<PAGE> 1
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 September 30, 1994
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 1-4188
------
RUBBERMAID INCORPORATED
-----------------------
(Exact name of registrant as specified in its charter)
OHIO 34-0628700
---- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1147 AKRON ROAD, WOOSTER, OHIO 44691
------------------------------------
(Address of principal executive offices and zip code)
216-264-6464
------------
(Registrant's telephone number, including area code)
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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Common Shares, Par Value $1.00, Outstanding at September 30, 1994 --161,615,912
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
------------------
Sept. 30, 1994 Sept. 30, 1993
-------------- --------------
<S> <C> <C>
Net sales $580,271 $515,208
Cost of sales 391,119 327,791
Selling, general, and administrative expenses 86,291 85,620
Other charges (credits), net:
Interest expense 2,316 1,865
Interest income (1,584) (1,189)
Miscellaneous, net (3,784) 1,215
--------- --------
(3,052) 1,891
--------- --------
Earnings before income taxes 105,913 99,906
Income taxes 39,154 39,525
--------- --------
Net earnings $ 66,759 $ 60,381
========= ========
Net earnings per Common Share (note 2) $ .41 $ .37
========= ========
Dividends paid per Common Share (note 3) $ .1125 $ .0975
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-1-
<PAGE> 3
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
Sept. 30, 1994 Sept. 30, 1993
-------------- --------------
<S> <C> <C>
Net sales $1,603,017 $ 1,487,345
Cost of sales 1,080,812 983,951
Selling, general, and administrative expenses 253,159 243,825
Other charges (credits), net:
Interest expense 5,951 5,630
Interest income (4,092) (3,536)
Miscellaneous, net (11,841) (2,143)
---------- -----------
(9,982) (49)
---------- -----------
Earnings before income taxes 279,028 259,618
Income taxes 105,503 99,046
---------- -----------
Net earnings $ 173,525 $ 160,572
========== ===========
Net earnings per Common Share (note 2) $ 1.08 $ 1.00
========== ===========
Dividends paid per Common Share (note 3) $ .3375 $ .2925
========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
- 2 -
<PAGE> 4
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Sept. 30, 1994 Dec. 31, 1993
-------------- -------------
(Unaudited)
Assets
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 86,952 $ 127,802
Marketable securities (note 5) 25,999 66,260
Receivables, less allowance for doubtful accounts
of $11,645 in 1994 and $13,886 in 1993 528,093 322,284
Inventories (note 4) 286,988 303,437
Prepaid expenses 17,079 9,961
---------- ----------
Total current assets 945,111 829,744
Property, plant, and equipment, net 580,200 572,136
Intangible and other assets, net (note 6) 159,472 111,244
---------- ----------
Total Assets $1,684,783 $1,513,124
========== ==========
</TABLE>
(Continued)
- 3 -
<PAGE> 5
RUBBERMAID INCORPORATED AND SUBSIDIARIES (Continued)
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Sept. 30, 1994 Dec. 31, 1993
-------------- -------------
(Unaudited)
Liabilities and Shareholders' Equity
------------------------------------
<S> <C> <C>
Current liabilities:
Notes payable $ 9,570 $ 12,783
Long-term debt, current 871 2,519
Payables 100,002 116,401
Accrued liabilities 168,159 127,611
--------- ---------
Total current liabilities 278,602 259,314
Other deferred liabilities 112,326 103,914
Long-term debt, non-current 12,559 19,414
Shareholders' equity:
Preferred stock, without par value.
Authorized 20,000,000 shares; none issued - -
Common Shares of $1 par value.
Authorized 400,000,000 shares; issued
162,677,082 shares in 1994 and 160,357,090
shares in 1993 162,677 160,357
Paid-in capital 69,745 10,515
Retained earnings 1,086,176 966,928
Foreign currency translation adjustment (8,649) (4,613)
Treasury shares, at cost (1,061,170 shares in
1994 and 89,826 shares in 1993) (note 7) (28,653) (2,705)
----------- ------------
Total shareholders' equity 1,281,296 1,130,482
----------- ------------
Total Liabilities and Shareholders' Equity $1,684,783 $1,513,124
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
- 4 -
<PAGE> 6
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
( ) Denotes decrease in cash and cash equivalents
Nine Months Ended
-----------------
Sept. 30, 1994 Sept. 30, 1993
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $173,525 $160,572
Adjustments to reconcile net earnings to net
cash from operating activities:
Depreciation 68,594 64,605
Changes in accounts receivable (192,827) (148,974)
Changes in inventories 28,471 741
Changes in payables (31,189) 11,577
Changes in accrued liabilities 37,431 55,670
Other, net 16,676 (764)
--------- ----------
Net cash from operating activities 100,681 143,427
Cash flows from investing activities:
Purchase of marketable securities (179,489) -
Proceeds from sale of marketable securities 219,760 -
Additions to property, plant, and equipment (74,286) (79,144)
Other, net (4,000) (1,790)
--------- ---------
Net cash from investing activities (38,015) (80,934)
Cash flows from financing activities:
Cash dividends paid (54,277) (46,900)
Proceeds from long-term borrowings 1,533 -
Repayment of long-term debt (20,199) (3,198)
Common stock repurchased (27,360) -
Other, net (3,213) (2,327)
--------- --------
Net cash from financing activities (103,516) (52,425)
--------- --------
Net change in cash and cash equivalents (40,850) 10,068
Cash and cash equivalents at beginning of year 127,802 122,494
--------- --------
Cash and cash equivalents at September 30 $ 86,952 $ 132,562
======== ========
Supplemental cash flow information:
Income taxes paid $ 85,993 $ 76,992
Interest paid $ 6,821 $ 6,666
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 7
RUBBERMAID INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
----------------------------------------------------------------
(Dollars in thousands except per share amounts)
(1) In the opinion of management the information furnished herein includes all
the adjustments necessary for a fair presentation of the results for the
interim periods and all such adjustments are of a normal recurring nature.
(2) Net earnings per Common Share is computed based on average shares
outstanding of 162,038,862 and 160,337,000 for the respective 1994 and
1993 three-month periods and 160,860,827 and 160,315,739 for the
respective nine-month periods.
(3) The actual number of shares outstanding on the respective record dates is
as follows:
<TABLE>
<CAPTION>
1994 1993
----------------------------------- ----------------------------------
Record Date No. Shares Record Date No. Shares
----------- ---------- ----------- ----------
<S> <C> <C> <C>
February 11 160,440,356 February 12 160,346,461
May 13 160,431,004 May 14 160,340,017
August 12 161,589,575 August 13 160,336,901
</TABLE>
(4) A summary of inventories follows:
<TABLE>
<CAPTION>
Sept. 30, 1994 Dec. 31, 1993
-------------- -------------
<S> <C> <C>
FIFO Cost:
Raw materials $ 98,979 $ 75,978
Work-in-process 19,814 15,964
Finished goods 188,877 224,023
-------- --------
307,670 315,965
Excess of FIFO over LIFO cost (20,682) (12,528)
-------- --------
$286,988 $303,437
======== ========
</TABLE>
(5) Effective January 1, 1994, the Company adopted FAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." There was no
significant impact resulting from the adoption of the statement.
Management determines the appropriate classification of debt securities
at the time of purchase and reevaluates such designation as of each
balance sheet date.
The Company's marketable securities are classified as available-for-sale
and are carried at fair value which approximates cost. The Company's
portfolio at September 30, 1994, consists of equity securities ($25,999).
In addition, at September 30, 1994, cash equivalents include commercial
paper ($16,762) maturing generally in 60 days or less.
(6) At September 30, 1994, and December 31, 1993, intangible and other
assets, net include the excess of cost over net assets of businesses
acquired of $106,158 and $44,862, respectively, net of accumulated
amortization of $15,624 and $15,367, respectively.
(7) As part of a program previously authorized by the Board of Directors, the
Company purchased 1,014,800 common shares for its treasury during the
third quarter of 1994 at an aggregate cost of $27,360.
(8) In April 1994, the Company completed a previously announced joint venture
with Richell Corporation, a leading Japanese housewares manufacturer.
The Company initially held a 40% equity interest in the venture, and
subsequent to September 30, 1994 exercised an option to increase its
equity interest to 51%.
(Continued)
- 6 -
<PAGE> 8
RUBBERMAID INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
-----------------------------------------------------------------
(Dollars in thousands except per share amounts)
(8) (Continued)
In May 1994, the Company ended its European housewares joint venture with
DSM, the Dutch chemical group. Under the terms of the dissolution
agreement, the Company will be free to enter the European housewares
market on an unrestricted basis after a brief transition period.
In June 1994, the Company acquired Carex Health Care Products, a
manufacturer and marketer of bath safety products, personal care
accessories, and other products designed to assist the aging and
physically challenged, in a cash transaction accounted for as a purchase,
and Empire Brushes, Inc., a manufacturer and marketer of brushes, brooms,
and mops for home and commercial use, in a stock transaction accounted
for as a purchase.
In September 1994, the Company sold its casual outdoor resin furniture
business to the Outdoor Products Group of Sunbeam-Oster Company, Inc.
(Sunbeam). Under the terms of the asset purchase agreement, Sunbeam
acquired specific tangible assets and assumed certain liabilities.
In October 1994, the Company acquired the assets of Glenwood Systems Pty.
Ltd. and related companies, well known in Australia as Ausplay, an
innovative designer and marketer of high-quality commercial playground
equipment.
In November 1994, the Company sold the assets of the Davson Division of
Rubbermaid Office Products to Quartet Manufacturing Company.
In November 1994, the Company announced that an agreement with Royal
Plastics Group Limited of Canada was reached to form a joint venture for
the manufacture and marketing of modular, plastic components and kits for
small structures, such as storage buildings and sheds, in consumer,
industrial, commercial and agricultural markets. Each partner will own
50 percent of the new company.
LIMITED REVIEW
--------------
The Company's independent public accountants have made a limited review of the
financial information furnished herein, in accordance with standards
established by the American Institute of Certified Public Accountants. See
Exhibit 15.
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<PAGE> 9
RUBBERMAID INCORPORATED AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Net sales for the three-month period ended September 30, 1994, increased 13%
over the third quarter of 1993. For the nine-month period ended September 30,
1994, sales increased 8% over the comparable 1993 period as sales levels
continued to improve from the slower sales growth experienced earlier in the
year. Unit volume increased in the third quarter and year-to-date periods by
15% and 9%, respectively, while price realization was a negative 2% for the
quarter and a negative 1% for the nine months as promotions continued
particularly to strengthen competitiveness on certain key products.
Acquisitions made in the second quarter of 1994, Empire Brushes and Carex
Health Care Products, contributed approximately 5% of the Company's sales and
volume growth for the third quarter versus the prior year period.
Net earnings for the third quarter of 1994 increased 11% over the comparable
1993 period. For the first nine months of 1994, net earnings increased 8% over
1993 reflecting the lower-than-normal sales volume increases during the first
quarter offset by strengthening volume growth in the second and third quarters.
Earnings growth was also driven by product cost control measures and
productivity improvements which overshadowed lower selling prices as well as a
third quarter increase in the cost of plastic resin.
Cost of sales as a percent of net sales for the third quarter of 1994 was 67.4%
versus 63.6% in the year ago period and equal to the 67.4% level realized in
the first half of this year. Commodity resin prices began to rise
significantly during the quarter, compared with the stable costs experienced in
the first half of this year. These higher raw material costs, which increased
faster than inflation, resulted in a LIFO charge of approximately $6 million in
the third quarter of 1994 compared with a LIFO credit of approximately $3
million in the prior year third quarter, a $9 million unfavorable swing. Cost
of sales during the quarter was also negatively impacted by the continued
actions taken to reduce and balance inventories. This impact as well as the
increase in raw material costs during the quarter was partially offset by
strong productivity improvements. Cost of sales as a percent of net sales for
the nine months was slightly more than one percentage point higher than the
comparable 1993 period reflecting the higher raw material prices, impact of
actions taken to balance inventories, and first quarter unabsorbed fixed
manufacturing costs associated with the harsh weather conditions largely offset
by tight cost controls and strong productivity improvements.
Additional resin price increases have been recently announced, and as a result,
resin costs are expected to rise further in the fourth quarter. This
escalation of resin costs is expected to lead to additional increases in the
Company's selling prices. The realization of such price increases, however,
will lag the resin cost increases in the fourth quarter.
Selling, general, and administrative expenses as a percent to net sales for the
three and nine-month periods ending September 30, 1994, were lower than the
comparable 1993 periods as a result of continued emphasis on productivity
improvements and controls over discretionary spending. The continued emphasis
on value improvements allowed the Company to leverage the dollar level of
operating expenses and reduce them as a percent of net sales, while continuing
the aggressive funding of marketing and brand building programs and investing
in research and development.
Miscellaneous, net during the third quarter was favorably impacted by the gain
recognized from the sale of the casual outdoor resin furniture business, and
was also favorably impacted during the nine-month period ended September 30,
1994, by the gain recognized from the dissolution of the European housewares
joint venture.
- 8 -
<PAGE> 10
RUBBERMAID INCORPORATED AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations (Continued)
- ---------------------
The effective tax rate for the third quarter was 37.0% versus 38.2% in the
second quarter. The difference reflects a downward revision of the estimated
effective tax rate for 1994 to just under 38%, partially attributable to the
sale of the casual outdoor furniture business. Last year's third quarter tax
rate of 39.6% was unusually high as a result of the retroactive adjustment made
to give effect to the Omnibus Budget Reconciliation Act of 1993, signed into
law in August 1993 which increased the U. S. corporate tax rate retroactive to
January 1, 1993.
Changes in Financial Condition
- ------------------------------
During the first nine months of 1994, cash and cash equivalents decreased by
$40.9 million as cash generated from operations of $100.6 million was exceeded
by cash used for investing activities of $38.0 million and cash used for
financing activities of $103.5 million. Cash generated from operations was
primarily the result of net income, non-cash depreciation charges, increased
accrued liabilities, and reduced inventory levels exceeding an increase in
receivables and reduced payables. The higher receivables reflected the
increased level of sales, dating and some lengthening of collections. The cash
used by investing activities was primarily the result of cash used to purchase
marketable securities and for new investments in property, plant, and equipment
exceeding the proceeds from the sale of marketable securities. Cash used for
financing activities was primarily cash dividends paid to shareholders,
repayment of long-term borrowings, and repurchase of 1,014,800 common shares
for the Company's treasury as part of a stock repurchase program previously
authorized by the Board of Directors.
Other
- -----
During the second quarter of 1994, the Company completed a previously announced
joint venture with Richell Corporation, a leading Japanese housewares
manufacturer, ended its European housewares joint venture with DSM, the Dutch
chemical group, and acquired two businesses -- Carex Health Care Products and
Empire Brushes, Inc.
During the third quarter, the Company began the integration of Carex Health
Care Products and Empire Brushes, Inc. In September 1994, the Company exited
its casual outdoor resin furniture business through a sale of assets.
Subsequent to September 30, 1994, the Company continued its business
development activities with the acquisition of Ausplay, a designer and marketer
of high-quality commercial playground equipment. In addition to being a
playground equipment market leader in Australia, Ausplay has an established
sales network throughout the Pacific Rim and a line of "contained play"
systems. Also in October, the Company exercised its option to increase to 51%
its equity interest in Rubbermaid Japan, the joint venture with Richell
Corporation, to sell and develop housewares, leisure and seasonal products to
the Japanese market. In November 1994, the Company sold the assets of the
Davson Division of Rubbermaid Office Products to Quartet Manufacturing Company.
Also in November, the Company announced that an agreement with Royal Plastics
Group Limited of Canada was reached to form a joint venture for the manufacture
and marketing of modular, plastic components and kits for small structures,
such as storage buildings and sheds, in consumer, industrial, commercial and
agricultural markets.
- 9 -
<PAGE> 11
RUBBERMAID INCORPORATED AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Other (Continued)
- -----
For further information relating to the Company's business development
activities, refer to Note 8 of the Condensed Consolidated Financial Statements.
- 10 -
<PAGE> 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 15. Letter regarding unaudited interim financial
information.
Exhibit 27. Financial data schedule.
(b) There were no reports on Form 8-K for the three months ended
September 30, 1994.
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.
RUBBERMAID INCORPORATED
DATE: November 14, 1994 /s/ James A. Morgan
----------------- -------------------------------------
James A. Morgan
Senior Vice President,
General Counsel and Secretary
DATE: November 14, 1994 /s/ John L. Theler
----------------- -------------------------------------
John L. Theler
Vice President & Corporate Controller
(Chief Accounting Officer)
- 11 -
<PAGE> 1
Exhibit 15
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Rubbermaid Incorporated
We have reviewed the accompanying condensed consolidated balance sheet of
Rubbermaid Incorporated and subsidiaries as of September 30, 1994, and the
related condensed consolidated statements of earnings and cash flows for the
three-month and nine-month periods ended September 30, 1994 and 1993. These
condensed consolidated financial statements are the responsibility of the
company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Rubbermaid Incorporated and
subsidiaries as of December 31, 1993 and the related consolidated statements of
earnings, cash flows and shareholders' equity for the year then ended (not
presented herein); and in our report dated February 1, 1994, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1993, is fairly presented in all material
respects in relation to the consolidated balance sheet from which it has been
derived.
/s/ KPMG Peat Marwick LLP
Cleveland, Ohio
October 12, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
"This schedule contains summary financial information extracted from the
condensed consolidated balance sheet as of September 30,1994 and related
condensed consolidated statements of earnings and cash flows for the
three-month and nine-month periods ended September 30, 1994 and is qualified in
its entirety by reference to such financial statements."
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 86,952
<SECURITIES> 25,999
<RECEIVABLES> 490,425
<ALLOWANCES> 11,645
<INVENTORY> 286,988
<CURRENT-ASSETS> 945,111
<PP&E> 1,135,675
<DEPRECIATION> 555,475
<TOTAL-ASSETS> 1,684,783
<CURRENT-LIABILITIES> 278,602
<BONDS> 12,559
0
0
<COMMON> 162,677
<OTHER-SE> 1,118,619
<TOTAL-LIABILITY-AND-EQUITY> 1,684,783
<SALES> 1,603,017
<TOTAL-REVENUES> 1,603,017
<CGS> 1,080,812
<TOTAL-COSTS> 1,080,812
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,951
<INCOME-PRETAX> 279,028
<INCOME-TAX> 105,503
<INCOME-CONTINUING> 173,525
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 173,525
<EPS-PRIMARY> 1.08
<EPS-DILUTED> 1.08
</TABLE>
