-----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, L5bek9b6ZAuu04A7OdUvYE6Bn81PLAtV3NYHZN8y83w3UqsxaFXlLG9TliCyu8aC grwuW+zzhaa3fZAapMH8rw== 0000950152-98-008820.txt : 19981116 0000950152-98-008820.hdr.sgml : 19981116 ACCESSION NUMBER: 0000950152-98-008820 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981112 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: SEC FILE NUMBER: 000-13375 FILM NUMBER: 98745696 BUSINESS ADDRESS: STREET 1: 10000 ALLIANCE RD STREET 2: P O BOX 42728 CITY: CINCINNATI STATE: OH ZIP: 45242 BUSINESS PHONE: 5135796411 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 INC. 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, 1998. 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, 1998: 9,676,190 2 LSI INDUSTRIES INC. FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1998 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................................. 8 PART II. Other Information ITEM 6. Exhibits and Reports on Form 8-K................ 11 Signatures ................................................ 11 Page 2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS LSI INDUSTRIES INC. CONSOLIDATED INCOME STATEMENTS (Unaudited)
Three Months Ended September 30 ------------------- (in thousands, except per 1998 1997 share data; unaudited) ---- ---- Net sales $ 53,414 $ 43,957 Cost of products sold 35,180 28,438 -------- -------- Gross profit 18,234 15,519 Selling and administrative expenses 11,973 10,729 -------- -------- Operating income 6,261 4,790 Interest expense 54 26 Interest (income) (128) (11) Other expense 32 15 -------- -------- Income before income taxes 6,303 4,760 Income tax expense 2,391 1,785 -------- -------- Net income $ 3,912 $ 2,975 ======== ======== Earnings per common share Basic $ .41 $ .31 ======== ======== Diluted $ .40 $ .31 ======== ========
The accompanying Notes to Financial Statements are an integral part of these financial statements. Page 3 4 LSI INDUSTRIES INC. CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share amounts) September 30, June 30, 1998 1998 -------- -------- ASSETS Current Assets Cash and cash equivalents $ 10,448 $ 9,338 Accounts receivable 31,838 33,184 Inventories 24,775 24,958 Other current assets 2,276 2,068 -------- -------- Total current assets 69,337 69,548 Property, plant and equipment, net 27,100 27,735 Goodwill and other assets, net 12,837 13,033 -------- -------- $109,274 $110,316 ======== ======== LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities Current maturities of long-term debt $ 164 $ 190 Accounts payable 11,942 13,689 Accrued expenses 13,318 15,432 -------- -------- Total current liabilities 25,424 29,311 Long-Term Debt 1,005 1,005 Other Long-Term Liabilities 1,261 1,343 Shareholders' Equity Preferred shares, without par value; Authorized 1,000,000 shares; none issued -- -- Common shares, without par value; Authorized 30,000,000 shares; Outstanding 9,674,696 and 9,634,608 shares, respectively 35,592 35,368 Retained earnings 45,992 43,289 -------- -------- Total shareholders' equity 81,584 78,657 -------- -------- $109,274 $110,316 ======== ========
The accompanying Notes to Financial Statements are an integral part of these financial statements. Page 4 5 LSI INDUSTRIES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands) Three Months Ended September 30 -------------------------- 1998 1997 ---- ---- Cash Flows from Operating Activities Net income $ 3,912 $ 2,975 Non-cash items included in income Depreciation and amortization 1,098 980 Deferred income taxes 30 30 Loss on disposition of fixed assets 32 15 Changes in operating assets and liabilities Accounts receivable 1,346 (1,294) Inventories 183 (1,878) Accounts payable and other (4,064) 766 Change in liability for discontinued operations (5) (4) ------- ------- Net cash flows from operating activities 2,532 1,590 ------- ------- Cash Flows from Investing Activities Purchase of property, plant and equipment (411) (911) Proceeds from sale of fixed assets -- 1 ------- ------- Net cash flows from investing activities (411) (910) ------- ------- Cash Flows from Financing Activities Increase in notes payable to bank -- 462 Payment of long-term debt (26) (29) Cash dividends paid (1,209) (955) Deferred compensation plan (49) (67) Proceeds from issuance of common shares 273 60 ------- ------- Net cash flows from financing activities (1,011) (529) ------- ------- Increase in cash and cash equivalents 1,110 151 Cash and cash equivalents at beginning of year 9,338 2,612 ------- ------- Cash and cash equivalents at end of period $10,448 $ 2,763 ======= ======= Supplemental Cash Flow Information Interest paid $ 48 $ 48 ======= ======= Income taxes paid $ 871 $ 1,243 ======= =======
The accompanying Notes to Financial Statements are an integral part of these financial statements. Page 5 6 LSI INDUSTRIES INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) 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, 1998, and the results of its operations and its cash flows for the periods ended September 30, 1998 and 1997. These statements should be read in conjunction with the financial statements and footnotes included in the fiscal 1998 annual report. NOTE 2: RECENT PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 (SFAS No. 133), "Accounting for Derivative Instruments and Hedging Activities," which establishes standards for reporting and disclosure of derivative and hedging instruments. SFAS No. 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999. The Company will not be affected by this new standard because the Company has no derivative or hedging financial instruments. NOTE 3: COMPREHENSIVE INCOME In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130 (SFAS No. 130), "Reporting Comprehensive Income," which established standards for reporting and display of comprehensive income and its components (revenues, expenses, gains, and losses) in a full set of general-purpose financial statements. The Company adopted SFAS No. 130 in the quarter ended September 30, 1998. For the periods disclosed, periods ending September 30, 1998 and 1997, comprehensive income is equal to the net income reported. NOTE 4: EARNINGS PER COMMON SHARE In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 (SFAS No. 128), "Earnings Per Share," which requires the presentation of basic and diluted earnings per share on the face of the income statement for all entities with complex capital structures and requires a reconciliation of both the numerator and denominator of the basic and dilutive earnings per share computations. The Company adopted SFAS No. 128 effective with the second quarter of fiscal year 1998. All prior period earnings per share have been restated for the new disclosure. Page 6 7 NOTE 4: EARNINGS PER COMMON SHARE (continued) The following table presents the amounts used to compute earnings per common share and the effect of dilutive potential common shares on net income and weighted average shares outstanding:
Three Months Ended September 30 ------------------------ 1998 1997 ---- ---- BASIC EARNINGS PER SHARE Net income $3,912 $2,975 ====== ====== Weighted average shares outstanding during the period, net of treasury shares 9,658 9,495 ====== ====== Basic earnings per share $ .41 $ .31 ====== ====== DILUTED EARNINGS PER SHARE Net income $3,912 $2,975 ====== ====== Weighted average shares outstanding during the period, net of treasury shares 9,658 9,495 Effect of dilutive securities: Impact of common shares to be issued under stock option plans and a deferred compensation plan (A) (B) 191 188 ------ ------ Weighted average shares outstanding 9,849 9,683 ====== ====== Diluted earnings per share $ .40 $ .31 ====== ======
(A) Calculated using the "Treasury Stock" method as if dilutive securities were exercised and the funds were used to purchase Common Shares at the average market price during the period. (B) Options to purchase 46,094 common shares during the quarter ended September 30, 1997 were not included in the computation of diluted earnings per share because the exercise price was greater than the average fair market value of the common shares. Page 7 8 NOTE 5: INVENTORIES Inventories consist of the following (in thousands):
September 30, 1998 June 30, 1998 ------------------ ------------- Raw Materials $12,624 $12,192 Work-in-Process and Finished Goods 12,151 12,766 ------- ------- $24,775 $24,958 ======= =======
NOTE 6: CASH DIVIDENDS The Company paid cash dividends of $1,209,000 and $955,000 in the three month periods ended September 30, 1998 and 1997, respectively. In October 1998, the Company's Board of Directors declared a $.0675 per share regular quarterly cash dividend ($653,000) payable on November 17, 1998 to shareholders of record November 10, 1998. NOTE 7: SHAREHOLDERS' EQUITY The Company has a non-qualified Deferred Compensation Plan with all Plan investments in common shares of the Company. As of September 30, 1998 a total of 40,544 common shares at a cost of $598,056 were held in the Plan, and, accordingly, have been recorded as treasury shares. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NET SALES BY BUSINESS SEGMENT (In thousands, unaudited)
Three Months Ended September 30 ------------------------ 1998 1997 ---- ---- Image Group $37,954 $31,799 Commercial / Industrial Lighting Group 15,460 12,158 ------- ------- $53,414 $43,957 ======= =======
Page 8 9 RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 1997 Net sales of $53,414,000 in the first quarter of fiscal 1999 increased 22% over fiscal 1998 first quarter net sales of $43,957,000. Image Group net sales increased 19% and Commercial / Industrial Lighting Group net sales increased 27% in the first quarter of fiscal 1999 as compared to the prior year. The increase in Commercial / Industrial Lighting Group net sales is attributed to growth in substantially all markets. The increase in Image Group sales is attributed to growth in substantially all markets and products, particularly petroleum lighting, graphics, and quick service restaurant. Net sales of the Image Group to the petroleum / convenience store market represented 47% and 46% of net sales in the first quarters of fiscal 1999 and fiscal 1998, respectively. While sales prices were increased, inflation did not have a significant impact on sales in 1999 as competitive pricing pressures held price increases to a minimum. Gross profit of $18,234,000 increased 17% over last year's first quarter gross profit of $15,519,000, and decreased as a percentage of net sales to 34.1% in fiscal year 1999 as compared to 35.3% in the prior year. The increase in amount of gross profit is due primarily to the 22% increase in net sales. The decrease in gross profit percentage is primarily related to a product mix of increased lighting sales in the Company's Commercial / Industrial Lighting Group. Selling and administrative expenses increased to $11,973,000 from $10,729,000 primarily as a result of increased sales volume. As a percentage of net sales, selling and administrative expenses were at 22.4% in the first quarter of fiscal 1999 as compared to 24.4% in the prior year. The Company reported net interest income of $74,000 in the first quarter of fiscal 1999 as compared to net interest expense of $15,000 in fiscal 1998 reflective of an increased amount short-term cash investments. The Company's effective tax rate increased to 37.9% in the first quarter of fiscal 1999 as compared to 37.5% in fiscal 1998 primarily due to increased provision of state and local income tax. Net income of $3,912,000 increased 31% over $2,975,000 in the first quarter of fiscal 1998. The increased net income resulted from increased gross profit on higher net sales, and from the reporting of a larger amount of net interest income in fiscal 1999 as compared to 1998, partially offset by increased operating expenses and income taxes. Diluted earnings per share of $0.40 increased 29% in the first quarter of fiscal 1999 from $0.31 per share in fiscal 1998. The weighted average common shares outstanding for purposes of computing diluted earnings per share increased 2% in the first quarter of fiscal 1999 to 9,849,000 shares from 9,683,000 shares in 1998 primarily as a result of the exercise of stock options during the year. Certain recently issued accounting pronouncements will affect the Company's future financial statements and / or disclosures. See Note 2 to these financial statements for additional discussion. Page 9 10 LIQUIDITY AND CAPITAL RESOURCES At September 30, 1998 the Company had working capital of $43.9 million, compared to $40.2 million at June 30, 1998. The ratio of current assets to current liabilities increased to 2.73 to 1 from 2.37 to 1. The increased working capital is primarily attributed to increased cash, and decreased accrued expenses and accounts payable, partially offset by decreased accounts receivable and inventories. The Company generated $2.5 million of cash from operating activities in the first quarter of fiscal 1999 as compared to $1.6 million fiscal 1998. The Company generated more cash in the first three months of fiscal 1999 primarily due to increased net income, and reductions of accounts receivable and inventories, partially offset by decreases in accounts payable and accrued expenses. As of September 30, 1998, the Company's day's sales outstanding were at approximately 53 days as compared to 55 days at June 30, 1998. Accrued expenses decreased significantly reflective of first quarter payments related to the Company's compensation and retirement plans, and accounts payable decreased in line with the flow of inventory replenishment. In addition to cash generated from operations, the Company's primary source of liquidity continues to be its lines of credit. The Company has two revolving lines of credit totaling $24 million, all of which was available as of November 6, 1998. These lines of credit are unsecured and expire in fiscal 1999. The Company believes that the total of available lines of credit plus cash flows from operating activities is adequate for the Company's fiscal 1999 operational and capital expenditure needs. The Company is in compliance with all of its loan covenants. Capital expenditures of $.4 million in the first quarter of fiscal 1999 compare to $.9 million in the prior year. Capital expenditures totaling approximately $6 million are planned for fiscal 1999, exclusive of business acquisitions. In October 1998, the Board of Directors declared a regular quarterly cash dividend of $.0675 per share ($653,000) to be paid November 17, 1998 to shareholders of record on November 10, 1998. The Company has completed a review of its business systems, office support systems, and its facilities and equipment with respect to year 2000 programming deficiencies. The review has extended to major suppliers and customers, and this element of the review is expected to be completed by June 30, 1999. The Company does not anticipate material costs to be incurred to modify or replace any affected systems. The Company anticipates completion of this process prior to June 30, 1999. 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. The Company believes that adequate financing for any such investments or acquisitions will be available through future borrowings or through the issuance of common or preferred shares in payment for acquired businesses. Page 10 11 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits 27 Financial Data Schedule b) Reports on Form 8-K No reports on Form 8-K were 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 Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) November 6, 1998 Page 11 EX-27.1 2 EXHIBIT 27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000763532 LSI INDUSTRIES INC. 1,000 3-MOS JUN-30-1998 JUL-01-1997 SEP-30-1997 2,763 0 29,212 (506) 24,936 58,255 41,549 (14,401) 98,539 25,972 1,165 0 0 34,509 35,472 98,539 43,957 43,957 28,438 10,594 15 135 15 4,760 1,785 2,975 0 0 0 2,975 0.31 0.31
EX-27.2 3 EXHIBIT 27.2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000763532 LSI INDUSTRIES INC. 1,000 3-MOS JUN-30-1999 JUL-01-1998 SEP-30-1998 10,448 0 32,604 (766) 24,775 69,337 45,022 (17,922) 109,274 25,424 1,005 0 0 35,592 45,992 109,274 53,414 53,414 35,180 11,973 32 0 (74) 6,303 2,391 6,303 0 0 0 6,303 .41 .40
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