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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO ______
Commission File Number: 0-22352
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HOLOPHANE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 31-1288751
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 EAST BROAD STREET
SUITE 1400
COLUMBUS, OHIO
43215
(Address of principal executive offices)
(614) 224-3134
Registrant's telephone number, including area code
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Indicate by check mark whether the registrant (1) has filed all reports to
be filed by Section 13 or Section 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 registrant's Common Stock as of
September 30 1997: 11,112,269
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HOLOPHANE CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
INDEX
PART I. FINANCIAL INFORMATION
Condensed Consolidated Statements of Income for the
three months ended September 30, 1997 and September 30,
1996 (unaudited) . . . . . . . . . . . . . . . . . . . 1
Condensed Consolidated Statements of Income for the
nine months ended September 30, 1997 and September 30,
1996 (unaudited) . . . . . . . . . . . . . . . . . . . 2
Condensed Consolidated Balance Sheets as of September
30, 1997 (unaudited) and December 31, 1996 . . . . . . 3
Condensed Consolidated Statements of Cash Flows for the
nine months ended September 30, 1997 and September 30,
1996 (unaudited) . . . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statement of Stockholders'
Equity as of September 30, 1997 (unaudited) . . . . . . 5
Notes to Condensed Consolidated Financial Statements. . 6
Management Discussion and Analysis . . . . . . . . . . 7 - 8
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . 9
Signature . . . . . . . . . . . . . . . . . . . . . . . 10
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HOLOPHANE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands except per share data)
Three Month Period Ended
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September 30 September 30
1997 1996
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Net Sales $56,437 $51,288
Cost of Goods Sold 34,124 30,919
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Gross Margin 22,313 20,369
Selling and Administrative Expenses 10,763 9,551
Research and Development 1,432 1,325
Other Expenses 6 100
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Operating Income 10,112 9,393
Interest Expense 428 544
Interest Income (124) (134)
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Income Before Income Taxes 9,808 8,983
Provision for Income Taxes 3,647 3,341
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Net Income $6,161 $5,642
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Primary Earnings Per Share $0.53 $0.48
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Fully Diluted Earnings Per Share $0.53 $0.48
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Weighted Average Number of Shares Outstanding 11,648 11,717
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The accompanying notes are an integral part of these consolidated financial
statements.
1
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HOLOPHANE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands except per share data)
Nine Month Period Ended
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September 30 September 30
1997 1996
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Net Sales $151,452 $133,949
Cost of Goods Sold 92,503 82,484
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Gross Margin 58,949 51,465
Selling and Administrative Expenses 32,144 27,835
Research and Development 4,426 4,118
Other Expenses 389 206
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Operating Income 21,990 19,306
Interest Expense 1,335 1,682
Interest Income (317) (416)
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Income Before Income Taxes 20,972 18,040
Provision for Income Taxes 7,783 6,805
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Net Income $13,189 $11,235
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Primary Earnings Per Share $1.13 $0.96
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Fully Diluted Earnings Per Share $1.12 $0.95
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Weighted Average Number of Shares Outstanding 11,704 11,751
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The accompanying notes are an integral part of these consolidated financial
statements.
2
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HOLOPHANE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) (Unaudited)
September 30 December 31
1997 1996
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ASSETS
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Cash and Equivalents $8,063 $8,072
Receivables 32,425 33,104
Inventory 14,582 13,302
Prepaid and Other Deferred Expenses 4,160 3,848
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TOTAL CURRENT ASSETS 59,230 58,326
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Property, Plant and Equipment, Net 39,992 39,413
Goodwill, Net 20,410 21,276
Other Assets 5,599 4,952
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TOTAL ASSETS $125,231 $123,967
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current Liabilities $34,215 $31,137
Long Term Debt 12,518 18,866
Other Long Term Liabilities 6,582 6,820
Stockholders' Equity 71,916 67,144
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $125,231 $123,967
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The accompanying notes are an integral part of these consolidated financial
statements.
3
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HOLOPHANE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Nine Month Period Ended
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September 30 September 30
1997 1996
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Net cash flow provided by operating activities $21,836 $11,894
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Investing activities:
Capital expenditures (5,854) (3,672)
Other (675) (6,095)
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Net cash used in investing activities (6,529) (9,767)
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Financing activities:
Principal payments of long term debt (6,340) (8,988)
Purchase of treasury shares (9,032) (1,871)
Proceeds from the sales of treasury shares 101 1,346
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Net cash used in financing activities (15,271) (9,513)
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Effects of exchange rate changes on cash (45) 34
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Net increase/(decrease) in cash and equivalents (9) (7,352)
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Cash and equivalents at beginning of period 8,072 13,356
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Cash and equivalents at end of period $8,063 $6,004
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The accompanying note is an integral part of these consolidated financial
statements.
4
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HOLOPHANE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
($ in thousands)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TREASURY STOCK CUMULATIVE
---------------------- PAID-IN RETAINED ------------------- TRANSLATION STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT ADJUSTMENTS EQUITY
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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BALANCE AT DECEMBER 31, 1996 11,895,861 $119 $43,801 $30,527 473,369 ($6,534) ($769) $67,144
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Net income for the year 13,189 13,189
Shares used in acquisition 13 (71,725) 1,367 1,380
Purchase of treasury shares 430,487 (9,457) (9,457)
Stock options exercised,
including related tax benefits (536) (48,539) 1,062 526
Translation adjustments (866) (866)
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BALANCE AT SEPTEMBER 30, 1997 11,895,861 $119 $43,278 $43,716 783,592 ($13,562) ($1,635) $71,916
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</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
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HOLOPHANE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION - The condensed consolidated balance sheet as of September
30, 1997, the condensed consolidated statements of income for the three months
ended September 30, 1997 and September 30, 1996 and the condensed consolidated
statements of income and cash flows and for the nine months ended September 30,
1997 and September 30, 1996, and the consolidated statement of stockholders'
equity for the nine months ended September 30, 1997 have been prepared by the
Company, without audit. In the opinion of management, all adjustments, which
include only normal recurring adjustments, necessary to present fairly the
financial position, results of operations, changes in stockholders' equity and
changes in cash flows for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These consolidated financial statements should
be read in conjunction with the financial statements and notes thereto included
in the Company's December 31, 1996 annual report on Form 10-K. The results of
operations for the nine month period ended September 30, 1997 are not
necessarily indicative of the operating results for the full year.
CLASSIFICATION OF INVENTORY
(in thousands)
(Unaudited)
September 30, December 31,
1997 1996
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Raw Materials $9,052 $7,997
Work in Process 3,809 3,620
Finished Goods 2,593 2,374
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TOTAL 15,454 13,991
Less Valuation Allowance (872) (689)
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TOTAL $14,582 $13,302
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6
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MANAGEMENT DISCUSSION AND ANALYSIS
COMPARISON OF THIRD QUARTER 1997 TO THIRD QUARTER 1996
Worldwide net sales for the third quarter of 1997 were $56.4 million, up $5.1
million, or 10% from third quarter 1996. Excluding MetalOptics, internal growth
was 4% in the quarter.
Including MetalOptics, U.S. sales increased 12% compared to 1996. European
sales in local currency were down 1% compared to last year. Canadian sales were
down approximately 9% in local currency in 1997 compared to 1996 due to soft
business conditions.
Operating income was $10.1 million up from $9.4 million. The increase in
operating income was due to higher sales volume, somewhat offset by higher
operating expenses compared to 1996.
The $0.1 million decrease in net interest expense principally resulted from
lower average outstanding indebtedness.
Third quarter net income and earnings per common share were $6.2 million and
$0.53, respectively, compared with $5.6 million and $0.48 in 1996.
COMPARISON OF FIRST NINE MONTHS 1997 TO FIRST NINE MONTHS 1996
Net sales for the 1997 period were $151.5 million, up $17.6 million or 13% from
the same period in 1996. Including MetalOptics, U.S. sales were up 15% from
prior year. Excluding MetalOptics, internal sales growth for the U.S. for the
year is approximately 5%. In local currencies, European and Canadian sales
have decreased 2% compared to the prior year period.
Operating income in 1997 was $22.0 million compared to $19.3 million in 1996.
The increase in operating income is due to higher volume, somewhat offset by
higher operating expenses in 1997.
Net interest expense was $1.0 million in 1997 compared to $1.3 million in 1996.
The decrease in interest expense was due to lower outstanding debt balances.
Net income and earnings per common share for the first nine months of 1997 were
$13.2 million and $1.13, respectively, compared to $11.2 million and $0.96 in
1996.
7
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CAPITAL RESOURCES AND LIQUIDITY
Working capital was $25.0 million as of September 30, 1997, down $2.2 million
from year-end 1996 due primarily to higher current liabilities partially offset
by increased inventory levels.
Cash on hand, funds generated from operations and amounts available under the
Credit Agreement are expected to adequately fulfill Holophane's anticipated
requirements for the remainder of 1997.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Except for historical information contained herein, the matters set
forth in this news release constitute forward-looking statements that are
dependent on certain risks and uncertainties that could cause actual results
to differ materially than those described in such forward-looking statements.
Such factors include, but are not limited to, weather conditions throughout
the remainder of the fiscal year, the general state of the national economy
and other risks detailed in the Company's Securities Exchange Act of 1934
filings.
8
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Not Applicable.
9
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Holophane
has duly caused this report to be signed on its behalf of the undersigned
thereunto duly authorized.
HOLOPHANE CORPORATION
(Registrant)
DATE: September 16, 1997 /s/ Bruce A. Philp
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Bruce A. Philp
Vice President, Finance and
Chief Financial Officer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 8,063
<SECURITIES> 0
<RECEIVABLES> 33,495
<ALLOWANCES> 1,070
<INVENTORY> 14,582
<CURRENT-ASSETS> 59,230
<PP&E> 87,618
<DEPRECIATION> 47,626
<TOTAL-ASSETS> 125,231
<CURRENT-LIABILITIES> 34,215
<BONDS> 12,518
0
0
<COMMON> 119
<OTHER-SE> 71,796
<TOTAL-LIABILITY-AND-EQUITY> 125,231
<SALES> 151,452
<TOTAL-REVENUES> 151,452
<CGS> 92,503
<TOTAL-COSTS> 36,570
<OTHER-EXPENSES> 389
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,335
<INCOME-PRETAX> 20,972
<INCOME-TAX> 7,783
<INCOME-CONTINUING> 13,189
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,189
<EPS-PRIMARY> 1.13
<EPS-DILUTED> 1.12
</TABLE>
