremitted foreign
earnings of approximately $55,526 at June 30, 1994 because such
earnings are considered to be permanently invested. The amount
of income tax payable upon the remittance of such earnings is not
practicable to determine.

The U.S. income tax returns prior to 1986 have been
examined by the Internal Revenue Service and all matters have
been settled.

13. Commitments and Other Matters
Certain past practices of the Company regarding hazardous
substances and/or hazardous wastes are the subject of
investigation by federal and state regulatory authorities, or are
the subject of lawsuits filed by such authorities. At June 30,
1994 and 1993, the Company has recorded approximately $3,274 and
$4,970, respectively, related to environmental matters, of which
$606 and $2,500, respectively, are classified as a current
liability in the consolidated balance sheets. Certain estimated
costs of performing environmental remediation were discounted at
a rate of 5% per annum based on the estimated timing of such
payments. Because of the uncertainties associated with assessing
environmental matters, the related ultimate liability is not
determinable. However, based on facts presently known,
management does not believe that these investigations or
lawsuits, if resolved adversely to the Company, would
individually or in the aggregate have a material adverse effect
on the Company's financial position or results of operations.

The Company is involved in proceedings with the New York
Department of Environmental Conservation (DEC) and the United
States Environmental Protection Agency regarding the clean-up of
a now-closed manufacturing facility and certain waste disposal
sites in upstate New York. The remedial investigation and
feasibility study of the now-closed manufacturing facility site
has been completed. The feasibility study report has been
approved by the DEC and the record of decision has been
finalized. On March 31, 1993, the Company executed a final
signed consent order from the DEC and remedial actions commenced.
Remediation activities at the site have been delayed as a result
of an extension of the public comment period to address the
remediation plan approved by the DEC. Management believes that
the Company has made adequate provision for the approved
remediation activities.

In June 1992, the Company was served with a summons and
complaint in a private contribution action. The action, which
lists the Company as a defendant with fourteen other defendants,
seeks contribution for response costs incurred to date, and to be
incurred in the future, for the remediation of a site in
Cortland, New York. Management does not believe it disposed of
any hazardous substances at this site and is vigorously
contesting this matter.

On April 18, 1991, an antidumping proceeding was
commenced against the Company at the Department of Commerce
(Commerce) and before the International Trade Commission,
concerning portable electric typewriters imported from Singapore.
Subsequently, on June 22, 1993, the Company and Commerce signed a
suspension agreement, suspending the antidumping investigation
and calling for the Company to monitor its international prices.
On February 4, 1994, all of the parties signed a settlement
agreement covering the antidumping investigation and related
litigation. Under the terms of the agreement, the petitioner
withdrew its petition against the Company's Singapore imports and
the Company sought revocation of various antidumping duty orders
against typewriters and word processors from Japan. Pursuant to
the agreement, the antidumping proceedings have been terminated.

On June 8, 1990, the Company filed suit in the United
States District Court for the District of Tennessee against
Pelikan, Inc. alleging patent infringement and false advertising.
On February 24, 1992, the Court entered a judgment awarding the
Company approximately $3,120 plus post-judgment interest.
Pelikan filed an appeal, petitioning for a rehearing by the Court
of Appeals, and subsequently offered to pay to the Company a
portion of the judgment aggregating approximately $1,900. The
$1,900 portion of the judgment was reflected in the June 30, 1993
financial statements. Pelikan's petition for rehearing was
subsequently denied and on August 9, 1993, the Company and
Pelikan entered into an agreement pursuant to which Pelikan
agreed to pay $525 to the Company for fees, expenses and costs
incurred in the suit along with the remaining $1,220 judgment.
On August 11, 1993, Pelikan paid the settlement amount to the
Company and satisfied the judgment, including interest.

The Company is also a defendant or plaintiff in various
other legal actions which have arisen in the ordinary course of
its business. It is the opinion of management, based on advice
of counsel with respect to legal matters, that the ultimate
resolution of these matters and the environmental matters
discussed above will not have a material adverse effect on the
Company's financial position or results of operation.

14. Restructuring Costs
Over the past few years, the Company has faced intense
competition from foreign producers. In July 1992, in order to
maintain its leadership as the low-cost producer in a highly
competitive worldwide business, the Board of Directors approved
and the Company announced a plan to phase out the Company's
manufacturing operations in Cortland, New York and relocate them
to a new facility in Mexico. As a result of this decision,
during fiscal 1993, the Company provided $16,500 in restructuring
charges, of which approximately $3,000 was non-cash in nature (see
table below). Once the Mexico facility is fully operational, this
action is expected to result in lower manufacturing costs of
approximately $15,000 annually, primarily due to lower labor costs
in Mexico.

The fiscal 1993 restructuring provision consisted of the
following items:

<TABLE>
<CAPTION>
Asset
Redeployment Asset Other
Severance Costs Impairments Costs Total
<S> <C> <C> <C> <C> <C>
Provision $8,300 $3,300 $3,000 $1,900 $16,500
Activity(1) (1,050) (1,150) (621) (1,900) (4,721)
June 30, 1993 balance 7,250 2,150 2,379 - 11,779
Activity(1) (3,945) (2,150) (1,552) - (7,647)

June 30, 1994 balance $3,305 $ - $ 827 $ - $4,132

(1) Represents cash payments, except for the asset impairments, which are
non-cash items

</TABLE>

The severance cost related to approximately 875 employees
at the Cortland facility. Severance benefit arrangements that
would be available to employees whose positions were eliminated
were communicated through a Company memorandum to all Cortland,
N.Y. employees when the restructuring action was adopted and
announced in July 1992. By the end of June 1994 all affected
individuals had been terminated.

The charge for asset redeployment costs consisted
primarily of incremental personnel costs, travel and lodging for
39 employees responsible for the set-up and establishment of the
equipment in the Mexican facility. The employees responsible for
the set-up and establishment were notified of their termination
and subsequent temporary duty assignment. As a consequence of
management's decision, the value of certain assets which were
used in the Cortland manufacturing process became impaired and
such impairment was included in the restructuring charge. Other
costs, which were expensed as incurred, consisted of incremental
costs associated with the site selection and outside consulting
fees.

The relocation plan, originally anticipated to take
approximately one year to complete, was delayed as a consequence
of heavy spring 1993 rainfall in Baja California together with a
reevaluation of lease versus purchase of the facility. By the
end of fiscal 1994, the Company had essentially completed the
relocation. The annual savings resulting from the restructuring
originally anticipated in 1994 were not realized as cost of sales
continued to reflect the higher Cortland manufacturing labor
costs. At June 30, 1994 there remained approximately $4.1
million in accrued restructuring costs, primarily employee-
associated costs payable within the next year.<PAGE>

15. Quarterly Financial Data (Unaudited)(1)
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended Quarter Ended Quarter Ended
September 30, December 31, March 31, June 30,
(In thousands) 1993 1992(2) 1993 1992(2) 1994 1993(2) 1994 1993(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $76,271 $68,140 $78,845 $75,629 $65,273 $61,028 $58,247 $49,026
Gross margin 19,775 17,972 16,368 22,300 14,518 15,800 13,895 9,995
Operating income (loss) 6,085 (6,292) 1,969 5,466 1,038 1,177 825 (12,705)
Income (loss) from
continuing operations 3,885 (4,684) 1,188 4,212 598 704 407 (8,529)
Discontinued operations
(net of income taxes):
Income (loss) from
operations 142 (414) 356 (165) 789 85 (38) (231)
Provision for loss on
disposal of
discontinued operations - - - - - - (2,200) -
Net income (loss) $4,027 $(5,098) $1,544 $4,047 $1,387 $789 $(1,831)$(8,760)
Earnings per common
share(3):
Income (loss) from
continuing operations $.13 $(.16) $.04 $.14 $.02 $.02 $.01 $(.28)
Discontinued operations:
Income (loss) from
operations - (.01) .01 (.01) .03 .01 - (.01)
Provision for loss on
disposal of
discontinued
operations - - - - - - (.07) -
Net income (loss) per
share $.13 $(.17) $.05 $.13 $.05 $.03 $(.06) $(.29)

(1) Amounts have been reclassified, where applicable, to reflect the
discontinued operations of SCM Office Supplies, Inc.
(2) Includes restructuring costs of $9,000, $460, $830 and $6,210 for
the first, second, third and fourth quarters, respectively.
(3) Based on 30,250,000 shares of common stock.
</TABLE>

<PAGE>
INDEPENDENT AUDITORS' REPORT
Smith Corona Corporation:

We have audited the accompanying consolidated balance
sheets of Smith Corona Corporation and subsidiaries as of June 30,
1994 and 1993 and the related consolidated income statements,
statements of changes in stockholders' equity and statements of
cash flows for each of the three years in the period ended June 30,
1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements
present fairly, in all material respects, the financial position of
Smith Corona Corporation and subsidiaries at June 30, 1994 and 1993
and the results of their operations and their cash flows for each
of the three years in the period ended June 30, 1994 in conformity
with generally accepted accounting principles.

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Stamford, Connecticut
July 27, 1994

EXHIBIT 21

SUBSIDIARIES OF
SMITH CORONA CORPORATION

Jurisdiction of Name Doing
Name Incorporation Business Under
<S> <C> <C>
Histacount Corporation New York Histacount
Corporation

Smith Corona Overseas Delaware Smith Corona Overseas
Holdings, Inc. Holdings, Inc.

Smith Corona Private Republic of Singapore Smith Corona Private
Ltd. Ltd.

SCM Office Supplies, Delaware SCM Office Supplies,
Inc. Inc.

SCM (United Delaware SCM (United
Kingdom) Limited Kingdom) Limited

Smith Corona Ontario, Canada Smith Corona
(Canada) Limited (Canada) Limited

Smith Corona France Paris, France Smith Corona France
S.A.R.L. S.A.R.L.

Smith Corona GmbH Dusseldorf, Germany Smith Corona GmbH

Smith Corona Australia New South Wales, Smith Corona Australia
PTY Limited Australia PTY Limited
</TABLE>

EXHIBIT 23

INDEPENDENT AUDITORS' CONSENT TO INCORPORATION BY REFERENCE
IN REGISTRATION STATEMENTS ON FORM S-8

SMITH CORONA CORPORATION:

We consent to the incorporation by reference in Smith Corona
Corporation's Registration Statement Nos. 33-34796 and 1-10281 on
Form S-8 of our reports dated July 27, 1994 appearing and
incorporated by reference in the Annual Report on Form 10-K for
the year ended June 30, 1994.

\s\ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Stamford, Connecticut
July 27, 1994

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTYRACTED FROM SMITH
CORONA CORPORATION CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO AS LISTED
ON PAGE 19 OF THIS FORM 10-K ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1994
<PERIOD-END> JUN-30-1994
<CASH> 6472
<SECURITIES> 0
<RECEIVABLES> 50906
<ALLOWANCES> 1563
<INVENTORY> 64247
<CURRENT-ASSETS> 148767
<PP&E> 78744
<DEPRECIATION> 40654
<TOTAL-ASSETS> 195034
<CURRENT-LIABILITIES> 63631
<BONDS> 0
<COMMON> 303
0
0
<OTHER-SE> 75419
<TOTAL-LIABILITY-AND-EQUITY> 195034
<SALES> 278636
<TOTAL-REVENUES> 278636
<CGS> 214080
<TOTAL-COSTS> 214080
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 708
<INCOME-PRETAX> 9209
<INCOME-TAX> 3131
<INCOME-CONTINUING> 6078
<DISCONTINUED> (951)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5127
<EPS-PRIMARY> .17
<EPS-DILUTED> .17

</TABLE>

EXHIBIT 10.37

January 14, 1994

Mr. John R. Noblitt
1389 Pine Bluff Drive
Marion, IN 46952

Dear Mr. Noblitt:

As you know, Smith Corona Corporation ("SCC") is
considering the sale of its interest in SCM Office
Supplies Inc. ("OSI"). The purpose of this letter is to
confirm that you will be eligible for a Retention
Incentive Bonus subject to the terms and conditions
herein, provided that you satisfy the following
conditions:

1. From the date hereof to the date six (6) months
following the date of closing you assist and
cooperate with SCC and a prospective Purchaser
to ensure a smooth sales process, transition and
continuity of business operations during any
change in the ownership of OSI's stock or
assets,

2. from the date hereof to the date six (6) months
following the date of closing, you devote your
full time and best efforts to fulfill
satisfactorily the duties and responsibilities
of your current position,

3. a sale of all of SCC's stock interest in OSI or
a sale by OSI of more than 50% of its tangible
assets is consummated ("Sale of the Company"),

4. after the sale of OSI, you assist SCC, as and
when requested by SCC, in the preparation of
and/or resolution of any questions or problems
with respect to the Closing Date Final Balance
Sheet, if any, and

5. you agree that on the date of the closing, as a
condition to the payment of the Retention
Incentive Bonus, you will execute and deliver to
SCC a Release in a form substantially similar to
the Release attached as Exhibit A, as that
Release may be amended so as to assure
compliance with all applicable Federal and State
laws.

<PAGE>
Mr. John R. Noblitt
January 14, 1994
Page 2

The amount of the Retention Incentive Bonus will be an
amount equal to twelve (12) months salary at a rate equal
to your salary as of the date of this Agreement. The
Retention Incentive Bonus shall be paid in two equal
installments; the first installment shall be paid within
eight (8) days of your execution and delivery to SCC of
the Release described in subparagraph 5, above, and the
second installment shall be paid (without interest) six
months thereafter. If the Closing does not take place on
or before December 31, 1994, the rights and obligations
set forth in this letter shall expire as of that date,
provided, however, that if a contract for the Sale of the
Company is executed on or before December 31, 1994, the
rights and obligations set forth in the Letter shall
continue until the latest Closing Date permitted under
the contract of sale or any extension of the Closing Date
upon which the parties to the contract may agree.

The Retention Incentive Bonus shall not be paid if you
(i) fail to satisfy the conditions and requirements set
forth herein, including without limitation the
requirements set forth in subparagraph 5, (ii) die or
resign, (iii) are discharged for cause prior to the date
of closing or due date for any installment, or (iv)
elect, prior to the payment of any installment of the
Retention Incentive Bonus, to participate in or accept an
equity position with Purchaser (except for normal stock
option plans offered by the Purchaser to comparable
employees of the Purchaser). The term "cause" shall mean
a material breach of, or willful misconduct in the
performance of your duties as an employee of OSI,
including, but not limited to, theft, embezzlement,
bribery or other act of comparable dishonesty, disloyalty
or breach of trust against SCC, OSI or its successors,
conviction of a felony or employment with a firm not
affiliated with SCC, OSI or its successors while employed
by SCC, OSI or its successors. In the event you are
terminated without cause by SCC, OSI or the Purchaser of
OSI's stock or assets, the remaining balance due on the
Retention Incentive Bonus shall become due and payable on
the date of your termination.

<PAGE>
Mr. John R. Noblitt
January 14, 1994
Page 3

You agree to hold all secret, confidential or proprietary
information, knowledge or date ("Confidential
Information") relating to SCC or any affiliated company
(other than OSI) and their respective businesses, which
has been obtained during your employment by SCC, its
subsidiaries or affiliates in a fiduciary capacity.
During and after the end of your employment, you agree
not to communicate, divulge or utilize any such
"Confidential Information" (other than information
relating to OSI which you use in the ordinary course of
performing your employment at OSI), without the prior
written consent of SCC.

You acknowledge that you have read this Agreement,
understand its terms and that it has been entered into by
you voluntarily. You further acknowledge that you have
had the opportunity to consider this Agreement and
discuss it with advisors of yours, including attorneys
and accountants. You further acknowledge that all
payments made under this Agreement shall not be
considered compensation for purposes of OSI's Retirement
Plan, Supplemental Retirement Plan or Retirement Savings
and Investment Plan (i.e., RSIP).

Very truly yours,

/s/G.Lee Thompson

G. Lee Thompson

Accepted and Agreed

/s/ John R. Noblitt

John R. Noblitt

GLT/hs