<PAGE>
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, 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 0-20274
-------
THE RIVAL COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-0794462
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
800 E. 101st Terrace, Kansas City, MO 64131
- ---------------------------------------------- ---------------------------
(Address of principal executive offices) (Zip Code)
(816) 943-4100
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
(l) Yes X No
----- -----
(2) Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
As of September 30, 1996, the registrant had 9,732,792 shares
of common stock, par value $.01 per share, outstanding.
<PAGE>
THE RIVAL COMPANY
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1996
INDEX
PART I. - FINANCIAL INFORMATION Page
ITEM 1. Financial Statements
(1) Condensed Consolidated Financial Statements (unaudited):
Condensed Consolidated Balance Sheets as of September 30,
1996, September 30, 1995 and June 30, 1996. 3
Condensed Consolidated Statements of Earnings for the
three months ended September 30, 1996 and
September 30, 1995. 4
Condensed Consolidated Statements of Cash Flows for the
three months ended September 30, 1996 and September 30, 1995. 5
(2) Notes to Condensed Consolidated Financial Statements. 6
ITEM 2. - Management's Discussion and Analysis of Financial Condition
and Results of Operations. 6
PART II. - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 7
2
<PAGE>
PART I - FINANCIAL INFORMATION
THE RIVAL COMPANY AND SUBSIDIARIES
-----------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 1996 and 1995 and June 30, 1996
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
9/30/96 9/30/95 6/30/96
------- ------- -------
<S> <C> <C> <C>
ASSETS
Currents assets:
Cash $ 195 $ 432 $ 1,503
Accounts receivable 90,583 64,226 74,103
Inventories 116,385 84,498 102,030
Deferred income taxes 1,602 860 1,602
Prepaid expenses 3,149 1,105 2,142
-------- -------- --------
Total current assets 211,914 151,121 181,380
Property, plant and equipment, net 41,823 27,525 40,345
Goodwill 59,562 47,780 60,086
Other assets 6,074 2,859 6,440
-------- -------- --------
$319,373 $229,285 $288,251
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 69,306 $ 51,327 $ 51,896
Current portion of long-term debt 4,000 4,000 4,000
Trade accounts payable 25,172 17,305 20,354
Income taxes payable 3,592 3,795 197
Other payables and accrued expenses 14,226 10,031 13,537
-------- -------- --------
Total current liabilities 116,296 86,458 89,984
Long-term debt, less current portion 88,000 42,000 88,000
Deferred income taxes and other
liabilities 4,232 2,372 4,119
Stockholders' equity:
Common stock 98 97 97
Paid-in capital 45,519 45,368 45,488
Retained earnings 66,032 53,654 61,341
Treasury stock, at cost (310) (310) (310)
Foreign currency translation
adjustments (494) (354) (468)
-------- -------- --------
Total stockholders' equity 110,845 98,455 106,148
-------- -------- --------
$319,373 $229,285 $288,251
======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
THE RIVAL COMPANY AND SUBSIDIARIES
-----------------------
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three months ended September 30, 1996 and September 30, 1995
(amounts in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three months ended
------------------
9/30/96 9/30/95
------- -------
<S> <C> <C>
Net sales $99,650 $73,897
Cost of sales 71,067 52,481
------- -------
Gross profit 28,583 21,416
Selling expenses 13,309 8,586
General and Administrative expenses 3,523 2,598
Amortization of goodwill 523 406
------- -------
Operating income 11,228 9,826
Interest expense (2,491) (1,476)
Other expense, net 18 (11)
------- -------
Earnings before income taxes 8,755 8,339
Income tax expense 3,479 3,246
------- -------
Net earnings $ 5,276 $ 5,093
======= =======
Weighted average common and
common equivalent shares
outstanding 9,948 9,921
======= =======
Net earnings per common share $ 0.53 $ 0.51
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
THE RIVAL COMPANY AND SUBSIDIARIES
-----------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended September 30, 1996 and September 30, 1995
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three months ended
------------------
9/30/96 9/30/95
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 5,276 $ 5,093
Adjustments to reconcile net earnings to
net cash used by operating activities:
Depreciation and amortization 2,465 1,693
Other 113 --
Changes in assets and liabilities:
Accounts receivable (16,480) (20,734)
Inventories (14,355) (3,394)
Prepaid expenses (1,007) (270)
Accounts payable and accruals 5,507 3,349
Income taxes payable 3,395 3,218
-------- --------
Net cash used by
operating activities (15,086) (11,045)
-------- --------
Cash flows from investing activities:
Capital expenditures (3,167) (1,600)
Other 88 (312)
-------- --------
Net cash used by investing activities (3,079) (1,912)
-------- --------
Cash flows from financing activities:
Net borrowings under
working capital loans 17,410 13,700
Dividends paid (585) (486)
Other 32 (18)
-------- -------
Net cash provided by
financing activities 16,857 13,196
-------- -------
Net increase (decrease) in cash (1,308) 239
Cash at beginning of period 1,503 193
-------- -------
Cash at end of period $ 195 $ 432
======== =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
THE RIVAL COMPANY AND SUBSIDIARIES
-----------------------
Notes to Condensed Consolidated Financial Statements
Three Months Ended September 30, 1996 and September 30, 1995
Note 1
- ------
In the opinion of Management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting of normal recurring
accruals) considered necessary to present fairly the financial position of the
Company as of September 30, 1996, and the results of its operations and its cash
flows for the three months ended September 30, 1996 and September 30, 1995. The
June 30, 1996, condensed consolidated balance sheet has been derived from the
audited consolidated financial statements as of that date. These financial
statements have been prepared in accordance with the instructions to Form 10-Q.
To the extent that information and footnotes required by generally accepted
accounting principles for complete financial statements are contained in or
consistent with the audited consolidated financial statements incorporated by
reference in the Company's Form 10-K for the year ended June 30, 1996, such
information and footnotes have not been duplicated herein.
Note 2
- ------
The results of operations for the three months ended September 30, are not
indicative of the results to be expected for the full year due to the seasonal
nature of the Company's operations.
Note 3 Inventories
- ------------------
The following is a summary of inventories at September 30, 1996 and 1995 and
June 30, 1996 (in thousands):
<TABLE>
<CAPTION>
Sept. 30, 1996 Sept. 30, 1995 June 30, 1996
-------------- -------------- -------------
<S> <C> <C> <C>
Raw Materials $ 41,214 $31,318 $ 37,442
Work in progress 4,580 3,401 5,028
Finished goods 75,360 54,086 64,103
-------- ------- --------
121,154 88,805 106,573
Less LIFO allowance (4,769) (4,307) (4,543)
-------- ------- --------
$116,385 $84,498 $102,030
======== ======= ========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net sales were $99.7 million for the quarter ended September 30, 1996 compared
to $73.9 million in the prior year. The higher sales were primarily the result
of the acquisitions of Fasco Consumer Products, Inc. in January 1996 and
Bionaire, Inc. in April 1996. The Company generated internal growth of 11% from
its kitchen electrics and personal care products due to strong sales of Crock
Pot(R) slow cookers and specialty massagers. Sales increases in other business
units resulted primarily from the acquisitions.
6
<PAGE>
Net sales by business unit were as follows (in millions):
<TABLE>
<CAPTION>
9/30/96 9/30/95
------- -------
<S> <C> <C>
Kitchen Electrics & Personal Care $49.8 $44.7
Home Environment 33.1 21.3
Industrial/Building Supply 9.7 5.3
International 7.1 2.6
----- -----
$99.7 $73.9
</TABLE>
Gross profit was $28.6 million (28.7% of sales) for the quarter ended September
30, 1996 compared to $21.4 million (29.0% of sales) in the prior year. The
decline in margins as a percentage of sales was the result of excess plant
capacity. During the quarter, plans to discontinue manufacturing in the Peru,
Indiana plant and curtail production at the Sweet Springs, Missouri plant were
announced. Neither action will result in a significant charge to earnings.
Selling expenses were $13.3 million (13.4% of sales) for the current quarter
compared to $8.6 million (11.6% of sales) in the prior year. The industrial and
international business units had incremental sales due to the Bionaire and Fasco
acquisitions and these businesses have higher selling costs than the Company's
other business units. Additionally, shipping expenses have increased as a
percentage of sales due to rental of outside warehouses to support growth and
increased special handling demands of the Company's retail customers.
General and administrative expenses were $3.5 million (3.5% of sales) in the
current quarter compared to $2.6 million (3.5% of sales) in the prior year. The
increase in general and administrative expenses includes a $.4 million increase
in research and development spending, $.3 million in other G&A costs relative to
Bionaire's Canadian operation and increased personnel to support the growth of
the Company's domestic operations.
Interest expense increased from $1.5 million to $2.5 million, primarily as a
result of increased borrowings to finance recent acquisitions. Average interest
rates were also slightly higher.
Net earnings for the quarter ended September 30, 1996 were $5.3 million ($.53
per share) compared to $5.1 million ($.51 per share) for the same period in the
prior year.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1996 the Company had $92 million in long term debt
(including $4 million current portion) and $85 million in revolving loan
commitments. Revolving credit loans outstanding were $69.3 million as of such
date. The long term debt requires periodic principal payments including $4.0
million for each of the next two years and has a final maturity in 2008. The
revolving credit facilities include a $75 million U.S. bank line and a Canadian
facility for the Canadian dollar equivalent of U.S. $10.0 million. The U.S.
revolving credit facility expires in June 1999 and currently bears interest at a
floating rate of LIBOR plus .75%.
During the three months ended September 30, 1996, the Company used $15.1 million
of cash for operating activities. The Company historically requires a
significant amount of cash each fall to fund its build-up in inventories and
accounts receivable during its peak selling season. These cash requirements are
funded through borrowings on the working capital line.
The Company plans to make capital expenditures of approximately $10.0 million
during fiscal 1997, including $4 million for a new distribution center.
Management believes that cash generated from operations and its bank credit
facility will be sufficient to meet its cash requirements for the foreseeable
future.
7
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits.
11 Schedule regarding computation of per share earnings.
(b) Reports on Form 8-K.
None
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.
THE RIVAL COMPANY
By:
--------------------------------
Dated: October 31, 1996 William L. Yager
President, Chief Operating
Officer
(Duly Authorized Officer)
8
<PAGE>
THE RIVAL COMPANY AND SUBSIDIARIES EXHIBIT 11
EARNINGS PER SHARE
(in thousands except per share data)
<TABLE>
<CAPTION>
Three Months ended
September 30,*
--------------
1996 1995
------ ------
<S> <C> <C>
Net earnings $5,276 $5,093
====== ======
Weighted average common and common
equivalent shares outstanding 9,948 9,921
====== ======
Earnings per common and common
equivalent shares $ 0.53 $ 0.51
====== ======
Computation of weighted average
common and common equivalent
shares outstanding:
Average common shares
outstanding 9,730 9,717
Average number of
options outstanding 684 538
Less treasury shares acquired
with proceeds from exercise
of options (446) (334)
------ ------
Weighted average common and common
equivalent shares outstanding 9,948 9,921
====== ======
</TABLE>
* Fully diluted earnings per share is equal to primary earnings per share for
both periods presented.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORM 10 FOR THE RIVAL COMPANY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1996
<PERIOD-START> JUL-01-1996 JUL-01-1995
<PERIOD-END> SEP-30-1996 SEP-30-1995
<CASH> 195 432
<SECURITIES> 0 0
<RECEIVABLES> 93,751 66,395
<ALLOWANCES> 3,168 2,169
<INVENTORY> 116,385 84,498
<CURRENT-ASSETS> 211,914 151,121
<PP&E> 73,222 50,253
<DEPRECIATION> 31,399 22,728
<TOTAL-ASSETS> 319,373 229,285
<CURRENT-LIABILITIES> 116,296 86,458
<BONDS> 88,000 42,000
<COMMON> 98 97
0 0
0 0
<OTHER-SE> 110,747 98,358
<TOTAL-LIABILITY-AND-EQUITY> 319,373 229,285
<SALES> 99,650 73,897
<TOTAL-REVENUES> 99,650 73,897
<CGS> 71,067 52,481
<TOTAL-COSTS> 71,067 52,481
<OTHER-EXPENSES> 17,355 11,590
<LOSS-PROVISION> 208 113
<INTEREST-EXPENSE> 2,491 1,476
<INCOME-PRETAX> 8,755 8,339
<INCOME-TAX> 3,479 3,246
<INCOME-CONTINUING> 5,276 5,093
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 5,276 5,093
<EPS-PRIMARY> 0.53 0.51
<EPS-DILUTED> 0.53 0.51
</TABLE>
