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, 1997
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
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, 1997, was 10,558,757 shares.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
THOMAS INDUSTRIES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in Thousands Except Amounts Per Share)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $139,989 $127,868 $266,345 $251,392
Cost of products sold 96,449 90,659 184,548 179,064
Gross profit 43,540 37,209 81,797 72,328
Other (income) expenses:
Selling, general, and
administrative expenses 31,931 28,557 62,294 57,712
Interest expense 1,677 1,803 3,302 3,730
Other (274) (268) (358) (438)
Income before income taxes 10,206 7,117 16,559 11,324
Income tax provision 3,776 2,669 6,127 4,251
Net income $ 6,430 $ 4,448 $ 10,432 $ 7,073
Per share amounts:
Net income per share $.59 $.42 $.96 $.66
Dividends declared per share $.10 $.10 $.20 $.20
Weighted average number of common
shares and common share equivalents 10,880,400 10,666,795 10,867,935 10,660,773
See notes to condensed consolidated financial statements.
</TABLE>
THOMAS INDUSTRIES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
(Unaudited)
June 30 December 31
1997 1996*
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents 7,821 $ 18,826
Accounts receivable, less allowance
(1997--$2,281; 1996--$2,243) 76,531 68,239
Inventories:
Finished products 38,863 33,072
Raw materials 20,101 21,622
Work in process 14,653 14,553
73,617 69,247
Assets held for disposition 495 493
Deferred income taxes 7,160 7,167
Other current assets 6,551 6,392
Total current assets 172,175 170,364
Property, plant, and equipment 154,896 149,719
Less accumulated depreciation and amortization 77,901 71,924
76,995 77,795
Intangible assets--less accumulated amortization 56,728 58,687
Other assets 13,669 12,804
Total assets $319,567 $319,650
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 10,649 $ 6,986
Accounts payable 26,303 27,377
Other current liabilities 41,669 42,405
Current portion of long-term debt 7,758 7,758
Total current liabilities 86,379 84,526
Deferred income taxes 8,398 8,603
Long-term debt (less current portion) 54,902 62,632
Minimum pension liability 2,154 2,154
Other long-term liabilities 3,327 4,033
Total liabilities 155,160 161,948
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: 1997--11,581,403;
1996--11,549,940 11,581 11,550
Capital surplus 115,460 115,206
Retained earnings 58,741 50,420
Minimum pension liability (780) (780)
Foreign currency translation (3,383) (1,482)
Less cost of treasury shares:
(1997--1,023,646; 1996--1,023,646) (17,212) (17,212)
Total shareholders' equity 164,407 157,702
Total liabilities and shareholders' equity $319,567 $319,650
*Derived from the audited December 31, 1996, consolidated balance sheet.
See notes to condensed consolidated financial statements.
</TABLE>
THOMAS INDUSTRIES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30
1997 1996
<S> <C> <C>
Cash flows from operating activities: $ 10,432 $ 7,073
Net income
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 8,561 8,401
Deferred income taxes (152) (423)
Provision for losses on accounts receivable 197 319
Gain on asset disposal (12) (58)
Changes in operating assets and liabilities,
net of effects of acquisitions and dispositions:
Accounts receivable (9,029) (7,841)
Inventories (5,380) (2,158)
Other current assets (177) 1,388
Accounts payable ( 239) (2,543)
Accrued expenses and other liabilities (1,055) 1,593
Other (1,394) 235
Net cash provided by operating activities 1,752 5,986
Cash flows from investing activities:
Purchases of property, plant, and equipment (7,476) (7,534)
Proceeds from sale of property, plant, and equipment 45 102
Net cash used in investing activities (7,431) (7,432)
Cash flows from financing activities:
Proceeds from short-term debt, net 4,328 1,136
Payments on long-term debt (7,730) (11,708)
Dividends paid (2,109) (2,023)
Other 185 749
Net cash used in financing
activities (5,326) (11,846)
Decrease in cash and cash equivalents (11,005) (13,292)
Cash and cash equivalents at beginning of year 18,826 18,305
Cash and cash equivalents at end of period $ 7,821 $ 5,013
See notes to condensed consolidated financial statements.
</TABLE>
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, 1997, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997. 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, 1996.
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.
Item 2. Management's Discussion and Analysis
Net sales during the second quarter ended June 30, 1997, increased 9% over the
second quarter of 1996 to $140.0 million. For the six months ended June 30,
1997, net sales were 6% higher than the first half of 1996. Net sales for the
second quarter and six month periods in 1997 are the highest for any comparable
periods in the Company's history. Lighting Segment sales increased 12% for the
second quarter over 1996, primarily attributable to strong performance in the
Commercial & Industrial Indoor Division. Compressor and Vacuum Pump Segment
sales were up 4% for the second quarter over 1996, due to increases in the North
American Segment.
Net income for the 1997 second quarter and first half of $6.4 million and $10.4
million, respectively, is 45% and 47% higher than the comparable 1996 periods.
The Lighting Segment operating income in the second quarter and first half of
1997 improved 54% and 63%, respectively, compared to last year primarily due to
improvements in the Commercial and Industrial Indoor Division. Operating income
for the Compressor and Vacuum Pump Segment for the 1997 second quarter and first
half improved 18% and 14% over 1996 levels as both the North American and
European Segments showed improvement.
Cost of products sold as a percent of sales was reduced to 68.9% and 69.3% for
the 1997 second quarter and six months, respectively, versus 70.9% and 71.2% for
the comparable 1996 periods. Gross margins in the both Segments in 1997 have
improved due to increased manufacturing efficiencies and ongoing implementation
of cost containment programs.
Selling, general, and administrative costs as a percent of sales of 22.8 % and
23.4 % in the second quarter and first half of 1997, respectively, were higher
than the 22.3% and 23.0% figures for the comparable 1996 periods. Additional
expenditures for information systems technology, including costs associated with
Year 2000 software conversion requirements are the primary components of the
increase.
Interest expense for the 1997 second quarter and first six months was less than
comparable 1996 amounts by 7% 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 $85.8 million at June 30, 1997, is virtually unchanged from
the amount at December 31, 1996. Accounts receivable at June 30, 1997, have
increased by 12% since December 31, 1996, due to seasonal factors in the
Lighting Group and the higher sales volume; however, the number of days sales in
receivables at June 30, 1997, compared to December 31, 1996, has improved to
49.0 days from 51.2. Inventory turnover at June 30, 1997, of 4.40 times per
year has improved over the December 31, 1996, level of 4.34 times per year. The
current ratio at June 30, 1997, was 1.99 compared to 2.02 at December 31, 1996.
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 $34 million are not restricted at June 30, 1997.
As of June 30, 1997, the Company had available credit of $42 million with banks
under short-term borrowing arrangements and a revolving line of credit, $39
million of which was unused at June 30, 1997. 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.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
a. A regular Annual Meeting of Shareholders was held on April 17, 1997.
b. Class II Directors elected at the Annual Meeting of Shareholders
were Timothy C. Brown, Wallace H. Dunbar, and Franklin J. Lunding,
Jr. Directors whose term of office as a director continued after
the meeting were Roger P. Eklund, H. Joseph Ferguson, Ralph D.
Ketchum, Gene P. Gardner, Lawrence E. Gloyd, and William M. Jordan.
c.
The voting at the Annual Meeting of Shareholders was as follows:
<TABLE>
<CAPTION>
Proposal No. 1 -- Election of Directors
For Withheld
<S> <C> <C>
Timothy C. Brown 9,555,730 36,635
Wallace H. Dunbar 9,557,272 35,093
Franklin J. Lunding, Jr. 9,556,782 35,583
</TABLE>
Proposal No. 2 -- Approval of business criteria and material terms
relating to performance share awards to be granted under the Thomas
Industries Inc. 1995 Incentive Stock Option Plan.
<TABLE>
<CAPTION>
<S> <C> <C>
For Against Abstain
9,381,787 102,466 108,111
</TABLE>
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 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 7,821
<SECURITIES> 0
<RECEIVABLES> 78,812
<ALLOWANCES> 2,281
<INVENTORY> 73,617
<CURRENT-ASSETS> 172,175
<PP&E> 154,896
<DEPRECIATION> 77,901
<TOTAL-ASSETS> 319,567
<CURRENT-LIABILITIES> 86,379
<BONDS> 54,902
0
0
<COMMON> 11,581
<OTHER-SE> 152,826
<TOTAL-LIABILITY-AND-EQUITY> 319,567
<SALES> 266,345
<TOTAL-REVENUES> 266,345
<CGS> 184,548
<TOTAL-COSTS> 184,548
<OTHER-EXPENSES> 61,739
<LOSS-PROVISION> 197
<INTEREST-EXPENSE> 3,302
<INCOME-PRETAX> 16,559
<INCOME-TAX> 6,127
<INCOME-CONTINUING> 10,432
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,432
<EPS-PRIMARY> .96
<EPS-DILUTED> .96
</TABLE>
