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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 September 27, 1997
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 SEPTEMBER
27, 1997 WAS 13,189,945.
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<PAGE>
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 27, 1997
INDEX
PART I. FINANCIAL INFORMATION
Consolidated Statements of Income for the three
months ended September 27, 1997 and September 28, 1996.......1
Consolidated Statements of Income for the nine
months ended September 27, 1997 and September 28, 1996.......2
Consolidated Balance Sheets as of
September 27, 1997 and December 31, 1996.....................3
Consolidated Statements of Cash Flows for the nine
months ended September 27, 1997 and September 28, 1996.......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 SEPTEMBER 27, 1997 AND SEPTEMBER 28, 1996
(000'S OMITTED, EXCEPT PER SHARE DATA)
(Unaudited)
1997 1996
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Net Sales $123,981 $116,036
Cost of Sales 81,393 76,688
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Gross Profit 42,588 39,348
Selling and Administrative Expenses 32,870 31,963
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Earnings Before Interest and Taxes 9,718 7,385
Interest Expense, net 1,073 1,361
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Income Before Income Taxes 8,645 6,024
Provision for Income Taxes 3,718 2,588
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Net Income $ 4,927 $ 3,436
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Earnings per Share $ 0.37 $ 0.26
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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 NINE MONTHS ENDED SEPTEMBER 27, 1997 AND SEPTEMBER 28, 1996
(000'S OMITTED, EXCEPT PER SHARE DATA)
(Unaudited)
1997 1996
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Net Sales $357,979 $337,138
Cost of Sales 235,640 224,861
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Gross Profit 122,339 112,277
Selling and Administrative Expenses 96,131 92,943
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Earnings Before Interest and Taxes 26,208 19,334
Interest Expense, net 3,208 4,457
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Income Before Income Taxes 23,000 14,877
Provision for Income Taxes 9,890 6,399
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Net Income $ 13,110 $ 8,478
- --------------------------------------------------------------------------------
Earnings per Share $ 0.98 $ 0.65
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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 SEPTEMBER 27, 1997 AND DECEMBER 31, 1996
(000'S OMITTED)
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(unaudited)
9/27/97 12/31/96
- --------------------------------------------------------------------------------
ASSETS:
Current Assets:
Cash and Cash Equivalents $ 3,514 $ 2,895
Accounts Receivable, less allowance for doubtful
account of $6,129 and $8,222, respectively 78,499 65,036
Inventories
Raw materials and supplies 32,194 31,798
Work in process 4,044 6,429
Finished goods 42,261 42,772
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Total Inventories 78,499 80,999
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Other Current Assets 17,215 14,909
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Total Current Assets 177,727 163,839
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Property, Plant & Equipment 215,269 211,349
Less: accumulated depreciation and amortization
on plant and equipment 155,315 150,969
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Net Property, Plant & Equipment 59,954 60,380
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Cost in excess of net assets of purchased business 11,556 11,755
Other Assets 7,299 2,141
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TOTAL ASSETS $ 256,536 $ 238,115
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LIABILITIES & STOCKHOLDERS' INVESTMENT
- --------------------------------------------------------------------------------
Current Liabilities:
Short-Term Borrowings $ 5,200 $ --
Current Maturities of Long-term Debt 54 51
Accounts Payable 42,385 44,440
Accrued Expenses 40,259 47,982
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Total Current Liabilities 87,898 92,473
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Long-term Debt 45,804 41,847
Deferred Income Taxes 6,350 3,368
Other Liabilities 18,947 16,644
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Total Liabilities 158,999 154,332
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Stockholders' Investment
Common Stock 132 131
Paid-in Capital 12,024 11,124
Foreign Currency Translation (2,382) (2,125)
Retained Earnings 87,763 74,653
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Total Stockholders' Investment 97,537 83,783
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TOTAL LIABILITIES & STOCKHOLDERS' INVESTMENT $ 256,536 $ 238,115
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The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 27, 1997 AND SEPTEMBER 28, 1996
(000'S OMITTED) (Unaudited)
<TABLE>
<CAPTION>
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1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Net Income $ 13,110 $ 8,478
Adjustments to reconcile net income to net cash
flows provided (used) by operating activities:
Depreciation and amortization 9,016 10,349
(Increase) decrease in:
Accounts receivable (13,463) (11,787)
Inventories 2,500 1,378
Other current assets (2,306) 656
Other assets (4,959) 25
Increase (decrease) in:
Accounts payable and accrued expenses (9,778) 1,956
Other liabilities 2,303 702
Deferred income taxes 2,982 (952)
- ------------------------------------------------------------------------------------------
Net cash flows provided (used) by operating activities (595) 10,805
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CASH FLOWS FROM INVESTING ACTIVITIES:
- ------------------------------------------------------------------------------------------
Purchase of plant and equipment, net of disposal (8,590) (6,125)
- ------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- ------------------------------------------------------------------------------------------
Options exercised 901 677
Increase (decrease) in debt to outsiders 9,160 (4,072)
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Net cash flows provided from (used in) financing activities 10,061 (3,395)
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EFFECT OF EXCHANGE RATE CHANGES (257) (24)
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Net increase in cash and cash equivalents 619 1,261
Cash and cash equivalents at beginning of year 2,895 263
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Cash and cash equivalents at end of period $ 3,514 $ 1,524
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - CASH PAID DURING
THE NINE MONTH PERIOD FOR:
- ------------------------------------------------------------------------------------------
Interest $ 3,196 $ 3,862
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Income taxes $ 13,805 $ 6,833
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</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
AS OF SEPTEMBER 27, 1997
(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 of operations for the nine month period ended September 27,
1997 are not necessarily indicative of the results to be expected for
the full year.
2. In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" ("SFAS No. 128"). Under SFAS No. 128, primary earnings per share
("Primary EPS") will be replaced by basic earnings per share ("Basic
EPS"), and fully diluted earnings per share ("Fully Diluted EPS") will
be replaced with diluted earnings per share ("Diluted EPS"). Basic EPS
differs from Primary EPS in that it only includes the weighted average
impact of outstanding shares of the Company's Common Stock. Diluted EPS
is substantially similar to Fully Diluted EPS as previously reported.
The provisions of SFAS No. 128 will result in the retroactive
restatement of previously reported Primary EPS and Fully Diluted EPS
figures, but SFAS No. 128 prohibits such restatement prior to December
31, 1997. Based on the Company's computations, the adoption of SFAS No.
128 is not expected to impact earnings per share amounts reported
during the current quarter or any recent prior period.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS:
COMPARISON OF THIRD QUARTER 1997 TO THIRD QUARTER 1996
Genlyte's net sales for the third quarter of 1997 were $124.0 million, a $7.9
million, or 6.8 percent increase from the third quarter of 1996. The sales
growth was concentrated in commercial and industrial product lines. Net income
increased by $1.5 million to $4.9 million from the third quarter of 1996 to the
third quarter of 1997, while earnings per share increased 42.3 percent from $.26
to $.37.
Cost of sales for the third quarter of 1997, when compared to the third quarter
of 1996, decreased to 65.7 percent of sales from 66.1 percent as the company
continued to reduce manufacturing costs. Selling, general and administrative
expenses decreased during the third quarter of 1997 to 26.5 percent of sales,
down from 27.6 percent of sales for the comparable period in 1996. This decrease
resulted from a reduction in administrative costs, as selling costs remained
constant as a percent of sales. Operating profit increased in the third quarter
of 1997 to $9.7 million, a 31.6 percent increase from the third quarter of 1996.
Interest expense amounted to $1.1 million, representing a decrease of $0.3
million, or 21.2 percent, over the comparable quarter of 1996. This decrease was
attributable to lower average borrowings.
The effective tax rate was approximately 43.0 percent for the third quarters of
both years.
COMPARISON OF FIRST NINE MONTHS 1997 TO FIRST NINE MONTHS 1996
During the first nine months of 1997, Genlyte's net sales were $358.0 million,
an increase of 6.2 percent compared to $337.1 million during the first nine
months of 1996. Net income increased 54.6 percent to $13.1 million from $8.5
million in 1996 and earnings per share increased 50.8 percent from $.65 to $.98.
Cost of sales for the first nine months of 1997 was 65.8 percent of sales,
compared to 66.7 percent of sales from the comparable period in 1996, reflecting
the continued reduction in manufacturing costs. Selling, general and
administrative expenses for the first nine months of 1997 was 26.9 percent of
sales as compared to 27.6 percent during the first nine months of 1996. This
decrease is attributable to a reduction in administrative costs.
Operating profit increased in the first nine months of 1997 to $26.2 million, a
35.6 percent improvement from the comparable period of 1996. Most of the
divisions' performance exceeded that of 1996 due to an improved product mix and
the favorable impact of reduced manufacturing costs.
Interest expense decreased to $3.2 million from $4.5 million for the comparable
period of 1996. The decrease was due to lower average borrowings.
The effective tax rate was approximately 43.0 percent for the first three
quarters of both years.
6
<PAGE>
FINANCIAL CONDITION:
Working capital for the end of third quarter of 1997 was 18.1 percent of sales
compared to 15.6 percent for the end of year 1996, primarily due to increased
accounts receivable levels.
Short term borrowings increased approximately $5.2 million and long-term debt
has increased by $4.0 million since year end 1996 primarily due to seasonal cash
usage. 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 September 8, 1995, arising out of the
Chapter 11 bankruptcy filing of Keene Corporation ("Keene"). The complaint is
being prosecuted by the Creditors' Trust created for the benefit of Keene's
creditors (the "Trust"), 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 ("Bairnco"). 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 April 7, 1997, the case was removed to the Federal District Court of the
Southern District of New York for all future proceedings. On September 15, 1997,
Genlyte and other defendants filed motions to dismiss the complaint for failure
to state a claim or plead a claim with particularity, and motions for summary
judgment on statute of limitations grounds. Responsive briefs are due on
November 14, 1997, and reply briefs are due on December 15, 1997. Genlyte
believes that it has meritorious motions and defenses to the adversary
proceeding and will defend said action vigorously, including the prosecution of
the motions to dismiss and/or for summary judgment described above.
Additionally, the Company is defendant and/or potentially responsible party,
with other companies, in actions and proceedings under state and federal
environment laws including the federal Comprehensive Environmental Response
Compensation and Liability Act, as amended ("Superfund"). Such actions include,
but are not limited to, the Keystone Sanitation Landfill site located in
Pennsylvania, in which the United States Environmental Protection Agency has
sought remedial action and reimbursement for past costs.
Management does not believe that the disposition of the lawsuits and/or
proceedings will have a material effect on the Company's financial condition or
results of operations.
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: October 31, 1997 /s/ NEIL M. BARDACH
------------------------------
Neil M. Bardach
VP Finance--CFO &
Treasurer
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
GENLYTE GROUP INC.
EXHIBIT 27 FINANCIAL DATA SCHEDULE
</LEGEND>
<CIK> 0000833076
<NAME> THE GENLYTE GROUP INCORPORATED
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-27-1997
<CASH> 3,514
<SECURITIES> 0
<RECEIVABLES> 78,499
<ALLOWANCES> 6,129
<INVENTORY> 78,499
<CURRENT-ASSETS> 177,727
<PP&E> 215,269
<DEPRECIATION> 155,315
<TOTAL-ASSETS> 256,536
<CURRENT-LIABILITIES> 87,898
<BONDS> 45,804
132
0
<COMMON> 0
<OTHER-SE> 97,405
<TOTAL-LIABILITY-AND-EQUITY> 256,536
<SALES> 357,979
<TOTAL-REVENUES> 357,979
<CGS> 235,640
<TOTAL-COSTS> 331,771
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,208
<INCOME-PRETAX> 23,000
<INCOME-TAX> 9,890
<INCOME-CONTINUING> 13,110
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,110
<EPS-PRIMARY> 0.98
<EPS-DILUTED> 0.98
</TABLE>
