<Page 1)
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
February 29, 2000
For the quarterly period ended ...........................................
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ................... to ....................
0-11631
Commission File Number ..........
JUNO LIGHTING, INC.
..........................................................................
(Exact name of registrant as specified in its charter)
Incorporated in Delaware 36-2852993
..........................................................................
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1300 South Wolf Road, Des Plaines, Illinois 60017-5065
..........................................................................
(Address of principal executive offices) (Zip Code)
847 - 827 - 9880
..........................................................................
(Registrant's telephone number, including area code)
..........................................................................
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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.
X
Yes ..... No .....
There were 2,412,126 shares of common stock outstanding as of March 31, 2000
<Page 2>
JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
=====================================
(In Thousands)
February 29, November 30,
ASSETS 2000 1999
------ ---------- -----------
(Unaudited) (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 2,723 $ 8,632
Accounts receivable, less allowance for
possible losses of $1,421 and $1,382 25,562 26,799
Inventories at lower of cost or market 29,043 29,317
Prepaid expenses and miscellaneous 4,134 4,142
---------- ----------
TOTAL CURRENT ASSETS 61,462 68,890
---------- ----------
PROPERTY, PLANT AND EQUIPMENT,
less accumulated depreciation of
$20,508 and $19,360 47,725 47,802
---------- ----------
OTHER ASSETS:
Goodwill and other intangibles, net of
accumulated amortization of
$1,667 and $1,629 4,084 4,123
Deferred financing costs and other, net of
miscellaneous accumulated
amortization of $837 and $514 9,381 9,676
Miscellaneous 130 143
---------- ----------
TOTAL OTHER ASSETS 13,595 13,942
---------- ----------
$ 122,782 $ 130,634
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 6,864 $ 6,566
Accrued liabilities 10,015 16,272
Current maturities of long-term debt 3,716 3,330
---------- ----------
TOTAL CURRENT LIABILITIES 20,595 26,168
---------- ----------
LONG-TERM DEBT & DEFERRED INCOME TAXES 205,520 208,623
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred Stock, Series A cumulative,
$.001 par, $100 stated value,
shares authorized 5,000,000;
issued 1,060,000 112,488 110,282
Common stock, $.001 and $.01 par, shares
authorized 45,000,000;
issued 2,412,126 2 2
Paid-in-capital 421 421
Accumulated other comprehensive income (478) (530)
Retained earnings (deficit) (215,766) (214,332)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (103,333) (104,157)
---------- ----------
$ 122,782 $ 130,634
========== ==========
(See Notes To Consolidated Financial Statements)
<Page 3>
JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
===========================================
(In Thousands Except Per
Share Amounts)
Three Months Ended
--------------------------
February 29, February 28,
2000 1999
----------- -----------
(Unaudited) (Unaudited)
NET SALES $ 39,465 $ 37,277
COST OF SALES 20,247 18,554
----------- -----------
Gross profit 19,218 18,723
SELLING, GENERAL AND ADMINISTRATIVE 12,250 10,797
----------- -----------
Operating income 6,968 7,926
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (5,724) (38)
Interest and dividend income 72 1,123
Miscellaneous 21 174
----------- -----------
Total other income (expense) (5,631) 1,259
----------- -----------
INCOME BEFORE TAXES ON INCOME 1,337 9,185
TAXES ON INCOME 559 3,176
----------- -----------
NET INCOME 778 6,009
LESS: PREFERRED DIVIDENDS 2,205 -
----------- -----------
NET (LOSS)INCOME AVAILABLE TO
COMMON SHAREHOLDERS $ (1,427) $ 6,009
=========== ===========
NET (LOSS) INCOME PER COMMON SHARE
(BASIC AND DILUTED) $ (.59) $ .32
====== =====
(See Notes To Consolidated Financial Statements)
<Page 4>
JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF RETAINED EARNINGS
=====================================================
(In Thousands)
Three Months Ended
February 29, 2000
-----------------
(Unaudited)
RETAINED EARNINGS, beginning of period $ (214,332)
PREFERRED DIVIDEND (2,205)
COMMON STOCK RETIREMENT (7)
NET INCOME, three months ended
February 29, 2000 778
----------
RETAINED EARNINGS (DEFICIT), end of period $ (215,766)
==========
(See Notes To Consolidated Financial Statements)
<Page 5>
JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
====================================
(In Thousands)
Three Months Ended
----------------------------
February 29, February 28,
2000 1999
------------ -----------
(Unaudited) (Unaudited)
CASH FLOWS PROVIDED BY (USED IN) OPERATING
ACTIVITIES:
Net income $ 778 $ 6,009
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,524 1,033
Changes in assets and liabilities:
Decrease(Increase) in accounts
receivable 1,289 (143)
Decrease(Increase) in inventory 273 (1,169)
Decrease in prepaid expense 9 984
(Increase)Decrease in other assets (43) 6
(Decrease)Increase in accounts
payable and accrued expenses (5,960) 224
Increase in deferred
income taxes 84 57
----------- ----------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (2,046) 7,001
----------- ----------
CASH FLOWS PROVIDED BY (USED IN) INVESTING
ACTIVITIES:
Capital expenditures (1,050) (1,508)
Purchases of marketable securities - (18,079)
Sales of marketable securities - 7,971
----------- ----------
NET CASH (USED IN)
INVESTING ACTIVITIES (1,050) (11,616)
----------- ----------
(Continued on Next Page)
<Page 6>
JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (CONTINUED)
====================================
(In Thousands)
Three Months Ended
----------------------------
February 29, February 28,
2000 1999
----------- -----------
(Unaudited) (Unaudited)
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
Proceeds from exercise of stock
options - 25
Proceeds from bank debt 2,500
Dividend paid - (1,860)
Principal payments on long-term debt (5,313) (40)
----------- -----------
NET CASH (USED IN) FINANCING ACTIVITIES (2,813) (1,875)
----------- -----------
NET (DECREASE) IN CASH (5,909) (6,490)
CASH AT BEGINNING OF PERIOD 8,632 10,498
----------- -----------
CASH AT END OF PERIOD $ 2,723 $ 4,008
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 9,567 $ 34
Income taxes 200 0
(See Notes To Consolidated Financial Statements)
<Page 7>
JUNO LIGHTING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
====================================================
FINANCIAL INFORMATION
The financial information presented in these consolidated financial
statements is unaudited but, in the opinion of management, reflects all normal
adjustments necessary for the fair presentation of the Company's financial
position, results of its operations and cash flows. The information in the
condensed consolidated balance sheet as of November 30, 1999 was derived from
the Company's audited consolidated financial statements.
INVENTORIES
Inventories are summarized as follows:
(In Thousands)
February 29, November 30,
2000 1999
------------ ------------
Finished goods $ 14,503 $ 14,333
Raw materials 14,540 14,984
------------ ------------
$ 29,043 $ 29,317
============ ============
LONG-TERM DEBT
The Company has a senior credit facility (the "Credit Facility")
with Bank Of America, N.A., Credit Suisse First Boston and certain other
lenders providing (i) a $90 million term facility consisting of a (a) $40
million tranche A term loan ("Term Loan A"), and (b) $50 million tranche B
term loan ("Term Loan B"), and (ii) a $35 million revolving credit facility
(the "Revolving Credit Facility"). Borrowings under the Credit Facility bear
interest, at the Company's option, at a rate per annum equal to either the
Eurodollar rate (the London interbank offered rate for eurodollar deposits as
adjusted for statutory reserve requirements) or a base rate plus a varying
applicable percentage. At February 29, 2000 the nominal interest rates for
Term Loan A and Term Loan B were 8.60% and 9.10%, respectively. Term Loan A
and Term Loan B are each payable in separate quarterly installments commencing
February 29, 2000. The final maturity of Term Loan A is November 30, 2005 and
the final maturity of Term Loan B is November 30, 2006. Borrowings under the
Revolving Credit Facility are due on November 30, 2005. In addition, the
Company issued $125 million principal amount of 11-7/8% senior subordinated
notes due July 1, 2009 (the "Notes") to qualified institutional buyers under a
private placement offering pursuant to Rule 144A and Regulation S of the
Securities Act, resulting in approximately $120.4 million in proceeds to the
Company. Interest is payable on the Notes semi-annually on January 1 and July
1 of each year commencing January 1, 2000. The Notes are unsecured senior
subordinated obligations of the Company, subordinated in right of payment to
all existing and future senior indebtedness of the Company, including the
Credit Facility. Each of the aforementioned debt facilities contain
restrictive covenants. The Secured Credit Agreement requires the Company to
maintain certain financial ratios, as defined.
The Credit Facility is collateralized by certain land and buildings.
The aggregate amounts of existing long-term debt maturing in each of the next
five years are as follows: 2001 - $5,108,000; 2002 - $6,035,000; 2003 -
$7,891,000; 2004 - $7,891,000; 2005 - $9,746,000.
<Page 8>
SERIES A PREFERRED STOCK
On June 30, 1999, the Company issued 1,060,000 shares of Series A
convertible stock ("Preferred Stock") to Fremont Investors and certain
employees of the Company. Holders of the Preferred Stock are entitled to
receive cumulative quarterly dividends, whether or not declared by the Board
of Directors, in an amount equal to the greater of:
- dividends which would have been payable to the holders of Series A
Convertible Preferred Stock in such quarter had they converted
their Series A Convertible Preferred stock into Juno common stock
prior to the record date of dividends declared on the common stock
in such quarter, or
- the stated amount then in effect multiplied by 2%.
Through June 30, 2004, the dividends for the Preferred Stock will be
payable by an increase in the stated amount of such stock. After June 30,
2004, the dividends will be paid in cash until redemption or conversion. The
Preferred Stock is convertible into shares of the Company's common stock at a
rate of $26.25 per share. Holders of Preferred Stock are entitled to vote for
each whole share of common stock that would be issuable to such holder upon
the conversion of all the shares of the Preferred Stock held by such holder on
the record date for the determination of stockholders entitled to vote.
Additionally, holders of Preferred Stock have preference to common
stockholders in the event of liquidation, dissolution or winding up of the
Company.
NET INCOME PER COMMON SHARE
Basic earnings per share is calculated by dividing net income by the
weighted average number of common shares outstanding. Diluted earnings per
share is calculated by dividing net income by the weighted average number of
common shares outstanding including assumed exercise of dilutive stock options
during the periods. Such weighted average number of shares outstanding is as
follows:
February 29, February 28,
2000 1999
---------- ----------
3 months ended
Basic 2,412,126 18,595,752
Diluted 2,412,126 18,650,611
<Page 9>
COMPREHENSIVE INCOME
As of December 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130).
The adoption of this Statement had no impact on the Company's net income or
stockholders' equity. SFAS 130 establishes new rules for the reporting and
display of comprehensive income and its components. SFAS 130 requires foreign
currency translation adjustments and unrealized gains or losses on the
Company's available-for-sale securities to be included in other comprehensive
income. Prior to the adoption of SFAS 130, the Company reported such
adjustments and unrealized gains or losses separately in stockholders' equity.
Amounts in prior year financial statements have been reclassified to conform
to SFAS 130.
The components of comprehensive income, net of related tax, are as
follows (in thousands):
Three Months Ended
February 29, February 28,
2000 1999
------- -------
Net income $ 778 $ 6,009
Net change in
unrealized gain (loss)
on available-for-sale
securities - (211)
Foreign currency
translation adjustment 52 54
------- -------
Comprehensive income $ 830 $ 5,852
======= =======
The components of accumulated other comprehensive (loss), net of
related tax, are as follows (in thousands):
February 29, November 30,
2000 1999
------ ------
Foreign currency translation adjustment $(478) $(530)
------ ------
Accumulated other comprehensive (loss) $(478) $(530)
====== ======
MERGER AND RECAPITALIZATION
On June 30, 1999, Jupiter Acquisition Corp. ("Merger Sub"), a
Delaware corporation and a wholly-owned subsidiary of Fremont Investors I, LLC
("Fremont Investors"), was merged (the "Merger") with and into the Company
pursuant to an Agreement and Plan of Recapitalization and Merger dated March
26, 1999 (the "Merger Agreement") by and among Merger Sub, the Company and
Fremont Investors. Pursuant to the Merger, the holders of all the issued and
outstanding shares of Juno common stock, $.01 par value per share, were
entitled to receive either $25 cash or one share of Juno common stock, $.001
par value per share, for each share of common stock issued and outstanding;
provided that this consideration was subject to proration, as such holders
were entitled to receive an aggregate of 2,400,000 shares of Juno common
stock. The Company funded this effective retirement of 16,242,527 shares of
the Company's common stock with a payment to stockholders in the aggregate of
approximately $406 million. The sources of this funding included the
Company's available cash and marketable securities, a $106 million preferred
stock investment by Fremont and key employees of Juno ("Preferred Stock"),
approximately $94.9 million of bank debt ("Bank Debt") and the issuance of
$125 million of subordinated debt
<Page 10>
("Subordinated Debt"). In connection with the Merger and Recapitalization the
Company incurred approximately $9.9 million in transaction costs and $10.2
million of deferred financing costs. Included in these costs were payments of
approximately $4.9 million to Fremont Investors.
GUARANTORS' FINANCIAL INFORMATION
The Company has issued and registered $125 million of Series B
Senior Subordinated Notes at 11-7/8% (the "Senior Subordinated Notes") under
the Securities Act of 1933, as amended (the "Act"). Pursuant to the
registration and issuance of the Senior Subordinated Notes under the Act, the
Company's domestic subsidiaries, Juno Manufacturing, Inc., Indy Lighting, Inc.
and Advanced Fiberoptic Technologies, Inc., will provide full and
unconditional senior subordinated guarantees for the Senior Subordinated Notes
on a joint and several basis.
Following is consolidating condensed financial information
pertaining to the Company ("Parent") and its subsidiary guarantors and
subsidiary non-guarantors.
<TABLE>
For the Three Months Ended February 29,2000
-------------------------------------------
<CAPTION>
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ 32,411 $ 32,777 $ 2,293 $ (28,016) $ 39,465
Cost of sales 25,181 20,611 1,898 (27,443) 20,247
-------- ------------ ------------- ------------ ------------
Gross profit 7,230 12,166 395 (573) 19,218
Selling, general and
administrative 6,642 5,087 494 27 12,250
-------- ------------ ------------- ------------ ------------
Operating income 588 7,079 (99) (600) 6,968
Other income(expense) (5,621) 20 (30) 0 (5,631)
-------- ------------ ------------- ------------ ------------
Income (loss) before
taxes on income (5,033) 7,099 (129) (600) 1,337
Taxes on income (1,864) 2,480 (56) (1) 559
-------- ------------ ------------- ------------ ------------
Net income (loss) (3,169) 4,619 (73) (599) 778
Less: preferred
dividends (2,205) - - - (2,205)
-------- ------------ ------------- ------------- --------------
Net (loss) income
available to
common shareholders $ (5,374) $ 4,619 $ (73) $ (599) $ (1,427)
======== ============ ============= ============ ============
</TABLE>
<Page 11>
<TABLE>
GUARANTORS' FINANCIAL INFORMATION (CONTINUED)
For the Three Months Ended February 28,1999
-------------------------------------------
(in thousands)
<CAPTION> Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ 31,314 $ 30,863 $ 2,007 $ (26,907) $ 37,277
Cost of sales 23,707 19,314 1,745 (26,212) 18,554
-------- ------------ ------------- ------------ ------------
Gross profit 7,607 11,549 262 (695) 18,723
Selling, general and
administrative 5,401 4,954 414 28 10,797
-------- ------------ ------------- ------------ ------------
Operating income 2,206 6,595 (152) (723) 7,926
Other income(expense) 1,157 132 (30) - 1,259
-------- ------------ ------------- ------------ ------------
Income (loss) before
taxes on income 3,363 6,727 (182) (723) 9,185
Taxes on income 980 2,276 (79) (1) 3,176
-------- ------------ ------------- ------------ ------------
Net income (loss)
available to
common shareholders $ 2,383 $ 4,451 $ (103) $ (722) $ 6,009
======== ============ ============= ============ ============
</TABLE>
<TABLE>
February 29, 2000
-----------------
<CAPTION> (in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash $ 2,562 $ 46 $ 113 $ 2 $ 2,723
Accounts receivable, net 25,108 58,505 1,269 (59,320) 25,562
Inventories 19,416 15,967 1,784 (8,124) 29,043
Other current assets 3,505 565 64 - 4,134
-------- ------------ ------------- ------------ ------------
Total current assets 50,591 75,083 3,230 (67,442) 61,462
Property and equipment 10,398 55,505 2,706 (376) 68,233
Less accumulated depreciation 2,420 17,887 471 (270) 20,508
-------- ------------ ------------- ------------ ------------
Net property and equipment 7,978 37,618 2,235 (106) 47,725
Other assets 73,480 67 - (59,952) 13,595
-------- ------------ ------------- ------------ ------------
$132,049 $ 112,768 $ 5,465 $ (127,500) $ 122,782
Total assets ======== ============ ============= ============ ============
Current liabilities $ 65,655 $ 11,968 $ 2,290 $ (59,318) $ 20,595
Other liabilities 205,441 - 2,170 (2,091) 205,520
-------- ------------ ------------- ----------- ------------
Total liabilities 271,096 11,968 4,460 (61,409) 226,115
Total stockholders'
(deficit) equity (139,047) 100,800 1,005 (66,091) (103,333)
-------- ------------ ------------- ------------ ------------
Total liabilities and
stockholders' equity $132,049 $ 112,768 $ 5,465 $ (127,500) $ 122,782
======== ============ ============= ============ ============
</TABLE>
<Page 12>
GUARANTORS' FINANCIAL INFORMATION (CONTINUED)
<TABLE>
November 30, 1999
-----------------
<CAPTION> (in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash $ 5,748 $ 2,827 $ 27 $ 30 $ 8,632
Marketable securities - - - - -
Accounts receivable, net 26,206 50,536 1,721 (51,664) 26,799
Inventories 18,879 16,458 1,507 (7,527) 29,317
Other current assets 3,390 480 79 193 4,142
-------- ------------ ------------- ------------ ------------
Total current assets 54,223 70,301 3,334 (58,968) 68,890
Property and equipment 10,393 54,490 2,656 (377) 67,162
Less accumulated depreciation (2,330) (16,871) (429) 270 (19,360)
-------- ------------ ------------- ------------ ------------
Net property and equipment 8,063 37,619 2,227 (107) 47,802
Other assets 73,819 76 1 (59,954) 13,942
-------- ------------ ------------- ------------ ------------
Total assets $ 136,105 $ 107,996 $ 5,562 $ (119,029) $ 130,634
======== ============ ============= ============ ============
Current liabilities $ 63,605 $ 11,816 $ 2,359 $ (51,442) $ 26,338
Other liabilities 208,372 - 2,177 (2,096) 208,453
-------- ------------ ------------- ------------ ------------
Total liabilities 271,977 11,816 4,536 (53,538) 234,791
Total stockholders'
(deficit) equity (135,872) 96,180 1,026 (65,491) (104,157)
-------- ------------ ------------- ------------ ------------
Total liabilities and
stockholders' equity $ 136,105 $ 107,996 $ 5,562 $ (119,029) $ 130,634
======== ============ ============= ============ ============
</TABLE>
<Page 13>
<TABLE>
For the Three Months Ended February 29,2000
<CAPTION> -------------------------------------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by
operating activities $ (344) $ (1,766) $ 99 $ (35) $(2,046)
--------- ------------ ------------- ------------ ------------
Cash flows provided by
(used in) investing
activities:
Capital expenditures (29) (1,015) (6) - (1,050)
Proceeds from sale
of assets - - - - -
Purchases of marketable
securities - - - - -
Sales of marketable
securities - - - - -
--------- ------------ ------------- ------------ ------------
Net Cash provided by (used in)
investing activities (29) (1,015) (6) - (1,050)
--------- ------------ ------------- ------------ ------------
Cash provided by (used in)
financing activities:
Dividends paid
Proceeds from issuance of
preferred stock
Proceeds from subordinated
debt
Proceeds from bank debt 2,500 - - - 2,500
Common stock retired
Other financing activities (5,313) - (7) 7 (5,313)
--------- ------------ ------------- ------------ ------------
Net cash used in financing
activities (2,813) - (7) 7 (2,813)
--------- ------------ ------------- ------------ ------------
Net increase (decrease)
in cash (3,186) (2,781) 86 (28) (5,909)
Cash at beginning of period 5,748 2,827 27 30 8,632
--------- ------------ ------------- ------------ ------------
Cash at end of period $ 2,562 $ 46 $ 113 $ 2 $ 2,723
========= ============ ============= ============ ============
</TABLE>
<Page 14>
GUARANTORS' FINANCIAL INFORMATION (CONTINUED)
<TABLE>
For the Three Months Ended February 28, 1999
<CAPTION> --------------------------------------------
(in thousands)
Danalite
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by
operating activities $ 7,833 $ (654) $ (214) $ 36 $ 7,001
-------- ------------ ------------- ------------ -----------
Cash flows provided by (used in)
investing activities:
Capital expenditures (21) (1,445) (42) - (1,508)
Purchases of marketable
securities (18,079) - - - (18,079)
Sales of marketable
securities 7,971 - - - 7,971
--------- ------------ ------------- ------------ ------------
Net Cash provided by (used in)
investing activities (10,129) (1,445) (42) (11,616)
--------- ------------ ------------- ------------ ------------
Cash provided by (used in)
financing activities:
Dividends paid (1,860) (1,860)
Other financing activities (15) - (6) 6 (15)
--------- ------------ ------------- ------------ ------------
Net cash used in financing
activities (1,875) - (6) 6 (1,875)
--------- ----------- ------------- ------------ ------------
Net increase (decrease)
in cash (4,171) (2,099) (262) 42 (6,490)
Cash at beginning of period 9,066 1,054 349 29 10,498
--------- ------------ ------------ ------------ ------------
Cash at end of period $ 4,895 $ (1,045) $ 87 $ 71 $ 4,008
========= ============= ============ ============ ============
</TABLE>
<Page 15>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
===========================================================
RESULTS OF OPERATIONS:
- ----------------------
Three Months Ended February 29, 2000 Compared With Three Months
- ---------------------------------------------------------------
Ended February 28, 1999
- ----------------------
During the first quarter ended February 29, 2000, net sales increased by
5.9% to $39,465,000 compared to $37,277,000 for the like period in 1999. In
management's opinion, this increase is due primarily to an increase in the
overall demand for lighting products.
Cost of sales as a percentage of net sales increased to 51.3% for the
quarter, compared to 49.8% for the like period in 1999 due to an unfavorable
change in sales mix and the result of increases in aluminum raw material
costs.
Selling, general and administrative expenses expressed as a percentage
of sales increased to 31.0% for the first quarter of 2000 compared with 29.0%
for the like period in 1999 due primarily to increases of $465,000 for
amortization of deferred financing costs resulting from the recapitalization
transaction and freight cost increases of $237,000, with the remainder due to
compensation increases.
As a result of the above factors, operating income decreased to 17.7% of
sales as compared to 21.3% for the like period in 1999.
Interest expense was $5,724,000 for the first quarter ended February 29,
2000 compared to $38,000 for the like period in 1999. This increase reflects
interest related to borrowings used to finance the merger in the third quarter
of 1999.
INFLATION
- ---------
While Juno believes that it generally has been successful in controlling
the prices it pays for materials and passing on increased costs by increasing
its prices, the Company may not have future success in limiting material price
increases or reflecting any material price increases in the prices it charges
its customers or offsetting such price increases through improved
efficiencies.
LIQUIDITY AND CAPITAL RESOURCES:
- --------------------------------
During the three month period ended February 29, 2000, operating
activities used cash flow of $2,046,000. This was comprised principally of
net income, depreciation and amortization, and decreases in accounts
receivable (collectively aggregating $3,591,000), net of decreases in accounts
payable and accrued expenses of $5,960,000. The decrease in accounts payable
and accrued expenses was due primarily to the payment of interest expense
which was previously included in accrued liabilities at November 30, 1999.
Net cash used in investing activities amounted to $1,050,000 and was
used to finance capital expenditures.
The net cash used in financing activities of $2,813,000 consisted of
principal payments on long-term debt of $5,313,000 less proceeds from the
Revolving Line of Credit Facility of $2,500,000.
<Page 16>
The Company historically has funded its operations principally from cash
generated from operations, available cash and income from marketable
securities. The Company incurred substantial indebtedness in connection
with the Merger. The Company's liquidity needs are expected to arise primarily
from operating activities and servicing indebtedness incurred in connection
with the Merger.
Principal and interest payments under the Senior Credit Facility and the
Subordinated Debt represent significant liquidity requirements for the
Company. As of February 29, 2000, the Company had cash of approximately $2.7
million and total indebtedness of $207.3 million. Detailed information
concerning the terms of the Senior Credit Facility and the Subordinated Debt
can be found in the Company's audited financial statements included in the
November 30, 1999 Annual Report on Form 10K.
The Company's $35 million Revolving Credit Facility is available to
finance its working capital and had no outstanding balance on February 29,
2000. The Company's principal source of cash to fund its liquidity needs will
be net cash from operating activities and borrowings under the Senior Credit
Facility. The Company believes these sources will be adequate to meet its
anticipated future requirements for working capital, capital expenditures, and
scheduled payments of principal and interest on its existing indebtedness for
the next 12 months. However, the Company may not generate sufficient cash flow
from operations or have future working capital borrowings available in an
amount sufficient to enable it to service its indebtedness, including the
notes, or to make necessary capital expenditures.
OTHER MATTERS:
- -------------
This document contains various forward-looking statements. Statements
in this document that are not historical are forward-looking statements. Such
statements are subject to various risks and uncertainties that could cause
actual results to vary materially from those stated. Such risks and
uncertainties include: economic conditions generally; levels of
construction and remodeling activities, the ability to improve manufacturing
efficiencies, disruptions in manufacturing or distribution, product and price
competition, raw material prices, the ability to develop and successfully
introduce new products, technology changes, patent issues, exchange rate
fluctuations, and other risks and uncertainties. The Company undertakes no
obligation to update any such factors or to publicly announce the result of
any revisions to any of the forward-looking statements contained herein to
reflect future events or developments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
=======================================================
The Company does not have any material risk-sensitive investments.
<Page 17>
PART II - OTHER INFORMATION
===========================
Item 1. Legal Proceedings - Reference is made to Item 3 of the Company's
Annual Report on Form 10-K for the fiscal year ended November 30,
1999 for descriptions of Nilssen vs. Juno Lighting, Inc. and
Linda Parnes v. George M. Ball, Thomas Tomsovic, Allan Coleman,
Robert S. Fremont, Julius Lewis, Fremont Investors I, LLC, Fremont
Partners, L.P. and Juno Lighting, Inc.
Item 2. None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. (a) Exhibits - None
(b) During the quarter for which this report is filed, no reports on
Form 8-K were filed.
<Page 18>
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.
JUNO LIGHTING, INC.
By:George J. Bilek
---------------------------------------
George J. Bilek, Vice President Finance
(Principal Financial Officer)
Dated: April 14, 2000
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