University of Mississippi eGrove Haskins and Sells Publications Deloitte Collection 1974 Client profile -- Norton Simon Inc Walter M. Bone Roy Stevens Gene Daniels Follow this and additional works at: https://egrove.olemiss.edu/dl_hs Part of the Accounting Commons, and the Taxation Commons Recommended Citation H&S Reports, Vol. 11, (1974 autumn), p. 14-19 This Article is brought to you for free and open access by the Deloitte Collection at eGrove. It has been accepted for inclusion in Haskins and Sells Publications by an authorized administrator of eGrove. For more information, please contact [email protected]. Norton CLIENT PROFILE Simon Norton Simon Inc. Incand reorganized .as Val Vita Food is an international marketing company Products, Inc. In 1943, the Hunt Brothers with major positions in the food and food Packing Company, a small northern services, soft drink, cosmetics, distilled California firm, merged with Val Vita spirits, packaging and communications Food Products, Inc. Mr. Simon and some industries. Such popular brand names as of his associates converted their Hunt's, Wesson, Canada Dry, Johnnie ownership of Hunt stock into control of Walker, Tanqueray, McCall Pattern, the company. With Norton Simon at the Redbook and Max Factor represent some helm, our Has kins & Sells office in San of the many facets of "NSI," an Francisco was chosen to handle the engagement which originates in the New general audit. York office, with substantial participating work by the Los Angeles office plus 27 In 1945, the company's name was other H&S practice offices and 17 DH&S changed to Hunt Foods, Inc., with our offices around the world. For the H&S Los Angeles office taking over the partners, managers and staff accountants engagement. In 1956, the Ohio Match who provide general audit, tax and Company and Hunt Foods, Inc. were consultation services, Norton Simon combined through an exchange of stock Inc. is much more than a group of under the Ohio Match Company name, trade names. and the following year the company was renamed Hunt Foods and Industries, Inc. Formed in 1968 with the consolidation of Hunt Foods and Industries, Inc., Canada Canada Dry traces its origin to a small and Spirits Division, which was Dry Corporation and McCall Corporation, plant in Toronto in 1890. A pharmacist subsequently spun off into Somerset the company bears the name of its and chemist, John J. McLaughlin, began Importers, Ltd. Our New York office founder, Norton Simon, the well-known bottling his soda water products for began performing audit services for California entrepreneur, investor and distribution to stores, beach resorts, Canada Dry and Somerset in 1925. art collector. sports arenas and restaurants, a move that gave birth to the modern soft drink McCall Pattern is the oldest of the Even as a young man, Norton Simon industry. In 1904, Mr. McLaughlin companies in the NSI family. Formed by displayed considerable talent as a formulated what he was later to call James McCall in 1869, McCall Pattern businessman. By his late teens he was Canada Dry Pale Dry Ginger Ale. later expanded into the publishing investing in the stock market and did Encouraged by rising demand in Canada, business and in 1897 distributed the well enough that he emerged from the the company expanded its operations. In first issue of McCall's magazine. In 1929, 1929 crash with $35,000. Part of this 1919, the first shipments of Canada Dry McCall's acquired Redbook magazine. went into the purchase of a bankrupt Ginger Ale were made to the United orange juice plant, which he renamed States, and in 1922 the first Canada Dry When Norton Simon Inc. was formed plant opened in New York. Following the through the consolidation of these three repeal of the U.S. Prohibition Amendment long-established companies, the in 1933, Canada Dry set up its own Wine corporation was headed by three men, all 14 Pat Waide (1.), partner in charge of the Norton Simon Inc. engagement, confers with David J. Mahoney, NSI board chairman and president. At 38, Mr. Mahoney became executive vice president of the Colgate-Palmolive Company. Five years later, he was recommended to Norton Simon as the man to rejuvenate one of Mr. Simon's investments, the Canada Dry Corporation. A year and a half later, Mr. Mahoney was named president and chief operating officer of the newly-formed Norton Simon Inc. In the six years of its corporate existence under David Mahoney's leadership, NSI has increased its shareholders' equity by 90 percent — from $342 million to $662 million. Working capital has also increased during the same period and is presently $623 million. It has been said that all of these figures reflect the soundness of NSI's basic product lines, imaginative marketing and the practicality of with prior experience as chief executives Angeles since the 1968 consolidation of decentralized management of its 12 of successful major business enterprises. the companies. operating companies. David J. Mahoney, formerly president and chief executive of Canada Dry The movement of NSI's corporate Each of NSI's 12 companies operates Corporation, was named the president headquarters to New York positioned the as a separate corporation with its own and chief operating officer of NSI. company in the midst of the corporate officers and board of directors. David and marketing capital of the world. It also Mahoney and the corporate officers In 1969, Mr. Mahoney was promoted to represented a symbolic return to the establish performance criteria and a chief executive officer. Later that year city of Mr. Mahoney's previous successes. policy framework for them. Each Norton Simon withdrew from the active Born and raised in New York, David company is then encouraged to develop management of the company to which he Mahoney attended the University of and implement its own plans for had given his name, to pursue his other Pennsylvania's Wharton School on continuing growth and increased interests.Soon thereafter, David Mahoney a basketball scholarship. At 28, he opened profitability. Twice a year at NSI's moved NSI's corporate headquarters to his own advertising agency, and when headquarters, operating plans, profit New York City. The 1971 audit of NSI he was 32, a client offered him the projections, market-share targets, marked the beginning of the New York presidency of the Good Humor office's supervision of the overall Corporation, which he built up and engagement, after being handled by Los sold for a handsome capital gain. 15 personnel policies, and other major objectives are formally drawn up. From that point on, each company president is free to operate as his judgment dictates, subject to quarterly reviews by his board and an annual review by the NSI board. In keeping with the East/West balance of NSI operations, board meetings are held alternately in New York and Los Angeles. Audit coordination is also national in scope. Partner Pat Waide and manager Ed Lewis meet with the NSI Audit Committee three times a year, alternating meetings between New York and Los Angeles. Pat and Ed have also kept pace with the international operations of NSI by visiting many of the subsidiary operations themselves to enable them to better coordinate this world-wide audit. As Pat Waide has said, "One of the most interesting aspects of the NSI engagement is the considerable attention given by both NSI top management and the management of the operating H&S alumnus Robert D. Walter (c), companies to our observations and NSI vice president with responsibility recommendations arising from the for finance, reviews a draft of annual audit. Dave Mahoney keeps the with new and progressive techniques the annual report with manager lines of communications open between that will help the profession keep pace Ed Lewis (1.) and senior H&S and NSI, particularly as to his with business changes. "The next decade',' Harvey Hennes. accessibility to our management group says Bob, "will provide the biggest and our having informative meetings challenge that professional accountants, with the NSI Audit Committee'.' both in public and private practice, this market, with demand limited only by have ever faced. Acting as business supply. Hunt-Wesson is also the leader In order to provide for more efficient changes will become more important in edible oil, with Wesson Oil continuing handling of the NSI engagement, different than ever; reacting to business changes to be America's most popular brand of partners and managers have been will leave all accountants trailing progress'.' salad and cooking oil. assigned to supervise each of the operating companies' audits. During the height of Carl Brody, director of taxes for NSI, In addition, NSI's food operations the audit, it is estimated that approximately was a tax manager in the New York office have also been successful in the 30 partners, 45 managers and 175 staff before joining Canada Dry Corporation introduction of a number of successtul accountants are working on the NSI in 1963. Assistant treasurer Bob Luth, convenience food items. They include: engagement across the country, in a variety former manager in our New York office, Snack Pack single portion desserts; of roles. Manager Ed Lewis says that joined NSI last year, as did former Skillet Dinners; Manwich Sandwich the opportunity to meet and work with H&S senior Patty Stalp, now manager of Sauce; the Wakefield line of frozen crab H&S management and staff, as well corporate accounting. Assistant controller specialties; Reddi-Wip non-dairy as NSI corporate officers, has been one of Brian McAuley, who was the manager dessert topping; and Orville Redenbacker's the more rewarding aspects of his work. on the McCall engagement for about four Gourmet Popping Corn.