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
August 31,2000
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 last 90 days.
X
Yes . . . No . . .
There were 2,443,248 shares of common stock outstanding as of
September 30, 2000.
<PAGE 2>
JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
=====================================
($ In Thousands)
August 31, November 30,
ASSETS 2000 1999
------ ---------- -----------
(Unaudited) (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 2 404 $ 8 632
Accounts receivable, less allowance for
possible losses of $1,333 and $1,382 27 950 26 799
Inventories at lower of cost or market 25 734 29 317
Prepaid expenses and miscellaneous 4 210 4 142
---------- ----------
TOTAL CURRENT ASSETS 60 298 68 890
---------- ----------
PROPERTY, PLANT AND EQUIPMENT,
less accumulated depreciation of
$21,850 and $19,360 46 261 47 802
---------- ----------
OTHER ASSETS:
Goodwill and other intangibles, net of
accumulated amortization of
$1,744 and $1,629 4 008 4 123
Deferred financing costs & other, net of
accumulated amortization of $1,478 & $514 8 746 9 676
Miscellaneous 111 143
---------- ----------
TOTAL OTHER ASSETS 12 865 13 942
---------- ----------
$ 119 424 $ 130 634
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 7 387 $ 6 566
Accrued liabilities 12 655 16 272
Current maturities of long-term debt 4 006 3 330
---------- ----------
TOTAL CURRENT LIABILITIES 24 048 26 168
---------- ----------
LONG-TERM DEBT & DEFERRED INCOME TAXES 193 738 208 623
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred Stock,
$.001 par, shares authorized 5,000,000;
Series A convertible, $100 stated value,
issued shares 1,060,000 117 033 110 282
Common stock, $.001 and $.01 par, shares
authorized 45,000,000;
issued 2,443,248 and 2,412,126 2 2
Paid-in-capital 580 421
Accumulated other comprehensive income (600) (530)
Retained earnings <Deficit> (215 377) (214 332)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY <DEFICIT> ( 98 362) (104 157)
---------- ----------
$ 119 424 $ 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
-------------------------
August 31, August 31,
2000 1999
----------- -----------
(Unaudited) (Unaudited)
NET SALES $ 44 611 $ 42 979
COST OF SALES 22 715 21 546
---------- ----------
Gross profit 21 896 21 433
SELLING, GENERAL AND ADMINISTRATIVE 13 227 13 845
---------- ----------
Operating income 8 669 7 588
---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (5 661) (3 896)
Interest and dividend income 77 1 225
Miscellaneous (15) (749)
---------- ----------
Total other income (expense) (5 599) (3 420)
---------- ----------
INCOME BEFORE TAXES ON INCOME 3 070 4 168
TAXES ON INCOME 1 176 1 535
---------- ----------
NET INCOME 1 894 2 633
LESS: PREFERRED DIVIDENDS 2 295 2 120
---------- ----------
NET (LOSS) INCOME AVAILABLE
TO COMMON SHAREHOLDERS $ (401) $ 513
========= ==========
NET (LOSS) INCOME PER COMMON
SHARE (BASIC AND DILUTED) $(.16) $ .08
===== =====
(See Notes To Consolidated Financial Statements)
<PAGE 4>
JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
===========================================
(In Thousands Except Per
Share Amounts)
Nine Months Ended
--------------------------
August 31, August 31,
2000 1999
----------- -----------
(Unaudited) (Unaudited)
NET SALES $ 130 298 $ 125 761
COST OF SALES 66 226 63 579
----------- -----------
Gross profit 64 072 62 182
SELLING, GENERAL AND ADMINISTRATIVE 38 095 36 517
----------- -----------
Operating income 25 977 25 665
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (17 075) (3 958)
Interest and divided income 222 3 495
Miscellaneous 40 (562)
----------- -----------
Total other income (expense) (16 813) (1 025)
----------- -----------
INCOME BEFORE TAXES ON INCOME 9 164 24 640
TAXES ON INCOME 3 458 8 692
----------- -----------
NET INCOME 5 706 15 948
LESS: PREFERRED DIVIDENDS 6 750 2 120
----------- ----------
NET (LOSS)INCOME AVAILABLE TO COMMON SHAREHOLDERS $ (1 044) $ 13 828
=========== ==========
NET (LOSS)INCOME PER COMMON SHARE - BASIC $(0.43) $ 1.01
===== =====
NET (LOSS)INCOME PER COMMON SHARE - DILUTED $(0.43) $ 1.00
===== =====
(See Notes To Consolidated Financial Statements)
<PAGE 5>
JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF RETAINED EARNINGS
=====================================================
(In Thousands)
Nine Months Ended
August 31, 2000
-----------------
(Unaudited)
RETAINED EARNINGS(DEFICIT), beginning of period $(214 332)
PREFERRED DIVIDEND (6 750)
COMMON STOCK RETIREMENT (1)
NET INCOME, nine months ended 5 706
August 31, 2000 ----------
RETAINED EARNINGS (DEFICIT), end of period $ (215 377)
==========
(See Notes To Consolidated Financial Statements)
<PAGE 6>
JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
====================================
(In Thousands)
Nine Months Ended
----------------------------
August 31, August 31,
2000 1999
------------ -----------
(Unaudited) (Unaudited)
CASH FLOWS PROVIDED BY (USED IN) OPERATING
ACTIVITIES:
Net income from continuing operations $ 5 706 $ 15 948
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation & amortization 4 711 3 567
Loss (gain) on sale of assets - 606
Changes in assets and liabilities:
(Increase) in accounts
receivable (1 221) (2 266)
Decrease(increase) in inventory 3 582 (1 541)
(Increase) decrease in
prepaid expense (67) 1 319
Decrease(increase) in other assets 36 (9 948)
(Decrease) increase in accounts
payable and accrued expenses (3 796) 5 956
Increase in deferred
income taxes 453 258
----------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 9 404 13 899
----------- ----------
CASH FLOWS PROVIDED BY (USED IN) INVESTING
ACTIVITIES:
Capital expenditures (2 089) (4 742)
Purchases of marketable securities - (63 966)
Sales of marketable securities - 151 346
----------- ----------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (2 089) 82 638
----------- ----------
(Continued on Next Page)
<PAGE 7>
JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (CONTINUED)
====================================
(In Thousands)
Nine Months Ended
----------------------------
August 31, August 31,
2000 1999
----------- -----------
(Unaudited) (Unaudited)
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
Proceeds from sale of common stock thru
employee purchase plan 159 193
Proceeds from exercise of stock
options - 838
Proceeds from issuance of preferred stock - 106 000
Proceeds from subordinated debt - 124 103
Proceeds from bank debt 4 250 94 900
Common stock retired - (415 636)
Dividend paid - (3 720)
Principal payments on long-term debt (17 952) (8 276)
----------- -----------
NET CASH (USED IN) FINANCING ACTIVITIES (13 543) (101 598)
----------- -----------
NET DECREASE IN CASH (6 228) (5 061)
CASH AT BEGINNING OF PERIOD 8 632 10 498
----------- -----------
CASH AT END OF PERIOD $ 2 404 $ 5 437
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 23 063 $ 1 148
Income taxes 2 073 7 550
(See Notes To Consolidated Financial Statements)
<PAGE 8>
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)
August 31, 2000 November 30, 1999
--------------- ------------------
Finished goods $12 906 $14 333
Raw materials 12 828 14 984
------- -------
$25 734 $29 317
======== =========
LONG-TERM DEBT
--------------
Long-term debt consists of the following:
(in thousands)
August 31, November 30,
2000 1999
------------ ------------
Bank of America, N.A. and certain other lenders,
Tranche A Term Loan, payable in escalating
installments through November, 2005, plus
interest at a variable rate, generally
approximating 3 month LIBOR plus 2.75% $30 122 $38 000
Bank of America, N.A. and certain other lenders,
Tranche B Term Loan, payable in escalating
installments through November, 2006, plus
interest at a variable rate, generally
approximating 3 month LIBOR plus 3.25% 41 176 48 000
Senior Subordinated Notes due July 2009, plus
interest at 11 7/8%, net of discount of $877 124 163 124 123
-------- --------
195 461 210 123
Less current maturities 4 006 3 330
-------- --------
Total long-term debt $191 455 $206 793
======== ========
<PAGE 9>
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 August 31, 2000 the nominal interest rates for
Term Loan A and Term Loan B were 9.49% and 9.99%, 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 in 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 of 1933, which notes were then exchanged for new
notes registered under the Securities Act of 1933 with
substantially identical economic terms, 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.
As of May 31, 2000, the Company was not in compliance with a
requirement of the Secured Credit Agreement for maintaining a
minimum ratio of EBITDA to Interest Expense, as defined. On June
30, 2000, the lenders agreed to waive compliance with this
requirement for the quarter ended May 31, 2000 and modified this
and other financial ratios for the remainder of the term.
The Credit Facility is collateralized by substantially all of
the assets of the Company and its domestic subsidiaries, as more
particularly described in the Credit Agreement dated June 29,
1999 and filed as an exhibit hereto. The aggregate amounts of
existing long-term debt maturing in each of the next five years
are as follows: 2001 - $4,404,000; 2002 - $5,202,000; 2003 -
$6,789,000; 2004 - $6,789,000; 2005 - $8,394,000.
<PAGE 10>
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 or greater than:
-dividends which would have been payable to
holders of Series A Convertible Preferred Stock
in such quarter they converted their Series A
Convertible Preferred Stock into Juno common
stock prior to the record date of the 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 price
of $26.25 per share. Holders of the 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 Preferred Stock held by such holder on the record date for the
determination of stockholders entitled to vote. Additionally,
holders of the Preferred Stock have a preference over 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 (loss)
income by the weighted average number of common shares
outstanding. Diluted earnings per share is calculated by
dividing net (loss) 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:
August 31, August 31,
2000 1999
----------- -----------
3 months ended
Basic 2 435 468 6 460 320
Diluted 2 435 468 6 469 117
9 months ended
Basic 2 421 463 13 741 834
Diluted 2 421 463 13 773 866
<PAGE 11>
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 Nine Months Ended
August 31, August 31, August 31, August 31,
2000 1999 2000 1999
---------- ---------- ---------- ----------
Net income $1 894 $2 633 $5 706 $15 948
Foreign currency
translation
adjustment 84 (38) (70) 80
-------- -------- ---------- ---------
Comprehensive
income $1 978 $2 595 $5 636 $16 028
======= ======= ======= =======
The components of accumulated other comprehensive income,
net of related tax, are as follows (in thousands):
August 31, November 30,
2000 1999
-------------- ------------
Foreign currency translation
adjustment $(600) $(530)
-------- -------
Accumulated other
comprehensive income $(600) $(530)
======= ======
(Continued on Next Page)
<PAGE 12>
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, 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 ("Subordinated Debt"). In
connection with the Merger 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 registered and issued $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
"Securities Act"), which notes were exchanged for Series A Senior
Subordinated notes with substantially identical economic terms
that were sold earlier in a private offering. Pursuant to the
terms of the Senior Subordinated Notes, the Company's wholly-
owned 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. The Company has not
presented separate financial statements and other disclosures
concerning its subsidiary guarantors because management has
determined that such information in not material to investors.
<PAGE 13>
<TABLE>
<CAPTION>
For the Three Months Ended August 31, 2000
------------------------------------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ 36 699 $ 38 348 $ 2 910 $(33 346) $ 44 611
Cost of sales 26 609 22 627 2 458 (28 979) 22 715
-------- ------------ ------------- ------------ ------------
Gross profit 10 090 15 721 452 (4 367) 21 896
Selling, general and
administrative 7 275 5 468 456 27 13 226
-------- ------------ ------------- ------------ ------------
Operating income 2 815 10 253 ( 4) (4 394) 8 670
Other income(expense) (5 534) (31) (35) - (5 600)
-------- ------------ ------------- ------------ ------------
Income (loss)before taxes
on income (2 719) 10 222 ( 39) (4 394) 3 070
Taxes on income (2 617) 3 809 ( 15) (1) 1 176
-------- ------------ ------------- ------------ ------------
Net income (loss) (102) 6 413 ( 24) (4 393) 1 894
Less: Preferred Dividends (2 295) - - - (2 295)
--------- ------------ ------------- ------------ ------------
Net Income (loss) available
To Common Shareholders $ (2 397) $ 6 413 $ ( 24) $ (4 393) $ (401)
======== =========== ============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
For the Three Months Ended August 31, 1999
------------------------------------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ 32 971 $ 39 168 $ 2 953 $(32 113) $ 42 979
Cost of sales 26 351 23 653 2 545 (31 003) 21 546
-------- ------------ ------------- ------------ ------------
Gross profit 6 620 15 515 408 (1 110) 21 433
Selling, general and
administrative 7 437 5 871 509 27 13 844
-------- ------------ ------------- ------------ ------------
Operating income (817) 9 644 (101) (1 137) 7 589
Other income(expense) (3 409) 23 (34) - (3 420)
-------- ------------ ------------- ------------ ------------
Income (loss) taxes
on income (4 226) 9 667 (135) (1 137) 4 169
Taxes on income (1 300) 2 899 (62) (1) 1 536
-------- ------------ ------------- ------------ ------------
Net income (loss) (2 926) 6 768 ( 73) (1 136) 2 633
Less: Preferred Dividends (2 120) - - - (2 120)
--------- ------------ ------------- ------------ ------------
Net income (loss)
available to
Common Shareholders $ (5 046) $ 6 768 $ ( 73) $(1 136) $ 513
======== ============ ============= ============ ============
</TABLE>
<PAGE 14>
<TABLE>
<CAPTION>
For the Nine Months Ended August 31, 2000
-----------------------------------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $105 580 $106 094 $ 7 834 $(89 210) $130 298
Cost of sales 80 865 66 237 6 667 (87 542) 66 227
-------- ------------ ------------- ------------ ------------
Gross profit 24 715 39 857 1 167 (1 668) 64 071
Selling, general and
administrative 20 962 15 568 1 482 82 38 094
-------- ------------ ------------- ------------ ------------
Operating income 3 753 24 289 (315) (1 750) 25 977
Other income(expense) (16 719) 6 (100) - (16 813)
-------- ------------ ------------- ------------ ------------
Income (loss) before taxes
on income (12 966) 24 295 (415) (1 750) 9 164
Taxes on income (5 118) 8 760 (180) (4) 3 458
-------- ------------ ------------- ------------ ------------
Net income (loss) (7 848) 15 535 (235) (1 746) 5 706
Less: Preferred
Dividends (6 750) - - - (6 750)
-------- ------------ -------------- ----------- ------------
Net Income (loss)
available to
Common Shareholders $(14 598) $ 15 535 $ (235) $ (1 746) $ (1 044)
======== =========== ============= =========== ===========
</TABLE>
<TABLE>
<CAPTION>
For the Nine Months Ended August 31, 1999
-----------------------------------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ 99 545 $106 064 $ 7 726 $(87 574) $ 125 761
Cost of sales 77 972 65 301 6 743 (86 437) 63 579
-------- ------------ ------------- ------------ ------------
Gross profit 21 573 40 763 983 (1 137) 62 182
Selling, general and
administrative 18 893 16 124 1 418 82 36 517
-------- ------------ ------------- ------------ ------------
Operating income 2 680 24 639 (435) (1 219) 25 665
Other income(expense) (1 230) 305 (100) - (1 025)
-------- ------------ ------------- ------------ ------------
Income (loss)before taxes
on income 1 450 24 944 (535) (1 219) 24 640
Taxes on income 595 8 335 (234) (4) 8 692
-------- ------------ ------------- ------------ ------------
Net income (loss) 855 16 609 (301) (1 215) 15 948
Less: Preferred Dividends (2 120) - - - (2 120)
--------- ------------ ------------- ------------ ------------
Net income (loss)
available to
Common Shareholders $ (1 265) $16 609 $ (301) $ (1 215) $ 13 828
======== ============ ============= ============ ============
</TABLE>
<PAGE 15>
<TABLE>
<CAPTION>
August 31,2000
---------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash $ 2 170 $ 176 $ 53 $ 5 $ 2 404
Accounts receivable, net 27 820 72 908 1 740 (74 518) 27 950
Inventories 19 594 14 082 1 386 (9 328) 25 734
Other current assets 3 680 438 91 - 4 209
-------- ------------ ------------- ------------ ------------
Total current assets 53 264 87 604 3 270 (83 841) 60 297
Property and equipment 10 424 55 388 2 676 (376) 68 112
Less accumulated depreciation 2 659 18 928 534 (271) 21 850
-------- ------------ ------------- ------------ ------------
Net property and equipment 7 765 25 460 2 142 (105) 46 262
Other assets 72 757 51 - (59 943) 12 865
-------- ------------ ------------- ------------ ------------
Total assets $133 386 $ 124 115 $ 5 412 $ (143 889) $ 119 424
======== ============ ============= ============ ============
Current liabilities $83 686 $ 12 400 $ 2 475 $ (74 513) $ 24 048
Other liabilities 193 662 - 2 156 (2 080) 193 738
-------- ------------ ------------- ------------ ------------
Total liabilities 277 348 12 400 4 631 (76 593) 217 786
Total stockholders'
(deficit) equity (143 562) 111 715 781 (67 296) ( 98 362)
-------- ------------ ------------- ------------ ------------
Total liabilities and
stockholders' equity $133 786 $ 124 115 $ 5 412 $ (143 889) $ 119 424
======== ============ ============= ============ ============
November 30, 1999
-----------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash $ 5 748 $ 2 828 $ 27 $ 29 $ 8 632
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 70 302 3 334 (58 969) 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 75 1 (59 953) 13 942
-------- ------------ ------------- ------------ ------------
Total assets $136 105 $107 996 $ 5 562 $ (119 029) $ 130 634
======== ============ ============= ============ ============
Current liabilities $ 63 435 $ 11 815 $ 2 359 $ (51 441) $ 26 168
Other liabilities 208 542 - 2 177 (2 096) 208 623
-------- ------------ ------------- ------------ ------------
Total liabilities 271 977 11 815 4 536 (53 537) 234 791
Total stockholders'
(deficit) equity (135 872) 96 181 1 026 (65 492) (104 157)
-------- ------------ ------------- ------------ ------------
Total liabilities and
stockholders' equity $136 105 $107 996 $ 5 562 $ (119 029) $ 130 634
======== ============ ============= ============ ============
</TABLE>
<PAGE 16>
<TABLE>
<CAPTION>
For the Nine Months Ended August 31, 2000
-----------------------------------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by
operating activities $11 140 $ (1 753) $ 64 $ (47) $ 9 404
--------- ------------ ------------- ------------ ------------
Cash flows provided by (used in)
investing activities
Capital expenditures (1 174) (898) (17) - (2 089)
--------- ------------ ------------- ------------ ------------
Net Cash provided by (used in)
investing activities (1 174) (898) (17) - (2 089)
--------- ------------ ------------- ------------ ------------
Cash provided by (used in)
financing activities
Proceeds from bank debt 4 250 - - - 4 250
Principal Payments on
Long Term Debt (17 952) - (21) 21 (17 952)
Other financing activities 159 - - - 159
--------- ------------ ------------- ------------ ------------
Net cash used in financing
activities (13 543) - (21) 21 (13 543)
--------- ------------ ------------- ------------ ------------
Net increase (decrease)
in cash (3 577) (2 651) 26 (26) (6 228)
Cash at beginning of period 5 747 2 828 27 30 8 632
--------- ------------ ------------- ------------ ------------
Cash at end of period $ 2 170 $ 177 $ 53 $ 4 $ 2 404
========= ============ ============= ============ ============
</TABLE>
<TABLE>
<CAPTION>
For the Nine Months Ended August 31, 1999
-----------------------------------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by
operating activities $ 9 466 $ 4 066 $ (248) $ 615 $ 13 899
-------- ------------ ------------- ------------ ------------
Cash flows provided by (used in)
investing activities:
Capital expenditures (163) (4 547) ( 32) - (4 742)
Proceeds from sale of assets - - - - -
Purchases of marketable
securities (63 966) - - - (63 966)
Sales of marketable
securities 151 346 - - - 151 346
--------- ------------ ------------- ------------ ------------
Net Cash provided by (used in)
investing activities 87 217 (4 547) (32) - 82 638
--------- ------------ ------------- ------------ ------------
Cash provided by (used in)
financing activities:
Dividends paid (3 720) - - - (3 720)
Proceeds from issuance
of preferred stock 106 000 - - - 106 000
Proceeds from
subordinated debt 124 103 - - - 124 103
Proceeds from bank debt 94 900 - - - 94 900
Common stock retired (415 636) - - - (415 636)
Other financing activities (7 245) - (20) 20 (7 245)
--------- ------------ ------------- ------------ ------------
Net cash used in financing
activities (101 598) - (20) 20 (101 598)
--------- ------------ ------------- ------------ ------------
Net increase (decrease)
in cash (4 915) (481) (300) 635 (5 061)
Cash at beginning of period 9 162 958 349 29 10 498
--------- ------------ ------------- ------------ ------------
Cash at end of period $ 4 247 $ 477 $ 49 $ 664 $ 5 437
========= ============ ============= ============ ============
<PAGE 17>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
===========================================================
RESULTS OF OPERATIONS:
----------------------
Three Months Ended August 31, 2000 Compared With Three Months
-------------------------------------------------------------
Ended August 31, 1999
------------------
During the third quarter ended August 31, 2000, net sales
increased by 3.8% to $44,611,000 compared to $42,979,000 for the
like period in 1999. Sales increases, principally as a result of
new commercial construction activities and sales of the Company's
new Flex 12 product line were offset, in part, by a softening in
national account business.
Cost of sales as a percentage of net sales increased to 50.9%
for the quarter, compared to 50.1% for the like period in 1999
due to a change in sales mix.
Selling, general and administrative expenses expressed as a
percentage of sales decreased to 29.6% for the third quarter of
2000 compared with 32.2% for the like period in 1999 due
primarily to one-time charges incurred in the third quarter of
1999 of $1,088,000 for bonuses paid to Juno officers pursuant to
Change of Control Benefit Agreements and $149,000 for the loss on
the early extinguishment of an Industrial Revenue Bond that was
paid off on June 30, 1999.
As a result of the above factors, operating income increased
to 19.4% of sales as compared to 17.7% for the like period in
1999.
Interest expense amounted to $5,661,000 for the third quarter
ended August 31, 2000 compared to $3,896,000 for the like period
in 1999. This increase reflects interest related to borrowings
used to finance the merger which closed on June 30, 1999.
Nine Months Ended August 31, 2000 Compared With Nine Months
-----------------------------------------------------------
Ended August 31, 1999
---------------------
During the nine month period ended August 31, 2000, net sales
increased 3.6% to $130,298,000 compared to $125,761,000 for the
like period in 1999. In management's opinion, this increase is
due to increases in the overall demand for lighting products as
well as sales of the Company's new Flex 12 product line.
<PAGE 18>
Cost of sales as a percentage of net sales increased to 50.8%
compared to 50.6% for the like period in 1999 due primarily to
changes in sales mix.
Selling, general and administrative expenses expressed as a
percentage of sales increased to 29.2% for the period compared
with 29.0% for the like period in 1999 due to the same factors
cited for the third quarter.
As a result of the above factors, operating income decreased
to 19.9% of sales as compared to 20.4% for the like period in
1999.
Interest expense amounted to $17,075,000 for the nine months
ended August 31, 2000 compared to $3,958,000 for the like period
in 1999. This increase reflects interest related to borrowings
used to finance the merger which closed on June 30, 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 nine month period ended August 31, 2000, the
Company generated positive net cash flow from operating
activities of $9,404,000. This was comprised principally of net
income, depreciation and amortization, and a decrease in
inventory, (collectively aggregating $13,999,000), net of an
increase in accounts receivable of $1,221,000 and a decrease in
accounts payable and accrued expenses of $3,796,000.
Net cash used in investing activities amounted to $2,089,000
and was used to finance capital expenditures.
The net cash used in financing activities of $13,543,000
consisted primarily of principal payments on long-term debt of
$17,952,000 less proceeds from the Revolving Line of Credit
Facility of $4,250,000.
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.
<PAGE 19>
Principal and interest payments under the Senior Credit
Facility and the Subordinated Debt represent significant
liquidity requirements for the Company. As of August 31, 2000,
the Company had cash of approximately $2.4 million and total
indebtedness of $196.5 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.
The Company's $35 million Revolving Credit Facility is
available to finance its working capital and had an outstanding
balance of $1.0 million on August 31, 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.
<PAGE 20>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
=======================================================
The Company does not have any material risk-sensitive
investments.
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 a description of
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.
On September 8, 1997, Juno Lighting, Inc. was served
with a complaint for patent infringement alleged by
Mr. Ole K. Nilssen (Case No. 97 C 4624 in the United
States District Court for the Northern District of
Illinois). In this complaint, Mr. Nilssen alleged
that Juno had infringed seven of Mr. Nilssen's patents
and sought a permanent injunction against Juno's sale
of products utilizing the inventions claimed by such
patents and unspecified monetary damages including
a request for treble damages. These patents relate
variously to low-voltage, high frequency power supplies
for lighting systems and to so-called track lighting
systems incorporating such low-voltage high frequency
power supplies. Juno filed an answer and counterclaim
denying the allegations of the complaint and asserting
a number of affirmative defenses and prayers for
declaratory relief. To allow the parties to focus on
negotiating a potential resolution of this dispute, on
November 10, 1999, Juno and Mr. Nilssen dismissed their
cases without prejudice and further entered into an
agreement to toll the statute of limitations up to and
including May 15, 2000.
To avoid further operation of the statute of
limitations, on May 15, 2000, Mr. Nilssen filed a
a complaint against Juno Lighting, Inc. in the United
States District Court for the District of Delaware and
served the Company with the complaint on September 12,
2000. The parties have agreed that the Company's
response to the complaint need not be filed until
November 10, 2000. In this complaint, Mr. Nilssen
alleges the same causes of action and seeks the same
relief as in the dismissed action. The Company and Mr.
Nilssen continue to focus on negotiating a potential
resolution of this dispute.
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 21>
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
and Treasurer (Principal Financial and
Accounting Officer)
Dated: October 13, 2000
</TABLE>
