-----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, LxJbbQjVwNW68QuH/FZFOe0LUV4yb7DM0W9Sp3rL/kY79NsSN570On6aVSP2z3ZJ IqGUFM68Ek/qlujLORKHuQ== 0000927025-98-000086.txt : 19980514 0000927025-98-000086.hdr.sgml : 19980514 ACCESSION NUMBER: 0000927025-98-000086 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 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: SEC FILE NUMBER: 001-11007 FILM NUMBER: 98617466 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 March 31, 1998 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 65202 (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 APRIL 30, 1998, THERE WERE 7,545,150 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 MARCH 31, 1998 AND 1997 3 CONSOLIDATED BALANCE SHEETS - MARCH 31, 1998 AND 1997 AND DECEMBER 31, 1997 4 CONSOLIDATED STATEMENTS OF CASH FLOWS - THREE MONTHS ENDED MARCH 31, 1998 AND 1997 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7-8 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 8 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 8 SIGNATURE 9 TOASTMASTER INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) QUARTER ENDED MAR 31 1998 1997 Net Sales $25,626 $26,315 Cost of Sales 21,318 22,181 Gross Profit 4,308 4,134 Selling, General and Admin. Expenses 4,977 5,054 Operating (Loss) (669) (920) Other Expense - Interest 855 862 (Loss) Before Income Taxes (1,524) (1,782) Income Tax (Benefit) (642) (641) Net (Loss) $ (882) $(1,141) Basic and Diluted (Loss) per Common Share $ (0.12) $ (0.15) Weighted Average Shares Used in Computation: Basic Earnings per Common Share 7,539 7,538 Diluted Earnings per Common Share 7,579 7,538 TOASTMASTER INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) 3/31/98 12/31/97 3/31/97 ASSETS Cash $ 89 $ 178 $ 92 Accounts Receivable, less allowances 23,157 42,396 25,376 Inventories Finished Goods 34,397 26,029 30,140 Raw Matl., WIP 9,335 7,157 10,808 LIFO/Inventory Valuation Reserve (1,247) (1,360) (4,472) Total Inventory 42,485 31,826 36,476 Deferred Income Tax 0 0 2,280 Prepaid Expenses 2,641 2,145 2,283 Income Taxes Receivable 4,418 4,070 1,428 Total Current Assets 72,790 80,615 67,935 Property, Plant and Equipment Land 928 928 928 Buildings 9,898 9,885 9,057 Less: Accumulated Depreciation (5,520) (5,393) (5,018) Machinery & Equipment 46,091 45,661 43,356 Less: Accumulated Depreciation (32,382) (31,818) (29,838) Net Property, Plant & Equipment 19,015 19,263 18,485 Goodwill, net of accumulated amortization 3,237 3,265 3,350 Other Assets 3,140 3,148 1,898 $98,182 $106,291 $91,668 LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities Current Installments of Long-Term Debt $ 2,090 $ 2,104 $ 2,135 Accounts Payable 7,427 4,383 5,999 Accrued Expenses 13,348 12,936 11,924 Deferred Income Taxes 1,456 1,456 0 Total Current Liabilities 24,321 20,879 20,058 Long Term Debt, Excl. Current Installments 32,076 42,597 31,884 Deferred Income Taxes 801 801 579 Other Liabilities 721 695 275 Total Liabilities 57,919 64,972 52,796 Stockholders' Equity: Common Stock, $.10 par value 760 760 760 Additional Paid-in Capital 25,344 25,344 25,340 Retained Earnings 14,845 15,878 13,299 Accumulated Other Comprehensive Income (398) (375) (239) 40,551 41,607 39,160 Treasury Stock (288) (288) (288) Total Stockholders' Equity 40,263 41,319 38,872 $98,182 $106,291 $91,668 TOASTMASTER INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) QUARTER ENDED MAR 31 1998 1997 Cash flows from operating activities: Net loss $ (882) $ (1,141) Adjustments to reconcile net loss to net cash from operating activities: Depreciation and amortization 966 938 Loss from disposition of prop. and equip. 40 0 Restructuring charge 0 123 Accounts receivable 19,239 17,328 Inventories (10,659) (1,999) Prepaid expenses & other current assets (496) (1,489) Other assets 7 (112) Accounts payable 3,044 2,244 Accrued liabilities 438 (1,401) Income taxes (348) (660) 12,231 14,972 Net cash flows provided by operating activities 11,349 13,831 Cash flows used in investing activities: Additions to property, plant and equipment (729) (948) Net cash flows used in investing activities (729) (948) Cash flows from financing activities: Proceeds from revolving credit agreement 35,275 28,962 Repayments of revolving credit agreement (45,277) (41,165) Dividends paid (151) (151) Repayment of long-term debt (533) (534) Net cash flows used in financing activities (10,686) (12,888) Foreign currency translation adjustment (23) 0 Net increase (decrease) in cash (89) (5) Cash at beginning of period 178 97 Cash at end of period $ 89 $ 92 Cash paid during the period for: Interest $ 970 $ 978 Income taxes $ 0 $ 0 TOASTMASTER INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying financial statements as of March 31, 1998 and March 31, 1997 and for the three months then ended are unaudited. The balance sheet as of December 31, 1997 has been derived from the audited balance sheet as of that date. 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, 1997 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, 1997. The results of operations for the interim periods shown are not necessarily indicative of the results for the entire fiscal year ending December 31, 1998. 2. The loan and security agreement between the Company and Fleet Capital Corporation, as described in note 3 in the Notes to Consolidated Financial Statements contained in the Company's Annual Report to Shareholders, was amended as of March 11, 1998. The amendment reduced by .5% the interest rate under the London Interbank Offering Rate(LIBOR) option for borrowings under the revolving credit and term loan provisions of the agreement. 3. Effective January 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income." The adjustments that were previously made through stockholders' equity for the minimum pension liability and foreign currency adjustments will now be disclosed as other comprehensive income. For the quarter ended March 31, 1998, other comprehensive loss was $23 thousand and the total comprehensive loss was $905 thousand. For the quarter ended March 31, 1997, other comprehensive income was zero and the total comprehensive loss was $1.1 million. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS WHEN USED IN THIS REPORT ON FORM 10-Q, THE WORDS "SHOULD", "EXPECT", "ANTICIPATE", "BELIEVE" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY 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, 1997, 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, 1997. 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 2.6% to $25.6 million for the quarter ended March 31, 1998 from $26.3 million for the quarter ended March 31, 1997. Kitchen appliance revenues were relatively unchanged at $20.2 million for the first quarter of 1998, compared to $20.1 million for the same period in 1997. A decline in toaster shipments was offset by increases in other categories. Time products revenues decreased 4.2% from $7.2 million for the first quarter of 1997 to $6.9 million for the quarter ended March 31, 1998. The loss of wall clock business with a major customer, beginning in the second half of 1997, was the primary reason for the decline. Sales to the five largest customers for the quarter ended March 31, 1998 represented approximately 49.3% of revenues. Sales to the five largest customers for the first quarter of 1997 were 44.3% of revenues. For the quarter ended March 31, 1998, gross profit improved to 16.8% of net sales or $4.3 million, compared to 15.7% of net sales or $4.1 million for the comparable period in 1997. The increase was primarily due to lower material prices. Selling, general and administrative expenses for the quarter ended March 31, 1998 decreased slightly to $5.0 million compared to $5.1 million for the first quarter of 1997. Interest expense decreased slightly to $855 thousand in 1998 from $862 thousand in 1997 for the quarter ended March 31. 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 three months ended March 31, 1998 were $11.3 million. A reduction in accounts receivable of $19.2 million and an increase in accounts payable of $3.0 million were offset by an increase in inventory of $10.7 million, all of which are the result of normal seasonal patterns. Cash flows used for additions to property, plant and equipment of $729 thousand include the cost of new equipment and tooling for new and existing products. Net cash flows used in financing activities were $10.7 million for the three months ended March 31, 1998, and were primarily from repayments under the revolving credit agreement. At March 31, 1998, amounts outstanding under the revolving credit agreement were $25.3 million. The Company could borrow an additional $12.6 million under the terms of the revolving credit agreement at March 31, 1998. Other long-term debt was $8.9 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 1997 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 flows and future borrowings. The revolving credit agreement expires in November 2001. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company has transactions denominated in foreign currencies as discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 1997 Annual Report. At March 31, 1998, accounts receivable included $1.5 million denominated in Canadian dollars and $1.2 million denominated in Mexican pesos. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended March 31, 1998. 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. May 13, 1998 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 MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1998 MAR-31-1998 89 0 25,837 2,680 42,485 72,790 19,015 37,902 98,182 24,321 0 0 0 760 39,503 98,182 25,626 25,626 21,318 21,318 4,977 0 855 (1,524) (642) (882) 0 0 0 (882) (.12) (.12)
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