FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 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: 0-20274
-------
THE RIVAL COMPANY
(Exact name of registrant as specified in its charter)
Delaware 43-0794462
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
800 E. 101st Terrace, Kansas City, Missouri 64131
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (816) 943-4100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $ .01 per share
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.
(1) Yes X No (2) Yes X No
--- --- --- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of voting stock held by non-affiliates of the
registrant is $118,603,000 as of August 29,1997. The non-inclusion of shares
held by directors, officers and beneficial owners of more than 5% of the
outstanding stock shall not be deemed an admission that such persons are
affiliates of the Registrant.
9,448,847
-----------------------------
(number of shares of common stock outstanding as of August 29, 1997.)
Documents Incorporated by Reference
Part I and Part II incorporate information by reference from the registrant's
Annual Report to Stockholders for the fiscal year ended June 30, 1997. Part
III incorporates information by reference from the Registrant's definitive
Proxy Statement, to be filed with the Commission for its 1997 Annual Meeting
of Stockholders.
1
<PAGE>
PART I
Item l. Business.
The Rival Company, the registrant, together with its subsidiaries, is
referred to herein as "Rival" or as the "Company". The Company's executive
offices are located at 800 E. 101st Terrace, Kansas City, Missouri 64131, and
its telephone number is (816) 943-4100. The Rival Company was incorporated in
Delaware on April 7, 1986 for the purpose of acquiring Rival Manufacturing
Company.
General
The Company is a leading designer, manufacturer and marketer of a variety
of products including small kitchen and personal care appliances such as Crock
Pot (REGISTERED TRADEMARK) slow cookers, can openers and massagers; products
for the home environment including space heaters, air purifiers, sump, well
and utility pumps, humidifiers and fans; and building supply and industrial
products such as household ventilation, door chimes, ceiling fans and
industrial fans.
Since 1992, Rival's sales have grown from $163.5 million to $376.5 million
largely as the result of seven acquisitions that enabled Rival to expand its
product line beyond kitchen appliances, its primary products for over sixty
years. As a consequence, Rival has expanded its sales through national
hardware/home centers and has entered new markets of distribution such as
electrical and industrial wholesale distributors. The Company has also
broadened its international presence.
Between January 1996 and January 1997, the Company made three acquisitions:
* Fasco Consumer Products, Inc. ("Fasco") which manufactures an assortment
of products including household ventilation, ceiling fans, door chimes
and heaters was acquired in January 1996. Prior to the acquisition, Fasco
generated annual sales of approximately $40.0 million in the home center,
building supply and electrical wholesale distribution channels.
* Bionaire, Inc. ("Bionaire") which assembles and sells air purifiers and
humidifiers for household use was acquired in April, 1996. Prior to the
acquisition, Bionaire had annual sales of approximately $57.0 million
with retail distribution in the U.S., Canada and Europe.
* Dazey Corporation ("Dazey"). In January 1997, the Company acquired
certain assets, primarily consisting of inventory, equipment and tooling,
for the manufacture and sale of products including fryers, combination
cookers, skillets, indoor grills and waffle makers. Sales of these
products, which will be marketed under the Rival brand name, are
estimated to be approximately $20 million annually.
These three acquisitions contributed $88.6 million to fiscal 1997 consolidated
sales.
The Company distributes the Rival (REGISTERED TRADEMARK), Rival Select
(REGISTERED TRADEMARK), Simer (REGISTERED TRADEMARK), Pollenex (REGISTERED
TRADEMARK), Patton (REGISTERED TRADEMARK), Bionaire (REGISTERED TRADEMARK),
Fasco (REGISTERED TRADEMARK) and White Mountain (REGISTERED TRADEMARK) product
lines to substantially all major retail outlets in the U.S. and Canada,
including such mass merchants as Kmart, Target and Wal-Mart; hardware/home
centers such as Ace Hardware, Home Depot and Lowes; department stores, catalog
showrooms and warehouse clubs. The Company also sells Patton commercial fans
and Fasco building supply and home products to industrial and electrical
dealers and distributors. The Company has focused its resources to provide its
customers with superior service, product innovation and marketing support. To
accomplish this, the Company has developed automated ordering, shipping,
invoicing and data storage and retrieval systems that are linked to the
retailers "point-of-sale" systems. These automated systems are supported by
close coordination between the traffic, warehousing, sales support and finance
departments of the retailer and the Company.
2
<PAGE>
The Company believes that its highly integrated and cost effective
manufacturing represents a competitive strength. The Company manufactures
approximately 70% of the products it sells. Its seven manufacturing
facilities (all of which are located in the U.S.) produce electric motors,
molded plastic components, screw machine parts, stampings and stoneware. The
Company believes that the ability to manufacture the majority of its products
in North America is one of the Company's fundamental strengths. Manufacturing
capability gives the Company flexibility, bargaining power with third party
vendors, quality control, and quick response time. The ability to manufacture
is also helpful in evaluating a prospective acquisition.
The Company believes it has significant opportunities for continued growth
through the enhancement of existing product lines, new product development,
and product line acquisitions. The Company believes that product line
acquisitions will continue to be a significant factor in the future growth of
the Company. The continuing consolidation within the retail sector, the
increasing automation demands and the trend of major retailers to reduce the
number of suppliers are expected to provide opportunities to acquire product
lines with established positions and shelf space. The Company also believes
that its relationships with major retailers and its existing broad product
offerings can enhance the shelf space of product lines which Rival may
acquire. The Company believes that it has adequate access to financing and
that its recent experience in making successful acquisitions will facilitate
future acquisitions.
Products and Business Units
The Company manages its operations through four business units:
* Kitchen Electrics and Personal Care. This group sells products including
Crock Pot (REGISTERED TRADEMARK) slow cookers, toasters, ice cream
freezers, can openers, food slicers, mixers, indoor grills, irons,
potpourri simmerers, fryers, skillets, and massagers to retailers and two
step distributors throughout the United States.
* Home Environment. This group sells products including fans, air
purifiers, humidifiers, electric space heaters, sump, well and utility
pumps, showerheads, and household ventilation to retail customers
throughout the United States.
* Industrial and Building Supply. Our industrial group sells products
including industrial fans and drum blowers, household ventilation,
ceiling fans, door chimes, electric heaters and household convenience
items to electrical and industrial wholesale distributors throughout the
United States.
* International. Our international group sells the Company's products in
Canada and Europe from its sales and distribution facilities in Toronto
and the Netherlands. It also ships products from the United States to
distributors in Latin America and Asia.
The following table indicates the Company's net sales by business unit
together with sales made directly to consumers for the periods presented:
Years ended June 30
------------------------
(in millions)
Product Category 1997 1996 1995
---------------- ------ ------ ------
Kitchen electrics and personal care $188.8 $178.9 $161.6
Home environment 116.5 91.8 55.6
Industrial/building supply 30.8 26.9 3.8
International 35.8 12.9 6.9
Consumer 4.6 3.4 3.8
------ ------ ------
Total $376.5 $313.9 $231.7
====== ====== ======
The majority of the Company's sales are in product lines which are
relatively mature and thus provide a stable base of revenues. Future growth is
expected to be generated primarily from 1) the introduction of new products
and product lines under each of the Company's brand names, 2) expansion and
enhancement of the customer base and distribution for Patton and Fasco
products, 3) future acquisitions and 4) increased sales through international
markets.
3
<PAGE>
Product Development
The Company has an internal product development team dedicated to product
line enhancements, and the introduction of new products. As part of this
effort, the Company maintains its own engineering and development department
to conduct research activities relating to the improvement of existing
products and the development of new products. This department presently
consists of over 60 people, including engineers, product designers, draftsmen
and product managers. The Company also retains the services of outside
engineering and design consultants from time to time. The Company's
expenditures for product engineering and development were $4.5 million, $3.1
million and $2.5 million for the years ended June 30, 1997, 1996 and 1995,
respectively. Costs associated with changes to existing products and the
development of new products are charged to operations as incurred. As a result
of acquisitions, the Company has been able to significantly strengthen the
engineering and development department without increasing the department's
expenditures as a percent of the Company's net sales.
Internal product development is critical, not only for growth, but also to
maintain existing market share. The Company regularly enhances existing
products by adding new features and modernizing their design in order to
maintain their visual appeal and competitiveness.
Acquisitions
For a number of years, the Company's growth strategy has included the
selective acquisitions of modest sized product lines. The Company acquires a
product line when it believes it can use either its manufacturing or
distribution strengths to reduce costs or increase sales. The Company has had
sufficient resources to more aggressively pursue this strategy since its
initial public offering in June 1992. In fiscal 1993, the Company acquired the
assets of Simer Pump, a $22 million assembler of sump, well and utility pumps
and of Pollenex Corporation, a $28 million marketer of massagers, showerheads
and air cleaners. In fiscal 1994, the Company acquired operating assets of
White Mountain Freezer, Inc., a $3 million manufacturer of premium quality ice
cream freezers. In 1995, the Company acquired Patton Electric Company, a $40
million manufacturer of space heaters and fans for household and industrial
use. In 1996, the Company acquired Fasco Consumer Products, Inc. which
generates approximately $40 million in sales of household ventilation
products, ceiling fans, door chimes and other household products to retailers
and electrical wholesale distributors and it acquired Bionaire, Inc. with over
$50 million in sales of humidifiers and air purifiers to retailers. And in
1997, the Company acquired certain assets of Dazey Corporation for the
manufacture and sale of an assortment of small kitchen electric appliances
with sales of approximately $20 million.
The housewares and hardware industries includes hundreds of companies with
limited product offerings and annual sales below $50 million. The fragmented
nature of the industry together with the continuing retail consolidation and
increasing automation requirements are expected to result in additional
acquisition opportunities. The Company believes that given its strong
financial condition, broad customer base, manufacturing expertise and recent
acquisition experience, it is poised to capitalize on such opportunities. As
such, product line acquisitions remain a key component of the Company's long
term growth strategy.
Marketing
The vast majority of the Company's sales are to the retail trade. For this
reason, the Company directs its marketing efforts at the retailer. The
Company's products are sold in all major channels of distribution including
mass merchants, hardware/home centers, department stores, catalog showrooms,
warehouse clubs, drug stores, military exchanges, mail order companies and
premium companies. Rival's broad distribution to retailers throughout the U.S.
and Canada was a key consideration in each of the seven acquisitions
consummated by the Company since 1992. Simer's, Patton's and Fasco's strong
distribution in hardware/home centers in conjunction with the Rival and
Pollenex product lines has provided the Company with the opportunity
4
<PAGE>
to combine the strengths of each of the sales organizations. The consolidated
group can thus focus its combined efforts on the retail trade which provides
the Company and its customers with efficiencies in distribution, warehousing,
computer systems and sales and purchasing personnel. The Patton and Fasco
acquisitions also provide the Company with a new class of customers, the
industrial and electrical distributors.
The approximate breakdown of the Company's sales by class of customer is as
follows:
Years ended June 30
-------------------
Class of Customer 1997 1996 1995
- ----------------- ---- ---- ----
Mass Merchant 44% 47% 48%
Hardware/Home Center 17 17 17
Department Store 12 9 12
Electrical and Industrial Distributor 9 10 2
Drug Store, Warehouse Clubs and Other 18 17 21
---- ---- ----
100% 100% 100%
==== ==== ====
The Company reaches its customers through its sales organization which
consists of a combination of in-house sales managers, field sales associates
and independent manufacturers' representative firms.
The Company's largest customer, Wal-Mart (including Sam's Wholesale Club),
accounted for 26% of net sales in fiscal 1997 and 1996, and 28% of net sales
in fiscal 1995. The Company's next five largest customers in fiscal 1997
represented 19% of net sales. While the Company does not have long-term
contractual relationships with any of its customers, it has been doing
business with Wal-Mart and with its next five largest customers continuously
for over ten years. The strategy of providing quality products at a
promotional price is consistent with the marketing strategy of mass merchants
who often use promotions in the small appliance department to create consumer
traffic in their stores.
The Company works closely with its retail customers in planning their
marketing programs and promotions. The Company's advertising strategy is
designed to supplement the marketing programs of its customers. Rather than
stressing national advertising, the Company devotes approximately 80% of its
advertising budget to more cost-effective cooperative advertising with
retailers, such as circulars and inserts. The cooperative advertising provides
identification of the Company's various brand names together with the name of
the retailer.
Customer Service
The Company's major customers have developed programs of "Quick Response"
to reduce inventory and related carrying costs and improve in-stock positions.
These programs have continued to grow in importance as retailers have reduced
their overall number of vendors in order to minimize freight, warehousing and
vendor support costs, such as paperwork and personnel costs. In conjunction
with the retailers' systems, the Company has developed automated ordering,
shipping and invoicing systems and has been able to combine products sold
under more than one of the Company's brand names to certain retailers to help
minimize the retailers' support costs.
Point of sales information is utilized to generate orders through an
Electronic Data Interchange ("EDI") computer system. Additionally, the
Company's distribution facilities in Clinton and Sedalia, Missouri, New Haven,
Indiana, Fayetteville, North Carolina, and Toronto, Canada incorporate state-
of-the-art computer systems that provide information on shipping directly back
to the customers' systems. The Company believes that its accommodation of its
customers' "Quick-Response" programs has further solidified its position as a
key supplier to its most important customers.
5
<PAGE>
Manufacturing
The Company's seven plants, all of which are in the U.S, manufacture and
assemble approximately 70% of the products it sells. The Company's remaining
products are produced, to its specifications, primarily in China. The
Company's plants are highly integrated and produce electric motors, injection
molded plastic components, screw machine parts, stampings and stoneware.
The ability to manufacture the majority of its products in the U.S. is one
of the Company's fundamental strengths. Manufacturing capability gives the
Company flexibility, bargaining power with third party vendors, quality
control, and quick response time when high demand for product results in
customers placing reorders with short delivery dates.
The Company operates four manufacturing and assembly facilities in rural
Missouri (Clinton, Sedalia, Sweet Springs and Warrensburg), near Kansas City,
Missouri which specialize in the production of kitchen electrics. A facility
in Flowood, Mississippi produces the stoneware for the Company's Crock-Pot
(REGISTERED TRADEMARK) slow cookers, Potpourri Crocks (REGISTERED TRADEMARK)
and Crock Grills (REGISTERED TRADEMARK). Additionally, the Company operates a
facility in New Haven, Indiana which produces fans and heaters and a facility
in Fayetteville, North Carolina which specializes in home environment and
building supply products. In the past five years, the Company has spent
approximately $33.6 million to build a new distribution facility in Sedalia,
Missouri and to significantly upgrade manufacturing capabilities.
Seasonality
A significant percentage of the products sold by the Company are given as
gifts and, as such, sell at larger volumes during the holiday season.
When holiday shipments are combined with seasonal products such as heaters and
humidifiers, sales during the months of August through November are at a
higher level than during the other months of the year. Additionally, the
Company's working capital requirements, primarily inventories and receivables,
peak during the fall. The Company meets these seasonal working capital needs
through borrowings under its revolving credit facility. Five of the Company's
product lines have sales with specific seasonal trends. These are space
heaters and humidifiers which are sold primarily during the fall and winter,
and ice cream freezers, pumps and fans which are sold primarily during the
spring and summer.
Competition
The markets for the Company's products are mature and highly competitive.
Competition is based upon price, access to retail shelf space, product
enhancements, new product introductions, as well as marketing support and
distribution systems. Several competitors, most notably, Black & Decker,
Sunbeam/Oster, and Hamilton Beach/Proctor Silex, each generate annual sales of
small electric household appliances which are higher than sales of the
Company. Other significant competitors include Wayne Home Equipment, Masco,
Nortek, Teledyne, Honeywell, Holmes, National Presto, Toastmaster, and West
Bend. Smaller manufacturers compete with the Company on a limited product-
offering basis. A few European manufacturers, such as Braun, Group SEB and
Moulinex have established niches in the small electric household appliance
market, particularly in the high-end department store trade.
Trademarks and Patents
The Company considers its various trademarks to be a valuable tool in the
marketing of its products. Of particular importance to the Company are the
Rival (REGISTERED TRADEMARK), Rival Select (REGISTERED TRADEMARK), Simer
(REGISTERED TRADEMARK), Pollenex (REGISTERED TRADEMARK), Patton (REGISTERED
TRADEMARK), Bionaire (REGISTERED TRADEMARK), White Mountain (REGISTERED
TRADEMARK) and the Crock-Pot (REGISTERED TRADEMARK) trademarks. In the course
of its operations, the Company files patent applications covering various
aspects of the items produced. While the Company's mechanical and design
patents in the aggregate are considered to be of importance to the Company,
the overall business is not dependent upon any single patent or group of
patents.
Regulation
The Company is subject to federal, state and local regulations concerning
the environment, occupational safety and health, and consumer product safety.
The Company has not experienced significant difficulty in complying with such
regulations and compliance has not had a material adverse effect on the
Company's business. All of the Company's electric-powered products are listed
by Underwriters Laboratories, Inc. or the Canadian Underwriters Laboratories,
Inc., which are independent, not-for-profit corporations engaged in the
testing of products for compliance with certain public safety standards.
6
<PAGE>
Foreign Operations
Approximately 10 percent of the Company's sales are generated by its
international operations. Information regarding foreign operations is
incorporated herein by reference from the information provided in Note 12 to
Consolidated Financial Statements from the Company's Annual Report to
Stockholders for the fiscal year ended June 30, 1997, page 30.
Employees
The Company has approximately 2,500 full-time associates including 250
salaried personnel, except during August through November when employment will
likely increase by approximately 10%. Approximately 360 hourly associates at
the Flowood, Mississippi plant are represented by a labor organization under a
collective bargaining agreement which expires in December 1998. The Company
considers its labor relations to be excellent and has experienced no work
stoppage or labor dispute during the past ten years.
Item 2. Properties
Owned/ Square
Location Leased Feet Present Use
-------- ------ ------- -----------
Kansas City, Missouri leased 32,000 General Offices
Sedalia, Missouri owned 157,000 Manufacturing & assembly
leased 67,000 Manufacturing and assembly
owned 216,000 Warehousing and distribution
Clinton, Missouri owned 164,000 Manufacturing & assembly
owned 279,000 Warehousing & distribution
Sweet Springs, Missouri owned 125,000 Manufacturing and service
return processing
Warrensburg, Missouri leased 68,000 Manufacturing & assembly
Flowood, Mississippi owned 142,000 Manufacturing
New Haven, Indiana owned 302,000 Manufacturing & distribution
Peru, Indiana owned 172,000 Warehousing
Fayetteville, North
Carolina owned 282,500 Manufacturing & assembly
owned 60,000 Warehousing & distribution
Mississauga, Ontario leased 55,000 General office, warehousing &
distribution
The Warrensburg plant and 67,000 square feet of the Sedalia plant are
occupied under long-term leases which give the Company the option to purchase
the relevant property at a nominal cost. The general offices are occupied
under a lease through 2005. The Mississauga facility is leased through July
2002.
Item 3. Legal Proceedings.
The Company is party to various product liability lawsuits relating to its
products and incidental to its business. The Company believes that many of the
personal injury and damage claims brought against it arise from the misuse or
misapplication of the Company's products and rarely involve manufacturing
defects. In such cases, the Company vigorously defends against such actions.
Historically, product liability awards have rarely exceeded the Company's
individual per occurrence self-insured retention. There can be no assurance,
however, that the Company's future product liability experience will be
consistent with its past experience. The Company believes that the ultimate
conclusion of the various pending claims and lawsuits of the Company will not
have a material adverse affect on the consolidated financial statements of the
Company.
<PAGE>
Item 4. Submission of Matters to be a Vote of Security Holders.
None.
PART II
Item 5. Market for the registrant's common equity and related stockholder
matters.
Incorporated herein by reference from the information provided under the
caption "Common Stock Price Range" in the Company's Annual Report to
Stockholders for the fiscal year ended June 30, 1997, page 32.
Item 6. Selected financial data.
Incorporated herein by reference from the Company's Annual Report to
Stockholders for the fiscal year ended June 30, 1997, page 14.
Item 7. Management's discussion and analysis of financial condition and
results of operations.
Incorporated herein by reference from the Company's Annual Report to
Stockholders for the fiscal year ended June 30, 1997, pages 15-19.
Item 7A. Quantitative and qualitative disclosure about market risk.
Incorporated herein by reference from the Company's Annual Report to
Stockholders for the fiscal year ended June 30, 1997, Note 1, page 25.
Item 8. Financial statements and supplementary data.
Incorporated herein by reference from the Company's Annual Report to
Stockholders for the fiscal year ended June 30, 1997, pages 20-31.
Item 9. Changes in and disagreements with accountants on accounting and
financial disclosure.
None.
PART III
Item 10. Directors and executive officers of the registrant.
Item 11. Executive compensation.
Item 12. Security ownership of certain beneficial owners and management.
Item 13. Certain relationships and related transactions.
Information incorporated into Items 10, 11, 12 and 13 above by reference
from the information included under the captions entitled "Nominees for
Election," "Executive Officers," "Executive Compensation," "Security Ownership
of Certain Beneficial Owners and Management" and "Related Party Transaction"
in the Company's definitive proxy statement to be filed with the Commission
pursuant to Regulation 14A with respect to its 1997 Annual Meeting of
Stockholders.
8
<PAGE>
PART IV
Item 14. Exhibits, financial statement schedules and reports on Form 8-K.
a) The financial statements and schedules listed in the accompanying index
to consolidated financial statements and financial statement schedules
on page 10 are filed as part of this report.
b) The exhibits listed in the accompanying index to exhibits are filed as
part of this report.
9
<PAGE>
THE RIVAL COMPANY AND SUBSIDIARIES
Index to Consolidated Financial Statements
and Financial Statement Schedules
INDEX
Page Reference
--------------
Annual Report
to
Form 10-K Stockholders
--------- ------------
Independent Auditors' Report 31
Financial Statements:
Consolidated Balance Sheets--June
30, 1997 and 1996 20
Consolidated Statements of Earnings--
Years Ended June 30, 1997, 1996,
and 1995 21
Consolidated Statements of Stockholders'
Equity--Years Ended June 30, 1997,
1996, and 1995 22
Consolidated Statements of Cash Flows--
Years Ended June 30, 1997, 1996 and 1995 23
Notes to Consolidated Financial Statements 24-31
Financial Statement Schedule:
Independent Auditors' Report on
Financial Statement Schedule
and Consent 11
Schedule VII - Valuation and
Qualifying Accounts 12
10
<PAGE>
INDEPENDENT AUDITORS' REPORT ON FINANCIAL
STATEMENT SCHEDULE AND CONSENT
The Board of Directors
The Rival Company:
The audits referred to in our report dated August 4, 1997 included the related
financial statement schedule for each of the years in the three-year period
ended June 30, 1997, included in the 1997 annual report on Form 10-K. This
financial statement schedule is the responsibility of The Rival Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits. In our opinion such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
We consent to incorporation by reference in the registration statement (No.
33-69392) on Form S-8 of The Rival Company of the above report and our report
dated August 4, 1997 relating to the consolidated balance sheets of The Rival
Company and subsidiaries as of June 30, 1997 and 1996, and the related
consolidated statements of earnings, stockholders' equity and cash flows for
each of the years in the three-year period ended June 30, 1997, which report
is incorporated by reference in the June 30, 1997 annual report on Form 10-K
of The Rival Company.
Kansas City, Missouri /s/ KPMG Peat Marwick, LLP
--------------------------
September 2, 1997 KPMG Peat Marwick, LLP
11
<PAGE>
SCHEDULE VII
THE RIVAL COMPANY AND SUBSIDIARIES
______________
VALUATION AND QUALIFYING ACCOUNTS
(amounts in thousands)
Additions Additions
Beginning Charged to from Deductions Ending
Balance Expense Acquisitions (A) Balance
------- ------- ------------ ----- -------
Allowance for collection
loss and discounts:
Year ended 6-30-97 $2,785 $ 986 $ --- $1,213 $2,558
Year ended 6-30-96 $1,909 $ 463 $ 547 $ 134 $2,785
Year ended 6-30-95 $1,693 $ 356 $ 351 $ 491 $1,909
(A): Write-off of accounts and changes in discount allowances.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: /s/ Thomas K. Manning
---------------------
Chief Executive Officer
September 2, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated below.
Signature Title Date
- --------- ----- ----
/s/ Thomas K. Manning
- -------------------------
Thomas K. Manning Chairman of the Board of September 2, 1997
Directors, Chief Executive
Officer
(Principal Executive Officer)
/s/ William L. Yager
- -------------------------
William L. Yager President, Chief Operating September 2, 1997
Officer and Director
/s/ W. Mark Meierhoffer
- -------------------------
W. Mark Meierhoffer Senior Vice President, September 2, 1997
Chief Financial Officer
(Principal Accounting and
Financial Officer)
/s/ William S. Endres
- -------------------------
William S. Endres Senior Vice President Sales and September 2, 1997
Marketing and Director
/s/ Darrel M. Sanders
- -------------------------
Darrel M. Sanders Senior Vice President September 2, 1997
Operations and Director
/s/ Jack J. Culberg
- -------------------------
Jack J. Culberg Director September 2, 1997
/s/ Todd Goodwin
- -------------------------
Todd Goodwin Director September 2, 1997
/s/ John E. Grimm, III
- -------------------------
John E. Grimm, III Director September 2, 1997
/s/ Lanny R. Julian
- -------------------------
Lanny R. Julian Director September 2, 1997
/s/ Noel Thomas Patton
- -------------------------
Noel Thomas Patton Director September 2, 1997
/s/ Beatrice B. Smith
- -------------------------
Beatrice B. Smith Director September 2, 1997
13
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------ ------- ----
2 (a) Agreement of Sale, dated September 11, 1992 between the
Rival Company and the Marley Company, relative to the
acquisition by the Company of specified assets of Simer
Pump (incorporated by reference to Exhibit 2 to
Registrant's Form 8-K dated as of September 15, 1992).
(b) Purchase Agreement by and between The Rival Company and
Pollenex Corporation dated April 30, 1993 (incorporated by
reference to Exhibit 1 to Registrant's Form 8-K dated as of
April 30, 1993).
(c) Purchase Agreement by and among Rival Acquisition Company,
The Rival Company and Patton Electric Company, Inc., Giant
Lion Trading, Ltd. and Noel Thomas Patton and Eve M. Patton
dated April 21, 1995 (incorporated by reference to Exhibit 1
to Registrant's Form 8-K dated as of April 21, 1995).
(d) Stock Purchase Agreement between H.S. Investments, Inc. as
seller, and The Rival Company, as buyer as of December 29,
1995 (incorporated by reference to Exhibit 2 to Form 8-K
dated as of January 2, 1996).
(e) Offer to purchase all of the Common Shares of Bionaire Inc.
(Offering Circular) dated March 5, 1995 (incorporated by
reference to Exhibit 1 to Form 8-K dated as of April 2, 1996).
3 (a) Restated Certificate of Incorporation of The Rival Company,
a Delaware corporation (the "Company") (incorporated by
reference to Exhibit 3(a) to Registrant's Form 10-K for the
year ended June 30, 1992).
(b) Bylaws of the Company (incorporated by reference to
Exhibit 3(b) to Registrant's Form 10-Q for the quarter ended
December 31, 1994).
4 (a) Form of Certificate representing shares of Common Stock,
par value $.01 per share (incorporated by reference to
Exhibit 4(a) to Registrant's Registration Statement on
Form S-1, Registration Number 33-46794 dated June 2, 1992
("Registrant's S-1")).
(b) Form of Certificate of Ownership and Merger of The Rival
Company into Rival Manufacturing Company (incorporated by
reference to Registrant's S-1).
10(a) Note Purchase Agreement for $50,000,000 Senior Unsecured
Notes dated as of July 23, 1993 between the Company and the
Purchasers listed therein (incorporated by reference to
Registrant's Form 10-K for the year ended June 30, 1993).
(b) Note Purchase Agreement for $50,000,000 Senior Unsecured
Notes dated as of April 15, 1996 between the Company and
The Purchasers listed therein (incorporated by reference to
Registrant's Form 10-Q for the quarter ended March 31, 1996).
(c) Credit Agreement for a $75,000,000 Revolving Credit
Facility dated as of April 15, 1996 between the Company,
the banks listed therein and, NationsBank of Texas, N.A.
as agent (incorporated by reference to Registrant's Form
10-Q for the quarter ending March 31, 1996).
(d) ** The Company's 1986 Stock Option Plan, as amended and restated
(incorporated by reference to Exhibit 10(a) to Registrant's
S-1).
(e) ** The Company's 1994 Stock Option Plan (incorporated by
reference to Exhibit A to Registrant's Proxy Statement, dated
September 23, 1994 for its 1994 Annual Meeting of Shareholders).
(f) ** Rival Secular Trust Agreement (incorporated by reference to
Exhibit 10(e) to Registrant's S-1).
14
<PAGE>
(g) ** Employment Agreements, dated as of February 1, 1989 between
the Company and Thomas K. Manning, William S. Endres, Darrel
Sanders and William L. Yager (incorporated by reference to
Registrant's Form 10-K for the year ended June 30, 1993).
(h) * Description of The Rival Company, Management Incentive
Compensation Plan.
(i) * Employment Agreement dated as of December 1, 1996 between the
** Company and W. Mark Meierhoffer.
11 * Statement regarding computation of earnings per share of
the Company.
13 * Annual Report to Stockholders for fiscal year ended June 30,
1997 (except for those pages which are specifically
incorporated herein by reference, the Company's Annual Report
is not to be deemed filed as part of this report.)
21 * List of subsidiaries of the Company.
23 * Independent auditors' consent
__________________________
* Filed herewith
** Management contract or compensation plan arrangement required
to be filed as an exhibit pursuant to Item14(c) of Form 10-K.
__________________________
The above exhibits may be obtained by Shareholders upon written request
to the Office of the Secretary, 800 E. 101st Terrace, Kansas City,
Missouri 64131.
15
<PAGE>
Exhibit 10(h)
The Rival Company
Management Incentive Compensation Plan
Each year, under the Management Incentive Bonus Plan, the Committee
establishes a goal relating to the Company's operating income that sets the
minimum and maximum bonus pools that may be earned. No bonus is paid to the
Chief Executive Officer, the President, or the Senior Vice Presidents if a
minimum level of budgeted operating income is not achieved. The incentive pool
is established as a percentage of operating income earned by the Company over
the threshold. A majority of the incentive pool generated by reaching the
target is distributed in cash ratably to designated executive officers and
managers at year-end based on a weighing of positions and base salaries. The
remaining portion of the incentive pool is distributed to outstanding
performers within the eligible group based on the recommendation of the CEO to
the Committee. The targeted and maximum bonuses payable to executive officers
represent a significant portion of an executive's total compensation (25-30%
of the total compensation derived from a combination of base salary, bonus and
stock options).
Exhibit 10(i)
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT ("Agreement") is entered into as of December 1,
1996, by and between THE RIVAL COMPANY, a Delaware corporation (the
"Company"), and W. Mark Meierhoffer (the "Executive").
A. Executive is currently employed as the Sr. Vice President of the Company.
B. The Company and Executive desire to continue such employment and to
provide economic security to the Executive, on the terms hereinafter set
forth, in the event such employment is terminated under certain circumstances.
Accordingly, in consideration of the foregoing premises, and for other
valuable consideration, the adequacy of which is hereby acknowledged, the
Company and the Executive, intending to be legally bound, hereby agree as
follows:
1. In the event that the Executive's employment is terminated by the
Company other than for "just cause" (as defined in numerical paragraph 2
hereof) or Executive terminates his employment for stated "good cause" (as
defined in numerical paragraph 3 hereof), the Company shall be obligated to
pay Executive (or his estate if Executive shall have died after being
discharged) twelve months severance pay, which shall equal such number of
months multiplied by the Executive's Annual Base Salary, divided by 12. For
purposes of this Agreement, Executive's Annual Base Salary shall equal the base
salary paid to Executive by the Company during the one year period ending
on the last day of the most recent pay period preceding the date of
termination, provided that if Executive has been employed by the Company for a
shorter period, the base salary for such shorter period shall be annualized.
Such severance pay shall be paid to Executive (or his estate) in substantially
equal monthly installments on the first day of each of the twelve months
commencing with the month immediately following the month in which his
employment with the Company is terminated.
2. The term "just cause", for purposes of termination of Executive's
employment for "just cause", shall mean (a) the Executive's violation of any
reasonable rule or regulation of the Board of Directors or the Executive's
superior or the Chief Executive Officer of the Company that results in
significant damage to the Company or which, after written notice to do so,
Executive fails to make reasonable efforts to correct within a reasonable
time, (b) any refusal by Executive to comply with a reasonable, direct order,
(c) any wilful misconduct by Executive in the responsibilities reasonably
assigned to him, (d) any refusal by Executive to perform his job as required
to meet Company objectives or (e) the Executive's performing services for any
other corporation or person which competes with the Company while he is
employed by the Company and without the written approval of the Chief
Executive Officer of the Company; provided, however, that there shall be a
rebuttable presumption that any discharge of Executive by the Company within
two (2) years after there has been a "change in control" (as defined in
numerical paragraph 4 hereof) is a discharge other than for "just cause."
3. The term "good cause", for purposes of termination by Executive of
Executive's employment for "good cause" shall mean: (a) any reduction in
Executive's salary, benefits or annual bonus not substantially commensurate
with reductions for other executive employees of the Company, (b) the
involuntary relocation or proposed involuntary relocation of Executive outside
the Kansas City and Clinton areas by the Company, (c) the assignment to
Executive of services and responsibilities not approved by Executive which are
not substantially commensurate with the executive and managerial services and
responsibilities which he is then performing for the Company or (d) a good
faith belief by Executive that Executive can no longer perform his duties for
the Company because of actions taken by the Company.
4. For purposes of this Agreement, a "change in control" shall mean (a) the
acquisition, directly or indirectly, by any "person" or "group" of "persons"
(as the terms are used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934 and the rules thereunder) of beneficial ownership of securities of
the Company or of securities of the Company's ultimate parent corporation
representing 30% or more of the combined voting power of the then outstanding
securities of such corporation, (b) any merger, consolidation or sale of all
or a substantial part of the assets of the Company or (c) a change in the
Board of Directors such that a majority of a Board of Directors of the Company
or the Company's ultimate parent corporation ceases to consist of Continuing
Directors ("Continuing Director " means any person who was a member of the
Board of Directors of the Company or the ultimate parent corporation, as the
case may be, as of the date hereof, and any person who subsequently becomes a
member of such Board of Directors if such person's appointment, election or
nomination for election to such Board of Directors is recommended or approved
by a majority of the then Continuing Directors of such Board of Directors).
5. The Company acknowledges and agrees that Executive shall be entitled to
receive all of the payments provided for herein regardless of any income which
Executive may receive from other sources after the termination of his
employment with the Company.
6. Nothing in this Agreement shall confer upon Executive the right to
continue in the employ of the Company or any of its subsidiaries or, subject
to the terms hereof, shall affect any right which the Company or any of its
subsidiaries may have to terminate the employment of the Executive. No benefit
provided herein is intended or shall be deemed to be granted to Executive in
lieu of any benefits, rights or privileges to which may be entitled while he
is an employee of the Company under any retirement, pension, insurance,
hospitalization, stock option, stock purchase, incentive compensation or other
plan of the Company which may now be in effect or which may hereafter be
adopted, it being understood that Executive shall have the same rights and
privileges to participate in such plans while employed by the Company as any
other executive employee of the Company.
7. As consideration for the execution of this Agreement by the Company,
Executive covenants and agrees as follows:
(a) During the term of and at all times after the termination (whether by
the Company or the Executive) of Executive's employment with the Company,
Executive shall keep confidential and not disclose to any person, firm or
corporation (other than the Company, a person designated in writing by the
Company, or as may otherwise be required by law or reasonable business
practice), the trade secrets or confidential information or knowledge relating
to the business of the Company or its affiliates or subsidiaries, including,
without limiting the generality of the foregoing: (i) the names of the
Company's agents, suppliers and customers; (ii) the contractual arrangements
between the Company and its agents, suppliers or customers; (iii) the
financial details (including credit and discount terms) of the Company's
relationship with its agents, suppliers or customers; (iv) the names of
prospective customers and their requirements; (v) information concerning the
Company's financial structure or operating results; (vi) information
concerning all inventions, products, discoveries, improvements, processes,
manufacturing, marketing and service methods or techniques, developments,
ideas, concepts, designs, styles, specifications, knowhow, strategies and
data, whether or not patentable or registerable under copyright or similar
statues, owned by the Company; (vii) information concerning the remuneration
paid by the Company to its employees; or (viii) any other matter which is not
readily available to the public relating to the business of the Company.
(b) All correspondence, notes, recordings, files, keys, computer programs
(whether source code or object code) and other materials and reproductions
thereof pertaining in any respect to the Company, its subsidiaries or
affiliates or any of their respective businesses, shall be the property of and
shall be delivered to and retained by the Company upon Executive's termination
of employment with the Company.
8. Executive acknowledges that the provisions of numerical paragraph 7
hereof are reasonable and necessary to protect the legitimate interests of the
Company and its subsidiaries and affiliates (such subsidiaries and affiliates,
whether now in existence or coming into existence later during the term of
this Employment Agreement, being third-party intended beneficiaries of
numerical paragraph 7 of this Agreement) and that any violation by Executive
of any provision of numerical paragraph 7 will cause irreparable injury to the
Company, its subsidiaries and affiliates. Executive acknowledges that the
Company, its subsidiaries and affiliates are entitled to appropriate
injunctive relief in any court of competent jurisdiction to enforce their
rights hereunder, in addition to any other rights available to them at law or
in equity.
9. In the event Executive commences litigation to enforce his rights under
this Agreement and prevails in such litigation, Executive shall be entitled to
recover his costs and expenses, including reasonable attorneys' fees.
10. No delay or omission to exercise any right, power or remedy accruing
under this Agreement shall impair any such right, power or remedy nor shall it
be construed to be a waiver of any such right, power or remedy or of any
similar right, power or remedy to which a party thereafter becomes entitled.
Any waiver, permit, consent or approval of any kind or character under this
Agreement, or any waiver of any provisions or conditions of this Agreement,
must be in writing and shall be effective only to the extent specifically set
forth in such writing.
11. If any part of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part by reason of any rule of law or public policy, such part shall be
deemed to be severed from the remainder of this Agreement for the purpose only
of the particular legal proceedings in question and all other covenants and
provisions of this Agreement shall in every other respect continue in full
force and effect and no covenant or provision shall be deemed dependent upon
any other covenant or provision.
12. This Agreement shall inure to and be binding upon the parties hereto and
their respective heirs, successors and assigns, including, without limitation,
any person, partnership or corporation which may acquire all or substantially
all of the Company's assets and business or with or into which the Company may
be consolidated or merged, and this provision shall apply in the event of any
subsequent merger, consolidation or transfer.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY:
THE RIVAL COMPANY
By: _____________________
William L. Yager
President
EXECUTIVE:
____________________________
W. Mark Meierhoffer
Sr. Vice President
Finance & Administration
Exhibit 11
THE RIVAL COMPANY AND SUBSIDIARIES
Earnings Per Share
(in thousands except per share data)
Years Ended June 30
-------------------
Primary Earnings Per Share* 1997 1996 1995
- --------------------------- ------- ------- -------
Net earnings $10,685 $14,239 $13,985
======= ======= =======
Weighted average common and common
equivalent shares outstanding 9,895 9,950 9,505
======= ======= =======
Earnings per common and common
equivalent share $ 1.08 $ 1.43 $ 1.47
======= ======= =======
Computation of weighted average
common and common equivalent
shares outstanding:
Average common shares
outstanding 9,684 9,725 9,312
Average number of
options outstanding 690 557 433
Less treasury shares acquired
with proceeds from exercise
of options (479) (332) (240)
------- ------- -------
Weighted average common and common
equivalent shares outstanding 9,895 9,950 9,505
======= ======= =======
* Fully diluted earnings per share is equal to primary earnings per share for
all periods presented.
Consolidated Statements of Earnings Data
(in thousands, except per share amounts)
Years ended June 30, 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------
Net sales $376,465 $313,864 $231,711 $229,233 $184,451
Cost of sales 278,455 230,207 168,406 162,703 130,979
-------- -------- -------- -------- --------
Gross profit 98,010 83,657 63,305 66,530 53,472
Selling, general and
administrative expenses 63,809 50,561 34,461 37,483 30,005
Restructuring expenses 3,000 - - - -
Amortization of
goodwill and other
intangible assets 3,069 2,432 1,774 1,635 1,347
-------- -------- -------- -------- --------
Operating income 28,132 30,664 27,070 27,412 22,120
Interest expense 10,081 7,117 4,216 4,113 3,560
Other expenses 21 295 120 205 301
-------- -------- -------- -------- --------
Earnings before income
taxes and extraordinary
item 18,030 23,252 22,734 23,094 18,259
Income tax expense 7,345 9,013 8,749 8,777 7,023
-------- -------- -------- -------- --------
Earnings before
extraordinary item 10,685 14,239 13,985 14,317 11,236
Extraordinary loss,
extinguishment of
debt, net - - - - 510
-------- -------- -------- -------- --------
Net earnings $ 10,685 $ 14,239 $ 13,985 $ 14,317 $ 10,726
======== ======== ======== ======== ========
Net earnings per share $ 1.08 $ 1.43 $ 1.47 $ 1.51 $ 1.14
======== ======== ======== ======== ========
Dividends per share $ 0.24 $ 0.20 $ 0.16 $ 0.12 $ -
======== ======== ======== ======== ========
Weighted average common
and common equivalent
shares outstanding (1) 9,895 9,950 9,505 9,475 9,417
======== ======== ======== ======== ========
(1) Stock options are included as common stock equivalents.
Consolidated Balance Sheet Data
(in thousands)
At June 30, 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------
Working capital $ 84,819 $ 91,396 $ 60,293 $ 60,063 $ 52,225
Total assets 298,605 288,251 204,368 151,467 139,666
Long-term debt
(less current portion) 84,000 88,000 42,000 46,000 50,000
Stockholders' equity 110,390 106,148 93,805 76,104 62,085
* The tables above should be read in conjunction with the Company's
consolidated financial statements and notes, which appear herein on pages
20-31, inclusive.
Page 14
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Consolidated Statements of Earnings Data
(expressed as a percentage of sales)
Years ended June 30, 1997 1996 1995
- -----------------------------------------------------------------------------
Net sales 100.0% 100.0% 100.0%
Cost of sales 74.0 73.3 72.7
------ ------ ------
Gross profit 26.0 26.7 27.3
Selling, general and administrative expenses 16.9 16.1 14.9
Restructuring expenses 0.8 0.0 0.0
Amortization of goodwill and other intangible assets 0.8 0.8 0.7
------ ------ ------
Operating income 7.5 9.8 11.7
Interest expense 2.7 2.3 1.8
Other expenses 0.0 0.1 0.1
------ ------ ------
Earnings before income taxes 4.8 7.4 9.8
Income tax expense 2.0 2.9 3.8
------ ------ ------
Net earnings 2.8% 4.5% 6.0%
====== ====== ======
Net Sales by Business Unit
($ in millions)
In order to better focus on each of its product lines and its broadened
customer base, the Company is now managing its operations using a business
unit approach. The business units identified by the Company are as follows:
* Kitchen Electrics and Personal Care. This group sells products including
Crock-Pot (REGISTERED TRADEMARK) slow cookers, toasters, ice cream
freezers, can openers and massagers to retailers and two step
distributors throughout the United States.
* Home Environment. This group sells products including fans, air
purifiers, humidifiers, electric space heaters, sump, well and utility
pumps and household ventilation to retail customers throughout the
United States.
* Industrial and Building Supply. Our industrial group sells products
including industrial fans and drum blowers, household ventilation,
ceiling fans, door chimes, electric heaters and household convenience
items to electrical and industrial wholesale distributors throughout the
United States.
* International. Our international group sells the Company's products in
Canada and Europe from its sales and distribution facilities in Toronto
and the Netherlands. It also ships products from the United States to
distributors in Latin America and Asia.
Sales by business unit and direct consumer sales are reflected in the charts
below as if the Company had used the business unit approach for each of the
prior three years.
(PIE CHART)
1995
- ----
Kitchen Electrics $161.6
Consumer 3.8
Home Environment 55.6
Industrial/Building Supply 3.8
International 6.9
------
$231.7
(PIE CHART)
1996
- ----
Kitchen Electrics $178.9
Consumer 3.4
Home Environment 91.8
Industrial/Building Supply 26.9
International 12.9
------
$313.9
(PIE CHART)
1997
- ----
Kitchen Electrics $188.8
Consumer 4.6
Home Environment 116.5
Industrial/Building Supply 30.8
International 35.8
------
$376.5
Page 15
<PAGE>
General
The Company's sales grew from $313.9 million in fiscal 1996 to $376.5 million
in fiscal 1997. The growth was the result of three acquisitions:
* Fasco Consumer Products, Inc. ("Fasco") which manufactures an assortment
of products including household ventilation, ceiling fans, door chimes
and heaters was acquired in January 1996. Fasco generates annual sales of
approximately $30.0 million in the home center, building supply and
electrical distribution channels.
* Bionaire, Inc. ("Bionaire") which assembles and sells air purifiers and
humidifiers for household use was acquired in April 1996. Bionaire has
annual sales of approximately $50.0 million with retail distribution in
the U.S., Canada and Europe.
* Dazey. In January 1997, the Company acquired certain assets, primarily
consisting of inventory, equipment and tooling, for the manufacture and
sale of products including fryers, combination cookers, skillets, indoor
grills and waffle makers. Sales of these products, which will be marketed
under the Rival brand name, are estimated to be approximately $20 million
annually.
Together, Fasco, Bionaire and Dazey contributed approximately $88.6 million
to fiscal 1997 sales. Fasco and Bionaire contributed approximately $24.5
million to fiscal 1996 sales. Exclusive of these acquisitions, sales were
generally flat as the Company's home environment and industrial/building
supply business units worked to integrate the Fasco and Bionaire product
lines. The kitchen electrics group solidified market share gains achieved in
fiscal 1996 when sales of these products grew by more than 10%.
The vast majority of the Company's sales are in product lines which are
relatively mature and provide a stable base of revenues. Future growth is
expected to be generated primarily from 1) the introduction of new products
and product lines under each of the Company's brand names, 2) expansion and
enhancement of the customer base and distribution for Patton and Fasco
products, 3) future acquisitions and 4) increased sales through international
markets.
(BAR CHART)
Net Sales
(Millions of Dollars)
1993 184.5
1994 229.2
1995 231.7
1996 313.9
1997 376.5
(BAR CHART)
Operating Income*
(Millions of Dollars)
1993 22.1
1994 27.4
1995 27.1
1996 30.7
1997 31.1
* (excluding restructuring charge)
Fiscal 1997 Compared to Fiscal 1996
Net Sales
Net sales increased $62.6 million to $376.5 million for the year ended June
30, 1997 ("fiscal 1997") compared to $313.9 million for the year ended June
30, 1996 ("fiscal 1996"). The acquisitions of Fasco, Bionaire and Dazey
between January 1996 and January 1997 contributed $64.1 million in incremental
sales. Excluding these acquired businesses, sales in the kitchen electrics
business unit increased approximately $3.5 million or two percent due to new
product introductions in the iron and massager categories. Industrial sales
were adversely affected by a $4.0 million decrease in sales of fans and drum
blowers due to unusually mild weather. The growth in the home environment and
international business units was generally consistent with incremental sales
from the Fasco and Bionaire acquisitions.
Gross Profit
Gross profit was $98.0 million (26.0% of net sales) in fiscal 1997 compared to
$83.7 million (26.7% of net sales) in fiscal 1996. The decline in gross
margins was the result of unfavorable manufacturing variances caused by excess
plant capacity together with high service returns from retail customers. The
under utilization in manufacturing was the result of recent acquisitions and
has been addressed through the closing of two plants in Montreal, Canada and
in Peru, Indiana. Additionally, production in the Sweet Springs, Missouri
plant was significantly curtailed as the facility is now being used as a
centralized return center to more effectively process and inspect customer
returns.
Selling, General and Administrative Expenses
Selling, general and administrative expenses totaled $63.8 million (16.9% of
net sales) in fiscal 1997 compared to $50.6 million (16.1% of net sales) in
fiscal 1996. Selling expenses increased as a percentage of net sales from
12.7% to 13.4%. The higher expenses as a percentage of net sales are due, in
part, to the full year impact of the international and industrial sales
contributed by the Bionaire and Fasco acquisitions. Although the Company
expects to reduce selling expenses of these business units as a percentage of
net sales in the future, they will likely continue to be higher than the
kitchen electrics and home
Page 16
<PAGE>
environment business units. Distribution expenses also increased as a
percentage of net sales due to inefficiencies caused by congestion in the
Clinton, Missouri distribution center. A new distribution center was opened in
July 1997 in Sedalia, Missouri in order to increase shipping capacity and
improve efficiency. General and administrative expenses were $13.5 million
(3.6% of net sales) in fiscal 1997 compared to $10.7 million (3.4% of net
sales) in fiscal 1996. Costs incurred by the product engineering group were
$3.8 million in fiscal 1997 compared to $2.7 million in fiscal 1996 as the
Company increased its spending on product development. Other general and
administrative costs increased at rates consistent with the sales growth.
Restructuring Charge
A restructuring charge of $3.0 million was recognized in fiscal 1997 as a
result of the decision to close the Montreal, Canada production and shipping
facility together with the consolidation of certain Canadian administrative
functions. The Montreal facility was acquired as part of the Bionaire
acquisition in April 1996. The closing reflects efforts by the Company to
reduce its excess plant capacity and is expected to save nearly $3.0 million
annually. The restructuring cost reflects the estimated cost of future lease
obligations in excess of projected sublease income as well as severance costs.
Interest Expense
Interest expense was $10.1 million in fiscal 1997 compared to $7.1 million in
fiscal 1996. Total average borrowings increased from $106 million to $154
million due to the three acquisitions made between January 1996 and January
1997 together with higher working capital requirements. Average interest rates
declined from 6.7% in fiscal 1996 to 6.4% in fiscal 1997 due to lower rates on
the revolving credit facility.
Income Taxes
Effective income tax rates were 40.7% in fiscal 1997 compared to 38.8% in
fiscal 1996. The statutory rate was 35% in each year. The difference between
the statutory rate and the effective rate is primarily due to nondeductible
amortization of goodwill recorded as a result of the 1986 acquisition of the
Company and the 1996 acquisition of Bionaire. Additional differences arise due
to state income taxes and differences between the rate of taxation between the
Company's U.S. and international operations. In fiscal 1997, the Company's
Canadian operations operated at a loss as a result of the aforementioned
restructuring charge. The tax benefit recognized by the Company on the
Canadian loss was below the U.S. statutory rate.
Net Earnings
Net earnings were $10.7 million ($1.08 per share) in fiscal 1997 compared to
$14.2 million ($1.43 per share) in fiscal 1996 due to the higher interest
costs and the restructuring charge discussed above. Average shares outstanding
declined slightly due to the repurchase of 295,000 shares in April 1997 and
May 1997.
Fiscal 1996 Compared to Fiscal 1995
Net Sales
Net sales increased $82.2 million to $313.9 million for fiscal 1996 compared
to $231.7 million for the year ended June 30, 1995 ("fiscal 1995"). The
majority ($61.6 million) of the $82.2 million increase reflected the sales
contributions of Patton, Fasco and Bionaire, companies acquired between April
1995 and April 1996. Excluding these acquired businesses, sales increased by
$20.6 million (9%), primarily from a $17.3 million increase in kitchen
electrics and personal care sales. A modest price increase combined with
higher unit sales, especially of toasters and Crock-Pot (REGISTERED TRADEMARK)
slow cookers, contributed to the sales growth.
Gross Profit
Gross profit was $83.7 million (26.7% of net sales) in fiscal 1996 compared to
$63.3 million (27.3% of net sales) in fiscal 1995. The decline in the gross
margin as a percentage of sales was the result of low margins on sales of
Patton products caused by the high cost of component inventories purchased in
the April 1995 acquisition, and unfavorable variances resulting from failure
of overseas suppliers to deliver components.
(BAR CHART)
Interest Expense
(Millions of Dollars)
1993 3.6
1994 4.1
1995 4.2
1996 7.1
1997 10.1
(BAR CHART)
Stockholders' Equity
(Millions of Dollars)
1993 62.1
1994 76.1
1995 93.8
1996 106.1
1997 110.4
Page 17
<PAGE>
Selling, General and Administrative Expenses
Selling, general and administrative expenses totaled $51.3 million (16.3% of
net sales) in fiscal 1996 compared to $34.9 million (15.0% of net sales) in
fiscal 1995. Selling expenses increased as a percentage of net sales from
11.2% to 12.7%. The higher selling expense percentage was primarily the result
of the operations of Fasco and Bionaire. Excluding these businesses, selling
expenses were 11.6% as compared to 11.2% in the prior year with the increase
being the result of incremental spending on print and television advertising
to promote the Crock-Pot (REGISTERED TRADEMARK) slow cooker. Selling expenses
for Fasco and Bionaire totaled $5.8 million (24.3% of net sales). These
expenses were especially high due to the seasonality of Bionaire sales
(Bionaire was acquired in the fourth fiscal quarter and less than 10% of
annual volume is shipped during such quarter) and the incomplete integration
of Bionaire and Fasco businesses into the consolidated entity. General and
administrative expenses were $11.4 million in fiscal 1996 compared to $8.9
million in 1995. The increase was generally required to support the company's
growth. General and administrative expenses as a percentage of net sales
declined from 3.8% to 3.6%.
Interest Expense
Interest expense was $7.1 million in fiscal 1996 compared to $4.2 million in
fiscal 1995. Total average borrowings increased from $66 million to $106
million due to the aforementioned acquisitions. The average interest rate
increased from 6.1% to 6.7% as a result of higher interest rates on the
revolving credit facility and the issuance of 10 year notes in April 1996 at
an interest rate of 7.21%.
Income Taxes
Effective income tax rates were 38.8% in fiscal 1996 compared to 38.5% in
fiscal 1995. The statutory rate was 35% in each year. The difference between
the statutory rate and the effective rate is primarily due to nondeductible
amortization of goodwill recorded as a result of the 1986 acquisition of the
Company, provisions for state income taxes and differences between the rate of
taxation between the Company's U.S. and international operations.
Net Earnings
Net earnings were $14.2 million ($1.43 per share) in fiscal 1996 compared to
$14.0 million ($1.47 per share) in fiscal 1995. The decrease in net earnings
per share reflects additional shares issued by the Company in conjunction with
the acquisition of Patton.
Liquidity & Capital Resources
The Company generated earnings plus depreciation and amortization of
$20.9 million in fiscal 1997, $22.5 million in fiscal 1996 and $20.6 million
in fiscal 1995. In recent years, the Company has used its operating cash flows
to make significant investments in its business as evidenced by the $83.9
million spent on four acquisitions and the investment of $23.2 million in
plant and equipment during the three years ended June 30, 1997.
Cash provided by operating activities was $19.4 million in fiscal 1997,
$3.7 million in fiscal 1996 and $9.2 million in fiscal 1995. The amount of net
cash provided by operating activities can fluctuate significantly as a result
of changes in accounts receivable and inventory balances.
Investing activities have resulted in a net use of cash during each of the
past three fiscal years due to expenditures for property, plant and equipment
together with acquisitions. Capital expenditures were $12.5 million in fiscal
1997, $5.9 million in fiscal 1996 and $4.9 million in fiscal 1995. The fiscal
1997 expenditures included $3.2 million for the construction of a 200,000
square foot distribution center which was completed in July 1997 at a total
cost of approximately $4.0 million.
(BAR CHART)
Net Earnings
(Millions of Dollars)
1993 10.7
1994 14.3
1995 14.0
1996 14.2
1997 10.7
(BAR CHART)
Dividends per Share
1993 0.00
1994 0.12
1995 0.16
1996 0.20
1997 0.24
(BAR CHART)
Total Assets
(Millions of Dollars)
1993 139.7
1994 151.5
1995 204.4
1996 288.3
1997 298.6
Page 18
<PAGE>
Cash flows from financing activities in fiscal 1997 consisted of $13.2
million in net borrowings under its revolving credit facilities. In fiscal
1996, the Company borrowed $50 million in a private placement under a ten
year, 7.21% unsecured note purchase agreement. The proceeds of the private
placement were used to repay borrowings which had accumulated under a
revolving credit agreement as a result of acquisitions.
The Company's operations require significant amounts of working capital,
particularly during the fall of each year. Sales are on terms which generally
range from 30 days to 75 days, resulting in substantial accounts receivable
balances. Due to the seasonal nature of the business, the Company builds
inventory levels during the spring and summer in anticipation of a heavy
August through November selling season for the kitchen electrics products and
some seasonal home environment items such as humidifiers and heaters.
Historically, inventory levels peak in August. The Company relies on revolving
credit loans to finance these working capital requirements.
As of June 30, 1997, the Company had $88 million in long term debt
(including $4 million current portion) and $85 million in revolving loan
commitments. Revolving credit loans outstanding were $65.1 million as of such
date. The long term debt requires annual principal payments ranging from $4.0
million to $7.0 million over the next five 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%. In addition, the Company is
required to pay a fee of .25% on the unused portion of the commitment.
The term notes and the revolving credit loans include financial covenants
regarding minimum net worth, minimum fixed charge coverage ratios and maximum
leverage ratios. The borrowings under the U.S. revolving credit facility are
required to be $45 million or less for a period of 45 consecutive days each
year. No assets of the Company are pledged to secure any indebtedness.
Management believes that cash generated from operations, together with the
revolving loan commitments will be sufficient to meet its cash requirements
for the foreseeable future.
Inflation
The Company believes that its business is not affected by inflation, except to
the extent the economy in general is affected thereby.
Forward Looking Information
This annual report contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, which may include
statements concerning projection of revenues, income or loss, capital
expenditures, capital structure, or other financial items, statements
regarding the plans and objectives of management for future operations,
statements of future economic performance, statements of the assumptions
underlying or relating to any of the foregoing statements, and other
statements which are other than statements of historical fact.
These statements appear in a number of places in this annual report and
include statements regarding the intent, belief, or current expectations of
the Company's management with respect to (i) the demand and price for the
Company's products and services, (ii) the Company's competitive position,
(iii) the supply and price of materials used by the Company, (iv) the cost and
timing of the completion of new or expanded facilities, or (v) other trends
affecting the Company's financial condition or results of operations.
Statements made throughout this report are based on current estimates of
future events, and the Company has no obligation to update or correct these
estimates.
Readers are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially as a result of these various factors.
(BAR CHART)
Working Capital
(Millions of Dollars)
1993 52.2
1994 60.1
1995 60.3
1996 91.4
1997 84.8
(BAR CHART)
Long-Term Debt
(Millions of Dollars)
1993 50.0
1994 46.0
1995 42.0
1996 88.0
1997 84.0
Page 19
<PAGE>
Consolidated Balance Sheets
(in thousands)
June 30, 1997 1996
- -----------------------------------------------------------------------------
Assets
Current assets:
Cash $ 194 $ 1,503
Accounts receivable (net of allowance for collection
losses and discounts of $2,558 and $2,785 in 1997
and 1996, respectively) 74,663 74,103
Inventories 105,287 102,030
Deferred income tax charges 2,584 1,602
Prepaid expenses 1,375 2,142
-------- --------
Total current assets 184,103 181,380
Property, plant and equipment, net 46,695 40,345
Goodwill 62,314 60,086
Other assets 5,493 6,440
-------- --------
$298,605 $288,251
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable to bank $ 65,075 $ 51,896
Current portion of long-term debt 4,000 4,000
Trade accounts payable 15,477 20,354
Accrued interest 1,979 2,232
Income taxes payable 1,231 197
Other payables and accrued expenses 11,522 11,305
-------- --------
Total current liabilities 99,284 89,984
Long-term debt, less current portion 84,000 88,000
Deferred income taxes and other liabilities 4,931 4,119
Stockholders' equity
Common Stock; $0.01 par value.
Authorized 15,000,000 shares; issued, 9,769,244
in 1997 and 9,755,064 in 1996; outstanding,
9,448,847 in 1997 and 9,729,667 in 1996 98 97
Paid-in capital 45,656 45,488
Foreign currency translation (632) (468)
Treasury stock, at cost (4,438) (310)
Retained earnings 69,706 61,341
-------- --------
Total stockholders' equity 110,390 106,148
-------- --------
Commitments and contingencies $298,605 $288,251
======== ========
See accompanying notes to consolidated financial statements.
Page 20
<PAGE>
Consolidated Statements of Earnings
(in thousands, except per share amounts)
Years ended June 30, 1997 1996 1995
- -----------------------------------------------------------------------------
Net sales $376,465 $313,864 $231,711
Cost of sales 278,455 230,207 168,406
-------- -------- --------
Gross profit 98,010 83,657 63,305
Selling expenses 50,352 39,884 26,019
General and administrative expenses 13,457 10,677 8,442
Restructuring expenses 3,000 - -
Amortization of goodwill and
other intangible assets 3,069 2,432 1,774
-------- -------- --------
Operating income 28,132 30,664 27,070
-------- -------- --------
Other expenses:
Interest expense 10,081 7,117 4,216
Miscellaneous, net 21 295 120
-------- -------- --------
Total other expenses 10,102 7,412 4,336
-------- -------- --------
Earnings before income taxes 18,030 23,252 22,734
Income tax expense 7,345 9,013 8,749
-------- -------- --------
Net earnings $ 10,685 $ 14,239 $ 13,985
======== ======== ========
Weighted average common and
common equivalent shares outstanding 9,895 9,950 9,505
======== ======== ========
Net earnings per share $ 1.08 $ 1.43 $ 1.47
======== ======== ========
See accompanying notes to consolidated financial statements.
Page 21
<PAGE>
<TABLE>
Consolidated Statements of Stockholders' Equity
<CAPTION>
(in thousands, except share amounts)
Foreign Total
Common Paid-In Currency Treasury Retained Stockholders'
Stock Capital Translation Stock Earnings Equity
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance June 30, 1994 $93 $40,176 $(409) $ (310) $36,554 $ 76,104
Common stock issued - 9,370 shares - 43 - - - 43
Foreign currency translation
adjustments - - 14 - - 14
Compensation expense from issuance
of non-qualified stock options,
net of income tax benefit of $18 - 32 - - - 32
Income tax benefit recognized upon
exercise of non-qualified stock
options - 43 - - - 43
Purchase of common stock for
treasury - 427,100 shares - - - (6,824) - (6,824)
Common stock issued relative to the
acquisition of a business -
850,000 shares 4 5,072 - 6,824 - 11,900
Dividends paid - - - - (1,492) (1,492)
Net earnings - - - - 13,985 13,985
----------------------------------------------------------
Balance June 30, 1995 97 45,366 (395) (310) 49,047 93,805
Common stock issued - 14,734 shares - 30 - - - 30
Foreign currency translation
adjustments - - (73) - - (73)
Income tax benefit recognized upon
exercise of non-qualified stock
options - 92 - - - 92
Dividends paid - - - - (1,945) (1,945)
Net earnings - - - - 14,239 14,239
----------------------------------------------------------
Balance June 30, 1996 97 45,488 (468) (310) 61,341 106,148
Common stock issued - 14,180 shares 1 138 - - - 139
Foreign currency translation
adjustments - - (164) - - (164)
Income tax benefit recognized upon
exercise of non-qualified stock
options - 30 - - - 30
Purchase of common stock for
treasury - 295,000 shares - - - (4,128) - (4,128)
Dividends paid - - - - (2,320) (2,320)
Net earnings - - - - 10,685 10,685
----------------------------------------------------------
Balance June 30, 1997 $98 $45,656 $(632) $(4,438) $69,706 $110,390
==========================================================
See accompanying notes to consolidated financial statements.
</TABLE>
Page 22
<PAGE>
Consolidated Statements of Cash Flows
(in thousands)
Years ended June 30, 1997 1996 1995
- -----------------------------------------------------------------------------
Cash Flows From Operating Activities:
Net earnings $10,685 $14,239 $13,985
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 10,246 8,293 6,638
Provision for losses on accounts receivable 986 463 356
Deferred income taxes (432) (402) 260
Other 292 433 75
Changes in assets and liabilities,
net of acquisitions:
Accounts receivable (1,546) (15,101) (2,610)
Inventories 2,499 (3,727) (5,435)
Prepaid expenses 767 455 248
Income taxes 1,034 (380) 171
Accounts payable and accruals (5,103) (567) (4,537)
------- ------- -------
Total adjustments 8,743 (10,533) (4,834)
------- ------- -------
Net cash provided by operating activities 19,428 3,706 9,151
------- ------- -------
Cash Flows From Investing Activities:
Capital expenditures (12,460) (5,873) (4,905)
Acquisition of businesses (10,922) (47,670) (25,269)
Other (61) (619) 329
------- ------- -------
Net cash used in investing activities (23,443) (54,162) (29,845)
------- ------- -------
Cash Flows From Financing Activities:
Borrowings under working capital loans 89,529 122,854 85,627
Repayment of working capital loans (76,350) (115,100) (52,600)
Borrowings under term loan agreements - 50,000 -
Repayment of long-term debt (4,000) (4,000) (4,000)
Net proceeds from issuance of common stock 139 30 43
Dividends paid (2,320) (1,945) (1,492)
Purchase of common stock for treasury (4,128) - (6,824)
------- ------- -------
Net cash provided by financing activities 2,870 51,839 20,754
------- ------- -------
Effect of Exchange Rate Changes on Cash (164) (73) 14
------- ------- -------
Net Increase (Decrease) in Cash (1,309) 1,310 74
Cash at Beginning of Period 1,503 193 119
------- ------- -------
Cash at End of Period $ 194 $ 1,503 $ 193
======= ======= =======
See accompanying notes to consolidated financial statements.
Page 23
<PAGE>
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Operations of The Rival Company and its Subsidiaries
The Rival Company and its subsidiaries ("the Company") design, manufacture and
market small household appliances, personal care appliances, commercial and
industrial fans, ventilation equipment as well as sump, well and utility
pumps. The Company sells its products to retail and industrial customers,
primarily in the U.S. and Canada. The Company's raw materials are readily
available, and the Company is not dependent on any small group of suppliers.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of The Rival
Company and its direct and indirect wholly-owned subsidiaries: Bionaire
Corporation, Bionaire International B.V. ("Bionaire - Europe"), Fasco Consumer
Products, Inc. ("Fasco"), Patton Electric Company, Inc. ("Patton"), Patton
Electric (Hong Kong) Limited ("PEHK"), Rival Consumer Sales Corporation, The
Rival Company of Canada, Ltd. ("Rival-Canada") and Waverly Products Company,
Ltd. All significant intercompany account balances and transactions have been
eliminated in consolidation.
Inventories
Approximately 43% of the Company's inventories are stated at the lower of LIFO
(last-in, first-out method) cost or market at June 30, 1997 (45% at June 30,
1996). The balance of the inventories is stated at the lower of FIFO (first-
in, first-out) cost 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 3 to 10
years on furniture and fixtures as well as machinery and equipment and 10 to
40 years on buildings and improvements.
Goodwill
The excess of the purchase price paid in the 1986 acquisition of the Company
over the estimated fair value of the net assets acquired (goodwill) is being
amortized on a straight-line basis over a period of forty years. The goodwill
resulting from subsequent acquisitions is being amortized on a straight-line
basis over periods ranging from 15 to 30 years. The Company assesses the
recoverability of goodwill and measures impairment, if any, by determining
whether the amortization of the goodwill balance over its remaining life can
be recovered through undiscounted future operating cash flows. Goodwill is
reflected in the accompanying Consolidated Balance Sheets net of accumulated
amortization of $14,448,000 and $12,220,000 at June 30, 1997 and 1996,
respectively.
Other Assets
Other assets include non-compete agreements with an aggregate unamortized
balance of $3.3 million. Such agreements are being amortized on a straight-
line basis over their contractual terms which range from three to eight years.
Income Taxes
The Company and its domestic subsidiaries file a consolidated federal income
tax return.
The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, 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.
Research and Development
Research and development costs are expensed when incurred. Such costs were
$4,477,000 in 1997, $3,136,000 in 1996 and $2,502,000 in 1995.
Self-insurance
The Company maintains a self-insurance program against general and product
liability claims, as well as medical claims and workers' compensation claims,
with excess coverage above the Company's self-insured retention. Provisions
for such claims are accrued based upon the Company's estimate of its aggregate
liability.
Net Sales
The Company recognizes revenue at the time products are shipped to its
customers. Sales to one of the Company's customers were 26%, 26% and 28% of
consolidated net sales for the years ended June 30, 1997, 1996 and 1995,
respectively.
The Company's customer base consists primarily of retailers and
distributors who sell to retailers throughout the United States and Canada. As
such, a significant concentration of the Company's business activity is with
entities whose ability to meet their obligations with the Company is dependent
upon prevailing economic conditions within the retail industry.
Page 24
<PAGE>
Foreign Currency Translation
Assets and liabilities in foreign currencies are translated into dollars at
the rates prevailing at the balance sheet date. Revenues and expenses are
translated at average rates for the year. The net exchange differences
resulting from these translations are reported in stockholders' equity, net of
tax effects.
Fair Value of Financial Instruments
The carrying amount of cash, accounts receivable, notes payable to bank and
trade accounts payable approximates fair value because of the short maturity
of these instruments. The fair value of the Company's long-term debt ($86.8
million at June 30, 1997) was estimated using current interest rates for
similar debt. The carrying amount of long-term debt at June 30, 1997 was $88.0
million. The fair value of the Company's interest rate swap agreement ($0.1
million at June 30, 1997) represents the estimated amount the Company would
pay to settle the swap agreement. The Company has no other derivative
financial instruments.
Net Earnings Per Share
Net earnings per share is computed based upon the weighted average number of
common shares and dilutive common equivalent shares outstanding. Common stock
options, which are common stock equivalents, have a dilutive effect on net
earnings per common share in all periods and are therefore included in the
computation of net earnings per common share.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings Per Share" which revises the calculation and presentation
provisions of Accounting Principles Board Opinion 15 and related
interpretations. Statement No. 128 is effective for the Company's quarter
ending December 31, 1997. Retroactive application will be required. The
Company believes the adoption of Statement No. 128 will not have a significant
effect on its reported earnings per share.
Use of Estimates
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires the Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
amounts.
2. Acquisitions
On January 7, 1997, the Company acquired certain of the assets of Dazey
Corporation. Assets acquired include the inventory, tooling, machinery and
equipment for the production and sale of the kitchen product line of Dazey.
Sales of these products, which will be marketed under the Rival brand name,
are estimated to be approximately $20 million annually and contributed
approximately $6.5 million to the Company's fiscal 1997 consolidated sales.
The Company paid $9.9 million in cash for the assets of Dazey. The
acquisition was accounted for as a purchase and, accordingly, the purchase
price was allocated to the assets acquired and the liabilities assumed based
upon their respective fair values. The allocation of the purchase price to
assets acquired is as follows: inventories - $5.8 million; property, plant and
equipment - $0.9 million and goodwill - $3.4 million. The Company also assumed
liabilities of $0.2 million. The proforma effect of this acquisition on
operating results for prior periods is not material.
On January 2, 1996, the Company acquired 100% of the Common Stock of Fasco
Consumer Products, Inc. ("Fasco"), a Fayetteville, North Carolina manufacturer
of heating, ventilating and other convenience products that are distributed
through wholesale and retail markets with annual sales of approximately $40
million at the date of acquisition. The Company paid $23.5 million in cash for
the stock of Fasco together with a non-compete agreement from the seller and
its affiliates.
On April 3, 1996, the Company, through a wholly-owned Canadian subsidiary,
completed the acquisition of Bionaire, Inc. ("Bionaire"). Bionaire, which had
annual sales of approximately $57 million and was headquartered in Lachine,
Quebec, assembles and markets air purifiers, humidifiers and related
accessories such as replacement filters. The Company paid $25.0 million in
cash for the stock of Bionaire.
The consolidated operating results for the Company for the fiscal years
ended June 30, 1996 and 1995 on a proforma basis as though the Fasco and
Bionaire acquisitions had occurred on July 1, 1994 would be as follows
(in thousands, except per share amounts) (unaudited): net sales - $383,646
and $363,045; net earnings - $14,995 and $17,770; earnings per share - $1.51
and $1.74. The proforma results of operations are not necessarily indicative
of the actual operating results that would have occurred had the acquisitions
been consummated on July 1, 1994 or of future operating results on a combined
basis.
The operating results of Fasco, Bionaire and Dazey have been included in
the consolidated results of the Company since the date of their respective
acquisitions. During fiscal 1996, Fasco and Bionaire contributed $24.5 million
in net sales. Fasco, Bionaire and Dazey contributed a combined $88.6 million
in net sales in fiscal 1997.
Page 25
<PAGE>
3. Inventories
Inventories consist of (in thousands):
at June 30, 1997 1996
- -----------------------------------------------------------------------------
Raw materials and work in process $ 52,933 $ 42,470
Finished goods 57,794 64,103
-------- --------
110,727 106,573
Valuation to LIFO (5,440) (4,543)
-------- --------
$105,287 $102,030
======== ========
If LIFO inventories had been stated at the lower of FIFO cost or market,
earnings before income taxes would have been $897,000, $761,000 and $544,000
higher for the years ended June 30, 1997, 1996 and 1995, respectively.
4. Property, Plant and Equipment
Property, plant and equipment is summarized as follows (in thousands):
at June 30, 1997 1996
- -----------------------------------------------------------------------------
Land $ 1,125 $ 958
Buildings and improvements 23,993 19,601
Machinery and equipment 50,832 44,247
Furniture and fixtures 6,392 5,248
------- -------
82,342 70,054
Less accumulated depreciation (35,647) (29,709)
------- -------
$46,695 $40,345
======= =======
5. Notes Payable and Long-Term Debt
On April 15, 1996, the Company entered into a $75 million unsecured revolving
line of credit with a group of banks (the "Revolving Credit Facility").
Borrowings under the Revolving Credit Facility bear interest at floating rates
determined at the Company's option to be LIBOR plus .75% or prime. In
addition, the Company is required to pay a fee of .25% per annum on the unused
portion of the commitment. At June 30, 1997, $55.3 million was outstanding
under the Revolving Credit Facility. Rival-Canada also has a revolving credit
facility through a Canadian bank for the Canadian Dollar equivalent of U.S.
$10 million. As of June 30, 1997, U.S. $9.8 million was outstanding under the
credit line.
On April 19, 1996, the Company sold $50 million in unsecured notes in a
private placement. The notes bear interest at a rate of 7.21%, and have a
final maturity in 2008. In conjunction with the sale of these notes, the
Company entered into a twelve year interest rate swap transaction with Bank of
America, N.A. in the notional amount of $25 million. The effect of the swap
transaction was to convert the interest payment stream on $25 million of the
notes to a variable rate which is approximately 0.45% above the prevailing six
month LIBOR rate. Income or expense associated with the interest rate swap
agreement is recognized on the accrual basis as an adjustment to interest
expense.
On July 23, 1993, the Company sold $50 million in unsecured notes in a
private placement. These notes bear interest at a per annum rate of 6.42%
which is paid semiannually and have a final maturity in 2003. The balance
outstanding on June 30, 1997 was $38.0 million.
Installment payments on the long-term debt for the next five fiscal years
are as follows: 1998, $4,000,000; 1999, $6,000,000; 2000, $7,000,000; 2001,
$7,000,000; 2002, $7,000,000.
The unsecured notes and the Revolving Credit Facility include financial
covenants regarding minimum net worth, minimum fixed charge coverage ratio and
maximum leverage ratios. At June 30, 1997, the Company had $15.7 million in
unrestricted retained earnings available for future dividends.
The year-end interest rate (exclusive of commitment fees) on working
capital loans under the Revolving Credit Facility was 6.13% and 6.31% at June
30, 1997 and 1996, respectively.
Total interest paid on all indebtedness during the years ended June 30,
1997, 1996 and 1995 was $10,334,000, $6,373,000 and $4,189,000, respectively.
Page 26
<PAGE>
6. Income Taxes
Income tax expense (benefit) is comprised of the following (in thousands):
Years ended June 30, 1997 1996 1995
- -----------------------------------------------------------------------------
Current:
Federal $6,690 $9,356 $7,629
State and local 640 549 811
Foreign 447 (490) 49
------ ------ ------
Total current tax expense 7,777 9,415 8,489
Deferred tax expense (benefit) (432) (402) 260
------ ------ ------
Total income tax expense $7,345 $9,013 $8,749
====== ====== ======
The tax effects of temporary differences that result in deferred assets and
(liabilities) are presented below (in thousands). There were no valuation
allowances provided for deferred tax assets.
at June 30, 1997 1996
- -----------------------------------------------------------------------------
Depreciation $(3,887) $(3,516)
Inventory (1,297) (1,436)
Pension plan costs (392) (469)
------- -------
Total deferred tax liabilities (5,576) (5,421)
------- -------
Bad debts 416 461
Reserves not currently deductible 2,157 1,876
Carryforward of Canadian income tax benefit 1,014 500
Other 245 408
------- -------
Total deferred tax assets 3,832 3,245
------- -------
Net deferred tax liabilities $(1,744) $(2,176)
======= =======
A reconciliation of the U.S. statutory rates to the Company's effective tax
rates is as follows:
Years ended June 30, 1997 1996 1995
- -----------------------------------------------------------------------------
Income tax expense at statutory rate 35.0% 35.0% 35.0%
State income tax expense net of
federal income tax benefit 2.3 1.5 2.4
Amortization of goodwill 2.9 1.8 1.7
Other .5 .5 (.6)
----- ----- -----
Effective tax rate 40.7% 38.8% 38.5%
===== ===== =====
Total income taxes paid, net of refunds, during the years ended June 30,
1997, 1996 and 1995 was $6,140,000, $9,703,000 and $8,275,000, respectively.
The Company has foreign investment tax credits approximating $1,300,000 and
domestic and foreign net operating loss carryforwards approximating $1,500,000
and $3,400,000, respectively, with respect to its acquisition of Bionaire.
Utilization of these carryforwards is subject to limitation and such
carryforwards expire starting in 2011 for domestic and 2001 for foreign.
7. Pension and Retirement Plans
The Company has noncontributory defined benefit pension and retirement plans
covering salaried and certain hourly employees. The components of the net
periodic pension cost of the plans are as follows (in thousands):
Years ended June 30, 1997 1996 1995
- -----------------------------------------------------------------------------
Service cost-benefits earned during the period $ 663 $ 566 $ 535
Interest cost on projected benefit obligation 879 826 765
Actual return on plan assets (1,416) (2,528) (936)
Net amortization and deferral 286 1,631 128
------- ------- -------
Net periodic pension expense $ 412 $ 495 $ 492
======= ======= =======
Page 27
<PAGE>
The following table sets forth the plans' funded status and the amounts
included in the Company's Consolidated Balance Sheets (in thousands):
at June 30, 1997 1996
- -----------------------------------------------------------------------------
Actuarial present value of accumulated benefit obligations:
Vested $10,529 $ 9,536
Non-vested 776 771
------- -------
Accumulated benefit obligation 11,305 10,307
Excess of projected benefit obligation over accumulated
benefit obligation 1,693 1,655
------- -------
Projected benefit obligation 12,998 11,962
======= =======
Fair value of plan assets 15,146 13,959
======= =======
Plan assets in excess of projected benefit obligation 2,148 1,997
Unrecognized net (gain) loss (980) (635)
Unrecognized prior service cost 700 231
Unrecognized net transition asset (amortized over 22 years) (936) (1,025)
------- -------
Prepaid pension cost $ 932 $ 568
======= =======
As of June 30, 1997, approximately 10% of pension plan assets were invested
in cash equivalents, 34% were invested in an intermediate term bond fund which
consisted primarily of U.S. Government obligations and 56% were invested in
common stocks. Significant pension plan assumptions are as follows:
Years ended June 30, 1997 1996 1995
- -----------------------------------------------------------------------------
Discount rate 7.50% 7.50% 7.50%
Expected long-term rate of return on plan assets 8.00% 8.00% 8.25%
Salary increase rate 4.50% 4.50% 4.50%
The Company has a Savings Plan (401K) which allows employees to make
voluntary contributions of up to 15% of annual compensation, as defined. The
Company makes partial matching contributions which were $119,000, $95,000 and
$71,000 for the years ended June 30, 1997, 1996 and 1995, respectively.
The Company does not provide any postretirement benefits other than
pensions.
8. Leases
The Company maintains operating leases on equipment, warehouse and office
properties. Rental expense under such leases amounted to $1,800,000, $790,000
and $406,000 for the years ended June 30, 1997, 1996 and 1995, respectively.
Future rental commitments under noncancellable operating leases with a
remaining term in excess of one year at June 30, 1997 are as follows: 1998,
$1,360,000; 1999, $1,328,000; 2000, $1,235,000; 2001, $757,000; 2002,
$724,000; thereafter, $1,936,000.
9. Compensation Arrangements
The 1994 Stock Option Plan provides for the granting of options to purchase
700,000 shares of common stock. Additionally, the 1986 Stock Option Plan
provided for the granting of options to purchase 742,000 shares of common
stock. Options granted under the plans may be either incentive stock options
or nonqualified stock options and have terms of ten years. The option price
for incentive stock options under the plans is to be the greater of par value
or fair market value on the date of grant. The option price for nonqualified
stock options under the plans is to be determined by the Company's Board of
Directors, but may not be less than par value. At the end of each year
following the date of grant, 25% of the options become exercisable, with
accumulation privileges.
The Company accounts for the stock options in accordance with the
provisions of Accounting Principles Board (APB) Opinion No. 25, "Accounting
for Stock Issued to Employees", and related interpretations. As such,
compensation expense is recorded on the date of grant only if the current
market price of the underlying stock exceeds the exercise price. On June 30,
1997, the Company adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (FAS 123), which permits entities to
recognize as expense over the vesting period the fair value of all stock-based
awards on the date of grant. Alternatively, FAS 123 allows entities to
continue to apply the provisions of APB Opinion No. 25 and provide pro forma
net earnings and pro forma earnings per share disclosures for employee stock
option grants made in 1996 and future years as if the fair-value-based method
defined in FAS 123 had been applied.
Page 28
<PAGE>
The Company has elected to continue to apply the provisions of APB Opinion No.
25 and provide the pro forma disclosure provisions of FAS 123.
A combined summary of the status of the Company's two fixed stock option
plans at the end of 1997, 1996 and 1995, and changes during these years is
presented below:
1997 1996 1995
- ------------------------------------------------------------------------------
Weighted- Weighted- Weighted-
Number average Number average Number average
of exercise of exercise of exercise
Fixed options shares price shares price shares price
- ------------------------------------------------------------------------------
Outstanding at
beginning of year 687,821 15.07 537,555 11.98 421,825 10.57
Granted 202,100 14.73 177,000 23.87 137,800 16.23
Exercised (14,180) 9.71 (14,734) 2.05 (9,370) 4.67
Forfeited (47,650) 21.00 (12,000) 19.22 (12,700) 16.76
- ------------------------------------------------------------------------------
Outstanding at
end of year 828,091 14.74 687,821 15.07 537,555 11.98
======= ======= =======
Options exercisable
at year end 435,579 319,161 232,130
======= ======= =======
The following table summarizes information about fixed stock options
outstanding at June 30,1997.
<TABLE>
<CAPTION>
Options Outstanding Options exercisable
- ----------------------------------------------------------------- -------------------------------
Range of Number Weighted-average Number
exercise outstanding remaining Weighted-average exercisable Weighted-average
prices at 6/30/97 contractual life price at 6/30/97 exercise price
- ----------------------------------------------------------------- ------------------------------
(in years)
<C> <C> <C> <C> <C> <C>
$0.19 102,741 2.6 $ 0.19 102,741 $ 0.19
$11.125 - 16.00 459,900 7.7 13.46 218,375 12.50
$19.50 - 25.625 265,450 8.0 22.59 114,463 21.62
- ----------------------------------------------------------------- ------------------------------
Total 828,091 7.0 $14.74 435,579 $11.99
=============================================== ==============================
</TABLE>
The per share weighted-average fair value of stock options granted during
1997 and 1996 was $5.87 and $7.33, respectively, on the date of grant using
the Black Scholes option-pricing model with the following assumptions:
expected dividend yield of 1.83% and 1.82% for 1997 and 1996, respectively;
weighted average risk-free interest rate of 6.50%, expected volatility factor
of 30.83% and 17.28% for 1997 and 1996, respectively; and a weighted-average
expected life of eight years.
Since the Company applies APB Opinion No. 25 in accounting for its plans,
no compensation expense has been recognized for its stock options in the
financial statements. Had the Company recorded compensation expense based on
the fair value at the grant date for its stock options under FAS 123, the
Company's net earnings and earnings per share would have been reduced by
approximately $582,000 or $0.06 per share in 1997 and approximately $414,000
or $0.04 per share in 1996. Pro forma net earnings reflect only options
granted during 1997 and 1996. Therefore, the full impact of calculating
compensation expense for stock options under FAS 123 is not reflected in the
pro forma net earnings amounts presented above, because compensation expense
is reflected over the options' vesting period of four years for the 1996 and
1997 options. Compensation expense for options granted prior to July 1, 1995
is not considered.
The Company provides an incentive compensation plan for certain members of
management. Bonuses under the plan are computed based upon actual earnings
from operations compared to budgeted earnings from operations. Bonuses under
the plan were $392,000 for 1997, $750,000 for 1996 and $450,000 for 1995.
10. Restructuring Charge
A restructuring charge of $3.0 million was recognized in fiscal 1997 as a
result of the decision to close the Montreal, Canada production and shipping
facility together with the consolidation of certain Canadian administrative
functions. The Montreal facility was acquired as part of the Bionaire
acquisition in April 1996.
The charge consisted of: 1) estimated cash expenditures for employee
termination costs of approximately $0.5 million, including severance pay and
related benefits for approximately 100 people. 2) estimated future leasehold
costs in excess of projected rentals to be received from subleasing the
facility through June 2000 of approximately $2.5 million.
The following table reflects the activity recorded for the charge in fiscal
1997 (in thousands):
Employee Lease
Severance Termination Total
- -----------------------------------------------------------------------------
Reserve established $ 500 $2,500 $3,000
Cash payments (331) (457) (788)
------ ------ ------
Reserve remaining at June 30, 1997 $ 169 $2,043 $2,212
====== ====== ======
Page 29
<PAGE>
11. Contingencies
The Company is party to various product liability lawsuits relating to its
products and incidental to its business. The Company believes that many of the
personal injury and damage claims brought against it arise from the misuse or
misapplication of the Company's products and rarely involve manufacturing
defects. In such cases, the Company vigorously defends against such actions.
Historically, product liability awards have rarely exceeded the Company's
individual per occurrence self-insured retention. There can be no assurance,
however, that the Company's future product liability experience will be
consistent with its past experience. The Company believes that the ultimate
conclusion of the various pending claims and lawsuits of the Company will not
have a material adverse effect on the consolidated financial statements of the
Company.
12. Business Segments
The Rival Company manages its operations through four business units: kitchen
electrics and personal care ("kitchen electrics"), home environment,
industrial and building supply ("industrial") and international. The kitchen
electrics business unit sells products including Crock-Pot (REGISTERED
TRADEMARK) slow cookers, toasters, ice cream freezers, can openers and
massagers to retailers throughout the U.S. The home environment business unit
sells products including fans, air purifiers, humidifiers, electric space
heaters, utility pumps and household ventilation to retailers throughout the
U.S. The industrial group sells products including industrial fans and drum
blowers, household ventilation, ceiling fans, door chimes and electric heaters
to electrical and industrial wholesale distributors throughout the U.S. The
international business unit sells the Company's products outside the U.S.
The Company is reporting business segment information in accordance with
the provisions of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" which was issued in June
1997. Prior to a series of acquisitions which occurred between April 1995 and
April 1996, the Company had only one business segment. Because of the
broadening of the product line and the diversification of the customer base
which resulted from these acquisitions, the Company began to manage its
operations using the business unit approach in fiscal 1997. Prior year
business unit information is not reported, as it would be impracticable to
create such information.
The Rival Company evaluates performance based upon contribution margin,
which it defines as gross margin less selling expenses. Administrative
functions such as finance and management information systems are centralized
and are not allocated to the business units. The various business units share
manufacturing and distribution facilities. Costs of operating the
manufacturing plants are allocated to the business units through full-
absorption standard costing and distribution costs are allocated based upon
volume shipped from each distribution center. Because the Company's property,
plant and equipment are not allocable to the business units, only inventory
and accounts receivable are included in the segment assets as reported herein.
Cost of sales consists of the standard cost of production together with an
allocation of any manufacturing and other cost variances. There are no
transfers of product or intercompany profits recognized between segments as
the manufacturing and purchasing functions serve all business units.
Summary financial information for each reportable segment, together with
non-business unit results consisting of sales directly to consumers, for
fiscal 1997 is as follows (in thousands):
<TABLE>
<CAPTION>
Kitchen Home
Electrics Environment Industrial International Other Total
-------- -------- ------- ------- ------ --------
<C> <C> <C> <C> <C> <C> <C>
Net sales $188,803 $116,485 $30,750 $35,825 $4,602 $376,465
Gross profit 49,985 25,384 8,093 11,632 2,916 98,010
Selling expenses 20,217 14,462 8,506 5,858 1,309 50,352
Contribution margin 29,768 10,922 (413) 5,774 1,607 47,658
Inventory 45,221 41,154 12,535 6,377 - 105,287
Accounts receivable 38,049 27,079 7,529 2,006 - 74,663
</TABLE>
Revenues and non-current assets by geographic region as of June 30, 1997
are as follows (in thousands):
Latin America
United States Canada Europe and Other Total
-------- ------- ------ ------ --------
Revenues $340,640 $22,419 $9,531 $3,875 $376,465
Non-current assets 109,501 3,152 1,849 - $114,502
Page 30
<PAGE>
13. Unaudited Quarterly Financial Data
Unaudited quarterly financial data is as follows (amounts in thousands except
per share amounts):
Fiscal 1997 Sept. 1996 Dec. 1996 March 1997 June 1997
- ------------------------------------------------------------------------
Net sales $99,650 $121,566 $74,828 $80,421
Gross profit 28,583 35,046 14,340 20,041
Operating income 11,228 16,682 (4,153) 4,375
Net earnings $ 5,276 $ 8,594 $(4,338) $ 1,153
======= ======== ======= =======
Net earnings per share $ 0.53 $ 0.86 $ (0.44) $ 0.12
======= ======== ======= =======
Fiscal 1996 Sept. 1995 Dec. 1995 March 1996 June 1996
- ------------------------------------------------------------------------
Net sales $73,897 $ 97,450 $61,916 $80,601
Gross profit 21,416 27,310 16,658 18,273
Operating income 9,826 13,982 4,432 2,424
Net earnings $ 5,093 $ 7,456 $ 1,572 $ 118
======= ======== ======= =======
Net earnings per share $ 0.51 $ 0.75 $ 0.16 $ 0.01
======= ======== ======= =======
Independent Auditors' Report
The Board of Directors and Stockholders
The Rival Company:
We have audited the accompanying consolidated balance sheets of The Rival
Company and subsidiaries as of June 30, 1997 and 1996 and the related
consolidated statements of earnings, stockholders' equity and cash flows for
each of the years in the three-year period ended June 30, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits 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 audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The Rival
Company and subsidiaries as of June 30, 1997 and 1996, and the results of
their operations and their cash flows for each of the years in the three-year
period ended June 30, 1997, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Kansas City, Missouri
August 4, 1997
Page 31
<PAGE>
Investor Information
Corporate Headquarters
800 East 101st Terrace
Kansas City, Missouri 64131
(816) 943-4100
SEC Form 10-K
Stockholders may receive a copy of the Company's 1997 Annual Report to the
Securities and Exchange Commission on Form 10-K free of charge by writing to
the Office of the Secretary.
Annual Meeting
The 1997 annual meeting of shareholders will be held at 9:00 a.m., Central
Standard time, on Tuesday, November 4, 1997, at the Doubletree Hotel, 10100
College Boulevard, Overland Park, Kansas. Formal notice of the meeting, a
proxy statement and proxy form will be mailed separately to all shareholders
of record at the close of business on September 5, 1997. Management urges all
shareholders to vote their proxies and thus participate in the decisions that
will be made at this meeting.
Registrar & Transfer Agent
UMB bank, N.A., P.O. Box 410064
Kansas City, MO 64141
For change of name, address, or to replace lost stock certificates, write the
UMB bank, N.A. at the above address, or phone: (816) 860-7445.
Independent Auditors
KPMG Peat Marwick LLP
1600 Commerce Bank Building
Kansas City, MO 64106
Security Analyst Contact
Security analyst inquiries are welcome.
Please direct them to Mr. W. Mark Meierhoffer,
Senior Vice President - Finance and Administration at 816-943-4100.
Common Stock Price Range
The Common Stock of The Rival Company is traded on The Nasdaq stock market
under the symbol RIVL. Stock price quotations can be found in major daily
newspapers and in The Wall Street Journal.
The Rival Company made its initial public offering of common stock at a
price of $10.50 per share on June 2, 1992. The following table shows the range
of high and low sales prices of the Company's common stock for fiscal 1997 and
1996.
Fiscal 1997 High Low
- ---------------------------------------------------------------------------
First Quarter ended September 30 $23.25 $17.75
Second Quarter ended December 31 24.88 21.25
Third Quarter ended March 31 24.31 21.00
Fourth Quarter ended June 30 21.88 13.50
Fiscal 1996 High Low
- ---------------------------------------------------------------------------
First Quarter ended September 30 $20.25 $14.25
Second Quarter ended December 31 23.00 19.25
Third Quarter ended March 31 24.25 20.50
Fourth Quarter ended June 30 25.75 22.25
At June 30, 1997, there were 9,448,847 shares outstanding and 213
stockholders of record. A substantial number of shares of common stock are
held in "street name." The number of individual stockholders is believed to be
approximately 3,500.
Dividends
The Board of Directors approved a quarterly dividend of $0.06 per share
payable in September 1997. Future dividend payments are subject to approval of
the Board of Directors. The Company paid dividends of $0.24 per share in
fiscal 1997 and $0.20 per share in fiscal 1996.
Page 32
<PAGE>
Directors and Executive Officers
Board of Directors
Thomas K. Manning (1),
Chairman of the Board and Chief Executive Officer
William L. Yager,
President and Chief Operating Officer
William S. Endres,
Senior Vice President-Sales and Marketing
Darrel M. Sanders,
Senior Vice President-Operations
Jack J. Culberg (1),
Investor and former Chairman of the Board of The Rival Company
Todd Goodwin (1, 2),
Partner, Gibbons Goodwin van Amerongen, Investment bankers
John E. Grimm III (2),
Chairman and Chief Executive Officer, Midbrook, Inc., Consultants
Lanny R. Julian (2, 3),
President, DONLAN Marketing Group, L.L.C., a marketing consulting company
Noel Thomas Patton (3),
Investor and former owner of Patton Electric Company, Inc.
Beatrice Smith, Ph.D. (1, 3),
Dean, College of Human Environmental Sciences, University of Missouri -
Columbia
1 - Member, Executive Committee, 2 - Member, Compensation and Stock Option
Committee, 3 - Member, Audit Committee
Officers
Thomas K. Manning,
Chairman of the Board and Chief Executive Officer
William L. Yager,
President and Chief Operating Officer
William S. Endres,
Senior Vice President-Sales and Marketing
W. Mark Meierhoffer,
Senior Vice President-Finance and Administration
Darrel M. Sanders,
Senior Vice President-Operations
Neal Bastick,
Vice President-International Sales
Stanley D. Biggs, Vice President,
Treasurer and Corporate Secretary
Gerald E. Byle,
Vice President-Canadian Sales
Scott Royal-Ferris,
Vice President-Kitchen Electrics Sales
Sidney W. Hose,
Vice President-Home Environment Sales
James Houchen,
Vice President-Materials Management
A. Aykut Ozgunay,
Vice President-Engineering
Jon K. Patterson,
Vice President-Management Information Systems
Michael A. Pignataro,
Vice President-Industrial Sales
Mark S. Sesler,
Vice President-Marketing
Trademarks
Trademarks of The Rival Company mentioned in this Annual Report include Rival,
Rival Select, Simer, Pollenex, Patton, Bionaire, Crock-Pot, Crock Grill,
Potpourri Crock and White Mountain.
(COPYRIGHT) The Rival Company 1997
Page 33
Exhibit 21
THE RIVAL COMPANY
List of Subsidiaries
Bionaire Corporation
Bionaire France
Bionaire International B.V.
Fasco Consumer Products, Inc.
Patton Electric Company, Inc.
Patton Electric (Hong Kong) Limited
Rival Consumer Sales Corporation
The Rival Company of Canada, Ltd.
Waverly Products Company, Ltd.
Exhibit 23
INDEPENDENT AUDITORS' REPORT ON FINANCIAL
STATEMENT SCHEDULE AND CONSENT
The Board of Directors
The Rival Company:
The audits referred to in our report dated August 4, 1997 included the related
financial statement schedule for each of the years in the three-year period
ended June 30, 1997, included in the 1997 annual report on Form 10-K. This
financial statement schedule is the responsibility of The Rival Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits. In our opinion such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
We consent to incorporation by reference in the registration statement (No.
33-69392) on Form S-8 of The Rival Company of the above report and our report
dated August 4, 1997 relating to the consolidated balance sheets of The Rival
Company and subsidiaries as of June 30, 1997 and 1996, and the related
consolidated statements of earnings, stockholders' equity and cash flows for
each of the years in the three-year period ended June 30, 1997, which report
is incorporated by reference in the June 30, 1997 annual report on Form 10-K
of The Rival Company.
Kansas City, Missouri /s/ KPMG Peat Marwick, LLP
--------------------------
September 2, 1997 KPMG Peat Marwick, LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-K
for the year ended 6/30/97 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1996
<PERIOD-START> JUL-01-1996 JUL-01-1995
<PERIOD-END> JUN-30-1997 JUN-30-1996
<CASH> 194 1,503
<SECURITIES> 0 0
<RECEIVABLES> 77,221 76,888
<ALLOWANCES> 2,558 2,785
<INVENTORY> 105,287 102,030
<CURRENT-ASSETS> 184,103 181,380
<PP&E> 82,342 70,054
<DEPRECIATION> 35,647 29,709
<TOTAL-ASSETS> 298,605 288,251
<CURRENT-LIABILITIES> 99,284 89,984
<BONDS> 84,000 88,000
0 0
0 0
<COMMON> 98 97
<OTHER-SE> 110,292 106,051
<TOTAL-LIABILITY-AND-EQUITY> 298,605 288,251
<SALES> 376,465 313,864
<TOTAL-REVENUES> 376,465 313,864
<CGS> 278,455 230,207
<TOTAL-COSTS> 278,455 230,207
<OTHER-EXPENSES> 69,878 52,993
<LOSS-PROVISION> 986 463
<INTEREST-EXPENSE> 10,081 7,117
<INCOME-PRETAX> 18,030 23,252
<INCOME-TAX> 7,345 9,013
<INCOME-CONTINUING> 10,685 14,239
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 10,685 14,239
<EPS-PRIMARY> 1.08 1.43
<EPS-DILUTED> 1.08 1.43
</TABLE>
