Juno Lighting, Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: JUNO)") else Response.Write("(Nasdaq: JUNO)") end if %>
2001 S. Mount Prospect Rd.
Des Plaines, IL 60017-5065
847-827-9880

ALEXANDRIA, Va., Sept. 26 /FOOLWIRE/ -- Juno Lighting, Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: JUNO)") else Response.Write("(Nasdaq: JUNO)") end if %> announced that for the quarter ended August 31, 1996 sales increased 12% to $34,869,000 compared to 1995 third quarter sales of $31,120,000. Net income for the third quarter of 1996 increased 35% to $5,892,000 ($0.32 per common share), compared to $4,374,000 ($0.24 per common share) for the like period in 1995. Sales for the first nine months of fiscal 1996 increased 2% to $98,099,000 compared to $95,880,000 for the like period in 1995. Net income for the first nine months of 1996 decreased 5% to $14,175,000 ($0.77 per common share), compared to $14,989,000 ($0.81 per common share) for the like period in 1995.

Financial Statement Highlights

Gross profit was $17.4 million, or 49.9%. Total operating expense for the quarter was $9.1 million, or 26% of sales, compared to $8.4 million for Q3 1995. Operating income for the quarter was $8.3 million, or 23.9% of sales, compared to $6 million in the year-ago period. Other income, net, was $920,000, compared to $821,000 for Q3 1995. Net income was $5.9 million, or 16.% of sales, compared to $4.4 million for Q3 1995. Effective income tax rate was 36.3%, up from 35.6% in the 1995 quarter.

Cash and current marketable securities currently lies at $69 million; receivables, $23.7 million; inventories, $23 million; and total current assets, $120.3 million. Net property equals $34.7 million and total assets, $169.3 million. Current liabilities equals $12.6 million; long-term debt, $4.5 million; stockholders' equity, $150.2 million.

Third Quarter Comments

Juno's US sales increased approximately 11.5% over the year-ago quarter while Canadian sales increased 16%. Indy sales increased a little over 13%. As was the case in the second quarter, sales for all three operating units have recovered from the drops seen in 1995 and have returned to 1994 levels. New products in the commercial area have contributed nicely to growth in the period. Recessed sales show an improvement much stronger than track, basically due to a depressed level of recessed sales in Q3 1995. Strength was seen across the country with the exception of the Northeast. Northeastern sales were the only weak growth area this quarter due mainly to strong sales in that region last year. Indy has a good quarter for department store and national accounts sales. The retail business looked strong during the period. Cost reduction efforts in component part tooling and carton design efforts have produced good cost savings, but these cost reduction drives are ongoing.

The sales mix was positive, being skewed more toward higher-margin products. Selling prices are about the same as last year. Some of the highly competitive lines are seeing sales price reductions, but those are not highly material. Assembling operations showed modest improvements in productivity and this slightly lower direct labor dollars in percentage terms. Gross margin was also impacted positively by economies of scale in direct labor and overhead. SG&A (sales, general, and administrative) expenses reflected the positive effects of cost-cutting when sales were down. As sales have increased, the company has realized greater leverage on this line of the income statement. SG&A expenses only grew at approximately 75% the rate of growth in total sales.

No stock repurchases were enacted during the quarter. No sales price increases are planned before 1997. New products are being developed in the area of extensions or improvements and will probably be released in the first half of 1997. The company is in the construction phase of new headquarters and manufacturing facilities. The company is optimistic that the building will be enclosed by late September, which is critical to occupying the facility by mid-1997. The company will be able to pinpoint new overhead cost structures during the next fiscal year as they approach occupancy of the facility. The company expects to put their existing real-estate on the market soon and will report small gains on these assets in the period next year when they are hoped to be sold.

Q&A

Margins on new products are not where the company would like. There is still room for engineering and purchasing cost reductions on these items.

The company is evaluating acquisition possibilities in an effort to add new product lines or achieve market penetrations or share gains. At the moment, though, there is nothing material to report on the acquisition front.

Commercial products are expected to take an increasing proportion of the sales mix, which will put some downward pressure on margins, as these are lower margin items.

On the new overhead cost structure, the early and unscientific outlook on the margin impact is that margins will not be materially and adversely impacted. In orders of magnitude, the impact will be in the pennies per share range. The company is going from a roughly 300,000 square foot facility to 520,000 feet.

The board of directors currently believes that acquisitions present a better use of capital than share repurchases. That is the reason they have been looking more at acquisitions and have spent time refining their acquisition and capital use criteria.

Pricing pressures from imports continue. Margins were better, though, as the company was able to sell less commodity items. They are investigating making component purchases from offshore sources to protect margins.

New product acceptance appears to be building though sales levels sequentially have not increased to any great degree. Sales growth is performing to expectations, however, and the company does expect specifications on the distributor level to be a continuing process. The exit and emergency lighting products are highly technical in the benefits they offer and it is taking some time to train the sales force and get the necessary sales appointments to ramp up sales. Lighting through fiber optics is on the list of possible acquisitions.

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