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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported: December 23, 1998)
ADVANCED LIGHTING TECHNOLOGIES, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
OHIO O-27202 34-1803229
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
32000 AURORA ROAD, SOLON, OHIO 44139
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code 440 / 519-0500
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NOT APPLICABLE
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
This filing presents the following with respect to Advanced Lighting
Technologies, Inc. (the "Company"):
1. Unaudited Pro Forma Financial Information; and
2. Recent Developments.
This information has been included from a preliminary prospectus contained in
Amendment No. 3 to the Registration Statement on Form S-4, filed December 23,
1998, relating to the registration of an offer to exchange 8% Senior Notes due
2008 of the Company for outstanding 8% Senior Notes due 2008 of the Company.
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UNAUDITED PRO FORMA FINANCIAL DATA
The accompanying unaudited pro forma condensed combined financial data are
presented for illustrative purposes only.
The unaudited pro forma condensed combined statements of operations for the
year ended June 30, 1998, give effect to the acquisition of Ruud Lighting, Inc.
("Ruud Lighting") and the issuance of the Company's 8% Senior Notes due 2008
(the "Notes") as if the Ruud Lighting acquisition and the issuance of the Notes
had occurred on July 1, 1997. The unaudited pro forma condensed combined
statement of operations for the year ended June 30, 1998 includes amounts
derived from the audited consolidated statement of operations of the Company for
the year ended June 30, 1998 (including the results of operations for Ruud
Lighting for the six months ended June 30, 1998) and the unaudited statement of
operations of Ruud Lighting for the six months ended December 31, 1997 and pro
forma adjustments to reflect the Ruud Lighting acquisition and the issuance of
the Notes.
The pro forma results are not necessarily indicative of the results of
operations of the Company had the Ruud Lighting acquisition and the issuance of
the Notes taken place on July 1, 1997 or of future results of the combined
companies. The allocation of the purchase price is preliminary. Final amounts
could differ from those reflected in the pro forma condensed statements of
operations, and such differences could be significant. Upon final determination,
the purchase price will be allocated to the assets and liabilities acquired
based on fair value as of the date of the acquisition.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30, 1998
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HISTORICAL PRO FORMA
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COMPANY RUUD LIGHTING ADJUSTMENTS COMBINED
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(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales................................... $163,893 $37,142 $ (981)a $200,054
Costs and expenses:
Cost of sales............................. 95,341 25,492 (981)a 119,365
(487)b
Marketing and selling..................... 25,746 3,497 29,243
Research and development.................. 9,319 1,057 10,376
General and administrative................ 10,851 3,914 (281)b 14,484
Fiber optic joint venture formation
costs.................................. 212 212
Purchased research and development........ 18,220 18,220
Special charges........................... 15,918 15,918
Settlement of claim....................... -- --
Amortization of intangible assets......... 1,454 737c 2,191
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Income (loss) from operations............... (13,168) 3,182 31 (9,955)
Other income (expense):
Interest expense.......................... (3,801) (335) (4,501)d (8,637)
Interest income........................... 1,436 1,436
Loss from equity investment............... (501) (501)
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Income (loss) from continuing operations
before income taxes....................... (16,034) 2,847 (4,470) (17,657)
Income taxes................................ 1,802 -- (1,792)e 1,151
1,141f
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Income (loss) from continuing operations.... $(17,836) $ 2,847 $ (3,819) $(18,808)
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Loss per share -- basic and diluted:
Loss from continuing operations........... $ (.98) $ (.95)
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Shares used for computing per share amounts
Basic and diluted......................... 18,195 19,715
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Pro forma adjustments were made to reflect the following:
a. Elimination of Company sales to Ruud Lighting.
b. Decrease in depreciation expense relating to Ruud Lighting's property, plant
and equipment based on estimated fair values over estimated useful lives.
c. Amortization of intangibles, such as tradename and customer service
infrastructure, and excess of cost over net assets of businesses acquired
("goodwill") related to the Ruud Lighting acquisition on a straight-line
method over 40 years.
d. Adjustments to interest expense resulting from the following:
<TABLE>
<S> <C>
Elimination of interest expense relating to the Company's
existing bank debt, excluding mortgage debt, assumed to be
paid in full with the proceeds of the offering of the
Notes....................................................... $ 1,762
Interest charges on the debt resulting from the issuance of
the Notes................................................... (6,000)
Amortization of estimated debt issuance costs of $3,500 over
the ten year life of the Notes.............................. (263)
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Net increase in interest expense.................. $(4,501)
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</TABLE>
e. Reduction of income taxes relating to the pro forma adjustments.
f. Income tax provision on Ruud Lighting's income before income taxes not
included in the historical condensed combined statement of income as Ruud
Lighting was a Subchapter S corporation.
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RECENT DEVELOPMENTS
The Company has begun to implement a plan resulting in changes to its
operations intended to accelerate and intensify the Company's focus on its metal
halide products and reduce its use of cash resources. This comes in response to
a reduction in the Company's revenues in the first quarter of fiscal 1999 as
compared to the fourth quarter of fiscal 1998 and due to economic conditions in
general, especially outside the United States. To implement this strategy, the
Company has taken or is taking the following actions:
- Limiting Pacific Rim Expansion. In recognition of the near-term
effects of the crisis in Asian capital markets, the Company modified
its expansion plans in the Pacific Rim and is acting to limit its
exposure by limiting further investment in its Pacific Rim ventures.
The Company is also considering installation in its Solon, Ohio
facility of up to three lamp manufacturing equipment groups which
were originally expected to be shipped to Asia pursuant to equipment
contracts with Pacific Rim companies.
- Changing Global Lamp Manufacturing Strategy. The Company is
revising its current global lamp manufacturing strategy to reduce
the overall cost of its lamps, including consideration of moving
some production to the manufacturing facilities of foreign joint
ventures. In addition, to reduce costs related to its lamp
production activities, the Company is consolidating its Bellevue,
Ohio specialty lamp manufacturing operations into its Solon lamp
manufacturing facility.
- Consolidating Marketing Operations in North America and Europe. The
Company is consolidating its marketing operations in Canada to
eliminate certain distribution channels and centers. Warehouses in
Toronto and Vancouver will be closed. OEM and plant growth sales
channels will be retained and serviced out of Solon, Ohio.
Aftermarket lamp sales are expected to be serviced through a
distributor, which the Company is currently seeking.
The Company is also restructuring its marketing operations in Europe
and the U.K. to make them more cost efficient. Sales offices in
France, Italy and Germany will be closed and future sales in those
locations will be handled by commissioned sales agents. Actions in
the U.K. include consolidation of locations and other related cost
reduction activities.
- Accelerating Exit from Noncore Products Lines. The Company will
eliminate the remaining non-metal halide product lines being sold by
its Canadian operations. The Company is currently seeking a buyer
for these product lines and inventory.
- Consolidating Equipment Manufacturing Operation into Solon, Ohio
Facility. The Company's equipment manufacturing operation in
Bellevue, Ohio is being closed. Machinery, equipment and research
and development facilities necessary to allow the Company to
continue manufacturing and support of lamp production equipment,
at reduced levels, is being moved to the Company's Solon, Ohio
facility. The Company has temporarily ceased the manufacture and
sale of turnkey lamp production equipment groups.
- Reducing Corporate Overhead. The Company was aggressively adding to
its corporate staff to support its aggressive growth goals. In light
of its focus on internal growth, instead of continued acquisitions
and joint ventures, the Company has reduced its corporate
overhead, including a significant reduction in corporate staff.
- Reducing Capital Expenditures. Previously announced plans to spend
approximately $20 million on capital expansion, primarily production
equipment, and approximately $14.5 million on facilities
improvements in fiscal 1999 have been substantially reduced. Capital
expenditures for the last three quarters of fiscal 1999 are
estimated to be $12.0 million.
- Discontinuing MicroSun Business. The Company has essentially
terminated the production of metal halide portable fixtures (i.e.,
table and floor lamps) and is working on selling the remaining
inventory and liquidating the remaining assets. Previously, the
Company had approved a plan to distribute to its shareholders, as a
tax-free spinoff, all of the ownership of Microsun Technologies,
Inc. ("MicroSun"), the subsidiary primarily responsible for
development, design, assembly and marketing of these fixtures for
hospitality and residential uses. However, because of the
deterioration of the capital markets subsequent to June 30, 1998 and
the Company's inability to raise capital necessary to spin off the
MicroSun business, the Company has decided to wind down and close
this business.
The Company anticipates recording pretax charges primarily in the second
quarter of fiscal 1999 ranging from $10 million to $21 million as a result of
implementing these changes.
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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 hereunto duly authorized.
ADVANCED LIGHTING TECHNOLOGIES, INC.
(Registrant)
Date: December 23, 1998 By: /s/ Wayne R. Hellman
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Wayne R. Hellman
Chief Executive Officer
