<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 2, 1996.
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.)
Commission file number 0-20274
-------
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 from last report)
<PAGE>
ITEM 2. ACQUISITION OF ASSETS
On January 2, 1996, the Company acquired 100% of the common stock of Fasco
Consumer Products, Inc. ("Fasco"), from H.S. Investments Inc., a subsidiary of
BTR Dunlop, Inc. Fasco is a manufacturer of heating, ventilating and other
convenience products that are distributed through wholesale and retail markets
with annual sales of approximately $40 million. The Company intends to continue
to use the assets of Fasco for the manufacture of heating, ventilating and other
convenience products.
The Company paid $23,532,000 in cash as consideration for the common stock of
Fasco and a Non-compete Agreement from H.S. Investments Inc. and its affiliates.
The amount of the consideration was determined by negotiation between the
parties. The source of the funds used by the Company to effect the acquisition
was borrowings under its Revolving Credit Agreement which was amended to
increase the facility from $50 million to $75 million to accommodate the
transaction. The acquisition will be accounted for as a purchase and,
accordingly, the purchase price will be allocated to Fasco's assets and
liabilities based upon their respective fair values.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
-----------------------------------------
Audited financial statements of Fasco Consumer Products, Inc. as of and for the
nine months ended September 30, 1995 are attached hereto as Exhibit 2.
(b) Pro Forma Financial Information (Unaudited)
-------------------------------------------
The following unaudited pro forma consolidated balance sheet as of December 31,
1995 gives effect to the acquisition as though it had occurred on December 31,
1995. The unaudited pro forma statements of earnings for the fiscal year ended
June 30, 1995 and the six months ended December 31, 1995 give effect to the
acquisition as if it had occurred at the beginning of the periods presented.
The financial statements utilized in the fiscal year pro forma information are
for the year ended December 31, 1995 for Fasco. The financial statements of
Fasco utilized in the pro forma interim financial information presented are for
the six months ended December 31, 1995. The unaudited pro forma financial
statements were prepared utilizing available information and certain assumptions
that management believes are reasonable. The unaudited pro forma financial
statements may not be indicative of the Company's financial position or results
of operations had the acquisition actually occurred on the dates indicated.
2
<PAGE>
THE RIVAL COMPANY
Unaudited Pro Forma Consolidated Balance Sheet
December 31, 1995
(Amounts in thousands)
<TABLE>
<CAPTION>
Pro Forma
ASSETS Rival Fasco Adjustments Pro Forma
------- ------ ----------- ---------
<S> <C> <C> <C> <C>
Current Assets:
Cash 461 25 (25)(3) 461
Accounts Receivable 86,612 6,211 0 92,823
Merchandise Inventories 74,092 7,694 0 81,786
Other Current Assets 1,481 2,141 (1,160)(3) 2,462
------- ------ ------- -------
Total Current Assets 162,646 16,071 (1,185) 177,532
Property, Plant and Equipment, net 27,096 7,104 2,210 (1) 36,410
Goodwill 47,374 0 0 47,374
Other Assets 2,784 0 4,000 (1) 6,784
------- ------ ------- -------
239,900 23,175 5,025 268,100
------- ------ ------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes Payable 53,900 0 23,532 (2) 77,432
Current Portion of Long-Term Debt 4,000 0 0 4,000
Accounts Payable 17,209 2,372 0 19,581
Other Current Liabilities 14,738 1,028 202 (1),(3) 15,968
------- ------ ------- -------
Total Current Liabilities 89,847 3,400 23,734 116,981
Long-Term Debt 42,000 0 0 42,000
Other 226 1,031 (1,031)(3) 226
Deferred Taxes 2,372 0 1,066 (1) 3,438
------- ------ ------- -------
Total Liabilities 134,445 4,431 23,769 162,645
Shareholders' Equity 105,455 18,744 (18,744)(4) 105,455
------- ------ ------- -------
239,900 23,175 5,025 268,100
======= ====== ======= =======
</TABLE>
Notes:
1) Adjustment to fair value of certain assets acquired and liabilities
assumed as part of Stock Purchase Agreement dated December 29, 1995 and
recognition of the value of the eight year non-compete agreement
included in the acquisition.
2) Recognition of indebtedness incurred by Rival to finance the
acquisition under its Revolving Credit Facility.
3) Elimination of assets not acquired and liabilities not assumed.
4) Elimination of shareholders' equity accounts of Fasco.
3
<PAGE>
THE RIVAL COMPANY
Unaudited Pro Forma Consolidated Statement of Earnings
Year ended June 30, 1995
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma
Rival Fasco(1) Adjustments Pro Forma
------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales 231,711 40,726 272,437
Cost of Sales 168,406 29,484 197,890
------- ------ -------
Gross Profit 63,305 11,242 74,547
Selling Expenses 26,019 7,600 33,619
General and Administrative Expenses 8,589 2,385 (989)(2) 9,985
Goodwill Amortization 1,327 0 1,327
Amortization of Non-compete Agreements 300 0 500 (3) 800
------- ------ ----- -------
Operating Income 27,070 1,257 489 28,816
------- ------ ----- -------
Interest Expense 4,216 33 1,612 (4) 5,861
Other (Income) Expenses 120 0 120
------- ------ ----- -------
Total Other Expenses 4,336 33 1,612 5,981
------- ------ ----- -------
Earnings before Income Taxes 22,734 1,224 (1,123) 22,835
Income Tax Expense 8,749 482 (432)(5) 8,799
------- ------ ----- -------
Net Earnings 13,985 742 (691) 14,036
======= ====== ===== =======
Weighted Average Common and Common
Equivalent Shares Outstanding 9,505 9,505
======= =======
Net Earnings Per Share 1.47 1.48
======= =======
</TABLE>
Notes:
1) Fasco operating results are for the year ended December 31, 1995.
2) During 1995, Fasco recognized lower expenses in the amount of $746,000
as a result of a curtailment relative to its postretirement benefit
plans. Postretirement benefits will not be offered subsequent to the
acquisition and, therefore, this benefit has been reversed in the pro
forma presentation. The pro forma adjustments also recognize the
reversal of $1,335,000 in expenses allocated by Fasco's former parent
company. Additionally, recognition has been given to $400,000 in annual
savings from lower salary and fringe benefit costs related to
administrative positions which will be eliminated in March 1996 as a
result of integrating these functions.
3) Amortization of the Non-compete Agreement from the acquisition.
4) Elimination of the historical interest expense of Fasco and recognition
of pro forma interest resulting from indebtedness associated with the
transaction (such interest assumed to bear a rate of 7.0%).
5) Income taxes are provided at a rate of 38.5%.
4
<PAGE>
THE RIVAL COMPANY
Unaudited Pro Forma Consolidated Statement of Earnings
Six months ended December 31, 1995
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma
Rival Fasco(1) Adjustments Pro Forma
------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales 171,347 19,995 191,342
Cost of Sales 122,621 15,530 138,151
------- ------ -------
Gross Profit 48,726 4,465 53,191
Selling Expenses 18,573 4,065 22,638
General and Administrative Expenses 5,383 1,183 (541)(2) 6,025
Goodwill Amortization 812 0 812
Amortization of Non-compete Agreements 150 0 250 (3) 400
------- ------ ----- -------
Operating Income 23,808 (783) 291 23,316
------- ------ ----- -------
Interest Expense 3,160 0 820 (4) 3,980
Other (Income) Expenses 144 0 144
------- ------ ----- -------
Total Other Expenses 3,304 0 820 4,124
------- ------ ----- -------
Earnings before Income Taxes 20,504 (783) (529) 19,192
Income Tax Expense 7,955 (309) (204)(5) 7,442
------- ------ ----- -------
Net Earnings 12,549 (474) (325) 11,750
======= ====== ===== =======
Weighted Average Common and Common
Equivalent Shares Outstanding 9,931 9,931
======= =======
Net Earnings Per Share 1.26 1.18
======= =======
</TABLE>
Notes:
1) Fasco operating results are for the six months ended December 31, 1995.
2) During 1995, Fasco recognized lower expenses in the amount of $746,000
($373,000 for the six months) as a result of a curtailment relative to
its postretirement benefit plans. Postretirement benefits will not be
offered subsequent to the acquisition and, therefore, this benefit has
been reversed in the pro forma presentation. The pro forma adjustments
also recognize the reversal of $714,000 in expenses allocated by Fasco's
former parent company during the six month period. Additionally,
recognition has been given to $400,000 in annual savings ($200,000 for
the six months) from lower salary and fringe benefit costs related to
administrative positions which will be eliminated in March as a result
of integrating these functions.
3) Amortization of the Non-compete Agreement from the acquisition.
4) Elimination of the historical interest expense of Fasco and recognition
of pro forma interest resulting from indebtedness associated with the
transaction (such interest assumed to bear a rate of 7.0%).
5) Income taxes are provided at a rate of 38.5%.
5
<PAGE>
SIGNATURE
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
Date: March 18, 1996
By: /s/ Thomas K. Manning
-------------------------------------
Thomas K. Manning
President and Chief Executive Officer
Duly Authorized Officer
6
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
1 Stock Purchase Agreement between H.S. Investments, Inc. as seller,
and The Rival Company, as buyer, dated as of December 29, 1995
(incorporated by reference to Exhibit 2 to Form 8-K dated as of
January 2, 1996 and filed on January 16, 1996).
2 Audited Financial Statements of Fasco Consumer Products, Inc. as of
and for the nine months ended September 30, 1995.
7
<PAGE>
FASCO CONSUMER PRODUCTS, INC.
FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors
Fasco Consumer Products, Inc.:
We have audited the accompanying balance sheet of Fasco Consumer Products, Inc.
as of September 30, 1995 and the related statements of earnings, stockholder's
equity and cash flows for the nine-month period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Fasco Consumer Products, Inc.
as of September 30, 1995 and the results of its operations and its cash flows
for the nine-month period then ended, in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
February 2, 1996
<PAGE>
FASCO CONSUMER PRODUCTS, INC.
Balance Sheet
September 30, 1995
<TABLE>
<CAPTION>
<S> <C>
Assets
------
Current assets:
Cash $ 413,697
Accounts receivable, net 6,448,642
Inventories 7,164,468
Deferred income taxes 895,323
Prepaid expenses and other current assets 455,135
-----------
Total current assets 15,377,265
Property, plant and equipment, net 7,497,639
$22,874,904
===========
Liabilities and Stockholder's Equity
------------------------------------
Current liabilities:
Trade accounts payable $ 2,464,137
Accrued expenses 201,382
Accrued employee compensation 431,963
-----------
Total current liabilities 3,097,482
Deferred income taxes 144,527
Accrued postretirement benefit obligation 1,031,000
Accrued pension obligation 104,018
Total liabilities -----------
4,377,027
-----------
Stockholder's equity:
Common stock, $1.00 par value; authorized 10,000 shares;
issued and outstanding 5,000 shares 5,000
Additional paid-in capital 16,550,315
Retained earnings 1,942,562
-----------
Total stockholder's equity 18,497,877
Commitments and contingencies
-----------
$22,874,904
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FASCO CONSUMER PRODUCTS, INC.
Statement of Earnings
Nine-month period ended September 30, 1995
<TABLE>
<CAPTION>
<S> <C>
Net sales $30,883,984
Cost of sales 21,113,602
-----------
Gross profit 9,770,382
Selling expenses 5,439,112
General and administrative expenses 1,522,355
-----------
Operating income 2,808,915
Interest expense 33,278
-----------
Earnings before income taxes 2,775,637
Income tax expense 1,093,905
-----------
Net earnings $ 1,681,732
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FASCO CONSUMER PRODUCTS, INC.
Statement of Stockholder's Equity
Nine-month period ended September 30, 1995
<TABLE>
<CAPTION>
Additional
Common paid-in Retained
stock capital earnings Total
------ ---------- --------- ----------
<S> <C> <C> <C> <C>
Balance, December 31, 1994 $5,000 12,294,961 260,830 12,560,791
Net earnings -- -- 1,681,732 1,681,732
Capital contributions from
parent company, net -- 4,255,354 -- 4,255,354
------ ---------- --------- ----------
Balance, September 30, 1995 5,000 16,550,315 1,942,562 18,497,877
====== ========== ========= ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FASCO CONSUMER PRODUCTS, INC.
Statement of Cash Flows
Nine-month period ended September 30, 1995
Cash flows from operating activities:
Net earnings $ 1,681,732
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization 777,817
Provision for accounts receivable 28,072
Deferred income taxes 441,171
Changes in assets and liabilities:
Accounts receivable (396,231)
Inventories 1,588,601
Prepaid expenses and other current assets 26,737
Accounts payable (250,071)
Accrued expenses (3,892,049)
----------
Net cash provided by operating activities 5,779
----------
Cash flows from investing activities - capital expenditures (2,447,436)
----------
Cash flows from financing activities:
Repayment of long-term debt (1,400,000)
Capital contributions from parent company, net 4,255,354
----------
Net cash provided by financing activities 2,855,354
----------
Net increase in cash 413,697
Cash at beginning of period -
----------
Cash at end of period $ 413,697
==========
Cash paid for interest $ 55,096
==========
See accompanying notes to financial statements.
<PAGE>
FASCO CONSUMER PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Description of Business
-----------------------
Fasco Consumer Products, Inc. (Fasco or the Company) is a wholly-owned
subsidiary of H.S. Investments, Inc., whose ultimate parent is BTR PLC.
Fasco operates a plant in Fayetteville, North Carolina where it
manufactures ceiling fans, baseboard heaters, ventilation systems and
other home comfort and industrial products. Fasco products are sold
through wholesale distribution to the electrical and building contractor
trade, and through retail distribution to home centers, warehouse clubs,
hardware stores and building materials retailers. Wholesale and retail
sales represented approximately 60% and 40% of sales for the nine-month
period ended September 30, 1995, respectively. The Company's customers
are located throughout the United States and Canada.
Fasco's raw materials are readily available, and Fasco is not dependent on a
small group of suppliers.
Use of Estimates
----------------
Management has made a number of estimates and assumptions relating to the
reporting of assets and liabilities and the disclosure of contingent
assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
Inventories
-----------
Inventories are stated at the lower of cost (first-in, first-out method) or
market.
Depreciation
------------
Depreciation on property, plant and equipment is computed on a straight-line
basis over the estimated useful lives of the assets which range from
three to thirteen years on machinery and equipment and furniture and
fixtures, and up to fifty years on buildings.
Income Taxes
------------
Fasco is included in the consolidated federal income tax return filed by its
parent company and other affiliated companies. Income taxes are
determined on a separate return basis.
Fasco accounts for income taxes under the asset and liability method whereby
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in earnings in the period that includes the enactment date.
(Continued)
<PAGE>
2
FASCO CONSUMER PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
Self-insurance
--------------
Fasco maintains a self-insurance program, through its parent company,
against general and product liability claims, as well as certain
medical claims and workers' compensation claims, with excess coverage
above the self-insured retention. Provisions for such claims are
accrued based upon estimates of aggregate liability.
Net Sales
---------
Fasco recognizes revenue at the time products are shipped to its customers.
Sales to two of Fasco's customers were 14% and 13% of sales for the
nine-month period ended September 30, 1995.
Fair Value of Financial Instruments
-----------------------------------
Fasco is not a party to any derivative financial instruments. The carrying
amount of cash, accounts receivable and trade accounts payable
approximates fair value because of the short maturity of these
instruments.
Related Party Transactions
--------------------------
The parent company of Fasco provides certain management, corporate,
financial and administrative services to Fasco. Fees for these
services are determined based generally on an allocation from the
parent company of actual costs incurred and amounted to $1,537,000 for
the nine-month period ended September 30, 1995.
Fasco purchases motors used in its products from an affiliated company.
Such purchases amounted to $2,099,000 for the nine-month period ended
September 30, 1995.
Cash generated by Fasco is transferred to the parent company. Cash required
by Fasco is transferred from the parent company. The net cash transfer
received from the parent company has been presented as a net capital
contribution in the accompanying financial statements for the nine-
month period ended September 30, 1995.
(2) ACCOUNTS RECEIVABLE
-------------------
Accounts receivable at September 30, 1995 consist of:
Trade $7,306,295
Less allowance for doubtful accounts,
discounts and sales rebates 857,653
----------
$6,448,642
==========
(3) INVENTORIES
------------
Inventories at September 30, 1995 consist of:
Raw materials $2,895,141
Work in process 1,369,993
Finished goods 2,899,334
----------
$7,164,468
==========
(Continued)
<PAGE>
3
FASCO CONSUMER PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
(4) PROPERTY, PLANT AND EQUIPMENT
-----------------------------
Property, plant and equipment at September 30, 1995 consist of:
Land and improvements $ 223,498
Buildings 3,481,988
Machinery and equipment 15,226,717
Furniture and fixtures 125,808
Automobiles 134,706
-----------
19,192,717
Less accumulated depreciation 11,695,078
-----------
$ 7,497,639
===========
(5) INCOME TAXES
------------
Income tax expense for the nine-month
period ended September 30, 1995 is
comprised of the following:
Current:
Federal $ 523,405
State and local 129,329
-----------
Total current tax expense 652,734
-----------
Deferred:
Federal 353,760
State and local 87,411
-----------
Total deferred income 441,171
taxes -----------
Total income tax expense $ 1,093,905
===========
The tax effects of temporary differences that result in deferred tax assets
and liabilities at September 30, 1995 and December 31, 1994 are
presented below. There were no valuation allowances provided.
September 30, December 31,
1995 1994
------------- ------------
[S] [C] [C]
Reserves not currently deductible $ 907,810 1,202,500
Inventory 319,417 302,992
Other 54,002 111,692
---------- ---------
Total deferred 1,281,229 1,617,184
income tax assets ---------- ---------
Depreciation 530,433 414,786
Other - 10,431
---------- ---------
Total deferred 530,433 425,217
income tax ---------- ---------
liabilities
Net deferred income $ 750,796 1,191,967
tax assets ========== =========
(Continued)
<PAGE>
4
FASCO CONSUMER PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
Actual income tax expense differs from expected income tax expense based on
the statutory federal income tax rate of 34% for the nine-month period
ended September 30, 1995 due to the following:
<TABLE>
<CAPTION>
<S> <C>
Expected income tax expense $ 943,717
State income tax expense, net of federal
income tax effect 143,048
Other 7,140
----------
Total income tax expense $1,093,905
==========
</TABLE>
Total income taxes paid for the nine-month period ended September 30, 1995
were $811,000.
(6) PENSION AND POSTRETIREMENT PLANS
--------------------------------
Fasco participates along with its parent company and other affiliated
companies in a noncontributory defined benefit pension plan covering
substantially all employees. The following table sets forth the plan's
funded status and the amounts included in Fasco's balance sheet at
September 30, 1995:
<TABLE>
<CAPTION>
<S> <C>
Actuarial present value of accumulated benefit obligation:
Vested $3,379,041
Nonvested 93,157
----------
Accumulated benefit obligation 3,472,198
Excess of projected benefit obligation over accumulated
benefit obligation 484,592
----------
Projected benefit obligation 3,956,790
Fair value of plan assets 3,895,488
----------
Plan assets less than projected benefit
obligation 61,302
Unrecognized net gain 42,716
----------
Accrued pension obligation $ 104,018
==========
</TABLE>
The components of the net periodic pension cost of the plan relating to
Fasco for the nine-month period ended September 30, 1995 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Service cost $ 110,678
Interest cost 234,108
Actual return on plan assets (240,768)
---------
Net periodic pension expense $ 104,018
=========
Significant pension plan assumptions are as follows:
Discount rate 8.50%
Expected long-term rate of return on 9.00
plan assets
Salary increase rate 5.00
</TABLE>
(Continued)
<PAGE>
5
FASCO CONSUMER PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
Fasco participates along with its parent company and other affiliated
companies in a 401(k) plan which allows employees to make voluntary
contributions, as defined. Fasco makes partial matching contributions
which were $178,000 for the nine-month period ended September 30, 1995.
Fasco participates along with its parent company in a defined benefit
health care plan that provides postretirement medical benefits to full-
time employees who meet minimum age and service requirements. The plan is
unfunded, provides for retiree contributions adjusted annually, and
contains other cost-sharing features. The following table sets forth the
plan's funded status and the amounts included in Fasco's balance sheet at
September 30, 1995:
<TABLE>
<CAPTION>
Accumulated postretirement benefit obligation:
<S> <C>
Retirees $ 217,000
Active plan participants 200,000
----------
417,000
Fair value of plan assets --
----------
Accumulated postretirement benefit
obligation in excess of plan assets 417,000
Unrecognized net gain 614,000
----------
Accrued postretirement benefit cost $1,031,000
==========
</TABLE>
Net postretirement benefit for the nine-month period ended September 30,
1995 is comprised of the following:
<TABLE>
<CAPTION>
<S> <C>
Service cost $ 5,000
Interest 42,000
Curtailment gain (752,000)
Net amortization and deferral (41,000)
---------
Net postretirement benefit $(746,000)
=========
</TABLE>
A curtailment gain of $752,000 was recognized during the nine-month period
ended September 30, 1995 due to a reduction in the work force of Fasco.
For measurement purposes, an 11.40% annual rate of increase in the per
capita cost of covered benefits (health care cost trend rate) was assumed
for 1995; the health care cost trend rate was assumed to decrease
gradually to 6.0% by the year 2006 and remain at that level thereafter.
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 8.50%.
(Continued)
<PAGE>
6
FASCO CONSUMER PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
(7) LEASES
------
Fasco maintains operating leases on certain equipment. Rental expense under
such leases amounted to $194,450 for the nine-month period ended
September 30, 1995. Future rental commitments under noncancelable
operating leases with a remaining term in excess of one year at September
30, 1995 are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $178,419
1997 140,630
1998 95,583
1999 75,498
</TABLE>
(8) CONTINGENCIES
-------------
Fasco is party to various product liability lawsuits relating to its
products and incidental to its business. Fasco believes that the ultimate
conclusion of the various pending claims and lawsuits of the Company will
not have a material adverse effect on the financial statements of Fasco.
(9) SUBSEQUENT EVENT
----------------
On January 2, 1996, 100% of the common stock of Fasco was acquired by The
Rival Company.
