1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
May 31, 2001
For the quarterly period ended ...........................................
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ................... to ....................
0-11631
Commission File Number ..........
JUNO LIGHTING, INC.
..........................................................................
(Exact name of registrant as specified in its charter)
Incorporated in Delaware 36-2852993
..........................................................................
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1300 South Wolf Road, Des Plaines, Illinois 60017-5065
..........................................................................
(Address of principal executive offices) (Zip Code)
847 - 827 - 9880
..........................................................................
(Registrant's telephone number, including area code)
..........................................................................
(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 Sections 13 or 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.
X
Yes ..... No .....
There were 2,469,914 shares of common stock outstanding as of June 30, 2001.
2
JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
=====================================
(In Thousands)
May 31, November 30,
ASSETS 2001 2000
------ ---------- -----------
(Unaudited) (Unaudited)
CURRENT ASSETS:
Cash $ 2,750 $ 4,817
Accounts receivable, less allowance for
doubtful accounts of $1,053 and $1,151 27,509 26,527
Inventories, net 23,469 24,208
Prepaid expenses and miscellaneous 3,408 3,904
---------- ----------
TOTAL CURRENT ASSETS 57,136 59,456
---------- ----------
PROPERTY, PLANT AND EQUIPMENT,
less accumulated depreciation of
$24,267 and $22,091 44,904 45,367
---------- ----------
OTHER ASSETS:
Goodwill and other intangibles, net of
accumulated amortization of
$1,877 and $1,782 3,725 3,970
Deferred financing costs, net of accumulated
amortization of $2,473 and $1,822 7,870 8,521
Miscellaneous 3,429 120
---------- ----------
TOTAL OTHER ASSETS 15,024 12,611
---------- ----------
$ 117,064 $ 117,434
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 9,822 $ 9,215
Accrued liabilities 17,257 16,255
Short-term borrowings 500 -
Current maturities of long-term debt 4,009 3,892
---------- ----------
TOTAL CURRENT LIABILITIES 31,588 29,362
---------- ----------
LONG-TERM DEBT & DEFERRED INCOME TAXES 179,083 184,840
---------- ----------
STOCKHOLDERS' DEFICIT:
Preferred Stock, Series A & B convertible,
$.001 par value,$100 stated value, shares
authorized 5,000,000; issued 1,063,500 124,567 119,730
Common stock, $.001 par value, shares
authorized 45,000,000;
issued 2,469,914 and 2,443,248 2 2
Paid-in-capital 319 319
Accumulated other comprehensive loss (709) (762)
Accumulated deficit (217,786) (216,057)
---------- ----------
TOTAL STOCKHOLDERS' DEFICIT (93,607) (96,768)
---------- ----------
$ 117,064 $ 117,434
========== ==========
(See Notes To Consolidated Financial Statements)
3
JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
===========================================
(In Thousands Except Per
Share Amounts)
Three Months Ended
--------------------------
May 31, May 31,
2001 2000
----------- -----------
(Unaudited) (Unaudited)
NET SALES $ 46,309 $ 46,222
COST OF SALES 22,811 23,265
----------- -----------
Gross profit 23,498 22,957
SELLING, GENERAL AND ADMINISTRATIVE 14,242 12,617
----------- -----------
Operating income 9,256 10,340
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (5,129) (5,689)
Interest and dividend income 17 73
Miscellaneous 11 33
----------- -----------
Total other income (expense) (5,101) (5,583)
----------- -----------
INCOME BEFORE TAXES ON INCOME 4,155 4,757
TAXES ON INCOME 1,533 1,723
----------- -----------
NET INCOME 2,622 3,034
LESS: PREFERRED DIVIDENDS 2,442 2,250
----------- -----------
NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS $ 180 $ 784
=========== ===========
NET INCOME PER COMMON SHARE
(BASIC AND DILUTED) $ .07 $ .33
====== =====
(See Notes To Consolidated Financial Statements)
4
JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
===========================================
(In Thousands Except Per
Share Amounts)
Six Months Ended
--------------------------
May 31, May 31,
2001 2000
----------- -----------
(Unaudited) (Unaudited)
NET SALES $ 87,847 $ 85,687
COST OF SALES 43,984 43,512
----------- -----------
Gross profit 43,863 42,175
SELLING, GENERAL AND ADMINISTRATIVE 28,634 24,867
----------- -----------
Operating income 15,229 17,308
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (10,391) (11,413)
Interest and dividend income 69 145
Miscellaneous 35 54
----------- -----------
Total other income (expense) (10,287) (11,214)
----------- -----------
INCOME BEFORE TAXES ON INCOME 4,942 6,094
TAXES ON INCOME 1,834 2,282
----------- -----------
NET INCOME 3,108 3,812
LESS: PREFERRED DIVIDENDS 4,837 4,455
----------- -----------
NET LOSS AVAILABLE TO
COMMON SHAREHOLDERS $ (1,729) $ (643)
=========== ===========
NET LOSS PER COMMON SHARE
(BASIC AND DILUTED) $ (.70) $ (0.27)
====== =====
(See Notes To Consolidated Financial Statements)
5
JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF ACCUMULATED DEFICIT
=======================================================
(In Thousands)
Six Months Ended
May 31, 2001
----------------
(Unaudited)
ACCUMULATED DEFICIT, beginning of period $ (216,057)
PREFERRED DIVIDEND (4,837)
NET INCOME, six months ended
May 31, 2001 3,108
----------
ACCUMULATED DEFICIT, end of period $(217,786)
==========
(See Notes To Consolidated Financial Statements)
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JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
====================================
(In Thousands)
Six Months Ended
---------------------------
May 31, May 31,
2001 2000
------------ -----------
(Unaudited) (Unaudited)
CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES:
Net income $ 3,108 $ 3,812
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,981 3,058
Deferred compensation 36 -
Changes in operating assets and liabilities:
(Increase) in accounts
receivable (930) (1,369)
Decrease in inventory 739 2,188
Decrease in prepaid expenses 496 88
Decrease in other assets 6 35
Increase (decrease) in accounts
payable and accrued liabilities 1,609 (300)
(Decrease) increase in deferred
income taxes (370) 275
---------- ---------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 7,675 7,787
---------- ---------
CASH FLOWS USED IN INVESTING
ACTIVITIES:
Capital expenditures (1,723) (1,766)
License - lighting technology (3,220) -
---------- ---------
NET CASH USED IN
INVESTING ACTIVITIES (4,943) (1,766)
---------- ---------
(Continued on Next Page)
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JUNO LIGHTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (CONTINUED)
====================================
(In Thousands)
Six Months Ended
---------------------------
May 31, May 31,
2001 2000
----------- -----------
(Unaudited) (Unaudited)
CASH FLOWS (USED IN) FINANCING
ACTIVITIES:
Proceeds from bank debt 14,000 2,500
Principal payments on long-term debt
and bank debt (18,799) (8,292)
---------- -----------
NET CASH (USED IN) FINANCING
ACTIVITIES (4,799) (5,792)
---------- -----------
NET (DECREASE) INCREASE IN CASH (2,067) 229
CASH AT BEGINNING OF PERIOD 4,817 8,632
---------- -----------
CASH AT END OF PERIOD $ 2,750 $ 8,861
========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 10,854 $ 11,477
Income taxes 263 680
(See Notes To Consolidated Financial Statements)
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JUNO LIGHTING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
====================================================
FINANCIAL INFORMATION
The financial information presented in these consolidated financial
statements is unaudited but, in the opinion of management, reflects all normal
adjustments necessary for the fair presentation of the Company's financial
position, results of its operations and cash flows. The information in the
condensed consolidated balance sheet as of November 30, 2000 was derived from
the Company's audited consolidated financial statements.
INVENTORIES
Inventories are summarized as follows:
(In Thousands)
May 31, November 30,
2001 2000
------------ ------------
Finished goods $ 11,241 $ 11,520
Raw materials 12,228 12,688
------------ ------------
$ 23,469 $ 24,208
============ ============
LONG-TERM DEBT AND SHORT-TERM BORROWINGS
Long-term debt consists of the following:
(In Thousands)
May 31, November 30,
2001 2000
---------- -----------
Bank of America, N.A. and certain other lenders,
Tranche A Term Loan, payable in escalating
installments through November, 2005, plus
interest at a variable rate, generally
approximating 3 month LIBOR plus 2.75% $22,975 $26,087
Bank of America, N.A. and certain other lenders,
Tranche B Term Loan, payable in escalating
installments through November, 2006, plus
interest at a variable rate, generally
approximating 3 month LIBOR plus 3.25% 34,106 36,293
Senior Subordinated Notes due July 2009, plus
interest at 11 7/8%, net of discount of $793
and $823 respectively 124,207 124,177
-------- --------
181,288 186,557
Less current maturities 4,009 3,892
-------- --------
Total long-term debt $177,279 $182,665
======== ========
The Company has a senior credit facility (the "Senior Credit
Facility") with Bank Of America, N.A., Credit Suisse First Boston and certain
other lenders providing (i) a $90 million term facility consisting of a (a)
$40 million tranche A term loan ("Term Loan A"), and (b) $50 million tranche B
term loan ("Term Loan B"), and (ii) a $35 million revolving credit facility
(the "Revolving Credit Facility"). Borrowings under the Senior Credit
Facility bear interest, at the Company's option, at a rate per annum equal to
either the Eurodollar rate (the London interbank offered rate for eurodollar
deposits as adjusted for statutory reserve requirements) or a base rate plus
variable applicable percentages. At May 31, 2001 the nominal interest rates
for Term Loan A and Term Loan B were 6.89% and 7.39%, respectively. Term Loan
A and Term Loan B are each payable in separate quarterly installments.
9
The final maturity of Term Loan A is November 30, 2005 and the final maturity
of Term Loan B is November 30, 2006. Amounts outstanding under the Revolving
Credit Facility at May 31, 2001 and November 30, 2000 were $500,000 and $0
respectively. Borrowings under the Revolving Credit Facility are due on
November 30, 2005. In addition, the Company issued $125 million principal
amount of 11-7/8% senior subordinated notes due July 1, 2009 (the "Notes") to
qualified institutional buyers under a private placement offering pursuant to
Rule 144A and Regulation S of the Securities Act of 1933, which notes were
then exchanged for new notes registered under the Securities Act of 1933 with
substantially identical economic terms, resulting in approximately $120.4
million in proceeds to the Company. Interest is payable on the Notes semi-
annually on January 1 and July 1 of each year. The Notes are unsecured senior
subordinated obligations of the Company, subordinated in right of payment to
all existing and future senior indebtedness of the Company, including the
Senior Credit Facility. Each of the aforementioned debt facilities contain
restrictive covenants. The Secured Credit Agreement requires the Company to
maintain certain financial ratios, as defined therein.
The Senior Credit Facility is collateralized by substantially all of
the assets of the Company and its domestic subsidiaries as more particularly
described in the Secured Credit Agreement dated June 29, 1999 and filed as an
exhibit hereto. The aggregate amounts of existing long-term debt maturing in
each of the next five years are as follows: 2002 - $4,342,000; 2003 -
$5,674,000; 2004 - $5,674,000; 2005 - $7,006,000; 2006 - $32,548,000.
SERIES A AND SERIES B PREFERRED STOCK
On June 30, 1999, the Company issued 1,060,000 shares of Series A
convertible preferred stock ("Series A") to Fremont Investors and certain
employees of the Company. On November 30, 2000, the Company issued 3,500
shares of Series B convertible preferred stock ("Series B", and together with
the Series A, the "Preferred Stock") to the Company's Chief Executive Officer.
Holders of the Preferred Stock are entitled to receive cumulative quarterly
dividends, whether or not declared by the Board of Directors, in an amount
equal to the greater of:
- dividends which would have been payable to the holders of Series A
or Series B, as the case may be, in such quarter had they
converted their Preferred stock into Juno common stock prior to
the record date of dividends declared on the common stock in such
quarter, or
- the stated amount then in effect multiplied by 2%.
Through June 30, 2004, the dividends for the Series A will be
payable by an increase in the stated amount of such stock, and through
November 30, 2005, the dividends for the Series B will be payable by an
increase in the stated amount of such stock. After June 30, 2004, the
dividends on the Series A will be paid in cash until redemption or conversion,
and after November 30, 2005, the dividends on the Series B will be paid in
cash until redemption or conversion. The Preferred Stock is convertible into
shares of the Company's common stock at a price of $26.25 per share. Holders
of Preferred Stock are entitled to one vote for each whole share of common
stock that would be issuable to such holder upon the conversion of all the
shares of the Preferred Stock held by such holder on the record date for the
determination of stockholders entitled to vote. Additionally, holders of
Preferred Stock have preference to common stockholders in the event of
liquidation, dissolution, winding up or sale of the Company.
10
NET INCOME PER COMMON SHARE
Basic earnings per share is calculated by dividing net income by the
weighted average number of common shares outstanding. Diluted earnings per
share is calculated by dividing net income by the weighted average number of
common shares outstanding including assumed exercise of dilutive stock options
during the periods. Such weighted average number of shares outstanding is as
follows:
May 31, May 31,
2001 2000
---------- ----------
3 months ended
Basic 2,469,914 2,412,126
Diluted 2,469,914 2,412,126
6 months ended
Basic 2,466,105 2,412,126
Diluted 2,466,105 2,412,126
COMPREHENSIVE INCOME
As of December 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130).
SFAS 130 established new rules for the reporting and display of comprehensive
income and its components. SFAS 130 requires foreign currency translation
adjustments to be included in other comprehensive income.
The components of comprehensive income, net of related tax, are as
follows (in thousands):
Three Months Ended Six Months Ended
May 31, May 31, May 31, May 31,
2001 2000 2001 2000
------- ------- ------- -------
Net income $ 2,622 $ 3,034 $ 3,108 $ 3,812
Foreign currency
translation adjustment 85 (206) 53 (154)
------- -------- ------- -------
Comprehensive income $ 2,707 $ 2,828 $ 3,161 $ 3,658
======= ======== ======= =======
The components of accumulated other comprehensive loss, net of
related tax, are as follows (in thousands):
May 31, November 30,
2001 2000
------ ------------
Foreign currency translation adjustment $ (709) $ (762)
------ ------
Accumulated other comprehensive loss $ (709) $ (762)
====== ======
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MERGER AND RECAPITALIZATION
On June 30, 1999, Jupiter Acquisition Corp. ("Merger Sub"), a
Delaware corporation and a wholly-owned subsidiary of Fremont Investors I, LLC
("Fremont Investors"), was merged (the "Merger") with and into the Company
pursuant to an Agreement and Plan of Recapitalization and Merger dated March
26, 1999 (the "Merger Agreement") by and among Merger Sub, the Company and
Fremont Investors. Pursuant to the Merger, the holders of all the issued and
outstanding shares of Juno common stock, $.01 par value per share, were
entitled to receive either $25 cash or one share of Juno common stock, $.001
par value per share, for each share of common stock issued and outstanding;
provided that this consideration was subject to proration, as such holders
were entitled to receive an aggregate of 2,400,000 shares of Juno common
stock. The Company funded this effective retirement of 16,242,527 shares of
the Company's common stock with a payment to stockholders in the aggregate of
approximately $406 million. The sources of this funding included the
Company's available cash and marketable securities, a $106 million preferred
stock investment by Fremont and key employees of Juno ("Series A"),
approximately $94.9 million of bank debt ("Bank Debt") and the issuance of
$125 million of subordinated debt ("Subordinated Debt"). In connection with
the Merger the Company incurred approximately $9.9 million in transaction
costs and $10.2 million of deferred financing costs. Included in these costs
were payments of approximately $4.9 million to Fremont Investors.
GUARANTORS' FINANCIAL INFORMATION
The Company has issued and registered $125 million of Series B
Senior Subordinated Notes at 11-7/8% (the "Senior Subordinated Notes") under
the Securities Act of 1933, as amended (the "Act") which notes were exchanged
for the notes that were sold earlier in a private placement offering to
qualified institutional buyers. Pursuant to terms of the Senior Subordinated
Notes, the Company's domestic subsidiaries, Juno Manufacturing, Inc., Indy
Lighting, Inc. and Advanced Fiberoptic Technologies, Inc., provide full and
unconditional senior subordinated guarantees for the Senior Subordinated Notes
on a joint and several basis.
Following is consolidating condensed financial information
pertaining to the Company ("Parent") and its subsidiary guarantors and
subsidiary non-guarantors.
For the Three Months Ended May 31, 2001
---------------------------------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
Net sales $ 38,190 $ 37,747 $ 2,568 $ (32,196) $ 46,309
Cost of sales 31,558 22,890 2,047 (33,684) 22,811
-------- ------------ ------------- ------------ ------------
Gross profit 6,632 14,857 521 1,488 23,498
Selling, general and
administrative 7,775 5,971 469 27 14,242
-------- ------------ ------------- ------------ ------------
Operating (loss) income (1,143) 8,886 52 1,461 9,256
Other (expense) income (5,060) (7) (34) - (5,101)
-------- ------------ ------------- ------------ ------------
(Loss) income before
taxes on income (6,203) 8,879 18 1,461 4,155
Taxes on income (1,910) 3,435 9 (1) 1,533
-------- ------------ ------------- ------------ ------------
Net (loss) income (4,293) 5,444 9 1,462 2,622
Less: preferred
dividends (2,442) - - - (2,442)
-------- ------------ ------------- ------------- --------------
Net (loss) income
available to
common shareholders $ (6,735) $ 5,444 $ 9 $ 1,462 $ 180
======== ============ ============= ============ ===========
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GUARANTORS' FINANCIAL INFORMATION (CONTINUED)
For the Three Months Ended May 31, 2000
---------------------------------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
Net sales $ 36,469 $ 34,969 $ 2,630 $ (27,846) $ 46,222
Cost of sales 29,073 22,999 2,310 (31,117) 23,265
-------- ------------ ------------- ------------ ------------
Gross profit 7,396 11,970 320 3,271 22,957
Selling, general and
administrative 7,045 5,013 532 27 12,617
-------- ------------ ------------- ------------ ------------
Operating income (loss) 351 6,957 (212) 3,244 10,340
Other (expense) income (5,564) 17 (35) (1) (5,583)
-------- ------------ ------------- ------------ ------------
(Loss) income before
taxes on income (5,213) 6,974 (247) 3,243 4,757
Taxes on income (637) 2,471 (109) (2) 1,723
-------- ------------ ------------- ------------ ------------
Net (loss) income (4,576) 4,503 (138) 3,245 3,034
Less: preferred
dividends (2,250) - - - (2,250)
-------- ------------ ------------- ------------- --------------
Net (loss) income
available to
common shareholders $ (6,826) $ 4,503 $ (138) $ 3,245 $ 784
======== ============ ============= ============ ============
For the Six Months Ended May 31, 2001
-------------------------------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
Net sales $ 72,711 $ 73,098 $ 4,990 $ (62,952) $ 87,847
Cost of sales 59,943 43,869 4,183 (64,011) 43,984
-------- ----------- ------------- ----------- -----------
Gross profit 12,768 29,229 807 1,059 43,863
Selling, general and
administrative 14,976 12,677 926 55 28,634
-------- ----------- ------------- ----------- -----------
Operating income (2,208) 16,552 (119) 1,004 15,229
Other income(expense) 54,429 (1) (65) (64,650) (10,287)
-------- ----------- ------------- ----------- -----------
Income (loss) before taxes
on income 52,221 16,551 (184) (63,646) 4,942
Taxes on income (4,307) 6,225 (81) (3) 1,834
-------- ----------- ------------- ----------- -----------
Net income (loss) 56,528 10,326 (103) (63,643) 3,108
Less: preferred
dividends (4,837) (4,837)
-------- ----------- -------------- ----------- -----------
Net income (loss)
available to
common shareholders $ 51,691 $ 10,326 $ (103) $ (63,643) $ (1,729)
======== =========== ============= =========== ===========
13
GUARANTORS' FINANCIAL INFORMATION (CONTINUED)
For the Six Months Ended May 31, 2000
-------------------------------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
Net sales $ 68,881 $ 67,746 $ 4,923 $ (55,863) $ 85,687
Cost of sales 54,256 43,610 4,208 (58,562) 43,512
-------- ----------- ------------ ----------- -----------
Gross profit 14,625 24,136 715 2,699 42,175
Selling, general and
administrative 13,687 10,100 1,026 54 24,867
-------- ----------- ------------ ----------- -----------
Operating income (loss) 938 14,036 (311) 2,645 17,308
Other (expense)income (11,185) 37 (65) (1) (11,214)
-------- ----------- ------------ ----------- -----------
(Loss) income before taxes
on income (10,247) 14,073 (376) 2,644 6,094
Taxes on income (2,501) 4,951 (165) (3) 2,282
-------- ----------- ------------ ----------- -----------
Net (loss) income (7,746) 9,122 (211) 2,647 3,812
Less: preferred
dividends (4,455) - - - (4,455)
-------- ----------- ------------- ----------- -----------
Net (loss) income
available to
common shareholders $(12,201) $ 9,122 $ (211) $ 2,647 $ (643)
======== =========== ============ =========== ===========
May 31, 2001
------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
Cash $ 1,313 $ 1,457 $ (33) $ 13 $ 2,750
Accounts receivable, net 72,150 66,420 1,419 (112,480) 27,509
Inventories, net 19,016 13,286 1,149 (9,982) 23,469
Other current assets 2,328 1,045 36 (1) 3,408
-------- ----------- ------------ ------------ ------------
Total current assets 94,807 82,208 2,571 (122,450) 57,136
Property and equipment 10,825 56,163 2,560 (377) 69,171
Less accumulated depreciation 3,081 20,884 576 (274) 24,267
-------- ----------- ------------ ------------ ------------
Net property and equipment 7,744 35,279 1,984 (103) 44,904
Other assets 74,895 47 - (59,918) 15,024
-------- ----------- ------------ ------------ ------------
$177,446 $ 117,534 $ 4,555 $ (182,471) $ 117,064
Total assets ======== =========== ============ ============ ============
Current liabilities $ 82,282 $ 60,194 $ 1,578 $ (112,466) $ 31,588
Other liabilities 179,010 - 2,134 (2,061) 179,083
-------- ----------- ------------ ----------- ------------
Total liabilities 261,292 60,194 3,712 (114,527) 210,671
Total stockholders'
(deficit) equity (83,846) 57,340 843 (67,944) (93,607)
-------- ----------- ------------ ------------ ------------
Total liabilities and
stockholders' equity
(deficit) $177,446 $ 117,534 $ 4,555 $ (182,471) $ 117,064
======== =========== ============ ============ ===========
14
GUARANTORS' FINANCIAL INFORMATION (CONTINUED)
November 30, 2000
-----------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
Cash $ 4,042 $ 739 $ 36 $ - $ 4,817
Accounts receivable, net 26,614 75,255 1,918 (77,260) 26,527
Inventories, net 19,902 14,108 1,189 (10,991) 24,208
Other current assets 3,177 654 73 - 3,904
-------- ------------ ------------ ------------ ------------
Total current assets 53,735 90,756 3,216 (88,251) 59,456
Property and equipment 10,507 54,762 2,565 (376) 67,458
Less accumulated depreciation 2,921 18,896 547 (273) 22,091
-------- ------------ ------------ ------------ ------------
Net property and equipment 7,586 35,866 2,018 (103) 45,367
Other assets 72,504 37 - (59,930) 12,611
-------- ------------ ------------ ------------ ------------
Total assets $133,825 $ 126,659 $ 5,234 $ (148,284) $ 117,434
======== ============ ============ ============ ============
Current liabilities $ 89,436 $ 14,995 $ 2,192 $ (77,261) $ 29,362
Other liabilities 184,764 - 2,148 (2,072) 184,840
-------- ------------ ------------ ------------ ------------
Total liabilities 274,200 14,995 4,340 (79,333) 214,202
Total stockholders'
(deficit) equity (140,375) 111,664 894 (68,951) (96,768)
-------- ------------ ------------ ------------ ------------
Total liabilities and
stockholders' equity
(deficit) $133,825 $ 126,659 $ 5,234 $ (148,284) $ 117,434
======== =========== ============ ============ ============
For the Six Months Ended May 31, 2001
-------------------------------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
Net cash provided by (used
in) operating activities $ 5,608 $ 2,123 $ (54) $ (2) $ 7,675
--------- ------------ ------------- ------------ ------------
Cash flows (used in)
investing activities:
Capital expenditures (318) (1,405) 0 0 (1,723)
License - lighting
technology (3,220) 0 0 0 (3,220)
--------- ------------ ------------- ------------ ------------
Net cash (used in)
investing activities (3,538) (1,405) 0 0 (4,943)
--------- ------------ ------------- ------------ ------------
Cash provided by (used in)
financing activities:
Proceeds from bank debt 14,000 0 0 0 14,000
Principal payments on
Long Term Debt (18,799) 0 (15) 15 (18,799)
--------- ------------ ------------- ------------ ------------
Net cash (used in)
provided by financing
activities (4,799) 0 (15) 15 (4,799)
--------- ------------ ------------- ------------ ------------
Net (decrease) increase
in cash (2,729) 718 (69) 13 (2,067)
Cash at beginning of period 4,042 739 36 0 4,817
--------- ------------ ------------- ------------ ------------
Cash at end of period $ 1,313 $ 1,457 $ (33) $ 13 $ 2,750
========= ============ ============= ============ ============
15
GUARANTORS' FINANCIAL INFORMATION (CONTINUED)
For the Six Months Ended May 31, 2000
-------------------------------------
(in thousands)
Guarantor Non-Guarantor Total
Parent Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
Net cash provided by (used
in) operating activities $ 8,673 $ (1,045) $ 74 $ 85 $ 7,787
--------- ------------ ------------- ----------- ------------
Cash flows (used in) investing
activities:
Capital expenditures (55) (1,696) (15) - (1,766)
--------- ------------ ------------- ----------- ------------
Net cash (used in)
investing activities (55) (1,696) (15) - (1,766)
--------- ------------ ------------- ----------- ------------
Cash provided by (used in)
financing activities:
Proceeds from bank debt 2,500 - - - 2,500
Common stock retired
Other financing activities (8,292) - (14) 14 (8,292)
--------- ------------ ------------- ----------- ------------
Net cash (used in) provided
by financing activities (5,792) - (14) 14 (5,792)
--------- ------------ ------------- ----------- ------------
Net increase (decrease)
in cash 2,826 (2,741) 45 99 229
Cash at beginning of period 5,748 2,828 27 29 8,632
--------- ------------ ------------- ----------- ------------
Cash at end of period $ 8,574 $ 87 $ 72 $ 128 $ 8,861
========= ============ ============= =========== ============
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
=========================================================
RESULTS OF OPERATIONS:
- ----------------------
Three Months Ended May 31, 2001 Compared With Three Months
- ----------------------------------------------------------
Ended May 31, 2000
- ------------------
Net sales for the quarter ended May 31, 2001 were $46,309,000
compared to second quarter 2000 sales of $46,222,000. As a result of general
volume increases and new product introductions during the last year, the
Company's Juno Lighting division reported a sales increase of 5.1% compared to
the second quarter of 2000. However, this increase was offset by a decrease in
sales of 19.7% versus the same period of a year ago at the Indy Lighting
division due to slowness in some of their end markets.
Gross profit expressed as a percentage of net sales increased to
50.7% for the quarter, compared to 49.7% for the like period in 2000 due
primarily to the effects of process re-engineering initiatives resulting in
improvements in material costs, labor costs and manufacturing overhead
expenses.
Selling, general and administrative expenses expressed as a
percentage of sales increased to 30.8% for the second quarter of 2001 compared
with 27.3% for the like period in 2000 due primarily to costs incurred of
$400,000 for the process re-engineering project which concluded in April 2001,
approximately $600,000 for additional advertising and sales promotion expenses
in connection with several programs designed to increase revenues for the
remainder of the year, and $400,000 for administrative salaries (including
$140,000 for severance payments in connection with the process re-engineering
initiative; $130,000 for salaries of executives hired in the second half of
fiscal 2000 and the remainder due primarily to inflation).
16
As a result of the above factors, operating income decreased to
20.0% of sales as compared to 22.4% for the like period in 2000.
Interest expense amounted to $5,129,000 for the second quarter of
2001 compared to $5,689,000 for the like period in 2000. This decrease is due
primarily to the reduction of debt from $204,358,000 at May 31, 2000 to
$181,788,000 at May 31, 2001.
Six Months Ended May 31, 2001 Compared With Six Months
- ------------------------------------------------------
Ended May 31, 2000
- ------------------
During the six month period ended May 31, 2001, net sales increased
2.5% to $87,847,000 compared to $85,687,000 for the like period in 2000. In
management's opinion, this increase is due primarily to new products
introduced in the last twelve months.
Gross profit expressed as a percentage of sales increased to 49.9%
for the six months ended May 31, 2001, compared to 49.2% for the like period
in 2000 due primarily to productivity improvements from the process re-
engineering project.
Selling, general and administrative expenses expressed as a
percentage of sales increased to 32.6% for the period compared with 29.0% for
the like period in 2000 due primarily to costs incurred of $1,350,000 for the
process re-engineering project, $175,000 for the settlement of a legal case,
approximately $1,100,000 for additional advertising and sales promotion
expenses in connection with several programs designed to increase revenue for
the remainder of the year, and $750,000 for administrative salaries (including
$140,000 for severance payments in connection with the process re-engineering
initiative; $260,000 for salaries of executives hired in the second half of
fiscal 2000; and $350,000 for with the fiscal 2001 management incentive
program).
As a result of the above factors, operating income decreased to
17.3% of sales as compared to 20.2% for the like period in 2000.
Interest expense amounted to $10,391,000 for the six months ended
May 31, 2001 compared to $11,413,000 for the like period in 2000. This
decrease is due primarily to the reduction in debt from $204,358,000 at May
31, 2000 to $181,788,000 at May 31, 2001.
INFLATION
- ---------
While Juno believes that it generally has been successful in
controlling the prices it pays for materials and passing on increased costs by
increasing its prices, the Company may not have future success in limiting
material price increases or reflecting any material price increases in the
prices it charges its customers or offsetting such price increases through
improved efficiencies.
LIQUIDITY AND CAPITAL RESOURCES:
- --------------------------------
During the six month period ended May 31, 2001, operating activities
provided cash flow of $7,675,000. This was comprised principally of net
income, depreciation and amortization, decreases in inventory and prepaid
expenses, and increases in accounts payable and accrued expenses(collectively
aggregating $8,933,000), net of increases in accounts receivable of $930,000.
Net cash used in investing activities amounted to $4,943,000 and was
used to finance capital expenditures of $1,723,000 and payments associated
with licensing certain intellectual property rights.
The net cash used in financing activities of $4,799,000 consisted of
proceeds from the Revolving Credit Facility of $14,000,000 less principal
payments on the Senior Credit Facility of $18,799,000 .
17
Prior to the Merger, the Company historically had funded its
operations principally from cash generated from operations and available cash.
The Company incurred substantial indebtedness in connection with the Merger.
The Company's liquidity needs are expected to arise primarily from operating
activities and servicing indebtedness incurred in connection with the Merger.
Principal and interest payments under the Senior Credit Facility and
the Subordinated Debt, both entered into in connection with the Merger,
represent significant liquidity requirements for the Company. As of May 31,
2001, the Company had cash of approximately $2.8 million and total
indebtedness of $181.8 million. Detailed information concerning the terms of
the Senior Credit Facility and the Subordinated Debt can be found in the
Company's audited financial statements included in the November 30, 2000
Annual Report on Form 10-K.
The Company's $35 million Revolving Credit Facility is available to
finance its working capital and had an outstanding balance of $.5 million on
May 31, 2001. The Company's principal source of cash to fund its liquidity
needs will be net cash from operating activities and borrowings under the
Senior Credit Facility. The Company believes these sources will be adequate to
meet its anticipated future requirements for working capital, capital
expenditures, and scheduled payments of principal and interest on its existing
indebtedness for the next 12 months. However, the Company may not generate
sufficient cash flow from operations or have future working capital borrowings
available in an amount sufficient to enable it to service its indebtedness,
including the notes, or to make necessary capital expenditures.
OTHER MATTERS:
- --------------
This document contains various forward-looking statements.
Statements in this document that are not historical are forward-looking
statements. Such statements are subject to various risks and uncertainties
that could cause actual results to vary materially from those stated. Such
risks and uncertainties include: economic conditions generally; levels of
construction and remodeling activities, the ability to improve manufacturing
efficiencies, disruptions in manufacturing or distribution, product and price
competition, raw material prices, the ability to develop and successfully
introduce new products, technology changes, patent issues, exchange rate
fluctuations, and other risks and uncertainties. The Company undertakes no
obligation to update any such factors or to publicly announce the result of
any revisions to any of the forward-looking statements contained herein to
reflect future events or developments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
=======================================================
The Company does not have any material risk-sensitive investments.
18
PART II - OTHER INFORMATION
===========================
Item 1. Legal Proceedings - None
Item 2. Changes in Securities and Use of Proceeds - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders -
(a) The Company held its annual meeting of stockholders on April
24, 2001.
(b) The Company's stockholders elected the following persons to
serve as directors: Robert Jaunich II, Mark Williamson, T. Tracy
Bilbrough, Daniel DalleMolle and Michael Froy.
(c) The following table shows the votes that were cast with respect
to the election of directors:
Nominee Votes in Favor Votes Withheld
------- -------------- --------------
Robert Jaunich II 7,029,606 14,976
Mark Williamson 7,029,616 14,966
T. Tracy Bilbrough 7,029,443 15,139
Daniel DalleMolle 7,029,656 14,926
Michael Froy 7,029,651 14,931
Item 5. Other Information - None
Item 6. (a) Exhibits - None
(b) During the quarter for which this report is filed, no reports on
Form 8-K were filed.
19
SIGNATURES
==========
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.
JUNO LIGHTING, INC.
By: George J. Bilek
---------------------------------------
George J. Bilek, Vice President Finance
(Principal Financial Officer and Duly
Authorized Officer of the Registrant)
Dated: July 12, 2001