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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 28, 1997
Commission File Number 0-16960
---------------
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 27,
1997 WAS 13,076,690.
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<PAGE>
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED JUNE 28, 1997
INDEX
PART I. FINANCIAL INFORMATION
Consolidated Statements of Income for the three
months ended June 28, 1997 and June 29, 1996.................1
Consolidated Statements of Income for the six
months ended June 28, 1997 and June 29, 1996.................2
Consolidated Balance Sheets as of
June 28, 1997 and December 31, 1996..........................3
Consolidated Statements of Cash Flows for the six
months ended June 28, 1997 and June 29, 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 JUNE 28, 1997 AND JUNE 29, 1996
(000'S OMITTED, EXCEPT PER SHARE DATA)
(Unaudited)
1997 1996
================================================================================
Net Sales $ 120,700 $ 112,440
Cost of Sales 79,188 74,775
- --------------------------------------------------------------------------------
Gross Profit 41,512 37,665
Selling and Administrative Expenses 32,126 31,292
- --------------------------------------------------------------------------------
Earnings Before Interest and Taxes 9,386 6,373
Interest Expense, net 1,164 1,544
- --------------------------------------------------------------------------------
Income Before Taxes 8,222 4,829
Provision for Taxes 3,533 2,078
- --------------------------------------------------------------------------------
Net Income $ 4,689 $ 2,751
- --------------------------------------------------------------------------------
Earnings per Share $ 0.35 $ 0.21
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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 28, 1997 AND JUNE 29, 1996
(000'S OMITTED, EXCEPT PER SHARE DATA)
(Unaudited)
1997 1996
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Net Sales $ 233,998 $ 221,102
Cost of Sales 154,247 148,173
- --------------------------------------------------------------------------------
Gross Profit 79,751 72,929
Selling and Administrative Expenses 63,262 60,980
- --------------------------------------------------------------------------------
Earnings Before Interest and Taxes 16,489 11,949
Interest Expense, net 2,135 3,096
- --------------------------------------------------------------------------------
Income Before Income Taxes 14,354 8,853
Provision for Income Taxes 6,172 3,808
- --------------------------------------------------------------------------------
Net Income $ 8,182 $ 5,045
- --------------------------------------------------------------------------------
Earnings per Share $ 0.61 $ 0.39
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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 28, 1997 AND DECEMBER 31, 1996
(000'S OMITTED)
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(unaudited)
6/28/97 12/31/96
- --------------------------------------------------------------------------------
ASSETS:
- --------------------------------------------------------
Current Assets:
Cash and Cash Equivalents $ 1,153 $ 2,895
Accounts Receivable, less allowance for doubtful
account of $5,938 and $8,222, respectively 76,804 65,036
Inventories
Raw materials and supplies 30,031 31,798
Work in process 6,781 6,429
Finished goods 45,109 42,772
- --------------------------------------------------------------------------------
Total Inventories 81,921 80,999
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Other Current Assets 16,756 14,909
- --------------------------------------------------------------------------------
Total Current Assets 176,634 163,839
- --------------------------------------------------------------------------------
Property, Plant & Equipment 212,999 211,349
Less: accumulated depreciation and amortization
on plant and equipment 152,514 150,969
- --------------------------------------------------------------------------------
Net Property, Plant & Equipment 60,485 60,380
- --------------------------------------------------------------------------------
Cost in excess of net assets of purchased business 11,626 11,755
Other Assets 7,236 2,141
- --------------------------------------------------------------------------------
TOTAL ASSETS $ 255,981 $ 238,115
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LIABILITIES & STOCKHOLDERS' INVESTMENT
- --------------------------------------------------------
Current Liabilities:
Short-Term Borrowings $ 5,160 $ --
Current Maturities of Long-term Debt 54 51
Accounts Payable 41,886 44,440
Accrued Expenses 40,118 47,982
- --------------------------------------------------------------------------------
Total Current Liabilities 87,218 92,473
- --------------------------------------------------------------------------------
Long-term Debt 50,817 41,847
Deferred Income Taxes 6,351 3,368
Other Liabilities 19,492 16,644
- --------------------------------------------------------------------------------
Total Liabilities 163,878 154,332
- --------------------------------------------------------------------------------
Stockholders' Investment
Common Stock 132 131
Paid-in Capital 11,448 11,124
Foreign Currency Translation (2,312) (2,125)
Retained Earnings 82,835 74,653
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Total Stockholders' Investment 92,103 83,783
- --------------------------------------------------------------------------------
TOTAL LIABILITIES & STOCKHOLDERS' INVESTMENT $ 255,981 $ 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 SIX MONTHS ENDED JUNE 28, 1997 AND JUNE 29, 1996
(000'S OMITTED) (Unaudited)
<TABLE>
<CAPTION>
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1997 1996
- ---------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
- ----------------------------------------------------------
<S> <C> <C>
Net Income $ 8,182 $ 5,045
Adjustments to reconcile net income to net cash
flows provided (used) by operating activities:
Depreciation and amortization 6,099 6,722
(Increase) decrease in:
Accounts receivable (11,768) (5,043)
Inventories (922) (629)
Other current assets (1,847) (3,250)
Other assets (4,966) 282
Increase (decrease) in:
Accounts payable and accrued expenses (10,418) (3,439)
Other liabilities 2,848 3,131
Deferred income taxes 2,983 198
- ---------------------------------------------------------------------------------------------
Net cash flows provided (used) by operating activities (9,809) 3,017
- ---------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- ---------------------------------------------------------------------------------------------
Purchase of plant and equipment, net of disposal (6,204) (4,241)
- ---------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- ---------------------------------------------------------------------------------------------
Options exercised 325 512
Increase in debt to outsiders 14,133 4,098
- ---------------------------------------------------------------------------------------------
Net cash flows provided from financing activities 14,458 4,610
- ---------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES (187) (24)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (1,742) 3,362
Cash and cash equivalents at beginning of year 2,895 263
- ---------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 1,153 $ 3,625
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - CASH PAID DURING
THE SIX MONTH PERIOD FOR:
- ---------------------------------------------------------------------------------------------
Interest $ 1,558 $ 2,659
- ---------------------------------------------------------------------------------------------
Income taxes $ 10,439 $ 6,711
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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 JUNE 28, 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 six month period ended June 28, 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 SECOND QUARTER 1997 TO SECOND QUARTER 1996
- --------------------------------------------------------
Genlyte's net sales for the second quarter of 1997 were $120.7 million, an $8.3
million, or 7.3 percent increase from the second quarter of 1996. The sales
growth was due to a strong commercial construction market as well as Genlyte's
continuing emphasis on new products. Net income increased by $1.9 million to
$4.7 million from the second quarter of 1996 to the second quarter of 1997,
while earnings per share increased 66.7 percent from $.21 to $.35.
Cost of sales for the second quarter of 1997, when compared to the second
quarter of 1996, decreased to 65.6 percent of sales from 66.5 percent as the
company improved its product mix and continued to realize the benefits of its
efforts to reduce manufacturing costs. Selling, general and administrative
expenses decreased during the second quarter of 1997 to 26.6 percent of sales,
down from 27.8 percent of sales for the comparable period in 1996. Part of this
decrease resulted from Genlyte relocating its headquarters from a leased
facility in Secaucus, NJ to a company-owned facility in Union, NJ during the
second quarter of 1996 and part from a reduction in administrative costs.
Operating profit increased in the second quarter of 1997 to $9.4 million, a 47.3
percent improvement from the second quarter of 1996.
Interest expense amounted to $1.2 million, representing a decrease of $0.4
million, or 24.6 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 second quarter of
1997 and 1996.
COMPARISON OF FIRST SIX MONTHS 1997 TO FIRST SIX MONTHS 1996
- ------------------------------------------------------------
During the first six months of 1997, Genlyte's net sales were $234.0 million, an
increase of 5.8 percent compared to $221.1 million during the first six months
of 1996. Net income increased 62.2 percent to $8.2 million from $5.0 million in
1996 and earnings per share increased 56.4 percent from $.39 to $.61.
Cost of sales for the first six months of 1997 was 65.9 percent of sales,
compared to 67.0 percent of sales from the comparable period in 1996, reflecting
a continual reduction in excess capacity and improved product mix. Selling,
general and administrative expenses for the first six months of 1997 was 27.0
percent of sales as compared to 27.6 percent during the first six months of
1996. This decrease is attributable to relocation expenditures incurred in 1996
but not in 1997, and certain lease-terminations.
6
<PAGE>
Operating profit increased in the first six months of 1997 to $16.5 million, a
38.0 percent improvement from the comparable period of 1996. Most of the
divisions' performance exceeded that of 1996 due to an improved product mix and
a favorable impact of the facility optimization plan.
Interest expense decreased to $2.1 million from $3.1 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 two quarters
of 1997 and 1996.
FINANCIAL CONDITION:
- -------------------
Working capital for the end of second quarter of 1997 was 18.5 percent of sales
compared to 15.6 percent for the end of year 1996.
Short term borrowings increased approximately $5.2 million and long-term debt
has increased by $9.0 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
-----------------
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"). 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. At a mandatory
pre-motion conference, held on June 6, 1997, the Court set the date of September
15, 1997 for filing motions to dismiss the complaint or otherwise move for
summary judgment, with responsive briefs due on November 14, 1997, and reply
briefs due on December 15, 1997. Genlyte believes that it has meritorious
defenses to the adversary proceeding and will defend said action vigorously,
including the filing of motions to dismiss and/or for summary judgment.
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: July 25, 1997 /S/ NEIL M. BARDACH
------------------------------
Neil M. Bardach
VP Finance--CFO &
Treasurer
9
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000833076
<NAME> THE GENLYTE GROUP INCORPORATED
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Jun-28-1997
<CASH> 1,153
<SECURITIES> 0
<RECEIVABLES> 76,804
<ALLOWANCES> 5,938
<INVENTORY> 81,921
<CURRENT-ASSETS> 176,634
<PP&E> 212,999
<DEPRECIATION> 152,514
<TOTAL-ASSETS> 255,981
<CURRENT-LIABILITIES> 87,218
<BONDS> 50,817
0
0
<COMMON> 132
<OTHER-SE> 91,971
<TOTAL-LIABILITY-AND-EQUITY> 255,981
<SALES> 233,998
<TOTAL-REVENUES> 233,998
<CGS> 154,247
<TOTAL-COSTS> 217,509
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,135
<INCOME-PRETAX> 14,354
<INCOME-TAX> 6,172
<INCOME-CONTINUING> 8,182
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,182
<EPS-PRIMARY> 0.61
<EPS-DILUTED> 0.61
</TABLE>
