-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DzbUCHBWZhVEuXmiPl1NbM3UODSLrhTZTs8B/pJkIuiiTRJbZyUzfBY7Hwq+8cnD boHTZudBB7BAJEf9FvxGRw== 0000950152-95-002606.txt : 19951119 0000950152-95-002606.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950152-95-002606 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LSI INDUSTRIES INC CENTRAL INDEX KEY: 0000763532 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 310888951 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13375 FILM NUMBER: 95591156 BUSINESS ADDRESS: STREET 1: 10000 ALLIANCE RD STREET 2: P O BOX 42728 CITY: CINCINNATI STATE: OH ZIP: 45242 BUSINESS PHONE: 5137933200 MAIL ADDRESS: STREET 1: 10000 ALLIANCE RD STREET 2: P O BOX 42728 CITY: CINCINNATI STATE: OH ZIP: 45242 FORMER COMPANY: FORMER CONFORMED NAME: LSI LIGHTING SYSTEMS INC DATE OF NAME CHANGE: 19891121 10-Q 1 LSI INDUSTRIES 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995. / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO_______. Commission File No. 0-13375 LSI Industries Inc. State of Incorporation - Ohio IRS Employer I.D. No. 31-0888951 10000 Alliance Road Cincinnati, Ohio 45242 (513) 793-3200 Indicate by checkmark 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, and (2) has been subject to such filing requirements for the past 90 days. YES X NO ---------- ---------- Common Shares, no par value. Shares Outstanding at October 30, 1995: 7,622,189. Page 1 of 10 2 LSI INDUSTRIES INC. FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 1995 INDEX
Begins on Page ---- PART I. Financial Information ITEM 1. Financial Statements Consolidated Income Statements........................ 3 Consolidated Balance Sheets........................... 4 Consolidated Statements of Cash Flows................. 5 Notes to Financial Statements......................... 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................... 7 PART II. Other Information ITEM 6. Exhibits and Reports on Form 8-K...................... 9 Signatures ...................................................... 9
Page 2 of 10 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS LSI INDUSTRIES INC. CONSOLIDATED INCOME STATEMENTS (Unaudited)
Three Months Ended September 30 1995 1994 ------- ------- (In thousands, except per share amounts) Net sales $35,882 $29,320 Cost of products sold 23,940 19,462 ------- ------- Gross profit 11,942 9,858 Selling and administrative expenses 8,312 6,905 ------- ------- Operating income 3,630 2,953 Interest expense 143 64 Other expenses 5 9 ------- ------- Income before income taxes 3,482 2,880 Income tax expense 1,288 1,031 ------- ------- Net income $ 2,194 $ 1,849 ======= ======= Net income per common share $ .28 $ .24 ======= ======= Average shares outstanding 7,961 7,748
The accompanying Notes to Financial Statements are an integral part of these financial statements. Page 3 of 10 4 LSI INDUSTRIES INC. CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) September 30, June 30, 1995 1995 ------- ------- (Unaudited) (Derived from Audited financial statements) ASSETS Current Assets: Cash $ 1,342 $ 2,124 Accounts receivable 21,661 19,273 Inventories 19,275 18,584 Other current assets 1,244 1,835 ------- ------- Total current assets 43,522 41,816 Property, plant and equipment, net 19,800 19,398 Goodwill 1,330 1,339 ------- ------- $64,652 $62,553 ======= ======= LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities: Notes payable to bank $ 1,500 $ -- Current maturities of long-term debt 843 842 Accounts payable 11,881 10,641 Accrued expenses 10,825 12,545 ------- ------- Total current liabilities 25,049 24,028 Long-Term Debt 7,060 7,257 Other Long-Term Liabilities 1,455 1,815 Shareholders' Equity: Preferred shares, without par value; -- -- Authorized 1,000,000 share, none issued Common shares, without par value; 8,040 7,915 Authorized 13,000,000 shares; Outstanding 7,613,776 and 7,554,229 shares, respectively Retained earnings 23,048 21,538 ------- ------- Total shareholders' equity 31,088 29,453 ------- ------- $64,652 $62,553 ======= =======
The accompanying Notes to Financial Statements are an integral part of these financial statements. Page 4 of 10 5 LSI INDUSTRIES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands) Three Months Ended September 30 ---------------------- 1995 1994 ------- ------- Cash Flows From Operating Activities: Net income from continuing operations $ 2,194 $ 1,849 Non-cash items included in income: Depreciation and amortization 567 457 Deferred income taxes 20 54 (Gain) on disposition of fixed assets (4) -- Changes in operating assets and liabilities: Accounts receivable (2,388) (3,196) Inventories (691) (1,772) Accounts payable and other (217) (296) Change in liability for discontinued operations (52) (26) ------- ------- Net cash flows from operating activities (1,571) (2,930) Cash Flows from Investing Activities: Purchase of property, plant and equipment (960) (777) Proceeds from sale of fixed assets 4 -- ------- ------- Net cash flows from investing activities (956) (777) Cash Flows from Financing Activities: Increase (decrease) in lines of credit 1,500 375 Payment of long-term debt (196) (29) Increase in long-term debt -- 2,500 Cash dividends paid (684) (476) Exercise of stock options 125 100 ------- ------- Net cash flows from financing activities 745 2,470 ------- ------- Increase (decrease) in cash (782) (1,237) Cash at beginning of year 2,124 1,614 ------- ------- Cash at end of period $ 1,342 $ 377 ======= =======
The accompanying Notes to Financial Statements are an integral part of these financial statements. Page 5 of 10 6 LSI INDUSTRIES INC. NOTES TO FINANCIAL STATEMENTS NOTE 1: INTERIM FINANCIAL STATEMENTS The interim financial statements are unaudited and are prepared in accordance with rules and regulations of the Securities and Exchange Commission. 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. In the opinion of Management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company's financial position as of September 30, 1995, and the results of its operations and its cash flows for the periods ended September 30, 1995 and 1994. These statements should be read in conjunction with the financial statements and footnotes included in the fiscal 1995 annual report. NOTE 2: NET INCOME PER COMMON SHARE The computation of net income per common share is based on the weighted average common shares outstanding for the period, including common share equivalents. Common share equivalents consist of dilutive stock options of which there were 379,000 and 270,000 shares, respectively, for the three month periods ended September 30, 1995 and 1994. NOTE 3: INVENTORIES Inventories consist of the following (in thousands):
September 30, 1995 June 30, 1995 ------------------ ------------- (unaudited) (derived from audited financial statements) Raw Materials $10,093 $ 9,821 Work-in-Process and Finished Goods 9,182 8,763 ------- ------- $19,275 $18,584 ======= =======
NOTE 4: CASH DIVIDENDS The Company paid dividends of $476,000 in September 1994 (annual dividend for fiscal year 1994) and $684,000 in September 1995 (fourth quarter and special year end dividend for fiscal year 1995). In October 1995, the Company's Board of Directors declared a $.04 per share regular quarterly dividend payable on November 13, 1995 to shareholders of record as of November 6, 1995. Page 6 of 10 7 NOTE 5: SALES TO MAJOR CUSTOMERS The Company made sales in both the Lighting and Graphics segments to a major customer, Chevron U.S.A., representing 11% and 15%, respectively, of consolidated net sales in the three month periods ended September 30, 1995 and 1994, respectively. NOTE 6: INCOME TAXES The Company discontinued a certain part of its operations in 1992 and reported a $4.3 million loss, net of a $3.2 million income tax benefit. The Internal Revenue Service (IRS) has completed its audit of the Company's 1989 through 1992 federal income tax returns. The IRS questioned the tax treatment of the loss associated with the discontinued operations, specifically as to whether it should receive ordinary loss or capital loss treatment. In October 1994, the IRS proposed audit adjustments which would have resulted in a return of approximately $2 million of income taxes (plus interest) which had been refunded to the Company with the filing of its 1992 income tax return. The Company is discussing a possible settlement with the IRS Appeals Division which could result in payment of approximately $1.8 million (composed of taxes and interest), and in a charge to discontinued operations of approximately $1.5 million to increase the Company's reserve for remaining liabilities associated with the discontinued operations. However, there can be no assurances as to the timing or amount of the resolution of this matter. The Company continues to investigate other options which may be available to it with respect to this matter. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NET SALES BY BUSINESS SEGMENT
Three Months Ended (In thousands; unaudited) September 30 ------------------ 1995 1994 ---- ---- Lighting $22,531 $16,247 Graphics 13,351 13,073 ------- ------- $35,882 $29,320 ======= =======
THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 1994 Net sales of $35,882,000 increased 22% over first quarter sales last year of $29,320,000. Lighting segment sales increased 39% and Graphics segment sales increased 2%, as a result of strong lighting sales in the petroleum/convenience store and the multi-site retail markets. One customer, Chevron U.S.A., accounted for 11% of Page 7 of 10 8 net sales in the first quarter of fiscal 1996 and 15% of net sales in the corresponding period of 1995. The Company believes that it continues to maintain a good business relationship with this major customer; however, the level of total sales is never assured in the future. Gross profit of $11,942,000, or 33.3% of net sales, increased over last year's first quarter gross profit of $9,858,000 or 33.6% of net sales. The increase in amount of gross profit is attributed primarily to the 22% increase in sales. A sales mix shift in the Company's Graphics segment to somewhat lower margin programs in the first quarter and an increase in lighting sales to the petroleum market both provided influences that reduced the gross profit percentage. Selling and administrative expenses increased to $8,312,000 primarily as a result of increased sales volume, and were reduced to 23% of net sales in fiscal 1996 from 24% of net sales in fiscal 1995. Interest expense increased from $64,000 to $143,000, primarily as a result of increased average borrowings on the Company's revolving lines of credit and term loan facilities in addition to increased effective borrowing rates. The Company's effective tax rate increased to 37% as a result of the increased provision for state income taxes. Net income of $2,194,000 or $.28 per share increased 19% from last year's net income of $1,849,000 or $.24 per share as a result of increased sales and gross profit, partially offset by increased operating expenses and increased provision for income taxes. As discussed in Note 6 to the financial statements and as previously described under "Legal Proceedings" in the Company's prior reports on Form 10-Q, the Company has been involved in a dispute with the Internal Revenue Service (IRS) in which the IRS has proposed audit adjustments which could result in a payment of income taxes by the Company of approximately $2 million, plus interest. The proposed adjustments relate to the Company's 1992 discontinued operations and are associated with income tax which had been refunded to the Company with the filing of its 1992 income tax return. The Company is discussing a possible settlement with the IRS Appeals Division which could result in payment of approximately $1.8 million, composed of taxes and interest, and in a charge to discontinued operations of approximately $1.5 million to increase the Company's reserve for remaining liabilities associated with the discontinued operations. However, there can be no assurances as to the timing or amount of the resolution of this matter. The Company continues to investigate other options which may be available to it with respect to this matter. LIQUIDITY AND CAPITAL RESOURCES At September 30, 1995 the Company had working capital of $18,473,000, compared to $17,788,000 at June 30, 1995. The ratio of current assets to current liabilities remained at 1.74 to 1. The increased working capital is primarily attributed to increases in accounts receivable and inventories, and to a reduction in accrued expenses, partially offset by increases in notes payable to banks, to increases in accounts payable (related to increased sales and production volumes), and to decreased cash. The Company used $1.6 million in cash for operating activities in the first quarter of fiscal year 1996. The debt to equity ratio of .28 to 1 at September 30, 1995 decreased from .30 to 1 as of June 30, 1995. The Company's primary source of liquidity continues to be its lines of Page 8 of 10 9 credit, which carried $9 million of available borrowing capacity as of November 2, 1995. The Company believes its sources of liquidity and capital are adequate to meet its operating needs. Capital expenditures of $960,000 in the first quarter of fiscal year 1996 compares to $777,000 in the comparable period last year. Spending in fiscal year 1996 is primarily related to manufacturing equipment and process improvements and is expected to total approximately $4.4 million for the full year. The Company paid cash dividends of $476,000 ($.07 per share) and a 5% stock dividend in September 1994. Cash dividends of $684,000 ($.04 per share for the regular fourth quarter dividend and $.05 per share for a special year-end dividend) were paid in September 1995. In October 1995, the Company's Board of Directors declared a regular quarterly cash dividend of $.04 per share ($305,000) to be paid November 13, 1995 to shareholders of record as of November 6, 1995. The Company continues to seek opportunities to invest in new products and markets and in acquisitions which fit its strategic growth plans in the lighting and graphics markets. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits 11 Statement Re Computation of Earnings per share (b) Form 8-K No reports on Form 8-K have been filed during the quarter for which this Report is filed. [All other items required in Part II have been omitted because they are not applicable or are not required.] 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. LSI Industries Inc. BY: /s/ ROBERT J. READY -------------------------------- Robert J. Ready President and Chief Executive Officer (Principal Executive Officer) BY: /s/ RONALD S. STOWELL -------------------------------- Ronald S. Stowell Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) November 10, 1995 Page 9 of 10 EX-11 2 EXHIBIT 11 1 EXHIBIT 11 LSI INDUSTRIES INC. STATEMENT RE COMPUTATION OF EARNINGS PER SHARE (IN THOUSANDS, EXCEPT PER SHARE)
Three Months Ended September 30 ------------------- 1995 1994 ------ ------ NET INCOME $2,194 $1,849 - ---------- ====== ====== AVERAGE SHARES OUTSTANDING Weighted average shares outstanding during the period 7,582 7,478 Common Share Equivalents: Common Shares to be issued under Stock Option Plan 379 270 ------ ------ Average Shares Outstanding 7,961 7,748 ====== ====== NET INCOME PER SHARE $ .28 $ .24 - -------------------- ====== ======
Note: Calculated using the "Treasury Stock" method as if options were exercised and the funds were used to purchase Common Shares at the average market price during the period. Page 10 of 10 EX-27 3 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS JUN-30-1995 SEP-30-1995 1,342 0 21,907 246 19,275 43,522 29,317 9,517 64,652 25,049 7,060 8,040 0 0 23,048 64,652 35,882 35,882 23,940 8,312 5 0 143 3,482 1,288 2,194 0 0 0 2,194 0.28 0.28
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