<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, 1997
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)
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
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Common Shares, Par Value $1.00, Outstanding at March 31, 1997 -- 149,927,087
<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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March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
Net sales $ 601,688 $ 533,285
Cost of sales 432,579 365,954
Selling, general, and administrative expenses 103,363 95,485
Other charges (credits), net:
Interest expense 10,858 4,469
Interest income (288) (510)
Miscellaneous, net 474 882
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11,044 4,841
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Earnings before income taxes 54,702 67,005
Income taxes 20,677 25,328
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Net earnings $ 34,025 $ 41,677
========= =========
Net earnings per Common Share (note 2) $ .23 $ .27
========= =========
Dividends paid per Common Share (note 3) $ .15 $ .14
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 3
RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
March 31, 1997 Dec. 31, 1996
-------------- -------------
(Unaudited)
<S> <C> <C>
Assets
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Current assets:
Cash and cash equivalents $ 54,487 $ 27,599
Receivables, less allowance for doubtful accounts
of $10,406 in 1997 and $10,900 in 1996 511,073 496,601
Inventories (note 4) 275,487 276,811
Prepaid expenses 61,596 55,709
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Total current assets 902,643 856,720
Property, plant, and equipment, net 723,807 721,914
Intangible and other assets, net (note 5) 480,516 475,346
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Total Assets $2,106,966 $2,053,980
========== ==========
</TABLE>
(Continued)
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RUBBERMAID INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (Continued)
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
March 31, 1997 Dec. 31, 1996
-------------- -------------
(Unaudited)
<S> <C> <C>
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Notes payable $ 458,103 $ 399,865
Long-term debt, current 281 3,287
Payables 152,873 154,518
Accrued liabilities 168,040 185,151
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Total current liabilities 779,297 742,821
Other deferred liabilities 146,789 142,992
Long-term debt, non-current 154,382 154,467
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 1997 and 1996 162,677 162,677
Paid-in capital 69,957 70,829
Retained earnings 1,176,582 1,165,052
Foreign currency translation adjustment (28,582) (25,359)
Treasury shares, at cost (12,749,995 shares in
1997 and 12,924,764 shares in 1996) (354,136) (359,499)
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Total shareholders' equity 1,026,498 1,013,700
----------- -----------
Total Liabilities and Shareholders' Equity $ 2,106,966 $ 2,053,980
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 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, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 34,025 $ 41,677
Adjustments to reconcile net earnings to net
cash from operating activities:
Depreciation and amortization 33,599 26,889
Other 4,613 3,102
Changes in:
Receivables (14,821) 33,072
Inventories 1,324 (9,711)
Other assets (10,527) (18,957)
Payables (1,645) (5,116)
Accrued liabilities (18,959) (23,895)
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Net cash from operating activities 27,609 47,061
Cash flows from investing activities:
Capital expenditures (41,277) (22,691)
Other, net 8,336 5,968
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Net cash from investing activities (32,941) (16,723)
Cash flows from financing activities:
Net change in notes payable 58,238 118,197
Repayment of long-term debt (3,091) (2,072)
Cash dividends paid (22,495) (21,618)
Common Shares repurchased -- (137,415)
Other, net (432) (189)
-------- ---------
Net cash from financing activities 32,220 (43,097)
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Net change in cash and cash equivalents 26,888 (12,759)
Cash and cash equivalents at beginning of year 27,599 50,969
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Cash and cash equivalents at March 31 $ 54,487 $ 38,210
======== =========
Supplemental cash flow information:
Income taxes paid $ 2,731 $ 2,880
Interest paid $ 8,066 $ 4,756
======== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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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 149,898,930 and 153,943,097 for the respective 1997 and
1996 three-month periods.
(3) The actual number of shares outstanding on the respective record dates is
as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------------------------- -----------------------------------
Record Date No. Shares Record Date No. Shares
----------- ---------- ----------- ----------
<S> <C> <C> <C>
February 7 149,975,560 February 9 154,412,532
</TABLE>
(4) A summary of inventories follows:
<TABLE>
<CAPTION>
March 31, 1997 Dec. 31, 1996
-------------- -------------
<S> <C> <C>
FIFO Cost:
Raw materials $ 86,172 $ 83,250
Work-in-process 12,682 11,494
Finished goods 208,500 213,000
--------- ---------
307,354 307,744
Excess of FIFO over LIFO cost (31,867) (30,933)
--------- ---------
$ 275,487 $ 276,811
========= =========
</TABLE>
(5) At March 31, 1997 and December 31, 1996, intangible and other assets, net
include the excess of cost over net assets of businesses acquired of
$377,042 and $380,524, respectively, net of accumulated amortization of
$31,207 and $28,385, respectively.
(6) On May 8, 1997, the Company announced it had reached an agreement to sell
its Office Products business to Newell Co. The transaction includes the
sale of the worldwide manufacturing and distribution facilities, related
equipment and inventory for $246.5 million, which will result in a
one-time gain of approximately $135 million pre-tax. It is anticipated
that the closing will occur in the second quarter.
Separately, the Company announced it will combine its Home and Seasonal
business units to focus on competitive strengths and better align
operations. With these final initiatives, the two-year realignment cost
estimate was increased by an additional $16 million pre-tax.
In the second quarter the Company will take an $81 million pre-tax
write-off on certain intangible assets, primarily related to acquisitions
which are now integrated into the core businesses.
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<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 quarter ended March 31, 1997 increased 13% over the first
quarter of 1996. Acquisitions, net of divestitures, contributed 14% to net sales
and core unit volume increased 2%, including the impact of the volume decrease
at Juvenile Products in part related to a toy inventory overhang from the slow
1996 Christmas season. Price realization and currency translation had an
unfavorable impact of 3% on net sales.
Net earnings for the quarter ended March 31, 1997, decreased 18% over the
comparable 1996 period, primarily due to significantly higher raw materials
costs, greater selling, general and administrative expenses arising from
acquisitions, and increased interest expense.
Cost of sales as a percent of net sales for the quarter ended March 31, 1997,
was 71.9% versus 68.6% in the year ago period. The increase in cost of sales as
a percentage of net sales is due primarily to the raw material price increases
incurred by the Company and the volume decline at Juvenile Products. LIFO
expense for the first quarter of 1997 was $0.9 million compared to a $0.9
million credit for the first quarter of 1996.
Selling, general, and administrative expenses as a percentage of net sales were
17.2% and 17.9% for the quarters ending March 31, 1997 and 1996. After taking
into consideration the integration and consolidation of Graco, improvements were
made in selling, general and administrative expenses, primarily related to
savings achieved from realignment activities.
Other charges, net were $11.0 million and $4.8 million for the quarters ended
March 31, 1997 and 1996, respectively. The increase in other charges is
primarily attributable to the increase in interest expense, which was $10.9
million in 1997 and $4.5 million in 1996.
The effective tax rate for the first quarter of 1997 and 1996 was 37.8%.
Changes in Financial Condition
- ------------------------------
During the first quarter of 1997, cash and cash equivalents increased by $26.9
million as cash generated from operations of $27.6 million and cash generated
from financing activities of $32.2 million exceeded cash used for investing
activities of $32.9 million. Cash generated from operations was primarily the
result of net earnings and non-cash depreciation charges exceeding the increase
in working capital. Cash provided from financing activities primarily consisted
of increases in notes payable less cash dividends paid to shareholders. Cash
used by investing activities was primarily the result of investments in capital
expenditures.
Other
- -----
Subsequent to the end of the quarter, the Company announced its intentions to
dispose of the Office Products business, combine its Home and Seasonal
businesses, and take certain charges in the second quarter. See the Notes to
Condensed Consolidated Financial Statements for further information.
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<PAGE> 8
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, 1997.
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 9, 1997 /s/ James A. Morgan
---------------------------- -------------------------------------
James A. Morgan
Senior Vice President,
General Counsel and Secretary
DATE: May 9, 1997 /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 MARCH 31, 1997 AND RELATED CONDENSED
CONSOLIDATED STATEMENT OF EARNINGS FOR THE PERIOD ENDED MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 54,487
<SECURITIES> 0
<RECEIVABLES> 511,073
<ALLOWANCES> 10,406
<INVENTORY> 275,487
<CURRENT-ASSETS> 902,643
<PP&E> 1,360,706
<DEPRECIATION> 636,899
<TOTAL-ASSETS> 2,106,966
<CURRENT-LIABILITIES> 779,297
<BONDS> 154,382
<COMMON> 162,677
0
0
<OTHER-SE> 863,821
<TOTAL-LIABILITY-AND-EQUITY> 2,106,966
<SALES> 601,688
<TOTAL-REVENUES> 601,688
<CGS> 432,579
<TOTAL-COSTS> 535,942
<OTHER-EXPENSES> 11,044
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,858
<INCOME-PRETAX> 54,702
<INCOME-TAX> 20,677
<INCOME-CONTINUING> 34,025
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,025
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
