10-Q 1 ten-q.txt 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 1, 2002 ------------------------------------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-8044 ------------------------------------------------------- HUNT CORPORATION -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Pennsylvania 21-0481254 -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) One Commerce Square 2005 Market Street, Philadelphia, PA 19103 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone no., including area code 215-656-0300 ------------------------------ 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 whether the registrant is an accelerated filer (as defined in Rule 126-2 of the Exchange Act of 1934. Yes No X --- --- As of September 30, 2002, there were outstanding 8,976,335 shares of the registrant's common stock. HUNT CORPORATION INDEX Page ------------ PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Condensed Consolidated Balance Sheets as of 3 September 1, 2002 and December 2, 2001 Condensed Consolidated Statements of Operations - 4 Three Months and Nine Months Ended September 1, 2002 and September 2, 2001 Consolidated Statements of Comprehensive Income (Loss) - 5 Three Months and Nine Months Ended September 1, 2002 and September 2, 2001 Condensed Consolidated Statements of Cash Flows - 6 Nine Months Ended September 1, 2002 and September 2, 2001 Notes to Condensed Consolidated Financial 7 - 10 Statements Item 2 - Management's Discussion and Analysis of Financial Condition 11-18 and Results of Operations Item 3 - Quantitative and Qualitative Disclosures about Market Risk 19 Item 4 - Controls and Procedures 20 PART II - OTHER INFORMATION Item 1 - Legal Proceedings 21 Item 5 - Other Information 21 Item 6 - Exhibits and Reports on Form 8-K 22 Signatures 23 Certifications 24-25 Part I - FINANCIAL INFORMATION Page 3 --------------------- Item 1. Financial Statements Hunt Corporation Condensed Consolidated Balance Sheets (In thousands except share and per share amounts)

~~HUNT~~September ~~CORPORATION~~1, ~~INDEX~~December ~~Page~~2, ASSETS 2002 2001 ---------------- ~~PART~~---------------- I(Unaudited) -Current ~~FINANCIAL~~assets: ~~INFORMATION~~Cash ~~Item~~and 1cash -equivalents ~~Financial~~$ ~~Statements~~27,098 ~~Condensed~~$ ~~Consolidated~~25,966 ~~Balance~~Accounts ~~Sheets~~receivable, asless ofallowance 3for ~~June~~doubtful 2,accounts: 2002, ~~and~~$625; ~~December~~2001, 2$1,031 ~~2001~~22,087 ~~Condensed~~17,486 ~~Consolidated~~Inventories: ~~Statements~~Raw ofmaterials ~~Income~~3,521 -2,973 4Work ~~Three~~in ~~Months~~process ~~and~~1,618 ~~Six~~1,440 ~~Months~~Finished ~~Ended~~goods ~~June~~6,526 24,976 ~~2002~~---------------- ~~and~~---------------- ~~June~~Total inventories 11,665 9,389 Deferred income taxes 3,804 ~~2001~~5,834 ~~Consolidated~~Prepaid ~~Statements~~expenses ofand ~~Comprehensive~~other ~~Income~~current ~~(Loss)~~assets 6,809 14,101 ---------------- 5---------------- ~~Three~~Total ~~Months~~current ~~and~~assets ~~Six~~71,463 ~~Months~~72,776 ~~Ended~~Property, ~~June~~plant 2and equipment, ~~2002~~less accumulated depreciation and ~~June~~amortization: 32002, $42,981; 2001, ~~Condensed~~$42,548 ~~Consolidated~~21,870 ~~Statements~~24,188 ofGoodwill ~~Cash~~754 ~~Flows~~754 -Intangible 6assets ~~Six~~65 ~~Months~~65 ~~Ended~~Other ~~June~~assets 27,417 ~~2002~~8,604 ~~and~~---------------- ~~June~~---------------- 3Total assets $ 101,569 ~~2001~~$ ~~Notes~~106,387 to================ ~~Condensed~~================ ~~Consolidated~~LIABILITIES ~~Financial~~AND 7STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term 9debt ~~Statements~~$ ~~Item~~5,000 $ 5,000 Accounts payable 2,799 -4,428 ~~Management's~~Accrued ~~Discussion~~expenses ~~and~~18,687 ~~Analysis~~22,776 of---------------- ~~Financial~~---------------- ~~Condition~~Total ~~and~~current ~~Results~~liabilities of26,486 ~~Operations~~32,204 10Long-term debt, less current portion 17,000 ~~Item~~22,000 3Deferred income taxes 189 1,004 Other non-current ~~Quantitative~~liabilities ~~and~~14,267 ~~Qualitative~~14,106 ~~Disclosures~~Commitments ~~about~~and ~~Market~~contingencies ~~Risk~~Stockholders' 17equity: ~~PART~~Preferred IIstock, -$.10 ~~OTHER~~par ~~INFORMATION~~value, ~~Item~~authorized 1,000,000 shares; none issued - ~~Legal~~- ~~Proceedings~~Common 18stock, ~~Item~~$.10 2par -value, ~~Changes~~40,000,000 inshares ~~Securities~~authorized; issued: 2001 and ~~Use~~2000 -16,152,322 shares 1,615 1,615 Capital in excess of ~~Proceeds~~par value 7,412 7,412 Accumulated other comprehensive loss (18) ~~Item~~- 4Retained earnings 135,086 129,695 ---------------- ~~Submission~~---------------- 144,095 138,722 Less cost of ~~Matters~~treasury tostock: a2002 ~~Vote~~- of7,175,987 ~~Security~~shares; ~~Holders~~2001 19- ~~Item~~7,248,347 6shares; (100,468) (101,649) ---------------- ~~Exhibits~~---------------- ~~and~~Total ~~Reports~~stockholders' onequity ~~Form~~43,627 837,073 -K--------------- 20---------------- ~~Signatures~~Total 21liabilities and stockholders' equity $ 101,569 $ 106,387 ================ ================

See accompanying notes to condensed consolidated financial statements. Page 4 Hunt Corporation Condensed Consolidated Statements of Operations (Unaudited) (In thousands except per share amounts)

~~Part~~Three IMonths -Ended ~~FINANCIAL~~Nine ~~INFORMATION~~Months ~~Page~~Ended 3----------------------------------------------------------------------------- ~~Item~~September 1., ~~Financial~~September ~~Statements~~2, ~~Hunt~~September ~~Corporation Condensed Consolidated Balance Sheets (In thousands except share and per share amounts) June 2~~1, ~~December~~September 2, ~~ASSETS~~2002 2001 2002 2001 ---------------- ---------------- ~~(Unaudited)~~---------------- ~~Current~~---------------- ~~assets:~~Net ~~Cash~~sales ~~and~~$41,970 ~~cash equivalents~~ $42,743 29$122,~~392~~786 $124,141 Cost of sales 25,~~966~~267 ~~Accounts~~27,054 ~~receivable~~73,185 ~~less~~75,288 ~~allowance~~---------------- ~~for~~---------------- ~~doubtful~~---------------- ~~accounts:~~---------------- ~~2002,~~Gross ~~$735;~~profit ~~2001~~16,703 $115,~~031~~689 1949,~~798~~601 1748,~~486~~853 ~~Inventories:~~Selling, ~~Raw~~general ~~materials~~and 3administrative expenses 12,~~763~~523 213,~~973~~292 ~~Work~~37,392 in39,015 ~~process~~Restructuring ~~1,722~~and ~~1,440~~other ~~Finished~~(170) ~~goods~~(207) ~~7,601~~32 ~~4,976~~(115) ---------------- ---------------- ~~Total~~---------------- ~~inventories~~---------------- 13Income from operations 4,~~086~~350 2,604 12,177 9,~~389~~953 ~~Deferred~~Interest ~~income~~expense ~~taxes~~545 21,~~840~~052 51,~~834~~678 ~~Prepaid~~3,107 ~~expenses~~Interest and other ~~current~~income, ~~assets~~net ~~9,187~~(342) 14(31) (1,~~101~~319) (389) ---------------- ---------------- ~~Total~~---------------- ~~current~~---------------- ~~assets~~Income ~~74,303~~from ~~72,776~~continuing ~~Property,~~operations ~~plant~~before ~~and~~income ~~equipment~~taxes 4,147 ~~less~~1,583 ~~accumulated~~11,818 ~~depreciation~~7,235 ~~and~~Provision ~~amortization:~~for ~~2002,~~income ~~$44,666;~~taxes ~~2001~~1,354 ~~$42,548~~432 224,~~645~~078 242,~~188~~405 ~~Goodwill~~---------------- ~~754~~---------------- ~~754~~---------------- ~~Intangible~~---------------- ~~assets~~Income 65from 65continuing ~~Other~~operations ~~assets~~2,793 81,~~339~~151 87,~~604~~740 4,830 ---------------- ---------------- ~~Total~~---------------- ~~assets~~---------------- $Discontinued ~~106,106~~operations: $Loss ~~106~~from discontinued business,~~387~~ ~~===============~~net ~~===============~~of ~~LIABILITIES~~tax ~~AND~~benefit ~~STOCKHOLDERS'~~of ~~EQUITY~~$115 ~~Current~~and ~~liabilities:~~$194 ~~Current~~in ~~portion~~2001 of- ~~long~~(1,132) -~~term~~ ~~debt~~(2,149) $Gain 5(loss) on disposal of discontinued business,~~000~~ net of tax benefit of $554 ~~5,000~~in ~~Accounts~~2002 ~~payable~~and 4$2,~~665~~495 4in 2001,~~428~~ ~~Accrued~~respectively ~~expenses~~934 18(27,~~567~~715) 22934 (27,~~776~~715) ---------------- ---------------- ~~Total~~---------------- ~~current~~---------------- ~~liabilities~~Net ~~28,232~~income 32(loss) $3,~~204~~727 ~~Long-term debt~~($27,696) ~~less current portion 22~~$8,~~000~~674 22($25,~~000~~034) ~~Deferred~~================ ~~income~~================ ~~taxes~~================ ~~257~~================ ~~1,004~~Basic ~~Other~~earnings ~~non-current~~per ~~liabilities~~common ~~14,951~~share: ~~14,106~~Income ~~Commitments~~from ~~and~~continuing ~~contingencies~~operations ~~Stockholders'~~$0.31 ~~equity:~~$0.13 ~~Preferred~~$0.86 ~~stock,~~ $0.1054 ~~par~~Loss ~~value,~~from ~~authorized~~discontinued ~~1,000,000~~business ~~shares; none issued~~ - ~~- Common stock, $~~(0.1013) ~~par value, 40,000,000 shares authorized; issued: 2001 and 2000~~ -~~16,152,322~~ ~~shares~~(0.24) ~~1,615~~Gain ~~1,615~~(loss) ~~Capital~~on indisposal ~~excess~~ of ~~par~~discontinued ~~value~~business ~~7,412~~0.11 ~~7,412~~(3.11) ~~Accumulated~~0.11 ~~other comprehensive loss~~ (423.10) ---------------- ~~Retained~~---------------- ~~earnings 132,394 129,695~~ ---------------- ---------------- ~~141,379~~Net ~~138,722~~income ~~Less~~(loss) ~~cost~~per ofshare ~~treasury~~- ~~stock~~Basic $0.42 ($3.11) $0.97 ($2.80) ================ ================ ================ ================ Diluted earnings per common share: ~~2002~~Income -from ~~7,175,987~~continuing ~~shares;~~operations ~~2001~~$0.31 $0.13 $0.85 $0.54 Loss from discontinued business - ~~7,248,347~~(0.13) ~~shares;~~- (~~100,713~~0.24) Gain (~~101,649~~loss) on disposal of discontinued business 0.10 (3.09) 0.11 (3.08) ---------------- ---------------- ~~Total stockholders' equity 40,666 37,073~~ ---------------- ---------------- ~~Total~~Net ~~liabilities~~income ~~and~~(loss) ~~stockholders'~~per ~~equity~~share - Diluted $0.41 ~~106,106~~($3.09) $0.96 ~~106,387~~($2.78) ================ ================ ~~See~~================ ~~accompanying~~================ ~~notes~~Dividends toper ~~condensed~~common ~~consolidated~~share ~~financial~~$0.1025 ~~statements~~$0.1025 $0.3075 $0.3075 ================ ================ ================ ================

See accompanying notes to condensed consolidated financial statements. Page 5 Hunt Corporation Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (In thousands)

~~Page 4 Hunt Corporation Condensed Consolidated Statements of Operations (Unaudited) (In thousands except per share amounts)~~ Three Months Ended ~~Six~~Nine Months Ended ------------------------ ------------------------ ~~June 2, June 3, June 2, June 3, 2002 2001 2002 2001~~ -------- -------- -------- ----~~-----~~ ~~Net~~September ~~sales $ 40~~1,~~320~~ $September 392,~~135~~ $September 801,~~816~~ $September 812,~~398~~ ~~Cost~~2002 of2001 ~~sales~~2002 ~~23,382~~2001 ~~23,352 47,918 48,235~~ -------- -------- -------- -------- ~~Gross profit 16,938 15,783 32,898 33,163 Selling, general and administrative expenses 12,688 12,984 24,869 25,720 Restructuring and other 121 51 202 92~~ -------- -------- -------- -------- ~~Income~~Net ~~from~~income ~~operations~~(loss) ~~4,129~~$ 23,~~748~~727 7$(27,~~827~~696) 7$ 8,~~351~~674 ~~Interest~~$ ~~expense 572 981 1~~(25,~~133~~034) ~~2,054~~Other ~~Interest~~comprehensive ~~and other~~ income, ~~net~~ (~~306~~loss): ~~(108)~~Foreign ~~(977)~~currency ~~(356)~~translation ~~--------~~adjustments, ~~--------~~net ~~--------~~of ~~--------~~income ~~Income~~tax ~~from~~expense ~~continuing~~of ~~operations~~$2,631 ~~before~~and ~~income taxes~~ $3,~~863~~242 ~~1,875~~- 7,~~671~~017 5- 6,~~653~~509 ~~Provision~~Currency ~~for~~hedging ~~income taxes 1~~adjustments,~~372~~ ~~696~~net ~~2,724~~of ~~1,974~~income ~~--------~~tax ~~--------~~expense ~~--------~~(benefit) ~~--------~~of ~~Income~~$12 ~~from~~and ~~continuing~~($9) ~~operations~~24 ~~2,491~~- ~~1,179~~(18) ~~4,947~~- ~~3,679~~ -------- -------- -------- -------- ~~Discontinued operations: Loss from discontinued business, net of tax benefit of $15 and $79~~ -- ~~(196)~~ -- ~~(1,017)~~ -------- --~~------~~ -------- -------- ~~Net~~Other comprehensive income $(loss) ~~2,491~~24 ~~$ 983 $ 4~~7,~~947~~017 ~~$ 2,662 ======== ======== ======== ======== Basic earnings per common share: Income from continuing operations $ 0.28 $ 0.13 $ 0.55 $ 0.41 Loss from discontinued business --~~ (~~0.02~~18) --6,509 ~~(0.11)~~ -------- -------- -------- -------- ~~Net income per share~~ - ~~Basic $ 0.28 $ 0.11 $ 0.55 $ 0.30 ======== ======== ======== ======== Diluted earnings per common share: Income from continuing operations $ 0.28 $ 0.13 $ 0.55 $ 0.40 Loss from discontinued business~~ -- ~~(0.02)~~ -- ~~(0.11)~~ -------- -~~-------~~ -------- -------- ~~Net~~Comprehensive income ~~per~~(loss) ~~share - Diluted~~ $ ~~0.28~~3,751 $(20,679) ~~0.11~~ $ ~~0.55~~8,656 $ ~~0.29~~(18,525) ======== ======== ======== ======== ~~Dividends per common share $ 0.1025 $ 0.1025 $ 0.205 $ 0.205~~ ======== ======== ======== ======~~== See accompanying notes to condensed consolidated financial statements.~~

See accompanying notes to condensed consolidated financial statements. Page 6 Hunt Corporation Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands)

~~Page~~Nine Months Ended ---------------------------------------- September 1, September 2, 2002 2001 ---------------- ---------------- Cash flows from operating activities: Net income (loss) $ 8,674 $ (25,034) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,516 5,964 ~~Hunt~~Deferred ~~Corporation~~income ~~Consolidated~~taxes ~~Statements~~1,215 1,256 Loss on disposals of ~~Comprehensive~~property, ~~Income~~plant and equipment 284 22 (~~Loss~~Gain) loss on business divestitures (~~Unaudited~~589) 27,715 Payment for patent infringement litigation - (In3,919) ~~thousands~~Payments/credits for special charges (1,296) ~~Three~~(715) ~~Months~~Issuance ~~Ended~~of ~~Six~~stock ~~Months~~under ~~Ended~~management incentive bonus and stock grant plans 71 60 Changes in operating assets and liabilities (1,722) (4,797) ---------------- ---------------- Net cash provided by operating activities 10,153 552 ---------------- ---------------- ~~June~~Cash 2,flows ~~June~~from 3,investing ~~June~~activities: 2Additions to property, ~~June~~plant 3and equipment (1,475) ~~2002~~(2,960) ~~2001~~Other, ~~2002~~net ~~2001~~(175) (321) ------- --------- ------- --------- Net ~~income~~cash $used ~~2,491~~for $investing ~~983~~activities $(1,650) 4(3,~~947~~281) $---------------- ~~2,662~~---------------- ~~Other~~Cash ~~comprehensive~~flows ~~loss:~~from ~~Foreign~~financing ~~currency~~activities: ~~translation~~Proceeds ~~adjustments,~~from ~~net~~issuance of ~~income~~long-term ~~tax~~debt ~~benefit~~- ~~of $1~~4,~~219~~751 ~~and~~Payments ~~$362~~on long--term debt, including current maturities (15,~~769~~000) -- (~~508~~4,680) ~~Currency~~Book ~~hedging~~overdrafts ~~adjustments~~(356) (2,692) ~~net~~Proceeds from exercise of ~~income~~stock ~~tax~~options ~~benefit~~599 - Purchases of ~~$18~~treasury ~~and~~stock ~~$23~~- (323,680) --Dividends paid (422,749) (2,734) Other, net (22) 8 -- ------- ------- ------- --------- ~~Other~~Net ~~comprehensive~~cash ~~loss~~used ~~(32)~~for financing activities (17,~~769~~528) (429,027) ~~(508)~~ ---------------- ---------------- Effect of exchange rate changes on cash 157 12 ---------------- ---------------- ~~Comprehensive~~Net ~~income~~increase (~~loss~~decrease) $in ~~2,459~~cash $and cash equivalents 1,132 (~~786~~11,744) Cash and cash equivalents, beginning of period 25,966 23,878 ---------------- ---------------- Cash and cash equivalents, end of period $ 427,~~905~~098 $ 212,~~154~~134 ======= ========= ======= ======= ~~See accompanying notes to condensed consolidated financial statements.~~==

See accompanying notes to condensed consolidated financial statements. Page 7 Hunt Corporation Notes to Condensed Consolidated Financial Statements (Unaudited) 1. The accompanying condensed consolidated financial statements and related notes are unaudited; however, in management's opinion all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the financial position at September 1, 2002 and the results of operations and cash flows for the periods shown have been made. Such statements are presented in accordance with the requirements of Quarterly Reports on Form 10-Q and do not contain certain information included in the Company's annual consolidated financial statements and notes. This Quarterly Report on Form 10-Q should be read in conjunction with the Company's consolidated financial statements and notes included in its 2001 Annual Report on Form 10-K. The results of operations for any interim period are not necessarily indicative of results for the full year. 2. Effective October 1, 2001, the Company sold its commercial Graphics Products business and related assets. The divested business had net sales of approximately $12.3 million and $40.4 million and after-tax losses of $1.1 million and $2.1 million for the three months and nine months ended September 2, 2001, respectively. The divested business is presented as a discontinued operation in the accompanying Condensed Consolidated Statements of Income. However, the Consolidated Statements of Comprehensive Income for the three months and nine months ended September 2, 2001 and Condensed Consolidated Statements of Cash Flows for the nine months ended September 2, 2001 have not been restated to reflect the discontinued operation. During the third quarter of fiscal 2001, the Company recorded an estimated after-tax loss of $28.2 million, or $3.16 per share, related to this sale. The charge included the loss on the sale of assets (net of the expected proceeds), severance costs, recognition of future lease obligations, and other related costs. The Company also recorded a tax benefit of $.5 million after-tax ($.05 per share) resulting from a resolution of a prior year tax exposure in connection with a 1997 divestiture. This item is included in the total tax benefit recorded for loss on disposal of discontinued business. During the third quarter of fiscal 2002, the Company recorded a tax benefit of $.7 million resulting from additional tax benefit realized at the time of the fiscal 2001 federal income tax filing and resolution of a prior year tax exposure in connection with the commercial Graphics Products business. The Company also reduced by $.2 million after-tax certain of its accruals established in connection with a 1997 divestiture. 3. A reconciliation of weighted average common shares outstanding to weighted average common shares outstanding assuming dilution in calculating the earnings per share is shown below (in thousands): Page 8 Hunt Corporation Notes to Condensed Consolidated Financial Statements (Unaudited)

~~Page~~Three ~~6 Hunt Corporation Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Six~~ Months Ended ---------------------------------~~-------~~ ~~June~~Sept. 21, ~~June~~Sept. 32, 2002 2001 ---------------- ---------------- ~~Cash~~Average ~~flows~~common ~~from~~shares ~~operating~~outstanding-basic ~~activities: Net income $ 4~~8,~~947~~976 ~~$ 2~~8,~~662~~895 ~~Adjustments to reconcile net income to net cash provided by operating activities~~Add: ~~Depreciation~~common ~~and~~equivalent ~~amortization~~shares ~~2,437~~representing ~~4,046~~shares ~~Deferred~~issuable ~~income~~upon ~~taxes~~exercise ~~2,247 (162) (Gain) loss on disposals~~ of ~~property,~~stock ~~plant~~options and ~~equipment~~vesting ~~245 (10) Payment for patent infringement litigation - 102 Payments/credits for special charges (851) (306) Issuance~~ of stock ~~under~~grants ~~management~~175 ~~incentive~~65 ~~bonus and stock grant plans 71 60 Changes in operating assets and liabilities (2,192) (1,713)~~ ---------------- ---------------- ~~Net~~Average ~~cash~~common ~~provided~~shares byand ~~operating~~dilutive ~~activities~~securities ~~6,904~~outstanding 49,~~679~~151 ~~---------------- ---------------- Cash flows from investing activities: Additions to property~~8,960 ~~plant~~=============== ~~and~~============== ~~equipment~~Nine ~~(1,033)~~Months ~~(2,081)~~Ended ~~Other, net (180) (205)~~ ---------------- ----------------- ~~Net~~Sept. ~~cash used for investing activities (~~1,~~213)~~ (Sept. 2,~~286)~~ 2002 2001 ---------------- ---------------- ~~Cash~~Average ~~flows~~common ~~from~~shares ~~financing activities: Proceeds from issuance of long~~outstanding-~~term~~basic ~~debt - 4~~8,~~598~~940 ~~Payments on long-term debt~~8,949 ~~including~~Add: ~~current~~common ~~maturities~~equivalent -shares ~~(4,522)~~representing ~~Book~~shares ~~overdrafts~~issuable ~~(908)~~upon ~~(2,012) Proceeds from~~ exercise of stock options ~~443~~and -vesting ~~Purchases~~ of ~~treasury~~ stock -grants ~~(3,680)~~141 ~~Dividends~~43 ~~paid (1,827) (1,823) Other, net~~ - ~~(5)~~ ---------------- ---------------- ~~Net~~Average ~~cash~~common ~~used~~shares ~~for financing activities (2,292) (7,444) ---------------- ---------------- Effect of exchange rate changes on cash 27 (56) ---------------- ---------------- Net increase (decrease) in cash~~ and ~~cash~~dilutive ~~equivalents~~securities ~~3,426~~outstanding (59,~~107)~~081 ~~Cash and cash equivalents~~8,992 ~~beginning of period 25,966 23,878 ---------------- ---------------- Cash and cash equivalents, end of period $ 29,392 $ 18,771~~ ================ ==============~~== See accompanying notes to condensed consolidated financial statements.~~

4. The following table sets forth the details and the cumulative activity in the various accruals and reserves associated with the Company's 2001 cost reduction plan (which resulted primarily from the sale of the commercial Graphics Products business) in the Condensed Consolidated Balance Sheet at September 1, 2002 (in thousands):

~~Three~~Balance ~~Months~~at ~~Ended~~Balance at December 2, Provision/ Cash Non-Cash September 1, 2001 (Credit) Activity Activity 2002 -------------------------------- ~~June 2, June 3, 2002 2001~~ --------------- ------------------------------------------ ~~Average~~Lease ~~common~~obligations ~~shares~~$256 ~~outstanding~~-~~basic~~ ~~8,938~~(220) ~~8,892~~- ~~Add:~~$36 ~~common~~Severance ~~equivalent~~3,513 ~~shares~~(20) ~~representing~~(971) ~~shares~~- ~~issuable~~2,522 ~~upon~~Fixed ~~exercise~~assets of38 ~~stock~~(11) ~~options~~- ~~and~~(27) ~~vesting~~- ofOther ~~stock~~51 ~~grants~~31 ~~182~~(82) 71- - -------------- --------------------------------------------------------------------------- ~~Average~~Total ~~common~~$3,858 ~~shares~~- ~~and~~(1,273) ~~dilutive~~(27) ~~securities outstanding 9~~$2,~~120~~558 ~~8,963~~ =============== ==========================================================================

The Company expects the cash payments of these accruals and reserves to be completed by the end of fiscal 2004. Page 9 Hunt Corporation Notes to Condensed Consolidated Financial Statements (Unaudited) The following table sets forth the details and the cumulative activity in the various accruals and reserves associated with the Company's 1999 restructuring plan in the Condensed Consolidated Balance Sheet at September 1, 2002 (in thousands):

~~Six~~Balance ~~Months~~at ~~Ended~~Balance at December 2, Cash Non-Cash September 1, 2001 Credit Activity Activity 2002 -------------------------------- ~~June 2, June 3, 2002 2001~~ --------------- ------------------------------------------ ~~Average~~Lease ~~common~~obligations ~~shares~~$249 ~~outstanding~~-~~basic~~ ~~8,922~~- ~~8,977~~22 ~~Add:~~$271 ~~common~~Severance ~~equivalent~~23 ~~shares~~(10) ~~representing~~(13) ~~shares~~- ~~issuable~~- ~~upon exercise of stock options and vesting of stock grants 128 56~~ --------------- -------------------------------------------------------------------------- ~~Average~~Total ~~common~~$272 ~~shares~~(10) ~~and~~(13) ~~dilutive~~22 ~~securities~~$271 ~~outstanding 9,050 9,033~~ =============== ==========================================================================

5. As a result of the sale of the commercial Graphics Products business in fiscal 2001 (see Note 2 above) and its impact on the Company's internal organizational structure, the Company now has only a single reportable segment: Consumer Products. All of the Company's long-lived assets are located in North America. 6. Effective December 3, 2001, the Company adopted the Financial Accounting Standards Board's Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." Under this SFAS, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized, but will be subject to periodic reviews for impairment. As a result, effective December 3, 2001, the Company no longer amortizes goodwill or intangible assets with indefinite lives. The Company has completed a transitional impairment review to identify whether there is an impairment to goodwill or indefinite-lived intangible assets using a fair value methodology. No such impairment loss was identified. The Company's indefinite-lived intangible assets consist of trademarks, and the Company has no amortizable intangible assets. In conformity with SFAS No. 142, the results of prior periods have not been restated. The following is a reconciliation of the Company's net income and earnings per share for the three months and nine months ended September 1, 2002 and September 2, 2001: Page 10 Hunt Corporation Notes to Condensed Consolidated Financial Statements (Unaudited)

~~Balance~~Three atMonths ~~Balance~~Ended atNine ~~December~~Months 2,Ended ~~Provision/~~------------------------------- ~~Cash Non~~-~~Cash~~------------------------------ ~~June~~Sept. 1, Sept. 2, ~~2001~~Sept. ~~(Credit)~~1, ~~Activity~~Sept. ~~Activity~~2, 2002 2001 2002 2001 ------------- ------------- ------------- ------------- Net income (loss): As reported $3,727 ($27,696) $8,674 ($25,034) Amortization expense - goodwill - 299 - 795 Amortization expense - intangible assets - 25 - 74 ------------- ------------- ~~Lease~~------------- ~~obligations~~------------- ~~$256~~Adjusted -net income (~~142~~loss) - $~~114 Severance~~ 3,~~513~~727 (20$27,372) $8,674 (~~604~~$24,165) -============= ~~2,889~~============= ~~Fixed~~============= ~~assets~~============= 38Basic earnings per share: As reported $.42 ($3.11) -$.97 (27$2.80) Amortization expense - ~~Other~~goodwill 51- 31.03 ~~(82)~~- .09 Amortization expense - intangible assets - - - - ------------- ---------- --- ----- -------~~---~~ ------------- ~~Total~~Adjusted ~~$3,858~~earnings (loss) per share - Basic $.42 (~~828~~$3.08) $.97 (27$2.71) ~~$3,003~~============= ============= ============ ============= Diluted earnings per share: As reported $.41 ($3.09) $.96 ($2.78) Amortization expense - goodwill - .03 - .09 Amortization expense - intangible assets - - - - ------------- ------------- ------------ ------------- Adjusted earnings (loss) per share - Diluted $.41 ($3.06) $.96 ($2.69) ============= ============= ============ =============

Page 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results ----------------------------------------------------------------------- of Operations ------------- Certain statements contained in this report are forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. Such forward-looking statements represent management's assessment based upon information currently available, but are subject to risks and uncertainties which could cause actual results to differ materially from those set forth in the forward-looking statements. These risks and uncertainties include, but are not limited to, the Company's ability to successfully complete the implementation, and realize the anticipated benefits, of its restructuring and cost reduction plans on a timely basis; the effect of, and changes in, worldwide general economic conditions, including the severity and duration of any economic slowdown; price and availability of raw materials; foreign exchange rates; technological and other changes affecting the manufacture of and demand for the Company's products; dependence on maintaining key customers; competitive and other pressures in the marketplace; acts of terrorism; and other risks and uncertainties set forth herein and in the Company's 2001 Form 10-K and as may be set forth in the Company's subsequent press releases and/or Forms 10-Q, 8-K, and other filings with the Securities and Exchange Commission. (Note: All earnings per share amounts in Management's Discussion and Analysis, including the paragraph immediately below, are presented on an after-tax, diluted basis.) In November 2001, the Company initiated a cost reduction plan (the "2001 cost reduction plan") designed to reduce the Company's cost structure. This plan resulted primarily from the sale of the commercial Graphics Products business to Neschen AG in October 2001 and related actions and is expected to generate approximately $3.6 million of annualized pre-tax cost savings in fiscal 2002 and annualized pre-tax cost savings of approximately $4.7 million in future years. Pre-tax cost savings realized in the third quarter and first nine months of 2002 were approximately $1.1 million ($.08 per share) and $2.5 million ($.18 per share), respectively. Although the Company expects to realize such future cost savings, there is no assurance that they will actually be achieved. The adoption of the 2001 cost reduction plan in the fourth quarter of fiscal 2001 resulted in the recognition of charges totaling $3.9 million pre-tax ($.30 per share) in that quarter which included employee severance costs (including certain separation costs for Donald L. Thompson, the Chairman of the Board and former Chief Executive Officer of the Company), recognition of future lease obligations, and other related costs. In addition to the fiscal 2001 fourth quarter charges related to this plan, the Company expects to spend a total of approximately $1.0 million for plan implementation costs (which will be recorded as period costs as incurred) over the next three fiscal years. During the first nine months of fiscal 2002, the Company recognized $.1 million ($.01 per share) of such implementation costs, consisting primarily of outplacement expenses. See Notes 2 and 4 to the Condensed Consolidated Financial Statements herein. As a result of the sale of the commercial Graphics Products business and the subsequent cost reduction plan described in the preceding paragraph, management believes that the Company has simplified its operations and expects to improve the overall profitability and financial strength of the Company's continuing operations. Additionally, the Company's management and Board of Directors continue to review and evaluate various possible strategies that the Company might pursue to strengthen the Company and enhance shareholder value. Such potential strategies range from growing the Company through internal development, joint ventures, and/or acquisitions, to selling some or all of the Company. Page 12 Results of Operations --------------------- The following discussion is on a continuing operations basis. Net Sales --------- Net sales from continuing operations of $42.0 million for the fiscal 2002 third quarter decreased 1.8% from the fiscal 2001 third quarter, while net sales from continuing operations of $122.8 million for the first nine months of fiscal 2002 decreased 1.1% from the first nine months of fiscal 2001. These net sales decreases were largely due to lower sales of office supplies products (down 8.9% for the third quarter and 6.8% year-to-date), partially offset by higher sales of art/framing supplies products (up 5.2% for the third quarter and 3.5% year-to-date). Export sales decreased 1.0% and 2.2% in the fiscal 2002 third quarter and first nine months, respectively, compared to the same prior year periods. The net decreases were primarily due to lower sales in Canada, partially offset by higher sales of consumer and art/framing products in Europe. Management believes that the third quarter decrease in sales was largely attributable to softness experienced by retailers in "back-to-school" sales, to the current uncertain economic situation in the U.S., and to product sales promotions offered in fiscal 2001 but not repeated in fiscal 2002. Gross Profit ------------ The Company's gross profit percentage increased to 39.8% of net sales in the third quarter of fiscal 2002 from 36.7% in the third quarter of fiscal 2001, and increased to 40.4% of net sales for the first nine months of fiscal 2002 from 39.4% in the same period of fiscal 2001. Gross margin dollars increased $1.0 million and $.7 million in the fiscal 2002 third quarter and first nine months, respectively, from the same prior year periods. The increases in the gross profit percentages and gross profit dollars relative to the prior year periods were primarily the result of lower raw material and product costs, lower manufacturing costs, and lower unfavorable inventory adjustments. Selling, General, and Administrative Expenses --------------------------------------------- Selling, general, and administrative expenses decreased $.8 million, or 5.8%, in the third quarter and $1.6 million, or 4.2%, in the first nine months of fiscal 2002 compared to the same prior year periods. The third quarter decrease was primarily due to lower general and administrative expenses due principally to reduced salaries and benefits and rent expenses resulting from the 2001 cost reduction plan, reductions in accounts receivable reserves, and decreases in reserves for customer deductions, partially offset by increases in accrued incentive compensation expenses. The decrease for the first nine months of fiscal 2002 was due primarily to lower marketing and selling expenses Page 13 (principally lower salaries and benefits and other expenses as a result of the 2001 cost reduction plan), and lower general and administrative expenses due to the reasons discussed above for the third quarter, partially offset by market value decreases in the cash surrender value of officers' life insurance policies. Selling, general, and administrative expenses, as a percentage of net sales, were 29.8% and 30.5% in the third quarter and first nine months of fiscal 2002, respectively, and 31.1% and 31.4%, respectively, in the same prior year periods. Restructuring and Other ----------------------- During the fiscal 2002 third quarter, the Company reduced by $.2 million a reserve established in connection with a 1997 business divestiture. This reserve reduction was related to lower than expected inventory returns. During the first nine months of fiscal 2002, the Company also reduced by $10,000 a reserve related to its 1999 restructuring plan, and reversed an accrual of $33,000 established in connection with the implementation of the 1999 restructuring plan. During the fiscal 2001 third quarter, the Company reduced by $.2 million a reserve related to its 1999 restructuring plan, reflecting lower than anticipated severance expense. During the first nine months of fiscal 2001, the Company recorded interest charges of $.1 million in connection with a previously reported patent infringement suit judgment, and during the third quarter of fiscal 2001, the Company paid approximately $3.9 million to the plaintiff with respect to this judgment. The Company recorded net losses on disposals of property, plant and equipment of $39,000 and $284,000 during the third quarter and first nine months of fiscal 2002, respectively, and recorded net losses of $23,000 and $13,000 during the third quarter and first nine months of fiscal 2001, respectively. Interest Expense ---------------- Interest expense in the fiscal 2002 third quarter and first nine months decreased to $.5 million and $1.7 million, respectively, from $1.1 million and $3.1 million in the fiscal 2001 third quarter and first nine months, respectively, due primarily to a principal repayment of $25 million on the Company's senior notes during the fourth quarter of fiscal 2001 and the first of five annual principal repayments of $5.0 million during the third quarter of fiscal 2002 with respect to the Company's senior debt notes. Interest and Other Income, net ------------------------------ Interest and other income, net increased to $.3 million and $1.3 million in the fiscal 2002 third quarter and first nine months, respectively, from $31,000 and $.4 million in the same prior year periods. The third quarter increase was due primarily to favorable foreign currency translation adjustments. The increase for the first nine months was due principally to favorable foreign currency Page 14 translation adjustments, as well as management and other net fees of $.6 million for transition services rendered by the Company to Neschen AG in connection with the sale of its commercial Graphics Products business, partially offset by lower interest income due to lower interest rates. Provision for Income Taxes -------------------------- The Company's effective income tax rate for continuing operations was 32.7% and 34.5% for the fiscal 2002 third quarter and first nine months, respectively, compared to 27.3% and 33.2% for the same prior year periods. These increases were due principally to the effect of lower tax credits and lower favorable resolutions of prior years' tax exposures in fiscal 2002. Financial Condition ------------------- The Company's overall financial condition improved during the first nine months of fiscal 2002. The Company's working capital increased to $45.0 million from $40.6 million, and its current ratio increased to 2.7 from 2.3 at the end of the third quarter of fiscal 2002 from the end of fiscal 2001. The Company's debt/capitalization percentage was 34% at the end of the fiscal 2002 third quarter compared to 42% at the end of fiscal 2001. Funds from operations and available cash balances were sufficient during the first nine months of fiscal 2002 to make a principal repayment of $5.0 million with respect to its senior notes, to fund additions to property, plant and equipment of $1.5 million, to pay cash dividends of $2.7 million, and to make cash payments of $1.3 million related to the 2001 cost reduction plan. Current assets decreased to $71.5 million at the end of the third quarter of fiscal 2002 from $72.8 million at the end of fiscal 2001, largely as a result of lower prepaid and other assets and deferred tax assets, partially offset by higher accounts receivable and inventories. The decrease of $7.2 million in prepaid and other assets was principally due to the receipt of amounts due to the Company from Neschen AG for transition services, receipt of income tax refunds, and to a reclassification of an income tax refund position to a deferred tax asset as a result of a net operating loss tax carryforward election in fiscal 2002. The decrease in deferred tax assets was due primarily to the current deductibility of reserves related to the divested commercial Graphics Products business and the 2001 cost reduction plan, and utilization of net operating loss carryforwards. Accounts receivable increased $4.6 million from the $17.5 million balance at the end of fiscal 2001 due to seasonal dating and back-to-school promotion programs, as well as lower bad debt reserve balances in the first nine months of 2002. The increase in inventories was due principally to the timing of purchases by the Company of finished goods inventories. Current liabilities decreased to $26.5 million at the end of the third quarter of fiscal 2002 from $32.2 million at the end of fiscal 2001. This decrease was largely attributable to reductions of accruals associated with the Company's 2001 divestiture of its commercial Graphics Products business ($3.2 million), reductions of accounts payable ($1.6 million), settlement of amounts owed to Neschen AG ($1.5 million) in connection with the Company's 2001 divested business, reductions in accruals associated with the Company's 2001 cost reduction plan ($.7 million), and reductions in reserves established in connection with 1997 business divestitures ($.6 million), partially offset by an increase in accrued incentive compensation ($2.3 million). Page 15 Although the Company currently has a revolving credit facility of $25 million, there were no outstanding borrowings under this facility at September 1, 2002. The Company's ability to comply with various of its debt covenants under its credit facility and outstanding senior notes will depend largely on the achievement of the Company's business plan, which, in turn, could be adversely affected by the economic climate, competitive uncertainties, and other factors. In the event that non-compliance with such debt covenants should occur or appear to be likely, the Company would pursue various alternatives to successfully resolve the non-compliance, which might include, among other things, seeking debt covenant waivers or amendments, refinancing of debt, restricting payments of future cash dividends, and/or reducing future capital expenditures. Although the Company believes that it would be successful in resolving any such actual or potential non-compliance with its debt covenants, there can be no assurance that such would be the case. Management believes that funds generated from operations, combined with its existing credit facilities, will be sufficient to meet currently anticipated working capital and other capital and debt service requirements. Should the Company require additional funds, management believes that the Company could obtain them at competitive costs. While subject to change, management currently expects that total fiscal 2002 expenditures for additions to property, plant and equipment to increase capacity and productivity will be approximately $2.0 million, of which approximately $1.5 million has been expended through the first nine months of fiscal 2002. Outlook ------- The Company is optimistic about the outlook for its business for the fourth quarter of fiscal 2002 and anticipates stronger sales and earnings growth compared to the prior year fourth quarter. However, management expects such sales and earnings for the fiscal 2002 fourth quarter to be lower than the current reported results for the fiscal 2002 third quarter. While management anticipates modest sales growth and stronger earnings for the 2002 full fiscal year, the economy remains uncertain and could adversely affect the anticipated results. In addition, the Company's ten largest customers account for a significant portion of its net sales and the loss of, or a reduction in net sales of the Company's products to, one or more of these customers could have a material adverse effect on the Company's future sales and earnings. Although the Company has experienced some cost reductions for certain of its raw materials during the first nine months of fiscal 2002, the Company has experienced some cost increases for some of these raw materials during the fourth quarter of fiscal 2002. As a result of the Company's 2001 cost reduction plan, the Company expects to generate $1.1 million of additional pre-tax cost savings in the fourth quarter of fiscal 2002 and annualized pre-tax cost savings of approximately $4.7 million in future years, but there is no assurance that such future cost savings will actually be achieved. Furthermore, the Company anticipates considerable increases in its employee benefit costs (i.e., pension and medical) in fiscal 2003, expected to be partially offset by an incentive based cost reduction program. Page 16 In addition, management and the Board of Directors continue to review and evaluate various potential strategies that the Company might pursue to strengthen the Company and enhance shareholder value, ranging from growing the Company through internal development, joint ventures, and/or acquisitions, to selling some or all of the Company. Critical Accounting Policies and Estimates ------------------------------------------ Critical accounting policies are those that involve subjective or complex judgments, often as a result of the need to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to customer programs, product returns, bad debts, inventories, valuation of long-lived assets, assets held for sale, intangible assets, cash surrender value of life insurance policies, a deferred cash account, income taxes, warranty obligations, restructuring, business divestitures, pensions and other employee benefit plans or arrangements, environmental matters, and contingencies and litigation. Management bases its estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements: o The Company records estimated reductions to revenue for customer programs, including special promotions and other volume-based incentives. o The Company maintains allowances for doubtful accounts for estimated losses resulting from the Company's review and assessment of its customers' ability to make required payments. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances might be required. o The Company provides for estimated costs of future anticipated product returns and warranty obligations based on historical experience. o The Company maintains reserves for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. o The Company holds life insurance policies for most of its officers in connection with the Company's Supplemental Executive Benefits Plan. The carrying value of these policies is subject to changes in investment market conditions. During the first nine months of fiscal 2002, the Company has experienced significant decreases in the market value of these policies, aggregating $.8 million. Page 17 o The Company maintains an accrual for a deferred cash account in connection with a long-term incentive compensation agreement with the Company's Chairman and former Chief Executive Officer, Donald L. Thompson. The value of this deferred cash account is tied to the Company's stock price, and this accrual is subject to changes in the fair market value of the Company's common stock. o The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. While the Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event that the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should the Company determine that it would not be able to realize all or part of its net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made. o The Company accounts for its qualified defined benefit pension plans and Supplemental Executive Benefit Plan in accordance with Statement of Financial Accounting Standards ("SFAS") No. 87, "Employer's Accounting for Pensions," which requires that amounts recognized in the financial statements be determined on an actuarial basis. SFAS No. 87 requires that experience gains and losses, including the effects of the performance of the plan assets and changes in pension liability discount rates on the Company's computation of pension expense (income) be amortized over future periods to the extent that these fall outside a defined threshold under SFAS 87. The most significant elements in determining the Company's pension expense (income) in accordance with SFAS No. 87 are the expected return on plan assets and the discount rate to be used to calculate the present value of plan liabilities. Differences in expected returns and the actual return on plan assets and changes in the discount rate, as well as changes in actuarial assumptions and experience, may materially affect the pension expense (income) year to year. New Accounting Standards ------------------------ In June 2001, the Financial Accounting Standards Board ("FASB") approved the issuance of SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 requires that entities record as a liability obligations associated with the retirement of a tangible long-lived asset when such obligations are incurred, and capitalize the cost by increasing the carrying amount of the related long-lived asset. SFAS No. 143 will be effective for fiscal years beginning after June 15, 2002. The Company does not expect a material impact from the adoption of SFAS No. 143 on its consolidated financial statements. Page 18 In August 2001, the FASB approved the issuance of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and certain parts of APB Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." SFAS No. 144 establishes an accounting model based on SFAS No. 121 for long lived assets to be disposed of by sale, previously accounted for under APB Opinion No. 30. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The Company believes this Statement will not materially affect the Company's financial position or results of operations. In April 2002, the FASB approved the issuance of SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS No. 145 primarily affects the reporting requirements and classification of gains and losses from the extinguishment of debt and requires that certain lease modifications with economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002. The Company is currently assessing the impact of the adoption of this statement, but believes it will not materially affect the Company's financial position or results of operations. In June 2002, the FASB approved the issuance of SFAS No. 146, "Accounting for Exit or Disposal Activities." SFAS No. 146 addresses significant issues regarding the recognition, measurement, and reporting of costs that are associated with exit and disposal activities, including restructuring activities that are currently accounted for pursuant to the guidance that the Emerging Issues Task Force (EITF) has set forth in EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." SFAS No. 146 will be effective for exit or disposal activities that are initiated after December 31, 2002. The Company believes this Statement will not materially affect the Company's financial position or results of operations. Page 19 Item 3 - Quantitative and Qualitative Disclosures about Market Risk ---------------------------------------------------------- There have been no material changes in the Company's market risk from that set forth in Part II, Item 7A of the Company's fiscal 2001 Form 10-K. Page 20 Item 4 - Controls and Procedures ----------------------- (a) Evaluation of disclosure controls and procedures ------------------------------------------------ Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's periodic SEC filings. (b) Changes in internal controls ---------------------------- There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. (c) Asset-Backed issuers -------------------- Not applicable. Page 21 PART II - OTHER INFORMATION ----------------- Item 1 - Legal Proceedings ----------------- Reference is made to Part I, Item 3 of the Company's fiscal 2001 Form 10-K and to Part II, Item 1 of the Company's fiscal 2002 second quarter Form 10-Q. Item 5 - Other Information ----------------- In addition to the Chief Executive Officer and Chief Financial Officer Certifications required by Section 302 of the Sarbanes-Oxley Act which are attached to this report following the signature page, the Company has submitted to the Securities and Exchange Commission as correspondence accompanying this report the Chief Executive Officer and Chief Financial Officer Certifications required by Section 906 of that Act. Page 22 Item 6 - Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits -------- (b) Reports on Form 8-K ------------------- No reports on Form 8-K were filed during the quarter for which this report is filed. Page 23 SIGNATURES ---------- Pursuant to the requirements 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. HUNT CORPORATION Date October 16, 2002 By /s/ Dennis S. Pizzica -------------------- ----------------------------------------- Dennis S. Pizzica Vice President, Chief Financial Officer Date October 16, 2002 By /s/ Bradley P. Johnson -------------------- ----------------------------------------- Bradley P. Johnson Chief Executive Officer and President Date October 16, 2002 By /s/ John Fanelli III -------------------- ----------------------------------------- John Fanelli III Vice President, Corporate Controller (Principal Accounting Officer) Page 24 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Bradley P. Johnson, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Hunt Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: October 16, 2002 /s/ Bradley P. Johnson --------------------------------------------------- Bradley P. Johnson Chief Executive Officer and President Page 25 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Dennis S. Pizzica, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Hunt Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: October 16, 2002 /s/ Dennis S. Pizzica --------------------------------------------------- Dennis S. Pizzica Vice President, Chief Financial Officer Certification of Chief Executive Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002 I, Bradley P. Johnson, the Chief Executive Officer of Hunt Corporation (the "Company"), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Form 10-Q of the Company for the quarterly period ended September 1, 2002 (the "Form 10-Q"), fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and (2) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: October 16, 2002 /s/ Bradley P. Johnson ------------------------------------- Bradley P. Johnson Chief Executive Officer and President Certification of Chief FINANCIAL Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002 I, Dennis S. Pizzica, the Chief Financial Officer of Hunt Corporation (the "Company"), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Form 10-Q of the Company for the quarterly period ended September 1, 2002 (the "Form 10-Q"), fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and (2) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: October 16, 2002 /s/ Dennis S. Pizzica --------------------------------------- Dennis S. Pizzica Vice President, Chief Financial Officer

Balance at Balance at December 2, Cash Non-Cash June 2, 2001 Credit Activity Activity 2002 --------------- ---------- -------- ---------- ------------ Lease obligations $249 - - 7 $256 Severance 23 (10) (13) - - --------------- ---------- -------- ---------- ------------ Total $272 (10) (13) 7 $256 =============== ========== ======== ========== ============

Three Months Ended Six Months Ended --------------------------- ------------------------- June 2, June 3, June 2, June 3, 2002 2001 2002 2001 ----------- -------- ---------- -------- Net income: As reported $2,491 $983 $4,947 $2,662 Amortization expense - goodwill - 311 - 496 Amortization expense - intangible assets - 24 - 49 ----------- -------- ---------- -------- Adjusted net income $2,491 $1,318 $4,947 $3,207 =========== ======== ========== ======== Basic earnings per share: As reported $.28 $.11 $.55 $.30 Amortization expense - goodwill - .04 - .06 Amortization expense - intangible assets - - - - ----------- -------- ---------- -------- Adjusted earnings per share - Basic $.28 $.15 $.55 $.36 =========== ======== ========== ======== Diluted earnings per share: As reported $.28 $.11 $.55 $.29 Amortization expense - goodwill - .04 - .06 Amortization expense - intangible assets - - - - ----------- -------- ---------- -------- Adjusted earnings per share - Diluted $.28 $.15 $.55 $.35 =========== ======== ========== ========

---------------------------------------------------------------------------------------------------------------- Withheld Nominee For (including any broker nonvotes) ---------------------------------------------------------------------------------------------------------------- Donald D. Belcher 8,390,869 33,266 ---------------------------------------------------------------------------------------------------------------- Bradley P. Johnson 8,388,045 34,092 ---------------------------------------------------------------------------------------------------------------- Robert H. Rock 8,389,092 35,043 ----------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------- Abstentions For Against (including any broker nonvotes) ---------------------------------------------------------------------------------------------------------------- 6,560,622 385,543 90,147 ----------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------- Abstentions For Against (including any broker nonvotes) ---------------------------------------------------------------------------------------------------------------- 8,390,103 16,786 17,244 ----------------------------------------------------------------------------------------------------------------

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