Smith Corona Corp – ‘10-K’ for 6/30/98

As of:  Monday, 9/28/98   ·   For:  6/30/98   ·   Accession #:  851292-98-8   ·   File #:  1-10281

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Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         53±   257K 
 2: EX-10       Material Contract                                      8±    39K 
 3: EX-21       Subsidiaries of the Registrant                         1      4K 
 4: EX-27       Financial Data Schedule (Pre-XBRL)                     1      7K 

10-K   —   Annual Report
Document Table of Contents

UNITED STATES                 
  SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549          

FORM 10-K       
(Mark One)                                                                      
[X]             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF                
THE SECURITIES EXCHANGE ACT OF 1934                                             

For the fiscal year ended June 30, 1998                         

OR                                                              

[ ]             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.)                     

839 Route 13 South, Cortland, New York  13045                   
(Address of principal executive offices)(Zip Code)              
(607) 753-6011                                              
(Registrant's telephone number, including area code)            

Securities registered pursuant to Section 12(b) of the Act:     None            
Securities registered pursuant to Section 12(g) of the Act:                     
Common Stock, $.001 par value                                                   

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 and                              
non-voting common equity of the registrant held by non-affiliates               
of the registrant as of September 1, 1998: $7,631,894 (Such amount              
has been computed as described in "Market for Registrant's Common               
Equity and Related Stockholder Matters.")                                       

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY                               
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:                                    

Indicate by check mark whether the registrant has filed all documents           
and reports required to be filed by Section 12, 13 or 15(d) of the              
Securities Exchange Act of 1934 subsequent to the distribution of               
securities under a plan confirmed by a court.                                   
Yes X  No                                                                       

Number of shares of Common Stock outstanding as of September 1, 1998: 2,983,372.
Documents Incorporated by Reference                             
Document        Part of Form 10-K                                               
Portions of the Proxy Statement relating to registrant's        Part III        
1998 Annual Meeting of Stockholders, to be filed with the                       
Commission within 120 days after the close of the                               
registrant's fiscal year                                                        

TABLE OF CONTENTS                                                               

PART I                                          3                               
Item 1. Business                                      3                         
General                                        3                                
Recent Events                                    3                              
Restructuring and Bankruptcy Reorganization        4                            
History of the Business                        5                                
Products                                              6                         
Marketing, Sales and Distribution                    7                          
Service                                        8                                
Seasonality                                        8                            
Manufacturing Operations                              8                         
Competition                                        9                            
Patents, Trademarks and Licenses                      9                         
Employees                                            9                          
Research and Development                              9                         

Item 2. Properties                                 10                           

Item 3. Legal Proceedings                           10                          

Item 4. Submission of Matters to a Vote                                         
of Security Holders                       11                    

Executive Officers of the Registrant             11                             

PART II                                       13                                
Item 5. Market for Registrant's Common                                          
Equity and Related Stockholder                                  
Matters                               13                        

Item 6. Selected Financial Data               14                                

Item 7. Management's Discussion and                                             
Analysis of Results of Operations                               
and Financial Condition               16                        

Item 8. Financial Statements and                                                
Supplementary Data                         20                   

Item 9. Changes in and Disagreements with                                       
Accountants on Accounting                                       
and Financial Disclosure                     20                 

PART III                                             20                         
Item 10. Directors and Executive Officers                                       
of the Registrant                         20                  

Item 11. Executive Compensation               20                                

Item 12. Security Ownership of Certain                                          
Beneficial Owners and Management           20                 

Item 13. Certain Relationships and                                              
Related Transactions                   20                     

PART IV                                       21                                
Item 14. Exhibits, Financial Statement                                          
Schedules, and Reports on Form 8-K       21                   

Index to Consolidated Financial Statements                                      
and Financial Statement Schedule                     25                         

PART I                                                          

Item 1. Business                                                                
The Company                                                     

General                                                                         

Smith Corona Corporation (the "Company") is dedicated to                        
providing productivity and communication solutions to the small                 
office and home office markets through new and emerging                         
technology products, in addition to its traditional portable                    
electronic typewriters and related accessories and supplies.                    

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 manufacture                  
and sale of typewriters, personal word processors and supplies                  
and accessories and businesses in the chemical, paper and food                  
industries.  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 "Old Common Stock").  On                   
July 5, 1995, the Company filed for relief under Chapter 11 of                  
the United States Bankruptcy Code (the "Bankruptcy Code").                      
Upon the Company's emergence from bankruptcy proceedings on                     
February 28, 1997, the Old Common Stock was canceled,                           
registered holders of the Old Common Stock as of August 15,                     
1996 received warrants to purchase one share of common stock,                   
par value $.001 per share (the "Common Stock"), for each 20                     
shares of Old Common Stock and certain of the Company's                         
creditors received Common Stock.  (See "Restructuring and                       
Bankruptcy Reorganization" for further discussion of the                        
bankruptcy proceedings.)                                                        

Recent Events                                                                   

On July 17, 1998 Peter N. Parts, Chairman of the Board of                       
Directors assumed the post of President and Chief Executive                     
Officer.  Peter Parts replaced W. Michael Driscoll, who retired                 
as the Company's President and Chief Executive Officer.                         

On July 22, 1998 Ronald F. Stengel resigned as Director of the                  
Company. Mr. Stengel stepped down as Chairman of the Board of                   
Directors in May 1998 due to constraints imposed by his current                 
business commitments.                                                           

On August 3, 1998 J. Thomas Malatesta joined the Company as                     
Vice President-New Market Development.  Mr. Malatesta will                      
explore synergistic opportunities in related markets and seek                   
out new channels of distribution for new and existing products.                 

Effective October 1, 1998, Martin D. Wilson will serve as the                   
Company's Senior Vice President, Chief Financial Officer and                    
Assistant Secretary. Mr. Wilson, who previously served as Vice                  
President/Controller will replace John A. Piontkowski, who                      
resigned as the Company's Executive Vice President, Chief                       
Financial Officer and Assistant Secretary.                                      

Effective September 28, 1998, the Company's Board of Directors                  
approved a restructuring program which includes: i.) the                        
elimination of approximately 130 positions primarily located at                 
the Company's Corporate Headquarters in Cortland, New York,                     
ii.) the sale or lease of the building in Cortland, New York,                   
iii.) relocation of the Corporate Headquarters to more                          
efficient facilities.  The Company expects the restructuring                    
program to be completed by June 30, 1999.  As a result of these                 
actions, the Company will record a first quarter pre-tax                        
charge, principally for severance payments, of approximately                    
$1.2 million.                                                                   

Restructuring and Bankruptcy Reorganization                                     

On May 8, 1995 the Company announced a major restructuring plan                 
whereby (i) the Company?s typewriter manufacturing would be                     
relocated from its Singapore and Batam Island, Indonesia                        
facilities to its Mexico facility and (ii) approximately 180                    
support positions within research and development, finance,                     
service, distribution, selling and marketing areas in both its                  
Cortland, New York and New Canaan, Connecticut locations would                  
be eliminated (the "Restructuring").                                            

The Company had experienced sales declines and operating                        
losses, had extended payment of obligations owed to its trade                   
vendors, and needed additional financing to meet operating                      
requirements and fund the Restructuring.  As a result, on July                  
5, 1995 (the "Petition Date"), the Company filed a voluntary                    
petition for relief under Chapter 11 of the United States                       
Bankruptcy Code in the United States Bankruptcy Court for the                   
District of Delaware (the "Bankruptcy Court").  From July 5,                    
1995 to February 28, 1997 the Company operated as a debtor-in-                  
possession.  On August 18, 1995, SCM Office Supplies, Inc., SCC                 
LI Corporation (formerly known as Histacount Corporation) and                   
Hulse Manufacturing Company, all wholly-owned nonoperating                      
subsidiaries of the Company (collectively, the "Nonoperating                    
Subsidiaries"), filed Chapter 11 petitions.  On October 31,                     
1996, Smith Corona Overseas Holdings, Inc., SCM Inter-American                  
Corporation and SCM (United Kingdom) Limited, all wholly-owned                  
domestic subsidiaries (the "Wholly-Owned Domestic                               
Subsidiaries"), also filed Chapter 11 petitions.  (The                          
petitions of the Company, the Nonoperating Subsidiaries and the                 
Wholly-Owned Domestic Subsidiaries are referred to herein                       
collectively as the ?Bankruptcy Proceedings?).  The primary                     
purpose of the October 31, 1996 filings, which had no effect on                 
operations, was to better protect corporate assets during the                   
reorganization period.  The Bankruptcy Proceedings primarily                    
related to all U.S. assets and operations and did not involve                   
the Company's international subsidiaries.                                       

On September 9, 1996, the Company filed its Third Amended                       
Second Joint Plan of Reorganization (the "Plan of                               
Reorganization") and Third Amended Second Disclosure Statement                  
with the Bankruptcy Court, which Disclosure Statement was                       
approved by the Bankruptcy Court for solicitation of creditor                   
acceptance of the Plan of Reorganization.  On January 27, 1997                  
the Bankruptcy Court entered an order confirming the Company's                  
Plan of Reorganization (the "Confirmation Order").  The                         
Confirmation Order was subject to satisfaction of certain                       
conditions precedent to the effective date.  The Company                        
satisfied the conditions and emerged from the Bankruptcy                        
Proceedings on February 28, 1997 (the "Effective Date").                        

Under the Plan of Reorganization, all allowed general unsecured                 
claims are being satisfied through the distribution to holders                  
of such claims of (i) the unsecured class cash of approximately                 
$11.3 million (less any amounts paid to holders of allowed                      
convenience class claims discussed below), and (ii) 85 percent                  
of the Common Stock (determined on a fully diluted basis, not                   
including the effect of the exercise of any of the below                        
described warrants). Each holder of an allowed general                          
unsecured claim receives one share of the Common Stock for each                 
ten dollars in allowed claim value. All allowed claims senior                   
to allowed general unsecured claims will be satisfied by the                    
payment in full in cash or notes (as provided by the Bankruptcy                 
Code) or the assumption of all such claims.  The distributions                  
to holders of allowed general unsecured claims and claims                       
senior to such claims commenced in March 1997.  In addition,                    
allowed convenience class claims (general unsecured claims of                   
one thousand five hundred dollars or less) have received                        
payment in cash in an amount equal to 60 percent of the amount                  
of such claims.  Registered holders as of August 15, 1996, of                   
the Old Common Stock received warrants to purchase one share of                 
Common Stock for each twenty shares of Old Common Stock.                        

For further discussion of the Company's Restructuring and                       
bankruptcy reorganization, see ?Business - Manufacturing                        
Operations? and "Management's Discussion and Analysis of                        
Results of Operations and Financial Condition."                                 

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 typewriter 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, the                 
Company implemented a major restructuring from 1984 to 1986 of                  
its typewriter operations which resulted in substantially                       
reduced manufacturing costs, a streamlined product line, a 50                   
percent reduction in worldwide employment and the consolidation                 
of certain of its United States operations.                                     

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

During the year ended June 30, 1995, the Company sold                           
substantially all of the assets and liabilities of SCM Office                   
Supplies, Inc. and Histacount Corporation (?Histacount?),                       
respectively, two of its wholly-owned subsidiaries.  The                        
results of operations and gain (loss) on sale related to SCM                    
Office Supplies, Inc., and Histacount are presented as                          
discontinued operations (see Item 6, Selected Financial Data).                  
Business operations of these two entities primarily consisted                 
of the manufacture and distribution of office supplies and                      
customized printed products, respectively.                                      

From July 5, 1995 to February 28, 1997 the Company operated as                  
a debtor-in-possession while in the Bankruptcy Proceedings.  On                 
January 27, 1997 the Bankruptcy Court entered the Confirmation                  
Order.  The Confirmation Order was subject to satisfaction of                   
certain conditions precedent to the Effective Date.  The                        
Company satisfied the conditions and emerged from the                           
Bankruptcy Proceedings on the Effective Date.  During the                       
Bankruptcy Proceedings, the Company confined expenditures to                    
those manufacturing and operating costs that were necessary to                  
preserve and maintain going-concern value.  In light of its                     
financial condition, the Company also implemented a planned                     
reduction in its workforce and a consolidation of its world                     
headquarters from New Canaan, Connecticut to its facility in                    
Cortland, New York.  Additionally, as part of the                               
Restructuring, the Company relocated its typewriter                             
manufacturing operations to its Mexico facility from facilities                 
in Singapore and Batam Island, Indonesia.  See "Business -                      
Restructuring and Bankruptcy Reorganization" and "Management's                  
Discussion and Analysis of Results of Operations and Financial                  
Condition."                                                                     

On November 24, 1997, the Company sold its remaining                            
manufacturing operations (the "Sale"). In addition, the Company                 
entered into a long-term manufacturing agreement pursuant to                    
which the purchaser will manufacture certain Smith Corona Brand                 
name products, including typewriters and related supplies and                   
accessories. The Sale included (i) certain property, plant and                  
equipment used in the manufacturing operations, (ii) all the                    
outstanding common stock of Smith Corona de Mexico, S.A. de                     
C.V., the Company's Mexican subsidiary, and (iii) raw material                  
and work-in-process inventories.  The Sale generated net                        
proceeds of $14.9 million and resulted in a gain of $3.9                        
million.                                                                        

Products                                                                        

Under the Plan of Reorganization, the Company's plans were to                   
expand its product line, primarily by sourcing new products                     
from outside manufacturers and that effort continues.  Such                     
sourcing includes entering into strategic alliances with third                  
parties in the United States, Europe and the Far East to                        
provide products or services.  In that respect, the Company's                   
efforts are focused on forging new and expanding existing                       
alliances with companies that provide technologically advanced                  
products for the small office and home office environment but                   
presently do not have a substantial United States market                        
penetration, and are intent on building or increasing market                    
penetration by selling their products under the well-known                      
"Smith Corona" name.  The Company intends to rely on its                        
existing distribution network to become a leading vendor of                     
technologically advanced products for the small office and home                 
office. Additionally, the Company is exploring synergistic                      
opportunities in related markets that will provide new and                      
expand existing channels of distribution.  In the fall of 1997,                 
newly sourced and manufactured products were available under                    
the Smith Corona brand name. The product offerings include                      
items in the telephony and plain paper inkjet facsimile product                 
lines.  These new telephony products included a family of                       
corded, as well as cordless phones incorporating the latest in                  
900 MHz, analog, digital and spread spectrum technology.  In                    
fiscal 1999 the Company intends to continue to introduce new                    
products for home office and small office applications.  Some                   
of the new products will be systems-oriented, and intended to                   
increase personal productivity.  Further, the Company                           
determined it would maintain its core business of distributing                  
its current product line of typewriters and related supplies                    
and accessories to satisfy continuing worldwide demand for                      
these products. Due to substantial sales volume reductions, in                  
June 1997 the Company ceased the manufacture of personal word                   
processors; servicing and customer support of personal word                     
processors, however, is continuing.                                             

As a result of the Company's sourcing strategy to use third-                    
party manufacturers the Company's results of operations are                     
subject to risks of doing business abroad such as economic and                  
political uncertainty.  Additionally, there can be no assurance                 
that a significant disruption of a third-party manufacturer                     
would not have a negative impact on the Company's business.                     
The success of the Company depends, in part, on its ability to                  
source, market and sell new products.                                           

The products or classes of similar products that accounted for                  
10 percent 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 49.4 percent, 45.1                  
percent and 38.1 percent of net sales in the fiscal years ended                 
June 30, 1998, 1997 and 1996, respectively, (ii) personal word                  
processors, which accounted for 11.5 percent and 21.8 percent                   
of net sales in the fiscal years ended June 30, 1997 and 1996,                  
respectively, and (iii) typewriters and personal word processor                 
supplies and accessories, which accounted for 35.4 percent,                     
36.5 percent and 29.4 percent of net sales in fiscal years                      
ended June 30, 1998, 1997 and 1996, respectively.                               

Marketing, Sales and Distribution                               

In the United States, the Company advertises, markets and                       
promotes its products through television and national print                     
media, both consumer and trade.  Advertisements focus on the                    
key features and benefits of the various products.  During the                  
Bankruptcy Proceedings advertising expenditures consisted of                    
limited trade and print advertising.  In the fiscal year ended                  
June 30, 1998 the Company significantly increased levels of                     
advertising to support introduction and sell-through of new                     
products.  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 the Company's                      
marketing support representatives.                                              

In the United States, the Company distributes its products                      
through outlets in all major channels of distribution,                          
including (i) national retail chain stores, such as Wal-Mart;                   
(ii) warehouse clubs, such as Sam's and BJ Wholesale; (iii)                     
catalog merchandisers, such as Service Merchandise; (iv)                        
national and regional office supply wholesalers such as United                  
Stationers and S.P. Richards; (v) office superstores, such as                   
Office Depot, Inc., OfficeMax and Staples; (vi) office                          
equipment dealers; (vii) regional discount stores, such as                      
FedCo; and (viii) United States military exchanges.  The                        
Company does not enter into long-term contracts with its                        
customers and there can therefore be no assurance that the                      
Company will continue to receive sales revenues from any                        
particular source.                                                              

Internationally, the Company distributes its products in                        
Canada, European Community countries, Latin America, South                      
America, Caribbean markets and 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.  The Company relies primarily on                      
distributors for sales of its products in international                         
markets.  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. See the footnotes to the                   
Consolidated Financial Statements in 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.  Wal-Mart                    
Stores, Inc., one of the Company's largest customers, was                       
responsible for 29.7 percent of consolidated net sales in the                   
year ended June 30, 1998.  Wal-Mart Stores, Inc. was the only                   
customer responsible for more than 10 percent of net sales.                     
All of the Company's sales are made to customers who are not                    
affiliated with the Company.                                                    

Service                                                                         

The Company's products are serviced in the United States by a                   
Smith Corona factory service center located in Cortland, New                    
York as well as at independent service stations domestically                    
and internationally.  The service center 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, although certain of its products sell more heavily in                 
gift-giving seasons such as the winter holidays and school                      
graduation periods.                                                             

Manufacturing Operations                                                        

On November 24, 1997 the Company completed the Sale of its                      
manufacturing operations.  In addition, the Company entered                     
into a long-term manufacturing agreement pursuant to which the                  
purchaser will manufacture certain Smith Corona brand name                      
products, including typewriters and related supplies and                        
accessories.                                                                    

Prior to the Sale, the Company's sole manufacturing operation                   
was located in Mexico. As a result of the Restructuring, the                    
Company ceased production in Singapore and Batam Island in mid-                 
November 1995, and completed the process of relocating certain                  
equipment to Mexico where typewriter production commenced in                    
December 1995.                                                                  

Competition                                                                     

The portable and compact electronic typewriter business is                      
highly competitive.   The Company faces competition from                        
Japanese and various other companies, including, among others,                  
Brother International Corporation, which manufacture portable                   
and compact electronic typewriters. Some of the competitors may                 
have greater financial resources than the Company.  As the                      
portable and compact electronic typewriter market has continued                 
to mature, competition has increased.  To remain competitive,                   
the Company has reduced the prices of its typewriters in line                   
with market pricing.  Telephony products compete against brands                 
such as Lucent, Sony, Uniden and Panasonic.  Facsimile products                 
compete against brands such as Brother, Canon and Sharp. The                    
telephony and facsimile markets are growing and are much larger                 
than those of the mature and shrinking markets for                            
typewriters, and supplies and accessories.  In the fourth                       
quarter of the Company's 1998 fiscal year competitors began                     
reducing market prices for the low-end telephony and facsimile                  
products.  These sharp price declines have resulted in the                      
Company having to reduce its low-end telephony and facsimile                    
product pricing as well as take charges for new product                         
inventory writedowns.  (See "Management's Discussion and                        
Analysis of Results of Operations and Financial Conditions" for                 
further discussion on inventory writedowns.)                                    

Patents, Trademarks and Licenses                                                

The Company owns or licenses a number of patents and patent                     
applications which are valuable to its typewriters and supplies                 
and accessories business.  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, 1998, the Company employed approximately 225                     
people.  Management considers its employee relations to be                      
good.                                                                           

Research and Development                                                        

The Company's expenditures for research and development                         
activities were approximately $4.8 million,$1.9 million and                     
$2.0 million for the fiscal years ended June 30, 1998, 1997 and                 
1996, respectively.  Research and development expenses were                     
concentrated primarily in the development of new products for                   
the year ended June 30, 1998 and in improving product                           
manufacturing and integration of products/technology to the                     
Company's product lines for the years ended June 30, 1997 and                   
1996.                                                                           

Item 2. Properties                                                              

The Company utilizes approximately 527,000 square feet of space,                
of which about 499,000 square feet are located in the United                    
States and about 28,000 square feet are located primarily in                    
Canada, the Netherlands and the United Kingdom. Of the total                    
square footage, approximately 422,000 square feet are owned and                 
the remaining 105,000 square feet are leased. Additionally, the                 
Company subleases approximately 12,600 square feet of the                       
77,000 square feet of warehousing and office space in the San                   
Diego facility.  Information with respect to the principal                      
facilities used by the Company is set forth below:                              

                         Approximate
                                Square      Owned/
Location               Primary Use             Footage     Leased               
Cortland, NY......  Headquarters/                                               
    Warehousing/Service        422,000     Owned
San Diego, CA.....  Warehousing/Office          77,000     Leased               
                     499,000
All other locations Warehousing/                                                
     Sales/Service               28,000     Leased

Total.............       527,000    

Item 3. Legal Proceedings                                                       

Description of Legal Proceedings                                                

Certain aspects of the Company's past handling and/or disposal                  
of hazardous substances have been the subject of investigation                  
by federal and state regulatory authorities, or have been the                   
subject of lawsuits filed by such authorities or by private                     
parties.  At June 30, 1998 and June 30, 1997, the Company had                   
recorded liabilities of approximately $1.9 million and $3.0                     
million, respectively, related to environmental matters.                        
Because of the uncertainties associated with assessing                          
environmental matters, the related ultimate liabilities are not                 
presently determinable. However, based on facts presently                       
known, management does not believe that these investigations,                   
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 was the owner and operator of manufacturing                         
facilities in Groton, New York (the "Groton Site") and                          
Cortlandville, New York (the "Cortlandville Site" and together,                 
the "Owner/Operator Sites").  The Company's liability, if any,                  
at the Owner/Operator Sites stems from groundwater                              
contamination at the Cortlandville Site and soil contamination                  
at the Groton Site. The remediation program at the                              
Cortlandville site currently consists of round-the-clock                        
pumping and filtering.  The soil venting with a soil                            
infiltration injection system for the Groton Site is now                        
reduced to periodic soil and water sampling. A decommissioning                  
plan for the Groton Site has been approved and decommissioning                  
activities have commenced.  To the Company's knowledge, the                     
only future costs that will be associated with remediation of                   
those sites are for operation, maintenance, monitoring,                         
shutdown, and post-shutdown of the systems.  The Company                        
believes that it has set aside adequate reserves for the                        
payment of expenses for the ongoing remediation programs at the                 
Groton and Cortlandville Sites.                                                 

The Company is also a defendant or plaintiff in various other                   
legal actions that have arisen in the ordinary course of its                    
business.  It is the opinion of management 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.                           

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                     
direction of the Board of Directors.  The executive officers of                 
the Company and their respective positions, ages at September                   
14, 1998 and backgrounds are as follows:                                        

Name                                            Position        Age             

Peter N. Parts .............    Chairman of the Board,                          
                                                   President and Chief Executive
                                                                      Officer 45
John A. Piontkowski ........    Executive Vice President,                       
           Chief Financial Officer and
                       Assistant Secretary                  44
Michael J. Murray  .........    Executive Vice President,                       
                       Sales and Marketing                  63
Michael W. Chernago.........    Vice President/Operations              52       
Gary J. Lynch   ............    Vice President/Treasurer                48      
J. Thomas Malatesta.........    Vice President/New Market                       
                      Development                         55
Martin D. Wilson ...........    Vice President/Controller              38       
John W. Wolff   ............    Vice President/Product                          
                       Development                          46

Mr. Parts, age 45, was elected Chairman of the Board of the                     
Company on May 23, 1998 and President and Chief Executive                       
Officer on July 17, 1998.  He has served as President and Chief                 
Executive Officer of Peter Parts Electronics, Inc., a North                     
American sales group for electronic manufactures from Asia and                  
Europe, since 1986.  Mr. Parts has been a director of the                       
Company since February 28, 1997.                                                

Mr. Piontkowski, age 44, was named Executive Vice President and                 
Chief Financial Officer on May 7, 1997.  From June 21, 1995 to                  
May 15, 1996, he also held the office of Treasurer.  He has                     
served as an Assistant Secretary of the Company since July 1,                   
Mr. Piontkowski served as Senior Vice President and                             
Chief Financial Officer from June 1995 to May 1997, as Vice                     
President/Finance and Controller from March 1995 to June 1995                   
and as Vice President/Controller of the Company from July 1993                  
to March 1995.  Mr. Piontkowski served as Director of Accounting                
and Financial Reporting of the Company from December 1991 to July 1993.         

Mr. Murray, age 63, has served as Executive Vice President of                   
Sales and Marketing for the Company since March 1, 1998.  Mr.                   
Murray served as Vice President for Worldwide Sales, Marketing                  
and Technical Service operations of Harris/RF Communications                    
Company, a manufacturer of military radios from January 1993 to                 
January 1995.  Mr. Murray served as Regional Business General                   
Manager and Vice President of the Office Imaging Division of                    
Eastman Kodak Company until his retirement in January 1993.                     
Mr. Murray is currently a director of Photikon Corporation.                     
Mr. Murray has been a director of the Company since February                    
28, 1997.                                                                       

Mr. Chernago was named Vice President/Operations on January 26,                 
From July 1994 to January 1996, Mr. Chernago served as                          
Vice President Product Assurance and Vice President/Operations                  
of the Company.  Mr. Chernago served as Director, Manufacturing                 
Engineering from September 1989 to July 1994.  Mr. Chernago has                 
held various other positions within the Company since 1973.                     

Mr. Lynch has served as Vice President/Treasurer of the Company                 
since May 15, 1996.  From April 1995 to May 1996, Mr. Lynch                     
served as Director of Treasury Services.  Mr. Lynch served as                   
Director of Budgets and Financial Analysis from April 1987 to                   
April 1995.  Mr. Lynch has held various other positions within                  
the Company since 1978.                                                         

Mr. Malatesta was named Vice President/New Market Development                   
on August 3, 1998.  Prior to August 1998 Mr. Malatesta was                      
President of Global Marketing Services Incorporated, a                          
strategic marketing consulting firm serving multinational                       
company's.  In August 1994, Mr. Malatesta filed for personal                    
bankruptcy under Chapter 11 of the United States Bankruptcy                     
Code. The filing was converted to Chapter 7 and upon appeal was                 
dismissed.                                                                      

Mr. Wilson was named Vice President/Controller of the Company                   
on May 15, 1996.  Prior to that time, he served as Controller                   
from July 1995 to May 1996, Assistant Controller from April                     
1995 to July 1995, and as Director/Accounting and Financial                     
Reporting from January 1994 to April 1995.  Prior to joining                    
the Company, he served as Financial Reporting Manager for                       
Fisher-Price Inc., an international manufacturer, marketer and                  
distributor of infant and preschool toys and juvenile products,                 
from November 1991 through December 1993.                                       

Mr. Wolff has served as Vice President/Product Development                      
since January 20, 1997.  He served as Director of Materials                     
from February 1996 to January 1997, Director of Procurement and                 
Distribution from December 1995 to February 1996, Director of                   
Division Procurement and Cortland Materials from November 1994                  
to December 1995, Director of Engineering from August 1993 to                   
November 1994 and Director of Engineering - Singapore from                      
January 1989 to August 1993.  Mr. Wolff has held various other                  
positions within the Company since 1981.                                        

PART II                                                                         

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

The Common Stock (NASDAQ symbol: SCCO) commenced trading on the                 
Nasdaq SmallCap Market on May 29, 1997.  From February 28, 1997                 
to May 29, 1997, the Common Stock was traded on the over-the-                   
counter market.  Since the suspension of the trading on the New                 
York Stock Exchange on May 30, 1996 until the Old Common Stock                  
was canceled on February 28, 1997, there was no established                     
public trading market for the Old Common Stock although the Old                 
Common Stock continued to trade on the over-the-counter market.                 

The following table sets forth the range of high and low bid                    
prices of the Common Stock since February 28, 1997, the date of                 
the first trade of the Common Stock.                                            

                                                                      Year Ended
                                                                   June 30, 1998
                                                                        High Low
First quarter  . . . . . . . . . .      . .         $4.88           $3.13       

Second quarter . . . . . . . . . . . .              8.13                    4.31

Third quarter  . . . . . . . . . . . .              7.00                    4.38

Fourth quarter . . . . . . . . . . . .              6.88                    5.00

                    Year Ended
                     June 30, 1997
                                   High                    Low

Third quarter (from February 28, 1997                                           
to March 31, 1997)(1) . . . . . . . . .   $6.00     $2.50                     
Fourth quarter (from April 1, 1997                                              
to May 29, 1997)(1) . . . . . . . . .      4.13                2.38           
Fourth quarter (from May 29, 1997                                               
to June 30, 1997) . . . . . . . . . . .    5.06                3.88           

(1) The range of high and low prices for the periods from                       
February 28, 1997 to March 31, 1997 and April 1, 1997 to May                    
29, 1997, were bid prices as reported by the National Quotation                 
Bureau, LLC (the "NQB") and the Nasdaq Trading and Marketing                    
Services (the "NTMS"), respectively.  The bid prices obtained                   
from NQB and NTMS represent prices between dealers which do not                 
include retail markup, markdown or commission and may not                       
necessarily represent actual transactions.                                      

As of September 1, 1998, there were approximately 349 holders                   
of record of Common Stock.                                                      

The Company's Transfer Agent and Registrar is Marine Midland                    
Bank, Corporate Trust Services, 140 Broadway, New York, NY                      
10005-1180.                                                                     

The Company is prohibited from paying dividends by the terms of                 
its Loan and Security Agreement (as hereinafter defined),                       
except for non-cash dividends pursuant to the Rights Agreement.                 
The Company did not pay any cash dividends in the fiscal years                  
ended June 30, 1998 and 1997.                                                   

On February 28, 1997, pursuant to the Plan of Reorganization,                   
the Board of Directors of the Company declared a dividend                       
distribution of one Right for each outstanding share of Common                  
Stock, payable to stockholders of record at the close of                        
business on such date and payable with respect to Common Stock                  
issued thereafter.                                                              

The calculation of the number of shares of Common Stock held by                 
non-affiliates shown on the cover page of this Form 10-K Annual                 
Report was made on the assumption that there were not                           
affiliates other than the executive officers and directors of                   
the Company, the Pension Benefit Guaranty Corporation (the                      
"PBGC") and Peter Parts Electronics, Inc.                                       

The Plan of Reorganization canceled all of the Old Common Stock                 
and provided registered shareholders of the Old Common Stock as                 
of August 15, 1996 with warrants to purchase one share of                       
Common Stock for each twenty shares of Old Common Stock.  The                   
exercise price of the warrants is $8.50 per share.  The                         
warrants may be exercised at any time to February 28, 1999.                     

Item 6.  Selected Financial Data                                                

The following table summarizes certain historical financial                     
information derived from the consolidated financial statements                  
of the Company.  This information should be read in conjunction                 
with the consolidated financial statements and related notes                    
and Management's Discussion and Analysis of Results of                          
Operations and Financial Condition, both of which are contained                 
in this Form 10-K Annual Report.                                                

SELECTED FIVE-YEAR FINANCIAL DATA                                               

(Dollars in thousands,                  For the year ended June 30,             
except per share amounts)    1998    1997       1996    1995(1)   1994(1)     

Net sales                  $58,924       $77,313      $112,548 $196,309 $261,306
Gross margin                13,542        17,910             9,193 15,350 56,979
Operating income (loss)(2) $(8,497)     $  (858)     $ (8,576) $(46,766) $ 8,422
Income (loss) from                                                              
 continuing operations     $(7,778)     $  (795)     $(11,122) $(62,245) $ 5,094
Discontinued operations                                                         
(net of income taxes):                                                        
Income from discontinued                                                    
   operations                           -              -             - 671 2,233
Gain(loss) on disposal                                                      
of discontinued                                                         
    operations                        -        -                 - 9,127 (2,200)
Income (loss) before                                                            
 extraordinary gain         (7,778)        (795)         (11,122) (52,447) 5,127
Extraordinary gain(3)        1,174         8,122                 -           - -
Net income (loss)          $(6,604)     $ 7,327   $(11,122)    $(52,447) $ 5,127
Earnings (loss) per common                                                      
Share:                                                                      
Income (loss) from                                                              
   continuing operations        $ (2.78)       $ (.32) $ (4.50) $ (25.19) $ 2.06
Discontinued operations:                                                    
Income from discontinued                                                  
    operations                         -               -               - .27 .90
Gain(loss) on disposal                                                    
of discontinued                                                         
    operations                       -         -                 -    3.69 (.89)
Income (loss) before                                                            
 extraordinary gain              (2.78)    (.32)            (4.50)  (21.23) 2.07
Extraordinary gain                  .42     3.28               -             - -
Net income (loss)                                                               
per common share                                                              
  (basic & diluted)            $ (2.36) $  2.96   $  (4.50)     $ (21.23) $ 2.07

Weighted average common                                                         
  shares (000's omitted)(4)      2,793     2,471             2,471   2,471 2,471

Working capital            $25,907       $27,045      $ 54,117 $ 27,116 $ 89,469
Total assets                   50,087     60,629          83,872 136,066 193,688
Bank loans                            -        -                 - 17,400 20,002
Stockholders equity             20,040    26,390             9,128 20,250 75,722
Cash dividends declared                                                         
  per common share(5)        $     -     $     -          $      -   $ .10 $ .20

(1) Amounts have been reclassified, where applicable, to                        
reflect the discontinued operations of SCM Office Supplies,                     
Inc. and Histacount.                                                            

(2) Includes approximately a $3,902 gain from the sale of                       
manufacturing operations in 1998, a $3,400 pension curtailment                  
gain and a $6,500 postretirement curtailment gain in 1997;                      
$19,500 restructuring income in 1996 and $14,900 provision in                   
1995.                                                                           

(3) Includes a $1,174 and $8,122 pre-tax and after-tax                          
extraordinary gain for debt forgiveness associated with                         
emergence from the Bankruptcy Proceedings.                                      

(4) For all periods prior to June 30, 1997 the weighted                         
average common and common equivalent shares outstanding are                     
based on the weighted average number of common shares                           
outstanding from the Effective Date until June 30, 1997.                        

(5) Based on 30,250,000 shares of Old Common Stock,                             
outstanding as of June 30, 1995 and 1994.                                       

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

The forward-looking comments in this Management's Discussion                    
and Analysis of Results of Operations and Financial Condition                   
are estimates by the Company's management of future performance                 
and are subject to a variety of risks and uncertainties that                    
could cause actual results to differ from management's current                  
expectations.                                                                   

Year Ended June 30, 1998 Compared to Year Ended June 30, 1997   

Results of Operations                                                           

Net sales of $58.9 million for the year ended June 30, 1998                     
decreased 23.8 percent from net sales for the year ended June                   
30, 1997 of $77.3 million, primarily due to lower volumes.                      
Unit sales of typewriters, personal word processors and related                 
accessories and supplies are lower than a year ago, both                        
domestically and internationally, as a result of a shrinking                    
market and a continuing difficult and competitive environment.                  
The lower volumes are partially offset by newly sourced                         
product net sales of $3.8 million. In June 1997, due to                         
substantial volume reductions, the Company ceased the                           
manufacture of personal word processors; servicing and customer                 
support, however is continuing.                                                 

The Company's plan to expand its product line continues.                        
Efforts are focused on forging new and expanding existing                       
alliances with companies that provide technologically advanced                  
products for the small office and home office environment but                   
presently do not have a substantial United states market                        
penetration and are intent on building or increasing market                     
penetration by selling their products under the well-known                      
"Smith Corona" name.  Management believes that the Company is                   
well positioned to leverage the strength of its brand name with                 
business products that combine functionality and contemporary                   
design.  The Company intends to rely on its existing                            
distribution network to become a leading provider of                            
technologically advanced products for the small office and home                 
office.  Additionally, the Company is exploring synergistic                     
opportunities in related markets that will provide new and                      
expand existing channels of distribution.  The Company believes                 
that the small office and home office market, globally,                         
represents growth opportunities. The Company intends to                         
maintain its core business of distributing its product line of                  
typewriters and related supplies and accessories to satisfy                     
continuing albeit declining worldwide demand.  The success of                   
the Company depends, in part, on its ability to source, market                  
and sell new products.                                                          

In the fourth quarter of the Company's 1998 fiscal year                         
competitors began reducing market prices for the low-end                        
telephony and facsimile products.  These sharp price declines                   
have resulted in the Company having to reduce its low-end                       
telephony and facsimile product pricing as well as take charges                 
for new product inventory writedowns.                                           

Gross margin, as a percentage of net sales was 23.0 percent for                 
the year ended June 30, 1998 compared with 23.2 percent for the                 
same period last year.  Included in cost of goods sold for the                  
year ended June 30, 1998 are $.8 million related to favorable                   
results of remediation activities of the Company's                              
environmental sites. Additionally, cost of goods sold for the                   
year ended June 30, 1998 includes inventory writedowns of                       
approximately $1.9 million primarily associated with certain                    
new product inventories. The gross margin has been favorably                    
impacted as a result of a reduction in sales of personal word                   
processors for which sales in the prior year had a negative                     
impact on margins. Included in cost of goods sold for the year                  
ended June 30, 1997 are writedowns of inventories of $1.9                       
million.                                                                        

Selling, general and administrative expenses for the year ended                 
June 30, 1998 were $26.4 million or 44.8 percent of net sales                   
as compared to $12.7 million or 16.5 percent in the comparable                  
prior period.  For the twelve months ended June 30, 1998,                       
selling, general and administrative expenses include increased                  
spending of $7.7 million to support development, introduction                   
and sell-through of newly sourced products offset by $4.0                       
million overall reductions in employee-related costs.  The                      
Company expects to reduce spending to support development and                   
advertising of new products for the twelve months ended June                    
30, 1999. Selling, general and administrative expenses for the                  
twelve months ended June 30, 1997 includes a pension plan                       
curtailment gain of $3.4 million and a postretirement                           
curtailment gain of $6.5 million.                                               

Effective September 28, 1998, the Company's Board of Directors                  
approved a restructuring program which includes: i.) the                        
elimination of approximately 130 positions primarily located at                 
the Company's Corporate Headquarters in Cortland, New York,                     
ii.) the sale or lease of the building in Cortland, New York,                   
iii.) relocation of the Corporate Headquarters to more                          
efficient facilities.  The Company expects the restructuring                    
program to be completed by June 30, 1999.  As a result of these                 
actions, the Company will record a first quarter pre-tax                        
charge, principally for severance payments, of approximately                    
$1.2 million.                                                                   

On November 24, 1997, the Company completed the sale of its                     
manufacturing operations (the "Sale").  The Sale generated                      
total net proceeds of $14.9 million and resulted in a gain of                   
$3.9 million.  In addition the Company entered into a long-term                 
manufacturing agreement pursuant to which the purchaser will                    
manufacture certain Smith Corona brand name products, including                 
typewriters and related supplies and accessories.                               

For the twelve months ended June 30, 1998 the Company recorded                  
an extraordinary gain of $1.2 million for the favorable                         
resolution of bankruptcy claims.  Included in the twelve months                 
ended June 30, 1997 is an extraordinary gain of $8.1 million                    
(pre-tax and after-tax)as a result of the Company's emergence                   
from Chapter 11 on February 28, 1997 for debt forgiveness.                      

Financial Condition                                                             

The Company's primary source of liquidity and capital                           
resources, on both a short- and long-term basis, are cash and                   
available borrowing capacity.                                                   

On February 28, 1997, the Company entered into a loan and                       
security agreement ("Loan and Security Agreement") with its                     
lender.  The Loan and Security Agreement provides for                           
extensions of revolving credit loans, term loans and letters of                 
credit, limited to a percentage of eligible accounts receivable                 
and inventories in the amount not to exceed $25.0 million                       
through the February 28, 2000 expiration date.  Interest is .75                 
percent over the Prime Rate or 3 percent over the Adjusted                      
Eurodollar rate.  Payment of dividends is prohibited by the                     
terms of the Loan and Securities Agreement, except for non-cash                 
dividends pursuant to the Rights Agreement. Pursuant to the                     
provisions of the Loan and Securities Agreement the Company                     
must maintain an adjusted net worth of $11.1 million.                           
Management believes that it has adequate flexibility and that                   
such a covenant should not impose an undue restriction on the                   
operations of the Company.  The Loan and Security Agreement is                  
secured by all of the Company's assets.  There are no                           
borrowings under the Loan and Securities Agreement as of June                   
30, 1998.                                                                       

During the twelve months ended June 30, 1998 the Company's                      
operating activities used $18.5 million of cash, primarily as a                 
result of the net loss before consideration of the $3.9 million                 
gain on the Sale and increase of inventory levels.  The                         
increase in inventory was due primarily to new product                          
inventory receipts partially offset by a decrease of $4.7                       
million in raw material and work-in-process inventories                         
associated with the Sale.  Capital expenditures for the twelve                  
months ended June 30, 1998 were $3.2 million compared to $1.0                   
million in the prior year.  Capital expenditures are comprised                  
primarily of new product tooling of $1.3 million and new                        
information systems hardware and SAP R/3 software of $1.7                       
million.  The Company had no material commitments for                           
additional capital expenditures at June 30, 1998.                               

The Company believes that its cash and borrowing capabilities                   
will be sufficient to meet its operating cash and capital                       
expenditure requirements in the foreseeable future.                             

The Company's products and major operating systems are year                     
2000 compliant. The Company is in the process of gathering                      
information concerning the year 2000 compliance status of its                   
suppliers.  In the event that any of the Company's significant                  
suppliers do not successfully and timely achieve year 2000                      
compliance, the Company's business could be adversely affected.                 
Any significant disruption of the Company's ability to                          
communicate electronically with its business partners could                     
negatively impact the Company's business.                                       

Year Ended June 30, 1997 Compared to Year Ended June 30, 1996                   

With the Company experiencing sales declines and operating                      
losses, having extended payment of obligations owed to its                      
trade vendors, and needing additional financing to meet                         
operating requirements and fund the Restructuring, the Company                  
filed a voluntary petition for relief under Chapter 11 of the                   
Bankruptcy Code in the Bankruptcy Court on July 5, 1995.  On                    
August 18, 1995, SCM Office Supplies, Inc., SCC LI Corporation                  
(formerly Histacount Corporation) and Hulse Manufacturing                       
Company, the Nonoperating Subsidiaries, filed Chapter 11                        
petitions. On October 31, 1996 the Wholly-Owned Domestic                        
Subsidiaries, Smith Corona Overseas Holdings, Inc., SCM Inter-                  
American Corporation and SCM (United Kingdom) Limited, filed                    
voluntary petitions for relief under Chapter 11 of the                          
Bankruptcy Code.                                                                

On January 27, 1997 the Bankruptcy Court entered the                            
Confirmation Order and the Company emerged from the Bankruptcy                  
Proceedings on the Effective Date of February 28, 1997.                         

During the Bankruptcy Proceedings, the Company confined                         
expenditures to those manufacturing and operating costs that                    
were necessary to preserve and maintain going-concern value.                    
In light of its financial condition, the Company also                           
implemented a planned reduction in its workforce and a                          
consolidation of its manufacturing and distribution operations                  
and relocated its world headquarters from New Canaan,                           
Connecticut to its facility in Cortland, New York.                              
Additionally, as part of the Restructuring, the Company                         
relocated its typewriter manufacturing operations to its Mexico                 
facility from facilities in Singapore and Batam Island,                         
Indonesia.                                                                      

Results of Operations                                                           

Net sales of $77.3 million for the year ended June 30, 1997                     
decreased 31.3 percent from net sales for the year ended June                   
30, 1996 of $112.5 million, primarily due to lower volumes.                     
Unit sales of typewriters, personal word processors and related                 
accessories and supplies were lower than a year ago, both                       
domestically and internationally, as a result of a shrinking                    
market and a continuing difficult and competitive environment.                  
Due to substantial volume reductions, in June 1997 the Company                
ceased the manufacture of personal word processors; servicing                   
and customer support of personal word processors, however, is                   
continuing.                                                                     

Gross margin, as a percentage of net sales, was 23.2 percent                    
for the year ended June 30, 1997 as compared to 8.2 percent for                 
the comparable period last year.  The margin improvement was                    
primarily the result of manufacturing efficiencies gained from                  
the Restructuring and proportionate increases of sales of                       
higher margin products.  Included in cost of goods sold were                    
writedowns of inventories of $1.9 million and $4.3 million, for                 
the years ended June 30, 1997 and June 30, 1996, respectively.                  

Selling, general and administrative expenses for the year ended                 
June 30, 1997 were 16.5 percent of net sales as compared to                     
24.7 percent in the comparable period last year.  The decreases                 
reflected the overall savings in employee-related costs as a                    
result of the Restructuring and reorganization efforts as well                  
as the impact of a pension plan curtailment gain of $3.4                        
million and a postretirement curtailment gain of $6.5 million.                  
During the Bankruptcy Proceedings professional fees were                        
charged to reorganization costs in the consolidated statements                  
of operations.                                                                  

The Company recorded reorganization costs for its Bankruptcy                    
Proceedings aggregating $5.9 million for the year ended June                    
30, 1997 compared to $10.3 million for the same period a year                   
ago.  The charges for the year ended June 30, 1997 included                     
professional fees, a provision for closing its world                            
headquarters in New Canaan, Connecticut and relocating such to                  
its facility in Cortland, New York and costs associated with                    
the distribution of the Plan of Reorganization, offset by                       
income from a purchase deposit forfeiture of $.5 million,                       
interest income earned on domestic cash balances of $.6 million                 
and a settlement the Company reached with its banks relating to the Company's   
debtor-in-possession financing of $.5 million.                                  

As a result of emergence from the Bankruptcy Proceedings the                    
Company recorded a pre-tax and after-tax extraordinary gain of                  
$8.1 million for debt forgiveness.                                              

Item 8. Financial Statements and Supplementary Data                             

See Consolidated Financial Statements in 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 is incorporated by                        
reference from Part I of this Form 10-K Annual Report and the                   
Company's definitive Proxy Statement for the 1998 Annual                        
Meeting of Stockholders, to be filed with the Securities and                    
Exchange Commission on or about September 28, 1998.                             

Item 11. Executive Compensation                                                 

The information required by this item is incorporated by                        
reference from the Company's definitive Proxy Statement for the                 
1998 Annual Meeting of Stockholders, to be filed with the                       
Securities and Exchange Commission on or about September 28,                    
1998.                                                                           

Item 12. Security Ownership of Certain Beneficial Owners and Management         

The information required by this item is incorporated by                        
reference from the Company's definitive Proxy Statement for the                 
1998 Annual Meeting of Stockholders, to be filed with the                       
Securities and Exchange Commission on or about September 28,                    
1998.                                                                           

Item 13. Certain Relationships and Related Transactions                         

The information required by this item is incorporated by                        
reference from the Company's definitive Proxy Statement for the                 
1998 Annual Meeting of Stockholders, to be filed with the                       
Securities and Exchange Commission on or about September 28,                    
1998.                                                                           

PART IV                                                         

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

(a)(1)  Financial Statements. See Consolidated                                  
Financial Statements in this Form 10-K Annual Report.                           

(a)(2)  Financial Schedules. See Consolidated Financial                         
Statements in 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) Reports on Form 8-K.                                                        
None                                                                          

(c) Exhibits (filed herewith or incorporated by                               
reference; see index to exhibits).                                              

2.1 Debtors' Third Amended Second Joint Plan of                                 
Reorganization under Chapter 11 of the United States                            
Bankruptcy Code (incorporated by reference to Exhibit 2.1 to                    
the Registrant's Annual Report on Form 10-K for the fiscal                      
year ended June 30, 1996 (File No. 1-10281) (see Exhibit A                      
included therein).                                                              
2.2 Motion to Approve Technical Amendments to the Debtors'                      
Third Amended Second Joint Plan of Reorganization, as approved                  
by the United States Bankruptcy Court for the District of                       
Delaware (incorporated by reference to Exhibit 2 to the                         
Registrant's Registration Statement on Form 8-A dated January                   
30, 1997 (File No. 1-10281)).                                                   
3.1 Restated Certificate of Incorporation of Smith Corona                       
Corporation (incorporated by reference to Exhibit 3.1 to the                    
Registrant's Form 8-K Current Report dated February 28, 1997                    
(File No. 1-10281)).                                                            
3.2     Certificate of Designation, Preferences and Rights of                   
Preferred Stock, Series A (incorporated by reference to                         
Exhibit 3.2 to the Registrant's Form 8-K Current Report dated                   
February 28, 1997 (File No. 1-10281)).                                          
3.2 By-Laws of Smith Corona Corporation (incorporated by                        
reference to Exhibit 3.3 to the Registrant's Form 8-K Current                   
Report dated February 28, 1997 (File No. 1-10281)).                             
4.1 Rights Agreement between Smith Corona Corporation and                       
Marine Midland Bank, as Rights Agent, dated as of February 28,                  
1997 (incorporated by reference to Exhibit 4.1 to the                           
Registrant's Form 8-K Current Report dated February 28, 1997                    
(File No. 10281)).                                                              
4.2 Warrant Agreement between Smith Corona Corporation and                      
Marine Midland Bank, as Warrant Agent, dated as of February                     
28,1997 (incorporated by reference to Exhibit 4.2 to the                        
Registrant's Form 8-K Current Report dated February 28, 1997                    
(File No. 1-10281)).                                                            
10.1 Smith Corona Corporation Retirement Savings and                            
Investment Plan adopted effective July 1, 1989, as amended and                  
restated effective January 1, 1997. (incorporated by reference                  
to exhibit 10.1 to the Registrant's Annual Report on Form 10-K                  
for the fiscal year ended June 30, 1997).                                       
10.2 The CORPORATE plan for Retirement, The Profit                              
Sharing/401(K) Plan, Fidelity Basic Plan Document No. 07                        
effective July 1, 1997 (incorporated by reference to exhibit                    
10.2 for the fiscal year ended June 30, 1997).                                  
10.3 Adoption Agreement - Article 1 between Smith Corona                        
Corporation and Fidelity Management Trust Company, as Trustee                   
effective July 1, 1997 (incorporated by reference to exhibit                    
10.3 for the fiscal year ended June 30, 1997).                                  
10.4 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)).                                                   
10.5 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)).                               
10.6 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)).                                                   
10.7 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)).                                        
10.8 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)).                               
10.9 Smith Corona Corporation Salaried Employees Retirement                     
Plan, as amended and restated as of January 1, 1994                             
(incorporated by reference to Exhibit 10.32 to the Company's                    
Form 10-K Annual Report for the fiscal year ended June 30,                      
1995, which is on file with the Commission).                                    
10.10 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).                                                      
10.11 Stock Purchase Agreement among Smith Corona                               
Corporation and W. Michael Driscoll, as Sellers and the MATCO                   
Electronics Group, Inc. and U.S. Assemblies San Diego, Inc.,                    
as Buyers dated of November 24, 1997 (incorporated by                           
reference to Exhibit 10.1 to the Company's Form 8-K Current                     
Report dated November 17, 1997 which is on the file with the                    
Commission).                                                                    
10.12 Asset Purchase Agreement among Smith Corona                               
Corporation, as Seller, U.S. Assemblies San Diego, Inc, as                      
Buyer, and the MATCO Electronics Group, Inc., as Guarantor                      
dated as of November 14, 1997 (incorporated by reference to                     
Exhibit 10.2 to the Company's  Form 8-K Current Report dated                    
November 17, 1997 which is on file with the Commission).                        
10.13 Contract manufacturing Agreement, The MATCO                               
Electronics Group, Inc., and Smith Corona Corporation dated                     
November 24, 1997 (incorporated by reference to Exhibit 10.3                    
to the Company's Form 8-K Current Report dated November 17,                     
1997 which is on file with the Commission).                                     
10.14 Loan and Security Agreement by and between Congress                       
Financial Corporation, as Lender, and Smith Corona                              
Corporation, as Borrower, dated February 28, 1997                               
(incorporated by reference to Exhibit 10 to the Company's Form                  
10-Q Quarterly Report for the quarterly period ended March 31,                  
1997, which is on file with the Commission).                                    
10.15 First Amendment to Loan and Security Agreement dated                      
July 2, 1997 (incorporated by reference to Exhibit 10.27 to                     
the Company's Form 10-K Annual Report for the fiscal year                       
ended June 30, 1997, which is on file with the Commission).                     
10.16 Employment Agreement between Smith Corona Corporation                     
and W. Michael Driscoll dated as of October 14, 1996 amended                    
as of June 2, 1997 (incorporated by reference to Exhibit 10.28                  
to the Company's Form 10-K Annual Report for the fiscal year                    
ended June 30, 1997, which is on file with the Commission).                     
10.17 Employment Agreement between Smith Corona Corporation                     
and John A. Piontkowski dated as of May 5, 1997 (incorporated                   
by reference to Exhibit 10.29 to the Company's Form 10-K                        
Annual Report for the fiscal year ended June 30, 1997, which                    
is on file with the Commission).                                                
*10.18  Smith Corona Corporation Stock Incentive Plan                           
*21     Schedule of Subsidiaries of the Registrant                              
*27     Financial Data Schedule                                                 

* Filed herewith                                                                

Stockholders may, upon payment of a fee therefor, obtain copies                 
of any of the exhibits to this Form 10-K Annual Report by                       
writing to the Secretary, Smith Corona Corporation, 839 Route                   
13 South, Cortland, New York 13045.                                             

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                                                        

September 28, 1998                              By  /s/ Peter N. Parts          
Peter N. Parts              
Chairman of the Board,      
Chief Executive Officer     
and President               

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.                                                                

Signature                                       Title   Date                    

/s/ Peter N. Parts                                                              
.......................    Chairman of the Board,                             
(Peter N. Parts)        Chief Executive Officer                           
             and President        September 28, 1998

/s/ John A. Piontkowski                                                         
 ........................   Executive Vice President and      September 28, 1998
(John A. Piontkowski)          Chief Financial Officer                    
   (Principal Financial Officer)

/s/ Jerome A. Colletti                                                          
........................   Director                      September 28, 1998   
(Jerome A. Colletti)                                                      

/s/ William J. Morgan                                                           
........................   Director    September 28, 1998                     
(William J. Morgan)                                                       

/s/ Michael J. Murray                                                           
........................   Executive Vice President    September 28, 1998     
(Michael J. Murray)      Sales and Marketing                              
and Director              

/s/ Dr. Richard N. Rosett                                                       
........................   Director    September 28, 1998                     
(Dr. Richard N. Rosett)                                                   

/s/ Martin D. Wilson                                                            
........................   Vice President/Controller   September 28, 1998     
(Martin D. Wilson)        (Principal Accounting                           
Officer)                

Index to Consolidated Financial Statements and Financial Statement Schedule     

                                                                    Page

Independent Auditors' Report                                        26          

Consolidated Balance Sheets as of June 30, 1998 and 1997                27      

Consolidated Statements of Operations for the Years Ended June                  
30, 1998, 1997 and 1996                                          28             

Consolidated Statements of Changes in Stockholders' Equity for                  
the Years Ended June 30, 1998, 1997 and 1996                        29          

Consolidated Statements of Cash Flows for the Years Ended June                  
30, 1998,  1997 and 1996                                                30      

Notes to Consolidated Financial Statements                            32        

Consolidated Supplemental Financial Statement Schedule for the                  
Years Ended June 30, 1998, 1997 and 1996                                        

Schedule II - Valuation and Qualifying Accounts                  55             

INDEPENDENT AUDITORS? REPORT                                                    
Smith Corona Corporation:                                                       

We have audited the accompanying consolidated balance sheets of                 
Smith Corona Corporation and subsidiaries (the ?Company?) as of                 
June 30, 1998 and 1997, and the related consolidated statements                 
of operations, statements of changes in stockholders? equity and                
statements of cash flows for each of the three years in the                     
period ended June 30, 1998.  Our audits also include the                        
financial statement schedule listed in the Index to Consolidated                
Financial Statements and Financial Statement Schedule.  These                   
financial statements and financial statement schedule are the                   
responsibility of the Company?s management.  Our responsibility is              
to express an opinion on these financial statements and financial               
statement schedule based on our audits.                                         

We conducted our audits in accordance with generally accepted                   
auditing standards.  Those standards require that we plan and                   
perform the audit 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, 1998 and 1997 and               
the results of their operations and their cash flows for each of                
the three years in the period ended June 30, 1998 in conformity                 
with generally accepted accounting principles.  Also, in our                    
opinion, such 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                                                           
August 21, 1998                                                                 
(September 28, 1998 as to note 16)                                              

Smith Corona Corporation and Subsidiaries                       
Consolidated Balance Sheets                                     

                      June 30,
(Dollars in thousands)                         1998     1997                    

Assets                                                                          
Current assets:                                                                 
Cash and cash equivalents                        $ 15,293       $ 21,985        
Accounts receivable (net of allowance                                           
for doubtful accounts of $638 and                                             
$931 for 1998 and 1997, respectively)        9,492      11,238                
Inventories                                      15,399         12,627          
Prepaid expenses and other current                                              
assets                                              3,090        2,108        
Total current assets                            43,274   47,958                 
Property, plant and equipment-net                   6,511       12,092          
Other assets                                       302      579                 
Total                                               $ 50,087 $ 60,629           

Liabilities and stockholders' equity                                            
Current liabilities:                                                            
Trade payables                              $  6,025 $  5,199                   
Accrued liabilities                               8,204          11,614         
Income taxes payable                             3,138    4,100                 
Total current liabilities                          17,367        20,913         
Postretirement benefits                       3,846       5,904                 
Pension liability                                   4,827         4,777         
Other long-term liabilities                       4,007           2,645         
Total liabilities                                  30,047   34,239              
Stockholders' equity:                                                           
Common stock- 3,141,665 shares and                                              
2,754,238 shares issued                                                       
and outstanding, respectively                     3          3                
Additional paid-in capital                        55,512         55,164         
Deferred compensation                            (326)     (232)                
Accumulated deficit                            (35,149) (28,545)                
Total stockholders' equity                        20,040         26,390         
Total                                               $ 50,087 $ 60,629           

See accompanying notes to consolidated financial statements.                    

Smith Corona Corporation and Subsidiaries                       
Consolidated Statements of Operations                           

(Dollars in thousands,                          For the year ended June 30,     
  except per share amounts)                        1998            1997     1996

Net sales                                           $58,924    $ 77,313 $112,548
Cost of goods sold                                  45,382        59,403 103,355
Gross margin                                      13,542          17,910   9,193
Selling, general and administrative                                             
 Expenses                                            26,371       12,754  27,773
Gain on sale of manufacturing operations              (3,902)         -        -
Reorganization (income) costs                      (280)          5,864   10,255
Restructuring expense (income)                       -        -  (19,461)       
Other (income)expense                              (150)            150    (798)
Operating loss                                       (8,497)       (858) (8,576)
Interest (income) expense                           (1,063)        (326)     515
Loss from continuing                                                            
operations before income taxes                                                
 and extraordinary gain                        (7,434)     (532)         (9,091)
Income taxes                                      344        263           2,031
Loss before extraordinary gain                 (7,778)     (795)        (11,122)
Extraordinary gain                                   1,174         8,122       -
Net income (loss)                                   $(6,604)   $ 7,327 $(11,122)
Earnings (loss) per common share                                                
(basic and diluted):                                                        
   Loss before extraordinary gain                   $ (2.78)    $( .32) $ (4.50)
   Extraordinary gain                                  .42         3.28        -
Net income (loss)                           $ (2.36) $  2.96  $ (4.50)    

See accompanying notes to consolidated financial statements.                    

Smith Corona Corporation and Subsidiaries                       
Consolidated Statements of Changes in Stockholders' Equity      
For the years ended June 30, 1998, 1997 and 1996                

                    Additional Deferred     (Accumu-
         Common  Paid-In    Compens-     lated
                       Stock  Capital    ation        Deficit)     Total

Balance June 30, 1995         $303       $44,697             - $(24,750) $20,250

Net loss                              -        -             - (11,122) (11,122)

Balance June 30, 1996          303        44,697                - (35,872) 9,128

Net income                          -          -                 -   7,327 7,327

Deferred compensation            -           267             $(267)          - -

Amortization of deferred                                                        
  compensation                  -              -                35          - 35

Cancellation of old                                                             
  common stock               (303)          303          -                  -  -

Issuance of common                                                              
  stock to creditors              3        9,897                 -       - 9,900

Balance June 30, 1997            3        55,164           (232) (28,545) 26,390

Net loss                              -        -               - (6,604) (6,604)

Deferred compensation            -           345              (345)          - -

Amortization of deferred                                                        
  compensation                  -              -               251         - 251

Exercise of warrants              -            3                 -           - 3

Balance June 30, 1998       $    3       $55,512       $ (326) $(35,149) $20,040

See accompanying notes to consolidated financial statements.                    

Smith Corona Corporation and Subsidiaries                       
Consolidated Statements of Cash Flows                           

                                                     For the year ended June 30,
(Dollars in thousands)                      1998               1997         1996

Cash flows from operating activities:                                           

Net (loss) income                          $(6,604)     $7,327  $(11,122)       
Adjustments to reconcile net income                                             
(loss) to net cash provided by (used in)                                      
continuing operating activities:                                              
Depreciation and amortization              2,289        3,534    5,665      
Loss (gain) on disposition of property,                                     
   plant and equipment                          192        (450)        (16,786)
  Gain on sale of manufacturing operations       (3,902)             -         -
Deferred income taxes                          -            -    3,406      
Inventory provisions                          1,056   2,364      5,199      
  Pension curtailment gain                            -  (3,394)         (1,524)
Extraordinary gain                            (1,174) (8,122)       -       
  Postretirement curtailment gain                      -         (6,534)       -
 Other noncash items                              -       (132)            832
Changes in assets and liabilities:                                              
Accounts receivable                           1,654     5,947   20,469      
  Inventories                                   (7,980)         1,882     32,263
Prepaid expenses and other                                                  
    current assets                               (1,170)         2,646   (1,177)
 Other assets                                   36        (102)            777
  Trade payables                                      974         1,696  (5,821)
Accrued liabilities and income                                              
taxes payable                               (3,220)   (158) (16,310)    
Postretirement benefits and                                                 
pension liability                           (2,008) (1,270)     (98)    
  Other long-term liabilities                       1,362          (217)      81
Net cash (used in) provided by                                                  
operating activities                            (18,495)         5,017  15,854
Cash flows from investing activities:                                           
Proceeds from sale of                                                           
manufacturing operations                         14,903        -             -
Proceeds from the sale of property,                                             
plant and equipment                              100        512         24,803
Capital expenditures                           (3,200)     (999)          (331) 
Net cash provided by (used in)                                                  
investing activities                         11,803        (487)       24,472 

Smith Corona Corporation and Subsidiaries                                       
Consolidated Statements of Cash Flows                                           
Continued                                                                       

                                           For the year ended June 30,
(Dollars in thousands)                         1998             1997        1996

Cash flows from financing activities:                                           
Bank loans (repayments), net                        -             -     (17,400)
Payments made to settle                                                         
liabilities subject to                                                        
 compromise                                          -      (12,474)           -
Net cash used in financing activities             -         (12,474)    (17,400)
Increase (decrease) in cash and                                                 
 cash equivalents                               (6,692)     (7,944)       22,926
Cash and cash equivalents:                                                      
 Beginning of year                               21,985         29,929     7,003
 End of year                                  $15,293       $21,985      $29,929
Cash paid during the year for:                                                  
Interest                                        $     -     $     -       $  662
Income taxes                               $   185          $   610       $  644

See accompanying notes to consolidated financial statements.                    

Smith Corona Corporation and Subsidiaries                                       
Notes to Consolidated Financial Statements                                      
(Dollars in thousands, except per share amounts)                                

1. Significant Accounting Policies                                              

Basis of Consolidation and Presentation: The consolidated                       
financial statements include the accounts of Smith Corona                       
Corporation and its wholly-owned subsidiaries.  All                             
significant intercompany accounts and transactions have been                    
eliminated.                                                                     

The consolidated financial statements for the year ended June                   
30, 1996 are presented in accordance with the American                          
Institute of Certified Public Accountants Statement of                          
Position 90-7: "Financial Reporting by Entities in                              
Reorganization Under the Bankruptcy Code".  The consolidated                    
financial statements are prepared in accordance with                            
generally accepted accounting principles applicable to a                        
going concern, which contemplates the realization of assets                     
and the satisfaction of liabilities in the normal course of                     
business.  Accordingly, the consolidated financial statements                   
for the year ended June 30, 1996 did not reflect adjustments                    
or provide for the potential consequences of the bankruptcy                     
proceedings.                                                                    

Management Estimates: The preparation of financial statements                   
in conformity with generally accepted accounting principles                     
requires management to make estimates and assumptions that                      
affect the reported amounts of assets and liabilities and the                   
disclosure of contingent assets and liabilities at the date                     
of the financial statements and the reported amounts of                         
revenue and expenses during the reporting periods. Actual                       
results could differ from those estimates.                                      

Statement of Cash Flows:  All highly liquid investments                         
purchased with a maturity of three months or less are                           
considered to be cash equivalents.  Included in the fiscal                      
year ended June 30, 1996 ("Fiscal 1996") gain (loss) on                         
disposition of property, plant and equipment is the gain from                   
the sale of a building in Singapore of $17,755.  This item is                   
included in the Fiscal 1996 Statement of Operations as                          
restructuring income.                                                           

Inventories:  Inventories are stated at the lower of cost or                    
market.  Cost is determined principally by the first-in,                        
first-out (FIFO) method.                                                        

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 up to forty years for                            
buildings.  Leasehold improvements are amortized over the                       
lease term.  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.                                                  

The Company periodically reviews the carrying value of its                      
long-lived assets to identify and assess impairment.                            

Retirement Plans: During the year ended June 30, 1997, the                      
Company terminated its defined benefit pension plan for                         
hourly employees and froze the benefits of its defined                          
benefit pension plan for salaried employees (see Note 10).                      
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.  In June 1997, the Company implemented a new                    
premium structure for retiree health care benefits whereby                      
retired employees will absorb the total cost of health care                     
premiums phased in over three years (see Note 10).                              

Revenue Recognition:  Net sales are recognized when products                    
are shipped. Accruals for customer discounts and rebates, and                   
defective returns are recorded as the related revenue is                        
recognized.                                                                     

Advertising Costs:  Costs incurred in producing media                           
advertising are expensed the first time the advertising takes                   
place.  Advertising associated with customer benefit programs                   
are accrued as the related revenues are recognized.                             

Research and Development:  The Company's product development                    
costs are expensed as incurred.  Research and development                       
expense was $4,805, $1,915 and $1,991 for the years ended                       
June 30, 1998, 1997 and 1996, respectively.                                     

Goodwill:  The excess of the allocated acquisition cost over                    
the fair value of net assets of businesses acquired are                         
amortized by the straight-line method over forty years.  Due                    
to operating losses and uncertainty of future operations, the                   
Company wrote off the remaining net book value of goodwill of                   
approximately $739 in the year ended June 30, 1996.                             

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.                                                                      

Environmental Remediation Costs: The Company accrues for                        
losses associated with environmental remediation obligations                    
when such losses are probable and reasonably estimable.                         
Costs of future expenditures for environmental remediation                      
obligations are not discounted to their present value.                          

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

Stock-Based Compensation - The Company adopted the                              
disclosure-only provisions of Statement of Financial                            
Accounting Standards No. 123, "Accounting for Stock-Based                       
Compensation" ("FAS 123"), in the first quarter of the year                     
ended June 30, 1997.  The Company, as provided for by FAS                       
123, is continuing to apply Accounting Principles Board                         
Opinion No. 25, "Accounting for Stock Issued to Employees"                      
for employee stock compensation measurement.                                    

Earnings (Loss) Per Common Share: In the second quarter of                      
the year ended June 30, 1998, the Company adopted Statement                     
of Financial Accounting Standards No. 128 " Earnings per                        
Share" ("SFAS 128").  Accordingly, all periods have been                        
restated to present basic and diluted earnings (loss) per                       
common share.  Earnings (loss) per common share for the                         
twelve months ended June 30, 1997 are based on the weighted                     
average number of common shares outstanding from the                            
Effective Date until June 30, 1997.                                             

The following tables reconcile the numerators and denominators                  
of the basic and diluted earnings per share for income (loss)                   
before extraordinary gain presented in the Consolidated                         
Statements of Operations:                                                       

                                     Twelve months ended June 30, 1998
                                                            Shares
                                 Income (loss) (000's omitted) Per-Share
                                       (Numerator)  (Denominator)   Amount

Basic Earnings per Share                                                        
Income (loss) before                                                        
    extraordinary gain                  $(7,778)                2,793    $(2.78)

Effect of dilutive securities                                                   
  Warrants                                                     (a)           (a)
Stock Options                                           (b)              (b)
Restricted Stock                                       -                 (c)

Diluted Earnings per Share                                                      
Income (loss) before                                                        
extraordinary gain and                                                  
effect of                                                               
dilutive securities                $(7,778)         2,793    $(2.78)    

                                       Twelve months ended June 30, 1997
                                                            Shares
                                 Income (loss) (000's omitted) Per-Share
                                       (Numerator)  (Denominator)   Amount

Basic Earnings per Share                                                        
Income (loss) before                                                        
extraordinary gain      $ (795)            2,471     $(.32)           

Effect of dilutive securities                                                   
Warrants                                                 (a)             (a)
Stock Options                                        -                    - 
Restricted Stock                                   -             (c)        

Diluted Earnings per Share                                                      
Income (loss) before                                                        
extraordinary gain and                                                  
effect of                                                               
dilutive securities         $ (795)         2,471     $(.32)            

(a) Warrants to purchase 1,512,073 shares of common stock at                    
$8.50 per share were outstanding but were not included in the                   
computation of diluted earnings per share because the                           
exercise price was greater than the market price of the common                  
shares.                                                                         
(b) Options to purchase 144,625 shares of common stock at                       
$6.13 per share were outstanding but were not included in the                   
computation of diluted earnings per share because the option                    
price was greater than the average market price of the common                   
shares.  There were no options outstanding as of June 30,                       
1997.                                                                           

(c) Restricted stock of 158,282 shares at June 30, 1998 and                     
93,894 shares at June 30, 1997 would have had an anti-                          
dilutive effect in computation.                                                 

For comparability purposes, basic and diluted earnings (loss)                   
per common share for the twelve months ended June 30, 1996,                     
is based on 2,471,336 shares, the weighted average number of                    
common shares outstanding from February 28, 1997, the date of                   
emergence from bankruptcy proceedings, until June 30, 1997.                     

New Financial Accounting Standards Board Releases: Statements                   
of Financial Accounting Standards No. 130 "Reporting                            
Comprehensive Income" ("SFAS 130"), and No. 131, "Disclosures                   
About Segments of an Enterprise and Related Information"                        
("SFAS 131"), were issued in June, 1997.                                        

SFAS 130 establishes standards for reporting and display of                     
comprehensive income and its components in a full set of                        
general purpose financial statements.  It requires that all                     
items that are required to be recognized under accounting                       
standards as components of comprehensive income be reported                     
in a financial statement that is displayed with the same                        
prominence as other financial statements.  Comprehensive                        
income is defined as "the change in equity of a business                        
enterprise during a period from transactions and other events                   
and circumstances from nonowner sources.  It includes all                       
changes in equity during a period, except those resulting                       
from investments by owners and distributions to owners".                        
This statement is effective for fiscal years beginning after                    
December 15, 1997.  The Company does not expect to be                           
affected by this new standard.                                                  

SFAS 131 established the way that public business enterprises                   
report information about operating segments in annual                           
financial statements and requires that those enterprises                        
report selected information about operating segments in                         
interim financial reports issued to stockholders. It also                       
establishes standards for related disclosures about products                    
and services, geographic areas, and major customers.  This                      
statement is effective for financial statements for periods                     
beginning after December 15, 1997.  The disclosure impact of                    
this statement is currently being assessed by the Company.                      

Reclassifications:  Certain reclassifications have been made                    
to the prior years' financial statements to conform with the                    
1998 presentation.                                                              

2. Petition for Reorganization Under Chapter 11                                 

On July 5, 1995 (the "Petition Date"), Smith Corona             
Corporation (the "Company") filed a voluntary petition for                      
relief under Chapter 11 of the United States Bankruptcy Code                    
(the "Bankruptcy Code") in the United States Bankruptcy Court                   
for the District of Delaware (the "Bankruptcy Court").  On                      
August 18, 1995, SCM Office Supplies, Inc., SCC LI                              
Corporation (formerly known as Histacount Corporation) and                      
Hulse Manufacturing Company, all wholly-owned nonoperating                      
subsidiaries of the Company (collectively, the "Nonoperating                    
Subsidiaries"), filed Chapter 11 petitions.  On October 31,                     
1996, Smith Corona Overseas Holdings, Inc., SCM Inter-                          
American Corporation and SCM (United Kingdom) Limited, all                      
wholly-owned domestic subsidiaries (the "Wholly-Owned                           
Domestic Subsidiaries"), also filed Chapter 11 petitions.                       
(The petitions of the Company, the Nonoperating Subsidiaries                    
and the Wholly-Owned Domestic Subsidiaries are referred to                      
herein collectively as the ?Bankruptcy Proceedings?).  The                      
primary purpose of the October 31, 1996 filings, which had no                   
effect on operations, was to better protect corporate assets                    
during the reorganization period.  The Bankruptcy Proceedings                   
primarily related to all U.S. assets and operations and did                     
not pertain to the Company's international subsidiaries.                        
From July 5, 1995 to February 28, 1997, the Company operated                    
as a debtor-in-possession.                                                      

On January 27, 1997 the Bankruptcy Court entered an             
order confirming the Company's Third Amended Second Joint                       
Plan of Reorganization (the "Confirmation Order").  The                         
Confirmation Order was subject to satisfaction of certain                       
conditions precedent to the effective date.  The Company                        
satisfied the conditions and emerged from the Bankruptcy                        
Proceedings on February 28, 1997 (the "Effective Date").                        

     The Company recorded reorganization costs relating to
its Bankruptcy Proceedings aggregating $5,864 for the year                      
ended June 30, 1997.  These charges include professional                        
fees, a provision for closing the New Canaan, Connecticut                       
headquarters and relocation of such headquarters to Cortland,                   
New York, and costs associated with the distribution of the                     
Company's Third Amended Second Joint Plan of Reorganization                     
(the "Plan of Reorganization") for the solicitation of                          
creditors, offset by interest income earned on domestic cash                    
balances of $607, a purchase deposit forfeiture of $500 and a                   
settlement the Company reached with its banks relating to the                   
Company's debtor-in-possession financing of $500.                               
Reorganization costs of $10,255 for the year ended June 30,                     
1996 were primarily professional fees.                                          

Under the Plan of Reorganization, all allowed general           
unsecured claims will be satisfied through the distribution                     
to holders of such claims of (i) the unsecured class cash of                    
approximately $11,330 (less any amounts paid to holders of                      
allowed convenience class claims discussed below), and (ii)                     
85 percent of the reorganized company's common stock to be                      
issued pursuant to the Plan of Reorganization (determined on                    
a fully diluted basis not including the effect of the                           
exercise of any of the below described warrants). Each holder                   
of an allowed general unsecured claim will receive one share                    
of the reorganized company's common stock for each ten                          
dollars in allowed claim value.  All allowed claims senior to                   
allowed general unsecured claims will be satisfied by the                       
payment in full in cash or notes (as provided for by the                        
Bankruptcy Code) or the assumption of all such claims.  As                      
described below, the distributions to holders of allowed                        
general unsecured claims and claims senior to such claims                       
have commenced.  Allowed convenience class claims (general                      
unsecured claims of one thousand five hundred dollars or                        
less) have received payment in cash in an amount equal to 60                    
percent of the amount of such claims.  In addition,                             
registered holders as of August 15, 1996, of the Company's                      
common stock, par value $.01 per share, which was outstanding                   
prior to the Effective Date (the "Old Common Stock") have                       
received warrants to purchase one share of common stock, par                    
value $.001 per share (the "Common Stock"), in the                              
reorganized company for each twenty shares of Old Common                        
Stock.                                                                          

During the quarter ended March 31, 1997, the Company            
made a disbursement of $12,474 to the distribution agent for                    
payment of allowed general unsecured claims and claims senior                   
to such claims.  Once disputed general unsecured claims are                     
resolved and allowed, such claimants will share, on a pro                       
rata basis, in the aforementioned cash pool as well as in 85                    
percent of the Common Stock.  On February 28, 1997 the                          
Company recorded a value of approximately $9,900 for 85                         
percent of the Common Stock.  In connection with the Plan of                    
Reorganization going effective, certain liabilities recorded                    
as subject to compromise were retained by the Company and                       
approximately $30,496 of such liabilities were settled which                    
resulted in a pre-tax and after-tax extraordinary gain of                       
approximately $8,122 for the year ended June 30, 1997.  An                      
additional gain of $1,174 (pre-tax and after-tax) was                           
recorded for the year ended June 30, 1998 as a result of                        
favorable resolutions of bankruptcy claims.  As of June 30,                     
1998 2,983,022 shares of common stock were issued to allowed                    
general unsecured claim holders.                                                

Under the Plan of Reorganization, the Company's plans were      
to expand its product line, primarily by sourcing new products                  
from outside manufacturers and that effort continues.  Such                     
sourcing includes entering into strategic alliances with third                  
parties in the United States, Europe and the Far East to                        
provide products or services.  In that respect, the Company's                   
efforts are focused on forging new and expanding existing                       
alliances with companies that provide technologically advanced                  
products for the small office and home office environment but                   
presently do not have a substantial United States market                        
penetration, and are intent on building or increasing market                    
penetration by selling their products under the well-known                      
"Smith Corona" name.  The Company intends to rely on its                        
existing distribution network to become a leading vendor of                     
technologically advanced products for the small office and home                 
office.  Additionally, the Company is exploring synergistic                     
opportunities in related markets that will provide new and                      
expand existing channels of distribution.  In the fall of 1997,                 
newly sourced and manufactured products were available under                    
the Smith Corona brand name. The product offerings include                      
items in the telephony and plain paper inkjet facsimile product                 
lines.  These new telephony products included a family of                       
corded, as well as cordless phones incorporating the latest in                  
900 MHz, analog, digital and spread spectrum technology.  In                    
fiscal 1999 the Company intends to continue to introduce new                    
products for home office and small office applications.  Some                   
of the new products will be systems-oriented, and intended to                   
increase personal productivity.  Further, the Company                           
determined it would maintain its core business of distributing                  
its current product line of typewriters and related supplies                    
and accessories to satisfy continuing worldwide demand for                      
these products.  The Company's long-term viability is dependent                 
upon the successful implementation of its reorganization plan                   
and the attainment of profitable operations.                                    

3. Inventories                                                                  

A summary of inventories, by major classification and                           
net of reserves, is as follows:                                                 
                      June 30,
            1998    1997

Raw materials and work-in-process         $    91       $ 4,961                 
Finished goods                        15,308     7,666                          
Total                                   $15,399      $12,627              

4. Property, Plant and Equipment                                                

            A summary of property, plant and equipment, by major classification,
is as follows:                                                                  
                          June 30,
                           1998     1997

Land                                           $   730  $   810                 
Buildings and improvements                  1,430        6,704                  
Machinery and other equipment           39,009          57,765                  
Total                                   41,169          65,279                  
Accumulated depreciation                    (34,658) (53,187)                   
Total                                    $ 6,511     $12,092              

5. Accrued Liabilities                                                          

Accrued liabilities consist of the following:                                   

                        June 30,
                            1998      1997

Promotional expenses                    $2,198  $ 3,940                         
Payroll and related expenses              1,981    3,297                        
Warranty expenses                              844      1,067                   
Bankruptcy expenses                           75           1,762                
Other                                    3,106    1,548                         

Total                                 $8,204       $11,614            

6. Leases                                                                       

The Company leases certain facilities, equipment and                            
vehicles for various periods through 2003 under                                 
non-cancelable operating leases.  Rental expense under                          
these operating leases was $1,493, $3,461 and $4,184 for                        
the years ended June 30, 1998, 1997 and 1996,                                   
respectively.                                                                   

The future minimum rental commitments for the operating                         
leases are as follows:                                                          
Year Ending                                                                     
June 30,        Amount                                                          

1999            $  622                                                          
2000            583                                                             
2001               545                                                          
2002                10                                                          
2003                6                                                           
Thereafter      2                                                               
Total   $1,768                                                                  

The Company subleases a portion of its San Diego                
distribution facility.  Rental income under this sublease was                   
$38 for the year ended June 30, 1998 and will be                                
approximately $65 each year until sublease expiration in May                    
2001.                                                                           

7. Bank Loans                                                                   

On February 28, 1997, the Company entered into a loan                           
and security agreement (the "Loan and Security                                  
Agreement") with a new lender.  The Loan and Security                           
Agreement provides for extensions of revolving credit                           
loans, term loans and letters of credit, limited to a                           
percentage of eligible accounts receivable and                                  
inventories in the amount not to exceed $25,000 through                         
the February 28, 2000 expiration date.  Interest is .75                         
percent over the Prime Rate or 3 percent over the                               
Adjusted Eurodollar Rate.  Payment of dividends is                              
prohibited by the terms of the Loan and Security                                
Agreement, except for non-cash dividends pursuant to the                        
Rights Agreement (as described in Note 8). Pursuant to                          
the provisions of the Loan and Security Agreement the                           
Company must maintain an adjusted net worth of $11,074.                         
Management believes that it has adequate flexibility                          
and that such a covenant should not impose an undue                             
restriction on the operations of the Company.  The Loan                         
and Security Agreement is secured by all of the                                 
Company's assets.                                                               

There were no borrowings or repayments under the                                
Company's credit facilities during the years ended June                         
30, 1998 and 1997. However, aggregate borrowings under                          
the Company's prior credit facility for the year ended                          
June 30, 1996 amounted to $1,330,700, while aggregate                           
repayments were $1,348,100.                                                     

8. Stockholders' Equity                                                         

Common Stock                                                                    

As of the Effective Date, the Company has authorized                            
100,000,000 shares of Common Stock, par value $.001 per                         
share.  Prior to the Effective Date the Company had                             
authorized 90,000,000 shares of Old Common Stock.                               

Preferred Stock                                                                 

As of the Effective Date, the Company has authorized                            
10,000,000 shares of preferred stock, par value of $.001 per                    
share.  The Company has reserved for issuance 10,000 shares                     
of Preferred Stock, Series A, whose terms are fixed by the                      
Rights Agreement.                                                               

Rights Agreement                                                                

On February 28, 1997, pursuant to the Plan of Reorganization,                   
the Board of Directors of the Company declared a dividend                       
distribution of one Right for each outstanding share of                         
Common Stock, payable to stockholders of record at the close                    
of business on such date and payable with respect to Common                     
Stock issued thereafter.  Each right, when it becomes                           
exercisable, entitles the registered holder to purchase from                    
the Company one one-thousandth of a share (a "Unit") of                         
Preferred Stock, Series A at a purchase price of $25.50 per                     
Unit, subject to adjustment.  The Rights attach to all                          
certificates representing shares of Common Stock, and no                        
separate certificates evidencing the Rights were distributed.                   
The Rights will separate from the Common Stock and will be                    
exercisable upon the earlier of (i) ten days (or such later                     
date as the Board of Directors shall determine) following                       
public disclosure that a person or group of affiliated or                       
associated persons has become an "Acquiring Person" (as                         
defined below) or (ii) ten business days (or such later date                    
as the Board shall determine) following the commencement of a                   
tender offer or exchange offer that would result in a person                    
or group becoming an "Acquiring Person".  Except for certain                    
claimants under the Plan of Reorganization, for whom the                        
percentage is higher, an "Acquiring Person" is a person or                      
group of affiliated or associated persons who has acquired                      
beneficial ownership of 15 percent or more of the outstanding                   
shares of Common Stock.  The term "Acquiring Person" excludes                   
(i) the Company, (ii) any subsidiary of the Company, (iii)                      
any employee benefit plan of the Company or any subsidiary of                   
the Company or (iv) any person or entity organized, appointed                   
or established by the Company for or pursuant to the terms of                   
any such plan.  The Rights, which do not have voting rights,                    
will expire on February 28, 2007 unless extended or earlier                     
redeemed by the Company.                                                        

In the event that a person becomes an Acquiring Person,                         
each holder of a Right will have the right to receive,                          
upon exercise of the Right, Common Stock having a value                         
equal to two times the exercise price of the Right.                             
Rights that are owned by any Acquiring Person will be                           
null and void.  In the event that a person has become an                        
Acquiring Person and the Company is acquired in a merger                        
or other business combination transaction in which the                          
Company is not the surviving corporation, or more than                          
50 percent of the Company's assets or earning power is                          
sold, each holder of a Right (except Rights which                               
previously have been voided as set forth above) shall                           
thereafter have the right to receive, upon exercise,                            
common stock of the acquiring company having a value                            
equal to two times the exercise price of the Right.                             

The Rights may be redeemed by the Company at a price of                         
$.001 per Right at any time until ten days following the                        
date on which a person has become an Acquiring Person.                          

Warrants                                                                        

Also on the Effective Date, the Company issued warrants to                      
stockholders of record as of August 15, 1996 of the Old                         
Common Stock.  Eligible stockholders received one warrant to                    
purchase one share of Common Stock for every 20 shares of the                   
Old Common Stock held by them.  The Old Common Stock was                        
canceled on the Effective Date.  The exercise price of the                      
warrants is $8.50 per share.  The warrants may be exercised                     
at any time from August 28, 1997 to February 28, 1999.  As of                   
June 30, 1998, there were 1,512,073 warrants outstanding.  In                   
the twelve months ended June 30, 1998, 350 warrants were                        
exercised.                                                                      

Restricted Stock                                                                

Pursuant to the Plan of Reorganization, the Chief Executive                     
Officer, Chief Financial Officer, Executive Vice                                
President/Sales and Marketing and at the discretion of the                      
Chief Executive Officer, other officers of the Company may be                   
granted up to 5 percent of the total shares of Common Stock                     
which are issued under the provisions of the Plan of                            
Reorganization on a fully diluted basis (not including the                      
effect of the exercise of any of the above warrants).  The                      
number of shares of the Company's Common Stock awarded and                      
outstanding under this plan as of June 30, 1998 and 1997 were                   
135,282 and 93,894 respectively.  In the twelve months ended                    
June 30, 1998, 41,388 shares were awarded.  Additionally,                       
under the provisions of the Employee Stock Incentive Plan (as                   
hereinafter described) the Company issued 23,000 shares of                      
Common Stock to employees during the twelve months ended June                   
30, 1998.  Rights to these shares vest on the second                            
anniversary of the Effective Date (the "Restriction Period")                    
or upon a change in control.  The market value of these                         
shares at the date of award is reflected as deferred                            
compensation in Stockholders' Equity and is being amortized                     
over the Restriction Period. During the twelve months ended                     
June 30, 1998 $251 of compensation expense was recorded.                        

Employee Stock Incentive Plan                                                   

Pursuant to the Plan of Reorganization, the Company                             
implemented an employee stock incentive plan, which provides                    
for the issuance of up to 10 percent of the total shares of                     
Common Stock (or options to acquire such shares) which are                      
issued pursuant to the provisions of the Plan of                                
Reorganization on a fully diluted basis (not including the                      
effect of the exercise of any of the above warrants). As of                     
June 30, 1998 23,000 shares of Common Stock (see Restricted                     
Stock) and  144,625 options to acquire Common Stock were                        
awarded and outstanding under this plan.  Options were                          
granted on January 15, 1998 at an exercise price of $6.125,                     
the fair market value of the Common Stock at that date.                         
Forty percent of the options become exercisable March 1, 1999                   
and twenty percent on January 15, 2000, 2001 and 2002.  The                     
options expire seven years after the date of grant.  The                        
weighted average fair value of options granted in the twelve                    
months ended June 30, 1998 was $555 and was estimated by                        
using the Black Scholes pricing model.  The assumptions used                    
in determining the weighted average fair value options                          
included (i) expected life of four years, (ii) risk-free                        
interest rate of 5.5 percent, (iii) volatility factor of .813                   
and (iv) dividend yield of zero percent.  Had compensation                      
cost for the nonqualified stock option been determined based                    
on their estimated fair market value at the date of grant,                      
the Company's net loss for the twelve months ended June 30,                     
1998 would have increased by $64 or $.02 per basic and                          
diluted share.                                                                  

9. Geographic Area Information                                                  

The Company operates predominantly in one industry                              
segment which includes marketing and distribution of                            
products to the small office and home office markets.                           
The products include typewriters and related supplies                           
and accessories as well as offerings in the telephony                           
and facsimile categories.  The Company distributes its                          
products through a variety of distribution channels,                            
domestically and internationally.  Transfers between                            
geographic areas are generally priced to recover cost                           
plus an appropriate markup for profit.  Information                             
regarding the Company's operations in different                                 
geographic locations is shown below:                                            

                           For the year ended June 30,
                                  1998          1997            1996
Net sales to customers:                                                         
   United States                     $ 53,306           $67,918         $ 90,470
Europe                              3,593         6,848          17,773   
Other Foreign                        2,025        2,547           4,305   
Total                       $ 58,924         $77,313        $112,548

Inter-area transfers:                                                           
United States                    $  3,293       $ 5,147        $ 11,287   
Singapore                           -                 -      22,480       
Europe                                 98           415               -   
Other Foreign                        3,860        8,890           6,735   
Total                       $  7,251         $14,452        $ 40,502

Operating income (loss):                                                        
United States                     $   (598)    $ 8,177         $(14,944)  
Singapore                         (119)           (110)         15,737    
Europe                             (3,082)      (4,234)         (6,461)   
Other Foreign                         (637)       (549)           (730)   
Corporate                       (4,061)         (4,142)         (3,815)   
Eliminations                          -               -         1,637     
Total                       $ (8,497)     $  (858)        $ (8,576) 

Identifiable assets:                                                            
United States                     $ 42,821       $51,535      $ 69,036    
Europe                              2,675          3,778         8,548    
Other Foreign                        4,591         5,316         6,288    
Total                       $ 50,087          $60,629      $ 83,872 

Sales to one of the Company's largest customers, Wal-                           
Mart Stores, Inc., amounted to 29.7%, 19.8% and 11.4% of                        
consolidated net sales during 1998, 1997 and 1996,                              
respectively.  Additionally, in 1996, sales to Office                           
Depot amounted to 10.1% of consolidated net sales.  The                         
above customers were the only customers responsible for                         
more than 10% of net sales in the periods noted.                                

10. Pension Plans and Postretirement Benefits                                   

On September 1, 1996, the Company discontinued future         
benefit accruals under its salaried defined benefit pension                     
plan (the "Salaried Plan") and as of October 6, 1996                            
terminated the hourly defined benefit pension plan (the                         
"Hourly Plan").   The freezing of benefit accruals resulted                     
in a $3,394 curtailment gain recorded in selling, general and                   
administrative expenses during the three months ended                           
September 30, 1996.                                                             

The Salaried Plan generally provides 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 of the                          
last ten consecutive years of service before retirement.                        
The Hourly Plan generally provides benefits of stated                         
amounts for each year of service.   The Company's policy                        
has been to fund, at a minimum, the amount necessary on                         
an actuarial basis to provide for benefits in accordance                        
with requirements of the Employee Retirement Income                             
Security Act of 1974 ("ERISA").                                                 

The net periodic pension cost (income) for the years                  
ended                                                                           
June 30, 1998, 1997 and 1996 is comprised of the following                      
components:                                                                     

              1998       1997           1996

Service cost                   $   393  $    512         $1,455                 
Interest cost                   2,929      4,185          5,656                 
Return on plan assets:                                                          
Actual                      (4,657)     (8,845) (7,347)                       
Unrecognized loss                 1,385           4,162          1,498        
Amortization of deferred                                                        
costs and actuarial gains           -        -           (227)              
Settlement gain                   -       (8,598)            -                  
Net curtailment gain                 -    (3,394) (1,524)                       
Pension cost (income)         $    50   $(11,978)       $ (489)                 

The net curtailment gains for 1997 and 1996 were a                    
result of the freezing of benefit accruals and the May 1995                     
restructuring, respectively. The settlement gain is a result                    
of termination of the Hourly Plan and is included as a                          
component of the extraordinary gain recorded in 1997.                           

The assumptions used in the development of these amounts were:        

                1998            1997        1996

Discount rate                  6.75%        7.50%          7.50%                
Rates of increase in                                                            
compensation levels        4.50%         4.50%          4.50%             
Rate of return on                                                               
plan assets                9.00%         9.25%          9.25%             

The following table sets forth the funded status of the                     
Salaried Plan and amounts recognized in the Company's                           
consolidated balance sheets:                                                    

                   Year ended June 30,
                       1998               1997
Projected benefit obligation     $45,623                $41,221                 
Fair value of assets                                                            
(principally publicly traded                                                  
securities)                   $42,841         $42,297                       
Funded status                   $ 2,782         $(1,076)                        
Unrecognized gains                   2,045                5,853                 
Net accrued pension liability   $ 4,827         $ 4,777                         

Summary information on the Company's Salary Plan in the                     
year ended June 30, 1998 and Salary Plan and Hourly Plan in                     
the year ended June 30, 1997 is as follows:                                     
                                   Year ended June 30,
                                 1998         1997

Change in Projected Benefit Obligation:                                         
Benefit obligation at the                                                   
beginning of the year                           $41,221        $78,822    
Service cost                                   393          512             
Interest cost                               2,929         4,185             
Assumption change                               5,588    (4,077)            
Curtailment/Settlement gain                       -     (33,419)            
Actuarial (gains) loss                       (395)       1,361              
Benefits paid                                (4,113)    (6,163)             
Benefit obligation at the end                                               
of the year                               $45,623     $41,221             

                                         Year ended June 30,
                                 1998         1997
Change in Plan Assets:                                                          
Fair value of plan assets at                                                
the beginning of the year                    $42,297   $68,766            
Actual return on plan assets                  4,657       8,845             
Employer contributions                                  -           904     
Benefits paid                               (4,113)     (6,163)             
Settlement                                         -    (30,055)            
Fair value of plan assets at                                                
the end of the year                             $42,841        $42,297    

       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                    
$241, $254 and $337 for the years ended June 30, 1998, 1997                     
and 1996, 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.                                                                        

Effective January 1, 1998 retired employees were                      
required to absorb incremental increases in the total cost of                   
health care premiums. By January 1, 2000, retired employees                     
will absorb 100% of the health care premium.  Furthermore,                      
the Company decided to terminate life insurance benefits for                    
retired employees effective January 1, 2000.  These changes                     
resulted in a net curtailment gain of $6,534 which was                          
recorded in selling, general and administrative expenses                        
during the fourth quarter of the year ended June 30, 1997.                      

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

                                   Year ended June 30,
                                  1998          1997

Change in Benefit Obligation:                                                   
Benefit obligation at the                                                   
beginning of the year                        $1,248      $9,573           
Service cost                                 -                83            
Interest cost                              68        687                    
Participant's contributions                 489              609            
Curtailment gain                                 -        (6,534)           
Actuarial gains                                (223)    (1,896)             
Benefits paid                            (1,063)         (1,274)            
Benefit obligation at the end                                               
of the year                            $  519            $1,248           

                                   Year ended June 30,
                                   1998           1997

Financial status of plans:                                                      
Accumulated postretirement                                                    
benefit obligation (APBO):                                                  
Retirees                                  $  519         $1,248           
Fully eligible, active                                                    
plan participants                           -                 -         
Other active plan                                                         
participants                                     -            -         
Unrecognized gains                       3,327             4,656          
Accrued postretirement                                                        
benefit cost                            $3,846             $5,904           

The components of net periodic postretirement benefit                 
income are as follows:                                                        
                     Year ended June 30,
                                   1998           1997

Service cost                               $     -          $    84             
Interest cost                                 68                687             
Amortization of gains                      (1,552)            (164)             
Net curtailment gain                             -           (6,534)            
Net periodic postretirement benefit                                             
income                                 $(1,484)           $(5,927)            

The net curtailment gains were primarily the result of                
the change in postretirement benefits in the year ended June                    
30, 1997.                                                                       

The discount rate used in determining the APBO was 6.75               
% in 1998 and 7.5% in 1997.  The assumed health care cost                       
trend rate used in measuring the accumulated postretirement                     
benefit obligation was 9.5% and 10.0% in 1998 and 1997,                         
respectively, declining to an ultimate rate of 5.5% to the                      
year 2005 and beyond.                                                           

The impact of changing the health care cost trend rate                
assumptions by 1.0% is not material to the plans.                               

12. Income Taxes                                                                

The components of loss from continuing operations before income taxes 
are as follows:                                                                 
                                   Year ended June 30,
                                               1998        1997           1996

United States                             $(4,922)       $3,124 $(21,590)       
Foreign                                  (2,512)         (3,656)        12,499  
   Total                                       $(7,434)         $ (532)$ (9,091)

The components of income tax expense consist of:                      

                                   Year ended June 30,
                                               1998            1997       1996
United States:                                                                  
Current                                     $   -      $   -  $(1,921)    
Deferred                                       -           -    2,217     
Foreign                                     158      104           1,218        
State                                         186            159             517
   Total                                        $  344     $ 263         $ 2,031

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

                                   Year ended June 30,
                                               1998       1997            1996

Continuing operations                      $  344          $263          $2,031 
Extraordinary Gain                                 -           -               -
  Total                                        $  344     $263          $2,031

The components of net deferred tax assets were as follows:                      

                                        June 30,
                                1998      1997
Deferred tax assets:                                                            
Accounts receivable                    $   664        $1,066                
Inventory                                  2,076       1,960                
Prepaid and other current assets            2,038      2,363                
Postretirement benefits                                                     
other than pensions                    1,470          2,257               
Pension                                      1,845     1,825                
Restructuring                              -     469                        
Other liabilities                          3,902       4,050                
Property, plant and equipment          1,936   3,291                        
Net operating loss carryforwards           27,253     21,195                
Capital loss carryforwards                7,494       7,515                 
Miscellaneous                                 2,163   2,615                 
Valuation allowances                 (50,841)(48,606)                       
Net deferred tax assets                 $     - $     -                     

The valuation allowances for the year ended June 30,                  
1998 increased by $2,235 to provide for the full                                
valuation of all deferred income tax assets.  For the                           
year ended June 30, 1996, the Company recorded a charge                         
to income tax expense increasing valuation allowances to                        
provide for full valuation of all of its deferred income                        
tax assets.                                                                     

In the consolidated balance sheet for the year ended            
June 30, 1998, refundable taxes of $2,306 are included in                       
prepaid expenses and other current assets.  The current                         
and long-term portion of a federal tax note payable of                          
$848 and $2,366, respectively are included in accrued liabilities               
and other long-term liabilities, respectively, at June 30, 1998.                

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:                                                          

                                   Year Ended June 30,
                               1998        1997           1996
Loss from continuing                                                            
  operations before income taxes         $(7,434)        $ (532)        $(9,091)
Statutory tax rate                          34%      34%             34%        
Tax computed at statutory rate      (2,527)     (181)    (3,091)                
Increase (reduction):                                                           
State income taxes,                                                             
net of federal benefit             (40)      2,980           405          
Effect of foreign earnings               1,059          1,661       (930)       
Valuation allowance                     2,235   (6,956)   8,425                 
Other adjustments                    (383)       2,759    (2,778)               
Total                                $   344         $  263   $ 2,031     

The other adjustments of $2,759 for the year ended June                         
30, 1997 resulted primarily from permanent                                      
capitalization of certain professional services related                         
to the Bankruptcy Proceedings for income tax purposes.                          
The other adjustments of $2,778 for the year ended June                         
30, 1996 primarily relate to adjustments to current                             
taxes payable for the results of the Internal Revenue                           
Service and New York State tax examinations.                                    

All U.S. income tax returns through June 30, 1995 have                          
been examined by the Internal Revenue Service.                                  
Additionally, the New York State tax authority completed                        
its examination of all returns through June 30, 1995.                           
The U.S. income tax return for the year ended June 30,                          
1996 is currently under examination by the Internal                             
Revenue Service.  Management does not expect a material                         
adjustment to result from this examination.                                     

For U.S. federal income tax purposes the Company has a                          
net operating loss carryforward of approximately $28,759                        
which will expire on June 30, 2013.  In addition, the                           
Company has net operating losses attributable to its                            
foreign subsidiaries of approximately $41,490 of which                          
approximately $36,110 may be carried forward                                    
indefinitely and the remaining amount will expire in                            
five to seven years.  The tax benefit of the net                                
operating loss carryforwards has been fully offset by                           
valuation allowances.                                                           

13. Commitments and Other Matters                                               

Certain aspects of the Company's past handling and/or                           
disposal of hazardous substances have been the subject                          
of investigation by federal and state regulatory                                
authorities, or have been the subject of lawsuits filed                         
by such authorities or by private parties.  At June 30,                         
1998 and June 30, 1997, the Company had recorded                                
liabilities of approximately $1,889 and $2,952,                                 
respectively, related to environmental matters.  Because                        
of the uncertainties associated with assessing                                  
environmental matters, the related ultimate liabilities                         
are not presently determinable.  However, based on facts                        
presently known, management does not believe that these                         
investigations, 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 was the owner and operator of manufacturing                         
facilities in Groton, New York (the "Groton Site") and                          
Cortlandville, New York (the "Cortlandville Site" and,                          
together, the "Owner/Operator Sites").  The Company's                           
liability, if any, at the Owner/Operator Sites stems                            
from groundwater contamination at the Cortlandville Site                        
and soil contamination at the Groton Site. The                                  
remediation program at the Cortlandville Site currently                         
consists of round-the-clock pumping and filtering.  The                         
soil venting with a soil infiltration injection system                          
at the Groton Site is now reduced to periodic soil and                          
water sampling. A decommissioning plan for the Groton                           
site has been approved and decommissioning activities                           
have commenced.  To the Company's knowledge, the only                           
future costs that will be associated with remediation of                        
those sites are for operation, maintenance, monitoring,                         
shutdown, and post-shutdown of the systems.  Under the                          
Plan of Reorganization, the Company will continue to be                         
responsible for those costs.  The Company believes that                         
it has set aside adequate reserves for the payment of                           
expenses for the ongoing remediation programs at the                            
Groton and Cortlandville Sites.                                                 

The Company is also engaged in various other legal              
actions that have arisen in the ordinary course of its                          
business.  It is the opinion of management 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.                       

The Company has severance agreements in place with                              
certain executive officers.  Substantially all the                              
agreements expire by March 1, 2000 and provide for                              
severance benefits of one year salary and aggregate                             
approximately $460 in the event all employees under such                        
severance agreements were involuntarily terminated.                             
Subsequent to June 30, 1998 the Chief Executive Officer                         
of the Company terminated employment and was paid under                         
his severance agreement.                                                        

14. Restructuring Costs                                                         

On May 8, 1995 the Company announced a major                                  
Restructuring whereby the Company?s typewriter                                  
manufacturing would be relocated from its Singapore and                         
Batam Island, Indonesia facilities to its Mexico                                
facility.  This action resulted in the termination of                           
approximately 1,300 workers in Singapore and Batam                              
Island.  The Company ceased production in Singapore and                         
Batam Island, Indonesia in November 1995, and relocated                         
equipment to Mexico where typewriter production                                 
commenced in December 1995.  The Company sold certain of                        
its Singapore machinery and equipment for proceeds of                           
approximately $2,333 resulting in a loss of                                     
approximately $1,489 which was accrued as part of the                           
Fiscal 1995 restructuring charge.  Additionally, the                            
Company sold its Singapore facility and the underlying                          
land lease on February 8, 1996 for net proceeds of                              
approximately $21,041.  The sale of the facility                                
resulted in a third quarter pretax gain of approximately                        
$17,755 and is included in restructuring income.                                

In addition to the relocation of typewriter                                     
manufacturing to Mexico, the Company also eliminated                            
approximately 180 support positions within the research                         
and development, finance, service, distribution, selling                        
and marketing areas in both its Cortland, New York and                          
New Canaan, Connecticut locations.  Approximately                               
$10,000 in additional annual pretax savings were                                
realized during the year ended June 30, 1997 from                               
elimination of these support positions.  These                                  
reductions were completed by the end of the first                               
quarter of Fiscal 1996 and resulted in a first quarter                          
pension curtailment gain of approximately $1,524 and                            
were included in restructuring expense (income) for the                         
third quarter of Fiscal 1996.                                                   

As a result of these actions, the Company recorded a                            
pretax charge of approximately $14,870 in the fourth                            
quarter of the year ended June 30, 1995, of which                               
approximately $1,877 represented primarily non-cash                             
machinery and equipment asset write-offs, and the                               
remainder related to employee severance.  Additionally,                         
certain costs, primarily relating to the shutdown of                            
Singapore operations, of approximately $1,622, pretax                           
were recognized as charges to operations as incurred                            
during the year ended June 30, 1996 as they did not                             
qualify as restructuring costs.                                                 

15. Quarterly Financial Data (Unaudited)                                        

Fiscal Year Ended                       First     Second     Third     Fourth   
June 30, 1998                       Quarter   Quarter(1) Quarter   Quarter(1)   
Net sales                               $14,792   $17,005        $15,096 $12,031
Gross margin                           3,251        4,786            4,496 1,009
Operating income (loss)            (1,502)         1,552         (3,177) (5,370)
Income (loss) before                                                            
 extraordinary gain                    (1,459)          1,725    (2,907) (5,137)
Extraordinary gain (2)                   -            460               -    714
Net income (loss)                       $(1,459)       $ 2,185 $(2,907) $(4,423)

Earnings (loss)per                                                              
common share - basic:                                                         
Income (loss) before                                                        
   extraordinary gain               $  (.55)     $   .63       $ (1.02) $ (1.75)
  Extraordinary gain                       -          .17                -   .24
  Net income (loss)                   $  (.55)   $   .80       $ (1.02) $ (1.51)

Weighted average common                                                         
  shares (000's omitted)                   2,677            2,708    2,845 2,935

Earnings (loss)per                                                              
common share - diluted:                                                       
Income (loss) before                                                        
   extraordinary gain               $  (.55)     $   .62       $ (1.02) $ (1.75)
  Extraordinary gain                       -          .16               -    .24
  Net income (loss)                   $  (.55)   $   .78       $ (1.02) $ (1.51)

Weighted average common                                                         
  shares (000's omitted)                   2,677            2,793    2,845 2,935

Fiscal Year Ended                       First      Second     Third     Fourth  
June 30, 1997                       Quarter(3) Quarter    Quarter   Quarter(4)  
Net sales                               $20,986    $22,463       $16,905 $16,959
Gross margin                           3,929         6,112           2,917 4,952
Operating income (loss)                73           (2,607)        (3,255) 4,931
Income (loss) before                                                            
 extraordinary gain                        85       (2,636)        (3,186) 4,942
Extraordinary gain (2)                   -               -           8,122     -
Net income (loss)                       $    85    $(2,636)      $ 4,936 $ 4,942

Earnings (loss) per common                                                      
share - basic:                                                                
Income (loss) before                                                        
   extraordinary gain               $  .04         $ (1.19)     $ (1.44)  $ 1.94
  Extraordinary gain                      -               -           3.67     -
  Net income (loss)                  $  .04        $ (1.19)       $  2.23 $ 1.94

Weighted average common                                                         
  shares (000's omitted)(5)            2,215          2,215          2,215 2,551

Earnings (loss) per common                                                      
share - diluted:                                                              
Income (loss) before                                                        
   extraordinary gain              $   .04        $ (1.19)       $ (1.44) $ 1.89
  Extraordinary gain                      -              -             3.67    -
  Net income (loss)                 $   .04        $(1.19)         $ 2.23 $ 1.89

Weighted average common                                                         
  shares (000's omitted)(5)            2,215         2,215           2,215 2,610

(1) Includes gain on sale of manufacturing operations for $3,700 and $202 in    
the second and fourth quarters, respectively.                                   
(2) Extraordinary gain resulted from the Company's Plan of Reorganization       
(see footnote 2)                                                                
(3) Includes pension curtailment gain of approximately $3,400.                  
(4) Includes postretirement curtailment gain of approximately $6,500.           
(5) For the first, second and third quarters in the fiscal year ended           
June 30, 1997, the weighted average common and common equivalent        
shares outstanding are based on the weighted average number of          
common shares outstanding from the Effective Date until March 31,       
1997.                                                                   

16. Subsequent Event                                                            

Effective September 28, 1998, the Company's Board of            
Directors approved a restructuring program which includes: i.)                  
the elimination of approximately 130 positions primarily located                
at the Company's Corporate Headquarters in Cortland, New York,                  
ii.) the sale or lease of the building in Cortland, New York,                   
iii.) relocation of the Corporate Headquarters to more efficient                
facilities.  The Company expects the restructuring program to be                
completed by June 30, 1999.  As a result of these actions, the                  
Company will record a first quarter pre-tax charge, principally                 
for severance payments, of approximately $1,200.                                

Financial Statement Schedule II                                                 

SMITH CORONA CORPORATION AND SUBSIDIARIES                                       
VALUATION AND QUALIFYING ACCOUNTS                                               
For the years ended June 30, 1998, 1997 and 1996                                
(In thousands)                                                                  

                                          Balance at
                                        Beginning   Costs and Reductions- End of
                                        of Period      Expenses Writeoffs Period

Year ended June 30, 1998:                                                       
Allowance for doubtful                                                        
   trade receivables                 $   931         $    51        $  344 $ 638
Allowance for inventory                                                       
   obsolescence and shrinkage       $ 5,415         $ 1,056      $ 1,460 $ 5,011

Year ended June 30, 1997:                                                       
Allowance for doubtful                                                        
   trade receivables                 $ 1,576         $   394       $ 1,039 $ 931
Allowance for inventory                                                       
   obsolescence and shrinkage       $ 7,552          $ 2,364     $ 4,501 $ 5,415

Year ended June 30, 1996:                                                       
Allowance for doubtful                                                        
   trade receivables                 $ 1,484         $  523        $ 431 $ 1,576
Allowance for inventory                                                       
   obsolescence and shrinkage       $10,595          $5,199      $ 8,242 $ 7,552

EXHIBIT INDEX                                                                   
EXHIBIT #                                                                       

10.18   Smith Corona Corporation Stock Incentive Plan                           
21      Schedule of Subsidiaries of the Registrant                              
27      Financial Data Schedule (Edgar Filing Only)                             

11                                                                              

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-K’ Filing		Date		Other Filings
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		2/28/07
		1/15/02
		1/15/01
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		1/15/00
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		6/30/99		10-K,  DEF 14A
		3/1/99
		2/28/99
		10/1/98
Filed on:		9/28/98		DEF 14A
		9/14/98
		9/1/98
		8/21/98
		8/3/98		8-K
		7/22/98
		7/17/98
For Period End:		6/30/98		DEF 14A
		5/23/98
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		6/30/97		10-K,  DEF 14A
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		3/31/97		10-Q
		2/28/97
		1/30/97		8-A12G
		1/27/97		8-K
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		10/31/96
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		9/30/96		10-K,  10-Q
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		6/30/96		10-K
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		6/30/95		10-K
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		5/8/95
		6/30/94		10-K,  8-K,  DEF 14A,  NT 10-K
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