================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended April 1, 2000
Commission File Number 0-16960
---------------
THE GENLYTE GROUP INCORPORATED
AND SUBSIDIARIES
4360 BROWNSBORO ROAD
LOUISVILLE, KY 40207
(502) 893-4600
Incorporated in Delaware I.R.S. Employer
Identification No. 22-2584333
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 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. YES [X] NO [ ]
THE NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S COMMON STOCK AS OF MAY 3, 2000
WAS 13,557,015.
================================================================================
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED APRIL 1, 2000
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Income for the three
months ended April 1, 2000 and April 3, 1999..................1
Consolidated Balance Sheets as of
April 1, 2000 and December 31, 1999...........................2
Consolidated Statements of Cash Flows for the three
months ended April 1, 2000 and April 3, 1999..................3
Notes to Consolidated Interim Financial Statements...............4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS......................6
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......8
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..........................8
Signatures.........................................................9
Exhibit 27: Financial Data Schedule................................10
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED APRIL 1, 2000 AND APRIL 3, 1999
(000'S OMITTED, EXCEPT PER SHARE DATA)
(Unaudited)
2000 1999
------------ ------------
Net sales $ 244,655 $ 237,476
Cost of sales 163,309 160,098
------------ ------------
Gross profit 81,346 77,378
Selling and administrative expenses 61,418 58,466
------------ ------------
Operating profit 19,928 18,912
Interest expense, net 857 1,196
Minority interest 5,877 5,514
------------ ------------
Income before income taxes 13,194 12,202
Income tax provision 5,540 5,247
------------ ------------
Net income $ 7,654 $ 6,955
============ ============
Earnings per share
Basic $ 0.56 $ 0.50
Diluted $ 0.55 $ 0.50
The accompanying notes are an integral part of these consolidated financial
statements.
1
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF APRIL 1, 2000 AND DECEMBER 31, 1999
(000'S OMITTED)
(Unaudited)
04/01/2000 12/31/1999
------------ ------------
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 22,016 $ 22,660
Accounts receivable, less allowance for doubtful
accounts of $14,736 and $14,910, respectively 159,735 155,428
Inventories
Raw materials and supplies 49,706 46,717
Work in process 14,883 14,027
Finished goods 74,637 75,297
------------ ------------
Total inventories 139,226 136,041
Other current assets 30,004 29,938
------------ ------------
Total current assets 350,981 344,067
Plant and equipment, at cost 321,931 322,867
Less: accumulated depreciation and amortization 217,703 217,878
------------ ------------
Net plant and equipment 104,228 104,989
Cost in excess of net assets of acquired businesses 114,079 111,426
Other assets 11,257 15,228
------------ ------------
TOTAL ASSETS $ 580,545 $ 575,710
============ ============
LIABILITIES & STOCKHOLDERS' INVESTMENT:
CURRENT LIABILITIES:
Short-term borrowings and current portion of long-term debt $ 1,641 $ 1,647
Accounts payable 85,679 86,717
Accrued expenses 72,326 80,001
------------ ------------
Total current liabilities 159,646 168,365
Long-term debt 53,752 53,964
Deferred income taxes 31,794 31,797
Minority interest 104,766 98,940
Other liabilities 21,496 20,102
------------ ------------
Total liabilities 371,454 373,168
STOCKHOLDERS' INVESTMENT:
Common stock 136 137
Additional paid-in capital 16,746 17,761
Retained earnings 160,961 153,307
Accumulated other comprehensive income 31,248 31,337
------------ ------------
Total stockholders' investment 209,091 202,542
------------ ------------
TOTAL LIABILITIES & STOCKHOLDERS' INVESTMENT $ 580,545 $ 575,710
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
2
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 1, 2000 AND APRIL 3, 1999
(000'S OMITTED)
(Unaudited)
2000 1999
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,654 $ 6,955
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 6,692 5,887
Loss from disposal of plant and equipment 1,019 623
(Increase) decrease in:
Accounts receivable (4,307) (16,130)
Inventories (3,185) (6,141)
Other current assets (66) (241)
Other assets 318 (1,713)
Increase (decrease) in:
Accounts payable and accrued expenses (8,713) (1,436)
Deferred income taxes (3) (262)
Minority interest 5,826 5,493
Other liabilities 1,394 252
Minimum pension liability -- 230
All other, net 70 (573)
------------ ------------
Net cash provided by (used in) operating activities 6,699 (7,056)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment (6,020) (4,335)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in short-term borrowings -- 14,144
Payments on long-term debt (218) (4,959)
Purchases of treasury stock (1,137) --
Stock options exercised 121 283
------------ ------------
Net cash provided by (used in) financing activities (1,234) 9,468
------------ ------------
Effect of exchange rate changes on cash and cash equivalents (89) 650
------------ ------------
Net decrease in cash and cash equivalents (644) (1,273)
Cash and cash equivalents at beginning of period 22,660 8,555
------------ ------------
Cash and cash equivalents at end of period $ 22,016 $ 7,282
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 789 $ 960
Income taxes $ 1,446 $ 837
The accompanying notes are an integral part of these consolidated financial
statements.
3
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
AS OF APRIL 1, 2000
(000'S OMITTED, EXCEPT PER SHARE DATA)
(Unaudited)
1. BASIS OF PRESENTATION
Throughout this Form 10-Q, the term "Company" as used herein refers to The
Genlyte Group Incorporated, including the consolidation of The Genlyte
Group Incorporated and all majority-owned subsidiaries. The term "Genlyte"
as used herein refers only to The Genlyte Group Incorporated.
The financial information presented is unaudited (except that as of
December 31, 1999), however, such information reflects all adjustments,
consisting solely of normal recurring adjustments, which are, in the
opinion of management, necessary for a fair statement of results for the
interim periods. The financial information has been prepared in accordance
with rules and regulations of the Securities and Exchange Commission for
Form 10-Q. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations. For further information refer to the consolidated
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999.
The results of operations for the three-month period ended April 1, 2000
are not necessarily indicative of the results to be expected for the full
year.
2. USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results
could differ from these estimates.
3. COMPREHENSIVE INCOME
For the three months ended April 1, 2000 and April 3, 1999 total
comprehensive income was $7,565 and $7,421, respectively.
4
4. EARNINGS PER SHARE
The calculation of the average common shares outstanding assuming dilution
for the three months ended April 1, 2000 and April 3, 1999 follows:
2000 1999
------ ------
Average common shares outstanding 13,675 13,789
Incremental common shares issuable:
Stock option plans 134 --
------ ------
Average common shares outstanding assuming
dilution 13,809 13,789
====== ======
5. SEGMENT REPORTING
The Company's reportable operating segments include the Commercial
Segment, the Residential Segment, and the Industrial and Other Segment.
Inter-segment sales are eliminated in consolidation and therefore not
presented in the table below. For the three months ended April 1, 2000 and
April 3, 1999:
Industrial
Commercial Residential and Other Total
---------- ----------- ---------- --------
2000
Net sales $ 174,139 $ 34,514 $36,002 $ 244,655
Operating profit $ 14,330 $ 2,250 $ 3,348 $ 19,928
1999
Net sales $ 168,513 $ 34,910 $34,053 $ 237,476
Operating profit $ 14,589 $ 1,386 $ 2,937 $ 18,912
The Company has operations throughout North America. Information about the
Company's operations by geographical area for the three months ended April
1, 2000 and April 3, 1999 follows. Foreign balances represent primarily
Canada and some Mexico.
United States Foreign Total
------------- ------- -----
2000
Net sales $ 214,594 $ 30,061 $ 244,655
Operating profit $ 17,775 $ 2,153 $ 19,928
1999
Net sales $ 209,425 $ 28,051 $ 237,476
Operating profit $ 16,989 $ 1,923 $ 18,912
No material changes have occurred in total assets since December 31, 1999.
5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
COMPARISON OF FIRST QUARTER 2000 TO FIRST QUARTER 1999
Net sales for the first quarter of 2000 were $244.7 million, an increase of 3.0
percent from the first quarter of 1999. Net income for the first quarter of 2000
was $7,654,000 ($.55 per share), a 10.1 percent increase over the first quarter
1999 net income of $6,955,000 ($.50 per share). Sales and earnings for the first
quarter of 2000 include Ledalite Architectural Products, which was purchased at
the end of June 1999. Without Ledalite, sales for the first quarter of 2000
would have been flat compared to the first quarter of 1999, while net income
would have increased 11.5 percent over the first quarter of 1999. January was a
relatively weak month, but sales volume improved progressively through February
and March. Also, sales were softer for some product lines because management
intentionally chose not to participate in some lower margin business.
Cost of sales for the first quarter of 2000 was 66.8 percent of net sales,
compared to 67.4 percent in the first quarter of 1999. This decrease is
primarily attributed to additional raw material cost savings resulting from the
combination of Genlyte and Thomas Lighting, as well as cost savings realized
from plant consolidations during 1999. Selling and administrative expenses
increased to 25.1 percent of sales in the first quarter of 2000 from 24.6
percent in the first quarter of 1999 primarily because of additional costs for
new product launches. In addition, certain divisions that have experienced
reduced sales have not reduced selling and administrative expenses.
Interest expense was $857,000 in the first quarter of 2000, compared to
$1,196,000 in the first quarter of 1999, because of lower levels of debt this
year. In 1999, there was an increase in debt to fund an increase in working
capital. This year additional debt has not been necessary because working
capital increases have been held down.
The effective tax rate was reduced to 42.0 percent for the first quarter of 2000
from 43.0 percent for the first quarter of 1999.
6
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $22.0 million at April 1, 2000 compared to $22.7
million at December 31, 1999. Total debt was $55.4 million at April 1, 2000
compared to $55.6 million at December 31, 1999. Working capital at April 1, 2000
was approximately $191 million, compared to $176 million at December 31, 1999.
Due to the seasonal requirements of the Company's business, accounts receivable
and inventory increased during the first quarter, but cash flow from operating
activities was sufficient to preclude the need for any additional short-term
borrowings.
Cash provided by operating activities during the first quarter of 2000 was $6.7
million, compared to a use of cash of $7.1 million in 1999. This $13.8 million
difference was primarily because the increases in accounts receivable and
inventory were much smaller in 2000 than 1999. Cash used in investing activities
in the first quarter of 2000 was $6.0 million for normal plant and equipment
purchases. Cash used in financing activities in the first quarter of 2000 was
$1.2 million, primarily to purchase shares of treasury stock. This compared to
cash provided by financing activities of $9.5 million in the first quarter of
1999, primarily reflecting a $14.1 million increase in short-term borrowings and
a $5.0 million decrease in long-term debt. Management believes that currently
available cash and borrowing facilities, combined with internally generated
funds, should be sufficient to fund capital expenditures as well as any increase
in working capital required to accommodate business needs in the foreseeable
future.
The Company has a $150 million revolving credit facility that matures in August
2003. There were no borrowings under this facility at April 1, 2000. The
Company's long-term debt at April 1, 2000 consisted of $19.7 million in Canadian
dollar notes, $22.3 million payable to Thomas Industries Inc., $10.5 million in
industrial revenue bonds and $1.3 million in capital leases and other.
YEAR 2000 ISSUES
The Company developed and executed plans to prepare its information technology
systems and non-information technology systems with embedded technology for the
year 2000 conversion. The company experienced no significant disruptions as a
result of the date change to January 1, 2000, and is not currently aware of any
significant adverse impact affecting its major vendors or customers. The cost
for the year 2000 project was approximately $3.0 million, which was incurred
from 1996 through 1999. Management believes the Company's business will not be
significantly affected in the future due to the year 2000 issue.
FORWARD-LOOKING STATEMENTS
The statements in this document with respect to future results, future
expectations, and plans for future activities may be regarded as forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, and actual results may differ materially from those currently expected.
The Company makes no commitment to disclose any revision to forward-looking
statements, or any facts, events or circumstances after the date hereof that may
bear upon forward-looking statements.
7
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At Genlyte's Annual Meeting of Stockholders held April 27, 2000, the following
actions were taken by stockholders:
David M. Engelman and Frank Metzger were re-elected to the Board of Directors.
Mr. Engelman had 12,085,112 shares voted for and 757,629 shares withheld, and
Dr. Metzger had 12,073,465 shares voted for and 769,276 shares withheld.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K: None
8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Genlyte has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
THE GENLYTE GROUP INCORPORATED
(Registrant)
Date: May 12, 2000 /s/ LARRY K. POWERS
------------------------------
Larry K. Powers
President and Chief Executive Officer
Date: May 12, 2000 /s/ WILLIAM G. FERKO
------------------------------
William G. Ferko
V.P. Finance - CFO & Treasurer
9