<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, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to
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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)
330-264-6464
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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 June 30, 1996 -- 149,767,973
<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
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June 30, 1996 June 30, 1995
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<S> <C> <C>
Net sales $ 572,989 $ 556,844
Cost of sales 389,127 409,991
Selling, general, and administrative expenses 105,173 96,406
Other charges (credits), net:
Interest expense 5,924 3,260
Interest income (357) (947)
Miscellaneous, net 1,176 2,072
--------- ---------
6,743 4,385
--------- ---------
Earnings before income taxes 71,946 46,062
Income taxes 27,196 17,252
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Net earnings $ 44,750 $ 28,810
========= =========
Net earnings per Common Share (note 2) $ .30 $ .18
========= =========
Dividends paid per Common Share (note 3) $ .14 $ .125
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 3
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Six Months Ended
----------------
June 30, 1996 June 30, 1995
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<S> <C> <C>
Net sales $ 1,106,274 $ 1,120,700
Cost of sales 755,081 796,519
Selling, general, and administrative expenses 200,658 187,176
Other charges (credits), net:
Interest expense 10,393 5,202
Interest income (867) (2,606)
Miscellaneous, net 2,058 1,658
----------- -----------
11,584 4,254
----------- -----------
Earnings before income taxes 138,951 132,751
Income taxes 52,524 49,800
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Net earnings $ 86,427 $ 82,951
=========== ===========
Net earnings per Common Share (note 2) $ .57 $ .52
=========== ===========
Dividends paid per Common Share (note 3) $ .28 $ .25
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 4
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30, 1996 Dec. 31, 1995
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(Unaudited)
Assets
------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 33,022 $ 50,969
Receivables, less allowance for doubtful accounts
of $9,861 in 1996 and $10,467 in 1995 445,009 499,203
Inventories (note 4) 266,545 251,723
Other current assets 53,772 49,312
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Total current assets 798,348 851,207
Property, plant, and equipment, net 628,018 626,637
Intangible and other assets, net (note 5) 236,653 213,684
---------- ----------
Total Assets $1,663,019 $1,691,528
========== ==========
</TABLE>
(Continued)
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<PAGE> 5
RUBBERMAID INCORPORATED AND SUBSIDIARIES
(Continued)
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30, 1996 Dec. 31, 1995
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(Unaudited)
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
<S> <C> <C>
Notes payable $ 251,736 $ 116,539
Long-term debt, current 3,013 5,957
Payables 128,560 102,003
Accrued liabilities 164,946 190,233
----------- -----------
Total current liabilities 548,255 414,732
Other deferred liabilities 136,576 135,244
Long-term debt, non-current 4,685 6,179
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 1996 and 1995 162,677 162,677
Paid-in capital 70,553 70,825
Retained earnings 1,121,511 1,098,670
Foreign currency translation adjustment (22,318) (18,420)
Treasury shares, at cost (12,909,109 shares in
1996 and 6,473,220 shares in 1995) (358,920) (178,379)
----------- -----------
Total shareholders' equity 973,503 1,135,373
----------- -----------
Total Liabilities and Shareholders' Equity $ 1,663,019 $ 1,691,528
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 6
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in thousands)
( ) Denotes decrease in cash and cash equivalents
<TABLE>
<CAPTION>
Six Months Ended
-------------------------------------------
June 30, 1996 June 30, 1995
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 86,427 $ 82,951
Adjustments to reconcile net earnings to net
cash from operating activities:
Depreciation and amortization 53,290 55,067
Other 5,725 4,827
Changes in:
Receivables 53,366 17,387
Inventories (14,822) (52,892)
Other assets (28,416) (9,811)
Payables 5,557 5,442
Accrued liabilities (26,881) (25,593)
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Net cash from operating activities 134,246 77,378
Cash flows from investing activities:
Capital expenditures (58,330) (75,393)
Purchase of marketable securities -- (99,151)
Proceeds from sale of marketable securities -- 158,200
Other, net 3,175 (14,808)
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Net cash used for investing activities (55,155) (31,152)
Cash flows from financing activities:
Net change in notes payable 135,197 33,503
Repayment of long-term debt (4,438) (461)
Cash dividends paid (42,586) (40,083)
Common Shares repurchased (185,482) (83,702)
Other, net 271 500
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Net cash used for financing activities (97,038) (90,243)
--------- ---------
Net change in cash and cash equivalents (17,947) (44,017)
Cash and cash equivalents at beginning of year 50,969 92,249
--------- ---------
Cash and cash equivalents at June 30 $ 33,022 $ 48,232
========= =========
Supplemental cash flow information:
Income taxes paid $ 32,205 $ 59,211
Interest paid $ 9,567 $ 4,125
========= =========
</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)
(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 150,348,835 and 159,574,805 for the respective 1996 and 1995
three-month periods and 152,241,168 and 160,153,499 for the respective
six-month periods.
(3) The actual number of shares outstanding on the respective record dates is
as follows:
<TABLE>
<CAPTION>
1996 1995
------------------------------------ -----------------------------------
Record Date No. Shares Record Date No. Shares
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
February 9 154,412,532 February 10 161,008,984
May 17 149,772,666 May 12 159,652,695
</TABLE>
(4) A summary of inventories follows:
<TABLE>
<CAPTION>
June 30, 1996 Dec. 31, 1995
------------- -------------
<S> <C> <C>
FIFO cost:
Raw materials $ 76,314 $ 73,862
Work-in-process 14,605 14,346
Finished goods 204,577 193,991
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295,496 282,199
Excess of FIFO over LIFO cost (28,951) (30,476)
--------- ---------
$ 266,545 $ 251,723
========= =========
</TABLE>
(5) At June 30, 1996, and December 31, 1995, intangible and other assets, net
include the excess of cost over net assets of businesses acquired of
$137,466 and $137,736, respectively, net of accumulated amortization of
$23,962 and $21,452, respectively.
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<PAGE> 8
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 June 30, 1996, increased 3% over the
second quarter of 1995. A significant improvement in retailer support and
promotion activity and a continued focus on the introduction of new products led
to 7% unit volume growth in ongoing core businesses, excluding the impact of a
5% year-over-year decrease in volume resulting from the Company's planned SKU
reduction program. Acquisitions contributed 3% to unit volume in the quarter,
while price realization decreased sales by 2% reflecting more competitive
pricing which began to be implemented at the end of the first quarter. For the
six-month period ended June 30, 1996, sales equaled the first half 1995 amount
of $1.1 billion.
Net earnings for the second quarter of 1996 increased 55% to $44.8 million from
the comparable 1995 period earnings of $28.8 million, reflecting lower resin and
corrugated prices, along with realized cost savings resulting from the value
improvement program. Net earnings for the first half of 1996 increased 4% over
the first half of 1995, reflecting lower resin and corrugated prices which were
offset by the negative impact of unfavorable operating variances that resulted
from the lack of volume growth primarily in the first three months of 1996.
Cost of sales as a percent of net sales for the three-month and six-month
year-to-date periods ended June 30, 1996, was 67.9% and 68.3%, respectively,
compared to 73.6% and 71.1% for the comparable year ago periods. The
year-over-year improvement is due to the reduction in resin and corrugated
prices and the improvement of productivity, partially offset by the lower price
realization on known value items (KVIs) and the unfavorable operating variances
in the first three months of 1996. LIFO was a $.6 million credit in the second
quarter of 1996 compared to a $3.6 million charge in the second quarter of 1995.
Selling, general, and administrative expenses as a percent of net sales were
18.4% and 18.1% for the three-month and six-month periods, respectively,
compared with 17.3% and 16.7% for the comparable year ago periods. The increase
is attributable to globalization efforts, the addition of acquisitions made in
the last twelve months, and additional marketing activities.
Other charges, net were $6.7 million versus last year's second quarter of $4.4
million, and $11.6 million for the first half of 1996 versus $4.3 million for
the first half of 1995. The unfavorable swing is primarily due to the increase
in net interest expense which is attributable to debt incurred to fund the share
repurchase program.
The effective tax rate for the second quarter was the same as the first quarter
rate of 37.8% versus 37.5% in 1995. The effective tax rate for all of 1995 was
37.5%. The increase represents increased growth in our international operations,
which typically have higher taxation rates.
CHANGES IN FINANCIAL CONDITION
During the first six months of 1996, cash and cash equivalents decreased by
$18.0 million as cash generated from operations of $134.2 million was exceeded
by cash used for investing activities of $55.2 million and cash used for
financing activities of $97.0 million. Cash generated from operations was
primarily the result of net earnings, decreased accounts receivable, and
non-cash depreciation and amortization charges exceeding the impact of a
decrease in accrued liabilities and increases in inventories and other assets.
Management's focus on all aspects of working capital (in particular,
inventories, receivables, and payables) added $88 million to cash
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<PAGE> 9
RUBBERMAID INCORPORATED AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
CHANGES IN FINANCIAL CONDITION (Continued)
flow over the year ago period. Cash used for investing activities was primarily
for capital expenditures, reflecting continued investment in the business. Cash
used for financing activities consisted primarily of dividends paid to
shareholders and the repurchase of Common Shares for the Company's treasury
funded by an increase in notes payable.
OTHER
As part of the Company's plan to add a prudent amount of debt to its capital
structure and enhance long-term shareholder value, it initiated a commercial
paper program in February 1996. As of June 30, 1996, $206.0 million was
outstanding. In January 1996, the Company filed a Form S-3 registration
statement to permit the sale from time to time of senior debt securities for
proceeds of up to $400 million. The Company intends to use any net proceeds from
the sale of the senior debt securities for general corporate purposes which may
include the refinancing of indebtedness. As of June 30, 1996, no debt had been
issued against this registration statement.
As part of the Company's previously announced two-year strategic realignment
program, approximately 45% of SKUs, and related inventory and machinery and
equipment, were to be eliminated to improve operating efficiencies. At the end
of the second quarter of 1996, this SKU reduction largely had been accomplished,
positioning the Company for a positive impact in customer service and
distribution logistics. The Company also has begun the physical realignment of
facilities to accomplish further improvements in operating effectiveness. The
year-to-date favorable impact realized as a result of the realignment activity
was offset by costs associated with the realignment of facilities, which in
accordance with Generally Accepted Accounting Principles were not included in
the realignment reserve, and costs to fund the global information systems
project.
In April 1996 the Company signed a ten-year agreement with IBM to create and
manage a common, global information system. The system will provide real-time
interface among all of the Company's locations to streamline business worldwide,
reduce costs, and strengthen the Company's competitive position.
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<PAGE> 10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders:
At the Annual Meeting of Shareholders held on April 23, 1996, the
Shareholders of Registrant voted on the following matter with
results as indicated:
The election of three directors to the class of Directors whose
terms expire in 1999.
<TABLE>
<CAPTION>
Vote
For Withheld
--- --------
<S> <C> <C>
Robert M. Gerrity 132,737,122 1,461,027
Paul G. Schloemer 132,722,102 1,476,047
Gordon R. Sullivan 132,512,242 1,685,907
</TABLE>
Item 6. Exhibit and Reports on Form 8-K.
(a) Exhibit 27. Financial Data schedule.
(b) On June 27, 1996, Registrant filed a Form 8-K reporting on the
adoption, by its Board of Directors on June 25, 1996, of a new
shareholder rights plan to replace the previous plan that
expired June 24, 1996.
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: July 29, 1996 /s/ James A. Morgan
--------------------------- ---------------------------------
James A. Morgan
Senior Vice President,
General Counsel and Secretary
DATE: July 29, 1996 /s/ George C. Weigand
--------------------------- --------------------------------
George C. Weigand
Senior Vice President and
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996 AND RELATED CONDENSED
CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 33,022
<SECURITIES> 0
<RECEIVABLES> 412,630
<ALLOWANCES> 9,861
<INVENTORY> 266,545
<CURRENT-ASSETS> 798,348
<PP&E> 1,288,512
<DEPRECIATION> 660,494
<TOTAL-ASSETS> 1,663,019
<CURRENT-LIABILITIES> 548,255
<BONDS> 4,685
<COMMON> 162,677
0
0
<OTHER-SE> 810,826
<TOTAL-LIABILITY-AND-EQUITY> 973,503
<SALES> 1,106,274
<TOTAL-REVENUES> 1,106,274
<CGS> 755,081
<TOTAL-COSTS> 955,739
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,393
<INCOME-PRETAX> 138,951
<INCOME-TAX> 52,524
<INCOME-CONTINUING> 86,427
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 86,427
<EPS-PRIMARY> .57
<EPS-DILUTED> .57
</TABLE>
