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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 29, 1996
Commission File Number 0-16960
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THE GENLYTE GROUP INCORPORATED
AND SUBSIDIARIES
2345 VAUXHALL ROAD
UNION, N. J. 07083-1948
(908) 964-7000
Incorporated in Delaware I.R.S. Employer
Identification No. 22-2584333
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
The number of shares outstanding of the issuer's common stock as of June 28,
1996 was 12,896,333.
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<PAGE>
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED JUNE 29, 1996
INDEX
PART I. FINANCIAL INFORMATION
Consolidated Statements of Income for the three
months ended June 29, 1996 and July 1, 1995 .............. 1
Consolidated Statements of Income for the six
months ended June 29, 1996 and July 1, 1995 .............. 2
Consolidated Balance Sheets as of June 29, 1996
and December 31, 1995 .................................... 3
Consolidated Statements of Cash Flows for the six
months ended June 29, 1996 and July 1, 1995 .............. 4
Notes to Consolidated Interim Financial Statements ......... 5
Management's Discussion and Analysis of
Results of Operations and Financial Condition ............ 6
PART II. OTHER INFORMATION
Item 1 Legal Proceedings .................................. 8
Item 6 Exhibits and Reports on Form 8-K ................... 8
Signature .................................................. 9
<PAGE>
PART 1 FINANCIAL INFORMATION
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 29, 1996 AND JULY 1, 1995
(000'S OMITTED, EXCEPT PER SHARE DATA)
(Unaudited)
1996 1995
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Net Sales $112,440 $110,967
Cost of Sales 74,775 77,519
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Gross Profit 37,665 33,448
Selling and Administrative Expenses 31,292 27,962
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Operating Profit 6,373 5,486
Interest Expense, net 1,544 2,129
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Income Before Income Taxes 4,829 3,357
Provision for Income Taxes 2,078 1,446
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Net Income $ 2,751 $ 1,911
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Average Number of Common
Shares Outstanding 13,002 12,806
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Earnings per Share $ .21 $ .15
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The accompanying notes are an integral part of these consolidated financial
statements.
1
<PAGE>
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 29, 1996 AND JULY 1, 1995
(000'S OMITTED, EXCEPT PER SHARE DATA)
(Unaudited)
1996 1995
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Net Sales $221,102 $221,205
Cost of Sales 148,173 154,938
- --------------------------------------------------------------------------------
Gross Profit 72,929 66,267
Selling and Administrative Expenses 60,980 55,851
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Operating Profit 11,949 10,416
Interest Expense, net 3,096 4,216
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Income Before Income Taxes 8,853 6,200
Provision for Income Taxes 3,808 2,667
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Net Income $ 5,045 $ 3,533
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Average Number of Common
Shares Outstanding 12,959 12,777
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Earnings per Share $ .39 $ .28
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The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 29, 1996 AND DECEMBER 31, 1995
(000'S OMITTED)
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(Unaudited)
6/29/96 12/31/95
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ASSETS:
- ---------------------------------------------
Current Assets:
Cash and cash equivalents $ 3,625 $ 263
Accounts receivable, less allowances for
doubtful accounts of $5,615 and $5,302 67,067 62,024
Inventories:
Raw materials and supplies 25,948 24,593
Work in progress 10,017 11,360
Finished goods 47,128 46,511
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Total Inventories 83,093 82,464
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Other current assets 13,614 10,364
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Total current assets 167,399 155,115
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Property, plant and equipment, at cost 213,595 229,416
Less: accumulated depreciation and amortization
on plant and equipment 151,927 165,267
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Net property, plant and equipment 61,668 64,149
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Cost in excess of net assets of purchased businesses 11,891 12,026
Other assets 3,654 3,801
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TOTAL ASSETS $ 244,612 $ 235,091
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LIABILITIES & STOCKHOLDERS' INVESTMENT:
- ---------------------------------------------
Current Liabilities:
Short-term borrowings $ 361 $ 1,236
Current maturities of long-term debt 51 50
Accounts payable 38,349 38,795
Accrued expenses 32,224 35,208
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Total current liabilities 70,985 75,289
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Long-term debt 70,868 65,896
Deferred income taxes 4,860 4,662
Other liabilities 18,409 15,287
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Total liabilities $ 165,122 $ 161,134
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Stockholders' Investment:
Common stock 130 129
Paid-in capital 10,646 10,135
Foreign currency translation adjustment (2,044) (2,020)
Retained earnings 70,758 65,713
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Total stockholders' investment 79,490 73,957
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TOTAL LIABILITIES AND STOCKHOLDERS'
INVESTMENT $ 244,612 $ 235,091
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The accompanying notes are an integral part of these consolidated balance
sheets.
3
<PAGE>
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 29, 1996 AND JULY 1, 1995
(000'S OMITTED) (Unaudited)
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1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
- ---------------------------------------------
Net Income $ 5,045 $ 3,533
Adjustments to reconcile net income to net cash
flows provided (used) by operating activities:
Depreciation and amortization 6,722 7,535
(Increase) decrease in:
Accounts receivable (5,043) (1,988)
Inventories (629) (504)
Other current assets (3,250) (2,563)
Other assets 282 (1,647)
Increase (decrease) in:
Accounts payable and accrued expenses (3,439) (6,362)
Other liabilities 3,131 3,194
Deferred income taxes 198 10
- --------------------------------------------------------------------------------
Net cash flows povided by operating activities 3,017 1,208
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Purchase of plant and equipment (4,241) (5,201)
Disposal of plant and equipment 0 666
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Net cash flows used in investing activities (4,241) (4,535)
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Options exercised 512 50
Increase in debt to outsiders 4,098 2,073
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Net cash flows provided from financing activities 4,610 2,123
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EFFECT OF EXCHANGE RATE CHANGES (24) (77)
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Net increase/(decrease) in cash and cash equivalents 3,362 (1,281)
Cash and cash equivalents at beginning of year 263 3,240
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Cash and cash equivalents at end of period $ 3,625 $ 1,959
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - CASH PAID DURING THE SIX
MONTH PERIOD FOR:
- --------------------------------------------------------------------------------
Interest $ 2,659 $ 3,957
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Income taxes $ 6,711 $ 3,394
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The accompanying notes are an integral part of these consolidated balance
sheets.
4
<PAGE>
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
AS OF JUNE 29, 1996
(Unaudited)
1. Basis of Presentation
The financial information included is unaudited; however, such information
reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
The results for interim periods are not necessarily indicative of the
results to be expected for the full year.
2. Consolidated Statement of Stockholders' Investment ($ in 000's):
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Foreign
Additional Currency
Common Paid-in Translation Retained
Stock Capital Adjustment Earnings
- --------------------------------------------------------------------------------
Balance, December 31, 1995 $ 129 $ 10,135 $ (2,020) $65,713
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Net Income - - - 5,045
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Options Exercised 1 511 - -
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Treasury Stock purchased - - - -
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Translation Adjustments - - (24) -
- --------------------------------------------------------------------------------
Balance, June 29, 1996 $ 130 $ 10,646 $ (2,044) $70,758
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5
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Management's Discussion and Analysis
RESULTS OF OPERATIONS:
Comparison of Second Quarter 1996 to Second Quarter 1995
Genlyte's net sales for the second quarter of 1996 were $112.4 million, a
$1.4 million, or 1.3 percent increase from the second quarter of 1995. Net
income increased $.9 million from the second quarter of 1995 to $2.8
million and earnings per share increased 40 percent from $.15 to $.21.
Cost of sales for the second quarter of 1996 when compared to the second
quarter of 1995 decreased to 66.5 percent of sales from 69.9 percent of
sales as the company improved its product mix and continued to realize the
benefits of its facility optimization plan. Selling, general and
administrative expenses increased during the second quarter of 1996 to 27.8
percent of sales, up from 25.2 percent of sales for the comparable period
in 1995. This increase primarily resulted from relocation expenditures
incurred as part of the facility optimization plan and the provision of
reserves for certain accounts receivable whose ultimate collection may be
impaired.
Operating profit increased in the second quarter of 1996 to $6.4 million, a
16.2 percent improvement from the second quarter of 1995. The improvement
in operating profit was attributable to the improved product mix,
principally in the commercial and outdoor divisions, and an intense focus
on costs in each of the divisions. A significant element of this cost focus
is the facility optimization plan. During the second quarter, Genlyte
relocated its headquarters from a leased facility in Secaucus, NJ to a
company-owned facility in Union, NJ and terminated its long-term lease in
Edison, NJ. In addition, the company has negotiated a partial lease
termination of its Compton, CA manufacturing facility and a sale of its
Tijuana, Mexico property.
Interest expense amounted to $1.5 million, representing a decrease of $.6
million, or 27.5 percent, over the comparable quarter of 1995. This
decrease was attributable to lower average borrowings.
The effective tax rate was approximately 43.0 percent for the first quarter
of 1996 and 1995.
Comparison of First Six Months 1996 to First Six Months 1995
During the first six months of 1996, Genlyte's net sales of $221.1 million
remained relatively flat compared to $221.2 million during the first six
months of 1995. Net income increased 42.8 percent to $5.0 million from $3.5
million in 1995 and earnings per share increased 39.3 percent from $.28 to
$.39. The second half of 1996 should reflect the benefits of the completed
expansion of Genlyte's Camargo, Mexico facility, a provider of low-cost
manufacturing of an array of products for all of its divisions. Genlyte
plans to expand production in Camargo in the third quarter. In addition,
the finishing touches on the Genlyte Technical Center, located at
Lightolier's headquarters in Fall River, MA, are soon to be completed. This
state-of-the-art facility,
6
<PAGE>
which is scheduled to open in the third quarter will showcase products from
all Genlyte divisions and will enable its sales professionals to show their
customers the full capabilities of Genlyte's lighting applications and
total lighting solutions.
Cost of sales for the first six months of 1996 was 65.9 percent of sales,
compared to 67.0 percent of sales from the comparable period reflecting a
continual reduction in excess capacity and improved product mix. Selling,
general and administrative expenses for the first six months of 1996 was
27.6 percent of sales as compared to 25.4 percent during the first six
months of 1995. This increase is attributable to relocation expenditures in
connection with facility optimization and the provision of reserves for
certain accounts receivable whose ultimate collection may be impaired.
Operating profit increased in the first six months of 1996 to $11.9
million, a 14.7 percent improvement from the comparable period of 1995.
Most of the divisions' performance exceeded 1995 due to an improved product
mix and a favorable impact of the facility optimization plan.
Interest expense decreased to $3.1 million from $4.2 million for the
comparable period of 1995. The decrease was due to lower average
borrowings.
The effective tax rate was approximately 43.0 percent for the first half of
1996 and 1995.
FINANCIAL CONDITION:
Working capital for the first half of 1996 was 21.6 percent of sales
compared to 23.0 percent for the first half of 1995. The current ratio on
June 29, 1996 is 2.4 to 1. Accounts receivable and inventory as a percent
of sales have remained relatively constant.
Long-term debt has slightly increased ($5.0 million) since year end.
However, year-to-date net cash generation is ahead of last year's
generation which resulted, over the entire year, in significant liquidation
of long-term debt.
The company believes that currently available cash, borrowing facilities,
and its ability to increase its credit line if needed, combined with
internally generated funds should be sufficient to fund capital
expenditures as well as any increase in working capital that would be
required to accommodate a higher level of business activity.
7
<PAGE>
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
Genlyte has been named as one of a number of corporate and individual
defendants in an adversary proceeding filed on June 8, 1995, arising
out of the Chapter 11 bankruptcy filing of Keene Corporation
("Keene"). Except for the last count, as discussed below, the claims
and causes of action are substantially the same as were brought
against Genlyte in the U.S. District Courts in New York in August
1993, which cases remain stayed due to the pendency of Keene's
bankruptcy. The new complaint is being prosecuted by the Official
Committee of Unsecured Creditors of Keene (the "Committee"), seeking
from the defendants, collectively, damages in excess of $700 million,
rescission of certain asset sale and stock transactions and other
relief. With respect to Genlyte, the complaint principally maintains
that certain lighting assets of Keene were sold to a predecessor of
Genlyte in 1984 at less than fair value, while both Keene and Genlyte
were wholly-owned subsidiaries of Bairnco Corporation. The complaint
also challenges Bairnco's spin-off of Genlyte in August 1988. Other
allegations are that Genlyte, as well as the other corporate
defendants, are liable as corporate successors to Keene. The complaint
fails to specify the amount of damages sought against Genlyte. The
complaint also alleges a violation of the Racketeer Influenced and
Corrupt Organizations Act.
On March 11, 1996, the Bankruptcy Court of the Southern District of
New York approved a Stipulation of Settlement between Keene, the
committee, and certain individual and corporate defendants, including
Genlyte, which inter alia stayed the adversary proceeding until 71
days following confirmation of Keene's Plan of Reorganization, which
stay will end on August 24, 1996, consensually provided for removal of
the adversary proceeding from the bankruptcy court to the Federal
District Court for the Southern District of New York, included Genlyte
and other defendants within the protection of two injunctions which
are expected to preclude the claims brought within the adversary
proceeding from being asserted in any other suit or proceeding in the
future, including a permanent stay of the 1993 district court actions,
and provided that Genlyte's indemnification claims against Keene
arising out of the 1984 transaction could be asserted by way of
set-off against any affirmative recovery from Genlyte. In the
stipulation, Genlyte waived any right to an affirmative recovery on
such indemnification claims against Keene within the bankruptcy
proceeding.
Genlyte is precluded from answering the complaint or otherwise moving
to dismiss the action while the stay is effect. Genlyte believes that
it has meritorious defenses to the adversary proceeding and will
defend said action vigorously.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27: Requirements for the Format and Input of Financial
Data Schedules
(b) Reports on Form 8-K : None
8
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Genlyte has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
THE GENLYTE GROUP INCORPORATED
(Registrant)
Date: 7/26/96 /s/ Neil M. Bardach
------------------------------
Neil M. Bardach
VP Finance -- CFO & Treasurer
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<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Jun-29-1996
<CASH> 3,625
<SECURITIES> 0
<RECEIVABLES> 67,067
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<PP&E> 213,595
<DEPRECIATION> 151,927
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<BONDS> 70,968
130
0
<COMMON> 0
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<SALES> 221,102
<TOTAL-REVENUES> 221,102
<CGS> 148,173
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<INCOME-TAX> 3,808
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<EPS-PRIMARY> 0.39
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