<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, 1996
-----------------
[ ] 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)
Ohio 34-1350353
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification)
incorporation or organization)
650 Alpha Drive, Cleveland, Ohio 44143
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(216) 449-6150
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Common Shares, Without Par Value New York Stock Exchange
- --------------------------------------------------------------------------------
(Title of Each Class) (Name of Each Exchange on which Registered)
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, 1996, 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, 1995 and 1996
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
----------
PAGES
-----
Report of Independent Accountants 2
Financial Statements:
Statement of Net Assets Available for Plan
Benefits at December 31, 1995 3
Statement of Net Assets Available for Plan
Benefits at December 31, 1996 4
Statement of Changes in Net Assets Available for
Plan Benefits for the year ended December 31, 1995 5
Statement of Changes in Net Assets Available for
Plan Benefits for the year ended December 31, 1996 6
Notes to Financial Statements 7-9
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes
for the years ended December 31, 1995 and 1996 10
Schedule of Reportable Transactions for the years
ended December 31, 1995 and 1996 11
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, 1995 and 1996 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, 1995 and 1996 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, 1995 and 1996 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 25, 1997
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, 1995
----------
<TABLE>
<CAPTION>
National Institutional Strong Vanguard Kaufmann
City Investors' Government Fidelity 500 Aggressive
Cash GIC Securities Puritan Portfolio Growth
Assets Account Fund Fund Fund Fund Fund
------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Investments $ 103,627 $1,868,941 $ 526,296 $ 968,232 $ 627,088 $1,445,854
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
========== ========== ========== ========== ========== ==========
NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Net Assets Available $ 44,750 $1,961,335 $ 545,450 $ 998,770 $ 658,953 $1,519,433
For Plan Benefits ========== ========== ========== ========== ========== ==========
<CAPTION>
Dodge & Davis
Scudder Cox New York Templeton Royal
Global Balanced Venture Foreign Stock Loan
Assets Fund Fund Fund Fund Fund Account Total
---- ---- ---- ---- ---- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Investments $ 538,856 $ 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 $ 538,856 137,810 $ 963,284 $ 22,828 $ 413,452 $ 94,664 $7,899,585
========== ========== ========== ========== ========= ========== ==========
NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Net Assets Available $ 538,856 $ 137,810 $ 963,284 $ 22,828 $ 413,452 $ 94,664 $7,899,585
For Plan Benefits ========== ========== ========== ========== ========= ========== ==========
</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, 1996
------------
<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 $186,992 $1,713,117 $499,147 $1,006,468 $1,063,144 $ -- $ --
Contributions receivable -- 77,893 16,205 27,089 43,602 -- --
-------- ---------- -------- ---------- ---------- ---- -----
Total assets $186,992 $1,791,010 $515,352 $1,033,557 $1,106,746 $ -- $ --
======== ========== ======== ========== ========== ==== ====
NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Net Assets Available $186,992 $1,791,010 $515,352 $1,033,557 $1,106,746 $ -- $ --
For Plan Benefits ======== ========== ======== ========== ========== ==== ====
<CAPTION>
Dodge & Davis
Cox New York Templeton Parkstone Royal
Balanced Venture Foreign Small Stock Loan
Assets Fund Fund Fund Capitalization Fund Account Total
------ ---- ---- ---- -------------- ---- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Investments $315,105 $1,305,178 $623,844 $1,973,851 $1,134,642 $551,019 $10,372,507
Contributions receivable 18,299 52,524 23,197 84,560 26,969 -- 370,338
-------- ---------- -------- ---------- ---------- ---- -----
Total assets $333,404 $1,357,702 $647,041 $2,058,411 $1,161,611 $551,019 $10,742,845
======== ========== ======== ========== ========== ======== ===========
NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Net Assets Available $333,404 $1,357,702 $647,041 $2,058,411 $1,161,611 $551,019 $10,742,845
For Plan Benefits ======== ========== ======== ========== ========== ======== ===========
</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, 1995
<TABLE>
<CAPTION>
National Institutional Strong Vanguard
City Investors' Government Fidelity 500 Gabelli
Cash GIC Securities Puritan Portfolio Growth
Account Fund Fund Fund Fund Fund
------- ---- ---- ---- ---- ----
<S> <C> <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 5,770
Participant's voluntary after-tax contributions (557) 1,999 373 249 460 43
Investment Income:
Interest 2,743 699 238 346 379 395
Dividend -- -- 30,741 50,138 13,293 --
Net appreciation/(depreciation) in fair
market value -- 117,061 56,875 114,910 129,627 22,452
Loans to participants, net 44,842 (14,872) (3,939) (9,972) (3,097) (220)
Transfers between funds, net (14,911) 26,612 (83,385) (39,288) 49,858 (480,408)
----------- ----------- --------- --------- --------- ---------
Total additions (27,228) 468,196 92,474 340,834 364,782 (451,968)
Deductions:
Benefits paid to participants 36,016 333,894 27,439 58,848 40,483 4,667
Miscellaneous fees -- 62 21 31 35 2
----------- ----------- --------- --------- --------- ---------
Net additions (63,244) 134,240 65,014 281,955 324,264 (456,637)
Net Assets Available for Plan Benefits,
Beginning of Year 107,994 1,827,095 480,436 716,815 334,689 456,637
----------- ----------- --------- --------- --------- ---------
Net Assets Available for Plan Benefits,
End of Year $ 44,750 $ 1,961,335 $ 545,450 $ 998,770 $ 658,953 $ --
=========== =========== ========= ========= ========= =========
<CAPTION>
Kaufmann Dodge & Davis
Aggressive Scudder Cox New York Templeton
Growth Global Balanced Venture Foreign
Fund Fund Fund Fund Fund
---- ---- ---- ---- ----
<S> <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 245,532 82,067 42,235 131,646 5,274
Participant's voluntary after-tax contributions 710 175 -- 1,070 --
Investment Income:
Interest 639 255 253 777 --
Dividend 26,621 11,548 5,026 62,466 --
Net appreciation/(depreciation) in fair
market value 342,306 69,458 7,255 162,229 --
Loans to participants, net (5,690) (2,769) (1,173) (2,305) --
Transfers between funds, net (4,271) (23,213) 51,511 517,730 --
--------- --------- --------- --------- --------
Total additions 771,593 176,596 134,180 973,047 22,828
Deductions:
Benefits paid to participants 115,426 34,435 3,199 37,323 --
Miscellaneous fees 106 23 21 65 --
--------- --------- --------- --------- --------
Net additions 656,061 142,138 130,960 935,659 22,828
Net Assets Available for Plan Benefits,
Beginning of Year 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
========= ========= ========= ========= ========
<CAPTION>
Royal
Stock Loan
Fund Account Total
---- ------- -----
<S> <C> <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.
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, 1996
<TABLE>
<CAPTION>
National Institutional Strong
City Investors' Government Fidelity
Cash GIC Securities Puritan
Account Fund Fund Fund
------- ---- ---- ----
<S> <C> <C> <C> <C>
Additions:
Contributions and Contributions Receivable:
Company contributions $ (18,958) $ 129,362 $ 35,808 $ 58,895
Employee pre-tax contributions 64,760 105,129 40,137 82,286
Participant's voluntary after-tax contributions 4,818 105 24 24
Investment Income:
Interest 1,976 1,570 31,338 112,773
Dividend -- -- -- --
Net appreciation/(depreciation) in fair
market value -- 105,407 (18,251) 23,837
Loans to participants, net 12,253 (125,898) (33,846) (33,337)
Transfers between funds, net 106,618 (193,758) (44,140) (104,150)
--------- ----------- --------- -----------
Total additions 171,467 21,917 11,070 140,328
Deductions:
Benefits paid to participants 29,225 192,082 41,164 105,535
Miscellaneous fees -- 160 4 6
--------- ----------- --------- -----------
Net additions 142,242 (170,325) (30,098) 34,787
Net Assets Available for Plan Benefits,
Beginning of Year 44,750 1,961,335 545,450 998,770
--------- ----------- --------- -----------
Net Assets Available for Plan Benefits,
End of Year $ 186,992 $ 1,791,010 $ 515,352 $ 1,033,557
========= =========== ========= ===========
<CAPTION>
Vanguard Kaufmann Dodge & Davis
500 Aggressive Scudder Cox New York
Portfolio Growth Global Balanced Venture
Fund Fund Fund Fund Fund
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Additions:
Contributions and Contributions Receivable:
Company contributions $ 93,833 $ 137,938 $ -- $ 41,883 $ 65,767
Employee pre-tax contributions 130,927 204,978 -- 54,304 172,996
Participant's voluntary after-tax contributions -- 68 -- -- 2,296
Investment Income:
Interest 22,096 108 10,035 12,700 61,988
Dividend -- -- -- -- --
Net appreciation/(depreciation) in fair
market value 155,419 338,117 7,293 21,421 202,250
Loans to participants, net (31,349) (53,638) -- (11,054) (51,356)
Transfers between funds, net 120,638 (2,039,285) (556,175) 82,512 64,445
----------- ---------- --------- --------- -----------
Total additions 491,564 (1,411,714) (538,847) 201,766 518,386
Deductions:
Benefits paid to participants 43,760 107,707 -- 6,166 123,956
Miscellaneous fees 11 12 9 6 12
----------- ---------- --------- --------- -----------
Net additions 447,793 (1,519,433) (538,856) 195,594 394,418
Net Assets Available for Plan Benefits,
Beginning of Year 658,953 1,519,433 538,856 137,810 963,284
----------- ---------- --------- --------- -----------
Net Assets Available for Plan Benefits,
End of Year $ 1,106,746 $ -- $ -- $ 333,404 $ 1,357,702
=========== ========== ========= ========= ===========
<CAPTION>
Templeton Parkstone Royal
Foreign Small Stock Loan
Fund Capitalization Fund Account Total
---- -------------- ---- ------- -----
<S> <C> <C> <C> <C> <C>
Additions:
Contributions and Contributions Receivable:
Company contributions $ 48,062 $ 115,108 $ 54,659 $ -- $ 762,357
Employee pre-tax contributions 75,064 51,551 118,654 -- 1,100,786
Participant's voluntary after-tax contributions 22 -- 2,279 -- 9,636
Investment Income:
Interest 26,562 307,471 121 6,400 595,138
Dividend -- -- -- -- --
Net appreciation/(depreciation) in fair
market value 54,222 (361,448) 715,383 -- 1,243,650
Loans to participants, net (31,046) (33,537) (57,147) 449,955 --
Transfers between funds, net 526,013 2,015,421 21,861 -- --
--------- ----------- ----------- -------- -----------
Total additions 698,899 2,094,566 855,810 456,355 3,711,567
Deductions:
Benefits paid to participants 74,666 36,123 107,639 -- 868,023
Miscellaneous fees 20 32 12 -- 284
--------- ----------- ----------- -------- -----------
Net additions 624,213 2,058,411 748,159 456,355 2,843,260
Net Assets Available for Plan Benefits,
Beginning of Year 22,828 -- 413,452 94,664 7,899,585
--------- ----------- ----------- -------- -----------
Net Assets Available for Plan Benefits,
End of Year $ 647,041 $ 2,058,411 $ 1,161,611 $551,019 $10,742,845
========= =========== =========== ======== ===========
</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.
In 1995 and 1996, 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.
E 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". This
investment option was discontinued in 1996.
-7-
<PAGE> 9
F. SCUDDER GLOBAL FUND - Seeks long term growth of capital by
investing in companies incorporated in the U.S. and foreign
countries. This investment option was discontinued in 1996.
ROYAL APPLIANCE MFG. CO.
EMPLOYEES PROFIT SHARING RETIREMENT PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
----------
1. Plan Description and Benefits (cont.):
-------------------------------------
G. DODGE & COX BALANCED FUND - seeks income, conservation of
principal, and long-term growth of principal and income.
H. DAVIS NEW YORK VENTURE FUND - seeks long term capital
growth by investing in securities that have above average
appreciation potential.
I. TEMPLETON FOREIGN FUND - seeks long term growth of capital
by investing in companies generally located in foreign
countries.
J. PARKSTONE SMALL CAPITALIZATION FUND - seeks growth of
capital by investing in stocks of small to medium size
companies primarily in the United States.
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, 1996 was as follows:
No. of
Participants
------------
Institutional Investors' GIC Fund 367
Strong Government Securities Fund 201
Fidelity Puritan Fund 253
Vanguard 500 Portfolio Fund 283
Dodge & Cox Balanced Fund 163
Davis New York Venture Fund 344
Templeton Foreign Fund 212
Parkstone Small Capitalization Fund 423
Royal Stock Fund 266
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 - Loans and hardship 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 500 Portfolio Fund, Kaufmann Aggressive Growth Fund,
Scudder Global Fund, Dodge & Cox Balanced Fund, Davis New York
Venture Fund, Templeton Foreign Fund, and Parkstone Small
Capitalization 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.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of net assets available for plan benefits and changes,
therein. Actual results could differ from those estimates.
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, 1995 AND 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------- ------------------------------------------------------
(a) (b) (c) (d) (e)
Identity of issue, borrower, Description of investment including maturity date, Cost Current
lessor, or similar party rate of interest, collateral, par or maturity value Value
- -------------------------------------------------------------------------- ------------------------------------------------------
<S> <C> <C> <C>
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 plus 1% 94,664 94,664
1996
====
Royal Appliance Stock Common Stock $988,120 $1,134,485
Armada Money Market Fund Mutual Fund 106,650 105,650
Dodge & Cox Balanced Fund Mutual Fund 287,586 315,068
Fidelity Puritan Fund Mutual Fund 943,228 1,006,439
Davis New York Venture Fund Mutual Fund 1,025,517 1,305,118
Vanguard Index 500 Fund Mutual Fund 787,685 1,050,525
Strong Government Securities Mutual Fund 487,730 496,561
Institutional Investors GIC Fund GIC Fund 1,455,182 1,705,780
Parkstone Small Cap Mutual Fund 2,332,149 1,973,315
Templeton Foreign Fund Mutual Fund 565,152 615,736
Participant Loans Various maturity dates; interest prime plus 1% 551,020 551,020
</TABLE>
-10-
<PAGE> 12
ROYAL APPLIANCE MFG. CO.
EMPLOYEES PROFIT SHARING RETIREMENT PLAN AND TRUST
ITEM 27 (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, 1995 AND 1996
<TABLE>
<CAPTION>
Realized
Number Purchase Selling Cost of Current Gain (Loss)
Identity of Party Involved Description Of Asset Of Shares Price Price Asset Value Of Asset On Sale
- -------------------------- -------------------- --------- ----- ----- ----- -------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995
National City Royal Appliance Mfg. Co.
Common Stock
Purchases 37,861 $128,427 $ -- $ 128,427 $94,202 $ --
1996
National City Royal Appliance Mfg. Co.
Common Stock
Purchases 41,734 $208,123 $ -- $ 208,123 $286,921 $ --
Sales 31,461 $ -- $ 175,447 $ 188,034 $ -- $ (12,587)
</TABLE>
-11-
