-----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, H37rRkfKVQlG+Vx+A4LHcQQ4tOK58qVr/joKu5iiWiIgV8H1NZfES5XnjKPN25ww 5LvBY6/tiicy92N8Ncy+JA== 0000950131-96-001112.txt : 19960319 0000950131-96-001112.hdr.sgml : 19960319 ACCESSION NUMBER: 0000950131-96-001112 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960102 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960318 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RIVAL CO CENTRAL INDEX KEY: 0000860194 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD APPLIANCES [3630] IRS NUMBER: 133327021 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20274 FILM NUMBER: 96535820 BUSINESS ADDRESS: STREET 1: 800 E 101ST TERRACE CITY: KANSAS CITY STATE: MO ZIP: 64131 BUSINESS PHONE: 8169434100 MAIL ADDRESS: STREET 1: 800 E 101ST TERRACE CITY: KANSAS CITY STATE: MO ZIP: 64131 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): January 2, 1996. THE RIVAL COMPANY ---------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 43-0794462 ----------------------------------- ---------------------- (State or other jurisdiction of (I.R.S.Employer incorporation or organization) Identification No.) Commission file number 0-20274 ------- 800 E. 101st Terrace, Kansas City, MO 64131 ---------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (816) 943-4100 ------------------------------------------------------------------ (Registrant's telephone number, including area code) Not applicable ----------------------------------------------------------------- (Former name, former address and former fiscal year, if changed from last report) ITEM 2. ACQUISITION OF ASSETS On January 2, 1996, the Company acquired 100% of the common stock of Fasco Consumer Products, Inc. ("Fasco"), from H.S. Investments Inc., a subsidiary of BTR Dunlop, Inc. Fasco is a manufacturer of heating, ventilating and other convenience products that are distributed through wholesale and retail markets with annual sales of approximately $40 million. The Company intends to continue to use the assets of Fasco for the manufacture of heating, ventilating and other convenience products. The Company paid $23,532,000 in cash as consideration for the common stock of Fasco and a Non-compete Agreement from H.S. Investments Inc. and its affiliates. The amount of the consideration was determined by negotiation between the parties. The source of the funds used by the Company to effect the acquisition was borrowings under its Revolving Credit Agreement which was amended to increase the facility from $50 million to $75 million to accommodate the transaction. The acquisition will be accounted for as a purchase and, accordingly, the purchase price will be allocated to Fasco's assets and liabilities based upon their respective fair values. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Business Acquired ----------------------------------------- Audited financial statements of Fasco Consumer Products, Inc. as of and for the nine months ended September 30, 1995 are attached hereto as Exhibit 2. (b) Pro Forma Financial Information (Unaudited) ------------------------------------------- The following unaudited pro forma consolidated balance sheet as of December 31, 1995 gives effect to the acquisition as though it had occurred on December 31, 1995. The unaudited pro forma statements of earnings for the fiscal year ended June 30, 1995 and the six months ended December 31, 1995 give effect to the acquisition as if it had occurred at the beginning of the periods presented. The financial statements utilized in the fiscal year pro forma information are for the year ended December 31, 1995 for Fasco. The financial statements of Fasco utilized in the pro forma interim financial information presented are for the six months ended December 31, 1995. The unaudited pro forma financial statements were prepared utilizing available information and certain assumptions that management believes are reasonable. The unaudited pro forma financial statements may not be indicative of the Company's financial position or results of operations had the acquisition actually occurred on the dates indicated. 2 THE RIVAL COMPANY Unaudited Pro Forma Consolidated Balance Sheet December 31, 1995 (Amounts in thousands)
Pro Forma ASSETS Rival Fasco Adjustments Pro Forma ------- ------ ----------- --------- Current Assets: Cash 461 25 (25)(3) 461 Accounts Receivable 86,612 6,211 0 92,823 Merchandise Inventories 74,092 7,694 0 81,786 Other Current Assets 1,481 2,141 (1,160)(3) 2,462 ------- ------ ------- ------- Total Current Assets 162,646 16,071 (1,185) 177,532 Property, Plant and Equipment, net 27,096 7,104 2,210 (1) 36,410 Goodwill 47,374 0 0 47,374 Other Assets 2,784 0 4,000 (1) 6,784 ------- ------ ------- ------- 239,900 23,175 5,025 268,100 ------- ------ ------- ------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Notes Payable 53,900 0 23,532 (2) 77,432 Current Portion of Long-Term Debt 4,000 0 0 4,000 Accounts Payable 17,209 2,372 0 19,581 Other Current Liabilities 14,738 1,028 202 (1),(3) 15,968 ------- ------ ------- ------- Total Current Liabilities 89,847 3,400 23,734 116,981 Long-Term Debt 42,000 0 0 42,000 Other 226 1,031 (1,031)(3) 226 Deferred Taxes 2,372 0 1,066 (1) 3,438 ------- ------ ------- ------- Total Liabilities 134,445 4,431 23,769 162,645 Shareholders' Equity 105,455 18,744 (18,744)(4) 105,455 ------- ------ ------- ------- 239,900 23,175 5,025 268,100 ======= ====== ======= =======
Notes: 1) Adjustment to fair value of certain assets acquired and liabilities assumed as part of Stock Purchase Agreement dated December 29, 1995 and recognition of the value of the eight year non-compete agreement included in the acquisition. 2) Recognition of indebtedness incurred by Rival to finance the acquisition under its Revolving Credit Facility. 3) Elimination of assets not acquired and liabilities not assumed. 4) Elimination of shareholders' equity accounts of Fasco. 3 THE RIVAL COMPANY Unaudited Pro Forma Consolidated Statement of Earnings Year ended June 30, 1995 (Amounts in thousands, except per share amounts)
Pro Forma Rival Fasco(1) Adjustments Pro Forma ------- -------- ----------- --------- Net Sales 231,711 40,726 272,437 Cost of Sales 168,406 29,484 197,890 ------- ------ ------- Gross Profit 63,305 11,242 74,547 Selling Expenses 26,019 7,600 33,619 General and Administrative Expenses 8,589 2,385 (989)(2) 9,985 Goodwill Amortization 1,327 0 1,327 Amortization of Non-compete Agreements 300 0 500 (3) 800 ------- ------ ----- ------- Operating Income 27,070 1,257 489 28,816 ------- ------ ----- ------- Interest Expense 4,216 33 1,612 (4) 5,861 Other (Income) Expenses 120 0 120 ------- ------ ----- ------- Total Other Expenses 4,336 33 1,612 5,981 ------- ------ ----- ------- Earnings before Income Taxes 22,734 1,224 (1,123) 22,835 Income Tax Expense 8,749 482 (432)(5) 8,799 ------- ------ ----- ------- Net Earnings 13,985 742 (691) 14,036 ======= ====== ===== ======= Weighted Average Common and Common Equivalent Shares Outstanding 9,505 9,505 ======= ======= Net Earnings Per Share 1.47 1.48 ======= =======
Notes: 1) Fasco operating results are for the year ended December 31, 1995. 2) During 1995, Fasco recognized lower expenses in the amount of $746,000 as a result of a curtailment relative to its postretirement benefit plans. Postretirement benefits will not be offered subsequent to the acquisition and, therefore, this benefit has been reversed in the pro forma presentation. The pro forma adjustments also recognize the reversal of $1,335,000 in expenses allocated by Fasco's former parent company. Additionally, recognition has been given to $400,000 in annual savings from lower salary and fringe benefit costs related to administrative positions which will be eliminated in March 1996 as a result of integrating these functions. 3) Amortization of the Non-compete Agreement from the acquisition. 4) Elimination of the historical interest expense of Fasco and recognition of pro forma interest resulting from indebtedness associated with the transaction (such interest assumed to bear a rate of 7.0%). 5) Income taxes are provided at a rate of 38.5%. 4 THE RIVAL COMPANY Unaudited Pro Forma Consolidated Statement of Earnings Six months ended December 31, 1995 (Amounts in thousands, except per share amounts)
Pro Forma Rival Fasco(1) Adjustments Pro Forma ------- -------- ----------- --------- Net Sales 171,347 19,995 191,342 Cost of Sales 122,621 15,530 138,151 ------- ------ ------- Gross Profit 48,726 4,465 53,191 Selling Expenses 18,573 4,065 22,638 General and Administrative Expenses 5,383 1,183 (541)(2) 6,025 Goodwill Amortization 812 0 812 Amortization of Non-compete Agreements 150 0 250 (3) 400 ------- ------ ----- ------- Operating Income 23,808 (783) 291 23,316 ------- ------ ----- ------- Interest Expense 3,160 0 820 (4) 3,980 Other (Income) Expenses 144 0 144 ------- ------ ----- ------- Total Other Expenses 3,304 0 820 4,124 ------- ------ ----- ------- Earnings before Income Taxes 20,504 (783) (529) 19,192 Income Tax Expense 7,955 (309) (204)(5) 7,442 ------- ------ ----- ------- Net Earnings 12,549 (474) (325) 11,750 ======= ====== ===== ======= Weighted Average Common and Common Equivalent Shares Outstanding 9,931 9,931 ======= ======= Net Earnings Per Share 1.26 1.18 ======= =======
Notes: 1) Fasco operating results are for the six months ended December 31, 1995. 2) During 1995, Fasco recognized lower expenses in the amount of $746,000 ($373,000 for the six months) as a result of a curtailment relative to its postretirement benefit plans. Postretirement benefits will not be offered subsequent to the acquisition and, therefore, this benefit has been reversed in the pro forma presentation. The pro forma adjustments also recognize the reversal of $714,000 in expenses allocated by Fasco's former parent company during the six month period. Additionally, recognition has been given to $400,000 in annual savings ($200,000 for the six months) from lower salary and fringe benefit costs related to administrative positions which will be eliminated in March as a result of integrating these functions. 3) Amortization of the Non-compete Agreement from the acquisition. 4) Elimination of the historical interest expense of Fasco and recognition of pro forma interest resulting from indebtedness associated with the transaction (such interest assumed to bear a rate of 7.0%). 5) Income taxes are provided at a rate of 38.5%. 5 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. THE RIVAL COMPANY Date: March 18, 1996 By: /s/ Thomas K. Manning ------------------------------------- Thomas K. Manning President and Chief Executive Officer Duly Authorized Officer 6 INDEX TO EXHIBITS Exhibit Number Description - ------- ----------- 1 Stock Purchase Agreement between H.S. Investments, Inc. as seller, and The Rival Company, as buyer, dated as of December 29, 1995 (incorporated by reference to Exhibit 2 to Form 8-K dated as of January 2, 1996 and filed on January 16, 1996). 2 Audited Financial Statements of Fasco Consumer Products, Inc. as of and for the nine months ended September 30, 1995. 7 FASCO CONSUMER PRODUCTS, INC. FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (WITH INDEPENDENT AUDITORS' REPORT THEREON) INDEPENDENT AUDITORS' REPORT ---------------------------- Board of Directors Fasco Consumer Products, Inc.: We have audited the accompanying balance sheet of Fasco Consumer Products, Inc. as of September 30, 1995 and the related statements of earnings, stockholder's equity and cash flows for the nine-month period then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Fasco Consumer Products, Inc. as of September 30, 1995 and the results of its operations and its cash flows for the nine-month period then ended, in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP February 2, 1996 FASCO CONSUMER PRODUCTS, INC. Balance Sheet September 30, 1995
Assets ------ Current assets: Cash $ 413,697 Accounts receivable, net 6,448,642 Inventories 7,164,468 Deferred income taxes 895,323 Prepaid expenses and other current assets 455,135 ----------- Total current assets 15,377,265 Property, plant and equipment, net 7,497,639 $22,874,904 =========== Liabilities and Stockholder's Equity ------------------------------------ Current liabilities: Trade accounts payable $ 2,464,137 Accrued expenses 201,382 Accrued employee compensation 431,963 ----------- Total current liabilities 3,097,482 Deferred income taxes 144,527 Accrued postretirement benefit obligation 1,031,000 Accrued pension obligation 104,018 Total liabilities ----------- 4,377,027 ----------- Stockholder's equity: Common stock, $1.00 par value; authorized 10,000 shares; issued and outstanding 5,000 shares 5,000 Additional paid-in capital 16,550,315 Retained earnings 1,942,562 ----------- Total stockholder's equity 18,497,877 Commitments and contingencies ----------- $22,874,904 ===========
See accompanying notes to financial statements. FASCO CONSUMER PRODUCTS, INC. Statement of Earnings Nine-month period ended September 30, 1995
Net sales $30,883,984 Cost of sales 21,113,602 ----------- Gross profit 9,770,382 Selling expenses 5,439,112 General and administrative expenses 1,522,355 ----------- Operating income 2,808,915 Interest expense 33,278 ----------- Earnings before income taxes 2,775,637 Income tax expense 1,093,905 ----------- Net earnings $ 1,681,732 ===========
See accompanying notes to financial statements. FASCO CONSUMER PRODUCTS, INC. Statement of Stockholder's Equity Nine-month period ended September 30, 1995
Additional Common paid-in Retained stock capital earnings Total ------ ---------- --------- ---------- Balance, December 31, 1994 $5,000 12,294,961 260,830 12,560,791 Net earnings -- -- 1,681,732 1,681,732 Capital contributions from parent company, net -- 4,255,354 -- 4,255,354 ------ ---------- --------- ---------- Balance, September 30, 1995 5,000 16,550,315 1,942,562 18,497,877 ====== ========== ========= ==========
See accompanying notes to financial statements. FASCO CONSUMER PRODUCTS, INC. Statement of Cash Flows Nine-month period ended September 30, 1995 Cash flows from operating activities: Net earnings $ 1,681,732 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 777,817 Provision for accounts receivable 28,072 Deferred income taxes 441,171 Changes in assets and liabilities: Accounts receivable (396,231) Inventories 1,588,601 Prepaid expenses and other current assets 26,737 Accounts payable (250,071) Accrued expenses (3,892,049) ---------- Net cash provided by operating activities 5,779 ---------- Cash flows from investing activities - capital expenditures (2,447,436) ---------- Cash flows from financing activities: Repayment of long-term debt (1,400,000) Capital contributions from parent company, net 4,255,354 ---------- Net cash provided by financing activities 2,855,354 ---------- Net increase in cash 413,697 Cash at beginning of period - ---------- Cash at end of period $ 413,697 ========== Cash paid for interest $ 55,096 ========== See accompanying notes to financial statements. FASCO CONSUMER PRODUCTS, INC. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ Description of Business ----------------------- Fasco Consumer Products, Inc. (Fasco or the Company) is a wholly-owned subsidiary of H.S. Investments, Inc., whose ultimate parent is BTR PLC. Fasco operates a plant in Fayetteville, North Carolina where it manufactures ceiling fans, baseboard heaters, ventilation systems and other home comfort and industrial products. Fasco products are sold through wholesale distribution to the electrical and building contractor trade, and through retail distribution to home centers, warehouse clubs, hardware stores and building materials retailers. Wholesale and retail sales represented approximately 60% and 40% of sales for the nine-month period ended September 30, 1995, respectively. The Company's customers are located throughout the United States and Canada. Fasco's raw materials are readily available, and Fasco is not dependent on a small group of suppliers. Use of Estimates ---------------- Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. Inventories ----------- Inventories are stated at the lower of cost (first-in, first-out method) or market. Depreciation ------------ Depreciation on property, plant and equipment is computed on a straight-line basis over the estimated useful lives of the assets which range from three to thirteen years on machinery and equipment and furniture and fixtures, and up to fifty years on buildings. Income Taxes ------------ Fasco is included in the consolidated federal income tax return filed by its parent company and other affiliated companies. Income taxes are determined on a separate return basis. Fasco accounts for income taxes under the asset and liability method whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date. (Continued) 2 FASCO CONSUMER PRODUCTS, INC. NOTES TO FINANCIAL STATEMENTS Self-insurance -------------- Fasco maintains a self-insurance program, through its parent company, against general and product liability claims, as well as certain medical claims and workers' compensation claims, with excess coverage above the self-insured retention. Provisions for such claims are accrued based upon estimates of aggregate liability. Net Sales --------- Fasco recognizes revenue at the time products are shipped to its customers. Sales to two of Fasco's customers were 14% and 13% of sales for the nine-month period ended September 30, 1995. Fair Value of Financial Instruments ----------------------------------- Fasco is not a party to any derivative financial instruments. The carrying amount of cash, accounts receivable and trade accounts payable approximates fair value because of the short maturity of these instruments. Related Party Transactions -------------------------- The parent company of Fasco provides certain management, corporate, financial and administrative services to Fasco. Fees for these services are determined based generally on an allocation from the parent company of actual costs incurred and amounted to $1,537,000 for the nine-month period ended September 30, 1995. Fasco purchases motors used in its products from an affiliated company. Such purchases amounted to $2,099,000 for the nine-month period ended September 30, 1995. Cash generated by Fasco is transferred to the parent company. Cash required by Fasco is transferred from the parent company. The net cash transfer received from the parent company has been presented as a net capital contribution in the accompanying financial statements for the nine- month period ended September 30, 1995. (2) ACCOUNTS RECEIVABLE ------------------- Accounts receivable at September 30, 1995 consist of: Trade $7,306,295 Less allowance for doubtful accounts, discounts and sales rebates 857,653 ---------- $6,448,642 ========== (3) INVENTORIES ------------ Inventories at September 30, 1995 consist of: Raw materials $2,895,141 Work in process 1,369,993 Finished goods 2,899,334 ---------- $7,164,468 ========== (Continued) 3 FASCO CONSUMER PRODUCTS, INC. NOTES TO FINANCIAL STATEMENTS (4) PROPERTY, PLANT AND EQUIPMENT ----------------------------- Property, plant and equipment at September 30, 1995 consist of: Land and improvements $ 223,498 Buildings 3,481,988 Machinery and equipment 15,226,717 Furniture and fixtures 125,808 Automobiles 134,706 ----------- 19,192,717 Less accumulated depreciation 11,695,078 ----------- $ 7,497,639 =========== (5) INCOME TAXES ------------ Income tax expense for the nine-month period ended September 30, 1995 is comprised of the following: Current: Federal $ 523,405 State and local 129,329 ----------- Total current tax expense 652,734 ----------- Deferred: Federal 353,760 State and local 87,411 ----------- Total deferred income 441,171 taxes ----------- Total income tax expense $ 1,093,905 =========== The tax effects of temporary differences that result in deferred tax assets and liabilities at September 30, 1995 and December 31, 1994 are presented below. There were no valuation allowances provided. September 30, December 31, 1995 1994 ------------- ------------ [S] [C] [C] Reserves not currently deductible $ 907,810 1,202,500 Inventory 319,417 302,992 Other 54,002 111,692 ---------- --------- Total deferred 1,281,229 1,617,184 income tax assets ---------- --------- Depreciation 530,433 414,786 Other - 10,431 ---------- --------- Total deferred 530,433 425,217 income tax ---------- --------- liabilities Net deferred income $ 750,796 1,191,967 tax assets ========== ========= (Continued) 4 FASCO CONSUMER PRODUCTS, INC. NOTES TO FINANCIAL STATEMENTS Actual income tax expense differs from expected income tax expense based on the statutory federal income tax rate of 34% for the nine-month period ended September 30, 1995 due to the following:
Expected income tax expense $ 943,717 State income tax expense, net of federal income tax effect 143,048 Other 7,140 ---------- Total income tax expense $1,093,905 ==========
Total income taxes paid for the nine-month period ended September 30, 1995 were $811,000. (6) PENSION AND POSTRETIREMENT PLANS -------------------------------- Fasco participates along with its parent company and other affiliated companies in a noncontributory defined benefit pension plan covering substantially all employees. The following table sets forth the plan's funded status and the amounts included in Fasco's balance sheet at September 30, 1995:
Actuarial present value of accumulated benefit obligation: Vested $3,379,041 Nonvested 93,157 ---------- Accumulated benefit obligation 3,472,198 Excess of projected benefit obligation over accumulated benefit obligation 484,592 ---------- Projected benefit obligation 3,956,790 Fair value of plan assets 3,895,488 ---------- Plan assets less than projected benefit obligation 61,302 Unrecognized net gain 42,716 ---------- Accrued pension obligation $ 104,018 ==========
The components of the net periodic pension cost of the plan relating to Fasco for the nine-month period ended September 30, 1995 is as follows:
Service cost $ 110,678 Interest cost 234,108 Actual return on plan assets (240,768) --------- Net periodic pension expense $ 104,018 ========= Significant pension plan assumptions are as follows: Discount rate 8.50% Expected long-term rate of return on 9.00 plan assets Salary increase rate 5.00
(Continued) 5 FASCO CONSUMER PRODUCTS, INC. NOTES TO FINANCIAL STATEMENTS Fasco participates along with its parent company and other affiliated companies in a 401(k) plan which allows employees to make voluntary contributions, as defined. Fasco makes partial matching contributions which were $178,000 for the nine-month period ended September 30, 1995. Fasco participates along with its parent company in a defined benefit health care plan that provides postretirement medical benefits to full- time employees who meet minimum age and service requirements. The plan is unfunded, provides for retiree contributions adjusted annually, and contains other cost-sharing features. The following table sets forth the plan's funded status and the amounts included in Fasco's balance sheet at September 30, 1995:
Accumulated postretirement benefit obligation: Retirees $ 217,000 Active plan participants 200,000 ---------- 417,000 Fair value of plan assets -- ---------- Accumulated postretirement benefit obligation in excess of plan assets 417,000 Unrecognized net gain 614,000 ---------- Accrued postretirement benefit cost $1,031,000 ==========
Net postretirement benefit for the nine-month period ended September 30, 1995 is comprised of the following:
Service cost $ 5,000 Interest 42,000 Curtailment gain (752,000) Net amortization and deferral (41,000) --------- Net postretirement benefit $(746,000) =========
A curtailment gain of $752,000 was recognized during the nine-month period ended September 30, 1995 due to a reduction in the work force of Fasco. For measurement purposes, an 11.40% annual rate of increase in the per capita cost of covered benefits (health care cost trend rate) was assumed for 1995; the health care cost trend rate was assumed to decrease gradually to 6.0% by the year 2006 and remain at that level thereafter. The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 8.50%. (Continued) 6 FASCO CONSUMER PRODUCTS, INC. NOTES TO FINANCIAL STATEMENTS (7) LEASES ------ Fasco maintains operating leases on certain equipment. Rental expense under such leases amounted to $194,450 for the nine-month period ended September 30, 1995. Future rental commitments under noncancelable operating leases with a remaining term in excess of one year at September 30, 1995 are as follows:
1996 $178,419 1997 140,630 1998 95,583 1999 75,498
(8) CONTINGENCIES ------------- Fasco is party to various product liability lawsuits relating to its products and incidental to its business. Fasco believes that the ultimate conclusion of the various pending claims and lawsuits of the Company will not have a material adverse effect on the financial statements of Fasco. (9) SUBSEQUENT EVENT ---------------- On January 2, 1996, 100% of the common stock of Fasco was acquired by The Rival Company. -----END PRIVACY-ENHANCED MESSAGE-----