<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 March 31, 1995
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
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(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 March 31, 1995 -- 160,880,887
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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
------------------
March 31, 1995 March 31, 1994
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<S> <C> <C>
Net sales $563,856 $491,648
Cost of sales 386,528 327,261
Selling, general, and administrative expenses 90,770 81,697
Other charges (credits), net:
Interest expense 1,942 1,862
Interest income (1,659) (1,333)
Miscellaneous, net (414) (163)
-------- --------
(131) 366
-------- --------
Earnings before income taxes 86,689 82,324
Income taxes 32,548 31,703
-------- --------
Net earnings $ 54,141 $ 50,621
======== ========
Net earnings per Common Share (note 2) $ .34 $ .32
======== ========
Dividends paid per Common Share (note 3) $ .1250 $ .1125
======== ========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
March 31, 1995 Dec. 31, 1994
-------------- -------------
(Unaudited)
Assets
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<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 72,401 $ 92,249
Marketable securities 18,850 59,049
Receivables, less allowance for doubtful accounts
of $10,071 in 1995 and $11,062 in 1994 542,061 471,384
Inventories (note 4) 348,501 295,180
Prepaid expenses 11,306 8,804
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Total current assets 993,119 926,666
Property, plant, and equipment, net 623,558 607,628
Intangible and other assets, net (note 5) 182,417 174,886
---------- ----------
Total Assets $1,799,094 $1,709,180
========== ==========
(Continued)
</TABLE>
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<TABLE>
RUBBERMAID INCORPORATED AND SUBSIDIARIES (Continued)
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands except per share amounts)
<CAPTION>
March 31, 1995 Dec. 31, 1994
-------------- -------------
(Unaudited)
Liabilities and Shareholders' Equity
------------------------------------
<S> <C> <C>
Current liabilities:
Notes payable $ 37,420 $ 20,374
Long-term debt, current 3,602 1,783
Payables 140,313 102,681
Accrued liabilities 154,898 170,759
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Total current liabilities 336,233 295,597
Other deferred liabilities 127,018 116,181
Long-term debt, non-current 13,501 11,576
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 1995 and 1994 162,677 162,677
Paid-in capital 70,280 69,795
Retained earnings 1,154,644 1,120,629
Foreign currency translation adjustment (16,595) (16,583)
Treasury shares, at cost (1,796,195 shares in
1995 and 1,875,830 shares in 1994) (48,664) (50,692)
---------- ----------
Total shareholders' equity 1,322,342 1,285,826
---------- ----------
Total Liabilities and Shareholders' Equity $1,799,094 $1,709,180
========== ==========
<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)
( ) Denotes decrease in cash and cash equivalents
<CAPTION>
Three Months Ended
------------------
March 31, 1995 March 31, 1994
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 54,141 $ 50,621
Adjustments to reconcile net earnings to net
cash from operating activities:
Depreciation and amortization 26,421 26,297
Changes in accounts receivable (62,389) (88,814)
Changes in inventories (48,974) (1,122)
Changes in payables 34,316 (33,718)
Changes in accrued liabilities (12,773) (1,838)
Other, net (1,532) 5,920
--------- ---------
Net cash from operating activities (10,790) (42,654)
Cash flows from investing activities:
Purchase of marketable securities (99,150) (51,107)
Proceeds from sale of marketable securities 139,350 76,510
Capital expenditures (30,909) (20,465)
Other, net (12,087) (411)
--------- ---------
Net cash from investing activities (2,796) 4,527
Cash flows from financing activities:
Net change in notes payable 15,221 (462)
Proceeds from long-term debt 3,831 1,863
Repayment of long-term debt (87) (567)
Cash dividends paid (20,126) (18,049)
Common Shares repurchased (5,409) -
Other, net 308 -
--------- ---------
Net cash from financing activities (6,262) (17,215)
--------- ---------
Net change in cash and cash equivalents (19,848) (55,342)
Cash and cash equivalents at beginning of year 92,249 127,802
--------- ---------
Cash and cash equivalents at March 31 $ 72,401 $ 72,460
========= =========
Supplemental cash flow information:
Income taxes paid $ 10,013 $ 7,368
Interest paid $ 1,822 $ 2,286
========= =========
<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)
(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 160,913,630 and 160,413,253 for the respective 1995
and 1994 three-month periods.
(3) The actual number of shares outstanding on the respective record
dates is as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------------------ -----------------------------------
Record Date No. Shares Record Date No. Shares
----------- ---------- ----------- ----------
<S> <C> <C> <C>
February 10 161,008,984 February 11 160,440,356
</TABLE>
<TABLE>
(4) A summary of inventories follows:
<CAPTION>
March 31, 1995 Dec. 31, 1994
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<S> <C> <C>
FIFO Cost:
Raw materials $106,292 $ 93,960
Work-in-process 17,528 16,555
Finished goods 251,988 209,140
-------- --------
375,808 319,655
Excess of FIFO over LIFO cost (27,307) (24,475)
-------- --------
$348,501 $295,180
======== ========
</TABLE>
(5) At March 31, 1995, and December 31, 1994, intangible and other assets,
net include the excess of cost over net assets of businesses acquired
of $122,118 and $118,579, respectively, net of accumulated amortization
of $17,896 and $16,768, respectively.
(6) In January 1995, the Company formed Royal Rubbermaid Structures Ltd., a
joint venture with Royal Plastics Group Limited of Canada, for the
manufacture and marketing of modular plastic components and kits for
small structures, such as storage buildings and sheds. Each partner
owns 50% of the joint venture, accounted for by the equity method.
In March 1995, the Company acquired Injectaplastic S.A., headquartered
in Oyonnax, France, a leading manufacturer and marketer of plastic
housewares, seasonal products and bath accessories in the French
market, in a cash and stock transaction accounted for as a purchase.
This acquisition marks Rubbermaid's reentry into the European home
products market.
In April 1995, the Company acquired PAR-REC Holdings, Inc., a Canadian
manufacturer of commercial playground equipment, in a cash transaction
accounted for as a purchase.
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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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 March 31, 1995, increased 15% over
the first quarter of 1994. Volume increased 12%, including 4% from
acquisitions, net of divestitures, while higher selling prices contributed 3%
of the total sales increase.
Net earnings for the first quarter of 1995 increased 7% over the comparable
1994 period. The increased earnings were due to the growth in sales volume,
higher selling prices, and continued productivity improvements, which were
partially offset by lower margins due to higher costs of plastic resins and
packaging materials.
Cost of Sales as a percent of net sales for the first quarter of 1995 was 68.6%
versus 66.6% in the first quarter of 1994. This increase reflects higher costs
for material such as resins, packaging and colorants that continue to impact
the Company's cost structure. These inflationary costs were partially offset
by accelerated productivity improvements. LIFO expense of $2.8 million
compared to a $.3 million credit last year and reflected the expectation of
higher cost levels at year end compared with costs at the end of the prior
year.
Market price levels for resin are up approximately 80% compared with last year
at this time. Rising material costs, particularly resin increases received
late in the first quarter, and forecasted further hikes, will present a
significant cost challenge during the second quarter. As a result, management
believes that margins could experience further erosion in the second quarter.
Selling, general, and administrative expenses as a percent of net sales for the
quarter ending March 31, 1995, were lower than the comparable 1994 period as a
result of continued emphasis on productivity improvements. 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.
The effective tax rate for the first quarter was 37.5% versus 38.5% in last
year's first quarter. The effective tax rate for all of 1994 was 37.9%.
Changes in Financial Condition
- ------------------------------
During the first quarter of 1995, cash and cash equivalents decreased by $19.8
million as operating, investing, and financing activities used cash of $10.8
million, $2.8 million, and $6.2 million, respectively. Cash used by operations
was primarily the result of increases in receivables and inventories and a
decrease in accrued liabilities, which exceeded net income, non-cash
depreciation charges and increased payables. Higher receivables reflected the
increased sales volume, higher selling prices, and some lengthening of
collections. Management will take action in the second quarter to bring the
growth rate of accounts receivable more in line with sales growth. The
increase in inventories is primarily the result of substantially higher raw
material costs. Cash used by investing activities was primarily the result of
cash used to purchase marketable securities, investment in capital
expenditures, and the purchase of Injectaplastic S.A. exceeding the proceeds
from the sale of marketable securities. Cash used for financing activities
primarily consisted of cash dividends paid to shareholders and the repurchase
of common shares for the Company's treasury which exceeded increases in notes
payable.
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<PAGE> 8
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
- -----
During the first quarter, the joint venture with Royal Plastics of Canada,
Royal Rubbermaid Structures Ltd., was formally launched. This venture will
manufacture and market modular, plastic components and kits for small
structures, such as storage buildings and sheds in consumer, industrial,
commercial and agricultural markets. The Company continued the integration of
Empire Brushes, acquired in 1994, with the existing Rubbermaid cleaning
business to form a Cleaning and Maintenance Products unit. Also, the Company
acquired Injectaplastic S.A., headquartered in Oyonnax, France, a leading
manufacturer and marketer of plastic housewares, seasonal products and bath
accessories in the French market.
For further information relating to the Company's business development
activities, refer to Note 6 of the Condensed Consolidated Financial Statements.
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<PAGE> 9
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
March 31, 1995.
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: May 11, 1995 /s/ James A. Morgan
----------------- ------------------------------
James A. Morgan
Senior Vice President,
General Counsel and Secretary
DATE: May 11, 1995 /s/ John L. Theler
----------------- ------------------------------
John L. Theler
Vice President & Corporate Controller
(Chief Accounting Officer)
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<PAGE> 1
Exhibit 15
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Rubbermaid Incorporated
We have reviewed the accompanying condensed consolidated balance sheets of
Rubbermaid Incorporated and subsidiaries as of March 31, 1995, and the related
condensed consolidated statements of earnings and cash flows for the
three-month periods ended March 31, 1995 and 1994. 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, 1994, and the related consolidated statement of
earnings, cash flows, and shareholders' equity for the year then ended (not
presented herein); and in our report dated January 31, 1995, 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, 1994, 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
April 13, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1995 AND RELATED CONDENSED
CONSOLIDATED STATEMENT OF EARNINGS FOR THE THREE-MONTH PERIOD ENDED MARCH 31,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 72,401
<SECURITIES> 18,850
<RECEIVABLES> 475,920
<ALLOWANCES> 10,071
<INVENTORY> 348,501
<CURRENT-ASSETS> 993,119
<PP&E> 1,205,076
<DEPRECIATION> 581,518
<TOTAL-ASSETS> 1,799,094
<CURRENT-LIABILITIES> 336,233
<BONDS> 13,501
<COMMON> 162,677
0
0
<OTHER-SE> 1,159,665
<TOTAL-LIABILITY-AND-EQUITY> 1,799,094
<SALES> 563,856
<TOTAL-REVENUES> 563,856
<CGS> 386,528
<TOTAL-COSTS> 386,528
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,942
<INCOME-PRETAX> 86,689
<INCOME-TAX> 32,548
<INCOME-CONTINUING> 54,141
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,141
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
