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Previous: MATEC CORP/DE/, 10QSB, 1996-05-13 |
Next: RUDDICK CORP, 10-Q, 1996-05-13 |
<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, 1996
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)
330-264-6464
------------
(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 March 31, 1996 -- 151,479,553
<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
------------------
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
Net sales $ 533,285 $ 563,856
Cost of sales 365,954 386,528
Selling, general, and administrative expenses 95,485 90,770
Other charges (credits), net:
Interest expense 4,469 1,942
Interest income (510) (1,659)
Miscellaneous, net 882 (414)
--------- ---------
4,841 (131)
--------- ---------
Earnings before income taxes 67,005 86,689
Income taxes 25,328 32,548
--------- ---------
Net earnings $ 41,677 $ 54,141
========= =========
Net earnings per Common Share (note 2) $ .27 $ .34
========= =========
Dividends paid per Common Share (note 3) $ .14 $ .125
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
- 1 -
<PAGE> 3
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
March 31, 1996 Dec. 31, 1995
-------------- -------------
(Unaudited)
Assets
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 38,210 $ 50,969
Receivables, less allowance for doubtful accounts
of $10,036 in 1996 and $10,467 in 1995 465,705 499,203
Inventories (note 4) 261,434 251,723
Other current assets 54,121 49,312
---------- ----------
Total current assets 819,470 851,207
Property, plant, and equipment, net 618,319 626,637
Intangible and other assets, net (note 5) 230,031 213,684
---------- ----------
Total Assets $1,667,820 $1,691,528
========== ==========
</TABLE>
(Continued)
- 2 -
<PAGE> 4
RUBBERMAID INCORPORATED AND SUBSIDIARIES (Continued)
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
March 31, 1996 Dec. 31, 1995
-------------- -------------
(Unaudited)
Liabilities and Shareholders' Equity
------------------------------------
<S> <C> <C>
Current liabilities:
Notes payable $ 234,736 $ 116,539
Long-term debt, current 3,966 5,957
Payables 96,887 102,003
Accrued liabilities 167,795 190,233
----------- -----------
Total current liabilities 503,384 414,732
Other deferred liabilities 134,840 135,244
Long-term debt, non-current 6,098 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 70,565 70,825
Retained earnings 1,118,729 1,098,670
Foreign currency translation adjustment (18,288) (18,420)
Treasury shares, at cost (11,197,529 shares in
1996 and 6,473,220 shares in 1995) (310,185) (178,379)
----------- -----------
Total shareholders' equity 1,023,498 1,135,373
----------- -----------
Total Liabilities and Shareholders' Equity $ 1,667,820 $ 1,691,528
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
- 3 -
<PAGE> 5
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in thousands)
( ) Denotes decrease in cash and cash equivalents
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 41,677 $ 54,141
Adjustments to reconcile net earnings to net
cash from operating activities:
Depreciation and amortization 26,889 26,421
Other 3,102 (64)
Changes in:
Receivables 33,072 (62,389)
Inventories (9,711) (48,974)
Other assets (18,957) (1,468)
Payables (5,116) 34,316
Accrued liabilities (23,895) (12,773)
--------- ---------
Net cash from operating activities 47,061 (10,790)
Cash flows from investing activities:
Capital expenditures (22,691) (30,909)
Purchase of marketable securities -- (99,150)
Proceeds from sale of marketable securities -- 139,350
Other, net 5,968 (12,087)
--------- ---------
Net cash from investing activities (16,723) (2,796)
Cash flows from financing activities:
Net change in notes payable 118,197 15,221
Proceeds from long-term debt -- 3,831
Repayment of long-term debt (2,072) (87)
Cash dividends paid (21,618) (20,126)
Common Shares repurchased (137,415) (5,409)
Other, net (189) 308
--------- ---------
Net cash from financing activities (43,097) (6,262)
--------- ---------
Net change in cash and cash equivalents (12,759) (19,848)
Cash and cash equivalents at beginning of year 50,969 92,249
--------- ---------
Cash and cash equivalents at March 31 $ 38,210 $ 72,401
========= =========
Supplemental cash flow information:
Income taxes paid $ 2,880 $ 10,013
Interest paid $ 4,756 $ 1,822
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
- 4 -
<PAGE> 6
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 153,943,097 and 160,913,630 for the respective 1996 and 1995
three-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
</TABLE>
(4) A summary of inventories follows:
<TABLE>
<CAPTION>
March 31, 1996 Dec. 31, 1995
-------------- -------------
<S> <C> <C>
FIFO Cost:
Raw materials $ 64,305 $ 73,862
Work-in-process 12,135 14,346
Finished goods 214,544 193,991
------- -------
290,984 282,199
Excess of FIFO over LIFO cost (29,550) (30,476)
-------- -------
$261,434 $251,723
======= =======
</TABLE>
(5) At March 31, 1996, and December 31, 1995, intangible and other assets, net
include the excess of cost over net assets of businesses acquired of
$138,457 and $137,736, respectively, net of accumulated amortization of
$22,706 and $21,452, respectively.
- 5 -
<PAGE> 7
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 March 31, 1996 decreased 5% from the
first quarter of 1995, primarily reflecting the impact from a planned 45%
reduction in stock-keeping units (SKUs), previously announced in December 1995
as part of the Company's realignment plan. The elimination of SKUs resulted in
an approximate 5% decrease in unit volume. Acquisitions added 3% to unit volume
in the quarter, which was offset by lower unit volume in core businesses, net of
the SKU reduction. Pricing was unchanged.
Net earnings for the first quarter of 1996 decreased 23% from the comparable
1995 period, reflecting lower sales volume and the related unfavorable
manufacturing efficiencies.
Cost of sales as a percent of net sales for the first quarter of 1996 equaled
the 68.6% of the year ago period. The negative impact resulting from the lack of
volume growth was off-set by lower year-over-year raw material costs. Market
price levels for plastic resin in the first quarter of 1996 were below the
levels of 1995, but still above the Company's 1994 cost levels. LIFO was a $.9
million credit in the first quarter of 1996 compared to a $2.8 million charge in
the first quarter of 1995.
Selling, general, and administrative expenses as a percent of net sales were
17.9% and 16.1% for the quarters ending March 31, 1996 and 1995, respectively.
The increase was attributable to acquisitions made in the last twelve months and
lower sales dollars.
Other charges (credits) net were a net charge of $4.8 million versus last year's
first quarter net credit of $.1 million. 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. Interest expense was $4.5 million in 1996
compared with $1.9 million in 1995, while interest income was $.5 million and
$1.7 million, respectively. This resulted in a net swing of $3.8 million. In
addition, goodwill amortization increased $.5 million for the increased
acquisition activity over the past twelve months.
The effective tax rate for the first quarter was 37.8% versus 37.5% in last
year's first quarter. 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 quarter of 1996 cash and cash equivalents decreased by $12.8
million from December 31, 1995, as cash generated from operations of $47.1
million was exceeded by cash used for investing activities of $16.7 million and
cash used for financing activities of $43.1 million. Cash generated from
operations was primarily the result of net earnings, decreased accounts
receivables, and non-cash depreciation charges exceeding the impact of a
decrease in accrued liabilities and accounts payable, and increases in inventory
and other assets. The decrease in receivables reflects management's continued
emphasis on managing working capital and to a lesser extent, the reduction in
sales. Cash used for investing activities was primarily for capital
expenditures, reflecting continued investment in the business. Cash used for
financing activities consisted primarily of the repurchase of common shares for
the Company's treasury and dividends paid to shareholders exceeding the increase
in notes payable. The increase in notes payable was principally for share
repurchase, as well as the normal demands on cash flow that occur in the first
quarter.
- 6 -
<PAGE> 8
RUBBERMAID INCORPORATED AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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 March 31, 1996, $192.1 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 March 31, 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 first 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. Costs
associated with the realignment of facilities not included in the realignment
reserve and realignment savings did not have a material impact on the first
quarter 1996 financial statements.
- 7 -
<PAGE> 9
PART II. OTHER INFORMATION
Item 6. Exhibit and Reports on Form 8-K.
(a) Exhibit 27. Financial Data schedule.
(b) There were no reports on Form 8-K for the three months ended
March 31, 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: May 10, 1996 /s/ James A. Morgan
---------------------- ---------------------------
James A. Morgan
Senior Vice President,
General Counsel and Secretary
DATE: May 10, 1996 /s/ George C. Weigand
---------------------- -----------------------------
George C. Weigand
Senior Vice President and
Chief Financial Officer
- 8 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996 AND RELATED CONDENSED
CONSOLIDATED STATEMENT OF EARNINGS FOR THE THREE-MONTH PERIOD ENDED MARCH 31,
1996 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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 38,210
<SECURITIES> 0
<RECEIVABLES> 426,815
<ALLOWANCES> 10,036
<INVENTORY> 261,434
<CURRENT-ASSETS> 819,470
<PP&E> 1,263,445
<DEPRECIATION> 645,126
<TOTAL-ASSETS> 1,667,820
<CURRENT-LIABILITIES> 503,384
<BONDS> 6,098
<COMMON> 162,677
0
0
<OTHER-SE> 860,821
<TOTAL-LIABILITY-AND-EQUITY> 1,667,820
<SALES> 533,285
<TOTAL-REVENUES> 533,285
<CGS> 365,954
<TOTAL-COSTS> 461,439
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,469
<INCOME-PRETAX> 67,005
<INCOME-TAX> 25,328
<INCOME-CONTINUING> 41,677
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,677
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
</TABLE>
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