-----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, VYhf2IaD5wLdd8cLSykUjhCVGV1uKskTHjWURO4KQuQrwsVlxlRsCl7aRIRPj5Io Iktw4QmUzvB+BWksbcAoow== 0000950131-98-000407.txt : 19980129 0000950131-98-000407.hdr.sgml : 19980129 ACCESSION NUMBER: 0000950131-98-000407 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980128 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RIVAL CO CENTRAL INDEX KEY: 0000860194 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC HOUSEWARES & FANS [3634] IRS NUMBER: 133327021 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20274 FILM NUMBER: 98515419 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 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q ( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 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 0-20274 ------- 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.) 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 since last report) 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. (l) Yes X No ----- ----- (2) Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. As of January 16, 1998, the registrant had 9,390,187 shares of common stock, par value $.01 per share, outstanding. 1 THE RIVAL COMPANY FORM 10-Q QUARTER ENDED December 31,1997 INDEX PART I. - FINANCIAL INFORMATION Page ITEM 1. Financial Statements (1) Condensed Consolidated Financial Statements (unaudited): Condensed Consolidated Balance Sheets as of December 31, 1997, December 31, 1996 and June 30, 1997. 3 Condensed Consolidated Statements of Operations for the three months and six months ended December 31, 1997 and 1996. 4 Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 1997 and 1996. 5 (2) Notes to Condensed Consolidated Financial Statements. 6-8 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 8-9 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 2 PART I - FINANCIAL INFORMATION THE RIVAL COMPANY AND SUBSIDIARIES -------------------------------- CONDENSED CONSOLIDATED BALANCE SHEETS December 31, 1997 and 1996 and June 30, 1997 (amounts in thousands) (unaudited)
12/31/97 12/31/96 06/30/97 -------- -------- -------- ASSETS Current assets: Cash $ 59 $ 1,332 $ 194 Accounts receivable 106,905 98,439 74,663 Inventories 98,498 106,601 105,287 Deferred income taxes 2,549 1,602 2,584 Prepaid expenses 1,753 2,231 1,375 -------- -------- -------- Total current assets 209,764 210,205 184,103 Property, plant and equipment, net 45,790 41,757 46,695 Goodwill 61,538 59,029 62,314 Other assets 5,124 5,731 5,493 -------- -------- -------- $322,216 $316,722 $298,605 ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Notes payable to banks $ 69,233 $ 65,116 $ 65,075 Current portion of long-term debt 4,000 4,000 4,000 Trade accounts payable 19,283 18,152 15,477 Income taxes payable 5,068 4,380 1,231 Other payables and accrued expenses 14,537 13,895 13,501 -------- -------- -------- Total current liabilities 112,121 105,543 99,284 Long-term debt, less current portion 84,000 88,000 84,000 Deferred income taxes and other liabilities 5,825 4,257 4,931 Stockholders' equity: Common stock 98 98 98 Paid-in capital 45,656 45,577 45,656 Retained earnings 79,735 74,043 69,706 Treasury stock, at cost (4,952) (310) (4,438) Foreign currency translation adjustments (267) (486) (632) -------- -------- -------- Total stockholders' equity 120,270 118,922 110,390 -------- -------- -------- $322,216 $316,722 $298,605 ======== ======== ========
See accompanying notes to condensed consolidated financial statements. 3 THE RIVAL COMPANY AND SUBSIDIARIES -------------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three months and six months ended December 31, 1997 and December 31, 1996 (amounts in thousands, except per share amounts) (unaudited)
Three months ended Six months ended ------------------ ---------------- 12/31/97 12/31/96 12/31/97 12/31/96 -------- -------- -------- -------- Net sales $127,852 $121,566 $224,549 $221,216 Cost of sales 93,680 86,520 164,799 157,587 -------- -------- -------- -------- Gross profit 34,172 35,046 59,750 63,629 Selling expenses 15,056 14,205 28,055 27,514 General and administrative expenses 3,624 3,411 6,879 6,717 Amortization of goodwill & other intangible assets 706 748 1,485 1,488 -------- --------- -------- -------- Operating income 14,786 16,682 23,331 27,910 Interest expense 2,872 2,739 5,459 5,230 Other (income) expense, net (95) 12 (92) (6) -------- --------- -------- -------- Earnings before income taxes Income tax expense 12,009 13,931 17,964 22,686 4,572 5,337 6,801 8,816 -------- --------- -------- -------- Net earnings $ 7,437 $ 8,594 $ 11,163 $ 13,870 ======== ========= ========= ========= Weighted average common shares outstanding 9,446 9,734 9,448 9,732 ======== ========= ========= ========= Net earnings per common share (Basic EPS) $0.79 $0.88 $1.18 $1.43 ======== ========= ========= ========= Weighted average common and common equivalent shares outstanding 9,598 9,973 9,631 9,961 ======== ========= ========= ========= Net earnings per common share (Diluted EPS) $0.77 $0.86 $1.16 $1.39 ======== ========= ========= =========
See accompanying notes to condensed consolidated financial statements. 4 THE RIVAL COMPANY AND SUBSIDIARIES __________________________________________________ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended December 31, 1997 and December 31, 1996 (amounts in thousands) (unaudited)
Six months ended ---------------- 12/31/97 12/31/96 -------- -------- Cash flows from operating activities: Net earnings $ 11,163 $ 13,870 Adjustments to reconcile net earnings to net cash used by operating activities: Depreciation and amortization 5,621 5,223 Other 144 138 Changes in assets and liabilities, net of acquisitions: Accounts receivable (32,242) (24,336) Inventories 6,789 (4,571) Prepaid expenses (378) (89) Accounts payable and accruals 4,842 (1,844) Deferred income taxes 35 -- Income taxes payable 3,837 4,183 -------- -------- Net cash used by operating activities (189) (7,426) -------- -------- Cash flows from investing activities: Capital expenditures (3,185) (5,065) Other (21) 178 -------- -------- Net cash used by investing activities (3,206) (4,887) -------- -------- Cash flows from financing activities: Net borrowings under working capital loans 4,158 13,220 Repurchase of common stock (514) -- Dividends paid (1,134) (1,168) Other 750 90 -------- -------- Net cash provided by financing activities 3,260 12,142 -------- -------- Net decrease in cash (135) (171) Cash at beginning of period 194 1,503 -------- -------- Cash at end of period $ 59 $ 1,332 ======== ========
See accompanying notes to condensed consolidated financial statements. 5 THE RIVAL COMPANY AND SUBSIDIARIES __________________________________________________ Notes to Condensed Consolidated Financial Statements Six Months Ended December 31, 1997 and December 31, 1996 Note 1 - ------ In the opinion of Management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position of the Company as of December 31, 1997 and 1996 and the results of its operations and its cash flows for the periods ended December 31, 1997 and 1996. The June 30, 1997 condensed consolidated balance sheet has been derived from the audited consolidated financial statements as of that date. These financial statements have been prepared in accordance with the instructions to Form 10-Q. To the extent that information and footnotes required by generally accepted accounting principles for complete financial statements are contained in or consistent with the audited consolidated financial statements incorporated by reference in the Company's Form 10-K for the year ended June 30, 1997, such information and footnotes have not been duplicated herein. Note 2 Seasonality - ------------------- The results of operations for the six months ended December 31, are not indicative of the results to be expected for the full year due to the seasonal nature of the Company's operations. Note 3 Inventories - ------------------ The following is a summary of inventories at December 31, 1997 and 1996 and June 30, 1997 (in thousands):
12/31/97 12/31/96 06/30/97 -------- -------- -------- Raw Materials and work in progress $ 43,968 $ 44,069 $ 52,933 Finished goods 60,420 67,525 57,794 --------- -------- -------- 104,388 111,594 110,727 Less LIFO allowance (5,890) (4,993) (5,440) --------- -------- -------- $ 98,498 $106,601 $105,287 ========= ======== ========
Note 4 Derivative Financial Instruments - ---------------------------------------- In conjunction with the sale of $50 million in 7.21% unsecured notes in April 1996, the Company entered into a twelve year interest rate swap transaction with Bank of America, N.A. (B of A) in the notional amount of $25 million. The effect of the swap transaction was to convert the interest payment stream on $25 million of the notes to a variable rate which was approximately 0.45% above the prevailing six-month LIBOR rate. During November 1997, the Company entered into an agreement with B of A to terminate the interest rate swap agreement in exchange for a payment by B of A to the Company in the amount of $750,000. The Company will recognize the $750,000 gain as a reduction of interest expense through the 2008 maturity of the underlying notes resulting in an effective interest rate to maturity of 6.74% on $25 million of the notes. 6 Note 5 Business Segments - ------------------------- The Rival Company manages its operations through four business units: kitchen electrics and personal care (kitchen electrics), home environment, industrial and building supply (industrial) and international. The kitchen electrics business unit sells products including Crock-Pot(R) slow cookers, toasters, ice cream freezers, can openers and massagers to retailers throughout the U.S. The home environment business unit sells products including fans, air purifiers, humidifiers, electric space heaters, utility pumps and household ventilation to retailers throughout the U.S. The industrial group sells products including industrial fans and drum blowers, household ventilation, ceiling fans, door chimes and electric heaters to electrical and industrial wholesale distributors throughout the U.S. The international business unit sells the Company's products outside the U.S. The Company is reporting business segment information in accordance with the provisions of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" which was issued in June 1997. The Rival Company evaluates performance based upon contribution margin, which it defines as gross margin less selling expenses. Administrative functions such as finance and management information systems are centralized and are not allocated to the business units. The various business units share manufacturing and distribution facilities. Costs of operating the manufacturing plants are allocated to the business units through full-absorption standard costing and distribution costs are allocated based upon volume shipped from each distribution center. Summary financial information for each reportable segment, together with non- business unit results consisting of sales directly to consumers, for the three month periods ended December 31, 1997 and 1996 is as follows (in thousands):
December Kitchen Home Inter- 1997 Electrics Environment Industrial national Other Total - -------------------------------------------------------------------------------------- Net sales $74,809 $26,097 $5,839 $19,163 $1,944 $127,852 Gross profit 20,347 6,079 1,251 5,431 1,064 34,172 Selling expenses 6,996 3,379 1,783 2,513 385 15,056 Contribution margin 13,351 2,700 (532) 2,918 679 19,116 December Kitchen Home Inter- 1996 Electrics Environment Industrial national Other Total - -------------------------------------------------------------------------------------- Net sales $69,296 $30,138 $6,607 $14,180 $1,345 $121,566 Gross profit 21,524 5,637 1,614 5,381 890 35,046 Selling expenses 6,486 3,494 1,699 2,161 365 14,205 Contribution margin 15,038 2,143 (85) 3,220 525 20,841
Summary financial information for the six-month periods ended December 31, 1997 and 1996 is as follows (in thousands):
December Kitchen Home Inter- 1997 Electrics Environment Industrial national Other Total - -------------------------------------------------------------------------------------- Net sales $124,410 $52,463 $14,915 $29,483 $3,278 $224,549 Gross profit 34,302 11,677 3,677 8,271 1,823 59,750 Selling expenses 12,710 6,455 3,926 4,196 768 28,055 Contribution margin 21,592 5,222 (249) 4,075 1,055 31,695 December Kitchen Home Inter- 1996 Electrics Environment Industrial national Other Total - -------------------------------------------------------------------------------------- Net sales $119,698 $61,832 $16,291 $21,245 $2,150 $221,216 Gross profit 36,930 13,447 4,009 7,820 1,423 63,629 Selling expenses 11,929 6,772 4,391 3,740 682 27,514 Contribution margin 25,001 6,675 (382) 4,080 741 36,115
7 Note 6 Treasury Stock Purchases During December 1997, the Company repurchased 37,700 shares of its common stock at a price of $13.625 per share. In January 1998, the Company repurchased an additional 50,000 shares of its common stock at a price of $13.125. The purchases were financed through borrowings under the Company's revolving credit agreement. Note 7 Net Earnings Per Share 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 ("APB 15") and related interpretations. Statement No. 128 has been adopted in the accompanying financial statements with retroactive application. Basic earnings per share excludes dilution and is computed by dividing net earnings by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Diluted earnings per share is computed based upon the weighted average number of common shares and dilutive common equivalent shares outstanding. Common stock options, which are common stock equivalents, have a dilutive effect on earnings per share in all periods and are therefore included in the computation of diluted earnings per share. Diluted earnings per share in the accompanying statements of operations is identical to the primary earnings per share previously presented in accordance with APB 15. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Net sales were $127.9 million for the quarter ended December 31, 1997 compared to $121.6 million in the prior year. For the first six months of the fiscal year, sales were $224.5 million compared to $221.6 million in the prior year. Sales growth for the quarter was due in part to later than normal ordering patterns resulting in a shift of sales from the Company's first fiscal quarter to its second quarter. Year to date sales increased 1.5% due to strong international sales, primarily in Canada and Latin America. Kitchen electric sales increased by 4% as strong demand for the Crock Pot(R) slow cooker and new products from the Dazey acquisition more than offset declines in toasters and novelty massagers. Sales in home environment declined by 15% due to reduced retail placement of seasonal products including heaters and humidifiers. Gross profit was $34.2 million (26.7% of sales) for the current year's quarter compared to $35.0 million (28.8% of sales) in the prior year. For the six months, gross profit decreased to $59.8 million (26.6% of sales) from $63.6 million (28.8% of sales) in the prior year. Approximately one half of the decline in gross profit as a percentage of sales was the result of decreased sales of the higher margin novelty massagers. The balance of the decrease was due to a higher accrual for service cost and a competitive retail environment. Selling expenses were $15.1 million (11.8% of sales) for the quarter compared to $14.2 million (11.7% of sales) in the prior year. For the six months, selling expenses were $28.1 million (12.5% of sales) compared to $27.5 million (12.4% of sales) in the prior year. The increased selling expenses reflect higher promotional and product development costs, partially offset by a decline in fixed expenditures including lower personnel costs. 8 General and administrative costs were $3.6 million for the quarter compared to $3.4 million in the prior year. For the six months, general and administrative costs increased 2% to $6.9 million. Substantial savings were achieved due to the consolidation of certain administrative functions in Canada, however, these were largely offset by increased legal and professional expenses incurred involving the Company's intellectual property. Interest expense increased from $5.2 million to $5.5 million for the six months due to increased borrowings as the Company invested $10 million in the acquisition of certain assets of Dazey Corporation and repurchased $4.6 million of the Company's common stock during the past twelve months. Net earnings for the quarter ended December 31, 1997 were $7.4 million ($0.77 per share) compared to $8.6 million ($0.86 per share) in the prior year. For the six months, net earnings were $11.2 million ($1.16 per share) compared to $13.9 million ($1.39 per share) in the prior year. Liquidity and Capital Resources As of December 31, 1997 the Company had $88.0 million in long term debt (including $4 million current portion) and $85 million in revolving loan commitments. Revolving credit loans outstanding were $69.2 million as of such date. The long-term debt requires periodic principal payments including $4.0 million in January 1998 and $6.0 million in January 1999 and has a final maturity in 2008. The revolving credit facilities include a $75 million U.S. bank line and a Canadian facility for the Canadian dollar equivalent of U.S. $10.0 million. The U.S. revolving credit facility expires in June 1999 and currently bears interest at a floating rate of LIBOR plus .75%. During the six months ended December 31, 1997, the Company used $0.2 million of cash for operating activities as compared to a use of $7.4 million of cash for operating activities for the same period in the prior year. The Company historically requires a significant amount of cash each fall to fund its build- up in inventories and accounts receivable during its peak selling season. These cash requirements are funded through borrowings on the working capital line. The decrease in cash used in operating activities in the current year primarily reflects a concerted effort by the Company to reduce inventory levels. The Company plans to make capital expenditures of approximately $9.0 million during fiscal 1998. Management believes that cash generated from operations and its bank credit facility will be sufficient to meet its cash requirements for the foreseeable future. New Accounting Pronouncement In 1997, the Financial Accounting Standard's Board issued Statement No. 130, "Reporting Comprehensive Income". This statement, which is effective for fiscal years beginning after December 15, 1997 expands disclosures and will have no impact on the Company's reported financial position, results of operations or cash flow. Computer Systems and the Year 2000 During the past several years, the Company has replaced all of its computer software applications and, as a result, all of its systems are Year 2000 compliant (i.e., support proper processing of transactions relating to the year 2000 and beyond.) 9 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS A regular annual meeting of shareholders was held on November 4, 1997. Each of the Company's directors was elected to a one-year term. The respective votes were as follows: Thomas K. Manning 7,591,481 shares voted for election and 34,215 shares withheld votes; William S. Endres, 7,591,691 shares voted for election and 34,005 shares withheld votes; Darrel M. Sanders, 7,591,481 shares voted for election and 34,215 shares withheld votes; William L. Yager, 7,550,744 shares voted for election and 74,952 shares withheld votes; Jack J. Culberg, 7,591,006 shares voted for election and 34,690 shares withheld votes; Todd Goodwin 7,592,956 shares voted for election and 32,740 shares withheld votes; John E. Grimm, III, 7,592,606 shares voted for election and 33,090 shares withheld votes; Lanny R. Julian, 7,592,801 shares voted for election and 32,895 shares withheld votes; Beatrice B. Smith, 7,592,481 shares voted for election and 33,215 shares withheld votes; Noel Thomas Patton, 7,593,501 shares voted for election and 32,195 shares withheld votes. Additionally, the shareholders voted to ratify the appointment of KPMG Peat Marwick as independent public accountants for the Company for the fiscal year ending June 30, 1998. The vote was 7,599,476 shares voted for ratification, 5,818 shares voted against ratification and 20,402 shares for which the vote was withheld. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. 11 Schedule regarding computation of per share earnings. (b) Reports on Form 8-K None SIGNATURES 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 Dated: January 23, 1998 By: /s/ William L. Yager ------------------------ William L. Yager President and Chief Operating Officer (Duly Authorized Officer) Dated: January 23, 1998 By: /s/ W. Mark Meierhoffer ------------------------- W. Mark Meierhoffer Senior Vice-President of Finance and Administration, Chief Financial Officer 10 EX-11 2 DILUTED EARNINGS PER SHARE Exhibit 11 THE RIVAL COMPANY AND SUBSIDIARIES Diluted Earnings Per Share (in thousands except per share data)
Three months ended Six months ended --------------------- -------------------- 12/31/97 12/31/96 12/31/97 12/31/96 -------- -------- -------- -------- Net earnings $ 7,437 $ 8,594 $ 11,163 $ 13,870 ======== ======== ======== ======== Diluted Earnings Per Share - -------------------------- Weighted average common and common equivalent shares outstanding 9,598 9,973 9,631 9,961 ======== ======== ======== ======== Earnings per common and common equivalent share (diluted) $ 0.77 $ 0.86 $ 1.16 $ 1.39 ======== ======== ======== ======== Share computation: Average common shares outstanding 9,446 9,734 9,448 9,732 Average number of options outstanding 816 663 822 673 Less treasury shares acquired with proceeds from exercise of options (664) (424) (639) (444) ======== ======== ======== ======== Weighted average common and common equivalent shares outstanding 9,598 9,973 9,631 9,961 ======== ======== ======== ========
EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Form 10-Q for the six months ended December 31, 1997 and 1996 and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS 6-MOS JUN-30-1998 JUN-30-1997 JUL-01-1997 JUL-01-1996 DEC-31-1997 DEC-31-1996 59 1,332 0 0 109,820 101,581 2,915 3,142 98,498 106,601 209,764 210,205 80,683 75,119 34,893 33,362 322,216 316,722 112,121 105,543 84,000 88,000 0 0 0 0 98 98 120,172 118,824 322,216 322,216 224,549 221,216 224,549 221,216 164,799 157,587 164,799 157,587 36,419 35,719 562 232 5,459 5,230 17,964 22,686 6,801 8,816 11,163 13,870 0 0 0 0 0 0 11,163 13,870 0 0 1.16 1.39
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