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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 4, 1998
Commission File Number 0-16960
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THE GENLYTE GROUP INCORPORATED
AND SUBSIDIARIES
2345 VAUXHALL ROAD
UNION, N. J. 07083-1948
(908) 964-7000
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 APRIL 4,
1998 WAS 13,426,143.
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THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED APRIL 4, 1998
INDEX
PART I. FINANCIAL INFORMATION
Consolidated Statements of Income for the three
months ended April 4, 1998 and March 29, 1997................1
Consolidated Balance Sheets as of
April 4, 1998 and December 31, 1997..........................2
Consolidated Statements of Cash Flows for the three
months ended April 4, 1998 and March 29, 1997................3
Notes to Consolidated Interim Financial Statements. ..........4
Management's Discussion and Analysis of
Results of Operations and Financial Condition ...............5
PART II. OTHER INFORMATION
Item 1 Legal Proceedings.....................................6
Item 6 Exhibits and Reports on Form 8-K......................6
Signature.....................................................7
PART 1 FINANCIAL INFORMATION
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED APRIL 4, 1998 AND MARCH 29, 1997
(000'S OMITTED, EXCEPT PER SHARE DATA)
(Unaudited)
1998 1997
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Net Sales $130,124 $113,298
Cost of Sales 85,648 75,059
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Gross Profit 44,476 38,239
Selling and Administrative Expenses 32,851 31,135
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Operating Profit 11,625 7,104
Interest Expense, net 844 971
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Income Before Income Taxes 10,781 6,133
Provision for Income Taxes 4,635 2,639
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Net Income $ 6,146 $ 3,494
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Earnings per Share
Basic $ 0.45 $ 0.27
Diluted $ 0.45 $ 0.26
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The accompanying notes are an integral part of these consolidated
financial statements.
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THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF APRIL 4, 1998 AND DECEMBER 31, 1997
(000'S OMITTED)
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(unaudited)
4/4/98 12/31/97
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ASSETS:
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Current Assets:
Cash and Cash Equivalents $ 1,234 $ 1,654
Accounts Receivable, less allowance for doubtful
account of $6,963 and $6,864, respectively 81,233 73,220
Inventories
Raw materials and supplies 32,804 32,324
Work in process 6,412 5,613
Finished goods 44,821 42,910
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Total Inventory 84,037 80,847
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Other Current Assets 20,972 18,385
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Total Current Assets 187,476 174,106
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Property, Plant & Equipment 216,063 213,141
Less: accumulated depreciation and amortization
on plant and equipment 156,972 153,523
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Net Property, Plant & Equipment 59,091 59,618
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Cost in excess of net assets of purchased business 12,616 12,434
Other Assets 7,832 7,870
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TOTAL ASSETS $267,015 $254,028
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LIABILITIES & STOCKHOLDERS' INVESTMENT
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Current Liabilities:
Short-Term Borrowings $ 250 $ --
Current Maturities of Long-term Debt 58 $ --
Accounts Payable 50,547 49,433
Accrued Expenses 39,520 42,712
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Total Current Liabilities 90,375 92,145
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Long-term Debt 40,771 32,785
Deferred Income Taxes 6,831 6,828
Other Liabilities 18,663 18,541
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Total Liabilities 156,640 150,299
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Stockholders' Investment
Common Stock 136 135
Paid-in Capital 13,128 12,889
Foreign Currency Translation (2,801) (3,061)
Retained Earnings 99,912 93,766
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Total Stockholders' Investment 110,375 103,729
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TOTAL LIABILITIES & STOCKHOLDERS' INVESTMENT $267,015 $254,028
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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 4, 1998 AND MARCH 29, 1997
(000'S OMITTED)(Unaudited)
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1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net Income $6,146 $3,494
Adjustments to reconcile net income to net cash
flows provided (used) by operating activities:
Depreciation and amortization 3,028 3,212
(Increase) in:
Accounts receivable (8,013) (3,826)
Inventories (3,190) (3,064)
Other current assets (2,587) (924)
Other assets (144) (848)
Increase (decrease) in:
Accounts payable and accrued expenses (2,078) (8,643)
Other liabilities 122 608
Deferred income taxes 3 (2)
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Net cash flows used by operating activities (6,713) (9,993)
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Purchase of plant and equipment, net of disposal (2,501) (2,095)
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Options exercised 240 191
Increase in debt to outsiders 8,294 12,866
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Net cash flows provided from financing activities 8,534 13,057
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EFFECT OF EXCHANGE RATE CHANGES 260 (159)
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Net (decrease) increase in cash and cash equivalents (420) 810
Cash and cash equivalents at beginning of year 1,654 2,895
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Cash and cash equivalents at end of period $1,234 $3,705
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - CASH PAID DURING
THE THREE MONTH PERIOD FOR:
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Interest $ 710 $ 676
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Income taxes $ 476 $2,878
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The accompanying notes are an integral part of these consolidated
financial statements.
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THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
AS OF APRIL 4, 1998
(Unaudited)
1. Basis of Presentation
The financial information included is unaudited; 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 results of operations for the three month period ended April 4,
1998 are not necessarily indicative of the results to be expected for
the full year.
2. Effective with fiscal years beginning after December 15, 1997,
companies are required to adopt the Statement of Financial Accounting
Standards (SFAS) No. 130 "Reporting Comprehensive Income." The
Statement establishes standards for the reporting and display of
comprehensive income and its components in a full set of general
purpose financial statements. The Statement requires that all items
that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement
that is displayed with the same prominence as other financial
statements. Comprehensive income includes net income and other
comprehensive income, which comprises certain specific items previously
reported directly in stockholders' equity. Other comprehensive income
comprises items such as unrealized gains and losses on debt and equity
securities classified as available-for-sale securities, minimum pension
liability adjustments and foreign currency translation adjustments. The
adoption of SFAS No.130 will not have a material impact on the way the
Company reports or has reported its financial statements.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS:
COMPARISON OF FIRST QUARTER 1998 TO FIRST QUARTER 1997
Genlyte's net sales for the first quarter of 1998 were $130.1 million, a $16.8
million, or 14.9 percent increase from the first quarter of 1997. Each of
Genlyte's major product lines grew during the first quarter as a result of a
strong commercial construction market and increased demand for more commercial
space in the markets Genlyte serves. Net income increased $2.7 million from the
first quarter of 1997 to $6.1 million and earnings per share increased 73.1
percent from $.26 to $.45.
Cost of sales for the first quarter of 1998, when compared to the first quarter
of 1997, decreased to 65.8 percent of sales from 66.2 percent as the company
continued its focus on improving productivity and moving production to its lower
cost facilities. Selling, general and administrative expenses decreased during
the first quarter of 1998 to 25.2 percent of sales, down from 27.5 percent of
sales for the comparable period in 1997 as the benefits of recent investments in
sales training and marketing programs began to materialize. Operating profit
increased in the first quarter of 1998 to $11.6 million, a 63.7 percent
improvement from the first quarter of 1997.
Interest expense amounted to $0.8 million, representing a decrease of $0.2
million, or 13.0 percent, over the comparable quarter of 1997. This decrease was
attributable to lower average borrowings.
The effective tax rate was approximately 43.0 percent for the first quarter of
1998 and 1997.
FINANCIAL CONDITION:
Working capital for the end of first quarter of 1998 was 18.7 percent of sales
compared to 16.8 percent for the end of year 1997. This resulted from
inventories increasing due to seasonal requirements and increased receivables
levels, partially offset by increased payables.
Short term borrowings increased approximately $0.3 million and long-term debt
has increased $8.0 million since year end primarily due to seasonal cash usage.
The company believes that currently available cash, borrowing facilities, and
its ability to increase its credit line if needed, combined with internally
generated funds should be sufficient to fund capital expenditures as well as any
increase in working capital that would be required to accommodate a higher level
of business activity.
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PART II OTHER INFORMATION
Genlyte has been named as one of a number of corporate and individual defendants
in an adversary proceeding filed on June 8, 1995, arising out of the Chapter 11
bankruptcy filing of Keene Corporation ("Keene"). Except for the last count, as
discussed below, the claims and causes of action are substantially the same as
were brought against Genlyte in the U.S. District Court in New York in August
1993, which have been permanently enjoined from proceedings as a result of
Keene's reorganization plan. The new complaint is being prosecuted by the
Creditors Trust created for the benefit of Keene's creditors (the "Trust"),
seeking from the defendants, collectively, damages in excess of $700 million,
rescission of certain asset sale and stock transactions, and other relief. With
respect to Genlyte, the complaint principally maintains that certain lighting
assets of Keene were sold to a predecessor of Genlyte in 1984 at less than fair
value, while both Keene and Genlyte were wholly-owned subsidiaries of Bairnco
Corporation. The complaint also challenges Bairnco's spin-off of Genlyte in
August 1988. Other allegations are that Genlyte, as well as other corporate
defendants, are liable as corporate successors to Keene. The complaint fails to
specify the amount of damages sought against Genlyte. The complaint also alleges
a violation of the Racketeer Influenced and Corrupt Organizations Act.
Following confirmation of the Keene reorganization plan, the parties moved to
withdraw the case from bankruptcy court to the Southern District of New York
Federal District Court. The case is now pending before the Federal District
Court. Genlyte and other defendants filed motions to dismiss the complaint and
motions for summary judgment on statute of limitations grounds on September 15,
1997, which were fully briefed and presented to the Court on December 15, 1997.
Oral argument was conducted on the summary judgment motion on February 13, 1998
and Genlyte is awaiting decisions of the Court on the other motions. Discovery
has been stayed until further order of the Court. Genlyte believes that it has
meritorious defenses to the adversary proceeding and will defend said action
vigorously.
Additionally, the company is a defendant and/or potentially responsible party,
with other companies, in actions and proceedings under state and Federal
environment laws including the Federal Comprehensive Environmental Response
Compensation and Liability Act, as amended ("Superfund"). Such actions include,
but are not limited to, the Keystone Sanitation Landfill site located in
Pennsylvania, in which the United States Environmental Protection Agency has
sought remedial action and reimbursement for past costs.
Management does not believe that the disposition of the lawsuits and/or
proceedings will have a material effect on the Company's financial condition or
results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27: Requirements for the Format and Input of Financial Data
Schedules
(b) Reports on Form 8-K : None
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SIGNATURE
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: April 29, 1998 /s/ NEIL M. BARDACH
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Neil M. Bardach
VP Finance--CFO & Treasurer
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