<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 June 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
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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 June 30, 1994 -- 162,629,539
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<TABLE>
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)
<CAPTION>
Three Months Ended
------------------
June 30, 1994 June 30, 1993
------------- -------------
<S> <C> <C>
Net sales $531,098 $488,460
Cost of sales 362,432 330,365
Selling, general, and administrative expenses 85,171 78,608
Other charges (credits), net:
Interest expense 1,773 1,729
Interest income (1,175) (995)
Miscellaneous, net (7,894) (1,460)
-------- --------
(7,296) (726)
-------- --------
Earnings before income taxes 90,791 80,213
Income taxes 34,646 29,638
-------- --------
Net earnings $ 56,145 $ 50,575
======== ========
Net earnings per Common Share (note 2) $ .35 $ .32
======== ========
Dividends paid per Common Share (note 3) $ .1125 $ .0975
======== ========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
(Dollars in thousands except per share amounts)
<CAPTION>
Six Months Ended
----------------
June 30, 1994 June 30, 1993
------------- -------------
<S> <C> <C>
Net sales $1,022,746 $972,137
Cost of sales 689,693 656,160
Selling, general, and administrative expenses 166,868 158,205
Other charges (credits), net:
Interest expense 3,635 3,765
Interest income (2,508) (2,347)
Miscellaneous, net (8,057) (3,358)
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(6,930) (1,940)
---------- --------
Earnings before income taxes 173,115 159,712
Income taxes 66,349 59,521
---------- --------
Net earnings $ 106,766 $100,191
========== ========
Net earnings per Common Share (note 2) $ .67 $ .63
========== ========
Dividends paid per Common Share (note 3) $ .225 $ .195
========== ========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands except per share amounts)
<CAPTION>
June 30, 1994 Dec. 31, 1993
------------- -------------
(Unaudited)
Assets
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 73,758 $ 127,802
Marketable securities (note 5) 52,199 66,260
Receivables, less allowance for doubtful accounts
of $12,705 in 1994 and $13,886 in 1993 455,930 322,284
Inventories (note 4) 304,876 303,437
Prepaid expenses 13,752 9,961
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Total current assets 900,515 829,744
Property, plant, and equipment, net 588,014 572,136
Intangible and other assets, net (note 6) 150,045 111,244
---------- ----------
Total Assets $1,638,574 $1,513,124
========== ==========
(Continued)
</TABLE>
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<TABLE>
RUBBERMAID INCORPORATED AND SUBSIDIARIES (Continued)
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands except per share amounts)
<CAPTION>
June 30, 1994 Dec. 31, 1993
------------- -------------
(Unaudited)
Liabilities and Shareholders' Equity
------------------------------------
<S> <C> <C>
Current liabilities:
Notes payable $ 15,790 $ 12,783
Long-term debt, current 2,434 2,519
Payables 107,984 116,401
Accrued liabilities 139,833 127,611
---------- ----------
Total current liabilities 266,041 259,314
Other deferred liabilities 111,408 103,914
Long-term debt, non-current 20,812 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 68,482 7,810
Retained earnings 1,019,546 966,928
Foreign currency translation adjustment (10,392) (4,613)
---------- ----------
Total shareholders' equity 1,240,313 1,130,482
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Total Liabilities and Shareholders' Equity $1,638,574 $1,513,124
========== ==========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in thousands)
<CAPTION>
( ) Denotes decrease in cash and cash equivalents
Six Months Ended
----------------
June 30, 1994 June 30, 1993
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $106,766 $100,191
Adjustments to reconcile net earnings to net
cash from operating activities:
Depreciation 49,197 44,385
Changes in accounts receivable (120,607) (76,462)
Changes in inventories 14,242 11,228
Changes in payables (46,023) 7,797
Changes in accrued liabilities 10,606 14,867
Other, net 19,160 2,512
-------- --------
Net cash from operating activities 33,341 104,518
Cash flows from investing activities:
Purchase of marketable securities (113,599) -
Proceeds from sale of marketable securities 127,660 -
Additions to property, plant, and equipment (48,549) (50,374)
Other, net (10,956) 582
-------- --------
Net cash from investing activities (45,444) (49,792)
Cash flows from financing activities:
Cash dividends paid (36,098) (31,267)
Proceeds from long-term borrowings 3,011 -
Repayment of long-term debt (11,861) (1,986)
Other, net 3,007 (3,609)
-------- --------
Net cash from financing activities (41,941) (36,862)
-------- --------
Net change in cash and cash equivalents (54,044) 17,864
Cash and cash equivalents at beginning of year 127,802 122,494
-------- --------
Cash and cash equivalents at June 30 $ 73,758 $140,358
======== ========
Supplemental cash flow information:
Income taxes paid $ 55,748 $ 54,315
Interest paid $ 3,433 $ 3,970
======== ========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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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) Earnings per Common Share is computed based on average shares outstanding
of 160,470,405 and 160,341,089 for the respective 1994 and 1993
three-month periods and 160,440,338 and 160,303,723 for the respective
six-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
</TABLE>
(4) A summary of inventories follows:
<TABLE>
<CAPTION>
June 30, 1994 December 31, 1993
------------- -----------------
<S> <C> <C>
FIFO Cost:
Raw materials $ 80,955 $ 75,978
Work-in-process 18,495 15,964
Finished goods 219,918 224,023
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319,368 315,965
Excess of FIFO over LIFO cost (14,492) (12,528)
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$304,876 $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 June 30, 1994, consists of debt securities ($10,000), all of
which mature in less than one year, and equity securities ($42,199). In
addition, at June 30, 1994, cash equivalents include commercial paper
($21,916) maturing generally in 60 days or less.
(6) At June 30, 1994, and December 31, 1993, intangible and other assets, net
include the excess of cost over net assets of businesses acquired of
$101,379 and $44,862, respectively, net of accumulated amortization of
$15,036 and $15,367, respectively.
(7) In April 1994, the Company completed a previously announced joint venture
with Richell Corporation, a leading Japanese housewares manufacturer.
The Company holds a 40% equity interest in the venture and intends to
increase its holding to a majority position by the end of 1994.
(Continued)
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RUBBERMAID INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
----------------------------------------------------------------
(Dollars in thousands except per share amounts)
(7) (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 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. These acquisitions had no effect on the second
quarter's results of operations.
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 June 30, 1994, increased 9% over the
second quarter of 1993. For the six-month period ended June 30, 1994, sales
increased 5% over the comparable 1993 period reflecting the slower sales growth
earlier in the year. Unit volume increased in the second quarter and
year-to-date periods by 10% and 6%, respectively, while price realization in
both periods decreased by 1% as promotions continued on certain key products.
Net earnings for the second quarter of 1994 increased 11% over the comparable
1993 period. For the first six months of 1994, net earnings increased 7% over
1993 reflecting the lower-than-normal sales volume increases during the first
quarter offset by product cost control measures and productivity improvements.
Cost of sales as a percent of net sales for the quarter was slightly higher
than the same quarter last year. Cost of sales during the quarter were
negatively impacted by aggressive actions taken to reduce and balance
inventories and by higher LIFO expense partially offset by productivity
improvements. Cost of sales as a percent of net sales for the six months was
slightly lower than the comparable 1993 period reflective of tight cost
controls, strong productivity improvements and reduced LIFO expense partially
offset by the second quarter actions to balance inventories and unabsorbed
fixed manufacturing costs in the first quarter due to the harsh weather
conditions.
Selling, general, and administrative expenses as a percent of net sales for the
quarter and six months were approximately even with the corresponding periods
of last year. Continued emphasis on productivity improvements and controls
over discretionary spending allowed the same level of operating expenses, as a
percent of sales, to be maintained while continuing the funding of marketing
and advertising programs and investing in research and development.
Miscellaneous, net during the second quarter was favorably impacted by the gain
recognized from the dissolution of the European housewares joint venture.
As a result of the Omnibus Budget Reconciliation Act of 1993 signed into law in
August 1993, the effective tax rates for the second quarter and six months of
1994 rose to 38.2% and 38.3%, respectively, compared to 36.9% and 37.3%,
respectively, for the comparable 1993 periods.
Changes in Financial Condition
- - ------------------------------
During the first six months of 1994, cash and cash equivalents decreased by
$54.0 million as cash generated from operations of $33.3 million was exceeded
by cash used for investing activities of $45.4 million and cash used for
financing activities of $41.9 million. Cash generated from operations was
primarily the result of net income, non-cash depreciation charges, 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.
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<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
Other
- - -----
In April 1994, the Company completed a previously announced joint venture with
Richell Corporation, a leading Japanese housewares manufacturer. The Company
holds a 40% equity interest in the venture and intends to increase its holding
to a majority position by the end of 1994.
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 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. These acquisitions
had no effect on the second quarter's results of operations.
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<PAGE> 11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders:
At the Annual Meeting of Shareholders held on April 26, 1994, the
Shareholders of Registrant voted on the following matters with
results as indicated:
A. A proposal to approve Registrant's Management Incentive Plan
in order to meet tax deductibility requirements of the Omnibus
Budget Reconciliation Act of 1993:
<TABLE>
<S> <C> <C> <C>
For 127,308,382 Abstain 1,550,064
Against 2,951,269 Broker Non-Vote 0
</TABLE>
B. A proposal to approve a Chief Executive Officer Incentive Plan
in order to meet tax deductibility requirements of the Omnibus
Budget Reconciliation Act of 1993:
<TABLE>
<S> <C> <C> <C>
For 126,498,280 Abstain 1,651,146
Against 3,660,289 Broker Non-Vote 0
</TABLE>
C. A proposal to amend the 1989 Restricted Stock Incentive Plan
to provide for the granting of stock options and stock
appreciation rights in addition to restricted stock awards;
and further, to meet the tax deductibility requirements of the
Omnibus Budget Reconciliation Act of 1993:
<TABLE>
<S> <C> <C> <C>
For 116,991,660 Abstain 1,133,495
Against 13,684,560 Broker Non-Vote 0
</TABLE>
D. A shareholder proposal concerning the tabulation of proxies:
<TABLE>
<S> <C> <C> <C>
For 14,745,987 Abstain 4,563,029
Against 96,001,150 Broker Non-Vote 16,769,549
</TABLE>
Item 6. Exhibit and Reports on Form 8-K.
(a) Exhibit 15. Letter regarding unaudited interim financial
information.
(b) There were no reports on Form 8-K for the three months ended
June 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: August 9, 1994 /s/ James A. Morgan
------------------- ---------------------------------------
James A. Morgan
Senior Vice President,
General Counsel and Secretary
DATE: August 9, 1994 /s/ John L. Theler
------------------- ---------------------------------------
John L. Theler
Vice President & Corporate Controller
(Chief Accounting Officer)
<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 June 30, 1994, and the related
condensed consolidated statements of earnings and cash flows for the
three-month and six-month periods ended June 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
Cleveland, Ohio
July 13, 1994
