SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
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
May 1, 1998, was 15,867,553 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
March 31
1998 1997
<S> <C> <C>
Net sales $141,924 $126,356
Cost of products sold 98,256 88,099
Gross profit 43,668 38,257
Other (income) expense:
Selling, general, and
administrative expenses 33,772 30,363
Interest expense 1,480 1,625
Other 82 (84)
Income before income taxes 8,334 6,353
Income tax provision 3,084 2,351
Net income $ 5,250 $ 4,002
Per Common Share amounts:
Net income per share
Basic $.33 $.25
Diluted $.32 $.25
Dividends declared per share $.075 $.067
Weighted average number of shares outstanding
Basic 15,864,291 15,818,603
Diluted 16,405,187 16,160,044
See notes to condensed consolidated financial statements.
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THOMAS INDUSTRIES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
(Unaudited)
March 31 December 31
ASSETS 1998 1997*
<S> <C> <C>
Current assets
Cash and cash equivalents $ 14,304 $ 17,352
Accounts receivable, less allowance
(1998--$2,338; 1997--$2,046) 80,374 71,385
Inventories:
Finished products 37,724 35,472
Raw materials 22,924 15,036
Work in process 14,325 23,620
74,973 74,128
Deferred income taxes 6,548 6,694
Other current assets 7,502 7,052
Total current assets 183,701 176,611
Property, plant and equipment 158,285 154,977
Less accumulated depreciation and amortization 78,547 74,780
79,738 80,197
Intangible assets--less accumulated amortization 55,758 56,333
Other assets 14,756 14,498
Total assets $333,953 $327,639
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 21,201 $ 2,564
Accounts payable 27,042 31,094
Other current liabilities 38,434 42,835
Current portion of long-term debt 7,850 7,860
Total current liabilities 94,527 84,353
Deferred income taxes 8,761 8,802
Long-term debt (less current portion) 47,246 55,006
Minimum pension liability 2,448 2,448
Other long-term liabilities 3,625 3,625
Total liabilities 156,607 154,234
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: 1998--17,400,159; 1997--17,394,198 17,400 17,394
Capital surplus 109,814 109,750
Retained earnings 72,593 68,533
Accumulated other comprehensive income (5,261) (5,060)
Less cost of treasury shares:
(1998--1,534,400; 1997--1,535,469) (17,200) (17,212)
Total shareholders' equity 177,346 173,405
Total liabilities and shareholders' equity $333,953 $327,639
*Derived from the audited December 31, 1997, 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>
Three Months Ended
March 31
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,250 $ 4,002
Reconciliation of net income to net cash
used in operating activities:
Depreciation and amortization 4,530 4,295
Deferred income taxes 110 69
Provision for losses on accounts receivable 127 73
(Gain) loss on asset disposal, net (7) 0
Changes in operating assets and liabilities,
net of effects of acquisitions and
dispositions:
Accounts receivable (9,184) (2,850)
Inventories (1,016) (4,007)
Other current assets (455) (822)
Accounts payable (4,023) (4,767)
Accrued expenses and other liabilities (4,254) (626)
Other (355) (1,333)
Net cash used in operating activities (9,277) (5,966)
Cash flows from investing activities:
Purchase of property, plant, and equipment (3,700) (3,950)
Proceeds from sale of property, plant, and
equipment 20 20
Net cash used in investing activities (3,680) (3,930)
Cash flows from financing activities:
Proceeds from short-term debt, net 18,708 5,841
Payments on long-term debt, net (7,770) (7,730)
Dividends paid (1,189) (1,053)
Other 82 151
Net cash provided by (used in)
financing activities 9,831 (2,791)
Effect of exchange rate changes on cash 78 0
Decrease in cash and cash equivalents (3,048) (12,687)
Cash and cash equivalents at beginning of period 17,352 18,826
Cash and cash equivalents at end of period $14,304 $ 6,139
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 three-month period ended March 31, 1998, are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1998. 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, 1997.
Note B - Contingencies
In the normal course of business, the Company is a party to legal proceedings
and claims. When costs can be reasonably estimated, appropriate liabilities for
such matters are recorded. While management currently believes the amount of
ultimate liability, if any, with respect to these actions will not materially
affect the financial position, results of operations, or liquidity of the
Company, the ultimate outcome of any litigation is uncertain. Were an
unfavorable outcome to occur, the impact could be material to the Company.
Note C - Comprehensive Income
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, Reporting Comprehensive Income (SFAS 130). SFAS 130
establishes new rules for the reporting and display of comprehensive income and
its components; however, the adoption of this Statement had no impact on the
Company's net income or shareholders' equity. SFAS 130 requires unrealized
gains or losses on the Company's foreign currency translation and minimum
pension liability adjustments, which, prior to adoption, were reported
separately in shareholders' equity to be included in other comprehensive income.
During the first quarter of 1998 and 1997, total comprehensive income was
$5,049,000 and $2,602,000, respectively.
Disclosure of accumulated balances of other comprehensive income:
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<CAPTION>
Minimum Foreign Accumulated Other
Pension Currency Comprehensive
Liability Translation Income
<S> <C> <C> <C>
Beginning balance ($473,000) ($4,587,000) ($5,060,000)
Current-year other comprehensive income -- (201,000) (201,000)
Ending balance ($473,000) ($4,788,000) ($5,261,000)
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Note D - Subsequent Event
On April 29, 1998, the Board of Directors of the Company unanimously approved a
definitive agreement whereby the Company would contribute substantially all
of its lighting assets and related liabilities to a joint venture with The
Genlyte Group Incorporated. Additional details are contained in the Company's
Form 8-K filed April 29, 1998.
Item 2. Management's Discussion and Analysis of Financial Position and
Results of Operations.
Net sales during the first quarter ended March 31, 1998, increased 12.3% over
the first quarter 1997 to $141.9 million. Net sales for the first quarter of
1998 were the highest for any first quarter in the Company's history. Lighting
Segment sales increased 12.7% over the first quarter of 1997, as all product
groups within the Segment reported increases. Compressor & Vacuum Pump Segment
sales were up 11.6% for the first quarter over 1997, due primarily to strength
in shipments to the medical market in North America.
Net income for the first quarter of 1998, was $5.3 million or 31.2% higher than
the first quarter of 1997. The Lighting Segment operating income improved due
to strength in the Outdoor and Accent Divisions. Operating income for the
Compressor & Vacuum Pump Segment increased in the first quarter of 1998 due to
improvement primarily in the European Segment. Lower interest expense also
contributed to the increase in net income as the Company continues to pay down
long-term debt.
Cost of products sold as a percent of sales decreased to 69.2% in the 1998 first
quarter from 69.7% for the comparable 1997 period. Gross margins in the
Lighting Segment in 1998 improved due to increased efficiencies and continued
implementation of cost containment programs. Compressor and Vacuum Pump Segment
margins were slightly below prior year levels due principally to a less
favorable product mix.
Selling, general, and administrative expense in the first quarter of 1998 was
$3.4 million higher compared to the prior-year first quarter. SG&A expense as a
percent of net sales was 23.8% in 1998 compared to 24.0% in 1997. In the
Lighting Segment, SG&A expense increased primarily due to additional selling,
commission, and shipping expenditures to support the higher sales volume. SG&A
expense in the Compressor & Vacuum Pump Segment increased in 1998
primarily due to additional engineering and administrative expenditures to
support the higher sales volume.
Interest expense for the first three months of 1998 was 8.9% lower than the
comparable 1997 period. A decrease in long-term debt was the primary cause for
the lower interest expense.
Working capital of $89.2 million at March 31, 1998, was 3.4% lower than the
$92.3 million at December 31, 1997. Accounts receivable at March 31, 1998,
increased by 12.6% since December 31, 1997, due to seasonal factors and the
increased sales volume. The number of days sales in receivables at March 31,
1998, increased to 50.1 days from 48.3 days at December 31, 1997. Inventory
increased 1.1% from December 31, 1997, to $75.0 million at March 31, 1998.
Inventory turnover at March 31, 1998, of 4.59 times per year improved slightly
from the December 31, 1997, level of 4.53 times per year. The current ratio at
March 31, 1998, was 1.94 compared to 2.09 at December 31, 1997. 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 $44.4 million are not restricted at March 31, 1998.
As of March 31, 1998, the Company had available credit of $11.7 million with
banks under short-term borrowing arrangements, $10.6 million of which was
unused, and a $30.0 million revolving line of credit that expires in 2002, which
was unused. Anticipated funds from operations, along with available short-term
credit, 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 April 29, 1998, the Board of Directors of the Company unanimously approved a
definitive agreement whereby the Company would contribute substantially all of
its lighting assets and related liabilities to a joint venture with The Genlyte
Group Incorporated. Additional details are contained in the Company's Form 8-K
filed April 29, 1998.
PART II. OTHER INFORMATION
Item 5. Other Information
On April 29, 1998, the Board of Directors of the Company unanimously approved a
definitive agreement whereby the Company would contribute substantially all of
its lighting assets and related liabilities to a joint venture with The Genlyte
Group Incorporated. Additional details are contained in the Company's Form 8-K
filed April 29, 1998.
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 May 13, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997<F1>
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 14,304 6,139
<SECURITIES> 0 0
<RECEIVABLES> 82,712 72,791
<ALLOWANCES> 2,338 2,222
<INVENTORY> 74,973 72,496
<CURRENT-ASSETS> 14,050 14,768
<PP&E> 158,285 151,887
<DEPRECIATION> 78,547 74,511
<TOTAL-ASSETS> 333,953 312,566
<CURRENT-LIABILITIES> 94,527 83,593
<BONDS> 47,246 54,822
0 0
0 0
<COMMON> 17,400 17,370
<OTHER-SE> 159,946 142,144
<TOTAL-LIABILITY-AND-EQUITY> 333,953 312,566
<SALES> 142,924 126,356
<TOTAL-REVENUES> 142,924 126,356
<CGS> 98,256 88,099
<TOTAL-COSTS> 98,256 88,099
<OTHER-EXPENSES> 33,727 30,206
<LOSS-PROVISION> 127 73
<INTEREST-EXPENSE> 1,480 1,625
<INCOME-PRETAX> 8,334 6,353
<INCOME-TAX> 3,084 2,351
<INCOME-CONTINUING> 5,250 4,002
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 5,250 4,002
<EPS-PRIMARY> .33 .25
<EPS-DILUTED> .32 .25
<FN>
<F1>Restated.
</FN>
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