<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to _______________________
Commission file number 0-20274
THE RIVAL COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-0794462
- ---------------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
800 E. 101st Terrace, Kansas City, MO 64131
- ---------------------------------------- -------------------------------
(Address of principal executive offices) (Zip Code)
(816) 943-4100
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
(l) Yes X No
----- -----
(2) Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
As of December 31, 1996, the registrant had 9,737,757 shares
of common stock, par value $.01 per share, outstanding.
<PAGE>
THE RIVAL COMPANY
FORM 10-Q
QUARTER ENDED DECEMBER 31, 1996
INDEX
PART I. - FINANCIAL INFORMATION Page
ITEM 1. Financial Statements
(1) Condensed Consolidated Financial Statements (unaudited):
Condensed Consolidated Balance Sheets as of December 31,
1996, December 31, 1995 and June 30, 1996. 3
Condensed Consolidated Statements of Earnings for the three
months and six months ended December 31, 1996 and 1995. 4
Condensed Consolidated Statements of Cash Flows for the
six months ended December 31, 1996 and 1995. 5
(2) Notes to Condensed Consolidated Financial Statements. 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 7
PART II. - OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders 8
ITEM 6. Exhibits and Reports on Form 8-K 9
2
<PAGE>
PART I - FINANCIAL INFORMATION
THE RIVAL COMPANY AND SUBSIDIARIES
-----------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995 and June 30, 1996
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
12/31/96 12/31/95 6/30/96
-------- -------- -------
<S> <C> <C> <C>
ASSETS
Currents assets:
Cash $ 1,332 $ 461 $ 1,503
Accounts receivable 98,439 86,612 74,103
Inventories 106,601 74,092 102,030
Deferred income taxes 1,602 860 1,602
Prepaid expenses 2,231 621 2,142
-------- -------- -------
Total current assets 210,205 162,646 181,380
Property, plant and equipment, net 41,757 27,096 40,345
Goodwill 59,029 47,374 60,086
Other assets 5,731 2,784 6,440
-------- -------- -------
$316,722 $239,900 $288,251
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 65,116 $ 53,900 $ 51,896
Current portion of long-term debt 4,000 4,000 4,000
Trade accounts payable 18,152 17,209 20,354
Income taxes payable 4,380 3,020 197
Other payables and accrued expenses 13,895 11,718 13,537
-------- -------- --------
Total current liabilities 105,543 89,847 89,984
Long-term debt, less current portion 88,000 42,000 88,000
Deferred income taxes and other
liabilities 4,257 2,598 4,119
Stockholders' equity:
Common stock 98 97 97
Paid-in capital 45,577 45,368 45,488
Retained earnings 74,043 60,625 61,341
Treasury stock, at cost (310) (310) (310)
Foreign currency translation
adjustments (486) (325) (468)
-------- -------- --------
Total stockholders' equity 118,922 105,455 106,148
-------- -------- --------
$316,722 $239,900 $288,251
======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
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THE RIVAL COMPANY AND SUBSIDIARIES
------------------------
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three months and six months ended December 31, 1996 and December 31, 1995
(amounts in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
------------------ -------------------
12/31/96 12/31/95 12/31/96 12/31/95
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $121,566 $ 97,450 $221,216 $171,347
Cost of sales 86,520 70,140 157,587 122,621
-------- -------- -------- --------
Gross profit 35,046 27,310 63,629 48,726
Selling expenses 14,205 9,987 27,514 18,573
General and administrative expenses 3,411 2,843 6,717 5,350
Amortization of goodwill
and other intangible assets 748 498 1,488 995
-------- -------- -------- --------
Operating income 16,682 13,982 27,910 23,808
Interest expense 2,739 1,684 5,230 3,160
Other (income) expense, net 12 133 (6) 144
-------- -------- -------- --------
Earnings before income taxes 13,931 12,165 22,686 20,504
Income tax expense 5,337 4,709 8,816 7,955
-------- -------- -------- --------
Net earnings $ 8,594 $ 7,456 $ 13,870 $ 12,549
======== ======== ======== ========
Weighted average common and
common equivalent shares
outstanding 9,973 9,941 9,961 9,931
======== ======== ======== ========
Net earnings per common share $ 0.86 $ 0.75 $ 1.39 $ 1.26
======== ======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
THE RIVAL COMPANY AND SUBSIDIARIES
-----------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended December 31, 1996 and December 31, 1995
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six months ended
------------------
12/31/96 12/31/95
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 13,870 $ 12,549
Adjustments to reconcile net earnings to
net cash used by operating activities:
Depreciation and amortization 5,223 3,576
Other 138 (15)
Changes in assets and liabilities:
Accounts receivable (24,336) (43,120)
Inventories (4,571) 7,012
Prepaid expenses (89) 214
Accounts payable and accruals (1,844) 4,940
Income taxes payable 4,183 2,443
-------- --------
Net cash used by operating activities (7,426) (12,401)
-------- --------
Cash flows from investing activities:
Capital expenditures (5,065) (2,510)
Other 178 (105)
-------- --------
Net cash used by investing activities (4,887) (2,615)
-------- --------
Cash flows from financing activities:
Net borrowings under working capital loans 13,220 16,273
Dividends paid (1,168) (971)
Other 90 (18)
-------- --------
Net cash provided by financing activities 12,142 15,284
-------- --------
Net increase (decrease) in cash (171) 268
Cash at beginning of period 1,503 193
-------- --------
Cash at end of period $ 1,332 $ 461
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
THE RIVAL COMPANY AND SUBSIDIARIES
-----------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended December 31, 1996 and December 31, 1995
Note 1
- ------
In the opinion of Management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting of normal recurring
accruals) considered necessary to present fairly the financial position of the
Company as of December 31, 1996 and 1995 and the results of its operations and
its cash flows for the six months ended December 31, 1996 and 1995. The June
30, 1996, condensed consolidated balance sheet has been derived from the audited
consolidated financial statements as of that date. These financial statements
have been prepared in accordance with the instructions to Form 10-Q. To the
extent that information and footnotes required by generally accepted accounting
principles for complete financial statements are contained in or consistent with
the audited consolidated financial statements incorporated by reference in the
Company's Form 10-K for the year ended June 30, 1996, such information and
footnotes have not been duplicated herein.
Note 2
- ------
The results of operations for the six months ended December 31, are not
indicative of the results to be expected for the full year due to the seasonal
nature of the Company's operations.
Note 3 Inventories
- ------------------
The following is a summary of inventories at December 31, 1996 and 1995 and June
30, 1996 (in thousands):
<TABLE>
<CAPTION>
Dec. 31, 1996 Dec. 31, 1995 June 30, 1996
------------- ------------- -------------
<S> <C> <C> <C>
Raw Materials and
work in progress $ 44,069 $ 31,009 $ 42,470
Finished goods 67,525 47,815 64,103
-------- -------- --------
111,594 78,824 106,573
Less LIFO allowance (4,993) (4,732) (4,543)
-------- -------- --------
$106,601 $ 74,092 $102,030
======== ======== ========
</TABLE>
Note 4 Subsequent Event
- -----------------------
On January 7, 1997, the Company acquired certain assets including inventory,
equipment and tooling necessary for the production of the kitchen electrics
product line from Dazey Corporation. These products will be manufactured in the
Company's Sedalia plant and are expected to generate annual sales of
approximately $20 million to $25 million. The Dazey products will be sold under
the Rival brand name and include fryers, combination cookers, skillets, indoor
grills and waffle makers.
The Company paid approximately $10.4 million in cash as consideration for the
assets. The source of funds used by the Company to effect the acquisition was
borrowings under its revolving credit facility. The acquisition will be
accounted for as a purchase and, accordingly, the purchase price will be
allocated to the assets acquired based upon their respective fair values.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Net sales were $121.6 million in the quarter ended December 31, 1996 compared to
$97.5 million in the prior year. For the six months ended December 31, 1996,
sales were $221.2 million compared to $171.3 million in the prior year. The
sales increase was the result of Fasco products (acquired in January 1996) and
Bionaire products (acquired in April 1996) as sales of the Company's other
products were essentially flat.
Net sales by business unit were as follows (in millions):
<TABLE>
<CAPTION>
Three months ended Six months ended
------------------- -------------------
12/31/96 12/31/95 12/31/96 12/31/95
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Kitchen Electrics and Personal Care $ 68.6 $71.8 $118.4 $116.5
Home Environment 32.3 21.4 65.3 42.6
Industrial/Building Supply 6.6 .8 16.3 6.1
International 14.1 3.5 21.2 6.1
------ ----- ------ ------
$121.6 $97.5 $221.2 $171.3
====== ===== ====== ======
</TABLE>
Gross profit was $35.0 million (28.8% of sales) for the quarter ended December
31, 1996 compared to $27.3 million (28.0% of sales) in the prior year. For the
first six months of the current fiscal year, gross profit was $63.6 million
(28.8% of sales) compared to $48.7 million (28.4% of sales) in the prior year.
Raw material prices have stabilized and, as a result, modest price increases
implemented in the past eighteen months have improved margins slightly.
Selling expenses were $14.2 million (11.7% of sales) for the quarter ended
December 31, 1996 compared to $10.0 million (10.2% of sales) in the prior year.
For the six months ended December 31, 1996 such expenses were $27.5 million
(12.4% of sales) compared to $18.6 million (10.8% of sales) in the prior year.
The higher selling expenses as a percentage of sales is the result of expenses
related to the international and industrial business units. Although the
Company expects to reduce selling expenses of these business units as a
percentage of sales over the next twelve months, they will likely continue to be
higher than the Company's kitchen electrics and home environment business units.
General and administrative expenses were $3.4 million for the December 1996
quarter compared to $2.8 million in the prior year. For the six months ended
December 31, 1996, general and administrative expenses were $6.7 million
compared to $5.4 million in the prior year. The higher expenses reflect
increases in product engineering as well as management and support personnel
required because of recent and expected future growth. General and
administrative expenses declined slightly as a percentage of sales.
Interest expense was $5.2 million for the six months ended December 31, 1996
compared to $3.2 million in the prior year as a result of higher borrowings
required to finance recent acquisitions. Average interest rates were also
slightly higher.
Net earnings for the quarter ended December 31, 1996 were $8.6 million ($0.86
per share) compared to $7.5 million ($0.75 per share) for the same period in the
prior year. For the six months ended December 31, 1996, net earnings were $13.9
million ($1.39 per share) compared to $12.5 million ($1.26 per share) in the
prior year.
7
<PAGE>
Liquidity and Capital Resources
As of December 31, 1996 the Company had $92 million in long term debt (including
$4 million current portion) and $85 million in revolving loan commitments.
Revolving credit loans outstanding were $65.1 million as of such date. The long
term debt requires periodic principal payments including $4.0 million in each of
January 1997 and 1998 and has a final maturity in 2008. The revolving credit
facilities include a $75 million U.S. bank line and a Canadian facility for the
Canadian dollar equivalent of U.S. $10.0 million. The U.S. revolving credit
facility expires in June 1999 and currently bears interest at a floating rate of
LIBOR plus .75%.
During the six months ended December 31, 1996, the Company used $7.4 million of
cash for operating activities. The Company historically requires a significant
amount of cash each fall to fund its build-up in inventories and accounts
receivable during its peak selling season. These cash requirements are funded
through borrowings on the working capital line.
The Company plans to make capital expenditures of approximately $10.0 million
during fiscal 1997, including $4 million for a new distribution center.
Management believes that cash generated from operations and its bank credit
facility will be sufficient to meet its cash requirements for the foreseeable
future.
PART II - OTHER INFORMATION
---------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
A regular annual meeting of shareholders was held on November 13, 1996.
Each of the Company's directors was elected to a one year term. The
respective votes were as follows: Thomas K. Manning, 7,302,549 shares
voted for election and 244,174 shares withheld votes; William S.
Endres, 7,302,274 shares voted for election and 244,449 shares withheld
votes; Darrel M. Sanders, 7,302,349 shares voted for election and
244,374 shares withheld votes; William L. Yager, 7,261,712 shares voted
for election and 285,011 shares withheld votes; Jack J. Culberg,
7,302,100 shares voted for election and 244,623 shares withheld votes;
Todd Goodwin, 7,302,704 shares voted for election and 244,019 shares
withheld votes; John E. Grimm, III, 7,301,940 shares voted for election
and 244,783 shares withheld votes; Lanny R. Julian, 7,302,239 shares
voted for election and 244,484 shares withheld votes; Beatrice B.
Smith, 7,302,539 shares voted for election and 244,184 shares withheld
votes; Noel Thomas Patton, 7,302,399 shares voted for election and
244,324 shares withheld votes. Additionally, the shareholders voted to
ratify the appointment of KPMG Peat Marwick as independent public
accountants for the Company for the fiscal year ending June 30, 1997.
The vote was 7,526,228 shares voted for ratification, 4,042 shares
voted against ratification and 16,453 shares for which the vote was
withheld.
8
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits.
11 Schedule regarding computation of per share earnings.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE RIVAL COMPANY
Dated: February 4, 1997 By: /s/ William L. Yager
-------------------------------------
William L. Yager
President and Chief Operating Officer
(Duly Authorized Officer)
Dated: February 4, 1997 By: /s/ W. Mark Meierhoffer
------------------------------------
W. Mark Meierhoffer
Senior Vice-President of
Finance and Administration,
Chief Financial Officer
9
<PAGE>
THE RIVAL COMPANY AND SUBSIDIARIES Exhibit 11
Earnings Per Share
(in thousands except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
------------------ ----------------
12/31/96 12/31/95 12/31/96 12/31/95
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net earnings $ 8,594 $ 7,456 $ 13,870 $ 12,549
======== ======== ======== ========
Primary Earnings Per Share
- --------------------------
Weighted average common and common
equivalent shares outstanding 9,973 9,941 9,961 9,931
======== ======== ======== ========
Earnings per common and common
equivalent share $ 0.86 $ 0.75 $ 1.39 $ 1.26
======== ======== ======== ========
Share computation:
Average common shares
outstanding 9,734 9,725 9,732 9,721
Average number of options
outstanding 663 531 673 535
Less treasury shares acquired
with proceeds from exercise
of options (424) (315) (444) (325)
-------- -------- -------- --------
Weighted average common and common
equivalent shares outstanding 9,973 9,941 9,961 9,931
======== ======== ======== ========
</TABLE>
* Fully diluted earnings per share is equal to primary earnings per share for
all periods presented.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
Form 10-Q for the six months ended December 31, 1996 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1996
<PERIOD-START> JUL-01-1996 JUL-01-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<CASH> 1,332 461
<SECURITIES> 0 0
<RECEIVABLES> 101,579 89,215
<ALLOWANCES> 3,140 2,603
<INVENTORY> 106,601 74,092
<CURRENT-ASSETS> 210,205 162,646
<PP&E> 75,119 50,411
<DEPRECIATION> 33,362 23,315
<TOTAL-ASSETS> 316,722 239,900
<CURRENT-LIABILITIES> 105,543 89,847
<BONDS> 88,000 42,000
<COMMON> 98 97
0 0
0 0
<OTHER-SE> 118,824 105,358
<TOTAL-LIABILITY-AND-EQUITY> 316,722 239,900
<SALES> 221,216 171,347
<TOTAL-REVENUES> 221,216 171,347
<CGS> 157,587 122,621
<TOTAL-COSTS> 157,587 122,621
<OTHER-EXPENSES> 35,719 24,918
<LOSS-PROVISION> 465 262
<INTEREST-EXPENSE> 5,230 3,160
<INCOME-PRETAX> 22,686 20,504
<INCOME-TAX> 8,816 7,955
<INCOME-CONTINUING> 13,870 12,549
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 13,870 12,549
<EPS-PRIMARY> 1.39 1.26
<EPS-DILUTED> 1.39 1.26
</TABLE>
