<PAGE>
                                 EXHIBIT 99.1 TO

                                    FORM 10-K


                                    FORM 11-K

                                  ANNUAL REPORT




                        Pursuant to Section 15(d) of the
                         Securities Exchange Act of 1934


              For the Fiscal Years Ended December 31, 2001 and 2000





                 ROYAL APPLIANCE 401(k) RETIREMENT SAVINGS PLAN
                 ----------------------------------------------
                            (Full title of the plan)


                            ROYAL APPLIANCE MFG. CO.
                            -------------------------
          (Name of issuer of the securities held pursuant to the plan)


                    7005 COCHRAN ROAD, GLENWILLOW, OHIO 44139
                     (Address of principal executive office)




<PAGE>



                          INDEX OF FINANCIAL STATEMENTS



                                                                           PAGES
                                                                           -----

Report of Independent Accountants                                            2

Financial Statements:

  Statements of Net Assets Available for Plan
    Benefits as of December 31, 2001 and 2000                                3

  Statements of Changes in Net Assets Available for
    Plan Benefits for the years ended December 31, 2001 and 2000             4

  Notes to Financial Statements                                            5-9


Supplemental Schedules:

   Schedule of Assets Held for Investment Purposes
      as of December 31, 2001                                               10

   Schedule of Reportable Transactions for the year
       ended December 31, 2001                                              11



                                        1
<PAGE>






                        REPORT OF INDEPENDENT ACCOUNTANTS



To the Trustees of the Royal Appliance 401(k) Retirement Savings Plan


In our opinion, the accompanying statements of net assets available for plan
benefits and the related statements of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
plan benefits of the Royal Appliance 401(k) Retirement Savings Plan (the "Plan")
at December 31, 2001 and 2000, and the changes in net assets available for plan
benefits for the years then ended in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Plan's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes as of December 31, 2001 and reportable transactions for
the year ended December 31, 2001, are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. These supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.



PricewaterhouseCoopers LLP



Cleveland, Ohio
February 20, 2002



                                        2
<PAGE>

                 ROYAL APPLIANCE 401(k) RETIREMENT SAVINGS PLAN
              STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS

<TABLE>
<CAPTION>
                                                                              DECEMBER 31,
                                                            ---------------------------------------------
                                                                    2001                     2000
                                                            ---------------------     -------------------

<S>                                                                 <C>                     <C>
  ASSETS

Investments, at fair value:
      Equity mutual funds                                           $ 14,108,506            $ 15,677,403
      Fixed income mutual funds                                        1,212,909                 672,787
      Royal Appliance Mfg. Co. common stock                              866,403                 688,427
      Participant loans                                                  857,655                 882,555
                                                                   -------------            ------------

           Total investments                                          17,045,473              17,921,172

Cash and cash equivalents                                                  2,766                   1,032
Contributions receivable                                                 301,500                 376,515
                                                                   -------------            ------------

Net Assets Available For Plan Benefits                              $ 17,349,739            $ 18,298,719
                                                                   =============            ============
</TABLE>

      The accompanying notes are an integral part of these financial statements





                                        3
<PAGE>

                 ROYAL APPLIANCE 401(K) RETIREMENT SAVINGS PLAN
         STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS

<TABLE>
<CAPTION>
                                                                    FOR YEARS ENDED DECEMBER 31,
                                                                   -----------------------------
                                                                       2001             2000
                                                                   ------------     ------------
<S>                                                                <C>              <C>
Additions:

      Contributions:
            Company Contributions                                  $    949,338     $  1,063,022
            Employee pre-tax contributions                            1,159,536        1,413,019
            Participants' after-tax contributions                         1,485            3,315
            Participant rollovers from other plans                       45,920           71,522
                                                                   ------------     ------------
                   Total contributions                                2,156,279        2,550,878

      Miscellaneous income                                                    -            9,465

      Investment Income:
            Interest and Dividends                                      236,516          251,278
            Net depreciation in fair market value                    (1,987,499)      (1,540,347)
                                                                   ------------     ------------
                   Net investment loss                               (1,750,983)      (1,289,069)
                                                                   ------------     ------------

                   Net additions                                        405,296        1,271,274

Deductions:

      Benefits paid to participants                                   1,351,536        2,185,812
      Miscellaneous fees                                                  2,740            9,335
                                                                   ------------     ------------

                   Net change for the year                             (948,980)        (923,873)

      Net assets available for plan benefits, beginning of year      18,298,719       19,222,592
                                                                   ------------     ------------

      Net assets available for plan benefits, end of year          $ 17,349,739     $ 18,298,719
                                                                   ============     ============
</TABLE>

    The accompanying notes are an integral part of these financial statements








                                        4
<PAGE>


                 ROYAL APPLIANCE 401(K) RETIREMENT SAVINGS PLAN
                          NOTES TO FINANCIAL STATEMENTS

1.   PLAN DESCRIPTION AND BENEFITS:

The following brief description of the Royal Appliance 401(k) Retirement Savings
Plan (the "Plan") is provided for general information purposes only.
Participants should refer to the Summary Plan Description for more complete
information.

     GENERAL - The Plan is a defined contribution plan covering substantially
     all employees of Royal Appliance Mfg. Co. (the "Company"). Employees who
     attain age 18 and complete at least six months of service are eligible to
     become participants in the Plan.

     On December 27, 1991, the Company filed Form S-8 with the Securities and
     Exchange Commission (SEC) allowing participants in the Plan to invest in
     Common Shares of the Company. This investment option was available as of
     February 1, 1992. As a result, the Plan is now required to comply with the
     reporting provisions of the SEC Form 11-K.

     CONTRIBUTIONS - Contributions consist of employer matching, employer profit
     sharing, salary reduction, voluntary after-tax contributions, and rollover
     contributions. During 2001 and 2000, employer matching contributions were
     100% of the first 3% of salary reduction contributions and 50% of the next
     2% of salary reduction contributions.

     The employer profit sharing contribution is discretionary based on amounts
     as authorized by the Board of Directors. All employer contributions have
     been made in the form of cash. Salary reduction contributions may range
     from 1% to 15% of qualified compensation subject to annual I.R.S. limits.
     Participants may also make voluntary after-tax contributions of up to 10%
     of their annual compensation in addition to the contribution through salary
     reduction. Rollover contributions are also permitted.

     PARTICIPANT ACCOUNTS - Each participant account is credited with the
     participant's contribution and allocations of the Company's contribution
     and Plan earnings offset by Plan administrative expenses. Each day, the
     Trustee calculates earnings and allocates gains and losses to each
     participant's account.

     INVESTMENT OF FUNDS - Delaware Management Trust Company ("Delaware" or
     "Trustee"), an affiliate of Lincoln National Corporation, is the trustee
     and recordkeeper of the Plan.

     Each participant may elect among the following investment vehicles:

     A.   STRONG GOVERNMENT SECURITIES FUND - seeks to provide a high level of
          current income by investing in securities issued or guaranteed by the
          U.S. government.

     B.   FIDELITY PURITAN FUND - seeks to maximize income, with growth of
          capital being a secondary objective. Invests in high-yielding
          securities, including common stocks, preferred stocks and bonds.

     C.   TEMPLETON INSTITUTIONAL FOREIGN EQUITY MUTUAL FUND - seeks long-term
          growth of capital by investing in companies generally located in
          foreign countries.




                                       5
<PAGE>


                 ROYAL APPLIANCE 401(k) RETIREMENT SAVINGS PLAN
                          NOTES TO FINANCIAL STATEMENTS

1.   PLAN DESCRIPTION AND BENEFITS (CONTINUED):

     D.   BLACKROCK SMALL CAPITALIZATION GROWTH FUND - seeks long-term capital
          growth by investing in stocks of small companies with earnings growth
          momentum and relative price strength.

     E.   MAS SMALL CAPITALIZATION VALUE PORTFOLIO - seeks long-term capital
          growth by investing in stocks of small companies with stocks selling
          at discounted price/earnings valuations.

     F.   MASSACHUSETTS INVESTORS GROWTH FUND - Seeks long term growth of
          capital and future income by choosing companies believed to have
          better-than-average long-term growth potential.

     G.   DAVIS NEW YORK VENTURE FUND - seeks long-term capital growth by
          investing in securities that have above average appreciation
          potential. This investment option was discontinued effective September
          1999. However, during January 2001, this investment option was
          reinstated.

     H.   DELAWARE S&P 500 INDEX FUND - seeks to return investment results that
          correspond to the price and yield performance of the S&P 500 Index.

     I.   DELAWARE PRESERVATION FUND - seeks to provide a high degree of safety,
          stable principal value and consistent and positive returns.

     J.   DELAWARE SELECT GROWTH FUND - seeks securities with high, consistent
          and accelerating earnings. Targets companies with earnings growth
          rates of 20% or more with capitalization of at least $300 million.

     K.   DELAWARE GROWTH AND INCOME FUND - seeks total return by providing
          capital appreciation potential plus dividend income. Invests in common
          stocks that have a better yield than the average dividend yield of the
          S&P 500 Index.

     L.   DELAWARE DEVON FUND - seeks stocks in "transition" from value to
          growth and/or mid-cap to large-cap. Identifies stocks with the
          potential for above average dividend growth. During January 2001, this
          investment option was discontinued and the participant funds were
          transferred to the Davis New York Venture Fund.

     M.   ROYAL STOCK FUND - This fund is comprised exclusively of Common
          Shares, without par value of the Company (Common Shares). Each
          participant electing to purchase Common Shares through the Stock Fund
          is permitted to vote such Common Shares in the same manner as any
          other shareholder and is furnished proxy materials to such effect. If
          a participant does not vote their proxy, the Trustee votes the proxy
          for the participant's Common Shares. Common Shares purchased under the
          Account are generally purchased on the open market for cash. The price
          of Common Shares purchased on the open market is priced for each
          participant's account at an average purchase price of all shares
          purchased, plus brokerage fees, taxes, commissions and expenses
          incident to the purchase, unless it is determined that the Company
          will bear these costs. No more than 50% of a participant's
          contributions may be invested in the Royal Stock Fund.

     Participants can allocate their contribution between the Funds in various
     percentages, which can be changed on a daily basis throughout the year.





                                       6
<PAGE>


                 ROYAL APPLIANCE 401(k) RETIREMENT SAVINGS PLAN
                          NOTES TO FINANCIAL STATEMENTS

1.   PLAN DESCRIPTION AND BENEFITS (CONTINUED):

     VESTING - All contributions are 100% vested and non-forfeitable.

     LOANS, DISTRIBUTIONS AND WITHDRAWALS - Loans and hardship withdrawals are
     permitted pursuant to the terms of the Plan. In addition, participants may
     make hardship withdrawals from the voluntary after-tax contribution account
     by filing a written request at least thirty (30) days in advance. Loans are
     secured by the balance in the participant's vested account and carry an
     interest rate equal to the prime rate plus one percent on the date of the
     loan. Interest rates range from 5.75% to 10.50%. Principal and interest are
     paid ratably through payroll deductions.

     Participants and their beneficiaries are entitled to receive a distribution
     of their account balances upon death, disability, termination of employment
     prior to retirement, or retirement. Distributions may be made in a lump sum
     or periodic payments, as may be elected by the participants or their
     beneficiaries, subject to the terms of the Plan.

     EXPENSES - Administrative fees, brokerage fees and other Plan expenses are
     the responsibility of the Plan. The Company, at its discretion has elected
     to pay these costs directly.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     BASIS OF PRESENTATION - The accompanying financial statements have been
     prepared on an accrual basis in accordance with accounting principles
     generally accepted in the United States of America. Certain
     reclassifications have been made to prior year's financial statements to
     conform to the current year presentation.

     USE OF ESTIMATES - The preparation of financial statements in accordance
     with accounting principles generally accepted in the United Sates of
     America requires the use of management's estimates. These estimates are
     subjective in nature and involve judgments that affect the reported amounts
     of assets and liabilities, the disclosure of contingent assets and
     liabilities at fiscal year end and the reported amounts of additions and
     deductions during the fiscal year. Actual results could differ from those
     estimates.

     RISKS AND UNCERTAINTIES - Financial instruments which potentially subject
     the Plan to concentrations of credit risk consist primarily of securities
     in which the Plan invests. Investment securities are exposed to various
     risks, such as interest rate, market and credit risks. Due to the level of
     risk associated with certain investment securities, it is at least
     reasonably possible that changes in the near-term could materially affect
     participants' account balances and the amounts reported in the statements
     of net assets available for plan benefits.

     CASH AND CASH EQUIVALENTS - The Plan considers all liquid investments with
     original maturities of three months or less to be classified as cash
     equivalents. Cash equivalents are stated at cost, which approximates market
     value.

     INVESTMENTS - The Plan's investments are maintained in a trust fund
     administered by the Trustee. Investments are recorded at acquisition cost
     on a trade-date basis, which includes brokerage commissions, and are
     revalued each business day based upon quoted market prices. In the
     statements of changes in net assets available for plan benefits, the Plan
     presents the realized appreciation or depreciation on investments and the
     unrealized appreciation or depreciation in the fair value of investments.
     Net appreciation or depreciation is determined based on the difference
     between average cost of the investments and the market value as of each
     valuation date of such investment. Average cost is determined based on the
     weighted average cost of all investments purchased less any dispositions
     during the Plan year.

     DISTRIBUTIONS - Plan distributions are recorded when paid.



                                       7
<PAGE>


                 ROYAL APPLIANCE 401(k) RETIREMENT SAVINGS PLAN
                          NOTES TO FINANCIAL STATEMENTS


3.   INVESTMENTS

     The following presents the market value of investments that represent 5
     percent or more of the Plan's net assets at either December 31, 2001 or
     2000:


<TABLE>
<CAPTION>
                                                                                     DECEMBER 31,
                                                                       --------------------------------------
                                                                             2001                 2000
                                                                       --------------------------------------
<S>                                                                          <C>                 <C>
Strong Governent Securities Fund,
112,410 and 63,530 shares, respectively                                      $ 1,212,909         $   672,787

Fidelity Purtian Fund, 111,314 and
121,164 shares, respectively                                                 $ 1,966,911         $ 2,281,522

Templeton Institutional Foreign Equity Mutual Fund,
81,165 and 82,275 shares, respectively                                       $ 1,174,454         $ 1,394,568

Blackrock Small Capitalization Growth Fund
137,134 and 153,044 shares, respectively                                     $ 1,814,287         $ 3,083,847

Davis New York Venture Fund, 63,068 shares as
of December 31, 2001                                                         $ 1,603,819         $         -

Delaware S&P 500 Index Fund, 393,041
and 422,653 shares, respectively                                             $ 2,641,239         $ 3,271,334

Delaware Preservation Fund, 183,132 and
131,228 shares, respectively                                                 $ 2,949,154         $ 1,996,640

Delaware Select Growth Fund, 33,434 and 33,729
shares, respectively                                                         $   764,980         $ 1,021,988

Delaware Devon Fund, 94,061 shares as
of December 31, 2000                                                         $         -         $ 1,607,509
</TABLE>



     The net (depreciation) appreciation in the fair value of the Plan's
     investments for fiscal years 2001 and 2000 was as follows:




                                                 2001            2000
                                          -----------     -----------

          Equity mutual funds             $(2,186,947)    $(1,435,210)
          Fixed income mutual funds            25,104          32,777
          Common stock                        174,344        (137,914)
                                          -----------     -----------

               Total                      $(1,987,499)    $(1,540,347)
                                          ===========     ===========





                                       8
<PAGE>
                 ROYAL APPLIANCE 401(k) RETIREMENT SAVINGS PLAN
                          NOTES TO FINANCIAL STATEMENTS


4.   INCOME TAX STATUS:

     The Internal Revenue Service (IRS) has issued a favorable determination
     letter dated June 20, 1995, with respect to the Plan's qualified status, as
     amended, under Section 401(a) of the Internal Revenue Code (Code). As such,
     the trust established thereunder is exempt from Federal income taxes under
     Section 501(a) of the Code. All withdrawals, with the exception of
     after-tax employee contributions, are taxable to the participants of the
     Plan.

5.   RIGHT TO TERMINATE:

     Although it has not expressed any interest to do so, the Company has the
     right to terminate the Plan at any time.

6.   RELATED PARTY TRANSACTIONS:

     At December 31, 2001 and 2000, the Plan held units of participation in
     certain mutual funds in which Delaware Investment Company is the advisor to
     the fund and Trustee to the Plan. As of December 31, 2001 and 2000, the
     funds had total cost of $7,135,339 and $5,324,051 and a total market value
     of $6,722,204 and $4,876,550, respectively.









                                       9
<PAGE>

                 ROYAL APPLIANCE 401(K) RETIREMENT SAVINGS PLAN
          ITEM 27 (a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
                             AS OF DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                              Description of investment
                                                           including maturity date, rate of
                  Identity of issue,                            interest, collateral,
          borrower, lessor, or similar party                    par or maturity value              Cost          Market Value
--------------------------------------------------------  ----------------------------------  ----------------  ----------------

<S>                                                                  <C>                          <C>               <C>
Strong Government Securities Fund                                    Mutual Fund                  $ 1,207,771       $ 1,212,909
Fidelity Puritan Fund                                                Mutual Fund                    2,082,024         1,966,911
Templeton Institutional Foreign Equity Mutual Fund                   Mutual Fund                    1,349,462         1,174,454
Blackrock Small Capitalization Growth Fund                           Mutual Fund                    2,661,609         1,814,287
MAS Small Capitalization Value Portfolio                             Mutual Fund                      752,830           713,363
Massachusetts Investors Growth Fund                                  Mutual Fund                      137,845           113,468
Davis New York Venture Fund                                          Mutual Fund                    1,793,878         1,603,819
Delaware S&P 500 Index Fund                                          Mutual Fund                    2,996,179         2,641,239
Delaware Preservation Account                                        Mutual Fund                    2,819,374         2,949,154
Delaware Select Growth Fund                                          Mutual Fund                      934,450           764,980
Delaware Growth & Income Fund                                        Mutual Fund                      385,336           366,831
Royal Stock Fund                                                    Common Stock                      964,618           866,403
Royal Cash Fund                                                         Cash                            2,766             2,766
Participant Loans                                                  5.75% to 10.50%                    857,655           857,655
                                                                                                     --------          --------

                                                                                                 $ 18,945,797      $ 17,048,239
</TABLE>



                                       10
<PAGE>

      ROYAL APPLIANCE 401(k) RETIREMENT SAVINGS PLAN
     ITEM 27 (d) - SCHEDULE OF REPORTABE TRANSACTIONS
           FOR THE YEAR ENDED DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                                 Purchase         Selling          Cost of        Realized Gain
    Identity of Party Involved        Description of Asset        Price            Price            Asset            on Sale
-----------------------------------  -----------------------  ---------------  ---------------  ---------------  ----------------

<S>                                  <C>                         <C>              <C>               <C>                 <C>
Delaware Devon Fund                  Mutual Fund                 $         -      $ 1,647,344      $ 1,571,180          $ 76,164

Davis New York Venture Fund          Mutual Fund                 $ 1,647,344      $         -      $ 1,647,344          $      -
</TABLE>











                                       11