One Albion Road
Cross is a rapidly evolving company, poised to ignite its business and be the innovative leader. We understand the importance of making our products relevant to today's consumer. We will provide consumers with distinctive and inspiring products to help them express their thoughts, feelings and style.
The largest and oldest manufacturer of fine writing instruments in the United States, A.T. Cross Company produces a broad line of high-quality pens, pencils, and other gift items and markets them in more than 140 countries worldwide. For decades a much-coveted status symbol, Cross writing instruments were first made in 1846, when Alonzo Townsend Cross founded the company. Over the ensuing century and a half, the Cross brand developed into one of the strongest names in U.S. business, becoming a fixture in homes and offices everywhere. A.T. Cross encountered rough sledding in the 1990s as sales of pens dramatically slowed, and the company hoped to return to its past glory in the early 21st century through the introduction of "hipper" new products and by diversifying outside its core area in order to evolve into a personal accessories firm.
Two generations of the Cross family directed the fortunes of A.T. Cross during its first six decades of business. The most famous of the Crosses and the man who lent his name to the enterprise was the company's founder, Alonzo Townsend Cross, a 19th-century English inventor who steered his family into pen manufacture in 1846 in the state of Rhode Island--the birthplace and headquarters of A.T. Cross Company. Though the formative efforts of Alonzo Townsend Cross and his descendants gave the company its name and a stable foundation upon which to build, another family--the Bosses--exerted greater influence over the history of A.T. Cross's development and controlled the company for a longer period of time. During most of the 1990s, the third generation of the Boss family, led by Bradford R. Boss and Russell A. Boss, superintended A.T. Cross's operation, having gained their executive positions atop the A.T. Cross corporate ladder by virtue of Walter Boss's acquisition of the company from the Cross family in 1916. From 1916 forward and from Walter Boss downward, the Boss family built Cross into one of the most recognizable brands in the history of American business.
For all intents and purposes, A.T. Cross, while under the stewardship of the Boss family, created the market for high-priced, prestigious pens in the United States, emerging as the first U.S. manufacturer of fine writing instruments with any appreciable might to compete in an arena dominated by foreign manufacturers. Before A.T. Cross's rise in the fine writing instrument field, the overwhelming majority of pens accorded any prestige were fountain pens manufactured more often than not in Europe; A.T. Cross changed all that with its slender, high-quality ballpoint pens, throwing aside consumer tastes of the past and creating a new trend that consumers wholly embraced.
In the years following the conclusion of World War II, ballpoint pens eclipsed fountain pens as the writing instrument of choice for those seeking the rarified air an elegant writing instrument could impart to its owner. It was a trend sparked by and benefited from by A.T. Cross, whose silver and gold metal pens and their lifetime warranty of superior performance were the rage for decades. The company was meticulous in its approach to the manufacture of mechanical pens and pencils, dictating exacting standards that A.T. Cross employees adhered to throughout the roughly 150 assembly steps involved in producing Cross writing instruments. Much of this assembly work was done by hand at the company's headquarters in Lincoln, Rhode Island, where skilled employees, each functioning as a quality-control expert, closely monitored the complicated process of making one of the world's most esteemed products. If a Cross writing instrument did not conform to manufacturing tolerances that were as precise as ensuring that engraved grooves were within one ten-thousandth of an inch of perfection, or if a Cross writing instrument demonstrated the slightest hint that its ink ball might clot, the product was summarily discarded. As a result, fewer than 2 percent of A.T. Cross's writing instruments were returned to the company's headquarters under its much publicized lifetime warranty.
Equally as important as A.T. Cross's emphasis on manufacturing a flawless product was the image associated with the company's writing instruments, which during the 20th century became synonymous with achievement, class, and sophistication. Cross writing instruments stood as ubiquitous symbols of distinction, prized gifts given to graduates, ascending corporate executives, and anyone else upon whom honor could be bestowed. The emergence of the Cross name as one of the most prestigious brand names in the business world was predicated on the company's renowned attention to the quality of its products and then successfully articulated by effective marketing.
Initial Public Offering in 1971
Underpinned by product quality and global name recognition, A.T. Cross evolved into the preeminent, stalwart force in its industry, dominating competitors and holding a tight grip on the market for fine writing instruments. Perennially, the company controlled 40 percent of the market for fine writing instruments, a market share that gave other writing instrument manufacturers little hope of ever mounting a successful attack on the industry leader. As the decades of Boss leadership progressed, A.T. Cross became increasingly stronger, entrenching itself as a manufacturer and marketer without rival. It was this powerful business force that converted to public ownership in 1971, ending its 125-year existence as a privately held company. In the wake of the company's first public stock offering, A.T. Cross succeeded as it never had before, posting record sales and record profits during the decade that followed its entry into the public spotlight. Between 1971 and 1981, A.T. Cross recorded an annually compounded growth rate of 19.6 percent in sales and an even more prodigious 21.6 percent in net income.
During the early 1980s, a national economic recession caused A.T. Cross's annual sales to dip nearly 10 percent and earnings more than 20 percent in 1982, but despite the temporary stain on the company's otherwise exemplary financial record since the 1971 initial public offering, Bradford and Russell Boss were sitting atop the largest and oldest maker of high-priced pens and pencils. Their company was the reigning champion in a $500-million-a-year market, but changes in A.T. Cross's structure and corporate strategy were being orchestrated by the two brothers that would alter the future course taken by their long-held family business.
The corporate strategy implemented during the early 1980s was born during the late 1970s, when the two Boss brothers were cruising Narragansett Bay in a chartered yacht after watching the America's Cup trials. It was the summer of 1977, and the two brothers were discussing A.T. Cross's business. At the time, their company derived 70 percent of its total sales from purchases of Cross products as gifts, which led the two Boss brothers to think about expanding and diversifying into other gift products. As the implications of their discussion on Narragansett Bay set in, the two brothers began to reshape their product lines to reflect and tap into the gift merchandising expertise acquired during the more than century-long existence of A.T. Cross, but six years would pass before Bradford and Russell Boss made their decisive move.
After years of contemplating what the appropriate acquisition for A.T. Cross to execute might be, the two brothers finally made their move in 1983. In October of that year, A.T. Cross acquired Mark Cross, Inc., a privately held company that coincidentally shared the Cross name with its new parent company. A.T. Cross paid $5.5 million for Mark Cross, a store-chain and mail-order retailer of high-priced luggage, handbags, briefcases, other leather goods, and assorted gifts. The bid to acknowledge its gift-business expertise gave A.T. Cross a chain of 17 company-and-licensee-owned retail stores and a mail-order business that added more revenue muscle to an enterprise already posting record financial results.
The acquisition of Mark Cross was followed by the purchase of a similarly oriented company, Manetti-Farrow, Inc., in 1987. During the years bridging these two acquisitions and the company's evolution into a business focused on the gift-giving market, A.T. Cross continued to flourish, becoming what one writing instrument retailer referred to as "a cleverly disguised gift manufacturer." Annual sales marched upward with each passing year, with the company's roughly 50 gold and sterling silver ballpoints, felt tips, desk sets, leather merchandise, and other gift products continuing to attract consumers. Known as a conservative company, Cross was methodically moving forward, yet recording financial growth that belied the staid and steady approach the nearly century-and-a-half-old business was pursuing. A.T. Cross confidently moved forward through the 1980s, reaching $247 million in sales and $36 million in net income by the end of the decade. As the 1990s neared, the road ahead appeared to lead toward continued success, prompting A.T. Cross's manager of product marketing to note in Adweek's Marketing Week, "We do not just catch on to a trend. We may not have the most timely approach, but we'll have the best-researched product."
Changes in the Early 1990s
The dynamics of the fine writing instrument market were changing, however, as A.T. Cross headed into the 1990s, and the changes underway would catch the venerable giant without a timely response to an emerging trend. Competition had begun to intensify during the mid-1980s, with Germany's Mont Blanc, France's Waterman, and other European pen manufacturers such as Lamy, Aurora, and Ferrari gaining momentum. Pushing these companies forward was the reemergence of the fountain pen as a status symbol and widely desired writing instrument, the same type of pen that A.T. Cross had helped to vanquish from the marketplace three decades earlier. In the hearts and minds of consumers, the fountain pen was back, driving the wholesale sales of the once-obsolete product upward, as people across the country turned back the clock to purchase a product that possessed what one industry observer termed "a beguiling combination of homespun utility, quiet glamour, and fashionable nostalgia."
Wholesale sales of fountain pens doubled between 1986 and 1991, but A.T. Cross, a company that prided itself on its slow and sure strategy, did not flesh out its collection of slender ballpoints with fatter fountain pens until 1990, years after the surge in demand had begun. "Cross had the market locked for so long they took it for granted," remarked one writing instrument retailer to a Forbes reporter several years after A.T. Cross introduced its "Signature" line of fountain pens. Financially, the company faltered, as annual sales and earnings fell from their record highs in 1989. By 1993, the $247 million in sales recorded in 1989 had fallen to $165 million, and net income had plunged from $36 million to $8 million, precipitous drops that caused widespread concern among A.T. Cross's executive management.
For a recovery, the fate of the company fell to the hands of Russell Boss, who began to reshape A.T. Cross during the early 1990s. Manufacturing processes were streamlined, parts inventories were reduced, and A.T. Cross employees were encouraged to take early retirement, all in the hope that the company's profitability could be restored. The changes effected saved A.T. Cross roughly $5 million annually, giving it a leaner look for the years ahead. Further changes were soon to follow, including the divestiture of its Mark Cross subsidiary in 1993. Sold 10 years after it was acquired, Mark Cross was purchased by Sara Lee Corporation, a transaction that gave A.T. Cross $7 million, and occurred at the same time the company brought to market in record time the Cross "Townsend" line. Sporting the middle name of A.T. Cross's founder, the Townsend line featured fatter and heavier pens, both in ballpoint and fountain pen models, that were decorated in several shades of lacquer as well as gold and silver metal.
On the heels of these developments, A.T. Cross formed a new products division called the Pen Computing Group in 1996 to develop merchandise complementary to its core business. During his announcement to the press about the formation of the new division, Russell Boss explained his intentions to those in attendance, saying, "In conjunction with leading high-technology companies, we will develop products that combine the functionality and beauty of our distinctive writing instrument products with state-of-the-art technology to meet the needs of this fast-growing market." With this new facet of its business providing an opportunity for growth in the future, A.T. Cross moved forward, past its 150th year of business and toward the late 1990s, still ranking as the dominant leader in its field.
Red Ink Flowing in the Late 1990s
Unfortunately, continued fierce competition and a significant slowdown in premium pen sales--sparked in part by the shift to computers--unleashed a dark period of declining sales and red ink in the late 1990s. Sales dropped steadily from the mid-1990s high of $191.1 million in 1995 to $127 million in 1999. The year 1997 brought the first of four straight years of net losses for A.T. Cross. Among a number of late 1990s cost-cutting moves was the closing down of the Manetti-Farrow subsidiary in 1997. The company also ventured unsuccessfully into the watch business in the late 1990s.
During this period, the much-ballyhooed Pen Computing Group had some initial success with its new product offerings but then the initiative fizzled out. Late in 1996 the division launched its first product, the Cross DigitalWriter, which was an inkless "pen" designed for writing on the screens of personal digital assistants (PDAs), such as the PalmPilot. During 1997 the Cross iPen debuted, generating $1 million in revenue that year. The iPen could be used to mark up and edit electronic documents on a Windows 95 PC, while at the same time performing all of the functions of a mouse. The most-hyped product that came out of the Pen Computing Group--and ultimately the biggest disappointment--was the CrossPad, an electronic notepad initially priced at $399 that enabled the user to capture electronic copies of handwritten notes and then transfer them to a PC for storing, organizing, and converting into computer text files. Developed in partnership with IBM and introduced in March 1998, the CrossPad enabled the pen Computing Group to achieve 1998 revenues of $25 million, or about 16 percent of overall company revenues. A.T. Cross's chief operating officer, John Buckley, told Barron's in June 1998 that the CrossPad had the potential to triple the company's revenues, comparing the product to the PalmPilot. Significant problems with the product's handwriting recognition software were one factor in a precipitous drop in sales in 1999, however, and the CrossPad racked up $24.3 million in losses that year, leading the company to post an overall net loss of $20.1 million. Late in 1999 production of the CrossPad was drastically reduced, and eventually, in 2001, the plug was pulled on the Pen Computing Group.
New Leadership for the New Century
In November 1999 David G. Whalen was named president and CEO of A.T. Cross. Whalen, who had been head of the North American unit of upscale sunglasses maker Ray-Ban Sun Optics, became the first person outside the Boss family to head up the company in 83 years. At the same time, Russell Boss became company chairman, and Ronald Boss was named chairman emeritus. Despite the passing of the leadership baton, Boss family interests remained in firm ownership control of the firm through their 25 percent stake in the company and their power to elect two-thirds of the board as a result of their full control of the Class B shares.
The new leader moved quickly in an attempt to turn around the company's fortunes. Early in 2000 A.T. Cross launched a restructuring of its writing instruments operations. The company's plant in Ballinasloe, Ireland, which had been in operation since 1972, was closed, and writing instrument manufacturing and distribution was consolidated at the company headquarters in Lincoln, Rhode Island. Approximately 160 jobs were cut from the payroll, and the company took a $19.9 million restructuring charge. For the year, A.T. Cross posted a net loss of $8.1 million on revenues of $130.5 million. Other developments during the year included the introduction of a new corporate logo to be used worldwide, replacing several variations that had been in use, and a renewed emphasis on new product development. New products accounted for 20 percent of revenues in 2000, a doubling from the 10 percent level of the previous year. Among the introductions was a new pen line called Morph, which featured adjustable grips. Also on the increase were sales through the company's website, cross.com, with online revenues tripling from 1999 to 2000.
Results for 2001 were something of a mixed bag. Revenues declined 5.4 percent as a result of difficult economic conditions, particularly during the second half of the year and in the wake of the events of September 11. Declines in corporate gift giving, which generally accounted for more than 20 percent of the company's business, had a significant effect on revenues. On the bright side, A.T. Cross eked out a profit, reporting net earnings of $980,000. A hip new ad campaign and slick new packaging supported a slew of new product offerings, and revenue from new products reached 30 percent. Introduced during 2001 were the Ion, a futuristic-looking chrome-plated pen that was about two inches long and used gel ink; and the MicroPen, which combined a ballpoint pen with a stylus tip that could used with most PDA models.
The 57 percent decline in profits that A.T. Cross suffered during the first quarter of 2002 showed that the firm's turnaround was far from complete. New products continued to be rolled out, however, including an innovative new multifunctional pen called the Cross Matrix that was aimed at the Generation X crowd. As part of an attempt to evolve into a personal accessories company, A.T. Cross returned to the watch field in January 2002 with the debut of a new line of Cross watches for the corporate gift-giving market. A.T. Cross was also seeking new distribution channels for its products. Among new retail channels in the United States were Franklin Covey and CompUSA outlets, and the company was also investigating a return to department stores, a retail sector it had previously had difficulty with.
Principal Subsidiaries: ATX Marketing Company; ATX International, Inc.; A.T. Cross Export Company Limited (Virgin Islands); A.T. Cross Limited (Ireland); A.T. Cross (Canada), Inc.; A.T. Cross (Europe), Limited (U.K.); A.T. Cross Espana, S.A. (Spain); A.T. Cross Deutschland GmbH (Germany); Cross Company of Japan, Ltd.
Principal Competitors: Société BIC; Compagnie Financière Richemont AG; The Gillette Company; Newell Rubbermaid Inc.; S.T. Dupont S.A.; Faber-Castell AG.
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