Server: BorderWare/2.2 Content-Type: text/html The Rival Company - Quarterly Report

THE RIVAL COMPANY
RIVAL/SIMER/POLLENEX/PATTON/FASCO/BIONAIRE
QUARTERLY REPORT



First Quarter - September 30, 1996


DEAR FELLOW SHAREHOLDER:

We made good progress during our first quarter which ended on September 30. Sales increased from $73.9 million to $99.7 million and net earnings were $5.3 million ($0.53 per share) compared to $5.1 million ($0.51 per share) in the prior year.
Although sales and earnings fell short of our business plan for the quarter, we achieved some of our primary objectives. Our plans to consolidate the operations of Bionaire which was acquired in April are on schedule. Each of Bionaire's operations (in the U.S., Canada and Europe) were profitable for the quarter. Additionally, through the discontinuation of our manufacturing operations in Peru, Indiana and the scheduled curtailment of operations in our Sweet Springs, Missouri facility, we have taken steps to reduce our excess manufacturing capacity.

The three acquisitions we made during the past eighteen months represent sales growth of over 60%. Each of these operations are now profitable, but they have not yet reached our expectations. We believe there are significant opportunities to improve manufacturing, purchasing and inventory management relative to Patton products. Fasco has the infrastructure to support additional business, and as a result, sales growth in these products can be achieved with minimal increases in fixed costs. There are also opportunities in Canada and Europe from combining the strengths of the Bionaire sales force with Rival's broad product line and multiple brand names. As we make these adjustments, we expect operating earnings as a percent of sales to improve.

We have hired Mark Meierhoffer as Senior Vice President and Chief Financial Officer. Mark has prior experience as Chief Operating Officer of a privately held benefits consulting company and as Vice President and International Treasurer of Marion Merrell Dow Inc., a publicly traded pharmaceutical company. We believe Mark will be a key addition to our management team.

We appreciate the continued support we have received from our dedicated associates, our shareholders and most importantly, our customers.

THOMAS K. MANNING
President and Chief Executive Officer
October 28, 1996


THE RIVAL COMPANY
Reports Increase in Earnings

KANSAS CITY, MO--October 17 1996-The Rival Company (NASDAQ;RIVL) reported a 35% increase in sales and a 4% increase in net earnings for the first quarter ended September 30, 1996 compared to the prior year.

Sales increased over 10% in kitchen electrics business unit while acquisitions over the last 12 months provided the remainder of the 35% sales increase.

Operating margins were 11.3% of net sales versus 13.3% in last year's quarter. Plant overcapacity resulted in gross profit of 28.7% of net sales versus 29.0% in the prior year. Selling expenses were 13.4% of net sales versus 11.6% last year primarily as a result of the international and industrial business units formed as a result of acquisitions in fiscal 1996. The Company expects to reduce the level of selling expenses during the year as the Fasco and Bionaire recent acquisitions are further integrated.

Thomas K. Manning, Chairman and Chief Executive Officer, said "Overall I would have to rate the first quarter as a B+. We have taken steps to reduce our overcapacity in manufacturing, we achieved profitability with Bionaire, and we grew our kitchen electrics core business by over 10%. A negative impact on the quarter was the sales shortfall of $10 million versus our expectations. Summer seasonal products as well as our international Bionaire business were below our sales plan. Our operating income as a percent of sales was very close to our expectations so I'm disappointed that our volume resulted in only a slight improvement in earnings over last years quarter. We still believe our plan for the year is intact."
The Rival Company is a leading designer, manufacturer and marketer of 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 under the Rival®, Rival Select®, Simer®, Pollenex®, Patton®, Fasco®, Bionaire® and White Mountain® brand names. For information, contact Bill Yager or Stan Biggs at 816-943-4100.



Summary Operating Data
(in thousands, except per share data)
Unaudited

Quarter ended September 30, 1996           1996                    1995
                                     
Sales                                  $ 99,650                $ 73,897
Net income                                5,276                   5,093
Net income per share                     $ 0.53                  $ 0.51 
Average common and common 
  equivalent shares outstanding           9,948                   9,921 

Consolidated Statements of Earnings (Unaudited) (in thousands, except per share data) Three Months ended Sept. 30, 1996 1995 Net sales $ 99,650 $ 73,897 Cost of sales 71,067 52,481 Gross profit 28,583 21,416 Selling expenses 13,309 8,586 General and administrative expenses 3,523 2,598 Amortization of goodwill 523 406 Operating income 11,228 9,826 Interest expense 2,491 1,476 Other (income) expense, net (18) 11 Earnings before income taxes 8,755 8,339 Income tax expense 3,479 3,246 Net earnings $ 5,276 $ 5,093

Weighted average common and 
  common equivalent shares outstanding    9,948                   9,921 

Net earnings per common share $ 0.53 $ 0.51
Condensed Consolidated Balance Sheets Sept. 30, Sept. 30, June 30, (in thousands) 1996 1995 1996 Assets Current assets $211,914 $151,121 $181,380 Property, plant and equipment, net 41,823 27,525 40,345 Goodwill 59,562 47,780 60,086 Other assets 6,074 2,859 6,440 $319,373 $229,285 $288,251
Liabilities and Stockholders' Equity Notes payable and current portion of LTD $ 73,306 $ 55,327 $ 55,896 Other current liabilities 42,990 31,131 34,088 Long-term debt, less current portion 88,000 42,000 88,000 Deferred income taxes & other liabilities 4,232 2,372 4,119 Stockholders' equity 110,845 98,455 106,148 $319,373 $229,285 $288,251