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, 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 65202
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:(573) 445-8666
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange
Title of Each Class on Which Registered
Common Stock, $.10 par value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None.
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, 1997, 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, 1997 AND 1996 3
CONSOLIDATED BALANCE SHEETS -
MARCH 31, 1997 AND 1996 AND
DECEMBER 31, 1996 4
CONSOLIDATED STATEMENTS OF CASH FLOWS -
THREE MONTHS ENDED MARCH 31, 1997 AND 1996 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 7-8
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9
SIGNATURE 10
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TOASTMASTER INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
QUARTER ENDED MAR 31
1997 1996
Net Sales $ 26,315 $ 26,739
Cost of Sales 22,181 23,380
______ ______
Gross Profit 4,134 3,359
Selling, General and Admin. Expenses 5,054 4,984
_______ _______
Operating Loss (920) (1,625)
Other Expense - Interest 862 980
_______ _______
Loss Before Income Taxes (1,782) (2,605)
Income Tax Benefit (641) (951)
_______ _______
Net Loss $(1,141) $(1,654)
======= =======
Net Loss Per Common and Common
Equivalent Shares Outstanding $ (0.15) $ (0.22)
====== ======
Weighted Average Common and Common
Equivalent Shares Outstanding 7,538 7,538
===== =====
SEE ACCOMPANYING NOTES
<PAGE>
TOASTMASTER INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
3/31/97 12/31/96 3/31/96
ASSETS
Cash $ 92 $ 97 $ 121
Accounts Receivable,
less allowances 25,376 42,704 30,514
Inventories
Finished Goods 30,140 30,043 32,217
Raw Matl.,WIP 10,808 10,811 11,944
LIFO/Inventory Valuation
Reserve (4,472) (6,377) (1,884)
______ ______ ______
Total Inventory 36,476 34,477 42,277
Deferred Income Tax 2,280 2,280 824
Prepaid Expenses 3,711 1,562 2,355
______ ______ ______
Total Current Assets 67,935 81,120 76,091
______ ______ ______
Property, Plant and Equipment
Land 928 926 921
Buildings 9,057 9,057 9,048
Less: Accumulated
Depreciation (5,018) (4,897) (4,540)
Machinery & Equipment 43,356 42,717 40,380
Less: Accumulated
Depreciation (29,838) (29,278) (26,433)
________ ________ ________
Net Property,
Plant & Equipment 18,485 18,525 19,376
________ _______ _______
Goodwill, net of
accumulated amortization 3,350 3,378 3,463
Other Assets 1,898 1,831 1,747
______ _______ _______
$ 91,668 $ 104,854 $100,677
====== ======= =======
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Current Installments of
Long-Term Debt $ 2,135 $ 2,145 $ 2,181
Accounts Payable 5,999 3,755 7,229
Accrued Expenses 12,199 13,600 13,061
______ ______ ______
Total Current Liabilities 20,333 19,500 22,471
Long Term Debt, Excl.
Current Installments 31,884 44,611 33,561
Deferred Income Taxes 579 579 1,036
______ ______ ______
Total Liabilities 52,796 64,690 57,068
______ ______ ______
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 13,299 14,591 18,080
Equity Adj. - Foreign
Currency Translation (12) (12) (16)
_______ _______ ______
39,160 40,452 43,897
Treasury Stock (288) (288) (288)
_______ _______ ______
Total Stockholders'
Equity 38,872 40,164 43,609
______ _______ _______
$ 91,668 $104,854 $100,677
====== ======= =======
SEE ACCOMPANYING NOTES
<PAGE>
TOASTMASTER INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
QUARTER ENDED MAR 31
1997 1996
Cash flows from operating activities:
Net loss $(1,141) $(1,654)
_______ _______
Adjustments to reconcile net loss
to net cash from operating activities:
Depreciation and amortization 938 1,105
Restructuring charge 123 0
Accounts receivable 17,328 33,990
Inventories (1,999) (3,272)
Prepaid expenses & other
current assets (1,489) (871)
Other assets (112) (28)
Accounts payable 2,244 1,286
Accrued liabilities (1,401) (2,826)
Income taxes (660) (2,237)
______ _______
14,972 27,147
______ _______
Net cash flows provided by
operating activities 13,831 25,493
______ ______
Cash flows used in investing activities:
Additions to property,plant and
equipment (948) (631)
_______ _______
Net cash flows used in investing
activities (948) (631)
_______ _______
Cash flows from financing activities:
Proceeds from revolving credit
agreement 28,962 33,783
Repayments of revolving credit
agreement (41,165) (57,858)
Dividends paid (151) (152)
Repayment of long-term debt (534) (549)
_______ _______
Net cash flows used in
financing activities (12,888) (24,776)
_______ ________
Foreign currency translation
adjustment 0 (7)
_______ _______
Net increase (decrease) in
cash (5) 79
Cash at beginning of period 97 42
______ ______
Cash at end of period $92 $121
===== =====
Cash paid during the period for:
Interest $978 $1,170
===== =====
Income taxes $0 $1,319
===== =====
SEE ACCOMPANYING NOTES
<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, 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.
<PAGE>
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 slightly to $26.3 million for the quarter
ended March 31, 1997 from $26.7 million for the quarter ended
March 31, 1996. Kitchen appliance revenues were $20.1 million
for the first quarter of 1997, a decrease of 6.9% from $21.6
million for the same period in 1996. An anticipated decline in
breadmaker shipments and reduced toaster revenues contributed to
the decrease. Time products revenues increased to $7.2 million
for the quarter ended March 31, 1997, as compared to $6.3 million
for the quarter ended March 31, 1996. This 14.3% change was
primarily from increased export shipments and new domestic
business.
Sales to the five largest customers for the quarter ended March
31, 1997 represented approximately 44.3% of revenues. Sales to
the five largest customers for the first quarter of 1996 were
42.2% of revenues.
<PAGE>
For the quarter ended March 31, 1997, gross profit was $4.1
million or 15.6% of net sales, an increase from $3.4 million or
12.7% of net sales for the comparable period in 1996. The
change was caused by lower material prices and improved
manufacturing efficiencies as a result of the restructuring
implemented during the fourth quarter of 1996, as well as
increased production levels in 1997.
Selling, general and administrative expenses for the quarter
ended March 31, 1997 increased slightly to $5.1 million compared
to $5.0 million for the first quarter of 1996. Interest expense
decreased to $862 thousand in 1997 from $980 thousand in 1996 for
the quarter ended March 31, due to decreased borrowings.
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, 1997 were $13.7 million. A reduction in
accounts receivable of $17.3 million, an increase in inventory of
$2.0 million and an increase in accounts payable of $2.2 million
are the result of normal seasonal patterns.
Cash flows used for additions to property, plant and equipment of
$948 thousand 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 $12.9 million for the
three months ended March 31, 1997, and were primarily from
repayments under the revolving credit agreement.
At March 31, 1997, amounts outstanding under the revolving credit
agreement were $23 million. The Company could borrow an
additional $12 million under the terms of the revolving credit
agreement at March 31, 1997. Other long-term debt was $11
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.
<PAGE>
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, 1997.
<PAGE>
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 12, 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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 92
<SECURITIES> 0
<RECEIVABLES> 28,024
<ALLOWANCES> 2,648
<INVENTORY> 36,476
<CURRENT-ASSETS> 67,935
<PP&E> 18,485
<DEPRECIATION> 34,856
<TOTAL-ASSETS> 91,668
<CURRENT-LIABILITIES> 20,333
<BONDS> 0
0
0
<COMMON> 760
<OTHER-SE> 38,112
<TOTAL-LIABILITY-AND-EQUITY> 91,668
<SALES> 26,315
<TOTAL-REVENUES> 26,315
<CGS> 22,181
<TOTAL-COSTS> 22,181
<OTHER-EXPENSES> 5,054
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 862
<INCOME-PRETAX> (1,782)
<INCOME-TAX> (641)
<INCOME-CONTINUING> (1,141)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,141)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> (.15)
</TABLE>
