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, 1998.
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 $49,280,000 as of August 26,1998. 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.
9,303,827
--------------------------------
(number of shares of common stock outstanding as of August 26, 1998.)
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, 1998. Part III
incorporates information by reference from the Registrant's definitive Proxy
Statement, to be filed with the Commission for its 1998 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, showerheads,
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 $376.9 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.
The company made no acquisitions in fiscal 1998 as management focused on
further integration and improvements to operations acquired in prior years.
The Company distributes the Rival(REGISTERED TRADEMARK), Rival Select
(REGISTERED TRADEMARK), Simer (REGISTERED TRADEMARK), Pollenex (REGISTERED
TRADEMARK), Patton (REGISTERED TRADEMARK), Bionaire (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
Home Quarters; department stores, catalog showrooms and warehouse clubs. The
Company also sells Patton commercial fans and 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
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 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. This 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. This 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.
<TABLE>
<CAPTION>
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 1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Kitchen electrics and personal care $191.8 $188.8 $178.9
Home environment 104.9 116.5 91.8
Industrial/building supply 30.0 30.8 26.9
International 43.7 35.8 12.9
Consumer 6.5 4.6 3.4
------ ------ ------
Total $376.9 $376.5 $313.9
====== ====== ======
</TABLE>
The majority of the Company's sales are in product lines which have limited
growth potential but with continuing demand that provides 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 products under the Patton and Patton Building Products brands, 3) future
acquisitions and 4) geographical expansion.
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 $5.4 million, $4.5 million, and $3.1 million
for the years ended June 30, 1998, 1997 and 1996, 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 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 include 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, household specialty
stores, 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 and Patton'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.
<TABLE>
<CAPTION>
The approximate breakdown of the Company's domestic sales by class of
customer is as follows:
Years ended June 30
-------------------
Class of Customer 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Mass Merchant 48% 45% 47%
Hardware/Home Center 17 17 17
Department Store 10 11 9
Electrical and Industrial Distributor 9 9 10
Drug Store, Warehouse Clubs and Other 16 18 17
---- ---- ----
100% 100% 100%
==== ==== ====
</TABLE>
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 each of the three years ended June 30, 1998.
The Company's next five largest customers in fiscal 1998 represented 21% 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 more than 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 manufacturing 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 July 1998, the company announced its plans to close its New Haven and
Fayetteville manufacturing plants and to expand its current operations in
Warrensburg and Sedalia, Missouri. The majority of the products currently
manufactured in these facilities will be moved to the Company's Missouri plants
while some production will be outsourced to overseas suppliers. Concentrating
production in fewer facilities will increase efficiency by more closely
aligning capacity with the seasonal nature of the Company's products, taking
advantage of vertical integration in its Missouri plants and reducing the
infrastructure associated with transportation of materials, production planning
and other activities.
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. Additional competition
arises as major retailers purchase directly from overseas suppliers, often
using a private label branding strategy.
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.
6
<PAGE>
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.("UL"), the Canadian Underwriters
Laboratories, Inc.("CUL"), or similar organizations in other markets. UL and
CUL are independent, not-for-profit corporations engaged in the testing of
products for compliance with certain public safety standards.
Foreign Operations
Approximately 12 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 13 to
Consolidated Financial Statements from the Company's Annual Report to
Stockholders for the fiscal year ended June 30, 1998, page 34.
Employees
The Company has approximately 2,100 full-time associates including 250
salaried personnel, except during August through November when employment will
likely increase by approximately 15%. Approximately 320 hourly associates at
the Flowood, Mississippi plant are represented by a labor organization under a
collective bargaining agreement which expires in December 2001. 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
<TABLE>
<CAPTION>
Owned/ Square
Location Leased Feet Present Use
- ----------------------- ------ ------- ------------------------------
<S> <C> <C> <C>
Kansas City, Missouri leased 32,000 General Offices
Sedalia, Missouri owned 157,000 Manufacturing and assembly
leased 67,000 Manufacturing and assembly
owned 216,000 Warehousing and distribution
Clinton, Missouri owned 164,000 Manufacturing and assembly
owned 279,000 Warehousing and distribution
Sweet Springs, Missouri owned 125,000 Manufacturing and service
return processing
Warrensburg, Missouri leased 68,000 Manufacturing and assembly
Flowood, Mississippi owned 142,000 Manufacturing
New Haven, Indiana* owned 302,000 Manufacturing and distribution
Peru, Indiana* owned 172,000 Warehousing
Fayetteville, North
Carolina* owned 282,500 Manufacturing and assembly
owned 60,000 Warehousing and distribution
Mississauga, Ontario leased 55,000 General office, warehousing
and distribution
</TABLE>
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.
* These facilities are scheduled to be closed during fiscal 1999 and the
Company plans to sell the properties.
7
<PAGE>
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.
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, 1998, page 36.
Item 6. Selected financial data.
Incorporated herein by reference from the Company's Annual Report to
Stockholders for the fiscal year ended June 30, 1998, 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, 1998, pages 15-21.
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, 1998, Note 1, pages 26 and 27.
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, 1998, pages 22-35.
Item 9. Changes in and disagreements with accountants on accounting and
financial disclosure.
None.
8
<PAGE>
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," and "Security
Ownership of Certain Beneficial Owners and Management" in the Company's
definitive proxy statement to be filed with the Commission pursuant to
Regulation 14A with respect to its 1998 Annual Meeting of Stockholders.
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 35
Financial Statements:
Consolidated Balance Sheets--June
30,1998 and 1997 22
Consolidated Statements of Earnings--
Years Ended June 30, 1998, 1997,
and 1996 23
Consolidated Statements of Stockholders'
Equity--Years Ended June 30, 1998,
1997, and 1996 24
Consolidated Statements of Comprehensive
Income - Years Ended June 30, 1998, 1997,
and 1996 24
Consolidated Statements of Cash Flows--
Years Ended June 30, 1998, 1997 and 1996 25
Notes to Consolidated Financial Statements 26-34
Financial Statement Schedule:
Independent Auditors' Report on
Financial Statement Schedule
and Consent 11
Schedule II - Valuation and
Qualifying Accounts 12
10
<PAGE
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 3, 1998 included the related
financial statement schedule for each of the years in the threeyear period
ended June 30, 1998, included in the 1998 annual report on Form 10K. 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.
3369392) on Form S8 of The Rival Company of the above report and our report
dated August 3, 1998 relating to the consolidated balance sheets of The Rival
Company and subsidiaries as of June 30, 1998 and 1997, and the related
consolidated statements of earnings, stockholders' equity, comprehensive income
and cash flows for each of the years in the threeyear period ended June 30,
1998, which report is incorporated by reference in the June 30, 1998 annual
report on Form 10K of The Rival Company.
Kansas City, Missouri /s/ KPMG Peat Marwick, LLP
September 1, 1998 --------------------------
KPMG Peat Marwick, LLP
11
<PAGE>
SCHEDULE II
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 6-30-98 $2,558 $915 $--- $1,515 $1,958
Year ended 6-30-97 $2,785 $986 $--- $1,213 $2,558
Year ended 6-30-96 $1,909 $463 $547 $ 134 $2,785
(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 4, 1998
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 Chairman of the Board of September 4, 1998
----------------- Directors, Chief Executive
Thomas K. Manning Officer
(Principal Executive Officer)
/s/William L. Yager President, Chief Operating September 4, 1998
---------------- Officer and Director
William L. Yager
/s/Mark Meierhoffer Senior Vice President, September 4, 1998
---------------- Chief Financial Officer
Mark Meierhoffer (Principal Accounting and
Financial Officer)
/s/Darrel M. Sanders Senior Vice President September 4, 1998
----------------- Operations and Director
Darrel M. Sanders
/s/Jack J. Culberg Director September 4, 1998
---------------
Jack J. Culberg
/s/Todd Goodwin Director September 4, 1998
------------
Todd Goodwin
/s/John E. Grimm, III Director September 4, 1998
------------------
John E. Grimm, III
/s/Lanny R. Julian Director September 4, 1998
---------------
Lanny R. Julian
/s/Noel Thomas Patton Director September 4, 1998
------------------
Noel Thomas Patton
/s/Beatrice B. Smith Director September 4, 1998
-----------------
Beatrice B. Smith
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
March 31, 1997).
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, 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 (incorporated by
reference to Registrant's Form 10-K for the year ended
June 30, 1997).
11 * Statement regarding computation of earnings per share of
the Company.
13 * Annual Report to Stockholders for fiscal year ended
June 30, 1998 (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
Exhibit 10(h)
The Rival Company
Management Incentive Compensation Plan
Each year, under the Management Incentive Bonus Plan, the Compensation and
Stock Option Committee establishes goals relating to the Company's operating
results and establishes the minimum and maximum bonus pools that may be earned.
No bonus is paid to the Chief Executive Officer or the President if a minimum
level of budgeted operating results are not achieved. The incentive pool is
established under a formula that weights several factors including operating
income, net sales and working capital management. A majority of the incentive
pool generated by reaching the targets 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 11
THE RIVAL COMPANY AND SUBSIDIARIES
Earnings Per Share
(in thousands except per share data)
Years Ended June 30
-------------------
Diluted Earnings Per Share 1998 1997 1996
------ ------- -------
Net earnings $9,207 $10,685 $14,239
====== ======= =======
Weighted average common and common
equivalent shares outstanding 9,582 9,895 9,950
====== ======= =======
Earnings per common and common
equivalent share $ 0.96 $ 1.08 $ 1.43
====== ======= =======
Computation of weighted average
common and common equivalent
shares outstanding:
Average common shares
outstanding 9,422 9,684 9,725
Average number of
options outstanding 796 690 557
Less treasury shares acquired
with proceeds from exercise
of options (636) (479) (332)
------ ------- -------
Weighted average common and common
equivalent shares outstanding 9,582 9,895 9,950
====== ======= =======
<TABLE>
Consolidated Statements of Earnings Data
<CAPTION>
(in thousands, except per share amounts)
Years ended June 30, 1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales $376,919 $376,465 $313,864 $231,711 $229,233
Cost of sales 281,043 278,455 230,207 168,406 162,703
-------- -------- -------- -------- --------
Gross profit 95,876 98,010 83,657 63,305 66,530
Selling, general and
administrative expenses 63,251 63,809 50,561 34,461 37,483
Restructuring expenses - 3,000 - - -
Amortization of
goodwill and other
intangible assets 2,894 3,069 2,432 1,774 1,635
-------- -------- -------- -------- --------
Operating income 29,731 28,132 30,664 27,070 27,412
Interest expense 10,099 10,081 7,117 4,216 4,113
Other expenses 3,875 21 295 120 205
-------- -------- -------- -------- --------
Earnings before
income taxes 15,757 18,030 23,252 22,734 23,094
Income tax expense 6,550 7,345 9,013 8,749 8,777
-------- -------- -------- -------- --------
Net earnings $ 9,207 $ 10,685 $ 14,239 $ 13,985 $ 14,317
======== ======== ======== ======== ========
Net earnings per share
(Basic EPS) $ 0.98 $ 1.10 $ 1.46 $ 1.50 $ 1.55
======== ======== ======== ======== ========
Net earnings per share
(Diluted EPS) $ 0.96 $ 1.08 $ 1.43 $ 1.47 $ 1.51
======== ======== ======== ======== ========
Weighted average common
shares outstanding 9,422 9,684 9,725 9,312 9,248
======== ======== ======== ======== ========
Weighted average common
and common equivalent
shares outstanding (1) 9,582 9,895 9,950 9,505 9,475
======== ======== ======== ======== ========
Earnings excluding
non-recurring items (2) $ 12,186 $ 12,755 $ 14,239 $ 13,985 $ 14,317
======== ======== ======== ======== ========
Diluted EPS excluding
non-recurring items $ 1.27 $ 1.29 $ 1.43 $ 1.47 $ 1.51
======== ======== ======== ======== ========
Dividends per share $ 0.26 $ 0.24 $ 0.20 $ 0.16 $ 0.12
======== ======== ======== ======== ========
(1) Stock options are included as common stock equivalents.
(2) Non-recurring items include Canadian litigation in 1998 and a restructuring
loss in 1997 relative to its Montreal manufacturing, distribution and
administrative functions.
</TABLE>
<TABLE>
Consolidated Balance Sheet Data
<CAPTION>
(in thousands)
At June 30, 1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Working capital $ 89,607 $ 84,819 $ 91,396 $ 60,293 $ 60,063
Total assets 292,114 298,605 288,251 204,368 151,467
Long-term debt
(less current portion) 78,000 84,000 88,000 42,000 46,000
Stockholders' equity 116,615 110,390 106,148 93,805 76,104
* The tables above should be read in conjunction with the Company's
consolidated financial statements and notes, which appear herein on pages
22-34, inclusive.
</TABLE>
Page 14
<PAGE>
Management's Discussion and Analysis of
financial Condition and Results of Operations
<TABLE>
Consolidated Statements of Earnings Data
<CAPTION>
(expressed as a percentage of sales)
Years ended June 30, 1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales 74.5 74.0 73.3
------ ------ ------
Gross profit 25.5 26.0 26.7
Selling, general and administrative expenses 16.8 16.9 16.1
Restructuring expenses 0.0 0.8 0.0
Amortization of goodwill and other intangible assets 0.8 0.8 0.8
------ ------ ------
Operating income 7.9 7.5 9.8
Interest expense 2.7 2.7 2.3
Other expenses 1.0 0.0 0.1
------ ------ ------
Earnings before income taxes 4.2 4.8 7.4
Income tax expense 1.8 2.0 2.9
------ ------ ------
Net earnings 2.4% 2.8% 4.5%
====== ====== ======
</TABLE>
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 manages 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? slow cookers, toasters, ice cream freezers, can openers, fryers
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 pumps, 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.
Sales by business unit and direct consumer sales are reflected in the charts
below:
[THREE PIE CHARTS]:
1996
Kitchen Electrics $178.9
Home Environment $ 91.8
Industrial/Building Supply $ 26.9
International $ 12.9
Consumer $ 3.4
1997
Kitchen Electrics $188.8
Home Environment $116.5
Industrial/Building Supply $ 30.8
International $ 35.8
Consumer $ 4.6
1998
Kitchen Electrics $191.8
Home Environment $104.9
Industrial/Building Supply $ 30.0
International $ 43.7
Consumer $ 6.5
Page 15
<PAGE>
[BAR CHART]
Net Sales
(Millions of Dollars)
94 229.2
95 231.7
96 313.9
97 376.5
98 376.9
[BAR CHART]
Operating Income
(Millions of Dollars)
94 27.4
95 27.1
96 30.7
97 28.1
98 29.7
General
The Company operates in an industry that continues to experience rapid change
and consolidation as evidenced by the recent mergers of major housewares
suppliers and continued concentration of retail sales among a few major
national retailers. Additionally, the recent economic turmoil in Asia has
increased the availability of low-cost household electric products. In this
environment, the Company believes it must provide a broad product line
including innovative new items, must promote consumer brand awareness and must
give excellent customer service in order to be competitive and ensure retail
product placement.
The Company's sales grew from $232 million in fiscal 1995 to $377 million in
fiscal 1998. This sales increase has been the result of internal growth,
especially in its kitchen electrics business unit combined with acquisitions
that have fueled the growth in its home environment, industrial and
international business units. In recent years, the Company has increased its
investment in product development in an effort to generate a higher rate of
internal sales growth in each of its business units. The Company's investment
in product development, excluding tooling, has grown from $3.1 million in
fiscal 1996 to $4.5 million in fiscal 1997 and $5.4 million in the most recent
year.
Manufacturing costs, especially labor rates, have increased in recent years;
however, it has been very difficult to pass on higher prices to retailers and
the ultimate consumer. Innovative new products and more efficient production
will be required to improve margins.
The Company has announced plans to close two of its seven manufacturing plants
in order to address its excess capacity and reduce costs. Some of the products
currently manufactured in plants identified for closure will be transferred to
overseas sources; however, most of the production will be transferred to the
Company's existing plants in Missouri. The transfer of fan production to
Sedalia, Missouri will help normalize production in this plant evenly
throughout the year. Additional benefits of the plant restructuring will
include lower transportation costs and better utilization of vertically
integrated manufacturing processes that are available in the Company's Missouri
facilities. The Company expects to record nonrecurring charges of approximately
$7.5 million pretax, mostly in the first quarter of fiscal 1999 for severance,
facility shutdowns and related costs.
The vast majority of the Company's sales are in product lines with continuing
demand that 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 products under the Patton and Patton
Building Products brands, 3) future acquisitions and 4) geographical expansion.
Fiscal 1998 Compared to Fiscal 1997
Net Sales. Net sales increased slightly from $376.5 million for the year ended
June 30, 1997 ("fiscal 1997") to $376.9 million for the year ended June 30,
1998 ("fiscal 1998"). Sales of kitchen electrics increased 2% as strong sales
of the Company's new oval-shaped Crock-Pot (REGISTERED TRADEMARK) slow
Page 16
<PAGE>
cooker more than offset lower sales of promotionally priced toasters and
novelty massagers. The international business unit experienced 22% sales growth
to $43.7 million due to improved placement of kitchen electric products with
Canadian retailers and increased fan sales into Latin America. Sales in the
home environment business unit declined 10% to $104.9 million due to decreases
in sales of Bionaire air purifiers and humidifiers and Patton space heaters
that more than offset a near doubling of Pollenex showerhead sales. The sales
declines were generally the result of products that were nearing the end of
their life cycles. The Company has introduced new products in each of these
categories for fiscal 1999. A similar investment in new showerhead development
resulted in the fiscal 1998 sales growth in this category. Industrial sales
declined slightly during fiscal 1998 as the Company solidified its customer
base through improved service during the year.
Gross Profit. Gross profit was $95.9 million (25.5% of net sales) in fiscal
1998 compared to $98.0 million (26.0% of net sales) in fiscal 1997. The decline
in gross margin was the result of a decrease in sales of high margin novelty
massagers together with increased manufacturing costs, in particular higher
labor rates, which were not accompanied by price increases. The Company is
transferring the production of some of its products to overseas sources and is
restructuring its manufacturing operations in an effort to reduce costs and
improve gross margins.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses totaled $63.3 million (16.8% of net sales) in fiscal
1998 compared to $63.8 million (16.9% of net sales) in fiscal 1997. The decline
was achieved despite an increase of $0.9 million in product development
spending. Legal and professional expenses also increased in fiscal 1998 due to
higher spending to protect the Company's intellectual property. These increases
were more than offset by savings generated from consolidation of administrative
functions in Canada, lower advertising expenditures and a decline in fixed
selling expenses from reducing the size of the direct sales force.
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.
Interest Expense. Interest expense was $10.1 million in both fiscal 1998 and
fiscal 1997. Total average borrowings were $150 million in fiscal 1998, down
slightly from $154 million in the prior year. The decline in borrowings was
offset by a small increase in average interest rates.
Other Non-operating Expense. During fiscal 1998, the Company recognized a
litigation charge of $3.8 million related to the settlement of a lawsuit in
Montreal. The litigation resulted from an action taken by minority shareholders
of Biotech Electronics, Inc., which was a predecessor to Bionaire. The lawsuit
originated in 1985 (over 10 years prior to the acquisition of Bionaire by
Rival). In January 1998, the Canadian Court of Appeal affirmed a lower court
decision and substantially increased the damages awarded to the plaintiffs. In
the settlement reached by the Company in June, the plaintiffs dropped all
actions against the Company and released the Company and its affiliates from
any further liability.
[BAR CHART]
Interest Expense
(Millions of Dollars)
94 4.1
95 4.2
96 7.1
97 10.1
98 10.1
[BAR CHART]
Stockholders' Equity
(Millions of Dollars)
94 76.1
95 93.8
96 106.1
97 110.4
98 116.6
Page 17
<PAGE>
[BAR CHART]
Net Earnings
(Millions of Dollars)
94 14.3
95 14.0
96 14.2
97 10.7
98 9.2
[BAR CHART]
Total Assets
(Millions of Dollars)
94 151
95 204
96 288
97 299
98 292
Income Taxes. Effective income tax rates were 41.6% in fiscal 1998 compared to
40.7% in fiscal 1997. The statutory rate was 35% in each year. The difference
between the statutory rate and the effective rate is primarily due to non-
deductible 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. Additionally,
in fiscal 1998, a portion of the Canadian litigation loss was non-deductible,
which resulted in the higher effective tax rate.
Net Earnings. Net earnings were $9.2 million ($0.96 per diluted share) in
fiscal 1998 compared to $10.7 million ($1.08 per diluted share) in fiscal 1997
due to the lower gross margins and the litigation charge discussed above.
Excluding the fiscal 1998 Canadian litigation charge and the fiscal 1997
Canadian restructuring charge, net earnings were $12.2 million ($1.27 per
diluted share) in fiscal 1998 compared to $12.8 million ($1.29 per diluted
share) in fiscal 1997. Average shares outstanding declined as a result of
295,000 shares repurchased late in fiscal 1997 and an additional 88,000 shares
repurchased in fiscal 1998.
Fiscal 1997 Compared to Fiscal 1996
Net Sales. Net sales increased $62.6 million to $376.5 million for 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 resulted in 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. Selling expenses of these two business units are higher as a
percentage of sales than the kitchen electrics and home environment business
units. Distribution expenses also increased as a
Page 18
<PAGE>
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. 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.
Liquidity & Capital Resources
The Company generated earnings plus depreciation and amortization of $20.0
million in fiscal 1998, $20.9 million in fiscal 1997 and $22.5 million in
fiscal 1996. In recent years, the Company has used its operating cash flows to
make significant investments in its business, as evidenced by the $58.6 million
spent on three acquisitions and the investment of $25.5 million in plant and
equipment during the three years ended June 30, 1998.
[BAR CHART]
Earnings Excluding Non-Recurring Items
(Millions of Dollars)
94 14.3
95 14.0
96 14.2
97 12.8
98 12.1
[BAR CHART]
Earnings Per Share (Diluted EPS) Excluding Non-Recurring Items
94 1.51
95 1.47
96 1.43
97 1.29
98 1.27
Page 19
<PAGE>
[BAR CHART]
Working Capital
(Millions of Dollars)
94 60.1
95 60.3
96 91.4
97 84.8
98 89.6
Cash provided by operating activities was $20.8 million in fiscal 1998, $19.4
million in fiscal 1997 and $3.7 million in fiscal 1996. 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 $7.2 million in fiscal
1998, $12.5 million in fiscal 1997 and $5.9 million in fiscal 1996. The fiscal
1997 expenditures included $3.2 million toward 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.
In fiscal 1998 cash was used to repay borrowings of $10.9 million, to
repurchase common stock for $1.2 million and to pay dividends in the amount of
$2.5 million. Cash flows from financing activities in fiscal 1997 consisted of
$13.2 million in net borrowings under the Company's 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, 1998, the Company had $84 million in long term debt (including
$6 million current portion) and $75 million in revolving loan commitments.
Revolving credit loans outstanding were $58.2 million as of such date. The long
term debt requires annual principal payments ranging from $6.0 million to $7.0
million over the next five years and has a final maturity in 2008. The
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. Subsequent to June 30,
1998, the Company obtained an additional revolving credit facility for a period
of one year in the amount of the Canadian Dollar equivalent of U.S. $10.0
million for the purpose of funding Canadian operations.
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.
Page 20
<PAGE>
Inflation
The Company believes that its business has not been affected by inflation,
except to the extent the economy in general has been affected thereby.
Computer Systems and the Year 2000
During the past several years, the Company has replaced all of its significant
computer software applications as part of normal system upgrades. All of the
new systems are, according to the software vendors, Year 2000 compliant (i.e.
support proper processing of transactions relating to the year 2000 and
beyond). The Company has created a task force to test all of its significant
software and to determine whether embedded technology, such as
microcontrollers, contained in its machinery and equipment is Year 2000
compliant. In addition, the task force will review the Year 2000 compliance of
its key suppliers and service providers in an effort to reduce the potential
adverse effect on its operations from non-compliance by such parties. The task
force is currently expected to complete its review by June 30, 1999. As systems
are tested, the Company intends to develop contingency plans for systems that
exhibit possible Year 2000 problems. The cost of the task force's activities is
not expected to be significant.
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, (v) the costs to close and the
estimated net realizable value to be received for facilities impacted by the
restructuring plan, or (vi) 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.
Some important factors that could cause the actual results to differ materially
from those discussed in the forward-looking statements include, but are not
limited to: the ability of the Company to successfully develop new products and
enhance existing product lines; general international and domestic economic
conditions; competitive, regulatory or tax changes that affect the cost of or
demand for the Company's products; weather conditions; adverse litigation
results; the ability of the Company to achieve cost-saving goals; changes in
raw material prices or availability; changes in the number of warranty claims
and product returns; and the loss of one or more significant customers. Other
factors not identified herein could also have such an effect.
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]
Long-Term Debt
(Millions of Dollars)
94 46.0
95 42.0
96 88.0
97 84.0
98 78.0
Page 21
<PAGE>
<TABLE>
Consolidated Balance Sheets
<CAPTION>
(in thousands)
June 30, 1998 1997
-------- --------
<S> <C> <C>
Assets
Current assets:
Cash $ 309 $ 194
Accounts receivable (net of allowance for collection
losses and discounts of $1,958 and $2,558 in 1998
and 1997, respectively) 75,106 74,663
Inventories 101,714 105,287
Deferred income tax charges 2,379 2,584
Prepaid expenses 1,376 1,375
-------- --------
Total current assets 180,884 184,103
Property, plant and equipment, net 46,045 46,695
Goodwill 60,418 62,314
Other assets 4,767 5,493
-------- --------
$292,114 $298,605
======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Notes payable to bank $ 58,200 $ 65,075
Current portion of long-term debt 6,000 4,000
Trade accounts payable 15,056 15,477
Accrued interest 1,920 1,979
Income taxes payable 403 1,231
Other payables and accrued expenses 9,698 11,522
-------- --------
Total current liabilities 91,277 99,284
Long-term debt, less current portion 78,000 84,000
Deferred income taxes and other liabilities 6,222 4,931
Stockholders' equity
Common Stock; $0.01 par value.
Authorized 15,000,000 shares; issued, 9,804,324 in 1998
and 9,769,244 in 1997; outstanding, 9,396,227 in 1998
and 9,448,847 in 1997 98 98
Paid-in capital 45,971 45,656
Accumulated other comprehensive income (309) (632)
Treasury stock, at cost (5,608) (4,438)
Retained earnings 76,463 69,706
-------- --------
Total stockholders' equity 116,615 110,390
Commitments and contingencies
-------- --------
$292,114 $298,605
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
Page 22
<PAGE>
<TABLE>
Consolidated Statements of earnings
<CAPTION>
(in thousands, except per share amounts)
Years ended June 30, 1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Net sales $376,919 $376,465 $313,864
Cost of sales 281,043 278,455 230,207
Gross profit 95,876 98,010 83,657
Selling expenses 50,055 50,352 39,884
General and administrative expenses 13,196 13,457 10,677
Restructuring expenses - 3,000 -
Amortization of goodwill and other
intangible assets 2,894 3,069 2,432
-------- -------- --------
Operating income 29,731 28,132 30,664
-------- -------- --------
Other expenses:
Interest expense 10,099 10,081 7,117
Miscellaneous, net 3,875 21 295
-------- -------- --------
Total other expenses 13,974 10,102 7,412
-------- -------- --------
Earnings before income taxes 15,757 18,030 23,252
Income tax expense 6,550 7,345 9,013
-------- -------- --------
Net earnings $ 9,207 $ 10,685 $ 14,239
======== ======== ========
Weighted average common shares outstanding 9,422 9,684 9,725
======== ======== ========
Net earnings per share (Basic EPS) $ 0.98 $ 1.10 $ 1.46
======== ======== ========
Weighted average common and common equivalent
shares outstanding 9,582 9,895 9,950
======== ======== ========
Net earnings per share (Diluted EPS) $ 0.96 $ 1.08 $ 1.43
======== ======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
Page 23
<PAGE>
<TABLE>
Consolidated Statements of Stockholders' Equity
<CAPTION>
(in thousands, except share amounts)
Accumulated
Other Total
Common Paid-In Comprehensive Treasury Retained Stockholders'
Stock Capital Income Stock Earnings Equity
--- ------- ----- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
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
Common stock issued-35,080 shares 0 252 - - - 252
Foreign currency translation adjustments - - 323 - - 323
Income tax benefit recognized upon exercise
of non-qualified stock options - 63 - - - 63
Purchase of common stock for
treasury-87,700 shares - - - (1,170) - (1,170)
Dividends paid - - - - (2,450) (2,450)
Net earnings - - - - 9,207 9,207
--- ------- ----- ------- ------- --------
Balance June 30, 1998 $98 $45,971 $(309) $(5,608) $76,463 $116,615
=== ======= ===== ======= ======= ========
</TABLE>
<TABLE>
Consolidated Statements of Comprehensive Income
<CAPTION>
(in thousands)
Years ended June 30, 1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Net earnings $ 9,207 $10,685 $14,239
Other comprehensive income:
Foreign currency translation adjustments 323 (164) (73)
------- ------- -------
Comprehensive income $ 9,530 $10,521 $14,166
======= ======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
Page 24
<PAGE>
<TABLE>
Consolidated Statements of Cash Flows
<CAPTION>
(in thousands)
Years ended June 30, 1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 9,207 $ 10,685 $ 14,239
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 10,788 10,246 8,293
Provision for losses on
accounts receivable 915 986 463
Deferred income taxes 683 (432) (402)
Other 173 292 433
Changes in assets and liabilities,
net of acquisitions:
Accounts receivable (1,358) (1,546) (15,101)
Inventories 3,573 2,499 (3,727)
Prepaid expenses (1) 767 455
Income taxes (828) 1,034 (380)
Accounts payable and accruals (2,304) (5,103) (567)
--------- --------- ---------
Total adjustments 11,641 8,743 (10,533)
--------- --------- ---------
Net cash provided by operating activities 20,848 19,428 3,706
--------- --------- ---------
Cash Flows From Investing Activities:
Capital expenditures (7,199) (12,460) (5,873)
Acquisition of businesses - (10,922) (47,670)
Other (364) (61) (619)
--------- --------- ---------
Net cash used in investing activities (7,563) (23,443) (54,162)
--------- --------- ---------
Cash Flows From Financing Activities:
Borrowings under working capital loans 85,200 89,529 122,854
Repayment of working capital loans (92,075) (76,350) (115,100)
Borrowings under term loan agreements - - 50,000
Repayment of long-term debt (4,000) (4,000) (4,000)
Dividends paid (2,450) (2,320) (1,945)
Purchase of common stock for treasury (1,170) (4,128) -
Other 1,002 139 30
--------- --------- ---------
Net cash provided (used) by
financing activities (13,493) 2,870 51,839
--------- --------- ---------
Effect of Exchange Rate Changes on Cash 323 (164) (73)
--------- --------- ---------
Net Increase (Decrease) in Cash 115 (1,309) 1,310
Cash at Beginning of Period 194 1,503 193
--------- --------- ---------
Cash at End of Period $ 309 $ 194 $ 1,503
========= ========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
Page 25
<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"), Patton Building Products,
Inc. ("PBC"), Patton Electric Company, Inc. ("Patton"), Patton Electric (Hong
Kong) Limited ("PEHK"), Rival Consumer Sales Corporation, The Rival Company of
Canada, Ltd. ("Rival-Canada"), Rival de Mexico S.A. de C.V. and Waverly
Products Company, Ltd. All significant intercompany account balances and
transactions have been eliminated in consolidation.
Inventories
Approximately 38% of the Company's inventories are stated at the lower of lifo
(last-in, first-out method) cost or market at June 30, 1998 (43% at June 30,
1997). 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 future operating cash flows. Goodwill is reflected in the
accompanying Consolidated Balance Sheets net of accumulated amortization of
$16,687,000 and $14,448,000 at June 30, 1998 and 1997, respectively.
Other Assets
Other assets include non-compete agreements with an aggregate unamortized
balance of $2.8 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
$5,418,000 in 1998, $4,477,000 in 1997 and $3,136,000 in 1996.
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.
Page 26
<PAGE>
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% of consolidated net
sales for each of the three years ended June 30, 1998.
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.
Comprehensive Income
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income" which establishes rules for the reporting
of comprehensive income and its components. Comprehensive income consists of
net income and foreign currency translation adjustments and is presented in the
Consolidated Statements of Comprehensive Income. The adoption of Statement No.
130 had no impact on total stockholders' equity.
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 as Other Comprehensive Income.
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 ($86.3
million at June 30, 1998) was estimated using current interest rates for
similar debt. The carrying amount of long-term debt at June 30, 1998 was $84.0
million.
Net Earnings Per 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 ("APB 15") and related
interpretations. Statement No. 128 has been adopted in the accompanying
financial statements with retroactive application. Basic earnings per share
excludes dilution and is computed by dividing net earnings by the weighted
average number of common shares outstanding for the period. Diluted earnings
per share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into common
stock. Diluted 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 earnings per share in all periods presented and are therefore
included in the computation of diluted earnings per share. Diluted earnings per
share in the accompanying statements of operations is identical to the primary
earnings per share previously presented in accordance with APB 15.
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 for $9.9 million in cash. 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 are marketed under the
Rival brand name, were approximately $20 million annually at the date of
acquisition.
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. The Company now markets these products under the Patton
Building Products trade name.
Page 27
<PAGE>
2. Acquisitions, continued
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 year ended
June 30, 1996 on a proforma basis as though the Fasco and Bionaire acquisitions
had occurred on July 1, 1995 would be as follows (in thousands, except per
share amounts) (unaudited): net sales - $383,646; net earnings - $14,995;
earnings per share - $1.51. The proforma effect of the Dazey acquisition on
operating results for prior periods was not significant. 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, 1995
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.
3. Inventories
<TABLE>
<CAPTION>
Inventories consist of (in thousands):
at June 30, 1998 1997
-------- --------
<S> <C> <C>
Raw materials and work in process $ 40,518 $ 52,933
Finished goods 67,061 57,794
-------- --------
107,579 110,727
Valuation to LIFO (5,865) (5,440)
-------- --------
$101,714 $105,287
======== ========
</TABLE>
If LIFO inventories had been stated at the lower of FIFO cost or market,
earnings before income taxes would have been $425,000, $897,000 and $761,000
higher for the years ended June 30, 1998, 1997 and 1996, respectively.
4. Property, Plant and Equipment
<TABLE>
<CAPTION>
Property, plant and equipment is summarized as follows (in thousands):
at June 30, 1998 1997
------- -------
<S> <C> <C>
Land $ 1,125 $ 1,125
Buildings and improvements 25,499 23,993
Machinery and equipment 50,521 50,832
Furniture and fixtures 7,466 6,392
------- -------
84,611 82,342
Less accumulated depreciation (38,566) (35,647)
------- -------
$46,045 $46,695
======= =======
</TABLE>
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, 1998, $58.2 million was outstanding under the
Revolving Credit Facility.
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. ("B of 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 was approximately 0.45% above the prevailing six
month libor rate. During fiscal 1998, the Company entered into an agreement
with B of A to terminate the interest rate swap agreement in exchange for a
payment by B of A to the Company in the amount
Page 28
<PAGE>
of $750,000. The Company will recognize the $750,000 gain as a reduction of
interest expense through the 2008 maturity of the underlying notes resulting in
an effective interest rate to maturity of 6.74% on $25 million of the notes.
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, 1998 was $34.0 million.
Installment payments on the long-term debt for the next five fiscal years are
as follows: 1999, $6,000,000; 2000, $7,000,000; 2001, $7,000,000; 2002,
$7,000,000; 2003, $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, 1998, the Company had $16.0 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 6.54% and 6.13% at June 30, 1998
and 1997, respectively.
Total interest paid on all indebtedness during the years ended June 30, 1998,
1997 and 1996 was $10,155,000, $10,334,000 and $6,373,000, respectively.
6. Income Taxes
<TABLE>
<CAPTION>
Income tax expense (benefit) is comprised of the following (in thousands):
Years ended June 30, 1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Current:
Federal $5,216 $6,690 $9,356
State and local 200 640 549
Foreign 451 447 (490)
------ ------ ------
Total current tax expense 5,867 7,777 9,415
Deferred tax expense (benefit) 683 (432) (402)
------ ------ ------
Total income tax expense $6,550 $7,345 $9,013
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
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, 1998 1997
------- -------
<S> <C> <C>
Depreciation $(4,373) $(3,887)
Inventory (1,385) (1,297)
Pension plan costs (361) (392)
------- -------
Total deferred tax liabilities (6,119) (5,576)
------- -------
Bad debts 157 416
Reserves not currently deductible 1,981 2,157
Carryforward of Canadian income tax benefit 1,269 1,014
Other 285 245
------- -------
Total deferred tax assets 3,692 3,832
------- -------
Net deferred tax liabilities $(2,427) $(1,744)
======= =======
</TABLE>
<TABLE>
<CAPTION>
A reconciliation of the U.S. statutory rates to the Company's effective tax
rates is as follows:
Years ended June 30, 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Income tax expense at statutory rate 35.0% 35.0% 35.0%
State income tax expense net of
federal income tax benefit 0.8 2.3 1.5
Amortization of goodwill 3.3 2.9 1.8
Non-deductible litigation loss 3.1 - -
Other (.6) .5 .5
---- ---- ----
Effective tax rate 41.6% 40.7% 38.8%
==== ==== ====
</TABLE>
Page 29
<PAGE>
6. Income Taxes, continued
Total income taxes paid, net of refunds, during the years ended June 30, 1998,
1997 and 1996 was $5,132,000, $6,140,000 and $9,703,000, respectively.
The Company has foreign investment tax credits approximating $1,300,000 and
domestic and foreign net operating loss carryforwards approximating $900,000
and $4,100,000, 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
<TABLE>
<CAPTION>
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, 1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 705 $ 663 $ 566
Interest cost on projected benefit obligation 928 879 826
Actual return on plan assets (3,616) (1,416) (2,528)
Net amortization and deferral 2,379 286 1,631
------- ------- -------
Net periodic pension expense $ 396 $ 412 $ 495
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
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, 1998 1997
------- -------
<S> <C> <C>
Actuarial present value of accumulated benefit obligations:
Vested $11,433 $10,529
Non-vested 731 776
------- -------
Accumulated benefit obligation 12,164 11,305
Excess of projected benefit obligation over accumulated
benefit obligation 1,565 1,693
------- -------
Projected benefit obligation 13,729 12,998
======= =======
Fair value of plan assets 18,388 15,146
======= =======
Plan assets in excess of projected benefit obligation 4,659 2,148
Unrecognized net (gain) loss (3,232) (980)
Unrecognized prior service cost 279 700
Unrecognized net transition asset (amortized over 22 years) (856) (936)
------- -------
Prepaid pension cost $ 850 $ 932
======= =======
As of June 30, 1998, approximately 2% of pension plan assets were invested in
cash equivalents, 40% were invested in an intermediate term bond fund which
consisted primarily of U.S. Government obligations and 58% were invested in
common stocks. Significant pension plan assumptions are as follows:
</TABLE>
<TABLE>
<CAPTION>
Years ended June 30, 1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Discount rate 7.25% 7.50% 7.50%
Expected long-term rate of return on plan assets 8.00% 8.00% 8.00%
Salary increase rate 4.50% 4.50% 4.50%
</TABLE>
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 $113,000, $119,000 and $95,000
for the years ended June 30, 1998, 1997 and 1996, respectively.
The Company does not provide any postretirement benefits other than pensions.
Page 30
<PAGE>
8. Leases
The Company maintains operating leases on equipment, warehouse and office
properties. Rental expense under such leases amounted to $1,394,000, $1,800,000
and $790,000 for the years ended June 30, 1998, 1997 and 1996, respectively.
Future rental commitments under noncancellable operating leases with a
remaining term in excess of one year at June 30, 1998 are as follows: 1999,
$1,243,000; 2000, $1,912,000; 2001, $689,000; 2002, $582,000; 2003, $566,000;
thereafter, $1,410,000.
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. 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.
<TABLE>
<CAPTION>
A combined summary of the status of the Company's two fixed stock option plans
at the end of 1998, 1997 and 1996, and changes during these years is presented
below:
1998 1997 1996
--------------- --------------- ---------------
Weighted- Weighted- Weighted-
Number average Number average Number average
of exercise of exercise of exercise
Fixed options shares price shares price shares price
--------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 828,091 14.74 687,821 15.07 537,555 11.98
Granted 177,200 15.60 202,100 14.73 177,000 23.87
Exercised (35,080) 7.25 (14,180) 9.71 (14,734) 2.05
Forfeited (84,900) 18.41 (47,650) 21.00 (12,000) 19.22
--------------- --------------- ---------------
Outstanding at end of year 885,311 14.86 828,091 14.74 687,821 15.07
======= ======= =======
Options exercisable at year end 492,037 435,579 319,161
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
The following table summarizes information about fixed stock options
outstanding at June 30, 1998.
Options Outstanding Options exercisable
------------------- -------------------
Range of Number Weighted-average Number
exercise outstanding remaining Weighted-average exercisable Weighted-average
prices at 6/30/98 contractual life price at 6/30/98 exercise price
- --------------- ------- --- ------ ------- ------
(in years)
<S> <C> <C> <C> <C> <C>
$0.19 90,161 1.4 $ 0.19 90,161 $ 0.19
$11.125 - 16.00 569,300 7.7 14.11 248,976 13.03
$19.50 - 25.625 225,850 7.0 22.35 152,900 21.97
- --------------- ------- --- ------ ------- ------
Total 885,311 6.9 $14.86 492,037 $13.46
=============== ======= === ====== ======= ======
</TABLE>
Page 31
<PAGE>
9. Compensation Arrangements, continued
The per share weighted-average fair value of stock options granted during 1998,
1997 and 1996 was $5.89, $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 1.94%, 1.83% and 1.82% for 1998, 1997 and 1996,
respectively; weighted average risk-free interest rate of 5.57% for 1998 and
6.50% for 1997 and 1996; expected volatility factor of 31.73%, 30.83% and
17.28% for 1998, 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
$641,000 or $0.07 per diluted share in 1998, approximately $582,000 or $0.06
per diluted share in 1997 and approximately $414,000 or $0.04 per diluted share
in 1996. Pro forma net earnings reflect only options granted during 1998, 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. 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 paid based upon achievement of
individual goals as well as the Company's performance as measured by actual
earnings from operations compared to budgeted earnings from operations. Bonuses
under the plan were $725,000 for 1998, $392,000 for 1997 and $750,000 for 1996.
10. Litigation and Restructuring Charges
During 1998, the Company recognized a litigation charge of $3.8 million ($3.0
million after tax) relative to the settlement of a lawsuit in Montreal. In the
litigation, several former shareholders of Biotech Electronics Ltd.
("Biotech"), claimed that they were underpaid for their stock by the majority
shareholders and filed a lawsuit against Biotech and the majority shareholders.
Biotech was the predecessor of Bionaire which, following the April 1996
acquisition, was merged into the Company's wholly-owned subsidiary, Rival
Canada. The lawsuit originated in 1985 (over 10 years prior to the
acquisition). In 1998 the Canadian Court of Appeal affirmed a failure to
disclose information by the stock purchasers and increased the damage award
from CDN $0.2 million to CDN $2.9 million together with interest and other
costs that increased the total judgment to CDN $7.2 million. Such judgment
was a joint and several obligation of Rival-Canada and the co-defendants.
During June 1998, the Company obtained a settlement in which the plaintiffs
dropped all actions against Biotech Electronics, Bionaire and Rival and
released the Company and its affiliates from further liability. The U.S. $3.8
million expense incurred relative to the settlement and related legal costs has
been included in the accompanying consolidated statement of earnings as other
non-operating expense.
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 estimated cash expenditures for employee termination
costs, including severance pay and related benefits for approximately 100
people and estimated future leasehold costs in excess of projected rentals to
be received from subleasing the facility through June 2000.
<TABLE>
<CAPTION>
The following table reflects the activity recorded for the charge in fiscal
1998 and 1997 (in thousands):
Employee Lease
Severance Termination Total
----- ------- -------
<S> <C> <C> <C>
Reserve established $ 500 $ 2,500 $ 3,000
Cash payments - fiscal 1997 (331) (457) (788)
Cash payments - fiscal 1998 (169) (1,034) (1,203)
----- ------- -------
Reserve remaining at June 30, 1998 $ - $ 1,009 $ 1,009
===== ======= =======
</TABLE>
Page 32
<PAGE>
11. Subsequent Event
In July 1998, the Company announced its plans to close two of its seven
manufacturing plants, to expand its current operations in Warrensburg and
Sedalia, Missouri and to outsource additional production with overseas
suppliers. The plans also call for closing three distribution centers. As a
result of the restructuring, the Company expects to incur charges for
severance, facility shutdowns and related costs of approximately $7.5 million
during the year commencing July 1, 1998.
12. 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.
13. 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, fryers 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, showerheads 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. Business unit
information for fiscal 1996 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.
Page 33
<PAGE>
13. Business Segments, continued
<TABLE>
<CAPTION>
Summary financial information for each reportable segment, together with non-
business unit results consisting of sales directly to consumers, is as follows
(in thousands):
Kitchen Home
Fiscal 1998 Electrics Environment Industrial International Other Total
-------- -------- ------- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Net sales $191,828 $104,920 $29,961 $43,703 $6,507 $376,919
Gross profit 48,631 24,059 7,771 11,886 3,529 95,876
Selling expenses 21,007 12,831 7,952 6,746 1,519 50,055
Contribution margin 27,624 11,228 (181) 5,140 2,010 45,821
Inventory 43,164 39,898 12,782 5,870 - 101,714
Accounts receivable 35,829 29,185 6,174 3,918 - 75,106
Kitchen Home
Fiscal 1997 Electrics Environment Industrial International Other Total
-------- -------- ------- ------- ------ --------
<S> <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>
<TABLE>
<CAPTION>
Revenues and non-current assets by geographic region are as follows (in thousands):
Latin America
Fiscal 1998 United States Canada Europe and Other Total
-------- ------- ------ ------- --------
<S> <C> <C> <C> <C> <C>
Revenues $333,216 $23,592 $8,753 $11,358 $376,919
Non-current assets 108,676 457 2,097 - $111,230
Latin America
Fiscal 1997 United States Canada Europe and Other Total
-------- ------- ------ ------- --------
<S> <C> <C> <C> <C> <C>
Revenues $340,640 $22,419 $9,531 $3,875 $376,465
Non-current assets 109,501 3,152 1,849 - $114,502
</TABLE>
14. Unaudited Quarterly Financial Data
<TABLE>
<CAPTION>
Unaudited quarterly financial data is as follows (amounts in thousands except per share amounts):
Fiscal 1998 Sept. 1997 Dec. 1997 March 1998 June 1998
------- -------- ------- -------
<S> <C> <C> <C> <C>
Net sales $96,697 $127,852 $70,851 $81,519
Gross profit 25,578 34,172 17,652 18,474
Operating income 8,545 14,786 3,010 3,390
Net earnings $ 3,726 $ 7,437 $ 267 $(2,223) (a)
======= ======== ======= =======
Net earnings per
share (diluted) $ 0.39 $ 0.77 $ 0.03 $ (0.24)
======= ======== ======= =======
Fiscal 1997 Sept. 1996 Dec. 1996 March 1997 June 1997
------- -------- ------- -------
<S> <C> <C> <C> <C>
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 (diluted) $ 0.53 $ 0.86 $ (0.44) $ 0.12
======= ======== ======= =======
<FN>
(a) Reflects $3.0 million after tax litigation settlement (Note 10).
</TABLE>
Page 34
<PAGE>
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, 1998 and 1997 and the related
consolidated statements of earnings, stockholders' equity, comprehensive income
and cash flows for each of the years in the three-year period ended June 30,
1998. 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, 1998 and 1997, and the results of their
operations and their cash flows for each of the years in the three-year period
ended June 30, 1998, in conformity with generally accepted accounting
principles.
/s/ KPMG PEAT MARWICK LLP
Kansas City, Missouri
August 3, 1998
Page 35
<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 1998 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 1998 annual meeting of shareholders will be held at 9:00 a.m., Central
Standard time, on Wednesday, November 11, 1998, 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 14, 1998. 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.
<TABLE>
<CAPTION>
The following table shows the range of high and low sales prices of the
Company's common stock for fiscal 1998 and 1997.
Fiscal 1998 High Low
------ ------
<S> <C> <C>
First Quarter ended September 30 $20.38 $14.13
Second Quarter ended December 31 16.50 12.75
Third Quarter ended March 31 17.25 13.00
Fourth Quarter ended June 30 18.00 13.00
Fiscal 1997 High Low
------ ------
<S> <C> <C>
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
</TABLE>
At June 30, 1998, there were 9,396,227 shares outstanding and 180 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
3,000.
Dividends
The Board of Directors approved a quarterly dividend of $0.07 per share payable
in September 1998. Future dividend payments are subject to approval of the
Board of Directors. The Company paid dividends of $0.26 per share in fiscal
1998 and $0.24 per share in fiscal 1997.
Page 36
<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
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
W. Mark Meierhoffer,
Senior Vice President-Finance and Administration
Darrel M. Sanders,
Senior Vice President-Operations
Neal Bastick,
Vice President-International Sales
Mark S. Bittner
Vice President-Kitchen Electric Sales
Stanley D. Biggs, Vice President,
Treasurer and Corporate Secretary
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 1998
Exhibit 21
THE RIVAL COMPANY
List of Subsidiaries
Bionaire Corporation
Bionaire France
Bionaire International B.V.
Patton Building Products, Inc.
Patton Electric Company, Inc.
Patton Electric (Hong Kong) Limited
Rival Consumer Sales Corporation
Rival de Mexico, S.A. de C. V.
The Rival Company of Canada, Ltd.
Waverly Products Company, Ltd.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> JUN-30-1998 JUN-30-1997
<PERIOD-START> JUL-01-1997 JUL-01-1996
<PERIOD-END> JUN-30-1998 JUN-30-1997
<CASH> 309 194
<SECURITIES> 0 0
<RECEIVABLES> 77,064 77,221
<ALLOWANCES> 1,958 2,558
<INVENTORY> 101,714 105,287
<CURRENT-ASSETS> 180,884 184,103
<PP&E> 84,611 82,342
<DEPRECIATION> 38,566 35,647
<TOTAL-ASSETS> 292,114 298,605
<CURRENT-LIABILITIES> 91,277 99,284
<BONDS> 78,000 84,000
0 0
0 0
<COMMON> 98 98
<OTHER-SE> 116,517 110,292
<TOTAL-LIABILITY-AND-EQUITY> 292,114 298,605
<SALES> 376,919 376,465
<TOTAL-REVENUES> 376,919 376,465
<CGS> 281,043 278,455
<TOTAL-COSTS> 281,043 278,455
<OTHER-EXPENSES> 66,145 69,878
<LOSS-PROVISION> 915 986
<INTEREST-EXPENSE> 10,099 10,081
<INCOME-PRETAX> 15,757 18,030
<INCOME-TAX> 6,550 7,345
<INCOME-CONTINUING> 9,207 10,685
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 9,207 10,685
<EPS-PRIMARY> 0.98 1.10
<EPS-DILUTED> 0.96 1.08
</TABLE>
