<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 period ended December 31, 1996
-----------------
OR
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from _____________________ to
_____________________
Commission file number 0-27202
ADVANCED LIGHTING TECHNOLOGIES, INC.
------------------------------------
(Exact name of registrant as specified in its charter)
OHIO 34-1803229
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2307 EAST AURORA ROAD, SUITE 1, TWINSBURG, OHIO 44087
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
216/ 963-6680
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check () 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 13,446,034 shares of the Registrant's Common Stock, $.001 par value
per share, outstanding as of February 7, 1997.
<PAGE> 2
INDEX
ADVANCED LIGHTING TECHNOLOGIES, INC.
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - December 31,
1996 and June 30, 1996 2
Condensed Consolidated Statements of Operations -- Three
and six months ended December 31, 1996 and
December 31, 1995 3
Condensed Statements of Consolidated Shareholders'
Equity - Six months ended December 31, 1996 4
Condensed Consolidated Statements of Cash Flows -- Six
months ended December 31, 1996 and December 31, 1995 5
Notes to Condensed Consolidated Financial Statements 6-9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings N/A
Item 2. Changes in Securities 18
Item 3. Default upon Senior Securities N/A
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18-20
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES
- ------------------------------------------------------------------------------
N/A - Not Applicable
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
1
<PAGE> 4
ADVANCED LIGHTING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
DECEMBER 31, JUNE 30,
1996 1996
------------ --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,668 $ 1,682
Short-term investments 13,670 --
Trade receivables, less allowances of $233 and $287 19,402 13,736
Receivables from related parties 98 98
Inventories:
Finished goods 12,956 10,344
Raw materials and work-in-progress 3,062 2,363
------- --------
16,018 12,707
Prepaid expenses 1,277 526
Deferred taxes 2,522 3,517
------- --------
Total current assets 58,655 32,266
Property, plant and equipment:
Land and buildings 3,256 2,304
Machinery and equipment 20,760 17,298
Furniture and fixtures 5,787 2,994
------- --------
29,803 22,596
Less accumulated depreciation 7,451 6,359
------- --------
22,352 16,237
Receivables from related parties 920 913
Investments and other assets 4,596 3,316
Excess of cost over net assets of businesses acquired, net 4,558 3,565
------- --------
$91,081 $ 56,297
======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt $ 1,003 $ 972
Accounts payable 8,051 8,790
Payables to related parties 237 434
Employee-related liabilities 1,819 1,859
Accrued income and other taxes 982 263
Other accrued expenses 2,469 2,607
------- --------
Total current liabilities 14,561 14,925
Long-term debt 12,247 11,034
Other liabilities 103 161
Deferred taxes 3,583 3,583
Shareholders' equity:
Common stock 13 11
Paid-in-capital 58,125 26,755
Retained earnings (deficit) 2,449 (172)
------- --------
60,587 26,594
------- --------
$91,081 $ 56,297
======= ========
</TABLE>
See notes to condensed consolidated financial statements
2
<PAGE> 5
ADVANCED LIGHTING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
--------------------- ----------------------
1996 1995 1996 1995
---------- -------- ----------- ---------
(In thousands, except per share dollar amounts)
<S> <C> <C> <C> <C>
Net sales $ 20,107 $ 12,037 $ 38,442 $ 23,509
Costs and expenses:
Cost of sales 10,696 6,422 20,597 12,552
Marketing and selling 3,581 1,748 6,642 3,528
Research and development 1,468 540 2,744 1,045
General and administrative 1,765 1,500 3,538 2,930
Amortization of intangible assets 47 18 94 35
Settlement of claim 771 -- 771 --
Noncash settlement of claim -- 2,732 -- 2,732
-------- -------- -------- --------
Income (loss) from operations 1,779 (923) 4,056 687
Other income (expense):
Interest expense (163) (462) (357) (985)
Interest income 111 28 329 34
-------- -------- -------- --------
Income (loss) before income taxes and
extraordinary charge 1,727 (1,357) 4,028 (264)
Income taxes 576 96 1,407 265
-------- -------- -------- --------
Income (loss) before extraordinary charge 1,151 (1,453) 2,621 (529)
Extraordinary charge, net of applicable income
tax benefits of $69 in 1995 -- (103) -- (103)
-------- -------- -------- --------
NET INCOME (LOSS) $ 1,151 $ (1,556) $ 2,621 $ (632)
======== ======== ======== ========
Income (loss) per share:
Before extraordinary item $ 0.08 $ (0.33) $ 0.20 $ (0.23)
Extraordinary charge -- (0.01) -- (0.01)
-------- -------- -------- --------
NET INCOME (LOSS) PER SHARE $ 0.08 $ (0.34) $ 0.20 $ (0.24)
======== ======== ======== ========
Shares used for computing per share amounts 13,650 8,448 13,344 8,133
======== ======== ======== ========
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE> 6
ADVANCED LIGHTING TECHNOLOGIES, INC.
CONDENSED STATEMENT OF CONSOLIDATED SHAREHOLDERS' EQUITY (UNAUDITED)
SIX MONTHS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
------------------------------------------
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
-------- --------- ---------- -------
(In thousands)
<S> <C> <C> <C> <C>
Balance at July 1, 1996 $ 11 $26,755 $ (172) $26,594
Net income -- -- 2,621 2,621
Net proceeds from public offering of
2,452,050 common shares 2 30,089 -- 30,091
Stock options exercised -- 306 -- 306
Issuance of shares in connection with
purchase of business -- 975 -- 975
---- ------- ------ -------
BALANCE AT DECEMBER 31, 1996 $ 13 $58,125 $2,449 $60,587
==== ======= ====== =======
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE> 7
ADVANCED LIGHTING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
------------------------
1996 1995
---------- --------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,621 $ (632)
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation and amortization 1,159 812
Deferred income taxes 995 --
Noncash settlement of claim -- 2,732
Extraordinary charge -- 103
Changes in operating assets and liabilities:
Trade receivables (5,620) (1,617)
Inventories (3,228) (1,655)
Prepaids and other assets (1,585) (877)
Accounts payable and accrued expenses (615) 3,090
Other liabilities (58) 66
-------- --------
Net cash (used in) provided by operating activities (6,331) 2,022
INVESTING ACTIVITIES
Capital expenditures (6,105) (1,255)
Purchase of short-term investments (19,611) --
Sale of short-term investments 5,941 --
Purchase of business (44) --
Investments in affiliate (519) --
-------- --------
Net cash used in investing activities (20,338) (1,255)
FINANCING ACTIVITIES
Proceeds from revolving credit facility 47,144 10,480
Payments of revolving credit facility (33,832) (7,801)
Proceeds from long-term debt 4,279 295
Payments of long-term debt and capital leases (3,633) (1,408)
Issuance of common and preferred stock 306 157
Redemption of common and preferred stock -- (310)
Redemption of preferred stock and dividends -- (1,013)
Net proceeds from public offering 30,091 23,996
Use of net proceeds from public offering:
Payment of long-term debt -- (3,125)
Payment of revolving credit facility (13,700) (3,879)
Redemption of warrant -- (3,000)
Payment of trade payables -- (3,100)
Payment of note -- (1,541)
Other -- (208)
-------- --------
Net cash provided by financing activities 30,655 9,543
-------- --------
Increase in cash and cash equivalents 3,986 10,310
Cash and cash equivalents, beginning of period 1,682 1,030
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,668 $ 11,340
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 328 $ 690
Income taxes paid 45 --
Noncash transactions:
Equipment acquired through capital leases 1,004 112
Stock issued for purchase of business 975
Detail of acquisition:
Assets acquired $ 1,231
Liabilities assumed 201
Stock issued 975
--------
Cash paid 55
Less cash acquired 11
--------
Net cash paid for acquisition $ 44
========
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE> 8
ADVANCED LIGHTING TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER 31, 1996
(In thousands, except per share data)
A. ORGANIZATION
Advanced Lighting Technologies, Inc. (the "Company") is an innovation-driven
designer, manufacturer and marketer of metal halide lighting products, including
lamps (light bulbs), lamp components and lamp production equipment.
The Company was formed on May 19, 1995 for the purpose of acquiring ownership,
primarily by merger (the "Combination"), of 17 affiliated operating corporations
that were previously under common ownership and management (the "Predecessors"),
each one of which is engaged in an aspect of the metal halide lighting business.
More specifically, the Combination was principally effected through a series of
nonmonetary mergers or stock exchanges in which the shareholders of the former
companies received shares of the Company. The Combination has been accounted for
as a reorganization of entities under common control. Historical financial
statements of each of the Predecessors for periods prior to the Combination have
been combined. Certain adjustments have been recorded primarily to eliminate
intercompany transactions that would have been required had the Company been a
consolidated entity during such periods.
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, this information includes
all material adjustments, including adjustments of a normal and recurring
nature, as well as the charge for the settlement of a claim described in Note D,
necessary for a fair presentation. 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; and, actual results
could differ from these estimates. Certain reclassifications were made to prior
year amounts to conform to the fiscal 1997 presentation. 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,
1996. Operating results for the three or six month periods ended December 31,
1996 are not necessarily indicative of the results that may be expected for the
full-year ending June 30, 1997.
6
<PAGE> 9
C. RECOVERABILITY OF LONG-LIVED ASSETS
Effective July 1, 1996, the Company adopted Statement of Financial Accounting
Standards (FAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of." FAS No. 121 requires long-lived assets
to be reviewed for impairment losses whenever events or changes in circumstances
indicate the carrying amount may not be recovered through future net cash flows
generated by the assets. No significant adjustments were made to the carrying
amount of assets as a result of adopting FAS 121.
D. SETTLEMENT OF A CLAIM
On March 1, 1996, a former common shareholder of a Predecessor asserted a claim
in the United States District Court for the Northern District of Ohio against
the Chief Executive Officer and a director of the Company, and the Executive
Vice President and a director of the Company, and subsequently, a claim against
the Company. The claim alleged that certain misrepresentations and/or omissions
were made to the former common shareholder in connection with: (i) the Company's
purchase of his equity interest effected by a merger of a Predecessor into the
Company, as to which the former common shareholder waived his statutory
appraisal rights and (ii) the purchase by the Chief Executive Officer of the
former common shareholder's beneficial interest in a trust controlled by the
Chief Executive Officer. The former common shareholder alleged that the
misrepresentations and/or omissions caused direct damages which exceed $900. The
suit also claimed punitive damages in an undetermined amount believed by the
former common shareholder to exceed $2,700. On August 23, 1996, another former
common shareholder filed similar claims against the Chief Executive Officer and
Executive Vice President and the Company seeking direct damages of $400 and
punitive damages of $1,200.
The Chief Executive Officer, the Executive Vice President and the Company denied
all of the allegations and vigorously defended against the claims.
On November 29, 1996, the Company, the Chief Executive Officer and the Executive
Vice President reached an out-of-court settlement of both former common
shareholders' claims for an aggregate amount of $475. The charge of $771 in the
second quarter of fiscal 1997 represents the $475 settlement plus legal and
other directly-related costs, net of anticipated insurance recoveries.
E. NONCASH SETTLEMENT OF CLAIM
On October 27, 1995, several former preferred shareholders of the Company's lamp
manufacturing subsidiary, whose shares were redeemed in August 1995 (prior to
the Combination), asserted a claim against certain officers of the Company. On
November 15, 1995, such officers entered into a settlement agreement with the
former preferred shareholders, whereby such officers and certain other
shareholders transferred, from their personal holdings, an aggregate of 273,185
shares of the Company's common stock to
7
<PAGE> 10
the former preferred shareholders. Since the settlement resulted in a transfer
of personal shares held by such officers, there was no dilution of the ownership
interest of shareholders of the Company. The settlement was recorded as a
noncash expense and paid-in-capital of the Company.
F. INCOME TAXES
At June 30, 1996, the Company had United States net operating loss carryforwards
("NOLs") for tax purposes of approximately $8,200 to offset future taxable
income. These NOLs expire in the fiscal years 2006 through 2011.
G. NET INCOME PER SHARE
Net income per share is based on the weighted average number of shares of common
stock and common stock equivalents outstanding during each period.
H. FINANCING ARRANGEMENT
In December 1996, a subsidiary of the Company entered into a three-year
financing arrangement with a bank for the purchase of real estate and a
building. The arrangement provides $450 to the subsidiary at a twelve-month
fixed interest rate of 8.25%, which was equal to the bank's prime lending rate
at the date of closing. Thereafter, the interest rate becomes variable based on
changes in the bank's prime lending rate. Only interest payments are required
for the first year of the loan. During the subsequent 23 months, principal
payments of $2 plus interest are required, followed by a final payment of $407
at maturity.
I. ACQUISITION
During December 1996, a newly-organized subsidiary of the Company, Advanced
Cable Lite Corporation, acquired all of the assets (and assumed certain
liabilities) of Cable Lite Corporation in exchange for 50,000 shares of the
Company's Common Stock (valued at $975), with an additional 50,000 shares of
Common Stock contingently issuable based upon the market price of the shares
during the month of June 1998. The purchase price resulted in an excess of cost
over net assets acquired of $1,008, which is being amortized over 25 years.
Advanced Cable Lite Corporation designs, manufactures and sells fiber optic and
fiber light products.
J. ACQUISITIONS SUBSEQUENT TO DECEMBER 31, 1996
On January 31, 1997, the Company completed the purchase of certain assets of Web
Design Associates, Inc., a company engaged in consumer product design and
development for approximately $619 in cash.
8
<PAGE> 11
On February 11, 1997, the Company acquired the outstanding shares of
Ballastronix, Inc., a company focused on designing, manufacturing and marketing
of electromagnetic power supplies for metal halide lighting systems. The
purchase price consisted of $5,511 in cash and 38,024 shares of the Company's
common stock. The funding required to complete the transaction was financed
through cash and a portion of the proceeds from a $8,400 term-loan with a bank.
The transaction will be accounted for by the purchase method.
9
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
(Dollars in thousands, except per share amounts)
This report on Form 10-Q may contain forward-looking statements. For this
purpose, any statement contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. 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 Operations for the indicated
periods:
10
<PAGE> 13
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales .............................. 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Cost of sales......................... 53.2 53.4 53.6 53.4
Marketing and selling ................ 17.8 14.5 17.3 15.0
Research and development.............. 7.3 4.5 7.1 4.4
General and administrative ........... 8.8 12.5 9.2 12.5
Amortization of intangibles .......... 0.2 0.1 0.2 0.1
Settlement of claim .................. 3.8 - 2.0 -
Noncash settlement of claim........... - 22.7 - 11.6
----- ----- ----- -----
Income (loss) from operations........... 8.8 (7.7) 10.6 2.9
Interest expense........................ (0.8) (3.8) (0.9) (4.2)
Interest income......................... 0.6 0.2 0.9 0.1
----- ----- ----- -----
Income (loss) before income taxes
and extraordinary charge.............. 8.6 (11.3) 10.5 (1.1)
Income taxes............................ 2.9 0.8 3.7 1.1
Income (loss) before extraordinary
charge................................ 5.7 (12.1) 6.8 (2.2)
Extraordinary charge.................... - (0.9) - (0.4)
----- ----- ----- -----
Net income (loss)....................... 5.7% (12.9%) 6.8% (2.7%)
===== ===== ===== =====
</TABLE>
NOTE: Columns may not total due to rounding.
Factors which have affected the results of operations and net income (loss) for
the second quarter of fiscal 1997 as compared to the second quarter of fiscal
1996 and the comparison of the first six months of fiscal years 1997 and 1996
are discussed below.
OVERVIEW OF RESULTS OF OPERATIONS--THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED
WITH THE THREE MONTHS ENDED DECEMBER 31, 1995
For the three months ended December 31, 1996 (second quarter of fiscal 1997)
income from operations of $1,779 was reported, in comparison to a loss from
operations of $923 for the three months ended December 31, 1995 (second quarter
of fiscal year 1996). Net income for the second quarter of fiscal 1997 was
$1,151, compared to a net loss of $1,556 for the second quarter of fiscal 1996.
11
<PAGE> 14
The following factors should be considered in comparing the Company's quarterly
operations:
o The results of operations for the second quarter of fiscal 1997
include a nonrecurring charge of $771 ($0.06 per share) in settlement
of a claim.
o The results of operations for the second quarter of fiscal 1996
include a noncash charge of $2,732 ($0.32 per share) in settlement of
threatened litigation, with a corresponding increase to shareholders'
equity (paid-in-capital). The noncash charge arose from the transfer
of shares of the Company's common stock from the personal holdings of
certain principal shareholders of the Company to former preferred
shareholders in settlement of their claim.
After excluding the above, on a comparable basis the Company's operating
activities would have resulted in income from operations of $2,550 in the second
quarter of fiscal 1997, a 41% increase over the $1,809 of income from operations
in the second quarter of fiscal 1996.
OVERVIEW OF RESULTS OF OPERATIONS--SIX MONTHS ENDED DECEMBER 31, 1996 COMPARED
WITH THE SIX MONTHS ENDED DECEMBER 31, 1995
For the six months ended December 31, 1996 (first half of fiscal 1997) reported
income from operations was $4,056, compared with income from operations of $687
for the six months ended December 31, 1995 (first half of fiscal year 1996). Net
income for the first half of fiscal 1997 was $2,621, compared to a net loss of
$632 reported for the first half of fiscal 1996.
The following factors should be considered in comparing the Company's six-month
operations:
o Results for the first half of fiscal 1997 include a nonrecurring
charge of $771 ($0.06 per share) in settlement of a claim.
o Results for the first half of fiscal 1996 include a noncash charge of
$2,732 ($0.34 per share) in settlement of threatened litigation.
After excluding the above, on a comparable basis the Company's operating
activities would have resulted in income from operations of $4,827 in the first
half of fiscal 1997, a 41% increase over the $3,419 of income from operations in
the first half of fiscal 1996.
12
<PAGE> 15
THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED WITH THREE MONTHS ENDED DECEMBER
31, 1995
Net sales. Net sales increased 67% to $20,107 for the second quarter of fiscal
1997 from $12,037 for the second quarter of fiscal 1996. This increase was a
result of sales growth in all of the Company's product categories -- lamps,
components and production equipment -- with the majority occurring in lamps
($4.9 million increase) and lamp production equipment ($2.1 million increase).
The increase in lamp sales was primarily attributable to increased unit volume.
The increase in equipment sales was attributable to an increase in equipment
contracts currently in-progress, as compared with the number of
contracts-in-progress during the second quarter of fiscal 1996.
Cost of Sales. Cost of sales increased 67% to $10,696 in the second quarter of
fiscal 1997 from $6,422 in the second quarter of fiscal 1996. As a percentage of
net sales, cost of sales remained constant at 53%.
Marketing and Selling Expenses. Marketing and selling expenses increased 105% to
$3,581 in the second quarter of fiscal 1997 from $1,748 in the second quarter of
fiscal 1996. Marketing and selling expenses, as a percentage of net sales,
increased to 18% in the second quarter fiscal 1997, from 15% in the second
quarter of fiscal 1996. The increase primarily reflects increased spending
related to the development of new domestic and foreign market opportunities.
Research and Development Expenses. Research and development expenses increased
to $1,468 in the second quarter of fiscal 1997, a 172% increase over the $540
incurred in the second quarter of fiscal 1996. As a percentage of net sales,
research and development expenses increased to 7.3% in the second quarter of
fiscal 1997 from 4.5% in the second quarter of fiscal 1996. The spending in this
vital area reflected the Company's continued emphasis on the development of
additional commercial and industrial products, the introduction of new lamp
types, and metal halide systems development.
General and Administrative Expenses. General and administrative expenses
increased 18% to $1,765 in the second quarter of fiscal 1997 from $1,500 in the
second quarter of fiscal 1996. As a percentage of net sales, general and
administrative expenses decreased to 9% in the second quarter of fiscal 1997
from 13% in the second quarter of fiscal 1996. The decrease primarily reflects a
spending growth rate considerably lower than sales increases through the
leveraging of fixed costs as sales levels increase.
Settlements of Claims. During the second quarter of fiscal 1997, the Company
paid $475 in an out-of-court settlement of a claim brought by certain former
common shareholders of a predecessor of the Company. The charge of $771 ($0.06
per share) in the second quarter of fiscal 1997 represents the $475 settlement
plus legal and other directly-related costs, net of anticipated insurance
recoveries.
During the second quarter of fiscal 1996, a settlement agreement was entered
into by certain principal shareholders of the Company with former preferred
shareholders of a subsidiary of the Company (the "Settlement"). Since the
Settlement resulted in a transfer of personal shares held by such shareholders,
there was no dilution of the ownership
13
<PAGE> 16
interest of the remaining shareholders of the Company. The Settlement was
recorded as a noncash expense in the second quarter of fiscal 1996 and an
increase to the Company's paid-in-capital. This Settlement resulted in a noncash
charge of $2,732 ($0.32 per share).
Income from Operations. As a result of the aforementioned factors, income from
operations during the second quarter of fiscal 1997 increased to $1,779, from a
loss of $923 during the second quarter of fiscal 1996. As a percentage of net
sales, income from operations increased to 9% in the second quarter of fiscal
1997 from (8%) in the second quarter of fiscal 1996.
Interest Expense. Interest expense decreased $299, or 65%, to $163 during the
second quarter of fiscal 1997 as compared to $462 for the second quarter of
fiscal 1996. This decrease resulted from lower average debt outstanding during
the second quarter of fiscal 1997, as compared to the average debt outstanding
during the second quarter of fiscal 1996.
Interest Income. Interest income increased to $111 during the second quarter of
fiscal 1997, as compared to $28 in the second quarter of fiscal 1996. This
increase is attributable to the short-term investments and cash equivalents
arising from the availability of the net proceeds of the common stock offering
completed during the first quarter of fiscal 1997.
Income Taxes. Income tax expense increased 498% to $576 in the second quarter of
fiscal 1997, from $96 for the comparable period of the preceding year. The
increase was caused by the utilization of net operating loss carryforwards
("NOLs") with the reversal of an equivalent valuation allowance in the second
quarter of fiscal 1996 as compared with the utilization of NOLs in the second
quarter of fiscal 1997 with no related valuation allowance reversal.
At June 30, 1996, the Company had United States NOLs for tax purposes of
approximately $8,200 to offset future taxable income. These NOLs expire in the
fiscal years 2006 through 2011.
Extraordinary Charge. The Company recorded a $103 extraordinary charge (net of
applicable income tax benefits of $69) in the second quarter of fiscal 1996,
representing costs associated with the early extinguishment of debt.
SIX MONTHS ENDED DECEMBER 31, 1996 COMPARED WITH SIX MONTHS ENDED DECEMBER 31,
1995
Net sales. Net sales increased 64% to $38,442 for the first half of fiscal 1997
from $23,509 for the first half of fiscal 1996. This increase was a result of
sales growth in all of the Company's product categories -- lamps, lamp
components and lamp production equipment -- with the majority occurring in lamps
($9.7 million increase) and lamp
14
<PAGE> 17
production equipment ($3.7 million increase). The increase in lamp and lamp
component sales arose primarily from increased unit volume. The increase in
equipment sales was attributable to an increase in equipment contracts for the
sale of lamp production equipment currently in-progress, as compared with the
number of contracts in progress during the first half of fiscal 1996.
Cost of Sales. Cost of sales increased 64% to $20,597 in the first half of
fiscal 1997 from $12,552 in the first half of fiscal 1996. As a percentage of
net sales, cost of sales remained constant at 53%.
Marketing and Selling Expenses. Marketing and selling expenses increased 88% to
$6,642 in the first half of fiscal 1997 from $3,528 in the comparable period of
fiscal 1996. Marketing and selling expenses, as a percentage of net sales,
increased to 17% in the first half fiscal 1997, from 15% in the first half of
fiscal 1996. The increase primarily reflects increased spending related to the
development of new domestic and foreign market opportunities.
Research and Development Expenses. Research and development expenses increased
to $2,744 in the first half of fiscal 1997, a 163% increase over the $1,045
incurred in the first half of fiscal 1996. As a percentage of net sales,
research and development expenses increased to 7% in the first half of fiscal
1997 from 4% in the first half of fiscal 1996. The spending in this vital area
reflected the Company's continued emphasis on the development of additional
commercial and industrial products, the introduction of new lamp types, and
metal halide systems development.
General and Administrative Expenses. General and administrative expenses
increased 21% to $3,538 in the first half of fiscal 1997 from $2,930 in the
first half of fiscal 1996. As a percentage of net sales, general and
administrative expenses decreased to 9% in the first half of fiscal 1997 from
13% in the first half of fiscal 1996. The decrease primarily reflects a spending
growth rate considerably lower than sales increases, through the leveraging of
fixed costs as sales levels increase.
Income from Operations. As a result of the aforementioned factors, including the
effects of the settlements of claims discussed previously, income from
operations during the first half of fiscal 1997 increased 490% to $4,056, from
$687 during the first half of fiscal 1996. As a percentage of net sales, income
from operations increased to 11% in the first half of fiscal 1997 from 3% in the
first half of fiscal 1996.
Interest Expense. Interest expense decreased 64%, to $357 during the first half
of fiscal 1997 as compared to $985 for the first half of fiscal 1996. This
decrease resulted from lower average debt outstanding during the first half of
fiscal 1997, as compared to the first half of fiscal 1996.
Interest Income. Interest income increased to $329, or 868% during the first
half of fiscal 1997, as compared to $34 in the first half of fiscal 1996. This
increase is attributable to
15
<PAGE> 18
the short-term investments and cash equivalents arising from the availability of
the net proceeds of the common stock offering completed during the first half of
fiscal 1997.
Income Taxes. Income tax expense increased 430% to $1,407 in the first half of
fiscal 1997, from $265 for the comparable period of the preceding year. The
increase was caused by the utilization of net operating loss carryforwards
("NOLs") with the reversal of an equivalent valuation allowance in the first
half of fiscal 1996 as compared with the utilization of NOLs in the first half
of fiscal 1997 with no related valuation allowance reversal.
At June 30, 1996, the Company had United States NOLs for tax purposes of
approximately $8,200 to offset future taxable income. These NOLs expire in the
fiscal years 2006 through 2011.
Extraordinary Charge. The Company recorded a $103 extraordinary charge (net of
applicable income tax benefits of $69) in the first half of fiscal 1996,
representing costs associated with the early extinguishment of debt.
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 will continue to be, financed through a combination of cash flow
from operations, borrowings under various credit facilities and the remaining
proceeds from the July 1996 issuance of common stock currently invested in
short-term instruments.
At December 31, 1996, working capital advances outstanding under the Company's
revolving credit agreements were $9,536. Under the agreements, the unpaid
principal balance (together with accrued interest thereon) is payable in March
1999. Working capital advances bear interest at the option of the Company at a
rate per annum equal to: (i) the higher of (a) the prime rate minus 0.5% or (b)
the Federal Funds Rate; or (ii) the average LIBOR plus 2.5%. At December 31,
1996, the interest rate was 7.75%.
Net cash used in operating activities during the six months ended December 31,
1996 totaled $6,331, of which $11,105 of operating cash flow was related to
operating assets and liabilities; primarily: (i) higher accounts receivable
arising from increased sales; (ii) an increase in inventory levels to support
higher lamp service levels; (iii) increased other assets; and, (iv) the payment
of accounts payable.
The Company's working capital at December 31, 1996 was $44,094 as compared to
$17,341 at June 30, 1996. During July 1996, the Company received $33,103 of
proceeds from the sale of 2,452,050 shares of its common stock in connection
with a public offering. Underwriting fees amounted to $1,913 and additional
costs associated with the public offering primarily for legal, accounting,
consulting, and printing fees amounted to
16
<PAGE> 19
$1,099. The net proceeds were $30,091, of which, $14,800 was used to reduce
outstanding debt under the Company's domestic Revolving Credit and Security
Agreement (the "Loan Agreement"). The remaining net proceeds were used to
purchase short-term investments and cash equivalents.
Capital expenditures, primarily for production equipment and leasehold
improvements, totaled $6,105 in the first half of fiscal 1997.
During November 1996 the Company entered into a 50% joint venture in the
formation of Lighting Professionals, Inc., to provide technical services and
designs for advanced optical systems used in conjunction with metal halide
lighting.
During December 1996, a newly-organized subsidiary of the Company, Advanced
Cable Lite Corporation, acquired all of the assets (and assumed certain
liabilities) of Cable Lite Corporation in exchange for 50,000 shares of the
Company's Common Stock (valued at $975), with an additional 50,000 shares of
Common Stock contingently issuable based upon the market price of the shares
during the month of June 1998. Advanced Cable Lite Corporation designs,
manufactures and sells fiber optic and fiber light products.
On January 31, 1997, the Company completed the purchase of certain assets of Web
Design Associates, Inc., a company engaged in consumer product design and
development for approximately $619 in cash.
On February 11, 1997, the Company acquired certain assets and the outstanding
shares of Ballastronix, Inc., a company focused on designing, manufacturing and
marketing of electromagnetic power supplies for metal halide lighting systems.
The purchase price consisted of $5,511 in cash and 38,024 shares of the
Company's common stock. The funding required to complete the transaction was
financed through cash and a portion of the proceeds from a $8,400 term-loan with
a bank (financing completed in early February 1997).
Over the next twelve months, the Company intends to spend approximately $10,100
on additional production equipment and approximately $5,300 for investments in
joint ventures and affiliates. While the Company believes that its available
cash, cash flow from operations and available borrowing capability are
sufficient to fund its operations for at least the next twelve months, it will
consider additional borrowings to finance capital expenditures and investments
when deemed appropriate.
17
<PAGE> 20
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
(c) On December 23, 1996, a newly-organized subsidiary of the Company,
Advanced Cable Lite Corporation, acquired all of the assets (and assumed certain
liabilities) of Cable Lite Corporation (the "Seller") in exchange for the
Company's issuance of 50,000 shares of Common Stock. The Seller will be entitled
to receive up to an additional 50,000 shares to the extent the price of the
shares (adjusted for certain capital transactions) is less than $30.00 per share
at any time during June 1998. In such event, up to 50,000 shares will be issued
based on the average market price in May 1998. If the average price is $30 or
more per share, no additional shares will be issued. If the average price is
between $15 and $30 per share, a proportionate number of additional shares will
be issued. If the average price is $15 or less per share, then all 50,000 shares
will be issued.
Advanced Cable Lite is engaged in the business of designing,
manufacturing and selling fiber optic and fiber light products and operates out
of facilities located in Dallas, Texas.
The Common Stock was issued to Cable Lite Corporation in a negotiated
purchase of assets. Cable Lite is required to transfer the shares to its
shareholders in liquidation. Cable Lite and its four shareholders signed an
investment representation and agreed to transfer restrictions. The certificates
representing the shares bear a restrictive legend. The sale of the shares was
exempt pursuant to Sections 4(1) and 4(2) of the Securities Act.
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS. An annual meeting
of shareholders was held on November 13, 1996. The following sets forth the
actions considered and the results of the voting with respect to each action:
1. Nominees for director for the term
expiring in 1999 -- All Elected.
<TABLE>
<CAPTION>
ABSTAINED/
FOR AGAINST BROKER NONVOTES
<S> <C> <C> <C>
Susuma Harada 12,089,787 23,739 -0-
A Gordon Tunstall 12,089,596 23,930 -0-
Richard D. Capra 12,089,596 23,930 -0-
2. Amendment to Articles of Incorporation
to increase authorized common shares
from 22,000,000 to 80,000,000 shares
-- Passed. 10,210,812 1,819,477 83,237
3. Ratify and approve 1995 Incentive
Award Plan -- Passed. 10,550,888 893,344 669,294
4. Ratify appointment of Ernst & Young
LLP -- Passed. 12,090,617 2,900 -0-
</TABLE>
ITEM 5. OTHER INFORMATION.
(a) The Company does not have pending any litigation that, separately,
or in the aggregate, if adversely determined, could reasonably be expected to
have a material adverse effect on the Company. The Company and its subsidiaries
may, from time-to-time, be a party to litigation or administrative proceedings
which arise in the normal course of their business.
18
<PAGE> 21
As reported in the Form 10-K for the year ended June 30, 1996, on March
1, 1996, Edmund E. Heartstedt asserted a claim in the United States District
Court for the Northern District of Ohio against Wayne R. Hellman, Chief
Executive Officer and a director of the Company, and Louis S. Fisi, Executive
Vice President and a director of the Company, alleging certain
misrepresentations and/or omissions were made to him in connection with: (i) the
cash-out of his interest effected by a merger of a Predecessor into the Company,
as to which Mr. Heartstedt did not exercise his statutory appraisal rights; and
(ii) the purchase by Mr. Hellman of Mr. Heartstedt's beneficial interest in a
trust controlled by Mr. Hellman. On July 2, 1996, the Complaint in this action
was amended to add the Company as an additional defendant (the Amended Complaint
is referred to as the "Heartstedt Claim.") Mr. Heartstedt alleged that the
misrepresentations and/or omissions made by Mr. Fisi and others on behalf of
Messrs. Hellman and Fisi and the Company caused him direct damages which he
believed exceed $900,000. The suit also claimed punitive damages in an
undetermined amount believed by the Plaintiff to exceed $2.7 million. Messrs.
Hellman and Fisi and the Company denied the allegations and vigorously defended
the claim. On August 23, 1996, John Hazen filed a claim (the "Hazen Claim") in
the United States District Court for the Northern District of Ohio against the
Company and Messrs. Hellman and Fisi, alleging that Mr. Hazen was or is a
partner of Mr. Heartstedt and asserting claims identical to the Heartstedt Claim
regarding the cash-out of Mr. Hazen's interest effected by the same merger
involved in the Heartstedt claim, as to which Mr. Hazen did not exercise
statutory appraisal rights. Mr. Hazen alleged that the alleged
misrepresentations by Mr. Fisi and others on behalf of the Company caused him
direct damages which he believed exceed $400,000. The suit also claimed punitive
damages in an undetermined amount believed to exceed $1,200,000. Messrs. Hellman
and Fisi and the Company denied the allegations and vigorously defended the
claim.
On November 29, 1996, the Company and Messrs. Hellman and Fisi reached
an out-of-court settlement of both the Heartstedt Claim and the Hazen Claim for
an aggregate amount of $475,000. The charge of $771,000 in the second quarter of
fiscal 1997 represents the $475,000 settlement costs plus legal and other
directly-related expenses, net of anticipated insurance recoveries.
(b) On February 11, 1997, the Company acquired certain assets and all
of the outstanding shares of Ballastronix, Inc. The negotiated purchase price
included $5,511,000 in cash and 38,024 shares of the Company's Common Stock. The
funding required to complete the transaction was financed through cash and a
portion of the proceeds from an $8,400,000 term loan with a bank. The
transaction will be accounted for by the purchase method.
The Common Stock was issued to five Ballastronix, Inc.
manager/shareholders in a negotiated acquisition. Each of these shareholders
signed an investment representation and agreed to transfer restrictions. The
shares were issued with a restrictive legend. The sale of the shares was exempt
pursuant to Section 4(2) of the Securities Act.
Ballastronix is engaged in the business of designing, manufacturing,
and selling electromagnetic power supplies for the lighting industry.
Ballastronix has a single manufacturing facility in Amherst, Nova Scotia. The
Company will continue these operations, focusing on power supplies for metal
halide lighting systems.
19
<PAGE> 22
(c) The following Earnings Statement (Unaudited) for the twelve month
period ended December 31, 1996 covers a period of twelve months beginning 20
days after the effective date of the Company's Registration Statement (File No.
33-97902) for its initial 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 Statement (Unaudited)
Twelve month period ended
December 31, 1996
(In thousands except per share dollar amounts)
<S> <C>
Net Sales $ 69,569
Costs and expenses:
Cost of sales 37,209
Marketing and selling 11,869
Research and development 4,700
General and administrative 6,759
Amortization of intangible assets 149
Settlement of claim 771
--------
Income from operations 8,112
Other income (expense):
Interest expense (823)
Interest income 429
--------
Income before income taxes and
extraordinary charge 7,718
Income taxes 2,052
--------
Income before extraordinary charge 5,666
Extraordinary charge, net of applicable income
tax benefits of $22 32
--------
NET INCOME $ 5,634
========
Income (loss) per share:
Before extraordinary item 0.47
Extraordinary charge (0.01)
--------
NET INCOME PER SHARE 0.46
========
Shares used for computing per share amounts 12,141
========
</TABLE>
20
<PAGE> 23
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
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. Incorporated by reference to Company's
Registration Statement on Form S-1, Registration No.
33-97902, effective December 11, 1995.
11 Statement re Computation of Earnings Per Share (Unaudited).
27 Financial Data Schedule.
(b) Reports on Form 8-K. No reports on Form 8-K have been filed
during the quarter ended December 31, 1996.
21
<PAGE> 24
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: February 14, 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 and Treasurer
22
<PAGE> 1
EXHIBIT 3.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
ADVANCED LIGHTING TECHNOLOGIES, INC.
[as amended to February 12, 1997]
FIRST: The name of the Corporation shall be Advanced Lighting
Technologies, Inc.
SECOND: The place in the State of Ohio where the principal
office of the Corporation is to be located is in the City of Solon in Cuyahoga
County.
THIRD: The purpose or purposes for which the Corporation is
formed are to engage in any lawful act or activity for which corporations may be
formed under ss.ss.1701.01 to 1701.98, inclusive, of the Ohio Revised Code.
FOURTH: The Corporation shall be authorized to issue eighty
million (80,000,000) shares of common stock, par value one thousandth of one
cent ($.01), and one million (1,000,000) shares of preferred stock, par value
one thousandth of one cent ($.001). Any and all shares so issued, the
consideration for which, as fixed by the incorporator or the Board of Directors,
has been paid or delivered, shall be fully paid and nonassessable. The shares of
each class shall have the following express terms:
PART A: SERIES OF PREFERRED SHARES.
1. RIGHTS OF DIRECTORS TO ADOPT AMENDMENTS IN RESPECT OF
PREFERRED SHARES. The Board of Directors is hereby authorized to adopt
amendments to this Article FOURTH in respect of any unissued Preferred Shares
(whether or not previously designated as shares of a particular series and
including Preferred Shares of any series issued and thereafter acquired by the
Corporation), to the full extent permitted by the Ohio Revised Code, creating
one or more series of Preferred Shares and, with respect to each such series,
fix or change, in whole or in part, the express terms (within the limits set
forth in Sections 1701.01 through 1701.99 of the Ohio Revised Code) of (a) any
class of shares before the issuance of any shares of that class or (b) one or
more series within a class before the issuance of any shares of that series.
2. PREFERRED SHARES, GENERALLY. All shares of any series shall
be identical in all respects, except that the shares of any one series issued at
different times may differ as to the dates from which dividends or distributions
thereon shall be cumulative. Preferred Shares shall have equal rank and priority
with respect to the payment of dividends and shall be identical in all respects
except as permitted by the foregoing provision of this Part A. Nothing contained
herein shall be construed to limit or restrict in any way the rights in respect
of unissued shares of any class or series granted to the Board of Directors by
the laws of Ohio now or hereafter in force.
<PAGE> 2
PART B: EXPRESS TERMS OF THE COMMON SHARES
1. SUBJECT TO PREFERRED SHARES. The Common Shares shall be
subject to the express terms of the Preferred Shares.
2. RIGHT TO DIVIDENDS. Subject to any rights to receive
dividends to which the holders of shares of outstanding Preferred Shares, if
any, may be entitled, the holders of shares of Common Shares shall be entitled
to receive dividends, if and when declared, payable from time to time by the
Board of Directors from any funds legally available therefor.
3. VOTING. Each outstanding share of Common Shares of the
Corporation shall entitle the holder thereof to one (1) vote and, except as
otherwise stated or expressed in a resolution or resolutions adopted by the
Board of Directors providing for the issuance of any Preferred Shares or as
otherwise provided by law, the exclusive voting power for all purposes shall be
vested in the holders of the Common Shares.
FIFTH: A. The number of Directors of the Corporation, none of
whom need be shareholders, shall be not less than three (3) nor more than ten
(10). Initially, the number of Directors of the Corporation shall be fixed at
three (3). By the majority vote of the Directors then in office, the number of
persons which shall constitute the Board of Directors for each ensuing year
shall be fixed, and may from time-to-time be increased or decreased.
B. The Board of Directors shall be and is divided
into three (3) classes. Each Director shall serve for a term ending on the date
of the third annual meeting following the annual meeting at which such Director
was elected; provided, however, that each initial Director in Class I shall hold
office until the annual meeting of shareholders in 1996, and each initial
Director in Class II shall hold office until the annual meeting of shareholders
in 1997. Elections of Directors need not be by ballot unless the Regulations so
provide. No reduction in the number of Directors of any class shall have the
effect of removing any Director of any class prior to the expiration of his term
of office.
C.In the event of any increase or decrease in the
authorized number of Directors: (i) each Director then serving as such shall
nevertheless continue as a Director of the class of which he or she is a member
until the expiration of his or her current term, or his or her prior death,
retirement, resignation, or removal; and (ii) the newly created or eliminated
directorships resulting from such increase or decrease shall be apportioned by
the Board of Directors among the three (3) classes of Directors as to maintain
such classes as nearly equal as possible.
D. Notwithstanding any of the foregoing provisions
of this Article FIFTH, each Director shall serve until his or her successor is
elected and qualified or until his or her death, retirement, resignation or
removal. Should a vacancy occur or be created, whether arising through death,
resignation or removal of a Director or through an increase in the number of
Directors of any class, such vacancy shall be filled by action of a majority of
the Directors in office. A
<PAGE> 3
Director so elected to fill a vacancy shall serve for the remainder of the then
present term of office of the class to which he or she was elected.
E. Shareholders may remove directors of the
Corporation only for cause. "Cause" for the removal of a Director by the
shareholders shall exist only upon the occurrence of one (1) of the following
events: (1) the conviction of the Director of a felony; or (2) a finding by a
court of law that the Director has been or is guilty of negligence or misconduct
in the performance of his duties as a Director of the Corporation. A majority of
the Directors may remove a Director with or without cause.
F. Nominations for the election of Directors shall
be made in accordance with the Regulations.
G. Wherever the term "Board of Directors" is used
in these Articles of Incorporation, such term shall mean the Board of Directors
of the Corporation; provided, however, that, to the extent any committee of
directors of the Corporation is lawfully entitled to exercise the powers of the
Board of Directors, such committee, to the extent provided by resolution of the
Board of Directors or the Regulations, may exercise any power or authority of
the Board of Directors under the Articles of Incorporation in the management of
the business and affairs of the Corporation (including, without limitation, the
declaration of a dividend or the authorization of the issuance of any shares of
Common Shares or Preferred Shares) other than the authority of filling vacancies
in the Board of Directors or in any committee thereof.
SIXTH: No holder of shares of any class shall be entitled as
such to subscribe for or purchase shares of any class now or hereafter
authorized, or securities convertible into or exchangeable for such shares, or
securities to which there are attached or appertained any warrants or rights
entitling the holder thereof to subscribe for or purchase such shares.
SEVENTH: The Corporation may purchase from time to time shares
of any class issued by it, upon agreement with the holder thereof. Such
purchases may be made either in the open market or at private or public sale, in
such manner and amount, from the holder or holders of outstanding shares of the
Corporation, and at such prices and upon such terms as the Board of Directors
shall, from time to time, determine. Unless a different procedure is established
in a written agreement among the Corporation and all of the shareholders of the
Corporation, the Board of Directors is hereby empowered to authorize such
purchases from time to time without any vote of the holders of any class of
shares authorized and outstanding at the time of any such purchases.
EIGHTH: A Director of the Corporation shall not be
disqualified by his office from dealing or contracting with the Corporation
either as a seller, purchaser or otherwise, nor shall any contract, or
transaction be void or voidable with respect to the Corporation for the reason
that it is between the Corporation and one or more of its Directors or officers,
or between the Corporation and any other person in which one or more of its
Directors or any officers are directors, trustees, or officers, or have a
financial or personal interest, or for the reason that one
<PAGE> 4
or more interested Directors or officers participate in or vote at the meeting
of the Directors or a committee thereof which authorizes such contract or
transaction, if in any such case (a) the material facts as to his or their
relationship or interests and as to the contract or transaction are disclosed or
are known to the Directors or the committee and the Directors or committee, in
good faith reasonably justified by such facts, authorize the contract or
transaction by the affirmative vote of a majority of the disinterested
Directors, even though the disinterested Directors constitute less than a
quorum; or (b) the material facts as to his or their relationship or interest
and as to the contract or transaction are disclosed or are known to the
shareholders entitled to vote thereon and the contract or transaction is
specifically approved at a meeting of the shareholders held for such purpose by
the affirmative vote of the holders of shares entitling them to exercise a
majority of the voting power of the Corporation held by persons not interested
in the contract or transaction; or (c) the contract or transaction is fair as to
the Corporation as of the time it is authorized or approved by the Directors, a
committee thereof, or the shareholders. Common or interested Directors may be
counted in determining the presence of a quorum at a meeting of the Directors,
or a committee thereof which authorizes the contract or transaction.
NINTH: The Court of Common Pleas of the county in which this
Corporation maintains its principal office is hereby authorized to order the
appointment of a provisional Director for this Corporation, in accordance with
the provisions of Sections 1701.56 and 1701.911 of the Ohio Revised Code.
TENTH: No holder of shares of the Corporation shall have the
right to cumulate the vote of such shares in the election of Directors.
ELEVENTH: Whenever, under the laws of the State of Ohio, now
or hereafter in effect, action is authorized or required to be taken by the vote
or consent of the holders of shares entitling them to exercise two-thirds of the
voting power of the Corporation or of any class or classes of shares thereof,
such action shall be effected by the vote, consent or authorization of the
holders of shares entitling them to exercise a majority of such voting power,
unless a greater proportion of votes is made mandatory for such particular
action by the laws of the State of Ohio.
<PAGE> 5
CERTIFICATE OF ADOPTION
OF
AMENDED ARTICLES OF INCORPORATION
OF
ADVANCED LIGHTING TECHNOLOGIES, INC.
Wayne R. Hellman and Louis S. Fisi, President and Secretary,
respectively, of ADVANCED LIGHTING TECHNOLOGIES, INC., an Ohio corporation,
having its principal office in the City of Solon, Ohio, do hereby certify that
on the 13th day of November, 1996, pursuant to the authority of Ohio Revised
Code Section 1701.71, a majority of the holders of the issued and outstanding
shares of said Corporation entitled to vote did, at a meeting of the
shareholders, unanimously approve the following action and adopt the following
resolution amending the existing Articles of Incorporation:
RESOLVED, that the first sentence of Article Fourth of the Second
Amended and Restated Articles of Incorporation of ADVANCED LIGHTING
TECHNOLOGIES, INC. is hereby amended as follows:
FOURTH: The Corporation shall be authorized to issue eighty million
(80,000,000) shares of common stock, par value one thousandth of one
cent ($.001), and one million (1,000,000) shares of preferred stock,
par value one thousandth of one cent ($.001).
IN WITNESS WHEREOF, Wayne R. Hellman and Louis S. Fisi, President and
Secretary, respectively, acting for and on behalf of said Corporation, have
hereunto subscribed their names this 10th day of February, 1997.
/s/ Wayne R. Hellman
--------------------------------
Wayne R. Hellman, President
/s/ Louis S. Fisi
--------------------------------
Louis S. Fisi, Secretary
<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 December 31,
---------------------------------------------------------------
1996 1995
---------------------------------------------------------------
Shares Amount EPS Shares Amount EPS
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) before extraordinary charge $1,151 $(1,453)
Less: Increase in warrants value -- 1,350
------ -------
INCOME (LOSS) BEFORE EXTRAORDINARY CHARGE
ATTRIBUTABLE TO COMMON SHAREHOLDERS $1,151 $(2,803)
====== =======
Net income (loss) $1,151 $(1,556)
Less: Increase in warrants value -- 1,350
------ -------
NET INCOME (LESS) ATTRIBUTABLE TO COMMON
SHAREHOLDERS $1,151 $(2,906)
====== =======
Sharebase:
Shares deemed outstanding at beginning
of period 10,845 7,282
Weighted average shares issued pursuant to
public offering 2,452 630
Weighted average shares issued upon
warrant conversion -- 117
Weighted average shares issued in acquisition 5 --
Weighted average shares issued for exercise
of stock options 8 --
Weighted average common share equivalents 305 419
Weighted average shares issuable 35 --
------ -----
13,650 8,448
====== =====
Income (loss) per share:
Income (loss) before extraordianary item $0.08 $(0.33)
Extraordinary charge -- (0.01)
----- -------
NET INCOME (LOSS) PER SHARE $0.08 $(0.34)
===== =======
<CAPTION>
Six Months Ended December 31,
-------------------------------------------------------------
1996 1995
--------------------------------------------------------------
Shares Amount EPS Shares Amount EPS
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) before extraordinary charge $2,621 $ (529)
Less: Increase in warrants value -- 1,350
------ -------
INCOME (LOSS) BEFORE EXTRAORDINARY CHARGE
ATTRIBUTABLE TO COMMON SHAREHOLDERS $2,621 $(1,879)
====== =======
Net income (loss) $2,621 $ (632)
Less: Increase in warrants value -- 1,350
------ -------
NET INCOME (LESS) ATTRIBUTABLE TO COMMON
SHAREHOLDERS $2,621 $(1,982)
====== =======
Sharebase:
Shares deemed outstanding at beginning
of period 10,845 7,282
Weighted average shares issued pursuant to
public offering 2,203 315
Weighted average shares issued upon
warrant conversion -- 58
Weighted average shares issued in acquisition 2 --
Weighted average shares issued for exercise
of stock options 4 --
Weighted average common share equivalents 255 478
Weighted average shares issuable 35 --
------ -----
13,344 8,133
====== =====
Income (loss) per share:
Income (loss) before extraordianary item $0.20 $(0.23)
Extraordinary charge -- (0.01)
----- -------
NET INCOME (LOSS) PER SHARE $0.20 $(0.24)
===== =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ADVANCED
LIGHTING TECHNOLOGIES, INC. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
QUARTER ENDED DECEMBER 31, 1996 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-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 5,668
<SECURITIES> 13,670
<RECEIVABLES> 19,733
<ALLOWANCES> 233
<INVENTORY> 16,018
<CURRENT-ASSETS> 58,655
<PP&E> 29,803
<DEPRECIATION> 7,451
<TOTAL-ASSETS> 91,081
<CURRENT-LIABILITIES> 14,561
<BONDS> 1,455
<COMMON> 13
0
0
<OTHER-SE> 60,574
<TOTAL-LIABILITY-AND-EQUITY> 91,081
<SALES> 20,107
<TOTAL-REVENUES> 20,107
<CGS> 10,696
<TOTAL-COSTS> 10,696
<OTHER-EXPENSES> 771
<LOSS-PROVISION> (54)
<INTEREST-EXPENSE> 163
<INCOME-PRETAX> 1,727
<INCOME-TAX> 576
<INCOME-CONTINUING> 1,151
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,151
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
