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, 1996
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: 001-11007
TOASTMASTER INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MISSOURI 43-1204566
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER ID NO.)
INCORPORATION OR ORGANIZATION)
L801 N. STADIUM BLVD.
COLUMBIA, MISSOURI 65202
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
TELEPHONE NUMBER (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. [X] YES [ ] NO
AS OF APRIL 30, 1996, THERE WERE 7,538,250 SHARES OF THE
REGISTRANT'S COMMON STOCK OUTSTANDING.
<PAGE>
TOASTMASTER INC.
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS -
QUARTERS ENDED MARCH 31, 1996 AND 1995 3
CONSOLIDATED BALANCE SHEETS -
MARCH 31, 1996 AND 1995 AND DECEMBER 31, 1995 4
CONSOLIDATED STATEMENTS OF CASH FLOWS -
THREE MONTHS ENDED MARCH 31, 1996 AND 1995 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION7-9
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9
SIGNATURE 10
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
ITEM 1. FINANCIAL STATEMENTS
TOASTMASTER INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
QUARTER ENDED MARCH 31
1996 1995
<S> <C> <C>
Net Sales $26,739 $30,827
Cost of Sales 23,380 26,631
Gross Profit 3,359 4,196
Selling, General and Admin. Expenses 4,984 4,690
Operating Loss (1,625) (494)
Other Expense - Interest 980 1,065
Loss Before Income Taxes (2,605) (1,559)
Income Tax Benefit (951) (468)
Net Loss $(1,654) $(1,091)
Net Loss Per Common and Common
Equivalent Shares Outstanding $(0.22) $(0.14)
Weighted Average Common and Common
Equivalent Shares Outstanding 7,538 7,586
</TABLE>
<PAGE>
<TABLE>
TOASTMASTER INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<CAPTION>
3/31/96 12/31/95 3/31/95
<S> <C> <C> <C>
ASSETS
Cash $ 121 $ 42 $ 53
Accounts Receivable,
less allowances 30,514 64,504 38,895
Inventories
Finished Goods 32,217 30,692 28,607
Raw Matl.,WIP 11,944 10,286 13,146
LIFO/Inventory Valuation Reserve (1,884) (1,973) (1,878)
Total Inventory 42,277 39,005 39,875
Deferred Income Tax 824 824 409
Prepaid Expenses 2,355 588 2,177
Total Current Asset 76,091 104,963 81,409
Property, Plant and Equipment
Land 921 921 851
Buildings 9,048 9,048 9,038
Less: Accumulated Depreciation (4,540) (4,419) (4,056)
Machinery & Equipment 40,380 39,887 37,594
Less: Accumulated Depreciation (26,433) (25,661) (23,067)
Net Property, Plant & Equipment 19,376 19,776 20,360
Goodwill, net of accumulated
amortization 3,463 3,491 3,575
Other Assets 1,747 1,765 1,925
$100,677 $129,995 $107,269
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Current Installments of
Long-Term Debt $ 2,181 $ 2,176 $ 2,147
Accounts Payable 7,229 5,943 9,024
Accrued Expenses 13,061 15,887 13,801
Income Taxes Payable 0 1,341 0
Total Current Liabilities 22,471 25,347 24,972
Long Term Debt, Excluding
Current Installments 33,561 58,190 37,798
Deferred Income Taxes 1,036 1,036 1,010
Total Liabilities 57,068 84,573 63,780
Stockholders' Equity:
Common Stock, $.10 par value 760 760 760
Additional Paid-in Capital 25,340 25,340 25,340
Minimum Pension Liability Adjustment (267) (267) (281)
Retained Earnings 18,080 19,886 17,915
Equity Adj from Foreign
Currency Translation 16) (9) (33)
43,897 45,710 43,701
Treasury Stock (288) (288) (212)
Total Stockholders' Equity 43,609 45,422 43,489
$100,677 $129,995 $107,269
</TABLE>
<PAGE>
<TABLE>
TOASTMASTER INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<CAPTION>
QUARTER ENDED MARCH 31
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,654) $ (1,091)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation and amortization 1,105 1,126
Gain on sale of fixed assets 0 (260)
Accounts receivable 33,990 25,551
Inventories (3,272) (2,876)
Prepaid expenses & other current assets (871) (1,559)
Other assets (28) (8)
Accounts payable 1,286 585
Accrued liabilities (2,826) (1,367)
Income taxes payable (2,237) (864)
Deferred income taxes 0 0
27,147 20,328
Net cash flows provided by
operating activities 25,493 19,237
Cash flows provided (used) by
investing activities:
Additions to property, plant and equipment (631) (554)
Proceeds from sale of property and plant 0 889
Net cash flows provided (used) by
investing activities (631) 335
Cash flows from financing activities:
Proceeds from revolving credit agreement 33,783 37,000
Repayments of revolving credit agreement (57,858) (55,674)
Dividends paid (152) (152)
Repayment of long-term debt (549) (546)
Purchase of treasury stock 0 (194)
Net cash flows used by financing
activities (24,776) (19,566)
Foreign currency translation adjustment (7) 22
Net increase in cash 79 28
Cash at beginning of period 42 25
Cash at end of period $ 121 $ 53
Cash paid during the period for:
Interest $1,170 $1,224
Income taxes $1,319 $1,050
</TABLE>
<PAGE>
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, 1995 AND NOTES THERETO
CONTAINED IN THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS
INCORPORATED BY REFERENCE IN THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995. THE RESULTS
OF OPERATIONS FOR THE INTERIM PERIODS SHOWN ARE NOT
NECESSARILY INDICATIVE OF THE RESULTS FOR THE ENTIRE FISCAL
YEAR ENDING DECEMBER 31, 1996.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
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, 1995.
The Company believes that sales of many of its products are
seasonal, with higher sales occurring during the spring and early
summer months for fans and during the fall and winter months for
forced air and radiant heaters and humidifiers. In addition, the
Company believes that significant quantities of its products are
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 94% of revenues.
RESULTS OF OPERATIONS
Net sales were $26.7 million for the quarter ended March 31,
1996, a decrease of $4.1 million or 13.3% from the $30.8 million
of net sales for the quarter ended March 31, 1995. Revenues in
the quarter ended March 31, 1996 for Kitchen countertop
appliances were $21.6 million, a decrease of 16.2% from the
comparable period of 1995. Shipments of virtually all kitchen
appliances were down, the result of slow retail sales during both
the fourth quarter of 1995 and the first quarter of 1996. In
addition, product returns were higher than for the same period
last year, as retailers attempted to reduce their inventories.
Environmental products revenues for the quarter ended March 31,
1996 were $120 thousand, down from $1.0 million in the first
quarter of 1995. Fan sales declined due to the Company's
continuing deemphasis of that product line, as well as cool early
spring weather. Time products revenues of $6.3 million for the
quarter ended March 31, 1996 had a slight increase from $6.2
million for the first quarter of 1995. Sales to the five largest
customers for the first quarter of 1996 represented approximately
42% of revenues. Sales to the five largest customers in the
first quarter of 1995 represented approximately 47% of revenues.
Gross profit was $3.4 million (12.6% of net sales) for the
quarter ended March 31, 1996 and $4.2 million (13.6% of net
sales) for the quarter ended March 31, 1995. The decrease of
1.0%, as a percentage of net sales, was primarily due to
manufacturing inefficiencies caused by a reduction in production.
Higher than acceptable inventory levels caused by lower sales
order demand required an adjustment to the production schedule.
The Company expects to implement <PAGE> selected price increases during
the second quarter of 1996, but does not expect price increases
to have a significant impact on the financial results for the
remainder of the year.
Selling, general and administrative expenses for the quarter
ended March 31, 1996 were $5.0 million compared to $4.7 million
for the same period of 1995. The increase is due primarily to a
gain realized in 1995 from the sale of unused land that was not
duplicated in 1996.
The Company's wholly-owned subsidiary, Toastmaster de Mexico
S.A. de C.V., generated income from operations and foreign
currency improvement of $94 thousand in the first quarter of
1996, compared to a loss of $186 thousand in the first quarter of
1995. The devaluation of the Mexican peso could have a negative
effect on the Company's future operating results in Mexico.
Interest expense of $980 thousand for the quarter ended
March 31, 1996 was a decrease of $85 thousand from the first
quarter of 1995. This was due primarily to lower interest rates.
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, 1996 were $25.5 million. Since December 31,
1995, accounts receivable decreased $34.0 million, inventories
increased $3.3 million, and accounts payable and other liabilities
decreased $3.8 million. The decrease in accounts receivable, as
well as the increase in inventory, was attributable to normal
seasonal patterns, and the decline in sales levels. A significant
portion of the fourth quarter 1995 shipments was due for payment
during the first quarter.
Net cash flows used for additions to property, plant and
equipment were $631 thousand and were primarily used to develop and
produce new products, as well as to purchase new equipment. Net
cash flows used by financing activities were $24.8 million for the
three months ended March 31, 1996, and resulted primarily from
repayments under the revolving credit agreement.
Amounts outstanding under the revolving credit agreement at
March 31, 1996 were $26.7 million and other long-term debt was $9.1
million, including the current portion of $2.2 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 Annual Financial
Statements contained in the Company's 1995 Annual Report to
shareholders.
The Company could borrow an additional $16.0 million under the
amended revolving credit agreement at March 31, 1996.
<PAGE>
Principal payments on the long-term debt, including a
principal amount of approximately $3.7 million due in 1997, are
expected to be funded from internally generated cash flow and
future borrowings. The revolving credit agreement expires in
November, 1999.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORMS 8K
No reports on Form 8-K were filed during the quarter ended
March 31, 1996.
<PAGE>
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.
Dated: TOASTMASTER INC.
May 10, 1996 BY
John E. Thompson
Executive Vice President
Chief Financial Officer
Signing on behalf of the registrant
and as principal financial officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGNED>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 121
<SECURITIES> 0
<RECEIVABLES> 33,134
<ALLOWANCES> 2,620
<INVENTORY> 42,277
<CURRENT-ASSETS> 76,091
<PP&E> 19,376
<DEPRECIATION> 30,973
<TOTAL-ASSETS> 100,677
<CURRENT-LIABILITIES> 22,471
<BONDS> 0
0
0
<COMMON> 760
<OTHER-SE> 42,849
<TOTAL-LIABILITY-AND-EQUITY> 100,677
<SALES> 26,739
<TOTAL-REVENUES> 26,739
<CGS> 23,380
<TOTAL-COSTS> 23,380
<OTHER-EXPENSES> 4,984
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 980
<INCOME-PRETAX> (2,605)
<INCOME-TAX> (951)
<INCOME-CONTINUING> (1,654)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,654)
<EPS-PRIMARY> (.22)
<EPS-DILUTED> (.22)
</TABLE>
