-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GXtc8kgcbuuQB1Hej+3taZDxyxqtfgen85/M/E1cG5iM9aWQmy0RY0ItAJmQrc35 EaTEtJYA1GUyqL4ajC/MQA== 0000927025-97-000136.txt : 19970806 0000927025-97-000136.hdr.sgml : 19970806 ACCESSION NUMBER: 0000927025-97-000136 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970805 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOASTMASTER INC CENTRAL INDEX KEY: 0000818268 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC HOUSEWARES & FANS [3634] IRS NUMBER: 431204566 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11007 FILM NUMBER: 97651340 BUSINESS ADDRESS: STREET 1: 1801 N STADIUM BLVD CITY: COLUMBIA STATE: MO ZIP: 65202 BUSINESS PHONE: 3144458666 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number: 1-11007 TOASTMASTER INC. (Exact name of registrant as specified in its charter) MISSOURI 43-1204566 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 1801 NORTH STADIUM BOULEVARD, COLUMBIA, MISSOURI 6520 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (573) 445-8666 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 [ ] At July 31, 1997, there were 7,538,250 shares of the registrant's Common Stock outstanding. TOASTMASTER INC. INDEX PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Statements of Operations - Quarters Ended June 30, 1997 and 1996 and 3 Six Months Ended June 30, 1997 and 1996 Consolidated Balance Sheets - June 30, 1997 and 1996 and December 31, 1996 4 Consolidated Statements of Cash Flows - Six Months Ended June 30, 1997 and 1996 5 Notes to Consolidated Financial Statements 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-9 PART II. OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders 10 ITEM 6. Exhibits and Reports on Form 8-K 10 SIGNATURE 11 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS TOASTMASTER INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) QUARTER SIX MONTHS ENDED JUNE 30 ENDED JUNE 30 1997 1996 1997 1996 Net Sales $27,757 $32,634 $54,072 $59,374 Cost of Sales 22,790 28,352 44,970 51,732 Gross Profit 4,967 4,282 9,102 7,642 Selling, General and Admin. Expenses 5,573 5,398 10,628 10,382 Operating Loss (606) (1,116) (1,526) (2,740) Other Income - Interest 343 - 343 - Other Expense - Interest (868) (926) (1,730) (1,907) Loss Before Income Taxes (1,131) (2,042) (2,913) (4,647) Income Tax Benefit (419) (730) (1,060) (1,681) Net Loss $ (712) $(1,312) (1,853) $(2,966) Net Loss Per Common and Common Equivalent Shares Outstanding $ (0.09) $ (0.17) (0.25) $ (0.39) Weighted Average Common and Common Equivalent Shares Outstanding 7,538 7,538 7,538 7,538 SEE ACCOMPANYING NOTES TOASTMASTER INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) 6/30/97 12/31/96 6/30/96 ASSETS Cash $ 79 $ 97 $ 60 Accounts Receivable,less allowances 23,202 42,704 33,494 Inventories Finished Goods 34,842 30,043 37,234 Raw Matl.,WIP 9,012 10,811 10,306 LIFO/Inventory Valuation Reserve (3,777) (6,377) (1,884) Total Inventory 40,077 34,477 45,656 Deferred Income Tax 2,280 2,280 824 Prepaid Expenses 4,252 1,562 2,901 Total Current Assets 69,890 81,120 82,935 Property, Plant and Equipment Land 928 926 921 Buildings 9,769 9,057 9,074 Less:Accumulated Depreciation (5,141) (4,897) (4,661) Machinery & Equipment 43,614 42,717 41,491 Less: Accumulated Depreciation (30,543) (29,278) (27,318) Net Property, Plant & Equipment 18,627 18,525 19,507 Goodwill, net of accumulated amortization 3,322 3,378 3,434 Other Assets 1,875 1,831 1,769 $93,714 $104,854 $107,645 LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities Current Installments of Long-Term Debt $ 2,124 $ 2,145 $ 2,186 Accounts Payable 8,410 3,755 8,617 Accrued Expenses 11,810 13,600 12,419 Total Current Liabilities 22,344 19,500 23,222 Long Term Debt, Excl. Current Installments 32,782 44,611 41,242 Deferred Income Taxes 579 579 1,036 Total Liabilities 55,705 64,690 65,500 Stockholders' Equity: Common Stock, $.10 par value 760 760 760 Additional Paid-in Capital 25,340 25,340 25,340 Minimum Pension Liability Adjustment (227) (227) (267) Retained Earnings 12,437 14,591 16,617 Equity Adj. - Foreign Currency Translation (13) (12) (17) 38,297 40,452 42,433 Treasury Stock (288) (288) (288) Total Stockholders' Equity 38,009 40,164 42,145 $93,714 $104,854 $107,645 SEE ACCOMPANYING NOTES TOASTMASTER INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) SIX MONTHS ENDED JUNE 30 1997 1996 Cash flows from operating activities: Net loss $(1,853) $(2,966) Adjustments to reconcile net loss to net cash from operating activities: Depreciation and amortization 1,868 2,214 Restructuring charge 123 0 Accounts receivable 19,502 31,010 Inventories (5,600) (6,651) Prepaid expenses & other current assets (1,629) (620) Other assets (134) (92) Accounts payable 4,655 2,674 Accrued liabilities (1,790) (3,468) Income taxes (1,061) (3,034) 15,934 22,033 Net cash flows provided by operating activities 14,081 19,067 Cash flows used in investing activities: Additions to property,plant and equipment (1,946) (1,800) Net cash flows used in investing activities (1,946) (1,800) Cash flows from financing activities: Proceeds from revolving credit agreement 60,414 70,226 Repayments of revolving credit agreement (71,184) (86,079) Dividends paid (301) (303) Repayment of long-term debt (1,081) (1,085) Net cash flows used in financing activities (12,152) (17,241) Foreign currency translation adjustment (1) (8) Net increase (decrease) in cash (18) 18 Cash at beginning of period 97 42 Cash at end of period $ 79 $ 60 Cash paid during the period for: Interest $ 1,871 $ 2,013 Income taxes $ 0 $ 1,401 SEE ACCOMPANYING NOTES TOASTMASTER INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. These financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 1996 and notes thereto contained in the Company's Annual Report to Shareholders incorporated by reference in the Annual Report on Form 10-K for the year ended December 31, 1996. The results of operations for the interim periods shown are not necessarily indicative of the results for the entire fiscal year ending December 31, 1997. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE STATEMENTS MADE IN THIS REPORT ON FORM 10-Q ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS, FINANCIAL CONDITION OR BUSINESS COULD DIFFER MATERIALLY FROM ITS HISTORICAL RESULTS, FINANCIAL CONDITION OR BUSINESS, OR THE RESULTS OF OPERATIONS, FINANCIAL CONDITION OR BUSINESS CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED UNDER THE CAPTION "FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS, FINANCIAL CONDITION OR BUSINESS" IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996, AS WELL AS THOSE DISCUSSED ELSEWHERE IN THE COMPANY'S REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. The following discussion should be read in conjunction with the attached financial statements and notes thereto, and with the Company's audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 1996. The Company believes that sales of many of its products are seasonal, with significant quantities of its products given as gifts, and therefore sell in larger volumes during the Christmas shopping season. Net sales reflect a reduction from revenues of amounts related to sales discount programs, including absorption of out-bound freight and certain allowances for advertising, the latter of which are accounted for by certain competitors as "advertising" expense. The Company views these amounts as price reductions, thereby reducing net sales and lowering gross profits, as well as selling, general and administrative expense. As used in this Quarterly Report on Form 10-Q, the term "revenues" are recorded net of product returns and are before deduction of items referred to above that are used in computing net sales. During the periods discussed below, net sales averaged approximately 95% of revenues. RESULTS OF OPERATIONS Net sales decreased 14.7% to $27.8 million for the quarter ended June 30, 1997 from $32.6 million for the quarter ended June 30, 1996. For the six months ended June 30, 1997, net sales decreased 9% to $54.1 million from $59.4 million for the comparable period in 1996. Kitchen appliance revenues were $22.2 million for the second quarter of 1997, a decrease of 9.8% from $24.6 million for the same period in 1996. Revenues from kitchen appliances for the six months ended June 30, 1997 decreased 8.2% to $42.4 million from $46.2 million for the six months ended June 30, 1996. An increase in breadmaker revenues was not sufficient to offset a decrease in revenues from counter-top ovens, toasters, wafflemakers and other appliances. Initial wafflebaker production in China, originally scheduled for March, was delayed until the third quarter and other products were negatively affected by a slowdown in retail activity during the quarter. Time products revenues were $6.2 million for the quarter ended June 30, 1997, a decrease of 29.5% from $8.8 million for the quarter ended June 30, 1996. For the six months ended June 30, 1997, revenues from time products were $13.4 million, a decrease of 11.3% from $15.1 million for the same period in 1996. A delay in certain second quarter promotions to later in the year were the primary reasons for the decrease. Environmental products revenues were minimal, as the phase out of this product line continues through 1997. Revenues from the five largest customers for the second quarter of 1997 represented approximately 48.9% of revenues. The five largest customers represented 45.4% of revenues for the second quarter of 1996. For the six months ended June 30, 1997, revenues from the five largest customers were 45.9%. Revenues from the five largest customers were 43.7% for the six months ended June 30, 1996. Gross profit was $5.0 million, 18% of net sales, for the quarter ended June 30, 1997, an increase from $4.3 million, or 13.1% of net sales, for the comparable period in 1996. Gross profit also increased for the six months ended June 30 to $9.1 million, or 16.8% of net sales, for 1997 from $7.6 million, or 12.9% of net sales, for the same period in 1996. The increase as a percentage of net sales was primarily due to product mix and lower fixed manufacturing costs, resulting from the restructuring implemented during the fourth quarter of 1996. Selling, general and administrative expenses for the quarter ended June 30, 1997 increased slightly to $5.6 million compared to $5.4 million for the second quarter of 1996. For the six months ended June 30, 1997, selling, general and administrative expenses were $10.6 million, an increase from $10.4 million for the same period in 1996. Selling and advertising expenses not directly related to sales, such as new product carton development, product brochures and trade show expenses were the primary areas of increased spending. Interest income of $343 thousand in the second quarter of 1997 was from an expected income tax refund from prior years. Interest expense decreased to $868 thousand for the quarter ended June 30, 1997 from $926 thousand for the same period in 1996. Interest expense for the six months ended June 30 decreased to $1.7 million in 1997 from $1.9 million in 1996. The decrease was primarily due to lower borrowing levels in 1997. LIQUIDITY AND CAPITAL RESOURCES The Company's operations require substantial working capital. The Company has used available cash flow from operations and borrowings under its revolving credit agreement to finance additional working capital, to retire long-term debt and to fund capital expenditures. Net cash flows provided by operating activities for the six months ended June 30, 1997 were $14.1 million. Since December 31, 1996, there was a reduction in accounts receivable of $19.5 million, an increase in inventory of $5.6 million and an increase in accounts payable of $4.7 million as a result of normal seasonal patterns. Cash flows used for additions to property, plant and equipment of $1.9 million include the cost of new equipment and tooling for new and existing products, as well as, construction costs for a warehouse addition for the time products division. Net cash flows used in financing activities were $12.2 million for the six months ended June 30, 1997, and were primarily from repayments under the revolving credit agreement. At June 30, 1997, amounts outstanding under the revolving credit agreement were $24.4 million. The Company could borrow an additional $9.4 million under the terms of the revolving credit agreement at June 30, 1997. Other long-term debt was $10.5 million, including the current portion of $2.1 million. The terms of and collateral for the revolving credit agreement and long-term debt are described in Note 3 of the Notes to the Consolidated Financial Statements contained in the Company's 1996 Annual Report to shareholders, which note is incorporated herein by reference. Principal payments on the long-term debt are expected to be funded from internally generated cash flow and future borrowings. The revolving credit agreement expires in November 2001. NEW ACCOUNTING PRONOUNCEMENT In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings Per Share" which revises the calculation and presentation provisions of Accounting Principles Board Opinion 15 and related interpretations. Statement No. 128 is effective for the Company's fiscal year ending December 31, 1997. Retroactive application will be required. The Company believes the adoption of Statement No. 128 will not have a significant effect on its reported earnings per share. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of the Stockholders of Toastmaster Inc. was held on May 13, 1997. The following items were submitted to a vote: Item 1. Robert H. Deming and Daniel J. Stubler were elected as Class III directors. Class II directors (John E. Thompson and S B. Rymer) and Class I directors (Edward J. Williams and James L. Hesburgh) continue to serve on the Board until the annual meeting of stockholders in 1999 and 1998, respectively. The vote with respect to the election of directors was as follows: Mr. Deming Mr.Stubler AFFIRMATIVE VOTES 6,952,233 6,953,733 WITHHELD AUTHORITY 59,813 58,313 Item 2. The selection of KPMG Peat Marwick LLP as the Company's independent auditors for the year ending December 31, 1997 was approved. The vote was as follows: AFFIRMATIVE VOTES 6,982,636 NEGATIVE VOTES 18,105 ABSTENTIONS 11,305 A total of 7,012,046 shares were voted. No broker non-votes were received. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended June 30, 1997. Exhibits Exhibit 27 Financial Data Schedule SIGNATURE 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. Dated: TOASTMASTER INC. August 1, 1997 BY:/s/ John E. Thompson John E. Thompson Executive Vice President Chief Financial Officer Signing on behalf of the registrant And as principal financial officer EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 JUN-30-1997 79 0 25,875 2,673 40,077 69,890 18,627 35,684 93,714 22,344 0 0 0 760 37,249 93,714 54,072 54,072 44,970 44,970 10,628 0 1,730 (2,913) (1,060) (1,853) 0 0 0 (1,853) (.25) (.25)
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