<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   ----------


                                    FORM 10-Q

(Mark One)

 X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
--- ACT OF 1934
For the quarterly period ended December 31, 1999

                                       or

________ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to_____________________

                         Commission File Number: 0-27202

                      ADVANCED LIGHTING TECHNOLOGIES, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
<S>                                                              <C>
                         OHIO                                                  34-1803229
-----------------------------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)

              32000 AURORA ROAD, SOLON, OHIO                                     44139
-----------------------------------------------------------------------------------------------------
         (Address of principal executive offices)                              (Zip Code)
</TABLE>

                                 440 / 519-0500
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


Indicate by check mark 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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes  X    No
    ---      ---

There were 20,373,738 shares of the Registrant's Common Stock, $.001 par value
per share, outstanding as of January 20, 2000.

<PAGE>   2

                                      INDEX

                      ADVANCED LIGHTING TECHNOLOGIES, INC.

<TABLE>
<CAPTION>
                                                                                                  PAGE
                                                                                                  NO.
PART I            FINANCIAL INFORMATION
<S>               <C>                                                                             <C>
Item 1.           Financial Statements (Unaudited)

                      Condensed Consolidated Balance Sheets --
                           December 31, 1999 and June 30, 1999 ............................         2

                      Condensed Consolidated Statements of Operations --
                           Three months and six months
                           ended December 31, 1999 and 1998 ...............................         3

                      Condensed Statement of Consolidated Shareholders' Equity --
                           Six months ended December 31, 1999..............................         4

                      Condensed Consolidated Statements of Cash Flows --
                           Six months ended December 31, 1999 and 1998.....................         5

                      Notes to Condensed Consolidated Financial Statements.................         6

Item 2.           Management's Discussion and Analysis of Financial Condition
                         and Results of Operations.........................................        15

Item 3.           Quantitative and Qualitative Disclosures about Market Risk...............        34


PART II           OTHER INFORMATION

Item 1.           Legal Proceedings........................................................        35

Item 2.           Changes in Securities and Use of Proceeds................................        35

Item 5.           Other Information........................................................        35

Item 6.           Exhibits and Reports on Form 8-K.........................................        36

SIGNATURES.................................................................................        38

EXHIBIT INDEX..............................................................................        39
</TABLE>

<PAGE>   3
                      ADVANCED LIGHTING TECHNOLOGIES, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                    (in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                                             (Unaudited)     (Audited)
                                                                            DECEMBER 31,     JUNE 30,
                                                                                 1999          1999
                                                                            ------------   -------------
<S>                                                                         <C>            <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                $   2,064      $   3,830
   Short-term investments                                                        --              350
   Trade receivables, less allowances of $1,065 and $1,257                     33,461         25,485
   Receivables from related parties                                               242             48
   Inventories:
      Finished goods                                                           22,896         24,275
      Raw materials and work-in-process                                        18,795         16,501
                                                                            ---------      ---------
                                                                               41,691         40,776
   Prepaid expenses                                                             2,436          2,354
                                                                            ---------      ---------
Total current assets                                                           79,894         72,843

Property, plant and equipment:
   Land and buildings                                                          43,301         42,646
   Production machinery and equipment                                          52,050         49,226
   Other equipment                                                              6,413          6,413
   Furniture and fixtures                                                      20,720         20,426
                                                                            ---------      ---------
                                                                              122,484        118,711
   Less accumulated depreciation                                               19,852         16,263
                                                                            ---------      ---------
                                                                              102,632        102,448

Receivables from related parties                                                6,937          5,048
Investments in affiliates                                                      15,420         13,475
Other assets                                                                    6,499          6,586
Intangible assets                                                              32,174         32,695
Excess of cost over net assets of businesses acquired, net                     50,784         51,411
                                                                            ---------      ---------
                                                                            $ 294,340      $ 284,506
                                                                            =========      =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Short-term debt and current portion of long-term debt                    $   8,480      $   8,543
   Accounts payable                                                            23,324         23,310
   Payables to related parties                                                  4,291          1,126
   Employee-related liabilities                                                 3,779          3,781
   Accrued income and other taxes                                                 942            904
   Other accrued expenses                                                      15,104         16,905
                                                                            ---------      ---------
Total current liabilities                                                      55,920         54,569

Long-term debt                                                                138,887        152,496
Preferred stock, $.001 par value, per share; 1,000 shares authorized;
   761 Series A convertible redeemable shares issued and outstanding at
   December 31, 1999 (redemption value -- $20,965 at December 31, 1999)        15,806           --

Common shareholders' equity:
   Common stock, $.001 par value, per share; 80,000 shares authorized;
       20,368 shares issued and outstanding as of December 31, 1999 and
       20,278 shares issued and outstanding as of June 30, 1999                    20             20
   Paid-in-capital                                                            195,906        190,654
   Accumulated other comprehensive income (loss)                                 (463)          (949)
   Loan receivable from officer                                                (9,170)        (9,520)
   Retained earnings (deficit)                                               (102,566)      (102,764)
                                                                            ---------      ---------
                                                                               83,727         77,441
                                                                            ---------      ---------
                                                                            $ 294,340      $ 284,506
                                                                            =========      =========
</TABLE>

See notes to condensed consolidated financial statements

                                        2
<PAGE>   4

                      ADVANCED LIGHTING TECHNOLOGIES, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                 (In thousands, except per share dollar amounts)

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED             SIX MONTHS ENDED
                                                                   DECEMBER 31,                 DECEMBER 31,
                                                           ------------------------      ------------------------
                                                              1999           1998           1999           1998
                                                           ---------      ---------      ---------      ---------
<S>                                                        <C>            <C>            <C>            <C>
Net sales                                                  $  59,885      $  39,704      $ 116,065      $  90,991

Costs and expenses:
   Cost of sales                                              36,852         31,448         71,696         62,352
   Marketing and selling                                      10,617         12,151         20,792         21,552
   Research and development                                    3,483          5,597          6,978          9,562
   General and administrative                                  4,086          5,338          8,121          9,843
   Special charges                                              --           16,273           --           16,273
   Amortization of intangible assets                             672            678          1,347          1,343
                                                           ---------      ---------      ---------      ---------
Income (loss) from operations                                  4,175        (31,781)         7,131        (29,934)

Other income (expense):
   Interest expense                                           (3,323)        (3,440)        (7,113)        (6,181)
   Interest income                                               214            328            434            566
   Income (loss) from equity investments                          35           (272)            85           (461)
                                                           ---------      ---------      ---------      ---------

Income (loss) from continuing operations
   before income taxes and cumulative
   effect of accounting change                                 1,101        (35,165)           537        (36,010)
Income taxes                                                     121          3,267            339          3,093
                                                           ---------      ---------      ---------      ---------

Income (loss) from continuing operations
   before cumulative effect of accounting change                 980        (38,432)           198        (39,103)
Recontinuance of previously discontinued operations             --           (1,540)          --             (687)
Cumulative effect of accounting change                          --             --             --           (2,443)
                                                           ---------      ---------      ---------      ---------

Net income (loss)                                          $     980      $ (39,972)     $     198      $ (42,233)
                                                           =========      =========      =========      =========
Earnings (loss) per share -- basic:
   Income (loss) from continuing operations                $     .02      $   (1.90)     $    (.02)     $   (1.93)
   Recontinuance of previously discontinued operations          --             (.08)          --             (.04)
   Cumulative effect of accounting change                       --             --             --             (.12)
                                                           ---------      ---------      ---------      ---------
Earnings (loss) per share -- basic                         $     .02      $   (1.98)     $    (.02)     $   (2.09)
                                                           =========      =========      =========      =========

Earnings (loss) per share -- diluted:
   Income (loss) from continuing operations                $     .02      $   (1.90)     $    (.02)     $   (1.93)
   Recontinuance of previously discontinued operations          --             (.08)          --             (.04)
   Cumulative effect of accounting change                       --             --             --             (.12)
                                                           ---------      ---------      ---------      ---------
Earnings (loss) per share -- diluted                       $     .02      $   (1.98)     $    (.02)     $   (2.09)
                                                           =========      =========      =========      =========
Weighted average shares outstanding:
    Basic                                                     20,351         20,222         20,318         20,215
                                                           =========      =========      =========      =========
    Diluted                                                   21,297         20,222         20,800         20,215
                                                           =========      =========      =========      =========
</TABLE>
See notes to condensed consolidated financial statements

                                        3
<PAGE>   5
                      ADVANCED LIGHTING TECHNOLOGIES, INC.
      CONDENSED STATEMENT OF CONSOLIDATED SHAREHOLDERS' EQUITY (UNAUDITED)
                       SIX MONTHS ENDED DECEMBER 31, 1999
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                               ACCUMULATED     LOAN
                                        COMMON STOCK            COMPREHENSIVE     OTHER     RECEIVABLE  RETAINED
                       PREFERRED     -----------------  PAID-IN     INCOME    COMPREHENSIVE    FROM     EARNINGS
                         STOCK       SHARES  PAR VALUE  CAPITAL     (LOSS)    INCOME (LOSS)  OFFICER    (DEFICIT)     TOTAL
                       ---------     ------  ---------  ------- ------------- ------------- ----------  ---------   ---------
<S>                    <C>           <C>     <C>        <C>     <C>           <C>           <C>         <C>         <C>
Balance at July 1,
  1999                      --       20,278  $      20  $ 190,654        --     $    (949)  $  (9,520)  $(102,764)  $  77,441

Net income                  --         --         --         --     $     198        --          --           198         198

Net Proceeds from
  issuance of preferred
  shares and warrant   $  15,203       --         --        5,000        --          --          --          --        20,203

Preferred shares
  accretion            $     603       --         --         (603)       --          --          --          --          --

Interest on loan to
  officer                   --         --         --         --          --          --          (370)       --          (370)

Interest payment
  received                  --         --         --         --          --          --           720        --           720

Issuance of shares
  in connection
  with the purchase
  of a business             --           40       --          535        --          --          --          --           535

Stock issued pursuant
  to employee benefit
  plan                      --           32       --          220        --          --          --          --           220

Stock purchases
  by employees              --           18       --          100        --          --          --          --           100

Other comprehensive
  income (loss):
  Foreign currency
    translation
    adjustment                                                            486
                                                                    ---------
Other comprehensive
  income (loss)                                                           486         486                                 486
                       ---------   --------  ---------  ---------   ---------   ---------   ---------   ---------   ---------

Comprehensive
  income (loss)                                                     $     684
                                                                    =========
BALANCE AT
  DECEMBER 31, 1999    $  15,806     20,368  $      20  $ 195,906               $    (463)  $  (9,170)  $(102,566)  $  99,533
                       =========   ========  =========  =========                ========   =========   =========   =========
</TABLE>

See notes to condensed consolidated financial statements.

                                       4
<PAGE>   6
                      ADVANCED LIGHTING TECHNOLOGIES, INC.
          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                   SIX MONTHS ENDED DECEMBER 31,
                                                                   ----------------------------
                                                                       1999            1998
                                                                   ----------      -----------
<S>                                                                 <C>            <C>
Operating activities
   Net income (loss)                                                $     198      $ (42,233)
   Adjustments to reconcile net income (loss) to net cash
      used in operating activities:
         Depreciation                                                   3,631          3,271
         Amortization                                                   1,347          1,343
         Provision for doubtful accounts                                   97            136
         (Income) loss from equity investments                            (85)           461
         Deferred income taxes                                           --            3,429
         Special charges                                                 --           25,629
         Cumulative effect of accounting change                          --            2,443
         Changes in operating assets and liabilities:
            Trade receivables                                          (7,835)        (3,979)
            Inventories                                                   190         (5,879)
            Prepaids and other assets                                  (2,265)        (2,309)
            Accounts payable and accrued expenses                       1,590          3,068
            Payments related to special charge accruals                (1,506)        (1,670)
            Other                                                         968         (1,529)
                                                                    ---------      ---------
                          Net cash used in operating activities        (3,670)       (17,819)

INVESTING ACTIVITIES
   Capital expenditures                                                (2,878)       (17,956)
   Sale of short-term investments                                         350           --
   Purchases of businesses                                                (30)        (5,024)
   Investments in affiliates                                           (1,920)        (3,298)
                                                                    ---------      ---------
                          Net cash used in investing activities        (4,478)       (26,278)

FINANCING ACTIVITIES
   Proceeds from revolving credit facility                             95,318        156,624
   Payments of revolving credit facility                             (103,254)      (113,724)
   Proceeds from long-term debt                                          --              868
   Payments of long-term debt and capital leases                       (6,205)        (2,685)
   Issuance of preferred stock and stock purchase warrant              20,203           --
   Loan to officer                                                       --           (9,000)
   Issuance of common stock                                               320            438
                                                                    ---------      ---------
                      Net cash provided by financing activities         6,382         32,521
                                                                    ---------      ---------

Decrease in cash and cash equivalents                                  (1,766)       (11,576)
Cash and cash equivalents, beginning of period                          3,830         22,167
                                                                    ---------      ---------

                       CASH AND CASH EQUIVALENTS, END OF PERIOD     $   2,064      $  10,591
                                                                    =========      =========

Supplemental cash flow information
     Interest paid                                                  $   7,313      $   5,070
     Income taxes paid                                                   --              211
     Capitalized interest                                                 196            458

     Detail of acquisitions:
         Assets acquired                                            $     868      $   9,688
         Liabilities assumed                                             (262)        (4,570)
         Stock issued                                                    (535)           (29)
                                                                    ---------      ---------
         Cash paid                                                         71          5,089
             Less cash acquired                                           (41)           (65)
                                                                    ---------      ---------
         Net cash paid for acquisition                              $      30      $   5,024
                                                                    =========      =========
</TABLE>

See notes to condensed consolidated financial statements.
                                        5
<PAGE>   7

                      ADVANCED LIGHTING TECHNOLOGIES, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                DECEMBER 31, 1999
                          (Dollar amounts in thousands)


A.  ORGANIZATION

Advanced Lighting Technologies, Inc. (the "Company" or "ADLT") is an
innovation-driven designer, manufacturer and marketer of metal halide lighting
products, including materials, system components, systems, and production
equipment.


B.  BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and
disclosures required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the financial statements
include all material adjustments necessary for a fair presentation, consisting
of normal recurring accruals. For further information, refer to the consolidated
financial statements and notes thereto included in the Company's annual report
on Form 10-K for the year ended June 30, 1999. Operating results for the three
months and six months ended December 31, 1999 are not necessarily indicative of
the results that may be expected for the full-year ending June 30, 2000.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts and related disclosures. Actual results could differ
from those estimates.

Accounting Change - Cost of Start-Up Activities

During the fourth quarter of fiscal 1999, the Company adopted Statement of
Position ("SOP") 98-5, "Reporting on the Costs of Start-Up Activities,"
effective July 1, 1998. The first six months of fiscal 1999 have been restated
to reflect the cumulative effect of accounting change.

New Accounting Standards

The Company has not yet adopted Statement of Financial Accounting Standards
("FAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities."
FAS No. 133 requires that all derivatives, such as interest rate exchange
agreements (swaps), be recognized on the balance sheet at fair value.
Derivatives which are not hedges must be adjusted to fair value through the
results of operations. Derivatives determined to be hedges will be adjusted to
fair value through either the results of operations or other comprehensive
income, depending on the nature of the hedge. The Company is required to adopt
FAS No. 133, as subsequently amended by FAS No. 137, on July 1, 2000. The
impact, if any, on net income, comprehensive income and financial position will
depend on the amount, timing and nature of any agreements entered into by the
Company.

                                        6

<PAGE>   8

                      ADVANCED LIGHTING TECHNOLOGIES, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
                                DECEMBER 31, 1999
                          (Dollar amounts in thousands)


B.  BASIS OF PRESENTATION (CONTINUED)

Financial  Statement Presentation Changes

Certain amounts for prior periods have been reclassified to conform to the
current period reporting presentation.


C.  COMPREHENSIVE INCOME

Statement of Financial Accounting Standards (FAS) No. 130, "Reporting
Comprehensive Income," requires disclosure of comprehensive income and its
components. FAS No. 130 requires companies to report, in addition to net income,
other components of comprehensive income, which for the Company includes foreign
currency translation adjustments.

For the three- and six-months ended December 31, 1999, the Company's
comprehensive income was $1,118 and $684, respectively. For the three- and
six-months ended December 31, 1998, the Company's comprehensive loss was
$(40,184) and $(42,179), respectively.


D.  BANK CREDIT FACILITY

In May 1999, the Company replaced its existing Credit Facility with a $50,000
revolving credit loan and $25,000 term loan provided by several financial
institutions. Subsequent to June 30, 1999 the Company reduced its commitment to
a $60,000 facility. Proceeds from the facility were used to repay the Company's
existing credit facility and certain other long-term debt. The revolving credit
loan has a three-year term expiring in May 2002. Interest rates on revolving
credit loans outstanding are based, at the Company's option, on LIBOR plus 2.75%
or the agent bank's prime rate. Availability of borrowings is determined by the
Company's eligible accounts receivable and inventories. The term loan has a
five-year term expiring in May 2004. The Company pays monthly principal payments
that total $3,576 annually, with the unpaid balance due at maturity. Interest
rates on the term loan are based, at the Company's option, on LIBOR plus 3.25%
or the agent bank's prime rate.

The Bank Credit Facility contains certain affirmative and negative covenants
customary for this type of agreement, prohibits cash dividends, and includes
financial covenants with respect to the coverage of certain fixed charges. The
principal security for the revolving credit loan is substantially all of the
personal property of the Company and each of its North American and United
Kingdom subsidiaries. The term loan is secured by substantially all of the
Company's machinery and equipment and is cross-collateralized and secured with
the revolving credit loan.


                                        7

<PAGE>   9

                      ADVANCED LIGHTING TECHNOLOGIES, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
                                DECEMBER 31, 1999
                          (Dollar amounts in thousands)


E.  SENIOR NOTES OFFERING

On March 13, 1998, the Company sold $100,000 of Senior Notes due March 15, 2008,
resulting in net proceeds of approximately $96,150. The Notes have an annual
coupon rate of 8% and are redeemable at the Company's option, in whole or in
part, on or after March 15, 2003 at certain preset redemption prices. In
addition, at any time prior to March 15, 2001, the Company may redeem up to 35%
of the aggregate principal amount of the Notes at 108% of par with the proceeds
of one or more public equity offerings. Interest on the Senior Notes is payable
semiannually on March 15 and September 15 of each year beginning on September
15, 1998. There are no sinking fund requirements.

From September 14, 1998, until the completion of a registered exchange offer to
existing noteholders, the Senior Notes bear interest at 8.5%. The offer is
expected to be completed within 45 days following the effectiveness of the
Company's related registration statement.

The Notes Indenture contains covenants that, among other things, limit the
ability of the Company and its Restricted Subsidiaries (as defined therein) to
incur indebtedness, pay dividends, prepay subordinated indebtedness, repurchase
capital stock, make investments, create liens, engage in transactions with
stockholders and affiliates, sell assets and, with respect to the Company,
engage in mergers and consolidations.


F.  GENERAL ELECTRIC COMPANY INVESTMENT

In October 1999, General Electric Company ("GE") completed an investment in the
Company of $20,554. In exchange for the investment, GE received 761,250 shares
of the Company's newly-created Series A Stock convertible at any time into
3,045,000 shares of Company Common Stock (subject to adjustment). GE also
received a Warrant (the "Initial Warrant") to purchase an additional 1,000,000
shares of Company Common Stock (subject to adjustment), which is immediately
exercisable at $.01 per share. GE has been a holder of 535,887 shares of Company
Common Stock since the Company's initial public offering in 1995. The Series A
Stock, Common Stock issuable on exercise of the Initial Warrant, and the Common
Stock held by GE represent (after giving effect to the shares issued on exercise
of the Initial Warrant) approximately 18.8% of the voting power and equity
ownership of the Company. The proceeds of the transaction were applied
principally to the reduction of short-term liabilities and outstanding amounts
under the Company's Bank Credit Facility.

The Series A Stock has a liquidation preference of $27 per share, plus an amount
equal to 8% per annum compounded annually from the date of issuance to the date
of payment. The Company is required to redeem any shares of Series A Stock which
have not been converted or retired on September 30, 2010. In addition, GE may,
by notice, require the Company to redeem the outstanding Series A Stock, within
one year following either September 30, 2004, or the occurrence of certain
corporate events.



                                        8

<PAGE>   10

                      ADVANCED LIGHTING TECHNOLOGIES, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
                                DECEMBER 31, 1999
                          (Dollar amounts in thousands)


F.  GENERAL ELECTRIC COMPANY INVESTMENT (CONTINUED)

If the Company fails to maintain certain financial ratios over certain
measurement periods, GE will have the right to acquire a combination of
subscription rights to additional shares and proxies with respect to shares
voted by certain officers of the Company, giving GE the ability to obtain the
majority of the voting power of the Company. The first measurement period was
the six months ended December 31, 1999. Thereafter, the measurement periods are
the six months ending on the last day of each successive fiscal quarter until
September 30, 2010.

The basis for GE's additional rights will be the failure of the Company to
maintain a 2.0 to 1.0 ratio of EBITDA to Interest Expense over the applicable
measurement periods. Under the terms of the transaction, EBITDA consists of net
earnings, plus interest expense, plus depreciation and amortization, plus income
taxes, less extraordinary gains and gains from asset sales plus extraordinary
losses and losses from asset sales. Interest Expense consists of interest
expense (net of interest income) calculated in accordance with generally
accepted accounting principles, but excludes amortization of deferred financing
costs up to a maximum of $125 in any fiscal quarter. The ratio for the six
months ended December 31, 1999, was 1.9 to 1.0 (1.61 to 1.0 for the quarter
ended September 30, 1999 and 2.23 to 1.0 for the quarter ended December 31,
1999) and, therefore, the "First Occurrence" has taken place.

There is no contractual effect of the First Occurrence other than to make a
"Second Occurrence" possible in the following measurement periods. If the
Company maintains a 2.0 to 1.0 ratio in the three fiscal quarters immediately
prior to the measurement period in which a failure occurs, a Second Occurrence
or "Third Occurrence," as the case may be, would not be effective.

A Second Occurrence would: (i) give GE the ability to vote the number of
shares currently voted by the Chief Executive Officer ("CEO") of the Company,
approximately 3.9 million shares, (ii) give GE the option to purchase shares
from the CEO and the President of the Company which, together with the shares
owned by GE, would represent 25% of the voting power of the Company, and (iii)
require the Company to grant GE an additional warrant to purchase shares, at the
then current market price, presently approximating 197,762 shares. The ability
to vote the shares, purchase shares or obtain the warrant would be dependent
upon compliance with antitrust laws. GE is not required to purchase additional
shares of the Company. If GE obtains approval and obtains in excess of 35% of
the voting power of the Company, the terms of the Indenture relating to the
Company's Senior Notes would require that the Company offer to repurchase the
$100,000 principal amount of outstanding Senior Notes due 2008 at a price of
101% of the principal amount thereof, plus accrued interest, and the Company's
banks will have the ability to demand payment of the Bank Credit Facility. Upon
a Third Occurrence, GE would have the right to vote shares currently voted by
the President and be granted a warrant to purchase (at the then current market
price) additional shares of Common Stock sufficient in number to give GE 50%
plus one vote of the voting power of the Company.



                                        9

<PAGE>   11

                      ADVANCED LIGHTING TECHNOLOGIES, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
                                DECEMBER 31, 1999
                          (Dollar amounts in thousands)


G.  RELATED PARTY TRANSACTION

Pursuant to a loan agreement dated October 8, 1998, between the Company and its
Chairman and Chief Executive Officer (the "CEO"), the Company loaned $9,000 to
its CEO for a one-year term at an interest rate of 8%. The loan was made
following approval by the Company's Board of Directors. The proceeds of the loan
were used by the Company's CEO to reduce the outstanding principal balance of a
margin account loan, which is secured by 2,053,070 shares of the Company's
Common Stock owned by the CEO and a related entity. In connection with the loan,
the Company's Board of Directors asked for and received the CEO's agreement to
extend the term of his employment agreement to December 31, 2003. The loan
agreement prohibits the CEO from encumbering his shares of the Company's Common
Stock in any manner except pursuant to the existing agreements governing the
CEO's margin account, without the consent of the Company's Board of Directors.

The CEO has paid accrued interest of $720 on the loan through October 6, 1999.
The principal on the loan was due on October 6, 1999. On January 25, 2000, the
Board agreed that Mr. Hellman would not be required to repay the loan until
October 6, 2000. However, if the price of the Company's Common Stock reaches $12
per share (a level which the directors believe would permit repayment of the
CEO's margin loan and refinancing with another lender), the Board and the CEO
will discuss earlier repayment of all or a portion of the loan. The directors
have informed the CEO that the Company may require immediate payment of the loan
if the Company requires the payment to prevent an unacceptable strain on cash
resources.


H.  SPECIAL CHARGES AND TERMINATED EQUIPMENT CONTRACTS

At December 31, 1999, the Company had a special charges accrual principally
related to the execution of the Company's fiscal 1999 plans related to its shift
in strategic direction intended to accelerate and intensify the Company's focus
on its metal halide products. The fiscal 1999 special charges related to:
limiting Pacific Rim expansion; changing global lamp manufacturing strategy;
restructuring marketing operations in North America and Europe; accelerating an
exit from noncore product lines; reducing excess overhead including staffing
reductions; consolidating an equipment manufacturing operation into the
Company's Solon, Ohio facility and significantly reducing the size of the
operation; and reducing capital expenditures. All actions required by the plans
are expected to be substantially completed by March 31, 2000. The amounts
the Company will ultimately incur may change as the Company's plans are
executed and actions are completed.


                                       10

<PAGE>   12

                      ADVANCED LIGHTING TECHNOLOGIES, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
                                DECEMBER 31, 1999
                          (Dollar amounts in thousands)


H.  SPECIAL CHARGES AND TERMINATED EQUIPMENT CONTRACTS (CONTINUED)

Details of the activity in the remaining accruals related to the fiscal 1999
special charges for the six months ended December 31, 1999 are summarized as
follows:

<TABLE>
<CAPTION>
                                                                       BALANCE AS OF     CHARGES       BALANCE AS OF
                    DESCRIPTION                     CASH/NONCASH      JUNE 30, 1999      UTILIZED      DEC. 31, 1999
      ------------------------------------        --------------     ----------------  -------------  ----------------
      <S>                                         <C>                <C>                <C>           <C>
      Lease/contract cancellations                Cash/Noncash            $ 3,689         $ 1,418          $ 2,271
      Staffing reductions                         Cash/Noncash                681             296              385
      Program cancelation                         Cash                        128              83               45
      Terminate management benefit program        Cash/Noncash                 86              83                3
      Shut-down costs of facilities               Cash                         78              73                5
      Write-off long-lived assets                 Cash/Noncash                 49              49               --
      Other                                       Cash                        143              93               50
                                                                     ----------------  -------------  ----------------

                                                                          $ 4,854         $ 2,095          $ 2,759
                                                                     ================  =============  ================
</TABLE>

The special charges for fiscal 1999 included costs related to the actions
described above and also include $2,981 related to the wind-down of portable
fixture manufacturing operations, which are described in Note I "Discontinued
Operations Subsequently Retained." Total special charges for the six-months
ended December 31, 1999 of $17,081 are classified in the consolidated statement
of operations as cost of sales ($808) and special charges ($16,273).

In conjunction with limiting its Pacific Rim expansion, the Company terminated
production equipment contracts related to the completion of four lamp
manufacturing equipment groups. Accordingly, in the second quarter of fiscal
1999, the Company reversed previously recognized sales of $14,961 and cost of
sales of $6,413 related to these contracts, which were accounted for under the
percentage-of-completion method.

I.  DISCONTINUED OPERATIONS SUBSEQUENTLY RETAINED

Microsun Technologies, Inc. ("Microsun") was identified in March 1998 for
disposition through a plan to distribute to ADLT shareholders all of the
ownership of Microsun in a tax-free spin-off transaction estimated to be
completed by December 1998. Because of the deterioration of the capital markets
and the inability to raise capital necessary to spin-off the Microsun business,
the Company concluded that it would wind-down the operations, close the
manufacturing facilities and liquidate the assets of Microsun. At June 30, 1999,
the plan of wind-down had been accomplished, the manufacturing facilities closed
and substantially all assets had been disposed. Accordingly, there were no
remaining discontinued operations accrued losses associated with Microsun at
June 30, 1999.



                                       11




<PAGE>   13

                      ADVANCED LIGHTING TECHNOLOGIES, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
                                DECEMBER 31, 1999
                          (Dollar amounts in thousands)


I.   DISCONTINUED OPERATIONS SUBSEQUENTLY RETAINED (CONTINUED)

In October 1999, management decided, with the approval of the Board of
Directors, to retain the Microsun business -- the portable lighting fixture
products business that uses metal halide lighting technology -- as part of the
Company's continuing operation. The decision to retain the business was based on
management's belief that, among other reasons, the market demand for Microsun
products remains substantial; the market potential will be expanded as the
Microsun portable lighting fixtures will be marketed and sold along with other
existing lines of products for residential use in an e-commerce format
("Microsun.com"); and the Microsun business will use the fulfillment
capabilities and infrastructure of existing ADLT businesses.

In retaining the Microsun business, the Company concentrates on assembling
fixtures produced by subcontractors, thereby eliminating the need for the
machinery, equipment and facilities that were used in the previous operation.
The assembly process is performed at existing ADLT businesses utilizing existing
facilities and operations. The Company utilizes the customer service systems and
personnel of an existing ADLT business, as well as the Internet at
http://www.microsun.com, to receive, process and fill orders. Therefore, the
Microsun business has been retained but without the use of the manufacturing
processes or assets used in the previous operations.

In accordance with the accounting requirements for recontinuance, the
accompanying financial statements have been reclassified to present Microsun
within continuing operations. The net amount charged to the income statement
consisted of the following:

<TABLE>
<CAPTION>
                                             Period Ended December 31, 1998
                                             ------------------------------
                                             Three months        Six months
                                             ------------        ----------
<S>                                           <C>                 <C>
Reclassification of discontinued
  operations to continuing operations         $   4,626           $  5,479
Discontinued operations provision                (6,166)            (6,166)
                                             ------------        ----------
Recontinuance of previously discontinued
  operations                                  $  (1,540)          $   (687)
                                             ============        ==========
</TABLE>

The $4,626 reclassified to continuing operations for the three months ended
December 31, 1998 consisted of a loss from operations of $1,645 and write-downs
to net realizable value of $2,981 in connection with the decision in November
1998 to wind-down the Microsun business related to fixed assets ($1,449) and
other assets ($1,532). These write-downs are classified in special charges. The
$5,479 reclassified to continuing operations for the six months ended December
31, 1998, consisted of a loss from operations of $2,498 and write-downs of
$2,981.



                                       12

<PAGE>   14

                      ADVANCED LIGHTING TECHNOLOGIES, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
                                DECEMBER 31, 1999
                          (Dollar amounts in thousands)


J.   CONTINGENCY

In April and May 1999, three class action suits were filed in the United States
District Court, Northern District of Ohio, by certain alleged shareholders of
the Company on behalf of themselves and purported classes consisting of Company
shareholders, other than the defendants and their affiliates, who purchased
stock during the period from December 30, 1997 through September 30, 1998 or
various portions thereof. A First Amended Class Action Complaint, consolidating
the three lawsuits, was filed on September 30, 1999, and the action is now
pending before a single judge. The named defendants in the case - styled In re
Advanced Lighting Technologies, Inc. Securities Litigation, Master File No.
1:99CV836, pending before the United States District Court, Northern District of
Ohio - are the Company and its Chairman and Chief Executive Officer.

The First Amended Class Action Complaint alleges generally that certain
disclosures attributed to the Company contained misstatements and omissions
alleged to be violations of Section 10(b) of the Securities Exchange Act of 1934
and Rule 10b-5, including claims for "fraud on the market" arising from alleged
misrepresentations and omissions with respect to the Company's financial
performance and prospects and alleged violations of generally accepted
accounting principles by, among other things, improperly recognizing revenue and
improper inventory accounting. The Complaint seeks certification of the
purported class, unspecified compensatory and punitive damages, pre- and
post-judgment interest and attorneys' fees and costs.

The Company and the CEO believe that these claims lack merit and on November 15,
1999, the Company and CEO filed a Motion to Dismiss the Complaint. The Company
and the CEO intend to continue to vigorously defend against these actions.



                                       13

<PAGE>   15

                      ADVANCED LIGHTING TECHNOLOGIES, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
                                DECEMBER 31, 1999
                          (Dollar amounts in thousands)


K.  EARNINGS PER SHARE

The following table summarizes the basic and diluted per share computations for
income (loss) from continuing operations and net income (loss) for the three and
six month periods ended December 31, 1999 and 1998:


<TABLE>
<CAPTION>
                                                                         Three Months Ended          Six Months Ended
                                                                             December 31,               December 31,
                                                                       ----------------------     -----------------------
                                                                          1999         1998          1999          1998
                                                                       ---------     --------     ---------      --------
<S>                                                                    <C>           <C>           <C>           <C>
Income (loss) from continuing operations
   before cumulative effect of accounting change                       $    980      $(38,432)     $    198      $(39,103)
Less:  Preferred shares accretion                                          (603)         --            (603)         --
                                                                       --------      --------      --------      --------
Income (loss) from continuing operations before cumulative
   effect of accounting change attributable to common shareholders     $    377      $(38,432)     $   (405)     $(39,103)
                                                                       ========      ========      ========      ========

Net income (loss)                                                      $    980      $(39,972)     $    198      $(42,233)
Less:  Preferred shares accretion                                          (603)         --            (603)         --
                                                                       --------      --------      --------      --------
Net income (loss) attributable to common shareholders                  $    377      $(39,972)     $   (405)     $(42,233)
                                                                       ========      ========      ========      ========

Weighted average shares -- Basic:
   Outstanding  at beginning of period                                   20,302        20,215        20,278        20,190
   Issued in acquisitions                                                    40             2            20             1
   Issued for exercise of stock options                                    --            --            --              17
   Issued pursuant to employee stock purchase plan                            4             5             7             7
   Issued pursuant to 401(k) plan                                             5          --              13          --
                                                                       --------      --------      --------      --------
      Weighted average shares -- Basic                                   20,351        20,222        20,318        20,215
                                                                       ========      ========      ========      ========

Weighted average shares -- Diluted:
   Basic from above                                                      20,351        20,222        20,318        20,215
   Effect of warrant issued                                                 946                         473
   Effect of stock options                                                 --            --               9          --
                                                                       --------      --------      --------      --------
      Weighted average shares -- Diluted                                 21,297        20,222        20,800        20,215
                                                                       ========      ========      ========      ========

Earnings (loss) per share attributed to common shareholders
   -- Basic
   Income (loss) from continuing operations before
     cumulative effect of accounting change attributable to common
     shareholders                                                      $ .   02      $  (1.90)     $   (.02)    $   (1.93)
   Recontinuance of previously discontinued operations                     --            (.08)         --            (.04)
   Cumulative effect of change in accounting for start-up costs            --            --            --            (.12)
                                                                       --------      --------      --------      --------
   Net income (loss) attributable to common shareholders --
     basic                                                             $    .02      $  (1.98)     $   (.02)     $  (2.09)
                                                                       ========      ========      ========      ========

Earnings (loss) per share attributed to common shareholders
   -- Diluted
   Income (loss) from continuing operations before
     cumulative effect of accounting change attributable to
     common shareholders                                               $    .02      $  (1.90)     $   (.02)     $  (1.93)
   Recontinuance of previously discontinued operations                     --            (.08)         --            (.04)
   Cumulative effect of change in accounting for start-up costs            --            --            --            (.12)
                                                                       --------      --------      --------      --------
   Net income (loss) attributable to common shareholders --
     diluted                                                           $    .02      $  (1.98)     $   (.02)     $  (2.09)
                                                                       ========      ========      ========      ========
</TABLE>



                                       14

<PAGE>   16

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (Dollar amounts in thousands)

This report on Form 10-Q may contain forward-looking statements that involve
risks and uncertainties, including the timely development and market acceptance
of new products, the timely and successful implementation of cost reduction and
cash flow initiatives, the impact of the initiatives on relationships with
customers, suppliers and employees, the ability to provide adequate incentives
to retain and attract key employees, the integration of acquired operations, the
impact of competitive products and pricing, and other risks which are detailed
in the Company's Form 10-K for the fiscal year ended June 30, 1999, in
particular, see "Risk Factors." For this purpose, any statement contained herein
that is not a statement of historical fact may be deemed to be a forward-looking
statement. Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects," and similar expressions are intended to identify
forward-looking statements. The Company's actual results may differ materially
from those indicated by such forward-looking statements based on the factors
outlined above.

The following is management's discussion and analysis of certain significant
factors which have affected the results of operations and should be read in
conjunction with the accompanying unaudited Condensed Consolidated Financial
Statements and notes thereto.

GENERAL

The Company designs, manufactures and markets metal halide lighting products,
including materials, systems and components. Metal halide lighting is currently
used primarily in commercial and industrial applications such as factories and
warehouses, outdoor site and landscape lighting, sports facilities and large
retail spaces such as superstores. With the January 1998 acquisition of
Deposition Sciences, Inc.("DSI"), the Company also manufactures and markets
turnkey deposition equipment to produce thin film coatings for a variety of
applications. Systems, components and materials revenue is recognized when
products are shipped, and deposition equipment revenue is recognized under the
percentage of completion method.

Consistent with the Company's strategy for new product introductions, the
Company invests substantial resources in research and development to engineer
materials and system components to be included in customers' specialized
lighting systems. Over the last three fiscal years, the Company has spent an
aggregate of $34,327 on research and development, representing 7.7% of aggregate
net sales from continuing operations over that period. Such expenditures have
enabled the Company to develop new applications for metal halide lighting,
improve the quality of its materials, and introduce new specialized products,
such as the Uni-Form(R) pulse start products. Uni-Form(R) pulse start products
are a new generation of metal halide components and systems which permit (a)
increased light output with lower power utilization, (b) faster starting, (c) a
quicker restart of lamps which have been recently turned off, and (d) better
color uniformity. The Company has spent additional amounts for manufacturing
process and efficiency enhancements, which were charged to cost of goods sold
when incurred. The Company expects to continue to make substantial expenditures
on research and development to enhance its position as the leading innovator in
the metal halide lighting industry.

The Company also has invested substantial resources in acquisitions and
strategic investments. In January 1998, the Company acquired Ruud Lighting, Inc.
and DSI, which enabled the Company to complete the assembly of the necessary
operations to take a leadership role in the development, manufacturing and
marketing of new and better systems in the growing metal halide lighting
industry.

                                       15

<PAGE>   17

RECENT DEVELOPMENTS

GENERAL ELECTRIC COMPANY INVESTMENT

On October 6, 1999, General Electric Company ("GE") completed an investment in
the Company of $20,554. The following description of the investment updates the
similar description of the transaction in the Company's Form 10-Q/A for the
quarter ended September 30, 1999.

The additional capital resources provided by the GE investment are expected to
provide additional flexibility to pursue opportunities in the metal halide
business. In addition, GE and the Company have entered into a five year,
renewable agreement for the supply of metal halide salts to GE. The Company and
GE are in discussions with respect to other supply arrangements. The Company
anticipates that the GE investment and the expansion which it will permit will
result in an expanded supplier-customer relationship with GE, enhancing the
Company's earnings and competitive position in the metal halide marketplace.

The GE investment includes 761,250 shares of the Company's newly-created Series
A Stock convertible at any time into 3,045,000 shares of Company Common Stock
(subject to adjustment). GE also received a Warrant (the "Initial Warrant") to
purchase an additional 1,000,000 shares of Common Stock of the Company (subject
to adjustment), which is immediately exercisable. GE has been a holder of
535,887 shares of Company Common Stock since the Company's initial public
offering in 1995. The Series A Stock, Common Stock issuable on exercise of the
Initial Warrant and the Common Stock held by GE represent (after giving effect
to the shares issued on exercise of the Initial Warrant) approximately 18.8% of
the voting power and equity ownership of the Company. See "Terms of the Series A
Stock" and "Terms of the Initial Warrant." Pursuant to the terms of the Stock
Purchase Agreement, GE provided the Company with candidates for the Company's
Board of Directors who are not directors, officers, employees or 10%
shareholders of GE. The Company is required to cause the number of such
candidates serving on the Board to be equal to the greater of 20% of the number
of members of the Board or the number of members which most nearly corresponds
to GE's percentage ownership interest in the Company. In December 1999, the
Company appointed two GE candidates to the Board of Directors.

The proceeds of the GE transaction have been applied principally to the
reduction of short-term liabilities and outstanding amounts under the Company's
Credit Facility, and have the effect of increasing available borrowings under
the Company's Credit Facility.

The following summaries of the terms of the Series A Stock, the Terms of the
Initial Warrant and Additional Terms of the GE Transaction are summaries of the
definitive documents in connection with the GE investment.

Terms of the Series A Stock

The Series A Stock is a newly authorized series of preferred stock of the
Company created for issuance in the GE transaction. 761,250 shares of Series A
Stock have been authorized and issued to GE. The Series A Stock has a
liquidation preference of $27 per share, plus an amount equal to 8% per annum
compounded annually from the date of issuance to the date of payment
("Liquidation Preference Amount").


                                       16

<PAGE>   18

Each outstanding share of Series A Stock is convertible at any time into four
shares (subject to adjustment as described below) of Common Stock of the
Company. Prior to conversion, holders of Series A Stock are entitled to vote in
all shareholder matters together with the holders of Company Common Stock as a
single class. In any such vote, the holders of Series A Stock are entitled to
four votes (equal to the number of shares of Common Stock into which the Series
A Stock held may initially be converted).

The Company is required to redeem any shares of Series A Stock which have not
been converted or retired on September 30, 2010. Any such redemption would be
made at the Liquidation Preference Amount. In addition, holders of the Series A
Stock may require the Company to redeem their shares of Series A Stock by giving
notice to the Company on or before September 30, 2004. If such notice is given,
the Company will be required to make such redemption on or prior to September
30, 2005. In addition, holders of Series A Stock will be entitled to require the
Company to redeem the Series A Stock following the occurrence of any of the
following events (each a "Triggering Event"): (1) failure of the shareholders of
the Company to approve, at the 1999 annual meeting, proposals necessary for
exercise of any rights to acquire beneficial ownership of additional shares of
Common Stock as described in "Additional Terms of the GE Transaction"; or (2)
any action by the Company to give effect to certain major corporate actions,
including actions to merge, sell all or a substantial portion of its assets
(other than in the ordinary course of business), issue capital stock, incur or
have outstanding indebtedness for borrowed money in excess of $210,000. Upon the
occurrence of a Triggering Event, the holders of the Series A Stock may require
the Company to redeem their shares of Series A Stock by giving notice to the
Company within 90 days following the Triggering Event. If such notice is given,
the Company will be required to make such redemption within one year following
such notice. Any such redemption would be made at the Liquidation Preference
Amount. Under the terms of the bank's revolving credit facility and the
indenture (the "Indenture") relating to the Company's Senior Notes due 2008, the
redemption of the Series A Stock would currently constitute an event of default,
permitting acceleration of the related indebtedness. If prior consent of the
banks is obtained, the redemption is permitted under the credit facility.
Payments for the redemption of equity securities are "Restricted Payments" under
the Indenture. The total of all "Restricted Payments" under the Indenture (with
exceptions not applicable to stock redemption) cannot exceed one-half of the
total of consolidated net earnings of the Company (excluding consideration of
certain unusual items) from April 1, 1998 (taken as a single period) plus the
amount of proceeds received from sales of non-redeemable stock. As of December
31, 1999, the Company had a net loss, excluding extraordinary items, of $80,150
for the period. Until this deficit has been cured, the Company cannot redeem the
Series A Stock without causing an event of default with respect to the Senior
Notes. In addition, the Indenture prohibits Restricted Payments (with exceptions
not applicable to stock redemptions) at any time where the ratio of EBITDA to
Interest Expense for the preceding four fiscal quarters does not exceed 2.5 to
1.

Subject to approval by Company shareholders, if the Company fails to make any
redemption as required (subject to permitted deferrals in the event that such
redemption would cause an event of default with respect to certain indebtedness
of the Company), the conversion ratio of the Series A Stock would be increased
from four shares of Common Stock to eight shares of Common Stock per share of
Series A Stock. In addition, also subject to the approval of Company
shareholders, the conversion ratio will be subject to adjustment to prevent
dilution of the interest of GE by the issuance of Common Stock after October 6,
1999. Except for issuance of shares under existing employee benefit plans, and
certain other



                                       17

<PAGE>   19

enumerated exceptions, any shares of Common Stock issued at a price below $6.75
per share, or, if higher, below the then current market price, would result in
adjustment of the conversion ratio. Any adjustment in the conversion ratio would
not affect the voting power represented by shares of Series A Stock prior to
conversion.

Upon liquidation, each share of Series A Stock will be entitled to be paid the
Liquidation Preference Amount prior to any payment or distribution to the
holders of Company Common Stock. Following such payment, holders of Series A
Stock will be entitled to a proportional share of any distribution to holders of
Company Common Stock based on the number of shares of Common Stock into which
the Series A Stock could have been converted at the time of the liquidation.

Terms of the Initial Warrant

The Initial Warrant entitles the holder to purchase shares of Company Common
Stock at $.01 per share. The Initial Warrant is immediately exercisable for
1,000,000 shares (subject to adjustment) of Common Stock. The number of shares
subject to the Initial Warrant will be subject to adjustment, after approval by
Company shareholders, at any time prior to exercise if the Company issues Common
Stock at a price below $6.75 per share or, if higher, below the then current
market price.

Additional Terms of the GE Transaction

In addition to GE's initial investment, under certain circumstances, GE will be
entitled to make additional investments in the Company and receive the right to
vote additional shares of Company Common Stock. The exercise of certain of these
rights is subject to applicable law, including the Ohio Control Share
Acquisition Act and the Hart-Scott-Rodino Antitrust Improvements Act of 1976
("HSR Approval"). GE and the Company entered into a Contingent Warrant Agreement
("Contingent Warrant Agreement"). The Contingent Warrant Agreement identifies
certain occurrences which will entitle GE to exercise these rights.

Upon the Second Occurrence (defined below), if it occurs, GE would be required
to exercise in full the Initial Warrant. In addition, GE would receive the right
to vote the number of shares then owned by Wayne R. Hellman and Hellman, LTD.
pursuant to proxies granted by Messrs. Hellman and Ruud. GE would receive the
right to vote the number of shares as to which Mr. Hellman then has voting power
pursuant to the Hellman Voting Trust or Irrevocable Proxies granted with respect
to shares removed from the Hellman Voting Trust (all shares voted by Mr.
Hellman, currently approximately 3.9 million shares, are referred to
collectively as the "Hellman Shares"). GE would also have an option, at the then
current market price, to purchase from Messrs. Hellman and Ruud, the number of
shares of Common Stock which, together with the shares owned by GE, would
represent 25% of the voting power of the Company. The Company would also be
required to grant to GE an additional warrant (the "First Contingent Warrant")
to purchase shares of Company Common Stock at the then current market price. The
number of shares subject to the First Contingent Warrant would be equal to the
number of shares required to allow GE to have a majority of the voting power of
the Company, assuming GE had effective proxies with respect to all shares as to
which Messrs. Hellman and Ruud then have voting power.


                                       18

<PAGE>   20

The exercise of the First Contingent Warrant, the options on shares held by
Messrs. Hellman and Ruud, and effectiveness of GE's proxy with respect to any
such shares, is subject to prior compliance with the Ohio Control Share
Acquisition Act (which condition would be fulfilled by shareholder approval to
be sought at the Company's annual meeting) and HSR Approval (which requires the
Company and GE to provide information to the federal government to allow it to
determine whether to contest an increase by GE to an interest in the Company in
excess of 25% pursuant to antitrust law). If the proxies become effective after
the Second Occurrence, GE will have the proxies to vote the number of Hellman
Shares and will be entitled to exercise approximately 35% of the then
outstanding voting power of the Company (assuming that none of the Hellman
Shares have been transferred by the beneficial owners and no issuance of
additional shares by the Company other than pursuant to the GE transaction) or
approximately 34% of the voting power of the Company on a fully diluted basis.
GE has not indicated that it will acquire additional shares of Company Common
Stock. However, if GE were to acquire additional shares of Common Stock (other
than shares subject to effective proxies as described above or shares obtained
on the exercise of the First Contingent Warrant), or if the number of
outstanding shares on a fully diluted basis were reduced, GE could obtain in
excess of 35% of the voting power of the Company on a fully diluted basis. In
addition, if a substantial number (currently approximately 300,000 shares) of
Hellman Shares were transferred (other than to GE) prior to the Second
Occurrence, and if GE exercised the First Contingent Warrant, GE would acquire
in excess of 35% of the voting power of the Company on a fully diluted basis. If
GE were to acquire in excess of 35% of the voting power of the Company on a
fully diluted basis, the terms of the Indenture relating to the Senior Notes
would require that the Company offer to repurchase the $100,000 principal amount
of outstanding Senior Notes due 2008 at a price of 101% of the principal amount
thereof, plus accrued interest ("Offer to Repurchase Notes"), and the Company's
banks will have the ability to demand payment of the Bank Credit Facility.

Upon the Third Occurrence (defined below), GE would receive the right to vote
the number of shares then owned by Mr. Ruud, and the right to vote the number of
shares as to which Mr. Ruud then has voting power pursuant to the Ruud Voting
Trust or Irrevocable Proxies granted with respect to shares removed from the
Ruud Voting Trust, currently approximately 3.6 million shares (the "Ruud
Shares"). The effectiveness of this right requires that the conditions for the
effectiveness of the proxies following the Second Occurrence have been
satisfied, and that any additional provisions of the Ohio Control Share
Acquisition Act required with respect to proxies or the Ruud Shares be
satisfied. If the proxies on the Ruud Shares become effective after the Third
Occurrence, GE will have the right to vote the Ruud Shares and will be entitled
to exercise approximately 48.4% of the then outstanding voting power of the
Company (assuming that none of the Hellman Shares or the Ruud Shares have been
sold by the beneficial owners, no exercise by GE of the Contingent Warrants and
no issuance of additional shares by the Company other than pursuant to the GE
transaction). If the Company has not already made an Offer to Repurchase Notes,
it will be required to make the offer upon effectiveness of the proxy on the
Ruud Shares and the Company's banks will have the ability to demand payment of
the Bank Credit Facility. In addition, GE will receive an additional warrant
(the "Second Contingent Warrant") which will entitle GE to purchase additional
shares of Common Stock at the then current market price. The number of shares
subject to the Second Contingent Warrant will be the number of shares necessary
to give GE 50% plus one vote of the voting power of the Company (including the
exercise of all outstanding Warrants, shares subject to irrevocable proxies, the
shares subject to the Second Contingent Warrant and all proxies held with
respect to Hellman Shares and Ruud Shares). Subject to shareholder approval,
after the Third Occurrence, if the Company issues additional shares of Common
Stock to anyone other than GE, GE will be entitled to purchase, on the same
terms given to the third party, the number of shares required to maintain GE's
voting power.

                                       19
<PAGE>   21
The basis for GE's additional rights will be the failure of the Company to
maintain a 2.0 to 1.0 ratio of EBITDA (as defined) to Interest Expense (as
defined) over the applicable measurement periods. The first measurement period
was the six months ended December 31, 1999. Thereafter, the measurement periods
are the six months ending on the last day of each successive fiscal quarter
until September 30, 2010. The first failure to maintain the required ratio would
be the "First Occurrence," the second such failure would be the "Second
Occurrence" and the third such failure would be the "Third Occurrence." The
ratio for the six months ended December 31, 1999, was 1.9 to 1.0 and, therefore,
the First Occurrence has taken place. However, after the First Occurrence, if
the Company maintains the required ratio in the three fiscal quarters
immediately prior to the measurement period in which a failure occurs, a Second
Occurrence or Third Occurrence, as the case may be, would not be effective.
Under the terms of the transaction, EBITDA consists of net earnings, plus
interest expense, plus depreciation and amortization, plus income taxes, less
extraordinary gains and gains from asset sales plus extraordinary losses and
losses from asset sales. Interest Expense consists of interest expense (net of
interest income) calculated in accordance with generally accepted accounting
principles, but excludes amortization of deferred financing costs up to a
maximum of $125 in any fiscal quarter.

The Company also entered into a number of other agreements with GE in connection
with the transaction. The Company has entered into a standard registration
rights agreement which will require the Company, upon GE's request, to register
the sale of the shares of Company Common Stock issued in connection with the
investment. If GE were to require such registration and sell a substantial
number of shares, it could adversely affect the market price of Company shares
and the ability of the Company to sell equity securities.

In addition to the proxies granted to GE by Messrs. Hellman and Ruud, Messrs.
Hellman and Ruud have granted to GE a first refusal right on the sale of their
shares. This agreement requires that if Messrs. Hellman and Ruud, or Hellman
Ltd., wish to sell shares of Company stock, they must first offer the shares to
GE on the same terms. The effect of sales of Company stock by Messrs. Hellman
and Ruud and Hellman Ltd. to third parties would be to increase the number of
shares which GE would have to buy from the Company pursuant to the Contingent
Warrants to obtain voting control of the Company. After issuance of the Second
Contingent Warrant, such sales would eliminate GE's contractual right to achieve
complete voting control. In addition, upon a Second Occurrence, GE will have an
option to purchase shares from Messrs. Hellman and Ruud which would permit GE to
raise its ownership to 25% of the outstanding shares of Company Common Stock.

The Company's annual meeting is scheduled for February 17, 2000. If the
Company's shareholders approve the proposals presented at the meeting regarding
the GE Transaction, all items described above as being subject to shareholder
approval will have received the required shareholder approval.

EXPANSION OF OPERATIONS IN INDIA

Subsequent to December 31, 1999, the Company obtained controlling, majority
interest in its lamp manufacturing joint venture in India. By acquiring its
joint venture partners' investment interests, the Company will effectively
increase its combined ownership to approximately 90%. In conjunction with this
increased investment, the Company has shipped approximately $3,000 worth of new
metal halide lamp-making equipment and is expanding its facility in Chennai
(Madras), India.


                                       20
<PAGE>   22

The Indian joint venture was created in March 1998 and began operations in
January 1999. The Tamilnadu Industrial Development Corporation Limited (TIDCO, a
governmental enterprise) in Chennai will remain as the Company's minority
partner.

The Chennai factory offers a very beneficial cost structure while meeting the
Company's product quality standards. The Company believes that in the third
quarter of fiscal 2000, the Chennai operation should be producing at an annual
rate of approximately one million metal halide units. By the end of the calendar
year 2000, the Company projects an annual production rate of over two million
units, or approximately $25,000 worth of potential product sales. The products
produced in the Indian facility will be used around the world and will consist
of both the Company's new Uni-Form(R) pulse start products as well as
more-mature metal halide lamp types.

DISCONTINUED OPERATIONS SUBSEQUENTLY RETAINED

Microsun Technologies, Inc. ("Microsun") was identified in March 1998 for
disposition through a plan to distribute to ADLT shareholders all of the
ownership of Microsun in a tax-free spin-off transaction estimated to be
completed by December 1998. Because of the deterioration of the capital markets
and the inability to raise capital necessary to spin-off the Microsun business,
the Company concluded that it would wind-down the operations, close the
manufacturing facilities and liquidate the assets of Microsun. At June 30, 1999,
the plan of wind-down had been accomplished, the manufacturing facilities closed
and substantially all assets had been disposed. Accordingly, there were no
remaining discontinued operations accrued losses associated with Microsun at
June 30, 1999.

In October 1999, management decided, with the approval of the Board of
Directors, to retain the Microsun business -- the portable lighting fixture
products business that uses metal halide lighting technology -- as part of the
Company's continuing operation. The decision to retain the business was based on
management's belief that, among other reasons, the market demand for Microsun
products remains substantial; the market potential will be expanded as the
Microsun portable lighting fixtures will be marketed and sold along with other
existing lines of products for residential use in an e-commerce format
("Microsun.com"); and the Microsun business will use the fulfillment
capabilities and infrastructure of existing ADLT businesses.

In retaining the Microsun business, the Company concentrates on assembling
fixtures produced by subcontractors, thereby eliminating the need for the
machinery, equipment and facilities that were used in the previous operation.
The assembly process is performed at existing ADLT businesses utilizing existing
facilities and operations. The Company utilizes the customer service systems and
personnel of an existing ADLT business, as well as the Internet at
http://www.microsun.com, to receive, process and fill orders. Therefore, the
Microsun business has been retained but without the use of the manufacturing
processes or assets used in the previous operations.



                                       21


<PAGE>   23

In accordance with the accounting requirements for recontinuance, the
accompanying financial statements have been reclassified to present Microsun
within continuing operations. The net amount charged to the income statement
consisted of the following:

<TABLE>
<CAPTION>
                                             Period Ended December 31, 1998
                                             ------------------------------
                                             Three months        Six months
                                             ------------        ----------
<S>                                           <C>                 <C>
Reclassification of discontinued
  operations to continuing operations         $   4,626           $  5,479
Discontinued operations provision                (6,166)            (6,166)
                                             ------------        ----------
Recontinuance of previously discontinued
  operations                                  $  (1,540)          $   (687)
                                             ============        ==========
</TABLE>


The $4,626 reclassified to continuing operations for the three months ended
December 31, 1998 consisted of a loss from operations of $1,645 and write-downs
to net realizable value of $2,981 in connection with the decision in November
1998 to wind-down the Microsun business related to fixed assets ($1,449) and
other assets ($1,532). These write-downs are classified in special charges. The
$5,479 reclassified to continuing operations for the six months ended December
31, 1998, consisted of a loss from operations of $2,498 and write-downs of
$2,981.

BANK CREDIT FACILITY

In May 1999, the Company replaced its existing Credit Facility with a $50,000
revolving credit loan and $25,000 term loan provided by several financial
institutions. Subsequent to June 30, 1999 the Company reduced its commitment to
a $60,000 facility. Proceeds from the facility were used to repay the Company's
existing credit facility and certain other long-term debt. The revolving credit
loan has a three-year term expiring in May 2002. Interest rates on revolving
credit loans outstanding are based, at the Company's option, on LIBOR plus 2.75%
or the agent bank's prime rate. Availability of borrowings is determined by the
Company's eligible accounts receivable and inventories. The term loan has a
five-year term expiring in May 2004. The Company pays monthly principal payments
that total $3,576 annually, with the unpaid balance due at maturity. Interest
rates on the term loan are based, at the Company's option, on LIBOR plus 3.25%
or the agent bank's prime rate.

The Bank Credit Facility contains certain affirmative and negative covenants
customary for this type of agreement, prohibits cash dividends, and includes
financial covenants with respect to the coverage of certain fixed charges. The
principal security for the revolving credit loan is substantially all of the
personal property of the Company and each of its North American and United
Kingdom subsidiaries. The term loan is secured by substantially all of the
Company's machinery and equipment and is cross-collateralized and secured with
the revolving credit loan.

UPDATE ON IN-PROCESS RESEARCH AND DEVELOPMENT

The Company's research and development projects acquired in connection with the
January 1998 acquisition of Deposition Sciences, Inc. are generally progressing
in line with the estimates set forth in the Company's 1999 Annual Report on Form
10-K.



                                       22

<PAGE>   24

RESULTS OF OPERATIONS - SELECTED ITEMS AS A PERCENTAGE OF NET SALES

The following table sets forth, as a percentage of net sales, certain items in
the Company's Condensed Consolidated Statements of Operations for the indicated
periods:

<TABLE>
<CAPTION>
                                                         Three Months Ended     Six Months Ended
                                                            December 31,           December 31,
                                                         ------------------     -----------------
                                                          1999        1998       1999        1998
                                                         -----        ----       ----        ----

<S>                                                       <C>         <C>        <C>        <C>
Net sales                                                  100%        100%       100%       100%

Costs and expenses:
   Cost of sales                                          61.5        79.2       61.8       68.5
   Marketing and selling                                  17.8        30.6       17.9       23.7
   Research and development                                5.8        14.1        6.0       10.5
   General and administrative                              6.8        13.4        7.0       10.8
   Special charges                                         --         41.0        --        17.9
   Amortization of intangible assets                       1.1         1.7        1.2        1.5
                                                          ----      ------       ----       ----
Income (loss) from operations                              7.0       (80.0)       6.1      (32.9)

Other income (expense):
   Interest expense                                       (5.6)       (8.7)      (6.1)      (6.8)
   Interest income                                         0.3         0.8        0.4        0.6
   Income (loss) from equity investments                   0.1        (0.7)       0.1       (0.5)
                                                          ----      ------       ----       ----

Income (loss) from continuing operations
   before income taxes and cumulative
   effect of accounting change                             1.8       (88.6)       0.5      (39.6)
Income taxes                                               0.2         8.2        0.3        3.4
                                                          ----      ------       ----       ----

Income (loss) from continuing operations
   before cumulative effect of accounting change           1.6       (96.8)       0.2      (43.0)
Recontinuance of previously discontinued operations        --         (3.9)       --        (0.7)
Cumulative effect of accounting change                     --          --         --        (2.7)
                                                          ----      ------       ----       ----
Net income (loss)                                          1.6%     (100.7%)      0.2%     (46.4%)
                                                          ====      ======       ====       ====
</TABLE>

Factors which have affected the results of operations for the second quarter and
first six months of fiscal 2000 as compared to the second quarter and first six
months of fiscal 1999 are discussed below.

OVERVIEW OF THE RESULTS OF OPERATIONS - SECOND QUARTER FISCAL 2000 COMPARED TO
SECOND QUARTER FISCAL 1999

The Company's operations for the second quarter of fiscal 2000 resulted in
income from continuing operations of $980 compared to a loss from continuing
operations of $38,432 for the second quarter of fiscal 1999.

                                       23
<PAGE>   25
During the second quarter of fiscal 1999, the Company recorded special charges
of $14,100 related to significant changes in its operations, which were intended
to accelerate and intensify the Company's focus on its metal halide products.
The special charges principally related to the execution of the Company's shift
in strategic direction and included: limiting Pacific Rim expansion; changing
global lamp manufacturing strategy; restructuring marketing operations in North
America and Europe; accelerating an exit from noncore product lines; reducing
excess overhead including staffing reductions; consolidating an equipment
manufacturing operation into the Company's Solon, Ohio facility and
significantly reducing the size of its operation; and, reducing capital
expenditures. In addition, the Company incurred special charges of $2,981
related to the wind-down of portable fixture manufacturing operations, which are
described in the section "Discontinued Operations Subsequently Retained." The
special charges for the second quarter of fiscal 1999 of $17,081 are classified
in the consolidated statement of operations as cost of sales ($808) and special
charges ($16,273).

In conjunction with limiting its Pacific Rim expansion, the Company terminated
production equipment contracts related to the completion of four lamp
manufacturing equipment groups. Accordingly, in the second quarter of fiscal
1999, the Company reversed previously recognized sales of $14,961 and cost of
sales of $6,413 related to these contracts, which were accounted for under the
percentage-of-completion method.

QUARTER ENDED DECEMBER 31, 1999 COMPARED WITH QUARTER ENDED DECEMBER 31, 1998

Net sales. Net sales increased 50.8% to $59,885 in the second quarter of fiscal
2000 from $39,704 in the second quarter of fiscal 1999. Commercial and
industrial sales increased 12.7% to $59,249 in the second quarter of fiscal 2000
as compared to $52,560 in the second quarter of fiscal 1999. Sales of Microsun
residential product decreased to $636 in the second quarter of fiscal 2000 from
$1,760 in the second quarter of fiscal 1999 due to the decision to wind-down the
portable residential fixture manufacturing operations in the second quarter of
fiscal 1999. No lamp equipment sales were recorded in the second quarter of
fiscal 2000 due to the cessation of these sales in the second quarter of fiscal
1999. The second quarter of fiscal 1999 includes the reversal of $14,961 in lamp
equipment sales due to the termination of equipment contracts noted above,
offset by $357 of lamp equipment sales.

Fiscal 2000 second quarter commercial and industrial sales (which exclude the
residential and lamp equipment amounts discussed above), reflect continued
growth in the sales of the Company's core U.S. metal halide operations, in
non-metal halide products, and in overseas sales. The Company's commercial and
industrial metal halide sales increased 15% (11% increase in the United States)
from the year ago period. The Company's core metal halide materials business, a
key indicator of industry trends, was up 61% from fiscal 1999. Geographically,
these sales of materials were up 38% in the U.S. and grew 102% outside the U.S.
The Company does not anticipate growth in materials sales to approach these
rates in the second half of fiscal 2000, but does expect materials sales to
continue to show strong growth.

Commercial and industrial sales outside the U.S. increased 29%. The Company
attributes the increase in international sales primarily to increased sales of
its materials and optical coatings, especially in the Pacific Rim. Sales of
non-metal halide products grew 6%, representing strong sales of the Company's
materials, particularly thin-film optical coating materials.


                                       24

<PAGE>   26

Sales increases were driven by increased volume in the Company's materials,
components and systems. Pricing in the metal halide lighting business is
competitive, and prices for the Company's products have remained flat or
declined slightly. The introduction of new products has helped to stabilize the
Company's product pricing.

The Company expects to see continued strong sales performance throughout fiscal
2000. It also believes that its expanded relationship with GE Lighting, along
with its own e-commerce initiatives, could add a significant amount of revenues.
However, the Company expects to reduce and manage its operating expense ratios
with the goal of generating profits irrespective of its revenue growth. The
Company has returned to profitability in the second quarter of fiscal 2000 and
believes its prospects for continued profitability are good.

Cost of Sales. Cost of sales increased 17.2% to $36,852 in the second quarter of
fiscal 2000 from $31,448 in the second quarter of fiscal 1999. As a percentage
of net sales, cost of sales decreased to 61.5% from 79.2%. The Company's
restructuring efforts in the second quarter of fiscal 1999 resulted in a
significant disruption of the ongoing business of the Company, and as a result,
a significant increase in its costs of sales. The biggest single area of
increased costs occurred as a result of the consolidation of the lamp and
equipment operations. Three manufacturing sites were consolidated into one,
which together with employee terminations, resulted in severe workforce
disruption. Simultaneously, the Company attempted to accelerate production of
new products such as Uni-Form(R) pulse start and began the implementation of
extensive, new information systems. Largely as a result of these initiatives,
the Company incurred significantly higher costs related to quality, rework and
productivity issues.

Cost of sales in the second quarter of fiscal 1999 included a credit of $6,413
related to the termination of equipment contracts and $808 related to the exit
of nonfocus product lines. Excluding these items, cost of sales decreased to
$36,852 in the second quarter of fiscal 2000 from $37,053 in the second quarter
of fiscal 1999. The abnormally high level of cost of sales in fiscal 1999 was
primarily a result of the production problems noted above in the second quarter
of fiscal 1999 as compared to a more normalized cost of sales amount in the
second quarter of fiscal 2000. As a percentage of net sales, excluding the
effect of the terminated equipment contracts and special charges, cost of sales
decreased to 61.5% in the second quarter of fiscal 2000 from 67.8% in the second
quarter of fiscal 1999.

Marketing and Selling Expenses. Marketing and selling expenses decreased 12.6%
to $10,617 in the second quarter of fiscal 2000 from $12,151 in the second
quarter of fiscal 1999. The reduction in marketing and selling expenses is
primarily due to a change in the manner in which the company is selling its
residential portable lighting fixtures. In the second quarter of fiscal 1999,
the company was utilizing newspaper ads in major metropolitan newspapers and
catalogues to sell these fixtures. As described earlier in the section
"Discontinued Operations Subsequently Retained," the Company is now utilizing
the customer service systems and personnel of an existing ADLT business, as well
as the Internet at http://www.microsun.com, to receive, process and fill orders,
which has resulted in a reduction in marketing and selling expenses. As a
percentage of net sales, excluding the effect of the terminated equipment
contracts in fiscal 1999, marketing and selling expenses decreased to 17.8% in
the second quarter of fiscal 2000 from 22.2% in the second quarter of fiscal
1999.

Research and Development Expenses. Research and development expenses decreased
37.8% to $3,483 in the second quarter of fiscal 2000 from $5,597 in the second
quarter of fiscal 1999. Research and


                                       25

<PAGE>   27

development expenses are incurred related to: (i) expansion of the new line of
Uni-Form (R) pulse start lamps (with improved energy efficiency, quicker
starting and restarting and a more compact arc source, which improves the light
and reduces material costs) intended to replace many first generation metal
halide lamps in industrial and commercial applications; (ii) development and
testing of electronic power supply systems; (iii) development of new materials
for the world's major lighting manufacturers; and, (iv) research and development
efforts aimed at improving the coating process of optical thin-films to broaden
the applications, developing new thin-film materials, and using coatings to
develop improvements to lighting and telecommunications technologies. The
decrease in research and development was primarily a result of a reduction in
spending related to the development of Uni-Form(R) pulse start lamps and the
Company's efforts to control the level of its research and development spending.
As a percentage of net sales, excluding the effect of the terminated equipment
contracts in fiscal 1999, research and development expenses decreased to 5.8% in
the second quarter of fiscal 2000 from 10.2% in the second quarter of fiscal
1999.

General and Administrative Expenses. General and administrative expenses
decreased 23.5% to $4,086 in the second quarter of fiscal 2000 from $5,338 in
the second quarter of fiscal 1999. The decrease reflects the Company's efforts
to control general and administrative costs and was primarily related to
reductions in salaries and benefits and travel costs. As a percentage of net
sales, excluding the effect of the terminated equipment contracts in fiscal
1999, general and administrative expenses decreased to 6.8% in the second
quarter of fiscal 2000 from 9.8% in the second quarter of fiscal 1999.

Special Charges. See discussion of special charges above.

Amortization of Intangible Assets. Amortization expense remained relatively
constant at $672 in the second quarter of fiscal 2000 compared to $678 in the
second quarter of fiscal 1999. Amortization expense relates primarily to the
amortization of goodwill and other intangible assets related to the January 1998
acquisitions of Ruud Lighting, Inc. and Deposition Sciences, Inc.

Income (Loss) from Operations. As a result of the items noted above, income from
operations in the second quarter of fiscal 2000 was $4,175 as compared to a loss
from operations in the second quarter of fiscal 1999 of $31,781. Income from
operations represented 7.0% of sales in fiscal 2000.

Interest Expense. Interest expense decreased to $3,323 in the second quarter of
fiscal 2000 from $3,440 in the second quarter of fiscal 1999. This decrease
resulted primarily from the lower average debt outstanding during the second
quarter of fiscal 2000 as compared to the second quarter of fiscal 1999,
resulting from the bank loan repayments made possible by the receipt of the GE
investment proceeds.

Interest Income. Interest income decreased to $214 in the second quarter of
fiscal 2000 from $328 in the second quarter of fiscal 1999. This decrease is
attributable to lower average cash equivalents and short-term investments in the
second quarter of fiscal 2000 as compared to the second quarter of fiscal 1999.

Income (Loss) from Equity Investments. The income from equity investments in the
second quarter of fiscal 2000 represents $35 of earnings from the Company's
investment in Fiberstars, Inc., a marketer and distributor of fiber optic
lighting products. The loss from equity investments in fiscal 1999 represents
$30 of earnings from the Company's investment in Fiberstars, Inc., offset by a
$302 loss from the Company's investment in Venture Lighting Japan, a
manufacturer and marketer of metal halide lamps in Japan.

                                       26

<PAGE>   28

Income (Loss) from Continuing Operations before Income Taxes. The Company had
income from continuing operations before income taxes of $1,101 during the
second quarter of fiscal 2000 as compared to a loss from continuing operations
before income taxes of $35,165 during the second quarter of fiscal 1999.

Income Taxes. Income tax expense was $121 for the second quarter of fiscal 2000
as compared to $3,267 in the second quarter of fiscal 1999. The income tax
expense in the second quarter of fiscal 2000 relates primarily to certain of the
Company's foreign operations.

For the second quarter of fiscal 1999, the Company reported a pretax loss from
continuing operations, including special charges, of $35,165, which created
operating losses and future tax deductions for financial reporting purposes.
Accordingly, at December 31, 1998, the Company recorded a valuation allowance
for deferred tax assets related to all NOLs, tax credits and net deductible tax
differences at December 31, 1998 in the amount of $15,503.

At June 30, 1999, the Company had net operating loss carryforwards ("NOLs") of
$57,309 available to reduce future United States federal taxable income, which
expire in varying amounts from 2008 to 2019.

The Company also has research and development credit carryforwards for tax
purposes of approximately $3,006, which expire in varying amounts from 2005 to
2019. Additionally, in conjunction with the Alternative Minimum Tax ("AMT")
rules, the Company had available AMT credit carryforwards for tax purposes of
approximately $162, which may be used indefinitely to reduce regular federal
income taxes.

Also at June 30, 1999, the Company had foreign net operating loss carryforwards
for tax purposes totaling $5,209 that expire in varying amounts from 2000 to
2005 and $10,587 that have no expiration dates.

Recontinuance of Previously Discontinued Operations. See "Discontinued
Operations Subsequently Retained" and Note I of "Notes to Condensed Consolidated
Financial Statements (Unaudited)" for further discussion.

Cumulative Effect of Accounting Change. During the fourth quarter of fiscal
1999, the Company adopted Statement of Position ("SOP") 98-5, "Reporting on the
Costs of Start-Up Activities," effective July 1, 1998. The first quarter of
fiscal 1999 has been restated to reflect the cumulative effect of the accounting
change of $2,443.

SIX MONTHS ENDED DECEMBER 31, 1999 COMPARED WITH SIX MONTHS ENDED DECEMBER 31,
1998

Net sales. Net sales increased 27.6% to $116,065 in the first six months of
fiscal 2000 from $90,991 in the first six months of fiscal 1999. Commercial and
industrial sales increased 14.7% to $115,097 in the first half of fiscal 2000 as
compared to $100,352 in the first half of fiscal 1999. Sales of Microsun
residential product decreased to $968 in the first half of fiscal 2000 from
$2,689 in the first half of fiscal 1999 due to the decision to wind-down the
portable residential fixture manufacturing operations in the second quarter of
fiscal 1999.  No lamp equipment sales were recorded in the first half of
fiscal 2000 due to the cessation of these sales in the second quarter of fiscal
1999. The first half of fiscal 1999 includes the reversal of $14,961 in lamp
equipment sales due to the termination of equipment contracts noted above,
offset by $2,911 of lamp equipment sales.

                                       27
<PAGE>   29
Fiscal 2000 second quarter commercial and industrial sales (which exclude the
residential and lamp equipment amounts discussed above), reflect continued
growth in the sales of the Company's core U.S. metal halide operations, in
non-metal halide products, and in overseas sales. The Company's commercial and
industrial metal halide sales increased 13% (12% increase in the United States)
from the year ago period. The Company's core metal halide materials business, a
key indicator of industry trends, was up 46% from fiscal 1999. Geographically,
these sales of materials were up 28% in the U.S. and grew 76% outside the U.S.
The Company does not anticipate growth in materials sales to approach these
rates in the second half of fiscal 2000, but does expect materials sales to
continue to show strong growth.

Commercial and industrial sales outside the U.S. increased 22%. The Company
attributes the increase in international sales to increased sales of its
materials and optical coatings, especially in the Pacific Rim. Sales of
non-metal halide products grew 19% representing strong sales of the Company's
materials, particularly thin-film optical coating materials.

Sales increases were driven by increased volume in the Company's materials,
components and systems. Pricing in the metal halide lighting business is
competitive, and prices for the Company's products have remained flat or
declined slightly. The introduction of new products has helped to stabilize the
Company's product pricing.

The Company expects to see continued strong sales performance throughout fiscal
2000. It also believes that its expanded relationship with GE Lighting, along
with its own e-commerce initiatives, could add a significant amount of revenues.
However, the Company expects to reduce and manage its operating expense ratios
with the goal of generating profits irrespective of its revenue growth. The
Company has returned to profitability in the second quarter of fiscal 2000 and
believes it prospects for continued profitability are good.

Cost of Sales. Cost of sales increased 15.0% to $71,696 in the first six months
of fiscal 2000 from $62,352 in the first six months of fiscal 1999. As a
percentage of net sales, cost of sales decreased to 61.8% in the first six
months of fiscal 2000 from 68.5% in the first six months of fiscal 1999. The
Company's restructuring efforts in the second quarter of fiscal 1999 resulted in
a significant disruption of the ongoing business of the Company, and as a
result, a significant increase in its costs and expenses. The biggest single
area of increased costs occurred as a result of the consolidation of the lamp
and equipment operations. Three manufacturing sites were consolidated into one,
which together with employee terminations, resulted in severe workforce
disruption. Simultaneously, the Company attempted to accelerate production of
new products such as Uni-Form(R) pulse start and began the implementation of
extensive, new information systems. Largely as a result of these initiatives,
the Company incurred significantly higher costs related to quality, rework and
productivity issues.

Cost of sales in the first six months of fiscal 1999 include a credit of $6,413
related to the termination of equipment contracts and $808 of inventory
write-downs related to the exit of nonfocus product lines. Excluding these
items, cost of sales increased 5.5% to $71,696 in the first six months of fiscal
2000 from $67,957 in the first six months of fiscal 1999. The abnormally high
level of cost of sales in fiscal 1999 was primarily a result of the production
problems noted above in the second quarter of fiscal 1999 as compared to a more
normalized cost of sales amount in the second quarter of fiscal 2000. As a
percentage of net sales, excluding the effect of the terminated equipment
contracts and inventory write-downs, cost of sales decreased to 61.8% in the
first six months of fiscal 2000 from 64.1% in the first six months of fiscal
1999.

                                       28
<PAGE>   30
Marketing and Selling Expenses. Marketing and selling expenses decreased 3.5% to
$20,792 in the first six months of fiscal 2000 from $21,552 in the first six
months of fiscal 1999. Marketing and selling expenses for the first six months
of fiscal 2000 increased in proportion to the increase in net sales (excluding
the equipment sales reversal of $14,961 in fiscal 1999). Offsetting this
increase was a reduction in marketing and selling expenses related to a change
in the manner in which the Company is selling its residential portable lighting
fixtures. In the first six months of fiscal 1999, the Company was utilizing
newspaper ads in major metropolitan newspapers and catalogues to sell these
fixtures. As described in the section "Discontinued Operations Subsequently
Retained," the Company is now utilizing the customer service systems and
personnel of an existing ADLT business, as well as the Internet at
http://www.microsun.com, to receive, process and fill orders, which has resulted
in a reduction in marketing and selling expenses. As a percentage of net sales,
excluding the effect of the terminated equipment contracts in fiscal 1999,
marketing and selling expenses decreased to 17.9% in the first six months of
fiscal 2000 from 20.3% in the first six months of fiscal 1999.

Research and Development Expenses. Research and development expenses decreased
27.0% to $6,978 in the first six months of fiscal 2000 from $9,562 in the first
six months of fiscal 1999. Research and development expenses are incurred
related to: (i) expansion of the new line of Uni-Form(R) pulse start lamps (with
improved energy efficiency, quicker starting and restarting and a more compact
arc source, which improves the light and reduces material costs) intended to
replace many first generation metal halide lamps in industrial and commercial
applications; (ii) development and testing of electronic power supply systems;
(iii) development of new materials for the world's major lighting manufacturers;
and, (iv) research and development efforts aimed at improving the coating
process of optical thin-films to broaden the applications, developing new
thin-film materials, and using coatings to develop improvements to lighting and
telecommunications technologies. The decrease in research and development was
primarily a result of a reduction in spending related to the development of
Uni-Form(R) pulse start lamps and the Company's efforts to control the level of
its research and development spending. As a percentage of net sales, excluding
the effect of the terminated equipment contracts in fiscal 1999, research and
development expenses decreased to 6.0% in the first six months of fiscal 2000
from 9.0% in the first six months of fiscal 1999.

General and Administrative Expenses. General and administrative expenses
decreased 17.5% to $8,121 in the first six months of fiscal 2000 from $9,843 in
the first six months of fiscal 1999. The decrease reflects the Company's efforts
to control general and administrative costs and was primarily related to
reductions in salaries and benefits and travel costs. As a percentage of net
sales, excluding the effect of the terminated equipment contracts in the first
six months of fiscal 1999, general and administrative expenses decreased to 7.0%
in the first six months of fiscal 2000 from 9.3% in the first six months of
fiscal 1999.

Special Charges. See discussion of special charges above.

Amortization of Intangible Assets. Amortization expense remained relatively
constant at $1,347 in the first six months of fiscal 2000 from $1,343 in the
first six months of fiscal 1999. Amortization expense relates primarily to the
amortization of goodwill and other intangible assets related to the January 1998
acquisitions of Ruud Lighting, Inc. and Deposition Sciences, Inc.



                                       29

<PAGE>   31

Income (Loss) from Operations. As a result of the items noted above, income from
operations in the second quarter of fiscal 2000 was $7,131 as compared to a loss
from operations in the second quarter of fiscal 1999 of 29,934. Income from
operations represented 6.1% of sales in fiscal 2000.

Interest Expense. Interest expense increased to $7,113 in the first six months
of fiscal 2000 from $6,181 in the first six months of fiscal 1999. This increase
resulted primarily from the higher average debt outstanding during the first six
months of fiscal 2000 as compared to the first six months of fiscal 1999.

Interest Income. Interest income decreased to $434 in the first six months of
fiscal 2000 from $566 in the first six months of fiscal 1999. This decrease is
attributable to lower average cash equivalents and short-term investments in
fiscal 2000 as compared to fiscal 1999, offset by an increase of approximately
$200 in interest income from the loan to officer.

Income (Loss) from Equity Investments. The income from equity investments in the
first six months of fiscal 2000 represents $85 of earnings from the Company's
investment in Fiberstars, Inc., a marketer and distributor of fiber optic
lighting products. The loss from equity investments in fiscal 1999 represents
$83 of earnings from the Company's investment in Fiberstars, Inc., offset by a
$544 loss from the Company's investment in Venture Lighting Japan, a
manufacturer and marketer of metal halide lamps in Japan.

Income (loss) from Continuing Operations before Income Taxes. The Company had
income from continuing operations before income taxes of $537 during the first
six months of fiscal 2000 as compared to a loss from continuing operations
before income taxes of $36,010 during the first six months of fiscal 1999.

Income Taxes. Income tax expense was $339 for the first six months of fiscal
2000 as compared to $3,093 in the first six months of fiscal 1999. The income
tax expense in the first six months of fiscal 2000 relates primarily to certain
of the Company's foreign operations.

For the second quarter of fiscal 1999, the Company reported a pretax loss from
continuing operations, including special charges, of $35,165, which created
operating losses and future tax deductions for financial reporting purposes.
Accordingly, at December 31, 1998, the Company recorded a valuation allowance
for deferred tax assets related to all NOLs, tax credits and net deductible tax
differences at December 31, 1998 in the amount of $15,503.

At June 30, 1999, the Company had net operating loss carryforwards ("NOLs") of
$57,309 available to reduce future United States federal taxable income, which
expire in varying amounts from 2008 to 2019.

The Company also has research and development credit carryforwards for tax
purposes of approximately $3,006, which expire in varying amounts from 2005 to
2019. Additionally, in conjunction with the Alternative Minimum Tax ("AMT")
rules, the Company had available AMT credit carryforwards for tax purposes of
approximately $162, which may be used indefinitely to reduce regular federal
income taxes.

Also at June 30, 1999, the Company had foreign net operating loss carryforwards
for tax purposes totaling $5,209 that expire in varying amounts from 2000 to
2005 and $10,587 that have no expiration dates.


                                       30

<PAGE>   32

Recontinuance of Previously Discontinued Operations. See "Discontinued
Operations Subsequently Retained" and Note I of "Notes to Condensed Consolidated
Financial Statements (Unaudited)" for further discussion.

Cumulative Effect of Accounting Change. During the fourth quarter of fiscal
1999, the Company adopted Statement of Position ("SOP") 98-5, "Reporting on the
Costs of Start-Up Activities," effective July 1, 1998. The first six months of
fiscal 1999 have been restated to reflect the cumulative effect of the
accounting change of $2,443.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal financial requirements are for market development
activities, research and development efforts, investments in business
acquisitions, joint ventures and working capital. These requirements have been,
and the Company expects they will continue to be, financed through a combination
of cash flow from operations, borrowings under various credit facilities and the
sale of stock.

Cash decreased $1,766 during the first six months of fiscal 2000. Uses of cash
consisted of $3,670 used in operating activities and $4,478 used in investing
activities. These uses of cash were offset by net financing activities of
$6,382.

Net cash used in operating activities. Net cash used in operating activities
totaled $3,670 during the first six months of fiscal 2000 as compared to $17,819
in the first six months of fiscal 1999. The increase in trade receivables of
$7,835 was the most significant usage, and was primarily a result of the
increase in sales. In spite of this usage of cash in the first six months, the
Company intends to manage its cash resources to generate positive cash flow from
operating activities for the full fiscal year 2000 and beyond. In the second
quarter of fiscal 2000, the Company generated net cash from operating activities
of $1,299.

Net cash used in investment activities. During the first six months of fiscal
2000, investing activities used $4,478 of cash, which was primarily represented
by a $2,878 usage for capital expenditures and a $1,920 investment in
affiliates, offset by a $350 source of funds from the sale of a short-term
investment.

Capital expenditures, primarily for production equipment and leasehold and
facility improvements, totaled $2,878 during the first six months of fiscal 2000
as compared to $17,956 during the first six months of fiscal 1999. Capital
expenditures in fiscal 2000 related to additional machinery and equipment to
improve production processes, which should result in increased productivity and
capacity in the production of lamps, power supplies and other lighting system
products.

The Company has modified its current growth and capital expansion plans due to
the present limited availability of cash resources. Specifically, the Company
will limit its capital expenditures for at least the next twelve months and, as
a result, the Company has postponed the acquisition of certain capital equipment
and, for all practical purposes, facilities expenditures have been completed.



                                       31

<PAGE>   33

As a result of the Company's decision to terminate joint venture equipment
contracts in the quarter ended December 31, 1998, approximately $6,500 of new
production equipment is available for installation at the Company's Solon, Ohio
lamp manufacturing facility. The Company estimates its maintenance level for
capital expenditures will approximate $6,000 to $8,000 over the next twelve
months. Future capital expenditures beyond this level will be discretionary, as
the Company presently has sufficient operating capacities to support several
years of sales growth at its historical rates.

To expand the Company's ability to develop and market new metal halide products
and systems, the Company has made a number of acquisitions and strategic
investments, the most notable of which, completed in January 1998, are described
below.

On January 28, 1998, the Company completed the acquisition of Deposition
Sciences, Inc. ("DSI"), of Santa Rosa, California. DSI is a leader in the
development of sophisticated thin film deposition systems and coatings for
lighting applications, with particular emphasis on coatings for metal halide
lighting systems, and other applications, including aerospace, defense and
automotive applications. The stock of DSI was acquired in a privately-negotiated
transaction. The purchase price consisted of 599,717 shares of the Company's
Common Stock and approximately $14,500 in cash.

On January 2, 1998, the Company acquired all of the capital stock outstanding of
Ruud Lighting (the "Ruud Stock"), located in Racine, Wisconsin. Ruud Lighting
manufactures and directly markets HID lighting systems, principally focusing on
metal halide installations for commercial, industrial and outdoor lighting
applications. The Ruud Stock was acquired from the five shareholders of Ruud
Lighting in a privately negotiated purchase transaction. The purchase price for
the Ruud Stock consisted of three million shares of the Company's Common Stock
and approximately $35,500 in cash.

Net cash provided by financing activities. During the first six months of fiscal
2000, net financing activities provided cash of $6,382, which included $20,203
of cash provided from the investment from GE, offset by net repayments of
borrowings under the Company's revolving credit facilities of $7,936 and net
repayments of long-term debt and capital leases of $6,205.

On March 13, 1998, the Company sold $100,000 of 8% Senior Notes due March 15,
2008, resulting in net proceeds of $96,150. Approximately $76,300 of the net
proceeds of the Senior Notes were used to repay amounts outstanding under the
Company's existing credit facility, thereby lengthening the average term of the
Company's debt, most of which had been incurred to finance the acquisitions of
Ruud Lighting and DSI. From September 14, 1998 until completion of a registered
exchange offer to existing noteholders, the Senior Notes bear interest at 8.5%.
The offer is expected to be completed within 45 days following effectiveness of
the Company's related registration statement.

Pursuant to a loan agreement dated October 8, 1998, between the Company and its
Chairman and Chief Executive Officer (the "CEO"), the Company loaned $9,000 to
its CEO for a one-year term at an interest rate of 8%. The loan was made
following approval by the Company's Board of Directors. The proceeds of the loan
were used by the Company's CEO to reduce the principal balance outstanding of a
margin account loan, which is secured by 2,053,070 shares of the Company's
Common Stock owned by the CEO and a related entity. In connection with the loan,
the Company's Board of Directors asked for



                                       32

<PAGE>   34

and received the CEO's agreement to extend the term of his employment agreement
to December 31, 2003. The loan agreement prohibits the CEO from encumbering his
shares of the Company's Common Stock in any manner except pursuant to the
existing agreements governing the CEO's margin account, without the consent of
the Company's Board of Directors.

The CEO paid accrued interest of $720 on the loan through October 6, 1999. The
principal on the loan was due on October 6, 1999. On January 25, 2000, the Board
agreed that Mr. Hellman would not be required to repay the loan until October 6,
2000. However, if the price of the Company's Common Stock reaches $12 per share
(a level which the directors believe would permit repayment of the CEO's margin
loan and refinancing with another lender), the Board and the CEO will discuss
earlier repayment of all or a portion of the loan. The directors have informed
the CEO that the Company may require immediate payment of the loan if the
Company requires the payment to prevent an unacceptable strain on cash
resources.

Ability to advance future operations. The Company has begun to implement, and
will continue to implement, changes in its operations and investment activities
intended to reduce the use of its cash resources to a level at or below the cash
flow generated by its operations and investments.

The Company's working capital (current assets less current liabilities) at
December 31, 1999 was $23,974, resulting in a working capital ratio of current
assets to current liabilities of 1.4 to 1.0, as compared to $18,274 or 1.3 to
1.0 at June 30, 1999. As of December 31, 1999, the Company had $2,064 in cash
and cash equivalents.

The interest-bearing obligations of the Company totaled $147,367 as of December
31, 1999, and consisted of: $24,235 of borrowings under the Bank Credit
Facility; $100,000 of 8% Senior Notes; mortgages of $17,046; a promissory note
due to an affiliate of $3,000; borrowings of a foreign subsidiary of $2,009;
and, capital leases of $1,077.

In May 1999, the Company replaced its existing Credit Facility with a $50,000
revolving credit loan and $25,000 term loan provided by several financial
institutions. Subsequent to June 30, 1999 the Company reduced its commitment to
a $40,000 revolver and $20,000 term loan. Proceeds from the facility were used
to repay the Company's existing credit facility and certain other long-term
debt. The revolving credit loan has a three-year term expiring in May 2002.
Interest rates on loans outstanding are based, at the Company's option, on LIBOR
plus 2.75% or the agent bank's prime rate. Availability of borrowings is
determined by the Company's eligible accounts receivable and inventories.
Following the GE investment on October 6, 1999, the proceeds were applied to
reduce the term loan to $20,000 and the remainder of the proceeds were applied
to the revolving credit loan. The term loan has a five-year term expiring in May
2004. The Company pays monthly principal payments of $298, with the unpaid
balance due at maturity. Interest rates on the term loan are based, at the
Company's option, on LIBOR plus 3.25% or the agent bank's prime rate.

The Bank Credit Facility contains certain affirmative and negative covenants
customary for this type of agreement, prohibits cash dividends, and includes
financial covenants with respect to the coverage of certain fixed charges. The
principal security for the revolving credit loan is substantially all of the
personal property of the Company and each of its North American and United
Kingdom subsidiaries.



                                       33

<PAGE>   35

The term loan is secured by substantially all of the Company's machinery and
equipment and is cross-collateralized and secured with the revolving credit
loan.

The Company's implementation of the cost reduction and cash flow enhancement
initiatives including consolidation of equipment and lamp-making operations,
reductions in capital expenditures, consolidation of international operations,
reduction of corporate expenses, and overall workforce reductions should
favorably impact the future cash flow of the Company. The Company intends to
manage its expenditures to generate positive cash flow in fiscal 2000 and
beyond.

The Company believes that the available cash, cash flow from operations, and the
initiatives outlined above, along with availability under its existing Bank
Credit Facility, will enable the Company to fund its operations for at least the
next 12 months. Beyond this time, the Company believes a return to profitability
and positive cash flow from operations, its strategic relationship with GE, and
the growth in the popularity and applications for metal halide products and
systems should enable the Company to access additional capital resources, as
needed.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

The Company has not yet adopted FAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." FAS 133 requires that all derivatives, such
as interest rate exchange agreements (swaps), be recognized on the balance sheet
at fair value. Derivatives which are not hedges must be adjusted to fair value
through the results of operations. Derivatives determined to be hedges will be
adjusted to fair value through either the results of operations or other
comprehensive income, depending on the nature of the hedge. The Company is
required to adopt FAS No. 133, as subsequently amended by FAS No. 137, on July
1, 2000. The impact, if any, on net income, comprehensive income and financial
position will depend on the amount, timing and nature of any agreements entered
into by the Company.

FOREIGN CURRENCY

Approximately 34% of the Company's net sales in fiscal 1999, were denominated in
currencies other than U.S. dollars, principally Pounds Sterling, Australian
dollars and Canadian dollars. A weakening of such currencies versus the U.S.
dollar could have a material adverse effect on the Company. The Company
currently does not hedge its foreign currency exposure.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the six months ended December 31, 1999, there have been no material
changes in the reported market risks presented in the Company's Annual Report on
Form 10-K for the year ended June 30, 1999.



                                       34


<PAGE>   36



PART II.  OTHER INFORMATION

Except as noted below, the items in Part II are inapplicable or, if applicable,
would be answered in the negative. These items have been omitted and no other
reference is made thereto.

ITEM 1.  LEGAL PROCEEDINGS

The information included in Note J of the "Notes to Condensed Consolidated
Financial Statements (Unaudited)" included in this Report on Form 10-Q/A is
hereby incorporated by reference.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

On October 1, 1999, the Company acquired the remaining 50% of Lighting Sciences,
Inc. ("LSI") which it did not already own. LSI is located in Phoenix, Arizona.
The acquisition was accomplished by a merger of the other shareholder of LSI
into a wholly-owned subsidiary of the Company. The other LSI shareholder, a
corporation, was owned by a revocable trust for the President and founder of LSI
and his wife. The trust received 40,000 shares of Common Stock and will have the
right to receive up to an additional 40,000 shares of Common Stock or cash if
the value of the shares issued is less than $800,000 at June 30, 2000. The
transaction was exempt from registration under the Act pursuant to Section 4(2).
The Common Stock was issued to the other shareholder of LSI, which was certified
to be an "accredited investor," as defined in Rule 501 under the Act. The trust
made customary representations and warranties, including acknowledgement of the
requirements of Rule 144 and the ability to evaluate the investment and bear the
economic risk, and the share certificate bears a restrictive legend.

ITEM 5.  OTHER INFORMATION

Pursuant to a loan agreement dated October 8, 1998, between the Company and its
Chairman and Chief Executive Officer (the "CEO"), the Company loaned $9,000 to
its CEO for a one-year term at an interest rate of 8%. The loan was made
following approval by the Company's Board of Directors. The proceeds of the loan
were used by the Company's CEO to reduce the outstanding principal balance of a
margin account loan, which is secured by 2,053,070 shares of the Company's
Common Stock owned by the CEO and a related entity. In connection with the loan,
the Company's Board of Directors asked for and received the CEO's agreement to
extend the term of his employment agreement to December 31, 2003. The loan
agreement prohibits the CEO from encumbering his shares of the Company's Common
Stock in any manner except pursuant to the existing agreements governing the
CEO's margin account, without the consent of the Company's Board of Directors.

The CEO has paid accrued interest of $720 on the loan through October 6, 1999.
The principal on the loan was due on October 6, 1999. On January 25, 2000, the
Board agreed that Mr. Hellman would not be required to repay the loan until
October 6, 2000. However, if the price of the Company's Common Stock reaches $12
per share (a level which the directors believe would permit repayment of the
CEO's margin loan and refinancing with another lender), the Board and the CEO
will discuss earlier repayment of all or a portion of the loan. The directors
have informed the CEO that the Company may require immediate payment of the loan
if the Company requires the payment to prevent an unacceptable strain on cash
resources.



                                       35

<PAGE>   37

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

<TABLE>
<CAPTION>

                                                                                  SEQUENTIAL
                                                                                  PAGE NUMBER/
EXHIBIT                                                                           INCORPORATED
NUMBER            TITLE                                                           BY REFERENCE
-------           -----                                                           ------------
<S>            <C>                                                                <C>
3.1            Second Amended and Restated Articles of Incorporation                   (1)

3.2            Certificate of Adoption of Amended and Restated Articles of
               Incorporation of the Company filed as of October 6, 1999, with
               the Ohio Secretary of State relating to the Series A Convertible
               Preferred Shares                                                        (2)

3.3            Code of Regulations                                                     (3)

4.1            Reference is made to Exhibits 3.1, 3.2 and 3.3

4.2            Registration Rights Agreement dated as of September 30, 1999, by and    (2)
               between the Company and General Electric Company

10.1           Assignment and Acceptance Agreement by and among the Company,
               PNC Bank, National Association and National City Commercial
               Finance, Inc., dated as of November 2, 1999

10.2           Assignment and Acceptance Agreement by and among the Company,
               PNC Bank, National Association and Sovereign Bank, dated as of
               November 2, 1999

10.3           Third Amendment Agreement by and among the Company and certain of
               its subsidiaries and PNC Bank, National Association, as agent for
               certain other banks dated as of November 2, 1999, and amending
               the Credit Agreement by and among the same parties, dated as of
               May 21, 1999

10.4           Series A1 Warrant to Purchase Common Shares of the Company issued       (4)
               To General Electric Company dated as of October 6, 1999

10.5           Stock Purchase Agreement by and between the Company and General         (2)
               Electric Company dated as of September 28, 1999

10.6           Contingent Warrant Agreement dated as of September 30, 1999, by and     (2)
               among the Company; General Electric Company; Wayne R. Hellman,
               individually and as voting trustee under Voting Trust Agreement
               dated October 10, 1995; Hellman, Ltd.; and Alan J. Ruud,
               individually and as voting trustee under Voting Trust Agreement
               dated January 2, 1998
</TABLE>


                                       36

<PAGE>   38

<TABLE>
<CAPTION>

                                                                                  SEQUENTIAL
                                                                                  PAGE NUMBER/
EXHIBIT                                                                           INCORPORATED
NUMBER            TITLE                                                           BY REFERENCE
-------           -----                                                           ------------
<S>            <C>                                                                <C>

10.7           Lamp Materials Purchase Agreement by and among the Company;             (5)
               General Electric Company, acting through its GE Lighting business;
               and APL Engineered Materials, Inc. dated as of September 30, 1999

10.8           Patent and Technical Assistance Agreement by and among the Company;     (6)
               APL Engineered Materials, Inc.; and General Electric Company, acting
               through its GE Lighting business dated as of September 30, 1999

10.9           Mutual Release and Indemnification Agreement by and between
               the Company and Louis S. Fisi, dated as of December 31, 1999

10.10          Consulting Agreement by and between the Company and
               Louis S. Fisi, dated as of December 31, 1999

12             Statement Re: Computation of Ratio of Earnings to Fixed Charges

27             Financial Data Schedule
</TABLE>

--------------------------------

(1)  Incorporated by reference to Exhibit of the same number in Company's
     Quarterly Report on Form 10-Q for the Quarterly Period ended December 31,
     1996.

(2)  Incorporated by reference to Exhibit of the same number in Company's
     Quarterly Report on Form 10-Q for the Quarterly Period ended September 30,
     1999

(3)  Incorporated by reference to Exhibit 3.2 in Company's Registration
     Statement on Form S-1, Registration No. 33-97902, effective December 11,
     1995.

(4)  Incorporated by reference to Exhibit 10.7 in Company's Quarterly Report on
     Form 10-Q for the Quarterly Period ended September 30, 1999.

(5)  Incorporated by reference to Exhibit 10.8 in Company's Quarterly Report on
     Form 10-Q for the Quarterly Period ended September 30, 1999.

(6)  Incorporated by reference to Exhibit 10.9 in Company's Quarterly Report on
     Form 10-Q for the Quarterly Period ended September 30, 1999.

(b)  Reports on Form 8-K.

No reports on Form 8-K have been filed during the quarter ended December 31,
1999.


                                       37

<PAGE>   39

                                   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.

                                       ADVANCED LIGHTING TECHNOLOGIES, INC.


Date:  February 14, 2000                              By:  /s/ Wayne R. Hellman
                                                          --------------------
                                                     Wayne R. Hellman
                                                     Chief Executive Officer



Date:  February 14, 2000                              By:  /s/ Nicholas R. Sucic
                                                          ---------------------
                                                     Nicholas R. Sucic
                                                     Chief Financial Officer






                                       38


<PAGE>   40



                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

EXHIBIT
NUMBER         DESCRIPTION OF EXHIBITS                                                            PAGE NO.
-------        -----------------------                                                            --------
<S>            <C>                                                                                <C>
3.1            Second Amended and Restated Articles of Incorporation                                (1)

3.2            Certificate of Adoption of Amended and Restated Articles of                          (2)
               Incorporation of the Company filed as of October 6, 1999, with the Ohio
               Secretary of State relating to the Series A Convertible Preferred Shares

3.3            Code of Regulations                                                                  (3)

4.1            Reference is made to Exhibits 3.1, 3.2 and 3.3

4.2            Registration Rights Agreement dated as of September 30, 1999, by and                 (2)
               between the Company and General Electric Company

10.1           Assignment and Acceptance Agreement by and among the Company,
               PNC Bank, National Association and National City Commercial
               Finance, Inc., dated as of November 2, 1999

10.2           Assignment and Acceptance Agreement by and among the Company,
               PNC Bank, National Association and Sovereign Bank, dated as of
               November 2, 1999

10.3           Third Amendment Agreement by and among the Company and certain of
               its subsidiaries and PNC Bank, National Association, as agent for
               certain other banks dated as of November 2, 1999, and amending
               the Credit Agreement by and among the same parties, dated as of
               May 21, 1999

10.4           Series A1 Warrant to Purchase Common Shares of the Company issued                    (4)
               to General Electric Company dated as of October 6, 1999

10.5           Stock Purchase Agreement by and between the Company and General                      (2)
               Electric Company dated as of September 28, 1999

10.6           Contingent Warrant Agreement dated as of September 30, 1999, by and                  (2)
               among the Company; General Electric Company; Wayne R. Hellman,
               individually and as voting trustee under Voting Trust Agreement dated
               October 10, 1995; Hellman, Ltd.; and Alan J. Ruud, individually and as
               voting trustee under Voting Trust Agreement dated January 2, 1998

10.7           Lamp Materials Purchase Agreement by and among the Company;                          (5)
               General Electric Company, acting through its GE Lighting business; and
               APL Engineered Materials, Inc. dated as of September 30, 1999
</TABLE>

                                       39

<PAGE>   41

<TABLE>
<CAPTION>

EXHIBIT
NUMBER         DESCRIPTION OF EXHIBITS                                                            PAGE NO.
-------        -----------------------                                                            --------
<S>            <C>                                                                                <C>
10.8           Patent and Technical Assistance Agreement by and among the Company;                  (6)
               APL Engineered Materials, Inc.; and General Electric Company, acting
               through its GE Lighting business dated as of September 30, 1999

10.9           Mutual Release and Indemnification Agreement by and between
               the Company and Louis S. Fisi, dated as of December 31, 1999

10.10          Consulting Agreement by and between the Company and
               Louis S. Fisi, dated as of December 31, 1999

12             Statement Re: Computation of Ratio of Earnings to Fixed Charges

27             Financial Data Schedule
</TABLE>

--------------------------------

(1)  Incorporated by reference to Exhibit of the same number in Company's
     Quarterly Report on Form 10-Q for the Quarterly Period ended December 31,
     1996.

(2)  Incorporated by reference to Exhibit of the same number in Company's
     Quarterly Report on Form 10-Q for the Quarterly Period ended September 30,
     1999.

(3)  Incorporated by reference to Exhibit 3.2 in Company's Registration
     Statement on Form S-1, Registration No. 33-97902, effective December 11,
     1995.

(4)  Incorporated by reference to Exhibit 10.7 in Company's Quarterly Report on
     Form 10-Q for the Quarterly Period ended September 30, 1999.

(5)  Incorporated by reference to Exhibit 10.8 in Company's Quarterly Report on
     Form 10-Q for the Quarterly Period ended September 30, 1999.

(6)  Incorporated by reference to Exhibit 10.9 in Company's Quarterly Report on
     Form 10-Q for the Quarterly Period ended September 30, 1999.






                                       40