SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [ X ]
For the quarterly period ended: June 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [ ]
For the transition period from________________________to______________________
Commission File Number 1-5426.
THOMAS INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
Delaware 61-0505332
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4360 Brownsboro Road, Louisville, Kentucky 40207
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 502/893-4600
Not Applicable
(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 Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve 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 issuer's Common Stock, $1 par value, as of
August 1, 1996, was 10,525,894 shares.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
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THOMAS INDUSTRIES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in Thousands Except Amounts Per Share)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net sales $127,868 $127,367 $251,392 $244,976
Cost of products sold 90,659 90,868 179,064 177,249
Gross profit 37,209 36,499 72,328 67,727
Other (income) expenses:
Selling, general, and
administrative expenses 28,557 27,786 57,712 54,034
Interest expense 1,803 1,917 3,730 4,190
Other (268) 253 (438) 245
Income before income taxes 7,117 6,543 11,324 9,258
Income tax provision 2,669 2,667 4,251 3,794
Net income $ 4,448 $ 3,876 $ 7,073 $ 5,464
Per share amounts:
Net income per share $.42 $.38 $.66 $.54
Dividends declared per share $.10 $.10 $.20 $.20
Average number of shares
outstanding 10,666,795 10,088,065 10,660,773 10,084,933
See notes to condensed financial statements.
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<TABLE>
THOMAS INDUSTRIES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
(Unaudited)
June 30 December 31
1996 1995*
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ASSETS
Current assets
Cash and cash equivalents $ 5,013 $ 18,305
Accounts receivable, less allowance
(1996--$2,346; 1995--$2,014) 70,675 61,975
Inventories:
Finished products 33,065 29,951
Raw materials 24,425 25,107
Work in process 14,809 13,007
72,299 68,065
Assets held for disposition 915 1,000
Deferred income taxes 6,174 5,775
Other current assets 8,355 9,619
Total current assets 163,431 164,739
Property, plant, and equipment 149,066 146,903
Less accumulated depreciation and amortization 72,265 71,193
76,801 75,710
Intangible assets--less accumulated amortization 59,815 61,379
Other assets 11,498 11,705
Total assets $311,545 $313,533
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 8,997 $ 7,679
Accounts payable 25,537 27,778
Other current liabilities 41,622 39,437
Current portion of long-term debt 8,471 9,008
Total current liabilities 84,627 83,902
Deferred income taxes 7,821 7,875
Long-term debt (less current portion) 62,661 70,791
Minimum pension liability 4,242 3,520
Other long-term liabilities 5,239 4,268
Total liabilities 164,590 170,356
Shareholders' equity
Preferred Stock, $1 par value,
3,000,000 shares authorized--none issued
Common Stock, $1 par value
Shares authorized: 60,000,000
Shares issued: 1996--11,546,374;
1995--11,485,865 11,546 11,486
Capital surplus 115,173 117,974
Retained earnings 42,181 40,003
Minimum pension liability adjustment (3,412) (2,690)
Equity adjustment from translation (1,321) (616)
Less cost of treasury shares:
(1996--1,023,646; 1995--1,366,695) (17,212) (22,980)
Total shareholders' equity 146,955 143,177
Total liabilities and shareholders' equity $311,545 $313,533
*Derived from the audited December 31, 1995, consolidated balance sheet.
See notes to condensed consolidated financial statements.
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THOMAS INDUSTRIES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in Thousands)
<CAPTION>
Six Months Ended
June 30
1996 1995
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Cash flows from operating activities:
Net income $ 7,073 $ 5,464
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 8,401 7,922
Deferred income taxes (423) (273)
Provision for losses on accounts receivable 319 339
Loss (gain) on asset disposal (58) 65
Changes in operating assets and liabilities,
net of effects of acquisitions and dispositions:
Accounts receivable (7,841) (9,275)
Inventories (2,158) (2,770)
Other current assets 1,388 2,564
Accounts payable (2,543) 3,175
Accrued expenses and other liabilities 1,593 4,877
Other 235 388
Net cash provided by operating activities 5,986 12,476
Cash flows from investing activities:
Purchases of property, plant, and equipment (7,534) (5,340)
Proceeds from sale of property, plant, and equipment 102 77
Net cash used in investing activities (7,432) (5,263)
Cash flows from financing activities:
Proceeds from short-term debt, net 1,136 490
Payments on long-term debt (11,708) (8,494)
Dividends paid (2,023) (2,015)
Other 749 87
Net cash used in financing activities (11,846) (9,932)
Decrease in cash and cash equivalents (13,292) (2,719)
Cash and cash equivalents at beginning of year 18,305 5,050
Cash and cash equivalents at end of period $ 5,013 $ 2,331
See notes to condensed consolidated financial statements.
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THOMAS INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note A -- Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial reporting and with the instructions to Form 10-Q and Article
10-01 of Regulation S-X. Accordingly, they do not include all the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
The results of operations for the six-month period ended June 30, 1996, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1996. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. For further information,
refer to the consolidated financial statements and footnotes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
Note B -- Contingencies
In the normal course of business, the Company and its subsidiaries are parties
to litigation. Management believes that these matters will be resolved with no
materially adverse impact on the financial position of the Company.
Note C -- Acquisition
On March 15, 1996, the Company acquired Welch Vacuum Technology, Inc., of
Skokie, Illinois, a manufacturer of high vacuum systems for laboratory and
chemical markets. Welch was acquired in exchange for 343,049 shares of Common
Stock of Thomas Industries Inc. in a transaction accounted for as a pooling of
interests. Due to immateriality, prior-year financial statements have not been
restated.
Item 2. Management's Discussion and Analysis
Net sales during the second quarter ended June 30, 1996, increased slightly over
the second quarter 1995 to $127.9 million. For the six months ended June 30,
1996, net sales were 3% higher than the first half of 1995. Net sales for the
second quarter and six-month periods in 1996 are the highest for any comparable
periods in the Company's history. Lighting Segment sales decreased 1% for the
second quarter compared to 1995, primarily in the Commercial & Industrial
Division. Compressor & Vacuum Pump Segment sales were up 3% for the second
quarter over 1995, due primarily to the acquisition of Welch Vacuum Technology.
Please see Note C on page 5 for additional information regarding the Welch
acquisition.
Net income for the 1996 second quarter and first half of $4.4 million and $7.1
million, respectively, is 15% and 29% higher than the comparable 1995 periods,
primarily due to improved performance of the Lighting Segment, enhanced results
from joint ventures, and reduced interest expense. Operating income for the
Compressor & Vacuum Pump Segment for the 1996 second quarter and first half is
approximately 6% below 1995 levels due primarily to competitive pricing
pressures and a weaker than expected OEM medical market.
Cost of products sold as a percent of sales was 70.9% and 71.2% for the 1996
second quarter and six months, respectively, versus 71.3% and 72.4% for the
comparable 1995 periods. Gross margins in the Lighting Segment in 1996 have
improved due to increased efficiencies and implementation of cost containment
programs. Compressor & Vacuum Pump Segment margins are slightly below prior-
year levels due to material cost increases and competitive margin pressures.
Selling, general, and administrative costs as a percent of sales of 22.3% and
23.0% in the second quarter and first half of 1996, respectively, were higher
than the 21.8% and 22.1% figures for the comparable 1995 periods. Additional
engineering and information system expenditures are the primary components of
the increase.
Interest expense for the 1996 second quarter and first six months was less than
comparable 1995 amounts by 6% and 11%, respectively. The reductions are
attributed to lower short-term interest rates in Europe and a decrease in long-
term debt.
Working capital of $78.8 million at June 30, 1996, is 2% lower than the $80.8
million at December 31, 1995. Accounts receivable at June 30, 1996, have
increased by 14% since December 31, 1995, due to seasonal factors in the
Lighting Group; however, the number of days sales in receivables at June 30,
1996, compared to December 31, 1995, has improved from 49.6 days to 49.2 days.
Inventory turnover at June 30, 1996, of 4.23 times per year has improved over
the December 31, 1995, level of 4.12 times per year. The current ratio at June
30, 1996, was 1.93 compared to 1.96 at December 31, 1995. Certain loan
agreements of the Company include restrictions on working capital, operating
leases, tangible net worth, and the payment of cash dividends and stock
distributions. Under the most restrictive of these arrangements, retained
earnings of $23 million are not restricted at June 30, 1996.
As of June 30, 1996, the Company had available credit of $10 million with banks
under short-term borrowing arrangements and a revolving line of credit, $50
million of which was available at June 30, 1996. Anticipated funds from
operations, along with available short-term credit and other resources, are
expected to be sufficient to meet cash requirements in the year ahead. Cash in
excess of operating requirements will continue to be invested in high grade,
short-term securities.
Item 4. Submission of Matters to a Vote of Security Holders
a. A regular Annual Meeting of Shareholders was held on April 18, 1996.
b. Class I Directors elected at the Annual Meeting of Shareholders were
Gene P. Gardner, Lawrence E. Gloyd, and William M. Jordan.
Directors whose term of office as a director continued after the
meeting were Timothy C. Brown, Wallace H. Dunbar, Roger P. Eklund,
H. Joseph Ferguson, Ralph D. Ketchum, and Franklin J. Lunding, Jr.
c. The voting at the Annual Meeting of Shareholders was as follows:
For Against Withheld
Gene P. Gardner 9,235,166 -- 150,939
Lawrence E. Gloyd 9,353,466 -- 32,639
William M. Jordan 9,345,410 -- 40,695
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter.
SIGNATURE
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.
THOMAS INDUSTRIES INC.
Registrant
/s/ Phillip J. Stuecker
Phillip J. Stuecker, Vice President
and Chief Financial Officer
Date August 12, 1996
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Thomas
Industries' Form 10-Q and is qualified in its entirety by reference to such Form
10-Q filing.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 5,013
<SECURITIES> 0
<RECEIVABLES> 73,021
<ALLOWANCES> 2,346
<INVENTORY> 72,299
<CURRENT-ASSETS> 163,431
<PP&E> 149,066
<DEPRECIATION> 72,265
<TOTAL-ASSETS> 311,545
<CURRENT-LIABILITIES> 84,627
<BONDS> 62,661
11,546
0
<COMMON> 0
<OTHER-SE> 135,409
<TOTAL-LIABILITY-AND-EQUITY> 311,545
<SALES> 251,392
<TOTAL-REVENUES> 251,392
<CGS> 179,064
<TOTAL-COSTS> 179,064
<OTHER-EXPENSES> 56,955
<LOSS-PROVISION> 319
<INTEREST-EXPENSE> 3,730
<INCOME-PRETAX> 11,324
<INCOME-TAX> 4,251
<INCOME-CONTINUING> 7,073
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,073
<EPS-PRIMARY> .66
<EPS-DILUTED> .66
</TABLE>
