<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended DECEMBER 31, 1995
-----------------
[ ] 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 0-19431
-------
ROYAL APPLIANCE MFG. CO.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Ohio 34-1350353
- ----------------------------------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification)
650 Alpha Drive, Cleveland, Ohio 44143
- ----------------------------------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
(216) 449-6150
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
Common Shares, Without Par Value New York Stock Exchange
-------------------------------- -----------------------
(Title of Each Class) (Name of Each Exchange on which Registered)
</TABLE>
Securities Registered Pursuant to Section 12(g) of the Act: None
1
<PAGE> 2
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- ------- ----------------------------------------------------------------
Exhibits
--------
Form 10K for December 31, 1995, is amended by the substitution of the
amended Form 11K, with respect to the Royal Appliance Mfg. Co. Employees
Profit Sharing Retirement Plan and Trust.
99.1 Form 11-K Annual Report for Royal Appliance Mfg. Co.
Employees Profit Sharing Retirement Plan and Trust.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on this 24th day of
February, 1998.
ROYAL APPLIANCE MFG. CO.
Registrant
By /s/ Richard G Vasek
-------------------------------------------------
Richard G. Vasek
Controller, Secretary & Chief Accounting Officer
(Principal Accounting Officer)
Date February 24, 1998
------------------------------------------------
2
<PAGE> 1
EXHIBIT 99.1 TO
FORM 10-K
AMENDED
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Years Ended December 31, 1994 and 1995
ROYAL APPLIANCE MFG. CO.
EMPLOYEES PROFIT SHARING RETIREMENT PLAN AND TRUST
--------------------------------------------------
(Full title of the plan)
ROYAL APPLIANCE MFG. CO.
------------------------
(Name of issuer of the securities held pursuant to the plan)
650 ALPHA DRIVE, CLEVELAND, OHIO 44143
--------------------------------------
(Address of principal executive office)
<PAGE> 2
INDEX OF FINANCIAL STATEMENTS
-----------------------
<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
Report of Independent Accountants 2
Financial Statements:
Statement of Net Assets Available for Plan
Benefits at December 31, 1994 3
Statement of Net Assets Available for Plan
Benefits at December 31, 1995 4
Statement of Changes in Net Assets Available for
Plan Benefits for the year ended December 31, 1994 5
Statement of Changes in Net Assets Available for
Plan Benefits for the year ended December 31, 1995 6
Notes to Financial Statements 7-9
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes
for the years ended December 31, 1994 and 1995 10
Schedule of Reportable Transactions for the years
ended December 31, 1994 and 1995 11
</TABLE>
1
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
-----------------------
To the Trustees of the
Royal Appliance Mfg. Co. Employees
Profit Sharing Retirement Plan and Trust
We have audited the accompanying statements of net assets available for plan
benefits of the Royal Appliance Mfg. Co. Employees Profit Sharing Retirement
Plan and Trust (the Plan) as of December 31, 1994 and 1995 and the related
statements of changes in net assets available for plan benefits for the years
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1994 and 1995 and the changes in net assets available for Plan
benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions for the years ended December
31, 1994 and 1995 are presented for the purpose of additional analysis and are
not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The Fund Information in the statement of net assets available for plan
benefits and the statement of changes in net assets available for plan benefits
is presented for purposes of additional analysis rather than to present the net
assets available for plan benefits and changes in net assets available for plan
benefits of each fund. The supplemental schedules and Fund Information have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Coopers & Lybrand L.L.P.
Cleveland, Ohio
March 27, 1996
2
<PAGE> 4
ROYAL APPLIANCE MFG. CO.
EMPLOYEES PROFIT SHARING RETIREMENT PLAN AND TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AT DECEMBER 31, 1994
-----------------------
<TABLE>
<CAPTION>
NATIONAL INSTITUTIONAL STRONG VANGUARD KAUFMANN
CITY INVESTORS' GOVERNMENT FIDELITY 500 GABELLI AGGRESSIVE SCUDDER
CASH GIC SECURITIES PURITAN PORTFOLIO GROWTH GROWTH GLOBAL
ASSETS ACCOUNT FUND FUND FUND FUND FUND FUND FUND
------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments $ 147,194 $1,715,176 $ 458,417 $ 682,430 $ 312,971 $ 453,325 $ 799,946 $ 373,899
Contributions receivable -- 111,919 22,019 34,385 21,718 3,312 63,426 22,819
Loans to participants (39,200) -- -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Assets $ 107,994 $1,827,095 $ 480,436 $ 716,815 $ 334,689 $ 456,637 $ 863,372 $ 396,718
========== ========== ========== ========== ========== ========== ========== ==========
NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Net Assets Available
For Plan Benefits $ 107,994 $1,827,095 $ 480,436 $ 716,815 $ 334,689 $ 456,637 $ 863,372 $ 396,718
========== ========== ========== ========== ========== ========== ========== ==========
DODGE & COX NEW YORK ROYAL
BALANCED VENTURE STOCK LOAN
ASSETS FUND FUND FUND ACCOUNT TOTAL
---- ---- ---- ------- -----
<S> <C> <C> <C> <C> <C>
Investments -- $ -- $ 414,646 $ 11,700 $5,369,704
Contributions receivable 6,850 27,625 24,651 -- 338,724
Loans to participants -- -- -- 39,200 --
----------- ---------- ---------- ---------- ----------
Total Assets $ 6,850 $ 27,625 $ 439,297 $ 50,900 $5,708,428
=========== ========== ========== ========== ==========
NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Net Assets Available
For Plan Benefits $ 6,850 $ 27,625 $ 439,297 $ 50,900 $5,708,428
=========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 5
ROYAL APPLIANCE MFG. CO.
EMPLOYEES PROFIT SHARING RETIREMENT PLAN AND TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AT DECEMBER 31, 1995
-----------------------
<TABLE>
<CAPTION>
National Institutional Strong Vanguard Kaufmann
City Investors' Government Fidelity 500 Aggressive Scudder
Cash GIC Securities Puritan Portfolio Growth Global
Assets Account Fund Fund Fund Fund Fund Fund
------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Investments $ 103,627 $1,868,941 $ 526,296 $ 968,232 $ 627,088 $1,445,854 $ 538,856
Contributions receivable -- 92,394 19,154 30,538 31,865 73,579 --
Loans to participants (58,877) -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total assets $ 44,750 $1,961,335 $ 545,450 $ 998,770 $ 658,953 $1,519,433 $ 538,856
========== ========== ========== ========== ========== ========== ==========
NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Net Assets Available
For Plan Benefits $ 44,750 $1,961,335 $ 545,450 $ 998,770 $ 658,953 $1,519,433 $ 538,856
========== ========== ========== ========== ========== ========== ==========
Dodge &
Cox New York Templeton Royal
Balanced Venture Foreign Stock Loan
Assets Fund Fund Fund Fund Account Total
---- ---- ---- ---- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Investments $ 123,278 $ 915,688 $ -- $ 388,266 $ 35,787 $7,541,913
Contributions receivable 14,532 47,596 22,828 25,186 -- 357,672
Loans to participants -- -- -- -- 58,877 --
---------- ---------- ---------- ---------- ---------- ----------
Total assets $ 137,810 $ 963,284 $ 22,828 $ 413,452 $ 94,664 $7,899,585
========== ========== ========== ========== ========== ==========
NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Net Assets Available
For Plan Benefits $ 137,810 $ 963,284 $ 22,828 $ 413,452 $ 94,664 $7,899,585
========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 6
ROYAL APPLIANCE MFG. CO.
EMPLOYEES PROFIT SHARING RETIREMENT PLAN AND TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1994
-----------------------
<TABLE>
<CAPTION>
Institutional Strong Vanguard
National Investors' Government Fidelity 500
City Cash GIC Securities Puritan Portfolio
Account Fund Fund Fund Fund
------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Additions:
Contributions and
Contributions Receivable:
Company contributions $ -- $ 168,698 $ 42,643 $ 68,900 $ 41,608
Employee pre-tax contributions 411,172 115,382 41,472 81,937 50,095
Participant's voluntary after-tax contributions 4,560 2,869 260 1,597 382
Investment Income:
Interest 6,310 1,345 23,906 51,230 8,479
Dividend -- -- -- -- --
Net appreciation/(depreciation) in fair
market value -- 76,666 (32,829) (54,344) (4,388)
Loans to participants, net 16,030 (5,333) (5,438) (1,479) (525)
Transfer from prior trustee 4,236,367 -- -- -- --
Transfers between funds, net (4,504,859) 1,614,845 438,024 591,138 249,775
----------- ----------- ----------- ----------- -----------
Total additions 169,580 1,974,472 508,038 738,979 345,426
Deductions:
Benefits paid to participants 61,414 147,211 27,560 21,873 10,557
Miscellaneous fees 172 166 42 291 180
----------- ----------- ----------- ----------- -----------
Net additions 107,994 1,827,095 480,436 716,815 334,689
Net Assets Available for Plan Benefits,
Beginning of Year -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net Assets Available for Plan Benefits,
End of Year $ 107,994 $ 1,827,095 $ 480,436 $ 716,815 $ 334,689
=========== =========== =========== =========== ===========
Kaufman Dodge &
Gabelli Aggressive Scudder Cox New York
Growth Growth Global Balanced Venture
Fund Fund Fund Fund Fund
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Additions:
Contributions and
Contributions Receivable:
Company contributions $ 28,905 $ 112,188 $ 44,727 $ 6,850 $ 27,625
Employee pre-tax contributions 60,352 123,214 51,451 -- --
Participant's voluntary after-tax contributions 349 1,472 85 -- --
Investment Income:
Interest 276 450 6,976 -- --
Dividend 20,571 -- -- -- --
Net appreciation/(depreciation) in fair
market value (18,039) 50,168 (19,719) -- --
Loans to participants, net (952) (10,323) (493) -- --
Transfer from prior trustee -- -- -- -- --
Transfers between funds, net 390,698 621,599 329,120 -- --
----------- ----------- ----------- ----------- -----------
Total additions 482,160 898,768 412,147 6,850 27,625
Deductions:
Benefits paid to participants 25,304 35,338 15,227 -- --
Miscellaneous fees 219 58 202 -- --
----------- ----------- ----------- ----------- -----------
Net additions 456,637 863,372 396,718 6,850 27,625
Net Assets Available for Plan Benefits,
Beginning of Year -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net Assets Available for Plan Benefits,
End of Year $ 456,637 $ 863,372 $ 396,718 $ 6,850 $ 27,625
=========== =========== =========== =========== ===========
Separate
Royal Capital Separate
Stock Loan Guaranteed Growth Bond
Fund Account Account Fund Account Total
---- ------- ------- ---- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Additions:
Contributions and Contributions Receivable:
Company contributions $ 45,057 $ -- $ -- $ -- $ -- $ 587,201
Employee pre-tax contributions 51,741 -- -- -- -- 986,816
Participant's voluntary after-tax contributions 634 -- -- -- -- 12,208
Investment Income:
Interest 651 1,426 11,652 -- -- 112,701
Dividend -- -- -- -- -- 20,571
Net appreciation/(depreciation) in fair
market value (195,941) -- -- 47,784 508 (150,134)
Loans to participants, net (971) 9,484 -- -- -- --
Transfer from prior trustee (85,514) -- (2,865,780) (1,105,683) (179,390) --
Transfers between funds, net 269,660 -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total additions 85,317 10,910 (2,854,128) (1,057,899) (178,882) 1,569,363
Deductions:
Benefits paid to participants 28,954 -- 16,503 17,819 3,460 411,220
Miscellaneous fees 90 -- -- -- -- 1,420
----------- ----------- ----------- ----------- ----------- -----------
Net additions 56,273 10,910 (2,870,631) (1,075,718) (182,342) 1,156,723
Net Assets Available for Plan Benefits,
Beginning of Year 383,024 39,990 2,870,631 1,075,718 182,342 4,551,705
----------- ----------- ----------- ----------- ----------- -----------
Net Assets Available for Plan Benefits,
End of Year $ 439,297 $ 50,900 $ -- $ -- $ -- $ 5,708,428
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 7
ROYAL APPLIANCE MFG. CO.
EMPLOYEES PROFIT SHARING RETIREMENT PLAN AND TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
National Institutional Strong Vanguard
City Investors' Government Fidelity 500
Cash GIC Securities Puritan Portfolio
Account Fund Fund Fund Fund
------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Additions:
Contributions and
Contributions Receivable:
Company contributions $ -- $ 163,144 $ 40,565 $ 78,586 $ 65,306
Employee pre-tax contributions (59,345) 173,553 51,006 145,865 108,956
Participant's voluntary after-tax contributions (557) 1,999 373 249 460
Investment Income:
Interest 2,743 699 238 346 379
Dividend -- -- 30,741 50,138 13,293
Net appreciation/(depreciation) in fair
market value -- 117,061 56,875 114,910 129,627
Loans to participants, net 44,842 (14,872) (3,939) (9,972) (3,097)
Transfers between funds, net (14,911) 26,612 (83,385) (39,288) 49,858
---------- ---------- ---------- ---------- ----------
Total additions (27,228) 468,196 92,474 340,834 364,782
Deductions:
Benefits paid to participants 36,016 333,894 27,439 58,848 40,483
Miscellaneous fees -- 62 21 31 35
---------- ---------- ---------- ---------- ----------
Net additions (63,244) 134,240 65,014 281,955 324,264
Net Assets Available for Plan Benefits,
Beginning of Year 107,994 1,827,095 480,436 716,815 334,689
---------- ---------- ---------- ---------- ----------
-- -- -- -- --
Net Assets Available for Plan Benefits,
End of Year $ 44,750 $1,961,335 $ 545,450 $ 998,770 $ 658,953
========== ========== ========== ========== ==========
Kaufmann Dodge &
Gabelli Aggressive Scudder Cox New York Templeton
Growth Growth Global Balanced Venture Foreign
Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Additions:
Contributions and
Contributions Receivable:
Company contributions $ -- $ 165,746 $ 39,075 $ 29,073 $ 99,434 $ 17,554
Employee pre-tax contributions 5,770 245,532 82,067 42,235 131,646 5,274
Participant's voluntary after-tax contributions 43 710 175 -- 1,070 --
Investment Income:
Interest 395 639 255 253 777 --
Dividend -- 26,621 11,548 5,026 62,466 --
Net appreciation/(depreciation) in fair
market value 22,452 342,306 69,458 7,255 162,229 --
Loans to participants, net (220) (5,690) (2,769) (1,173) (2,305) --
Transfers between funds, net (480,408) (4,271) (23,213) 51,511 517,730 --
---------- ---------- ---------- ---------- ---------- ----------
Total additions (451,968) 771,593 176,596 134,180 973,047 22,828
Deductions:
Benefits paid to participants 4,667 115,426 34,435 3,199 37,323 --
Miscellaneous fees 2 106 23 21 65 --
---------- ---------- ---------- ---------- ---------- ----------
Net additions (456,637) 656,061 142,138 130,960 935,659 22,828
Net Assets Available for Plan Benefits,
Beginning of Year 456,637 863,372 396,718 6,850 27,625 --
---------- ---------- ---------- ---------- ---------- ----------
Net Assets Available for Plan Benefits,
End of Year $ -- $1,519,433 $ 538,856 $ 137,810 $ 963,284 $ 22,828
========== ========== ========== ========== ========== ==========
Royal
Stock Loan
Fund Account Total
----- -------- -------
<S> <C> <C>
Additions:
Contributions and
Contributions Receivable:
Company contributions $ 57,425 $ -- $ 755,908
Employee pre-tax contributions 94,766 -- 1,027,325
Participant's voluntary after-tax contributions 1,577 -- 6,099
Investment Income:
Interest 381 5,642 12,747
Dividend -- -- 199,833
Net appreciation/(depreciation) in fair
market value (152,101) -- 870,072
Loans to participants, net (805) 38,122 38,122
Transfers between funds, net (235) -- --
---------- ---------- ----------
Total additions 1,008 43,764 2,910,106
Deductions:
Benefits paid to participants 26,818 -- 718,548
Miscellaneous fees 35 -- 401
---------- ---------- ----------
Net additions (25,845) 43,764 2,191,157
Net Assets Available for Plan Benefits,
Beginning of Year 439,297 50,900 5,708,428
---------- ---------- ----------
Net Assets Available for Plan Benefits,
End of Year $ 413,452 $ 94,664 $7,899,585
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 8
ROYAL APPLIANCE MFG. CO.
EMPLOYEES PROFIT SHARING RETIREMENT PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
------------------
1. Plan Description and Benefits:
-----------------------------
The following brief description of the Royal Appliance Mfg. Co. Employees
Profit Sharing Retirement Plan and Trust (the "Plan") is provided for
general information purposes only. Participants should refer to the
Summary Plan Description for more complete information.
GENERAL - The Plan is a defined contribution plan covering substantially
all employees of Royal Appliance Mfg. Co. (the "Company"). Employees who
attain age 20-1/2 and complete at least six months of service are
eligible to become participants in the Plan.
On December 27, 1991, the Company filed Form S-8 with the Securities and
Exchange Commission (SEC) allowing participants in the Plan to invest in
Common Shares of the Company. This investment option was available as of
February 1, 1992. As a result, the Plan is now required to comply with
the reporting provisions of the SEC Form 11-K.
CONTRIBUTIONS - Contributions consist of employer matching, employer
profit sharing, salary reduction, voluntary after-tax contributions, and
rollover contributions.
Employer matching contributions were 75% of the salary reduction
contributions that do not exceed 4% of employee compensation for 1994. In
1995, employer matching contributions were 100% of the salary reduction
contributions that do not exceed 2% of qualified employee compensation
and 50% of the salary reduction contributions greater than 2% but not in
excess of 4% of qualified employee compensation. The employer profit
sharing contribution is discretionary based on amounts as authorized by
the Board of Directors. All employer contributions have been made in the
form of cash. Salary reduction contributions may range from 1% to 15% of
qualified compensation subject to annual I.R.S. limits. Participants may
also make voluntary after-tax contributions of up to 10% of their annual
compensation in addition to the contribution through salary reduction.
Rollover contributions are also permitted.
INVESTMENT OF FUNDS - All of the investment transactions are executed by
National City Trust ("National City"), an affiliate of National City
Corporation.
Each participant may elect among the following investment vehicles:
A. INSTITUTIONAL INVESTORS' GIC FUND - Seeks to provide income and
stability of principal by investing in guaranteed investment
contracts (GIC's) or similar instruments issued by insurance
companies and/or banks.
B. STRONG GOVERNMENT SECURITIES FUND - Seeks to provide a high level
of current income by investing in securities issued or guaranteed
by the U.S. government.
C. FIDELITY PURITAN FUND - Seeks to maximize income, with growth of
capital being a secondary objective. Invests in high-yielding
securities, including common stocks, preferred stocks and bonds.
D. VANGUARD 500 PORTFOLIO FUND - Seeks to return investment results
that correspond to the price and yield performance of the S&P 500
index.
7
<PAGE> 9
ROYAL APPLIANCE MFG. CO.
EMPLOYEES PROFIT SHARING RETIREMENT PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
------------------
1. Plan Description and Benefits (cont.):
-------------------------------------
E. GABELLI GROWTH FUND - Seeks long-term capital growth by investing
in companies whose stock is considered to be undervalued. This fund
was discontinued in 1995.
F. KAUFMANN AGGRESSIVE GROWTH FUND - Seeks growth of capital by
investing in stocks of small to medium size companies typically
outside of the S&P 500 "universe".
G. SCUDDER GLOBAL FUND - Seeks long term growth of capital by
investing in companies incorporated in the U.S. and foreign
countries.
H. DODGE & COX BALANCED FUND - seeks income, conservation of
principal, and long-term growth of principal and income.
I. NEW YORK VENTURE FUND - seeks long term capital growth by investing
in securities that have above average appreciation potential.
J. TEMPLETON FOREIGN FUND - seeks long term growth of capital by
investing in companies generally located in foreign countries.
K. ROYAL STOCK FUND - This fund is comprised exclusively of Common
Shares, without par value of the Company (Common Shares). Each
participant electing to purchase Common Shares through the Stock
Fund is permitted to vote such Common Shares in the same manner as
any other shareholder and is furnished proxy materials to such
effect. If a participant does not vote their proxy, the Trustee
votes the proxy for the participant's Common Shares. Investments
in the Stock Fund may be made as of January 1, April 1, July 1, or
October 1 investment dates, but may not, for administrative
reasons, be effected until up to 12 days (or such later date as is
legally or administratively required) after the relevant quarterly
investment date. Common Shares purchased under the Account are
generally purchased on the open market for cash. The price of
Common Shares purchased on the open market is priced for each
participant's account at an average purchase price of all shares
purchased, plus brokerage fees, taxes, commissions and expenses
incident to the purchase, unless it is determined that the Company
will bear these costs. No more than 50% of a participant's
contributions may be invested in the Stock Fund.
Participants can allocate their contribution between the Funds in various
percentages, which can be changed on a quarterly basis throughout the
year.
The number of participants in each investment program as of December 31,
1995 was as follows:
<TABLE>
<CAPTION>
No. of
Participants
------------
<S> <C>
Institutional Investors' GIC Fund 403
Strong Government Securities Fund 203
Fidelity Puritan Fund 261
Vanguard 500 Portfolio Fund 239
Kaufmann Aggressive Growth Fund 376
Scudder Global Fund 215
Dodge & Cox Balanced Fund 115
New York Venture Fund 298
Royal Stock Fund 247
</TABLE>
VESTING - All contributions are 100% vested and non-forfeitable.
8
<PAGE> 10
ROYAL APPLIANCE MFG. CO.
EMPLOYEES PROFIT SHARING RETIREMENT PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
------------------
1. Plan Description and Benefits (cont.):
-----------------------------
DISTRIBUTION AND WITHDRAWALS - Hardship loans and withdrawals are
permitted pursuant to the terms of the Plan. In addition, participants
may make hardship withdrawals from the voluntary after-tax contribution
account by filing a written request at least thirty (30) days in advance.
Participants and their beneficiaries are entitled to receive a
distribution of their account balances upon death, disability,
termination of employment prior to retirement, or retirement.
Distribution may be made in a lump sum or periodic payments, as may be
elected by the participants or their beneficiaries, subject to the terms
of the Plan.
APPRECIATION (DEPRECIATION) IN FAIR MARKET VALUE OF ASSETS - The Plan
presents, in the Statements of Changes in Net Assets Available for Plan
Benefits, the net appreciation (depreciation) in the fair market value of
its investments, which consist of realized gains or losses and unrealized
appreciation (depreciation).
EXPENSES - Administrative fees, brokerage fees and other Plan expenses
are the responsibility of the Plan. The Company, at its discretion has
elected to pay these costs directly.
2. Summary of Significant Accounting Policies:
------------------------------------------
BASIS OF PRESENTATION - The accompanying financial statements have been
prepared on an accrual basis in accordance with generally accepted
accounting principles.
INVESTMENTS - Certain assets of the Plan are maintained in Guaranteed
Investment Contracts (the Institutional Investors' GIC Fund) and
Investment Funds (Strong Government Securities Fund, Fidelity Puritan
Fund, Vanguard S&P 500 Portfolio Fund, Kaufmann Aggressive Growth Fund,
Scudder Global Fund, Dodge & Cox Balanced Fund and New York Venture Fund,
Templeton Foreign Fund)and common shares of the Company. Contributions by
the Company and employees are first made to National City via the cash
account facility. Contributions and income from investments of each Fund
are reinvested in the same Fund.
Investments in Guaranteed Investment Contracts are recorded at the
guaranteed value (contribution and interest) of the Plan assets.
Other investments are valued at fair market value by National City using
readily available published market values.
3. Income Tax Status:
-----------------
The Internal Revenue Service (IRS) has issued a favorable determination
letter dated June 20, 1995, with respect to the Plan's qualified status,
as amended, under Section 401(a) of the Internal Revenue Code (Code). As
such, the trust established thereunder is exempt from Federal income
taxes under Section 501(a) of the Code. All withdrawals are taxable to
the participants of the Plan.
4. Right to Terminate:
------------------
Although it has not expressed any interest to do so, the Company has the
right to terminate the Plan at any time.
9
<PAGE> 11
ROYAL APPLIANCE MFG. CO.
EMPLOYEES PROFIT SHARING RETIREMENT PLAN AND TRUST
ITEM 27 (A) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
<TABLE>
<CAPTION>
- ----- ---------------------------------------------- ---------------------------------------------- ------------- -------------
(a) (b) (c) (d) (e)
Identity of issue, borrower, lessor, or similar Description of investment including maturity Cost Current
party date, rate of interest, collateral, Value
par or maturity value
- ----- ---------------------------------------------- ---------------------------------------------- ------------- -------------
<S> <C> <C> <C>
1994
====
Royal Appliance Stock Common Stock $847,183 $414,635
Kaufmann Fund Mutual Fund 749,101 799,792
Scudder Global Fund Mutual Fund 393,447 373,846
Fidelity Puritan Fund Mutual Fund 735,809 682,381
Vanguard Index 500 Fund Mutual Fund 317,181 312,910
Strong Government Securities Mutual Fund 488,188 457,814
Institutional Investors GIC Fund GIC Fund 1,628,991 1,704,312
Gabelli Asset Fund Mutual Fund 471,184 453,213
NCC Money Market Portfolio Mutual Fund 119,497 119,497
Participant Loans Various maturity dates; interest prime plus 1% 50,900 50,900
1995
====
Royal Appliance Stock Common Stock $969,611 $388,007
Armada Money Market Fund Mutual Fund 29,770 29,770
Dodge & Cox Balanced Fund Mutual Fund 114,065 121,320
Fidelity Puritan Fund Mutual Fund 907,585 967,696
Kaufmann Fund Mutual Fund 1,068,027 1,443,216
Davis New York Venture Fund Mutual Fund 751,463 859,620
Scudder Global Fund Mutual Fund 490,712 537,616
Vanguard Index 500 Fund Mutual Fund 493,344 617,198
Strong Government Securities Mutual Fund 499,044 526,597
Institutional Investors GIC Fund GIC Fund 1,674,244 1,850,373
Participant Loans Various maturity dates; interest prime 94,664 94,664
plus 1%
</TABLE>
10
<PAGE> 12
ROYAL APPLIANCE MFG. CO.
EMPLOYEES PROFIT SHARING RETIREMENT PLAN AND TRUST
ITEM 30(D) - SCHEDULE OF TRANSACTIONS OR SERIES OF TRANSACTIONS
IN EXCESS OF 5% OF THE CURRENT VALUE OF PLAN ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
--------------
<TABLE>
<CAPTION>
IDENTITY OF PARTY DESCRIPTION OF # OF SHARES PURCHASE
----------------- -------------- ----------- --------
INVOLVED ASSET PRICE
-------- ----- -----
<S> <C> <C> <C> <C>
1994 Royal Appliance Mfg. Co.
- ---- National City Common Stock
Purchase 70,329 $330,828
1995 Royal Appliance Mfg. Co.
- ---- National City Common Stock
Purchase 37,681 $128,427
</TABLE>
<TABLE>
<CAPTION>
IDENTITY OF PARTY SELLING PRICE COST OF ASSET CURRENT VALUE OF REALIZED GAIN (LOSS)
----------------- ------------- ------------- ---------------- ---------------------
INVOLVED ASSET ON SALE
-------- ----- -------
<S> <C> <C> <C> <C> <C>
1994
- ---- National City
-- $330,828 $246,152 --
1995
- ---- National City
-- $128,427 $94,202 --
</TABLE>
11
