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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 18, 2002
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ACUITY BRANDS, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-16583 No. 58-2632672
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
1170 Peachtree Street, N.E.
Suite 2400, Atlanta, GA 30309
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 853-1400
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None
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(Former name or former address, if changed since last report)
ITEM 5. Other Events.
Attached hereto is a press release issued by Acuity Brands, Inc. (the
"Registrant") on December 18, 2002. A copy of the press release is filed herewith
as Exhibit 99.1 and is incorporated herein by reference.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
The following exhibit is filed herewith:
EXHIBIT NO. DESCRIPTION
99.1 Press Release, issued by Registrant on December 18, 2002.
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 hereunto duly authorized.
Date: December 20, 2002
ACUITY BRANDS, INC.
BY: /S/ VERNON J. NAGEL
----------------------------
Vernon J. Nagel
Executive Vice President and
Chief Financial Officer
Exhibit 99.1
Company Contact:
Karen Holcom
Acuity Brands, Inc.
(404) 853-1437
ACUITY BRANDS REPORTS
2003 FIRST QUARTER RESULTS
ATLANTA, December 18, 2002 - Acuity Brands, Inc. (NYSE: AYI) announced today
that sales for its first quarter ended November 30, 2002 were $505.2 million
compared to $481.7 million reported in the year ago period, an increase of $23.5
million, or 4.9 percent. Sales increased 5.1 percent and 4.2 percent at Acuity
Lighting Group (ALG) and Acuity Specialty Products Group (ASP), respectively.
The current quarter included the full period results of American Electric
Lighting (AEL), which was acquired in October 2001. Net income for the first
quarter of fiscal 2003 was $10.5 million, or $0.25 per share, compared to $11.5
million, or $0.28 per share, reported in the first quarter of fiscal 2002. This
represents a decrease in net income and earnings per share of approximately 9
percent and 11 percent, respectively. The decline in net income compared to the
year ago period was primarily due to higher costs for certain raw materials,
greater expenses for non-discretionary items, and increased spending for new
product introductions and expanded marketing and logistics initiatives. The
impact of these higher costs was partially offset by the contribution margin
earned from the higher sales volume noted above, benefits from profit
improvement initiatives, and cost containment programs. While these consolidated
results were consistent with management's expectations, the Company continued to
experience very difficult market conditions, including weak customer demand in
the non-residential construction market and rising raw material and
non-discretionary costs.
First Quarter Segment and Corporate Overview
Sales at Acuity Lighting Group in the first quarter of fiscal 2003 were $382.7
million compared to $364.1 million reported in the year ago period, an increase
of $18.5 million, or 5.1 percent. The increase in sales at ALG was primarily due
to greater shipments of products through channels of distribution serving
national accounts, utilities, and other key commercial and industrial markets;
improved service capabilities; and available backlog. Sales at ALG in the first
quarter of fiscal 2003 compared to the year ago period were benefited by $6.7
million due to the inclusion of the full quarter results of American Electric
Lighting, which was acquired in October 2001. Excluding the impact of AEL, net
sales at Acuity Lighting Group increased 3.3 percent in the first quarter of
fiscal 2003 compared to the year ago period. While sales increased in the
current quarter, incoming orders remained soft reflecting the continued weak
economic environment, particularly in the non-residential construction industry.
Order rates, excluding AEL, for the first quarter were approximately 4 percent
below order rates from the year ago period. The decline in order rates during
the quarter, coupled with process improvement initiatives to reduce order cycle
times and shorten lead times to customers, resulted in a lower backlog at
November 30, 2002. The backlog at ALG decreased $25.6 million, or 17.7 percent,
to $119.1 million at November 30, 2002 from August 31, 2002. Excluding the
impact of AEL, the backlog declined 5.6 percent in the year ago period.
Operating profit for Acuity Lighting Group improved $1.0 million to $26.1
million in the first quarter of fiscal 2003 from $25.1 million reported in the
prior year. Operating profit margins dropped nominally to 6.8 percent from 6.9
percent, as the variable contribution margin from the higher sales volume noted
above was offset by continued pricing pressure and product mix changes, higher
raw material costs, and non-discretionary spending for expenses such as
insurance.
Sales at Acuity Specialty Products Group in the first quarter of fiscal 2003
were $122.6 million, an increase of 4.2 percent over the same period one year
earlier. The increase in sales was driven by greater product penetration in key
channels of distribution including home improvement centers and certain
industrial market segments, including food processing and preparation and
vehicle wash. Operating profit at ASP for the first quarter of fiscal 2003
declined $3.2 million to $3.7 million from $6.9 million reported in the year ago
period. Operating margins declined to 3.0 percent from 5.9 percent. The decline
in operating profit was primarily due to startup costs associated with a number
of initiatives, including new product introductions and expanded marketing and
logistics programs, all of which are expected to benefit future periods. In
addition, ASP incurred higher costs for certain raw materials and certain
non-discretionary spending, such as insurance, which were partially offset by
increased selling prices and the greater contribution margin from the higher
sales volume noted above.
Corporate expenses were $3.5 million in the first quarter of fiscal 2003
compared to $2.7 million in the year ago period. The increase was due primarily
to increased expense associated with certain stock-based benefit plans and
greater non-discretionary costs such as insurance. Interest expense of $9.8
million in the first quarter of fiscal 2003 was lower than interest expense of
$10.4 million reported in the year ago period due to a reduction in both debt
balances and interest rates.
Outlook
James S. Balloun, Chairman, President, and Chief Executive Officer of Acuity
Brands, said, "Our first quarter results, which modestly exceeded internal
expectations, reflected our ability to adapt to the difficult conditions that
continue to prevail in certain key markets, particularly non-residential
construction. I am pleased that we were able to partially offset the negative
impact of these conditions by aggressively taking actions to make our businesses
stronger, particularly at Acuity Lighting Group. Our results were benefited by
numerous initiatives to reduce costs, improve customer service, enhance
productivity, and further expand our product offerings and brands through a
variety of channels. Overall, these efforts allowed us to essentially maintain
gross profit margins while experiencing significant cost increases for raw
materials and non-discretionary spending for insurance, as well as to fund key
initiatives at both companies including certain sales and marketing programs.
Also, during the quarter, we were able to generate sufficient cash flow to
maintain our debt balance while paying our quarterly dividend and investing in
our businesses.
"I am pleased with our continued progress in making each business a stronger and
more competitive organization in spite of prevailing market conditions, which
have made it difficult to produce more favorable results. We continue to
innovate, to find ways to more effectively serve our customers, and to improve
our margins. We are doing this through better management of pricing, including
price increases which have been previously announced by our businesses; greater
sales to an expanding customer base; and enhanced productivity. We continue to
pursue more profitable growth by focusing on and better serving our best
customers and introducing innovative and more effective products. While these
efforts are not without short-term costs, we anticipate that these initiatives,
in addition to our relentless focus on cost reduction and productivity
enhancements, will allow us to create greater value for our customers and our
shareholders.
"We remain optimistic about the long-term potential of the solid businesses that
comprise Acuity Brands. However, we are cautious about our near-term results due
to uncertainty in the economic environment, particularly for non-residential
construction, which is one of the key drivers of the lighting fixture market and
where incoming orders for Acuity Lighting Group declined year over year in the
first quarter of fiscal 2003. We anticipate that the second quarter of our
fiscal year, which is historically the Company's weakest, will be an even
greater challenge due to the current economic situation. We continue to expect
our full year earnings to be in the range of $1.20 to $1.40 per share, assuming
a modest rebound in the economy in the second half of our fiscal 2003."
Conference Call and Board News
As previously announced, the Company will host a conference call to discuss
first quarter results on December 18, 2002 at 4:00 p.m. EST. Interested parties
may listen to this call live today or hear a replay until January 8, 2003 at the
Company's Web site: www.acuitybrands.com.
The Board of Directors will hold its quarterly meeting on December 19, 2002, the
date of the annual meeting of stockholders.
Acuity Brands, Inc., with fiscal year 2002 sales of approximately $2.0 billion,
is comprised of Acuity Lighting Group and Acuity Specialty Products Group.
Acuity Lighting Group is the world's leading lighting fixture manufacturer and
includes brands such as Lithonia(R), Holophane(R), Peerless(R), Hydrel(R), and
American Electric Lighting(R). Acuity Specialty Products Group is a leading
provider of specialty chemicals and includes brands such as Zep(R), Enforcer(R),
and Selig Industries(TM). Headquartered in Atlanta, Georgia, Acuity Brands
employs 11,800 people and has operations throughout North America and in Europe.
Forward-Looking Statements
Certain information contained in this press release constitutes forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are inherently uncertain and involve
risks. Consequently, actual results may differ materially from those indicated
by the forward-looking statements. Statements made herein that may be considered
forward looking include statements concerning: (a) expected future benefits of a
number of initiatives for which startup costs were incurred, including new
product introductions and expanded marketing and logistics programs at Acuity
Specialty Products Group; (b) the impact of the Company's focus on servicing
customers, introducing innovative and more effective products, cost reduction,
and productivity enhancements on increased value for the Company's customers and
shareholders; and (c) forecasted earnings per share for fiscal 2003. A variety
of risks and uncertainties could cause the Company's actual results to differ
materially from the anticipated results or other expectations expressed in the
Company's forward-looking statements. The risks and uncertainties include
without limitation the following: (a) the uncertainty of general business and
economic conditions, including the potential for a more severe slowdown in
non-residential construction, changes in interest rates, and fluctuations in
commodity and raw material prices or foreign currency rates; (b) the Company's
ability to realize the anticipated benefits of initiatives expected to reduce
costs, improve profits, enhance customer service, increase manufacturing
efficiency, reduce debt, and expand product offerings and brands in the market
through a variety of channels; (c) the risk that projected future cash flows
from operations are not realized; (d) unexpected developments in the Company's
legal and environmental proceedings; and (e) the other risk factors more fully
described in the Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission on November 11, 2002.
ACUITY BRANDS, INC.
SUMMARY OF OPERATIONS (Unaudited)
THREE MONTHS ENDED NOVEMBER 30
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SALES OPERATING PROFIT (LOSS)
(Amounts in thousands, except per-share data) 2002 2001 2002 2001
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Lighting Equipment $ 382,658 $ 364,110 $ 26,067 $ 25,062
Specialty Products 122,568 117,581 3,671 6,911
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$ 505,226 $ 481,691 29,738 31,973
Corporate (3,456) (2,698)
Other income (expense), net (1) (118) (252)
Interest expense, net (9,774) (10,423)
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Income before taxes 16,390 18,600
Income taxes 5,900 7,066
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Net income $ 10,490 $ 11,534
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Earnings per Share:
Basic earnings per share $ .25 n/a
Basic weighted-average shares outstanding during period 41,391 n/a
Diluted earnings per share: $ .25 n/a
Diluted weighted-average shares outstanding during period 41,432 n/a
Pro Forma Earnings per Share (2):
Basic earnings per share n/a $ .28
Basic weighted-average shares outstanding during period n/a 41,221
(1) Other income (expense), net consists primarily of gains or losses on the sale of assets and foreign currency gains or losses.
(2) Actual per share data has not been presented for periods prior to the second quarter of fiscal 2002 since the businesses
that comprise Acuity Brands were wholly owned subsidiaries of National Service Industries, Inc. during those periods.
Additionally, public trading of the Acuity Brands shares did not commence until December 3, 2001; therefore, no historical
market share prices exist for the calculation of the potential dilutive effect of stock options for the periods prior to the
second quarter of fiscal year 2002. As a result, pro forma diluted earnings per share is not presented for those periods.
ACUITY BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
NOVEMBER 30 AUGUST 31 NOVEMBER 30 AUGUST 31
(Amounts in thousands, except 2002 2002 2002 2002
per-share data)
- -------------------------------------------------------------- --------------------------------------------------------------------
Assets Liabilities and Stockholders' Equity
Current Assets
Cash and short-term investments $ 4,674 $ 2,694 Current Liabilities $ 424,986 $ 430,807
Receivables, net 307,826 322,735 Long-Term Debt, less current maturities 390,454 410,630
Inventories 216,459 216,942 Deferred Income Taxes 24,826 23,480
Other current assets 50,179 48,626 Other Long-Term Liabilities 92,073 91,085
----------- ---------- Stockholders' Equity 405,439 401,952
Total Current Assets 579,138 590,997 ---------- ----------
$1,337,778 $1,357,954
========== ==========
Property,Plant,and Equipment,net 235,558 240,679 Current Ratio 1.4 1.4
Other Assets 523,082 526,278 Percent of Debt to Total Capitalization 57.3% 57.5%
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Total Assets $1,337,778 $1,357,954
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CONDENSED CONSOLIDATED CASH FLOWS (Unaudited)
THREE MONTHS ENDED THREE MONTHS ENDED
NOVEMBER 30 NOVEMBER 30
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(Amounts in thousands) 2002 2001(3) 2002 2001 (3)
- ----------------------------------------------------------------------------------------------------------------------------
Cash Provided by (Used for): Cash Provided by (Used for):
Operations- Financing-
Net income $10,490 $11,534 Debt $ 736 $ 34,822
Depreciation and amortization 11,766 12,756 Dividends (6,216) -
Other operating activities (8,141) (776) Net activity with NSI - (18,632)
----------- ---------- Other financing activities 439 -
Cash Provided by Operations 14,115 23,514 ---------- -----------
----------- ---------- Cash (Used for) Provided
by Financing (5,041) 16,190
---------- -----------
Investing- Effect of Exchange Rate on Cash (212) 28
Capital expenditures (7,257) (8,945) ---------- -----------
Acquisitions - (26,387)
Sale of assets 375 180 Net Change in Cash 1,980 4,580
----------- ---------- Cash at Beginning of Year 2,694 8,006
---------- -----------
Cash Used for Investing $ (6,882) $(35,152) Cash at End of Period $ 4,674 $12,586
----------- ---------- ========== ===========
(3) Certain prior period amounts have been reclassified to conform with the current year presentation.