<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1997
------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________________ to _____________________
Commission File Number: 0-27202
ADVANCED LIGHTING TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
OHIO 34-1803229
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2307 EAST AURORA ROAD, SUITE ONE, TWINSBURG, OHIO 44087
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(Address of principal executive offices) (Zip Code)
330/963-6680
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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. Yes [X] No [ ]
There were 16,471,036 shares of the Registrant's Common Stock, $.001 par value
per share, outstanding as of November 10, 1997.
<PAGE> 2
INDEX
ADVANCED LIGHTING TECHNOLOGIES, INC.
PAGE NO.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets --
September 30, 1997 and June 30, 1997 2
Condensed Consolidated Statements of Income --
Three months ended September 30, 1997 and
September 30, 1996 3
Condensed Statement of Consolidated
Shareholders' Equity -- Three months ended
September 30, 1997 4
Condensed Consolidated Statements of Cash Flows --
Three months ended September 30, 1997
and September 30, 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II OTHER INFORMATION
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
EXHIBIT INDEX 17
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<PAGE> 3
ADVANCED LIGHTING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, JUNE 30,
1997 1997
------------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 23,839 $ 4,198
Short-term investments 4,075 4,075
Trade receivables, less allowances of $318 and $315 32,659 28,916
Receivables from released parties 438 346
Inventories:
Finished goods 23,525 21,143
Raw materials and work-in-process 8,944 7,982
-------- --------
32,469 29,125
Prepaid expenses 1,636 1,363
Deferred taxes 2,202 2,566
-------- --------
Total current assets 97,318 70,589
Property, plant and equipment
Land and buildings 6,177 6,143
Machinery and equipment 37,550 32,712
Furniture and fixtures 8,303 7,704
-------- --------
52,030 46,559
Less accumulated depreciation 9,201 8,558
-------- --------
42,829 38,001
Deferred taxes 535 535
Receivables from related parties 2,020 1,209
Investments in affiliates 8,036 7,565
Other assets 11,892 8,954
Excess of cost over net assets of businesses acquired, net 7,878 7,985
-------- --------
$170,508 $134,838
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt $ 3,738 $ 3,731
Account payable 11,221 15,773
Payables to related parties 579 699
Employee-related liabilities 2,806 2,674
Accrued income and other taxes 2,632 1,689
Other accrued expenses 3,736 3,643
-------- --------
Total current liabilities 24,712 28,209
Long-term debt 3,143 35,908
Other liabilities 177 463
Deferred taxes 4,305 4,226
Shareholders' equity
Common stock 16 13
Paid-in-capital 128,733 59,087
Retained earnings 9,422 6,932
-------- --------
138,171 66,032
-------- --------
$170,508 $134,838
======== ========
</TABLE>
See notes to condensed consolidated financial statements
2
<PAGE> 4
ADVANCED LIGHTING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share dollar amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1997 1996
-------- --------
<S> <C> <C>
Net sales $ 30,242 $ 18,335
Cost and expenses:
Cost of sales 17,546 9,900
Marketing and selling 4,416 3,062
Research and development 1,594 1,277
General and administrative 2,286 1,772
Consumer product advertising 269 --
Fiber optic joint venture formation costs 212 --
Amortization of intangible assets 219 47
-------- --------
Income from operations 3,700 2,277
Other income (expenses):
Interest expense (337) (237)
Interest income 527 261
-------- --------
Income before income taxes 3,890 2,301
Income taxes 1,400 831
-------- --------
Net income $ 2,490 $ 1,470
======== ========
Earnings per share $ .15 $ .11
======== ========
Shares used for computing per share amounts 16,625 13,034
======== ========
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE> 5
ADVANCED LIGHTING TECHNOLOGIES, INC.
CONDENSED STATEMENT OF CONSOLIDATED SHAREHOLDERS' EQUITY (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
--------------------------------------------------
Common Paid-In Retained
Stock Capital Earnings Total
--------------------------------------------------
(Dollar amounts in thousands)
<S> <C> <C> <C> <C>
Balance at July 1, 1997 $ 13 $ 59,087 $ 6,932 $ 66,032
Net income - - 2,490 2,490
Net proceeds from public offering of
3,000,000 common shares 3 69,332 - 69,335
Stock options exercised - 314 - 314
------- -------- ------- -------
BALANCE AT SEPTEMBER 30, 1997 $ 16 $128,733 $ 9,422 $138,171
======= ======== ======= ========
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE> 6
<TABLE>
<CAPTION>
ADVANCED LIGHTING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 30,
---------------------------------------
1997 1996
------------ -------------
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,490 $ 1,470
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 863 585
Deferred income taxes 443 587
Changes in operating assets and liabilities:
Trade receivables (3,743) (2,890)
Inventories (3,343) (1,036)
Prepaids and other assets (1,100) (451)
Accounts payable and accrued expenses (3,994) (484)
Other (378) (101)
------------ -------------
Net cash used in operating activities (8,762) (2,320)
INVESTING ACTIVITIES
Capital expenditures -- (2,888)
Purchase of short-term investments -- (15,125)
Investments in affiliates (671) (211)
Use of net proceeds from public offering:
Capital expenditures (5,095) --
Acquisition of minority interest in Fiberstars, Inc. (2,835) --
------------ -------------
Net cash used in investing activities (8,601) (18,224)
FINANCING ACTIVITIES
Proceeds from revolving credit facility 14,957 26,451
Payments of revolving credit facility (15,107) (18,990)
Proceeds from long-term debt 1,387 1,532
Payments of long-term debt and capital leases (882) (1,440)
Issuance of common stock 314 --
Net proceeds from public offering 69,335 30,091
Use of net proceeds from public offering (excluding $7,459
used for working capital purposes for the three months
ended September 30, 1997):
Payment of long-term debt (7,400) --
Payment of revolving credit facility (25,600) (13,700)
------------ -------------
Net cash provided by financing activities 37,004 23,944
------------ -------------
Increase in cash and cash equivalents 19,641 3,400
Cash and cash equivalents, beginning of period 4,198 1,682
------------ -------------
Cash and cash equivalents, end of period $ 23,839 $ 5,082
============ =============
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 362 $ 118
Income taxes paid 213 45
Equipment acquired through capital leases 376 244
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE> 7
ADVANCED LIGHTING TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1997
(Dollar amounts in thousands)
A. ORGANIZATION
Advanced Lighting Technologies, Inc. (the "Company") is an innovation-driven
designer, manufacturer and marketer of metal halide lighting products, including
materials, system components, systems, and production equipment.
B. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and
disclosures required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. For further information, refer to the consolidated financial
statements and notes thereto included in the Company's annual report on Form
10-K for the year ended June 30, 1997. Operating results for the three months
ended September 30, 1997 are not necessarily indicative of the results that may
be expected for the full-year ending June 30, 1998.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions in
certain circumstances that affect amounts reported in the consolidated financial
statements and notes. Actual results could differ from those estimates.
Certain reclassifications were made to prior year amounts to conform to the
current period presentation.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (FAS) No. 128, "Earnings per Share," which
requires changes in computing and presenting earnings per share effective for
the quarter ended December 31, 1997. At that time, the Company will be required
to change the method currently used to compute earnings per share and restate
all prior periods. The adoption of this standard will not have a material impact
on the Company's earnings per share.
In June 1997, the Financial Accounting Standards Board issued FAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information". The
statement requires a "management" approach to reporting financial and
descriptive information about a Company's operating segments. The Company must
adopt this statement in the first quarter of fiscal 1999. Management is
currently studying the potential effect of adopting this statement.
6
<PAGE> 8
ADVANCED LIGHTING TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--CONTINUED
SEPTEMBER 30, 1997
(Dollar amounts in thousands)
C. ISSUANCE OF COMMON STOCK
In July 1997, the Company issued three million shares of its Common Stock in a
public offering. Net proceeds amounted to $69,335 and $33,000 of the net
proceeds from this offering were used to repay substantially all amounts
outstanding under its Revolving Credit and Security Agreement and its Term Note
(the "Loan Agreement").
In connection with the completion of the Ruud Lighting, Inc. transaction (as
described in Note G), additional debt financing will be required. In obtaining
that additional financing, it is anticipated that the Company will repay any
amounts outstanding and replace the Loan Agreement. This early extinguishment of
debt under the Loan Agreement will result in a noncash write-off of deferred
financing costs and an extraordinary charge against earnings in the quarter when
the replacement of the Loan Agreement occurs, presently anticipated to be the
second quarter of fiscal 1998. The amount of this extraordinary charge, net of
applicable estimated income tax benefits, is estimated to be $650.
D. CONSUMER PRODUCT ADVERTISING COSTS
In connection with the Company's metal halide lamp systems for the residential
and consumer markets, beginning with the sale of portable lamps in March 1997,
the Company implemented a direct marketing program which resulted in $269 of
advertising and promotion costs being charged to operations during the first
quarter of fiscal 1998.
E. FIBER OPTICS JOINT VENTURE FORMATION COSTS
On May 6, 1997, the Company entered into a joint development agreement with Rohm
and Haas Company ("Rohm and Haas"), for the development of advanced fiber optic
cable systems using metal halide lamps. On November 3, 1997, the Company
announced that it will form a joint venture with Rohm and Haas, which will focus
on the manufacture and sale of fiber optic cable and illuminators and fiber
optic lighting systems to the worldwide lighting market. Upon the formation of
the joint venture, the Company will be obligated to contribute $5,000 cash, its
subsidiary, Advanced Cable Lite Corporation, and other fiber optic system
assets. In connection with this joint venture, the Company incurred $212 of
formation and development costs which were charged to operations during the
first quarter of fiscal 1998.
7
<PAGE> 9
ADVANCED LIGHTING TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--CONTINUED
SEPTEMBER 30, 1997
(Dollar amounts in thousands)
F. INVESTMENT IN FIBERSTARS, INC.
On July 30, 1997, the Company invested $2,835 of cash in exchange for a 19.6%
equity interest in Fiberstars, Inc., a marketer and distributor of fiber optic
lighting products. The Company accounts for this investment under the cost
method.
G. RUUD LIGHTING, INC. TRANSACTION
In September 1997, the Company announced the signing of a letter of intent to
acquire all of the outstanding capital stock of Ruud Lighting, Inc. Under the
terms of the proposed agreement, Ruud Lighting's shareholders would receive
$35,500 in cash and three million shares of the Company's Common Stock. The
Company intends to complete this acquisition through additional debt financing.
The transaction is subject to certain conditions, including completion by the
Company of financing arrangements, satisfactory completion of due diligence, and
completion of the premerger notification process.
8
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
(Dollar amounts in thousands)
This report on Form 10-Q may contain forward-looking statements. For this
purpose, any statement contained herein that is not a statement of historical
fact may be deemed to be a forward-looking statement. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," and similar
expressions are intended to identify forward-looking statements. There are a
number of factors that could cause the Company's actual results to differ
materially from those indicated by such forward-looking statements.
The following is management's discussion and analysis of certain significant
factors which have affected the results of operations and should be read in
conjunction with the accompanying unaudited Condensed Consolidated Financial
Statements and notes thereto.
RESULTS OF OPERATIONS -- SELECTED ITEMS AS A PERCENTAGE OF NET SALES
The following table sets forth, as a percentage of net sales, certain items in
the Company's Condensed Consolidated Statements of Income for the indicated
periods:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
------------------
1997 1996
------ ------
<S> <C> <C>
Net sales...................................... 100.0% 100.0%
Costs and expenses:
Cost of sales................................ 58.0 54.0
Marketing and selling........................ 14.6 16.7
Research and development..................... 5.3 7.0
General and administrative................... 7.6 9.7
Consumer product advertising................. 0.9 -
Fiber optic joint venture formation costs.... 0.7 -
Amortization of intangible assets............ 0.7 0.2
------ ------
Income from operations......................... 12.2 12.4
Other income (expense):
Interest expense............................. (1.1) (1.3)
Interest income.............................. 1.7 1.4
------ ------
Income before income taxes..................... 12.8 12.5
Income taxes................................... 4.6 4.5
------ ------
Net income..................................... 8.2% 8.0%
====== ======
</TABLE>
Factors which have affected the results of operations and net income for the
quarter ended September 30, 1997 as compared to the comparable period of 1996
are discussed below.
9
<PAGE> 11
QUARTER ENDED SEPTEMBER 30, 1997 COMPARED WITH QUARTER ENDED SEPTEMBER 30, 1996
Net sales. Net sales increased 64.9% to $30,242 for the first quarter of fiscal
1998 from $18,335 for the first quarter of fiscal 1997. This increase was a
result of sales growth in system components including power supplies ($7,872),
materials ($1,755), systems ($787) and lamp production equipment ($1,493). The
increase in system components, materials, and systems was primarily attributable
to increased unit volume, while the increase in equipment sales resulted from an
increase in equipment contracts in-progress, as compared with the number of
contracts-in-progress during the first quarter of fiscal 1997.
Cost of Sales. Cost of sales increased 77.2% to $17,546 in the first quarter of
fiscal 1998 from $9,900 in the first quarter of fiscal 1997. As a percentage of
net sales, cost of sales increased to 58.0% in the first quarter of fiscal 1998
from 54.0% in the first quarter of fiscal 1997. This increase was primarily
attributable to a change in the product mix, whereby lower-margin power supplies
sales represented a larger component of total sales in fiscal 1998.
Marketing and Selling Expenses. Marketing and selling expenses increased 44.2%
to $4,416 in the first quarter of fiscal 1998 from $3,062 in the first quarter
of fiscal 1997. Marketing and selling expenses, as a percentage of net sales,
decreased to 14.6% in the first quarter of fiscal 1998 from 16.7% in the first
quarter of fiscal 1997. This decrease resulted primarily from lower marketing
expenses associated with the sale of power supplies.
Research and Development Expenses. Research and development expenses increased
to $1,594 in the first quarter of fiscal 1998, a 24.8% increase over the $1,277
incurred in the first quarter of fiscal 1997. This increase arises from
increased spending for the: (i) expansion of the line of new lamps intended to
replace many first generation metal halide lamps in industrial and commercial
applications; (ii) development and testing of electronic power supply systems,
and (iii) development of new materials for the world's major lighting;
manufacturers. As a percentage of net sales, research and development expenses
decreased to 5.3% in the first quarter of fiscal 1998 from 7.0% in the first
quarter of fiscal 1997.
General and Administrative Expenses. General and administrative expenses
increased 29.0% to $2,286 in the first quarter of fiscal 1998 from $1,772 in the
first quarter of fiscal 1997. As a percentage of net sales, general and
administrative expenses decreased to 7.6% in the first quarter of fiscal 1998
from 9.7% in the first quarter of fiscal 1997. The decrease primarily reflects a
spending growth rate considerably lower than sales increases through the
leveraging of fixed costs as sales levels increase.
Consumer Product Advertising Costs. In connection with the Company's metal
halide lamp systems for the residential and hospitality markets, beginning with
the sale of table and floor lamps in March 1997, the Company implemented a
direct marketing program which resulted in $269 of advertising and promotion
costs being charged to operations during the first quarter of fiscal 1998.
Fiber Optic Joint Venture Formation Costs. On May 6, 1997, the Company entered
into a joint development agreement with Rohm and Haas Company ("Rohm and Haas")
for the development of advanced fiber optic cable systems using metal halide
lamps. On November 3, 1997, the Company announced that it will form a joint
venture with Rohm and Haas, which will focus on the manufacture and sale of
fiber optic cable and illuminators and fiber optic lighting
10
<PAGE> 12
systems to the worldwide lighting market. In connection with this proposed joint
venture, the Company incurred $212 of formation and development costs which were
charged to operations during the first quarter of fiscal 1998.
Income from Operations. As a result of the aforementioned factors, during the
first quarter of fiscal 1998 income from operations increased 62.5% to $3,700
from $2,277 during the first quarter of fiscal 1997. As a percentage of net
sales, income from operations remained relatively constant at 12.2% in the first
quarter of fiscal 1998 as compared to 12.4% in the first quarter of fiscal 1997.
Interest Expense. Interest expense increased to $337 during the first quarter of
fiscal 1998 as compared to $237 for the first quarter of fiscal 1997. This
increase resulted from a higher average debt outstanding during the first
quarter of fiscal 1998 as compared to the first quarter of fiscal 1997.
Interest Income. Interest income increased to $527 during the first quarter of
fiscal 1998 as compared to $261 in the first quarter of fiscal 1997. This
increase is attributable to higher average cash equivalents and short-term
investments during the first quarter of fiscal 1998 as compared to the first
quarter of fiscal 1997.
Income Taxes. Income tax expense increased 68.5% to $1,400 in the first quarter
of fiscal 1998, from $831 for the comparable period of the preceding year. The
increase was primarily due to the increase in income from operations.
At June 30, 1997, the Company had United States net operating loss
carryforwards ("NOLs") for tax purposes of approximately $4,500 to offset
future taxable income. These NOLs expire in the fiscal years 2006 through 2011.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal financial requirements are for manufacturing equipment,
market development activities, research and development efforts, investments in
business acquisitions, joint ventures and working capital. These requirements
have been, and the Company expects they will continue to be, financed through a
combination of cash flow from operations, borrowings under various credit
facilities and the sales of common stock (including the remaining proceeds from
the July 1996 and July 1997 issuances of common stock currently invested in
short-term instruments and cash equivalents).
During July 1997, the Company received $74,250 of proceeds from the sale of
three million shares of its common stock in connection with a public offering.
Underwriting fees amounted to $3,720 and additional costs associated with the
public offering, primarily for legal, accounting, consulting and printing fees,
amounted to $1,195. The net proceeds were $69,335, of which $33,000 was used to
reduce debt outstanding under the Company's domestic Revolving Credit and
Security Agreement and its Term Note (the "Loan Agreement"). Of the remaining
net proceeds, $5,095 was used for capital expenditures, primarily production
equipment and leasehold improvements, and $2,835 was used to purchase 19.6% of
Fiberstars, Inc., a company specializing in the marketing and distribution of
fiber optic lighting products. A portion of the remaining proceeds were used for
working capital purposes. As of September 30, 1997, the Company had
approximately $27,800 in cash and cash equivalents and short-term investments.
11
<PAGE> 13
Net cash used in operating activities during the three months ended September
30, 1997 amounted to $8,762, as a result of higher accounts receivable arising
from increased sales, an increase in inventory levels to support higher sales
service levels, and a reduction in accounts payable.
The Company's working capital at September 30, 1997 was $72,606, resulting in a
working capital ratio of 3.9 to 1.0, as compared to $42,380 or 2.5 to 1.0 at
June 30, 1997. At September 30, 1997, the Company had no working capital
advances outstanding under its revolving credit agreements.
In September 1997, the Company announced the signing of a letter of intent to
acquire all of the outstanding capital stock of Ruud Lighting, Inc. for $35,500
and three million shares of the Company's Common Stock. In connection with the
completion of the Ruud Lighting, Inc. transaction, additional debt financing
will be required. In obtaining that additional financing, it is anticipated that
the Company will repay any amounts outstanding and replace its existing Loan
Agreement. This early extinguishment of debt under the Loan Agreement will
result in a noncash write-off of deferred financing costs and an extraordinary
charge against earnings in the quarter when the replacement of the Loan
Agreement occurs, presently anticipated to be the second quarter of fiscal 1998.
The amount of this extraordinary charge, net of applicable estimated income tax
benefits, is estimated to be $650.
Additionally, over the next twelve months the Company intends to spend
approximately $12,000 on additional production equipment.
The Company believes that the successful completion of the July 1997 offering
has strengthened its financial position and enhanced its ability to obtain
additional financing. In summary, the Company believes that the combination of
its available cash, current borrowing facilities and strengthened financial
position will be sufficient for the Company to fund its operations for at least
the next 12 months. In addition, the Company is presently discussing with
potential lenders the establishment of a comprehensive financing to facilitate
its prospective acquisition of Ruud in January 1998 and its other short and
long-term financial requirements.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (FAS) No. 128, "Earnings per Share," which
requires changes in computing and presenting earnings per share effective for
the quarter ended December 31, 1997. At that time, the Company will be required
to change the method currently used to compute earnings per share and restate
all prior periods. The adoption of this standard will not have a material impact
on the Company's earnings per share.
In June 1997, the Financial Accounting Standards Board issued FAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information". The
statement requires a "management" approach to reporting financial and
descriptive information about a Company's operating segments. The Company must
adopt this statement in the first quarter of fiscal 1999. Management is
currently studying the potential effect of adopting this statement.
12
<PAGE> 14
PART II. OTHER INFORMATION
Except as noted below, the items in Part II are inapplicable or, if applicable,
would be answered in the negative. These items have been omitted and no other
reference is made thereto.
ITEM 5. OTHER INFORMATION
(a) On September 18, 1997, the Company announced the signing of a letter of
intent to acquire all of the outstanding capital stock of Ruud Lighting, Inc.
("Ruud"), located in Racine, Wisconsin. Started in 1982, Ruud is the world's
leading direct marketer of high-intensity discharge ("HID") lighting systems,
with a strong focus on metal halide installations, and it has established one of
the best known brand names in the lighting systems industry due to unsurpassed
product quality and customer service. Ruud manufactures and directly markets HID
lighting systems for commercial, industrial, outdoor, and retail lighting
applications to its more than 20,000 customers. Ruud's sales for its fiscal year
ending November 30, 1997 are expected to exceed $65 million.
Under the terms of the proposed agreement, Ruud's shareholders would
receive $35.5 million in cash and three million shares of Advanced Lighting
Technologies, Inc. ("ADLT") common stock. The transaction is subject to certain
conditions, including completion by ADLT of financing arrangements, satisfactory
completion of due diligence, and completion of the premerger notification
process. The transaction is expected to close in January 1998. After closing,
Alan J. Ruud, founder and Chief Executive Officer of Ruud, will remain in that
capacity and will join the ADLT board of directors as Vice-Chairman.
(b) On November 3, 1997, the Company announced that it will form a joint
venture with Rohm and Haas Company of Philadelphia, Pennsylvania to provide
total fiber optic lighting systems to the worldwide lighting market. Under the
terms of the joint venture, each party will contribute its fiber optic lighting
assets and working capital.
Rohm and Haas is a Philadelphia-based specialty chemical company with
annual sales of more than $4 billion. Its products are used to impart unique
performance characteristics to consumer products around the world. Rohm and
Haas, an acknowledged leader in acrylic technology, also offers a full range of
products for the building, agricultural and semiconductor industries.
13
<PAGE> 15
(c) The following Earnings Statement (Unaudited) for the twelve month
period ended September 30, 1997 covers a period of twelve months beginning 77
days after the effective date of the Company's Registration Statement (File No.
333-05953) for its July 1996 public offering, and is hereby made available to
security holders pursuant to Rule 158 of the Securities Act of 1933, as amended.
<TABLE>
<CAPTION>
ADVANCED LIGHTING TECHNOLOGIES, INC.
Earnings Statements (Unaudited)
Twelve month period ended September 30, 1997
(In thousands, except per share dollar amounts)
<S> <C>
Net sales $ 98,397
Costs and expenses:
Cost of sales 53,384
Marketing and selling 16,788
Research and development 6,121
General and administrative 7,698
Settlement of claim 771
Consumer product advertising 667
Fiber optic joint venture formation costs 498
Amortization of intangible assets 578
--------------
Income from operations 11,892
Other income (expense):
Interest expense (1,613)
Interest income 1,111
--------------
Income before income taxes 11,390
Income taxes 3,266
--------------
Net income $ 8,124
==============
Earnings per share $ .56
==============
Shares used for computing per share amounts 14,462
==============
</TABLE>
14
<PAGE> 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
SEQUENTIAL
PAGE NUMBER/
EXHIBIT INCORPORATED
NUMBER TITLE BY REFERENCE
- ------- ----- ------------
3.1 Second Amended and Restated Articles of Incorporation
(as amended to February 12, 1997); Second Amendment to
Second Amended and Restated Articles of Incorporation. *
3.2 Code of Regulations. **
10.1 Letter of Intent dated September 17, 1997 between Advanced
Lighting Technologies, Inc. and Alan Ruud regarding Ruud
Lighting, Inc. Shares. 18
11 Statement Re: Computation of Earnings Per Share 30
27 Financial Data Schedule 31
- -------------
*Incorporated by reference to Exhibit of same number in Company's Quarterly
Report on Form 10-Q for the Quarterly Period ended December 31, 1996.
**Incorporated by reference to Company's Registration Statement on Form S-1,
Registration No. 33-97902, effective December 11, 1995.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the quarter ended September 30,
1997.
15
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 13, 1997 ADVANCED LIGHTING TECHNOLOGIES, INC.
By: /s/ Wayne R. Hellman
------------------------------------
Wayne R. Hellman
Chief Executive Officer
By: /s/ Nicholas R. Sucic
------------------------------------
Nicholas R. Sucic
Chief Financial Officer
16
<PAGE> 18
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS PAGE NO.
- ------- ----------------------- --------
3.1 Second Amended and Restated Articles of Incorporation (as
amended to February 12, 1997); Second Amendment to Second
Amended and Restated Articles of Incorporation. *
3.2 Code of Regulations. **
10.1 Letter of Intent dated September 17, 1997 between Advanced
Lighting Technologies, Inc. and Alan Ruud regarding Ruud
Lighting, Inc. Shares. 18
11 Statement Re: Computation of Earnings Per Share 30
27 Financial Data Schedule 31
- -------------
*Incorporated by reference to Exhibit of same number in Company's Quarterly
Report on Form 10-Q for the Quarterly Period ended December 31, 1996.
**Incorporated by reference to Company's Registration Statement on Form S-1,
Registration No. 33-97902, effective December 11, 1995.
17
<PAGE> 1
Exhibit 10.1
September 17, 1997
FINAL
Mr. Alan Ruud
RUUD LIGHTING, INC.
9201 Washington Avenue
Racine, WI 53406
Dear Mr. Ruud:
This binding letter of intent outlines the basic economic terms of the
agreement by Advanced Lighting Technologies, Inc. ("ADLT") to acquire all of the
outstanding capital stock of Ruud Lighting, Inc. ("RLI").
Subject to the preparation and execution of final, definitive agreements
and ancillary documents satisfactory in form and substance to the parties and
their counsel, we understand the principal terms of our agreement to include the
following:
1. STRUCTURE AND PURCHASE PRICE. At the Closing (as defined below), ADLT
will acquire all of the outstanding shares of RLI capital stock, by
merger or purchase, for compensation consisting of (a) $35.5 million in
cash and (b) three million shares of ADLT common stock (collectively,
the "Purchase Price"). The transaction will be fully taxable at closing.
Notwithstanding anything contained herein to the contrary, if the per
share Market Value of the ADLT common stock as of Closing (calculated
using the average of the closing prices on the Nasdaq National Market as
of the ten consecutive trading days immediately prior to Closing) equals
less than $23 per share, ADLT, RLI or the RLI Shareholders holding a
majority of the outstanding RLI common stock may elect not to proceed
with the sale described herein.
18
<PAGE> 2
2. SHAREHOLDERS' EQUITY. At Closing, shareholders' equity in RLI, as
reported by the statement of net worth required below, shall equal
$15,563,592. The cash portion of the purchase price shall increase by an
amount equaling the sum, if any, by which shareholders' equity in RLI at
Closing exceeded $15,563,592; the cash portion of the purchase price
shall decrease by an amount equaling the sum, if any, by which
shareholders' equity in RLI at Closing equaled less than $15,563,592. By
February 15, 1998, RLI shall deliver to ADLT audited financial
statements as of November 30, 1997 and a statement of net worth as of
Closing, both prepared in accordance with GAAP except as provided in
section 19 below. By February 28, 1998, the parties shall pay to each
other the amount, if any, necessary to effect the cash Purchase Price
adjustment required by the second sentence of this section 2.
3. PRE-CLOSING TRANSACTIONS. RLI may make tax-free distributions to the RLI
shareholders (the "RLI Shareholders") from its accumulated adjustment
account existing as of the date hereof. RLI may also distribute to the
RLI Shareholders RLI's earnings during calendar year and fiscal year
1997 (the "Earnings Distribution"). Such distributions shall not exceed
the total of (a) an amount which, together with all distributions made
from December 1, 1996 to the date hereof, does not exceed the net income
of RLI for the twelve months ended November 30, 1997 (as determined in
accordance with generally accepted accounting principles ("GAAP")
consistently applied) and (b) $1.5 million (which is the amount of the
total of the anticipated rebate adjustment, the anticipated LIFO
adjustment and the tax on the anticipated RLI income for December 1997).
The RLI Shareholders shall be responsible for the payment of all taxes
payable on such earnings. Except as recited in section 2 above, the
Purchase Price shall not be decreased or otherwise affected by the
payment of the Earnings Distribution.
4. CLOSING. Closing of the purchase described herein shall occur on January
2, 1998 (the "Closing"), with effect as of January 1, 1998, or, if
later, the earliest practicable date following satisfaction of all
conditions to closing; provided however, Closing shall occur no later
than January 20, 1998.
19
<PAGE> 3
5. MANAGEMENT. Upon Closing, RLI will become a direct or indirect
subsidiary of ADLT. After the Closing and until the ADLT annual
shareholders' meeting in 2000, Alan Ruud ("Mr. Ruud") shall serve as
Vice Chairman of ADLT and CEO of RLI and shall be appointed to serve on
the board of directors of ADLT. He will serve on the executive committee
of the ADLT's board. Mr. Ruud shall be entitled to nominate an
additional director of ADLT to serve a term expiring in 1999, such
nominee shall not be a past or present employee of RLI or ADLT and such
appointment to the board shall be subject to the approval of the
existing board of directors of ADLT, which approval the board shall not
unreasonably withhold.
6. EMPLOYMENT AGREEMENTS AND AGREEMENTS NOT TO COMPETE. Mr. Ruud, Ted
Sokoly and Don Wandler will each enter into three-year employment
agreements with ADLT, reciting the principal terms of his employment
with ADLT and prohibiting him from competing with ADLT for three years
following the termination of his employment by ADLT. Susan Ruud,
Christopher Ruud and Jason Johnson shall each enter into employment
agreements with ADLT for a minimum term of one year on terms reasonably
acceptable to the parties.
7. CONDUCT OF RLI'S BUSINESS. Prior to Closing, RLI shall operate its
business in the ordinary course, and, without the prior consent of ADLT,
shall not:
(a) Except as recited in section 3 hereof, pay any dividends or make any
distributions to shareholders, except RLI shall be permitted to
distribute to its shareholders real property which is not used in
RLI's business, and which is not subject to current development
plans for RLI's business or it may sell any such real property and
distribute to its shareholders the net proceeds of such sale;
(b) Take any action which would cause a material breach of any
representation or warranty of RLI or its shareholders in the
definitive agreement;
(c) Enter into any material agreement with any shareholder of any
affiliate of RLI or any shareholder of RLI; or
20
<PAGE> 4
(d) Make or commit to any individual capital expenditure in excess of
$200,000 or enter into any contract outside the ordinary course of
business.
8. CONDUCT OF ADLT'S BUSINESS. Prior to Closing, ADLT and its affiliates
shall operate their businesses in the ordinary course and, without the
prior consent of RLI, shall not:
(a) issue any shares of capital stock in ADLT or grant any options to
purchase such capital stock other than as already existing and
approved in ADLT's stock option plans (including the 1997 Billion
Dollar Incentive Award Plan approved by the board for the submission
to shareholders at the annual meeting);
(b) pay any dividends or make any distributions to shareholders, other
than dividends or distributions from a subsidiary to a parent
corporation;
(c) sell, transfer or convey, or enter an agreement to sell, transfer or
convey, all or a material portion of the assets of ADLT or of any
affiliate except in the ordinary course of business; provided,
however, that assets relating to fiber optic lighting systems may be
transferred to ADLT's proposed joint venture with Rohm and Haas
Company;
(d) take any action which would cause a material breach of any
representation or warranty of ADLT in the definitive agreement; or
(e) enter into any material agreement with any shareholder of any
affiliate of ADLT or any shareholder of ADLT.
9. DUE DILIGENCE.
(a) RLI Obligations. RLI shall grant access to ADLT, its accountants,
its counsel and its advisors to all of the facilities and books and
records of RLI in order to conduct a due
21
<PAGE> 5
diligence examination of RLI. Such access shall be subject in all
respects to our letter dated July 17, 1997 regarding
confidentiality. In addition, the due diligence process shall be
conducted to the extent possible during regular business hours and
with minimal disruption of the business of RLI;
(b) ADLT Obligations. ADLT shall grant access to RLI, its accountants,
its counsel and its advisers to all of the facilities and books and
records of ADLT in order to conduct a due diligence examination of
ADLT. Such access shall be subject to a confidentiality letter
similar in all respects to the existing letter dated July 17, 1997
between ADLT and RLI with such changes as may be necessary to
reflect the confidentiality obligations relating to a public
company. In addition, the due diligence process shall be conducted
to the extent possible during regular business hours and with
minimum disruption of the business of ADLT.
10. ENVIRONMENTAL ISSUES. ADLT will conduct a Phase I environmental audit
of the real property of RLI using a mutually-acceptable environmental
consultant. RLI and ADLT shall each receive a copy of the preliminary
report for review and comment. If the results of the final agreed upon
audit recommend further on-site testing, ADLT may request that such
tests be performed. RLI may, in its sole discretion, permit or prohibit
such further tests; provided, however that if RLI prohibits further
tests, ADLT may terminate this letter of intent and the transaction
contemplated hereby. ADLT shall bear the costs of all such testing.
11. REPRESENTATIONS AND WARRANTIES. Each party shall be required to make
representations and warranties regarding the conduct of its business
prior to the Closing. These representations and warranties will include,
without limiting the possible warranties which may be required,
representations as to (the following shall apply equal to both RLI and
ADLT unless specifically stated to the contrary below):
(a) The organization and good standing of the entity and its
subsidiaries;
22
<PAGE> 6
(b) Authority of the party to enter into the transaction and to conduct
its business;
(c) The fact that the shareholders entering the definitive agreement are
the only shareholders of RLI;
(d) Compliance of RLI's fiscal 1996 and 1997 audited financial
statements with GAAP (except as specifically stated herein), and
shareholders' equity at November 30, 1996 of not less that
$15,563,592;
(e) No distributions by RLI after November 30, 1996 in excess of amounts
described in section 3 above;
(f) Inventories and receivables (including maintenance of adequate
inventory and receivable of quality and quantity at not less than
historical levels) and trade payables (including amounts not in
excess of historical levels);
(g) Matters necessary for compliance with securities law, including
registration and financial reporting requirements;
(h) Absence of material litigation;
(i) Transactions with related parties;
(j) Compliance with laws, including environmental and tax laws;
(k) Material contracts;
(l) Intellectual property:
(m) Employee benefits, and
(n) Absence of material adverse events.
12. DEFINITIVE PURCHASE AGREEMENT. Following execution of this letter of
intent, RLI and ADLT will promptly commence, and use their best efforts
to complete, the negotiation, preparation and execution
23
<PAGE> 7
of a definitive purchase agreement and ancillary documents on or prior
to October 31, 1997, and shall diligently commence preparation of all
ancillary documents and preparation of materials necessary to obtain all
consents required to complete the transaction.
13. CONDITIONS TO CLOSING. In addition to the provisions recited in this
letter of intent, consummation of the acquisition will be subject to
satisfaction of the following conditions on or before Closing or the
date indicated below, if earlier:
(a) Preparation and execution of a definitive agreement and ancillary
documents reasonably acceptable to the parties;
(b) Evidence reasonably satisfactory to the party which would be harmed
thereby that there are no material breaches of any representations
and warranties of RLI, the RLI shareholders or ADLT, as applicable;
(c) Evidence reasonably satisfactory to ADLT of completion by RLI and
its shareholders in all material respects of all covenants required
to be completed by them prior to the Closing;
(d) Evidence reasonably satisfactory to ADLT of RLI's receipt of all
material consents and approvals to the transaction required under
any of RLI's material contracts;
(e) Within 45 days of the execution of this letter, ADLT shall have (i)
obtained approval by its board of directors of the transaction
described and (ii) received and provided a copy to RLI of any
required consent of ADLT's existing lender (or in the event ADLT
refinances its existing loan facilities, or obtains a new loan to
finance this transaction, consent by ADLT's principal lender or
lenders) which is required to consummate the transaction;
(f) Receipt of all necessary governmental approvals or consents,
including termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976;
24
<PAGE> 8
(g) No injunction, order or decree of any county or governmental
authority shall have been issued, the effect of which is to prevent
or materially condition the consummation of the transactions
contemplated hereby;
(h) Evidence reasonably satisfactory to RLI of receipt by the RLI
Shareholders of the Purchase Price;
(i) Evidence reasonably satisfactory to RLI of completion by ADLT in all
material respects of all covenants required to be completed by it
prior to the Closing;
(j) Evidence reasonably satisfactory to RLI that no material adverse
change has occurred in the business operations, financial condition
or prospects of ADLT.
(k) The results of the "due diligence" investigations performed by RLI
and ADLT shall have reasonably satisfied such parties.
(l) Reasonable satisfaction with the results of the "due diligence"
investigation by each party, provided that, if a party shall have
failed to provide access and materials as reasonably requested to
allow completion of such investigation by October 24, 1997, the
other party may notify the defaulting party of the failure to
satisfy this condition and, unless satisfied on or before October
31, 1997, may elect not to close hereunder.
14. EMPLOYEE BENEFITS. Subject to the ADLT due diligence review, ADLT will
maintain in force RLI employee benefit plans for a minimum of one year,
unless ADLT can provide improved benefit plans acceptable to RLI
management. ADLT will pursue a consolidation of all domestic
subsidiaries' benefits plans. ADLT intends that this consolidation will
include RLI as soon as practicable. ADLT believes this consolidated plan
will provide improved benefits to all ADLT companies, including RLI.
15. STOCK OPTION PLAN. ADLT shall implement a stock option plan pursuant to
which current RLI employees and directors shall receive compensatory,
market value option grants at the time of Closing to
25
<PAGE> 9
purchase approximately 800,000 shares of ADLT common stock. Such options
will be granted in accordance with the direction of the CEO of RLI and
be subject to forfeiture consistent with the terms and conditions
consistent with ADLT's existing stock option plans.
16. RESTRICTIONS ON ADLT COMMON STOCK TRANSFER. The common stock portion of
the purchase price will constitute a private sale and will not be
registered pursuant to the Securities Act of 1933. Each shareholder will
be required to agree to fulfill all steps reasonably necessary to
preserve the applicable exemptions from registration. In addition, each
shareholder will agree not to transfer any shares issued to such
shareholder as a portion of the Purchase Price for a period of two years
following the Closing. Notwithstanding the foregoing, the RLI
Shareholders shall be permitted to make charitable gifts and transfers
to other permitted transferees (so long as such transfers are in
compliance with applicable securities laws) after the Closing so long as
such transferees agree to be bound by the two-year transfer restriction.
Upon the expiration of two years following Closing (the "restricted
period"), such shareholders and transferees may transfer such common
stock in accordance with securities laws. Each common stock certificate
issued will bear a legend reciting the restrictions on transfer. Upon
expiration of the restricted period, ADLT shall remove any legend
reciting any restriction which no longer applies.
17. REGISTRATION RIGHTS. Any RLI Shareholder, and any transferee of any RLI
Shareholder (the "Ruud block"), will be entitled to "piggyback"
registration rights with respect to ADLT common stock received as a
result of the transaction on all registrations of ADLT shares after the
Restricted Period. Such "piggyback rights" will entitle the Ruud block
to sell shares in registered public offerings which include sales by
ADLT shareholders, participating on a pro rata basis with (a) the other
affiliated selling shareholders and (b) such other shareholders which
may then be entitled to participate in such offering. ADLT shall bear
all expenses (other than underwriters' commissions and discounts)
arising in connection with such registration.
26
<PAGE> 10
18. ADLT LOANS TO RLI SHAREHOLDERS. ADLT will, in April 1999, make
nonrecourse loans available to the RLI Shareholders up to an amount
equal to the excess of (a) the aggregate amount of taxes payable by the
RLI Shareholders on their 1998 taxable income which could have been
deferred had the exchange of ADLT stock for RLI stock been structured as
tax free over (b) $5 million. Such loans shall be secured solely by a
pledge of a portion of the ADLT stock acquired by such RLI Shareholder
and shall bear interest at the annual rate of 7%. On or before Closing,
the parties shall calculate the amount of the tax which will be payable
by each RLI Shareholder to determine the amount of the loan
corresponding to each RLI Shareholder.
19. CLOSING STATEMENT OF NET WORTH. RLI shall, with the assistance of its
accountants, prepare a statement of closing net worth of RLI (the
"Statement of Net Worth") prepared as of December 31, 1997. The
Statement of Net Worth shall be prepared as recited in section 3 above
(including exceptions permitting inventory stated at its FIFO basis and
accruing unreceived rebates relating to 1997).
20. PROCEDURES WITH RESPECT TO TAX ISSUES.
(a) APPRAISALS. In connection with the use of any discount to value the
ADLT shares transferred to the RLI Shareholders (whether for book
accounting or tax purposes), ADLT and RLI shall obtain an appraiser
reasonably satisfactory to each of the parties to appraise the value
of the ADLT stock transferred and the reasonableness of the
discount. Such appraisal shall value the shares for purposes of the
RLI Shareholder's tax liability and for purposes of valuing the
goodwill acquired in the transaction. ADLT shall bear all costs and
expense arising in connection with such appraisal.
ADLT and RLI shall obtain an appraisal, by an appraiser reasonably
satisfactory to each, for the value of the assets of RLI, which
value the parties shall use in the calculation of the tax impact
upon them (in making an Internal Revenue Code, section 338(h)(10)
election, etc.). ADLT shall bear all costs and expenses arising in
connection with such appraisal.
27
<PAGE> 11
(b) Indemnification. ADLT agrees to indemnify RLI and the RLI
Shareholders from any and all costs, losses and expenses arising in
any attempt by the Internal Revenue Service or Wisconsin Department
of Revenue or other taxing authority to tax the proceeds of the
transaction in an amount greater than the amount of tax calculated
by ADLT in its presentations to RLI and the RLI Shareholders. Such
costs and expenses shall include, without limitation, reasonable
attorneys' fees incurred in defending against a claim by the
Internal Revenue Service, Department of Revenue or other taxing
authority (whether or not successful), any losses, penalties or
interest (but not additional taxes) payable in the event of an
adverse determination, and any and all other costs and expenses.
21. LIFE INSURANCE. Prior to January 1, 1998, Mr. Ruud may purchase, and the
parties agree to permit Mr. Ruud to purchase, at its cash surrender
value, the $2,000,000 life insurance policy presently owned by RLI on
the life of Mr. Ruud.
22. EXPENSES. ADLT shall be responsible for all of its costs and expenses in
connection with this letter, the agreement and the transaction. RLI
shall be responsible for all of the costs and expenses of RLI and the
RLI Shareholders in connection with this letter, the agreement and the
transaction.
23 PUBLICITY. RLI recognizes that ADLT is a public company and is required
by law to announce major corporate developments. ADLT and RLI will issue
a joint press release announcing the execution of this letter of intent
(which release will occur no sooner than September 18, 1997) and will
make such other disclosures as the parties mutually agree subject in all
cases to ADLT's public disclosure obligations as ADLT and its counsel
reasonably determine.
24 EXCLUSIVE NEGOTIATIONS. Until the later of execution of the definitive
agreement or December 31, 1997, RLI shall not, nor shall it give
authorization or permission to any of its shareholders to institute,
continue or otherwise entertain or maintain negotiations or
28
<PAGE> 12
discussions with any other person, firm or corporation with respect to
the sale of all, or substantially all, the capital stock, business or
assets of RLI. RLI and the RLI Shareholders understand and agree that
the definitive agreement will contain a provision substantially similar
to this paragraph prohibiting negotiations and discussions prior to
Closing or the termination of the definitive agreement.
This letter evidences our mutual and respective understanding to negotiate
in good faith and proceed, as quickly as possible, with the preparation of
definitive agreements and ancillary documents within the conceptual frame work
described herein.
If this letter adequately reflects the intention of RLI and its primary
shareholders, please sign the enclosed copy where indicated below.
ADLT looks forward to working with RLI and its management to continue to
build the leading innovator in the HID lighting business!
Very truly yours,
ADVANCED LIGHTING TECHNOLOGIES, INC.
By /s/ Wayne R. Hellman
-------------------------------------
Wayne R. Hellman
President
MW2\23438
Accepted and Agreed this 17th day of
September, 1997.
/s/ Alan Ruud
- ---------------------------------------
Alan Ruud as President of Ruud Lighting, Inc.
and as its majority shareholder
29
<PAGE> 1
Exhibit 11
ADVANCED LIGHTING TECHNOLOGIES, INC.
Exhibit 11 -- Statement Re: Computation of Earnings Per Share
(In thousands, except per share dollar amounts)
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------------------------------
1997 1997
--------------------------------------------------------
Shares Amount EPS Shares Amount EPS
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET INCOME ATTRIBUTABLE TO COMMON
SHAREHOLDERS $2,490 $1,470
====== ======
Sharebase:
Shares deemed outstanding at beginning
of period 13,435 10,845
Weighted average shares issued pursuant
to public offering 2,772 1,953
Weighted average shares issued for
exercise of stock options 18 -
Weighted average common share
equivalents 365 201
Weighted average shares issuable 35 35
------ ------
16,625 13,034
====== ======
NET EARNINGS PER SHARE $ .15 $ .11
====== ======
</TABLE>
30
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Advanced
Lighting Technologies, Inc. Condensed Consolidated Financial Statements for the
three months ended September 30, 1997 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUL-01-1997
<CASH> 23,839
<SECURITIES> 4,075
<RECEIVABLES> 35,435
<ALLOWANCES> 318
<INVENTORY> 32,469
<CURRENT-ASSETS> 97,318
<PP&E> 52,030
<DEPRECIATION> 9,201
<TOTAL-ASSETS> 170,508
<CURRENT-LIABILITIES> 24,712
<BONDS> 3,143
0
0
<COMMON> 16
<OTHER-SE> 138,155
<TOTAL-LIABILITY-AND-EQUITY> 170,508
<SALES> 30,242
<TOTAL-REVENUES> 30,242
<CGS> 17,546
<TOTAL-COSTS> 25,842
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3
<INTEREST-EXPENSE> 337
<INCOME-PRETAX> 3,890
<INCOME-TAX> 1,400
<INCOME-CONTINUING> 2,490
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,490
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
