<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, 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
------
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, 1995 --
157,437,582
<PAGE> 2
<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
------------------
Sept. 30, 1995 Sept. 30, 1994
-------------- --------------
<S> <C> <C>
Net sales $641,520 $580,271
Cost of sales 453,802 391,119
Selling, general, and administrative expenses 101,184 86,291
Other charges (credits), net:
Interest expense 3,900 2,316
Interest income (145) (1,584)
Miscellaneous, net 2,347 (3,784)
--------- ---------
6,102 (3,052)
--------- ---------
Earnings before income taxes 80,432 105,913
Income taxes 30,143 39,154
-------- --------
Net earnings $ 50,289 $ 66,759
======== ========
Net earnings per Common Share (note 2) $ .32 $ .41
======== ========
Dividends paid per Common Share (note 3) $ .125 $ .1125
======== ========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<PAGE> 3
<TABLE>
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
(Dollars in thousands except per share amounts)
<CAPTION>
Nine Months Ended
-----------------
Sept. 30, 1995 Sept. 30, 1994
-------------- --------------
<S> <C> <C>
Net sales $1,762,220 $1,603,017
Cost of sales 1,250,321 1,080,812
Selling, general, and administrative expenses 288,360 253,159
Other charges (credits), net:
Interest expense 9,102 5,951
Interest income (2,751) (4,092)
Miscellaneous, net 4,005 (11,841)
----------- -----------
10,356 (9,982)
----------- -----------
Earnings before income taxes 213,183 279,028
Income taxes 79,943 105,503
----------- -----------
Net earnings $ 133,240 $ 173,525
=========== ===========
Net earnings per Common Share (note 2) $ .84 $ 1.08
=========== ===========
Dividends paid per Common Share (note 3) $ .375 $ .3375
=========== ===========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<PAGE> 4
<TABLE>
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands except per share amounts)
<CAPTION>
Sept. 30, 1995 Dec. 31, 1994
-------------- -------------
(Unaudited)
Assets
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 50,412 $ 92,249
Marketable securities - 59,049
Receivables, less allowance for doubtful accounts
of $9,759 in 1995 and $11,062 in 1994 617,031 471,384
Inventories (note 4) 321,721 295,180
Prepaid expenses 21,446 8,804
----------- -----------
Total current assets 1,010,610 926,666
Property, plant, and equipment, net 646,990 607,628
Intangible and other assets, net (note 5) 195,758 174,886
----------- -----------
Total Assets $1,853,358 $1,709,180
=========== ===========
(Continued)
</TABLE>
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<PAGE> 5
<TABLE>
RUBBERMAID INCORPORATED AND SUBSIDIARIES (Continued)
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands except per share amounts)
<CAPTION>
Sept. 30, 1995 Dec. 31, 1994
-------------- -------------
(Unaudited)
Liabilities and Shareholders' Equity
------------------------------------
<S> <C> <C>
Current liabilities:
Notes payable $ 140,896 $ 20,374
Long-term debt, current 6,158 1,783
Payables 127,492 102,681
Accrued liabilities 166,796 170,759
--------- ---------
Total current liabilities 441,342 295,597
Other deferred liabilities 133,538 116,181
Long-term debt, non-current 10,957 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 1,194,077 1,120,629
Foreign currency translation adjustment (13,771) (16,583)
Treasury shares, at cost (5,239,500 shares in
1995 and 1,875,830 shares in 1994) (145,742) (50,692)
---------- -----------
Total shareholders' equity 1,267,521 1,285,826
---------- -----------
Total Liabilities and Shareholders' Equity $1,853,358 $1,709,180
========== ==========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<PAGE> 6
<TABLE>
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in thousands)
( ) Denotes decrease in cash and cash equivalents
<CAPTION>
Nine Months Ended
-----------------
Sept. 30, 1995 Sept. 30, 1994
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 133,240 $ 173,525
Adjustments to reconcile net earnings to net
cash from operating activities:
Depreciation and amortization 80,591 72,727
Changes in accounts receivable (128,460) (192,827)
Changes in inventories (16,991) 28,471
Changes in payables 20,355 (31,189)
Changes in accrued liabilities (7,141) 37,431
Other, net (7,377) 12,543
--------- ---------
Net cash from operating activities 74,217 100,681
Cash flows from investing activities:
Purchase of marketable securities (99,151) (179,489)
Proceeds from sale of marketable securities 158,200 219,760
Capital expenditures (103,069) (74,286)
Other, net (28,799) (4,000)
--------- ---------
Net cash from investing activities (72,819) (38,015)
Cash flows from financing activities:
Net change in notes payable 120,168 (3,213)
Proceeds from long-term debt - 1,533
Repayment of long-term debt (1,803) (20,199)
Cash dividends paid (59,791) (54,277)
Common Shares repurchased (102,487) (27,360)
Other, net 678 -
--------- ----------
Net cash from financing activities (43,235) (103,516)
--------- ----------
Net change in cash and cash equivalents (41,837) (40,850)
Cash and cash equivalents at beginning of year 92,249 127,802
--------- ----------
Cash and cash equivalents at September 30 $ 50,412 $ 86,952
========= ==========
Supplemental cash flow information:
Income taxes paid $ 66,477 $ 85,993
Interest paid $ 9,282 $ 6,821
========= ==========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<PAGE> 7
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 157,742,939 and 162,038,862 for the respective 1995 and
1994 three-month periods and 159,395,030 and 160,860,827 for the
respective nine-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
May 12 159,652,695 May 13 160,431,004
August 11 157,664,643 August 12 161,589,575
</TABLE>
(4) A summary of inventories follows:
<TABLE>
<CAPTION>
Sept. 30, 1995 Dec. 31, 1994
-------------- -------------
<S> <C> <C>
FIFO Cost:
Raw materials $110,052 $ 93,960
Work-in-process 15,987 16,555
Finished goods 230,660 209,140
-------- --------
356,699 319,655
Excess of FIFO over LIFO cost (34,978) (24,475)
-------- --------
$321,721 $295,180
======== ========
</TABLE>
(5) At September 30, 1995, and December 31, 1994, intangible and other
assets, net include the excess of cost over net assets of businesses
acquired of $131,059 and $118,579, respectively, net of accumulated
amortization of $20,056 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 and
seasonal 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.
In September 1995, the Company acquired Decor Concepts, Inc., better
known as Omni, an innovative leader in the design and manufacture of
commercial playground equipment, in a cash transaction accounted for as a
purchase.
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<PAGE> 8
RUBBERMAID INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
----------------------------------------------------------------
(Dollars in thousands)
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
Results of Operations
- ---------------------
Net sales for the three-month period ended September 30, 1995 increased 11%
over the third quarter of 1994. Unit volume increased 6% in the quarter while
higher selling prices contributed 5% of the sales increase. Acquisitions, net
of divestitures, contributed 4% to sales and volume. For the nine-month period
ended September 30, 1995, sales increased 10% over the comparable 1994 period.
Unit volume increased 5% in the year-to-date period while higher selling prices
contributed 5% of the total sales increase. Acquisitions, net of divestitures,
contributed 5% to year-to-date sales and volume.
Net earnings for the three-month period ended September 30, 1995, decreased 25%
over the comparable 1994 period, primarily due to lackluster consumer spending,
significantly higher raw materials costs, greater marketing expenses, and lower
manufacturing efficiencies. In addition, prior year's third quarter earnings
benefited from a one-time non-operating gain on the sale of the outdoor casual
furniture business. For the first nine months of 1995, net earnings decreased
23% over 1994 reflecting unprecedented increases in plastic resin costs and
lower-than-normal sales volume increases in the second and third quarters.
Earnings for the 1994 period benefited from one-time non-operating gains on the
dissolution of the European housewares joint venture and the sale of the
outdoor casual furniture business.
Cost of sales as a percent of net sales for the three-month period ended
September 30, 1995, was 70.7% versus 67.4% in the year ago period and was
slightly below the 71.1% realized in the first half of this year. While the
third quarter of 1995 saw a reduction in the year-over-year impact in the
inflationary costs of materials versus the second quarter, raw material costs
were still significantly above the comparable 1994 period. Cost of sales
during the quarter was also negatively impacted by inefficiencies from new
hires and some strains in distribution in responding to significantly stronger
demand than experienced in the second quarter of 1995. These unfavorable
factors were partially offset by continued productivity improvements and other
cost savings. Cost of sales as a percent of net sales for the nine-month
year-to-date period were significantly higher than the year ago period,
reflecting unprecedented increases in plastic resins, packaging and colorants,
and the negative effects of intentionally decelerating manufacturing production
during the second quarter. LIFO expense for the third quarter of 1995 was $4.1
million compared to $6.2 million for the third quarter of 1994.
Selling, general, and administrative expenses as a percent of net sales for the
three-month and the nine-month year-to-date periods were higher than the
comparable 1994 periods. These increases reflect higher marketing expenses on
lower-than-planned sales levels and the negative impact of consolidating
acquisitions having higher selling, general and administrative expenses as a
percent of net sales.
Other charges (credits), net were a net charge for the third quarter and
nine-month year-to-date periods ended September 30, 1995, compared with a net
credit in the comparable periods of 1994. The unfavorable swing is primarily
due to higher net interest expense in 1995, and gains in the third quarter of
1994 from the sale of the outdoor casual furniture business and in the second
quarter of 1994 from the dissolution of the European housewares joint venture.
The effective tax rate for the third quarter of 1995 was 37.5% versus 37.0% in
the third quarter of 1994, and was 37.5% for the nine months year-to-date
versus 37.8% in the comparable 1994 period. The effective tax rate for all of
1994 was 37.9%.
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<PAGE> 10
RUBBERMAID INCORPORATED AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Changes in Financial Condition
- ------------------------------
During the first nine months of 1995, cash and cash equivalents decreased by
$41.8 million as cash generated from operations of $74.2 million was exceeded
by cash used for investing activities of $72.8 million and cash used for
financing activities of $43.2 million. Cash generated from operations was
primarily the result of net earnings, and non-cash depreciation charges
exceeding an increase in accounts receivable. The higher receivables reflected
the increase in sales, dating, and the impact of increased international sales
which typically carry longer payment terms. Cash used by investing activities
was primarily the result of cash used to purchase marketable securities,
investment in capital expenditures, and the acquisitions of businesses
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 3.6 million common shares for the Company's treasury
which exceeded increases in notes payable.
Other
- -----
During the first quarter, the joint venture with Royal Plastics of Canada,
Royal Rubbermaid Structures Ltd., was formally launched. This venture
manufactures and markets 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 in the first
quarter, 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.
During the second quarter, the Company acquired Par-Rec Holdings, Inc., a
Canadian manufacturer of commercial playground equipment. Royal Rubbermaid
Structures, Ltd. began the manufacture of small plastic structures and began
shipping to customers at quarter end. The Company continued the integration of
Empire Brushes and Injectaplastic, S.A., and relocated the operations of
Rubbermaid Health Care Products (formerly Carex Health Care Products, acquired
in 1994) from a leased facility in New Jersey to an existing, larger facility
in North Carolina that offers immediate and future expansion opportunities.
During the third quarter, the Company acquired Decor Concepts, Inc., better
known as Omni, the leading provider of contained soft-play systems. Omni
brings to the Company opportunities for global growth and operational synergy
with our other commercial play operations.
For further information relating to the Company's business development
activities, refer to Note 6 of the Condensed Consolidated Financial Statements.
- 9 -
<PAGE> 11
PART II. OTHER INFORMATION
Item 6. Exhibit 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, 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: November 9, 1995 /s/ James A. Morgan
--------------------- --------------------------------
James A. Morgan
Senior Vice President,
General Counsel and Secretary
DATE: November 9, 1995 /s/ John L. Theler
--------------------- ---------------------------------
John L. Theler
Vice President & Corporate Controller,
(Chief Accounting Officer)
- 10 -
<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 September 30, 1995, and the
related condensed consolidated statements of earnings for the three- and
nine-month periods ended September 30, 1995 and 1994, and cash flows for the
nine-month periods ended September 30, 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 statements 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
October 13, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1995 AND RELATED CONDENSED
CONSOLIDATED STATEMENT OF EARNINGS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30,
1995 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-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 50,412
<SECURITIES> 0
<RECEIVABLES> 578,500
<ALLOWANCES> 9,759
<INVENTORY> 321,721
<CURRENT-ASSETS> 1,010,610
<PP&E> 1,271,005
<DEPRECIATION> 624,015
<TOTAL-ASSETS> 1,853,358
<CURRENT-LIABILITIES> 441,342
<BONDS> 10,957
<COMMON> 162,677
0
0
<OTHER-SE> 1,104,844
<TOTAL-LIABILITY-AND-EQUITY> 1,853,358
<SALES> 1,762,220
<TOTAL-REVENUES> 1,762,220
<CGS> 1,250,321
<TOTAL-COSTS> 1,250,321
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,102
<INCOME-PRETAX> 213,183
<INCOME-TAX> 79,943
<INCOME-CONTINUING> 133,240
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 133,240
<EPS-PRIMARY> .84
<EPS-DILUTED> .84
</TABLE>
