Acuity Brands, Inc. 8-K
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) October 3, 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 October 3, 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 October 3, 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: October 3, 2002
ACUITY BRANDS, INC.
BY: /S/ VERNON J. NAGEL
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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
2002 FOURTH QUARTER RESULTS
***
Substantial Reduction in Debt
ATLANTA, October 3, 2002 - Acuity Brands, Inc. (NYSE: AYI) announced today that
sales for its fourth quarter ended August 31, 2002 were $515.3 million, up two
percent from sales of $505.6 million reported for the same period a year ago.
Excluding the results of American Electric, which was acquired in the first
quarter of 2002, net sales in the fourth quarter were down approximately one
percent compared to last year's results. Record quarterly sales at Acuity
Specialty Products were offset by reduced sales in the Acuity Lighting Group due
to lower volumes and continued pricing pressure in certain commercial and
industrial lighting markets caused by the continued weak economic environment.
Net income for the fourth quarter was $15.4 million, or $0.37 per share,
compared to $6.4 million, or $0.16 per share, reported last year. This
represents an increase of approximately 140 percent for net income and 130
percent for earnings per share. The fourth quarter included a pre-tax gain of
$3.1 million on the sale of assets while last year's fourth quarter included
$4.1 million in restructuring and asset impairment charges, a $3.1 million
charge for the termination of a purchase obligation, and $3.0 million of
amortization expense that has been discontinued. Excluding the impact of these
items, earnings per share would have been $0.32 in the fourth quarter of 2002
and $0.34 in the fourth quarter of 2001. The lost contribution margin on lower
sales (noted above) and continued higher expenses for certain non-discretionary
costs were offset by the benefits obtained from continued aggressive expense
control and profit improvement programs implemented throughout the company.
Fourth Quarter Segment and Corporate Overview
Net sales in the fourth quarter for the Acuity Lighting Group were $382.0
million, up approximately two percent compared to last year's fourth quarter as
well as to the 2002 third quarter. Excluding the sales contributed by American
Electric, the Acuity Lighting Group's sales were down approximately two percent
when compared to the fourth quarter of 2001. The decline in net sales was
primarily the result of lower shipments to certain commercial and industrial
markets and reduced selling prices for certain key products due to severe
competition for available orders caused by weakened demand. Operating profit at
the Acuity Lighting Group was $19.3 million, down 24 percent compared to last
year's $25.3 million. The decline in operating profit was primarily due to
product mix changes, lower selling prices for certain products, and increases
for certain non-discretionary items. This decline was partially offset by profit
improvement initiatives and cost containment programs implemented throughout the
company. Additionally, the adoption of a new accounting standard that eliminated
amortization for certain goodwill and intangibles contributed approximately $2.5
million to lighting's fourth quarter operating profit.
Net sales in the fourth quarter for Acuity Specialty Products were $133.3
million, up approximately two percent compared to the prior year, and
represented record quarterly sales for Acuity Specialty Products, excluding the
impact of certain divested operations from historical periods. The increase in
sales was primarily due to continued strength in the retail sector and, to a
lesser extent, in certain niche markets. Acuity Specialty Products also set a
record with fourth quarter operating profit of $15.9 million, a 52 percent
increase over last year's $10.4 million. This increase was primarily due to the
profit contribution on higher volumes, the impact of profit improvement
programs, and the elimination of $0.5 million of amortization, which were
partially offset by increased expenses for certain non-discretionary items and
investments made to enhance the company's sales force capabilities in certain
strategic markets.
Corporate expenses were $4.3 million, down $2.6 million from last year. The
decline was due primarily to cost containment programs and the reorganization of
the corporate staff. Net interest expense of $9.8 million was below the prior
year's $11.2 million largely due to lower interest rates and debt outstanding.
Fiscal 2002 Results
In 2002, Acuity Brands generated net sales of approximately $2.0 billion, which
were essentially flat with the prior year's sales. Excluding the results from
the divestiture of certain Acuity Specialty Products foreign operations and the
acquisition of American Electric, net sales declined approximately three percent
compared to 2001. This decline was primarily due to lower net sales at the
Acuity Lighting Group caused by weakened customer demand and intense price
competition for available orders, partially offset by the solid second half
results posted by Acuity Specialty Products.
Net income for 2002 was $52.0 million, or $1.26 per share, up 28 percent
compared to $40.5 million, or $0.99 per share, in 2001. Excluding $3.2 million
in gains on property sales and $0.9 million in restructuring reversals, fiscal
2002 earnings per share would have been $1.20 compared to last year's $1.63,
excluding a $15.3 million loss from divested operations, $4.1 million of
restructuring and asset impairment charges, a $3.1 million charge from the
termination of a purchase obligation, and $12.0 million in discontinued
amortization expenses. In 2002, the company's effective tax rate declined to
37.2 percent from 41.4 percent reported the prior year. The decline in the rate
was primarily the result of the legal entity restructuring that occurred in
connection with the spin-off transaction and the elimination of amortization of
goodwill.
Outlook
James S. Balloun, Chairman, President and Chief Executive Officer of Acuity
Brands, said, "Our first year as a stand-alone publicly traded company was very
challenging. During the year, events such as well-publicized lapses in proper
corporate governance, sensational business bankruptcies, large layoffs, and the
tragedy on September 11, 2001, all took their toll on an economy that had not
experienced a downturn in over a decade. For our company, this created an
economic environment characterized by weakened demand in key markets,
particularly non-residential construction; rising costs for raw materials and
other non-discretionary expenses; and intense price competition in certain
markets for available orders. We responded and adapted to these changing and
volatile market conditions by reducing costs, boosting productivity, and better
managing our investments to produce solid earnings and cash flow for our
shareholders. We were able to accomplish this without damaging our
organizational development or stopping investments toward our future. I am proud
of the manner in which our 12,000 employees performed under very trying
circumstances and that we delivered earnings within the range of $1.10 to $1.30
per share, which we projected in December 2001.
"In the fourth quarter as well as the entire fiscal year, we continued to make
progress toward our goal of building a more competitive company that can better
meet the challenges of an uncertain economic environment and that is capable of
delivering more consistent earnings and cash flow in the future. Our initiatives
throughout the year included programs that helped us better manage discretionary
spending, lower product costs, enhance manufacturing efficiencies, and penetrate
channels of distribution and customer bases that allowed for greater
diversification of our end markets and made us less dependent on the commercial
construction market. I am pleased that we turned in a record quarter at Acuity
Specialty Products. Additionally, I continue to be particularly pleased with our
intense focus on delivering an improved balance sheet through better managing
our investment in working capital. In fact, this effort has allowed us to reduce
our outstanding debt to $543 million as of August 31, 2002 from $643 million at
November 30, 2001, the effective date of the spin-off of Acuity Brands as a
separate, publicly traded company."
Balloun continued, "As we conclude 2002 and look forward to 2003, we remain
confident in the long-term potential of our company as a whole as well as each
of our businesses. However, at this time we fail to see any real signs of a
meaningful recovery or sustainable improvement in the business climate for our
key markets, particularly in North America. While some economists predict that
the economy will improve late in our fiscal 2003, we are preparing for another
year of very difficult conditions. Therefore, our focus remains on improving the
products and services we provide to our customers, becoming more productive and
efficient, and enhancing our profitability while diversifying and expanding the
many end markets and customers we serve. Assuming that economic conditions
overall, and more specifically in our key markets, do not deteriorate beyond
their already weakened state, we forecast our 2003 earnings to be between $1.20
and $1.40 per share. The low end of this range is based on the current economic
environment and is essentially flat with our 2002 earnings per share, excluding
gains on asset sales and restructuring reversals previously noted. Should the
economy begin to improve in the second half of our fiscal 2003, however, we
could potentially deliver earnings per share at the high end of the range. Sales
are expected to increase modestly in 2003, based on current market conditions."
Dividend Declaration
On October 2, 2002, the board of directors of Acuity Brands declared a quarterly
dividend of 15 cents per share. The dividend is payable on November 1, 2002 to
shareholders of record on October 15, 2002.
Conference Call
The company will host a conference call to discuss fourth quarter results on
October 3, 2002 at 4:00 p.m. EDT. Interested parties may listen to this call
live today or hear a replay until October 24, 2002 at the following Web site:
www.AcuityBrands.com.
Acuity Brands, Inc., whose businesses had fiscal year 2002 sales of
approximately $2.0 billion, is comprised of the Acuity Lighting Group and Acuity
Specialty Products. The Acuity Lighting Group is the world's leading lighting
fixture manufacturer and includes brands such as Lithonia(R), Holophane(R),
Peerless(R), and Hydrel(R). Acuity Specialty Products is a leading provider of
specialty chemicals and includes brands such as Zep(R), Enforcer(R), and
Selig(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) expectations regarding no
meaningful recovery or sustainable improvement in the business climate for the
company's key markets; (b) the company's focus on improving products and
services, becoming more productive and efficient, and enhancing profitability
while diversifying and expanding end markets and customers; and (c) forecasted
sales and earnings per share. 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
company's ability to realize the anticipated benefits of cost containment and
productivity initiatives; (b) the uncertainty of general business and economic
conditions, including the potential for a more severe slowdown in
non-residential construction awards, interest rate changes, and fluctuations in
commodity and raw material prices; (c) unexpected developments in the company's
legal and environmental proceedings; and (d) the other risk factors described in
the company's registration statement on Form 10 filed with the Securities and
Exchange Commission on November 9, 2001.
ACUITY BRANDS, INC.
SUMMARY OF OPERATIONS (Unaudited)
THREE MONTHS ENDED AUGUST 31
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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 $ 382,024 $ 374,347 $ 19,265 $ 25,250
Specialty Products 133,260 131,292 15,857 10,419
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$ 515,284 $ 505,639 35,122 35,669
Corporate (4,321) (6,928)
Other income (expense), net (1) 2,674 (6,901)
Interest expense, net (9,778) (11,176)
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Income before taxes 23,697 10,664
Income taxes 8,336 4,265
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Net income $ 15,361 $ 6,399
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Earnings per Share:
Basic earnings per share $ .37 n/a
Basic weighted-average shares outstanding during period 41,341 n/a
Diluted earnings per share: $ .37 n/a
Diluted weighted-average shares outstanding during period 41,561 n/a
Pro Forma Earnings per Share (2):
Basic earnings per share n/a $ .16
Basic weighted-average shares outstanding during period n/a 41,157
YEAR ENDED AUGUST 31
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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 $ 1,474,882 $ 1,468,558 $ 89,553 $ 118,829
Specialty Products 497,914 514,142 44,931 41,337
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$ 1,972,796 $ 1,982,700 134,484 160,166
Corporate (14,357) (20,577)
Other income (expense), net (1) 3,399 (21,640)
Interest expense, net (40,690) (48,797)
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Income before taxes 82,836 69,152
Income taxes 30,812 28,649
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Net income $ 52,024 $ 40,503
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Pro Forma Earnings per Share (2):
Basic earnings per share $ 1.26 $ .99
Basic weighted-average shares outstanding during period 41,286 41,068
(1) Other income (expense), net consists primarily of losses on the sale of businesses, gains or losses on the sale of assets,
restructuring charges, 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)
AUGUST 31 AUGUST 31 AUGUST 31 AUGUST 31
(Amounts in thousands, except 2002 2001 (3) 2002 2001
per-share data)
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Assets Liabilities and Stockholders' Equity
Current Assets
Cash and short-term investments $ 2,694 $ 8,006 Current Liabilities $ 430,271 $ 442,067
Receivables, net 322,735 296,900 Long-Term Debt, less current maturities 411,167 373,707
Inventories 216,942 210,783 Deferred Income Taxes 23,480 31,759
Other current assets 48,626 43,427 Other Long-Term Liabilities 91,084 99,744
----------- ---------- Stockholders' Equity 401,952 383,298
Total Current Assets 590,997 559,116 ---------- ----------
$1,357,954 $1,330,575
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Property,Plant,and Equipment,net 240,679 248,423 Current Ratio 1.4 1.3
Other Assets 526,278 523,036 Percent of Debt to Total Capitalization 57.5% 61.4%
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Total Assets $1,357,954 $1,330,575
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CONDENSED CONSOLIDATED CASH FLOWS (Unaudited)
YEAR ENDED YEAR ENDED
AUGUST 31 AUGUST 31
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(Amounts in thousands) 2002 2001 2002 2001
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Cash Provided by (Used for): Cash Provided by (Used for):
Operations- Financing-
Net income $52,024 $40,503 Debt $(65,708) $(28,751)
Depreciation and amortization 49,494 62,911 Dividends (18,606) -
Other operating activities 40,482 79,001 Net activity with NSI (18,633) (103,386)
----------- ---------- Other financing activities 830 -
Cash Provided by Operations 142,000 182,415 ---------- -----------
----------- ---------- Cash Used for Financing (102,117) (132,137)
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Investing- Effect of Exchange Rate on Cash (147) 173
Capital expenditures (33,482) (47,611) ---------- -----------
Acquisitions (24,765) -
Sale of assets 8,358 3,469 Net Change in Cash (5,312) 7,547
Other investing activities 4,841 1,238 Cash at Beginning of Year 8,006 459
----------- ---------- ---------- -----------
Cash Used for Investing $(45,048) $(42,904) Cash at End of Period $ 2,694 $ 8,006
----------- ---------- ========== ===========
(3) Certain prior period amounts have been reclassified to conform with the current year presentation.