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
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 (I.R.S. Employer
incorporation or organization) Identification No.)
4360 Brownsboro Road, Louisville, Kentucky 40207
(Address of principal executive offices) (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
November 1, 1997, was 10,570,089 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 Nine Months Ended
September 30 September 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $141,204 $129,611 $407,549 $381,003
Cost of products sold 97,023 90,423 281,571 269,487
Gross profit 44,181 39,188 125,978 111,516
Other (income) expenses:
Selling, general, and
administrative expenses 32,015 28,583 94,309 86,295
Interest expense 1,500 1,801 4,802 5,531
Other (461) (503) (819) (941)
Income before income taxes 11,127 9,307 27,686 20,631
Income tax provision 4,102 3,405 10,229 7,656
Net income $ 7,025 $ 5,902 $ 17,457 $ 12,975
Per Share amounts:
Net income per share $.43 $.37 $1.07 $.81
Weighted average number of
common shares and common
share equivalents 16,338,284 16,015,263 16,322,883 15,989,750
See notes to condensed consolidated financial statements.
</TABLE>
THOMAS INDUSTRIES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
(Unaudited)
September 30 December 31
1997 1996*
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $12,163 $ 18,826
Accounts receivable, less allowance
(1997--$2,220; 1996--$2,243) 82,950 68,239
Inventories:
Finished products 35,544 33,072
Raw materials 22,329 21,622
Work in process 15,302 14,553
73,175 69,247
Deferred income taxes 7,137 7,167
Other current assets 6,872 6,885
Total current assets 182,297 170,364
Property, plant and equipment 158,617 149,719
Less accumulated depreciation and amortization 80,915 71,924
77,702 77,795
Intangible assets--less accumulated amortization 56,062 58,687
Other assets 13,790 12,804
Total assets $329,851 $319,650
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 10,511 $ 6,986
Accounts payable 27,988 27,377
Other current liabilities 44,752 42,405
Current portion of long-term debt 7,758 7,758
Total current liabilities 91,009 84,526
Deferred income taxes 8,440 8,603
Long-term debt (less current portion) 54,874 62,632
Minimum pension liability 2,154 2,154
Other long-term liabilities 3,327 4,033
Total liabilities 159,804 161,948
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 17,375,136;
1996 17,324,910 17,375 17,325
Capital surplus 109,679 109,431
Retained earnings 64,710 50,420
Minimum pension liability adjustment (780) (780)
Foreign currency translation (3,725) (1,482)
Less cost of treasury shares
(1997 1,535,469; 1996 1,535,469) (17,212) (17,212)
Total shareholders' equity 170,047 157,702
Total liabilities and shareholders' equity $329,851 $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>
Nine Months Ended
September 30
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $17,457 $12,975
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 12,517 12,515
Deferred income taxes (64) (65)
Provision for losses on accounts receivable 300 455
Gain on asset disposal, net (830) (143)
Changes in operating assets and liabilities:
Accounts receivable (15,706) (10,415)
Inventories (5,189) 591
Other current assets 56 2,819
Accounts payable 817 (2,983)
Accrued expenses and other liabilities 2,173 (1,812)
Other (905) (1,093)
Net cash provided by operating activities 10,626 12,844
Cash flows from investing activities:
Purchases of property, plant, and equipment (11,868) (10,939)
Proceeds from sale of property, plant, and equipment,
and other assets 949 207
Net cash used in investing activities (10,919) (10,732)
Cash flows from financing activities:
Proceeds from short-term debt, net 4,267 283
Payments of long-term debt (7,758) (11,721)
Dividends paid (3,164) (3,074)
Other 285 1,080
Net cash used in financing activities (6,370) (13,432)
Decrease in cash and cash equivalents (6,663) (11,320)
Cash and cash equivalents at beginning of year 18,826 18,305
Cash and cash equivalents at end of period $12,163 $ 6,985
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 nine-month period ended September 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; and when costs can be reasonably estimated, the Company records
appropriate liabilities for such matters.
Note C Subsequent Events
On October 16, 1997, the Board of Directors authorized a three-for-two stock
split to be effected in the form of a 50 percent stock dividend on all shares of
Common Stock, payable December 1, 1997, for shareholders of record November 14,
1997. Also on October 16, 1997, the Board of Directors declared a cash dividend
of 7-1/2 cents per post-split share which, due to the effect of the stock split,
creates a 12-1/2 percent increase in the cash dividend. All share data included
in these condensed consolidated financial statements have been restated to
reflect this stock split.
Item 2. Management's Discussion and Analysis
Net sales during the third quarter ended September 30, 1997, increased 9% over
the third quarter 1996 to $141.2 million. For the nine months ended September
30, 1997, net sales were 7% higher than the first nine months of 1996. Net
sales for the third quarter and nine-month periods in 1997 are the highest for
any comparable periods in the Company's history. Lighting Segment sales in the
third quarter 1997 increased 13% compared to the third quarter 1996, primarily
due to strength in the Commercial & Industrial Indoor and Outdoor Divisions.
Compressor and Vacuum Pump Segment sales decreased slightly in the third quarter
compared to 1996, due primarily to weakness in the medical and refrigerant
recovery markets.
Net income for the 1997 third quarter and first nine months, of $7.0 million and
$17.5 million, respectively, is 19% and 35% higher than the comparable 1996
periods. Net income for the third quarter and nine-month periods in 1997 are
the highest for any comparable periods in the Company's history. The Lighting
Segment and the Compressor and Vacuum Pump Segment achieved higher operating
profit levels in the third quarter of 1997 compared to 1996.
Cost of products sold as a percent of sales was 68.7% and 69.1% for the 1997
third quarter and nine months, respectively, versus 69.8% and 70.7% for the
comparable 1996 periods. Operating income in the Lighting Segment for the third
quarter and first nine months in 1997 improved 31% and 46%, respectively, due to
the higher sales volume and improved efficiencies and the effect of cost
reduction programs in the manufacturing operations. Compressor and Vacuum Pump
Segment operating income for the third quarter and first nine months in 1997
improved 7% and 11%, respectively, primarily due to improved margins in European
operations.
Selling, general, and administrative expense as a percent of sales of 22.7% and
23.1% in the third quarter and nine months of 1997, respectively, were higher
than the 21.9% and 22.6% 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 third quarter and first nine months was less than
comparable 1996 amounts by 17% and 13%, respectively. The reductions are
attributed to lower short-term interest rates in Europe and a decrease in long-
term debt.
Working capital of $91.3 million at September 30, 1997, is 6.4% higher than the
$85.8 million at December 31, 1996. Accounts receivable at September 30, 1997,
have increased by 21.6% since December 31, 1996, due to seasonal factors in the
Lighting Group. The number of days sales in receivables at September 30, 1997,
was 52.2 days compared to 51.2 days at December 31, 1996. Inventory turnover at
September 30, 1997, of 4.49 times per year has improved over the December 31,
1996, level of 4.34 times per year. The current ratio at September 30, 1997, is
virtually unchanged at 2.00 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 $38 million are not restricted at September 30, 1997.
As of September 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 September 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.
On October 16, 1997, the Board of Directors authorized a three-for-two stock
split on all shares of Common Stock, payable December 1, 1997, for shareholders
of record November 14, 1997. For every two shares of the Company's Common Stock
held on the record date, the holder will receive one additional share. This
action is intended to increase the liquidity of the stock of the Company and
create an expanded universe of potential stockholders. Also on October 16,
1997, the Board of Directors declared a cash dividend of 7-1/2 cents per post-
split share which, due to the effect of the stock split creates a 12-1/2 percent
increase in the cash dividend.
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 this 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: November 10, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains first nine months summary information extracted from the
Thomas Industries Inc. 1997 Third Quarter Form 10-Q and is qualified in its
entirety by reference to such Form 10-Q filing.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 12,163
<SECURITIES> 0
<RECEIVABLES> 85,170
<ALLOWANCES> 2,220
<INVENTORY> 73,175
<CURRENT-ASSETS> 182,297
<PP&E> 158,617
<DEPRECIATION> 80,915
<TOTAL-ASSETS> 329,851
<CURRENT-LIABILITIES> 91,009
<BONDS> 54,874
0
0
<COMMON> 11,583
<OTHER-SE> 158,464
<TOTAL-LIABILITY-AND-EQUITY> 329,851
<SALES> 407,549
<TOTAL-REVENUES> 407,549
<CGS> 281,571
<TOTAL-COSTS> 281,571
<OTHER-EXPENSES> 93,190
<LOSS-PROVISION> 300
<INTEREST-EXPENSE> 4,802
<INCOME-PRETAX> 27,686
<INCOME-TAX> 10,229
<INCOME-CONTINUING> 17,457
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,457
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
</TABLE>
