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Tab Products (TBP) recently appointed a new CEO and several other senior executives in an effort to improve results.

Tab Products manufactures and markets a wide range of filing systems and related filing supplies. Filing systems range from individual filing cabinets and units to large mobile filing systems. Systems furniture includes wood trim and designer trim office panel systems and clustered workstations. The company also markets a line of computer related products including magnetic media storage systems. Products are marketed to diverse customers including government agencies, industrial companies, and service companies in the US, Canada, Western Europe and Australia.

Fiscal year 1997 has brought many changes to the TAB organization. In July of 1996 the former CEO resigned and his subordinate was appointed acting President and CEO. In January of 1997 the company hired Philip Kantz as CEO/President, whereupon the acting CEO resigned and was appointed EVP - two months later EVP resigned. New CEO has served as Pres/CEO with such firms as TransOcean Ltd, Transisco Inds., Gentrix, and Itel Containers Corp. Also was a Sr. VP and General Mgr of GE Capital - is a Director of 3Com, Mine Reclamation Corp, Search Systems, Sonic Force LLC, and Blue Cross of CA.

CEO comes in and immediately issues 3 new goals - 1)Continue to improve profitability through cost control and operational effectiveness 2) Increase top line growth aggressively - believes they are capable of double digit growth over next 2-3 years 3) Change the very nature of the company to fit a "new and dynamic business model - which focuses TAB on becoming a strategic partner with clients and become a provider of a total solutions. The key ideal is to become known as TAB the solution provider rather than TAB the product maker. Integration of technology, services, equipment and people will be the mission. CEO wants to focus on their core strengths which is document solutions 1)organize 2) control 3) find.

The interesting thing about this story is that the CEO came right in and initiated a major change in the way the company does business, including bringing in some major talent on the marketing and operations side. CFO told me that they were putting the finishing touches on the strategic process after having spent the last 4 months defining the mission and the execution of that strategy - the company will announce to both the employees and investors the complete package within the next 60-90 days -- essentially before year end.

Other executive mgt changes were as follows: new Sr VP Operations with responsibility for Mfg, info Tech, and Sales & Support ops - previously VP of PLM Intl with expertise in process analysis, redesign and implementation. New VP Marketing with responsibility for worldwide marketing efforts - previously Director of Business Development for Cisco Systems. New Corporate Controller with responsibilities for financial planning and analysis - previously a director with Coopers and Lybrand, Raychem and IBM with background in process reengineering, financial mgt and consulting.

These executives will be in charge of the restructuring and redesign of the company's information technology and manufacturing functions in addition to contemporizing the methods of marketing to leverage the distribution channel. Marketing is a big key - they never had a real marketing strategy - Ms. Grba brings a solid marketing career at Cisco in addition to a huge positive of having a technology background. This is important because the company's vision of document management focuses on the use of paper based records and how they translate into technology and information.

Distribution Channels - The company has 20 branch operations in 20 key markets. 135 reps who function as both sales and account mgrs. 60 independent reps who are dedicated retailers of TAB products and are paid commission - TAB invoices the end user. Company has $32 million in foreign sales and would like to eventually see that move up to 50% of their business. Co believes there is significant potential in Europe and Asia - essentially wherever there is a prevalence of information storage needs ie: financial centers. Current international revenue levels are 21% of sales. The company implemented a new TAB Express telesales program - a low cost channel of distribution with the goal of increasing the productivity of the branch and independent direct sales channel. This plugs the gap in coverage that the direct sellers may have in their territory. Expectations are for $6 million in revs from this in 1998. TAB also implemented the Professional Services organization as a consulting and conversion of paper based document systems - this division was created to fulfill the mission of providing a complete solution for document mgt. They survey a clients needs and advise the client as to the appropriate solution, whether it is paper based or tech based. This is a true niche, as there are no national competitors - only regional, and while they offer some of the same products, no one offers a complete solution. This will be a distinct advantage going forward.

The company reported continued earnings momentum with EPS of $.76 vs $.57. 1Q98 continued that trend with revs of $39.4 million vs $35 million and EPS of $.17 vs $.14. SGA remained under 35% CFO mentioned increased mktg will cause a slight bump - peaking in the 36% range by year end, looks to offset some by productivity gains/cost controls. CFO told me rev goal is double digit growth over the next 24-36mos, believes it is definitely achievable with new mgt and strategy.
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