UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2007

or

o 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)

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)

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 þ   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.(Check one):

Large accelerated filer o          Accelerated filer o          Non-accelerated filer þ 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes þ   No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o   No þ

There were 1,184 shares of the Registrant’s Common Stock, $.001 par value per share, outstanding as of March 31, 2007.

INDEX

Advanced Lighting Technologies, Inc.

		Page No.
Part I	Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets — March 31, 2007 and June 30, 2006	2
	Condensed Consolidated Statements of Operations — Three and Nine Months Ended March 31, 2007 and 2006	4
	Condensed Consolidated Statement of Shareholders’ Equity — Nine Months Ended March 31, 2007	5
	Condensed Consolidated Statements of Cash Flows — Nine Months Ended March 31, 2007 and 2006	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	17
Item 4.	Controls and Procedures	18
Part II	Other Information
Item 6.	Exhibits	19
Signatures		20
EX-31.1
EX-31.2
EX-32.1
EX-32.2

1

Advanced Lighting Technologies, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)

	(Unaudited)		(Audited)
	March 31,		June 30,
	2007		2006
Assets
Current assets:
Cash and cash equivalents	$	2,451	$	4,290
Trade receivables, less allowances of $1,168 and $742		42,871		35,857
Inventories:
Finished goods		29,376		23,977
Raw materials and work-in-process		8,773		11,825
		38,149		35,802
Prepaid expenses		2,894		2,097
Total current assets		86,365		78,046
Property, plant and equipment:
Land and buildings		10,696		10,341
Machinery and equipment		31,015		26,930
Furniture and fixtures		3,704		3,017
		45,415		40,288
Less accumulated depreciation		11,742		7,729
		33,673		32,559
Receivables from related parties		659		1,829
Investments		2,239		2,168
Other assets		2,377		3,604
Intangible assets, net		23,104		23,623
Goodwill		48,430		48,550
	$	196,847	$	190,379

See Notes to Condensed Consolidated Financial Statements

2

Advanced Lighting Technologies, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)

	(Unaudited)		(Audited)
	March 31,		June 30,
	2007		2006
Liabilities and shareholders’ equity
Current liabilities:
Short-term debt and current portion of long-term debt	$	13,088	$	6,513
Accounts payable		9,428		6,964
Payables to related parties		575		862
Employee-related liabilities		3,728		6,705
Accrued income and other taxes		905		667
Other accrued expenses		6,884		9,315
Total current liabilities		34,608		31,026
Long-term debt		119,900		121,669
Deferred tax liabilities		937		341
Deferred lease credits		3,291		3,453
Total liabilities		158,736		156,489
Minority interest		—		2,906
Preferred stock,
Series A and B		29,688		29,688
Common shareholders’ equity
Common stock, $.001 par value, 80,000 shares authorized; 1 share issued and outstanding		1		1
Paid-in-capital		1,183		1,183
Accumulated other comprehensive income		1,587		65
Retained earnings		5,652		47
Total common shareholders’ equity		8,423		1,296
	$	196,847	$	190,379

See Notes to Condensed Consolidated Financial Statements

3

Advanced Lighting Technologies, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands)

	Quarter Ended March 31,						Nine Months Ended March 31,
	2007			2006			2007			2006
Net sales	$	47,982		$	42,079		$	134,082		$	119,650
Costs and expenses:
Cost of sales		27,955			24,428			79,728			69,670
Marketing and selling		7,563			7,320			22,534			20,567
Research and development		1,743			1,585			5,116			4,752
General and administrative		2,805			2,851			8,630			8,880
Amortization of intangible assets		307			259			842			785
Special charges and asset impairment		—			4,093			—			4,093
Income from operations		7,609			1,543			17,232			10,903
Other income (expense):
Interest expense		(3,453	)		(3,651	)		(10,492	)		(10,866	)
Interest income		42			75			163			245
Income from investments		96			3			377			351
Income (loss) before income taxes and minority interest		4,294			(2,030	)		7,280			633
Income tax expense		483			345			1,185			752
Income (loss) before minority interest		3,811			(2,375	)		6,095			(119	)
Minority interest in income of consolidated subsidiary		(159	)		(229	)		(490	)		(614	)
Net income (loss)	$	3,652		$	(2,604	)	$	5,605		$	(733	)

See Notes to Condensed Consolidated Financial Statements

4

Advanced Lighting Technologies, Inc.
Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)
Nine Months Ended March 31, 2007
(dollars in thousands)

									Accumulated
									Other				Common
	Preferred		Common Stock				Paid-In		Comprehensive		Retained		Shareholders’
	Stock		Shares		Par Value		Capital		Income		Earnings		Equity		Total
Balance at June 30, 2006	$	29,688		1,184	$	1	$	1,183	$	65	$	47	$	1,296	$	30,984
Net income												5,605		5,605		5,605
Foreign currency translation adjustment										1,522				1,522		1,522
Balance at March 31, 2007	$	29,688		1,184	$	1	$	1,183	$	1,587	$	5,652	$	8,423	$	38,111

See Notes to Condensed Consolidated Financial Statements

5

Advanced Lighting Technologies, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

	Nine Months Ended March 31,
	2007			2006
Operating activities
Net income	$	5,605		$	(733	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		3,883			4,248
Amortization		842			785
Provision for doubtful accounts		289			150
Income from investments		(377	)		(351	)
Special charges and asset impairment		—			4,093
Changes in current assets and liabilities and other		(8,248	)		(20,587	)
Net cash provided by (used in) operating activities		1,994			(12,395	)
Investing activities
Capital expenditures		(5,678	)		(3,483	)
Proceeds from sale of investment		—			3,154
Cash distributions from investments		328			—
Purchase of minority interest in conrolled subsidiary		(3,289	)		—
Proceeds from sale-leaseback		—			3,841
Net cash provided by (used in) investing activities		(8,639	)		3,512
Financing activities
Net borrowings under credit facilities		6,575			5,894
Proceeds from long-term debt		—			3,850
Payments of long-term debt		(1,769	)		(1,909	)
Issuance of preferred stock		—			350
Issuance of common stock		—			53
Net cash provided by financing activities		4,806			8,238
Decrease in cash and cash equivalents		(1,839	)		(645	)
Cash and cash equivalents, beginning of period		4,290			2,643
Cash and cash equivalents, end of period	$	2,451		$	1,998
Supplemental cash flow information
Interest paid	$	13,427		$	13,855
Income taxes paid		440			554

6

Advanced Lighting Technologies, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2007
(Dollars in thousands)

A. Organization

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

B. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America 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, including adjustments of a normal and recurring nature. 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, 2006.

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

Income Taxes

Actual income tax expense for the interim periods differ from the amounts computed by applying the U.S. Federal income tax rate of 35% to the income before income taxes because under FAS No. 109, Accounting for Income Taxes, the tax benefit related to the U.S. loss for these interim periods was required to be reserved in a valuation allowance due to the uncertainty regarding the ultimate realization of the tax benefit of such losses. The income tax expense recognized for the interim periods relates to income taxes on certain foreign subsidiaries’ income. Goodwill was reduced by $120 during the nine months ended March 31, 2007 related to the benefit received from the utilization of pre-fresh start net operating losses of certain foreign subsidiaries.

7

Advanced Lighting Technologies, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2007
(Dollars in thousands)

C. Comprehensive Income

For the quarters ended March 31, 2007 and 2006, the Company’s comprehensive income (loss) was $3,903 and ($2,593), respectively. These amounts include the period’s net income and the Company’s other component of comprehensive income or loss, foreign currency translation adjustments.

For the nine months ended March 31, 2007 and 2006, the Company’s comprehensive income (loss) was $7,127 and ($1,189) respectively. These amounts include the period’s net income and the Company’s other component of comprehensive income or loss, foreign currency translation adjustments.

8

Advanced Lighting Technologies, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2007
(Dollars in thousands)

D. Financing Facilities

The Company’s Bank Credit Facility consists of a term loan requiring monthly principal payments of $183 ($7,700 outstanding at March 31, 2007) with a revolving credit loan, subject to availability, making up the remainder of the facility. Availability of borrowings under the revolving credit loan is determined by the Company’s eligible account receivables and inventories. Total availability was approximately $16,253 of which the amount outstanding under the revolving credit loan was $10,888 at March 31, 2007. Interest rates on the revolving credit loan are based on Libor plus 2.50% or Prime plus .50% (8.75% at March 31, 2007). Interest rates on the term loan are based on Libor plus 3.00% or Prime plus 1.00% (8.35% at March 31, 2007). The final maturity of the facility is December 10, 2008. The revolving credit loan amount has been classified as a current liability in accordance with the provisions of Emerging Issues Task Force Issue No. 95-22, Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements that include Both a Subjective Acceleration Clause and a Lock-box Arrangement.

The Bank Credit Facility includes affirmative and negative covenants customary for this type of agreement, prohibits cash dividends and includes financial covenants relating to Minimum Adjusted EBITDA and Capital Expenditures. The principal security for the Bank Credit Facility 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 in North America and the United Kingdom and the Company’s facility in Urbana, Illinois, and is cross-collateralized and secured with the revolving credit loan.

The Company’s long-term debt includes $114,400 of 11% Senior Notes due March 2009. The Notes are redeemable at the Company’s option, in whole or in part, at any time at a price equal to the principal amount of the Notes plus accrued interest. Interest on the Notes is payable semi-annually on March 31 and September 30. The Indenture for the Notes 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. There are no sinking fund requirements.

E. Subsequent Event

On April 11, 2007, the Company signed a commitment letter with CIT Lending Services Corporation to refinance its existing credit facilities, provide working capital and fund future acquisitions. The new financing includes up to $185 million in secured credit facilities. The transaction is subject to documentation and customary closing conditions.

F. Minority Interest

9

On March 30, 2007, the Company purchased the remaining interest in a foreign controlled subsidiary for $3,289 resulting in elimination of the Company’s minority interest liability. The difference in purchase price of $108 has been reflected as a reduction of long term assets.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Dollars in thousands)

This report on Form 10-Q may contain forward-looking statements that involve risks and uncertainties. The operation of the Company and its subsidiaries involves risks and uncertainties, including the strength of the recovery of the U.S. economy, trends affecting the Company’s financial condition or results of operations, continued growth of the metal halide lighting market, the Company’s operating and growth strategies, litigation affecting the Company, the timely development and market acceptance of new products, the ability to provide adequate incentives to retain and attract key employees, the impact of competitive products and pricing, and other risks. 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 is an innovation-driven designer, manufacturer and marketer focused on metal halide lighting products, including materials, system components, systems and equipment. Metal halide lighting is currently used primarily in commercial and industrial applications such as factories and distribution centers, outdoor site and landscape lighting, sports facilities and large retail spaces such as superstores. Systems, components and materials revenue is recognized when products are shipped, and 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 systems. 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^® pulse start metal halide products. Uni-Form^® pulse start products 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 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.

10

Results of Operations

Quarter Ended March 31, 2007 Compared to Quarter Ended March 31, 2006

The following table sets forth, as a percentage of net sales, certain items in the Company’s Condensed Consolidated Statements of Operations for the three months ended March 31, 2007 and 2006:

	Quarter Ended					Quarter Ended
	March 31, 2007					March 31, 2006
Net sales	$	47,982		100.0	%	$	42,079		100.0	%
Costs and expenses:
Cost of sales		27,955		58.3			24,428		58.1
Marketing and selling		7,563		15.8			7,320		17.4
Research and development		1,743		3.6			1,585		3.8
General and administrative		2,805		5.8			2,851		6.8
Amortization of intangible assets		307		0.6			259		0.6
Special charges and asset impairment		—		—			4,093		9.7
Income from operations		7,609		15.9			1,543		3.7
Other income (expense):
Interest expense		(3,453	)	(7.2	)		(3,651	)	(8.7	)
Interest income		42		0.1			75		0.2
Income (loss) from investments		96		0.2			3		0.0
Income before income taxes and minority interest		4,294		8.9			(2,030	)	(4.8	)
Income tax expense		483		1.0			345		0.8
Income before minority interest		3,811		7.9			(2,375	)	(5.6	)
Minority interest in income of consolidated subsidiary		(159	)	(0.3	)		(229	)	(0.5	)
Net income	$	3,652		7.6	%	$	(2,604	)	-6.2	%

Factors that have affected the results of operations for the third quarter of fiscal 2007 as compared to the third quarter of fiscal 2006 are discussed below.

Net Sales. Net sales increased 14.0% to $47,982 in the third quarter of fiscal 2007 from $42,079 in the third quarter of fiscal 2006. Third quarter metal halide product sales increased 12.3% to $39,650 compared with $35,307 in the same period last year. This increase in metal halide product sales is primarily the result of an increase in lamp and power supply sales. Non-metal halide lighting product sales increased 13.6% over the year ago period due primarily to an increase in non-metal halide lamps, fixtures, and power supply sales.

Cost of Sales. Cost of sales increased 14.4% to $27,955 in the third quarter of fiscal 2007 from $24,428 in the third quarter of fiscal 2006. As a percentage of net sales, cost of sales was 58.3% for the third quarter of fiscal 2007 compared with 58.1% for the third quarter of fiscal 2006. Cost of sales was positively impacted by the transfer of lamp production to India and improvements in cost management. Cost of sales was negatively impacted by the higher cost of power supplies and mix of product sales.

11

Marketing and Selling Expenses. Marketing and selling expenses increased 3.3% to $7,563in the third quarter of fiscal 2007 from $7,320 in the third quarter of fiscal 2006. As a percentage of net sales, marketing and selling expenses decreased slightly to 15.8% in the third quarter of fiscal 2007 from 17.4% in the third quarter of fiscal 2006. Sales increased at a higher rate than compensation and benefits and other marketing and selling expenses incurred.

Research and Development Expenses. Research and development expenses increased to $1,743 in the third quarter of fiscal 2007 as compared to $1,585 in the third quarter of fiscal 2006. Research and development expenses relate to: (i) expansion of the product line and continued improvement in lamp technology; (ii) continual development of new materials for the world’s major lighting manufacturers; (iii) development and testing of electronic and electromagnetic power supply systems; and (iv) improvement of coating processes of optical thin-films to broaden the applications and development of new thin-film materials, and using coatings to develop improvements to lighting technologies. 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.

General and Administrative Expenses. General and administrative expenses decreased slightly to $2,805 in the third quarter of fiscal 2007 as compared to $2,851 in the third quarter of fiscal 2006. As a percentage of net sales, general and administrative expenses decreased to 5.8% in the third quarter of fiscal 2007 from 6.8% in the third quarter of fiscal 2006. This decrease in general and administrative expenses as a percentage of sales was primarily due to decreases in compensation expense.

Amortization of Intangible Assets. Amortization expense of $307 in the third quarter of fiscal 2007 was comparable to amortization expense of $259 in the third quarter of fiscal 2006.

Special Charges and Asset Impairment. The Company recognized a $4,093 charge in the third quarter of fiscal 2006 related to the abandonment of certain long-lived assets and the write-down of the Solon, Ohio facility to estimated fair value.

Income from Operations. As a result of the items noted above, the Company realized income from operations in the third quarter of fiscal 2007 of $7,609 as compared to income from operations of $1,543 in the third quarter of fiscal 2006.

Interest Expense. Interest expense in the third quarter of fiscal 2007 of $3,453 was slightly lower than interest expense of $3,651 in the third quarter of fiscal 2006. This decrease was primarily due to lower average debt outstanding during the third quarter of fiscal 2007 as compared with the third quarter of fiscal 2006.

Income from Investments. Income from investments in the third quarter of fiscal 2007 was $96 compared with $3 in the third quarter of fiscal 2006. Income from investments of $96 which represents the equity income from the Company’s 40% ownership of Aldrich-APL LLC, a manufacturer and distributor of ultra-pure inorganics and metals for high-technology applications, increased from $3 in the third quarter of fiscal 2006.

Income Tax Expense. Income tax expense was $483 for the third quarter of fiscal 2007 as compared to $345 in the third quarter of fiscal 2006. The income tax expense in both quarters related to certain of the Company’s foreign operations.

12

Nine Months Ended March 31, 2007 Compared to Nine Months Ended March 31, 2006

The following table sets forth, as a percentage of net sales, certain items in the Company’s Condensed Consolidated Statements of Operations for the nine months ended March 31, 2007 and 2006:

	Nine Months Ended					Nine Months Ended
	March 31, 2007					March 31, 2006
Net sales	$	134,082		100.0	%	$	119,650		100.0	%
Costs and expenses:
Cost of sales		79,728		59.5			69,670		58.2
Marketing and selling		22,534		16.8			20,567		17.2
Research and development		5,116		3.8			4,752		4.0
General and administrative		8,630		6.4			8,880		7.4
Amortization of intangible assets		842		0.6			785		0.7
Special charges and asset impairment		—		—			4,093		3.4
Income from operations		17,232		12.9			10,903		9.1
Other income (expense):
Interest expense		(10,492	)	(7.8	)		(10,866	)	(9.1	)
Interest income		163		0.1			245		0.2
Income from investments		377		0.3			351		0.3
Income before income taxes and minority interest		7,280		5.4			633		0.5
Income tax expense		1,185		0.9			752		0.6
Income before minority interest		6,095		4.5			(119	)	(0.1	)
Minority interest in income of consolidated subsidiary		(490	)	(0.4	)		(614	)	(0.5	)
Net income	$	5,605		4.2	%	$	(733	)	-0.6	%

Factors that have affected the results of operations for the first nine months of fiscal 2007 as compared to the first nine months of fiscal 2006 are discussed below.

Net Sales. Net sales increased 12.1% to $134,082 in the first nine months of fiscal 2007 from $119,650 in the first nine months of fiscal 2006. Metal halide product sales increased 13.8% to $112,394 compared with $98,764 in the same period last year. This increase in metal halide product sales is primarily the result of an increase in lamp and power supply sales. Non-metal halide lighting product sales increased 12.6% over the year ago period due primarily to an increase in non-metal halide lamp and fixture sales.

Cost of Sales. Cost of sales increased 14.4% to $79,728 in the first nine months of fiscal 2007 from $69,670 in the first nine months of fiscal 2006. As a percentage of net sales, cost of sales was 59.5% for the first nine months of fiscal 2007 compared with 58.2% for the first nine months of fiscal 2006. Cost of sales was positively impacted by the transfer of lamp and production to India and improvements in cost management. Cost of sales was negatively impacted by the higher cost of power supplies and mix of product sales.

Marketing and Selling Expenses. Marketing and selling expenses increased 9.6% to $22,534 in the first nine months of fiscal 2007 from $20,567 in the first nine months of fiscal 2006. As a percentage of net sales, marketing and selling expenses decreased slightly to 16.8% in the first nine months of fiscal 2007

13

from 17.2% in the first nine months of fiscal 2006. Sales increased at a higher rate than marketing and selling expenses incurred.

Research and Development Expenses. Research and development expenses increased to $5,116 in the first nine months of fiscal 2007 as compared to $4,752 in the first nine months of fiscal 2006. Research and development expenses relate to: (i) expansion of the product line and continued improvement in lamp technology; (ii) continual development of new materials for the world’s major lighting manufacturers; (iii) development and testing of electronic and electromagnetic power supply systems; and (iv) improvement of coating processes of optical thin-films to broaden the applications and development of new thin-film materials, and using coatings to develop improvements to lighting technologies. 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.

General and Administrative Expenses. General and administrative expenses decreased to $8,630 in the first nine months of fiscal 2007 as compared to $8,880 in the first nine months of fiscal 2006. As a percentage of net sales, general and administrative expenses decreased to 6.4% in the first nine months of fiscal 2007 from 7.4% in the first nine months of fiscal 2006. This decrease in general and administrative expenses as a percentage of sales was primarily due to decreases in compensation expense.

Amortization of Intangible Assets. Amortization expense of $842 in the first nine months of fiscal 2007 was comparable to amortization expense of $785 in the first nine months of fiscal 2006.

Special Charges and Asset Impairment. The Company recognized a $4,093 charge in the first nine months of fiscal 2006 related to the abandonment of certain long-lived assets and the write-down of the Solon, Ohio facility to estimated fair value.

Income from Operations. As a result of the items noted above, the Company realized income from operations in the first nine months of fiscal 2007 of $17,232 as compared to income from operations of $10,903 in the first nine months of fiscal 2006.

Interest Expense. Interest expense in the first nine months of fiscal 2007 of $10,492 was slightly lower than interest expense of $10,866 in the first nine months of fiscal 2006. This decrease was primarily due to lower average debt outstanding during the first nine months of fiscal 2007 as compared with the first nine months of fiscal 2006.

Income from Investments. Income from investments in the first nine months of fiscal 2007 was $377 compared with $351 in the first nine months of fiscal 2006. Income from investments of $377 which represents the equity income from the Company’s 40% ownership of Aldrich-APL LLC, a manufacturer and distributor of ultra-pure inorganics and metals for high-technology applications, increased from $295 in the first nine months of fiscal 2006.

Income Tax Expense. Income tax expense was $1,185 for the first nine months of fiscal 2007 as compared to $752 in the first nine months of fiscal 2006. The income tax expense in both periods related to certain of the Company’s foreign operations.

Liquidity and Capital Resources

The Company’s sources of liquidity include cash and cash equivalents, cash flow from operations and amounts available under its Bank Credit Facility. The Company believes these sources of liquidity are

14

sufficient for at least the next several years. The Company believes that its cash flow from operations will be more than adequate to service the debt, prior to the maturity of the $114,400 of 11% Senior Notes.

The Bank Credit Facility consists of a term loan that requires monthly principal payments of $183 ($7,700 outstanding at March 31, 2007) with a revolving credit loan, subject to availability, making up the remainder of the facility. Total availability was approximately $16,253 of which the amount outstanding under the revolving credit loan was $10,888 at March 31, 2007. Interest rates on the revolving credit loan are based on Libor plus 2.50% or Prime plus .50% (8.75% at March 31, 2007). Interest rates on the term loan are based on Libor plus 3.00% or Prime plus 1.00% (8.35% at March 31, 2007). The final maturity of the revolving credit facility and the term loan is December 10, 2008.

The Bank Credit Facility contains certain affirmative and negative covenants customary for this type of agreement, prohibits cash dividends, and includes financial covenants related to Minimum Adjusted EBITDA and Capital Expenditures. At March 31, 2007, the Company was in compliance with the terms of the Bank Credit Facility. The principal security for the Bank Credit Facility 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 in North America and the United Kingdom as well as the Company’s facility in Urbana, Illinois, and is cross-collateralized and secured with the revolving credit loan.

Cash decreased $1,839 during the nine months ended March 31, 2007. Cash provided by operating activities totaled $1,994, cash used in investing activities totaled $8,639, and cash provided by financing activities totaled $4,806.

Net Cash Provided by Operating Activities. Net cash provided by operating activities totaled $1,994 for the nine months ended March 31, 2007.

Net Cash Used in Investing Activities. In the nine months ended March 31, 2007, net cash used in investing activities totaled $8,639, which included $5,678 of capital expenditures for plant and equipment, the majority of which relates to machinery and equipment, and $328 of distributions from investments in affiliates and $3,289 to purchase minority interest of controlled subsidiary.

Net Cash Used in Financing Activities. In the nine months ended March 31, 2007, net cash provided by financing activities was $4,806 resulting from borrowings on the Company’s revolving credit loan of $6,575 and scheduled payments of long-term debt of $1,769.

The interest-bearing obligations of the Company totaled $132,988 as of March 31, 2007, and consisted of: $18,588 outstanding under the Bank Credit Facility and $114,400 of 11% Senior Notes.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires

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us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and costs and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to: valuation of accounts and notes receivable and loan receivable from officer, valuation of investments, valuation of long-lived assets, valuation of inventory valuation reserves, revenue recognition, and deferred tax assets. We base our estimates on historical experience and on various other assumptions that we believe reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We have identified the following policies as critical to our business operations and the understanding of our results of operations. For a detailed discussion on the application of these and other accounting policies, see Note C of the “Notes to Consolidated Financial Statements” in the Annual Report on Form 10-K for the Period Ended June 30, 2006.

Valuation of Accounts and Notes Receivable

Management evaluates and makes estimates of the collectibility of the Company’s accounts and notes receivable, including unbilled accounts receivable related to long-term equipment contracts, based on a combination of factors. Management analyzes historical bad debts, customer credit-worthiness, and current economic trends in evaluating the adequacy of the allowance for doubtful accounts and whether there is any impairment in its notes receivable. In circumstances where the Company is aware of a certain customer’s inability to meet its financial obligation, a specific reserve is recorded to reduce the receivable to the amount the Company believes will be collected. Material changes in the allowance for doubtful accounts may occur if the results of management’s evaluation change or if a different method is used to estimate possible losses. The accounts receivable balance was $42,871 net of an allowance of $1,168 as of March 31, 2007.

The Company has notes receivable plus accrued interest from the Ruud Lighting, Inc. shareholders in the aggregate amount of $1,480. These notes are due June 1, 2009. Rebates earned on purchases by Ruud Lighting, Inc. pursuant to its current agreement with the Company will be credited toward prepayment of the principal and interest on the notes. The Company believes the total receivable amount will be realized in accordance with the terms of the notes.

Inventory Valuation Reserves

The Company values its inventory for accounting purposes at the lower of cost (first-in, first-out method) or market. In circumstances where the Company is aware of a problem in the valuation of a certain item, a specific reserve is recorded to reduce the item to its net realizable value. For all other inventory, the Company records a reserve based on a combination of factors, including actual usage in recent history and projected usage in the future. If expected circumstances should change due to general economic or product obsolescence issues resulting in lower-than-expected usage, management’s estimate of the net realizable value could be reduced by a material amount.

Valuation of Long-Lived Assets

The Company evaluates the carrying value of its investment in long-lived assets (e.g. property, plant and equipment and amortizable intangibles) for impairment whenever there is an impairment indicator, generally using an undiscounted cash flow methodology. Additionally, the Company evaluates the

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indefinite-lived intangibles, goodwill, trade names and trademarks, for impairment at least annually and whenever there is an impairment indicator using the fair value guidelines of FAS No. 142.

Revenue Recognition

The Company has entered into certain contracts with customers for the construction of lighting and thin-film coating equipment. The Company also has certain contracts related to the further development and application of lighting and coating technologies for the U.S. government. Revenue is recognized on these contracts as work on the contract progresses using the percentage of completion method of accounting, which relies on estimates of total expected contract revenues and costs. Under this method reasonable estimates of the costs applicable to the various stages of a contract are made, thus, impacting the level of recognized revenue. Since the financial reporting of these contracts depends on estimates, which are assessed continually during the term of the contract, recognized revenues and profit are subject to revisions as the contract progresses toward completion. Revisions in profit estimates are reflected in the period in which the facts that give rise to the revision become known. Should estimates indicate a loss is expected to be incurred under a contract, cost of sales is charged with a provision for such loss.

Deferred Tax Assets and Valuation Allowance

The Company had approximately $14,552 of net deferred tax assets related principally to certain unused tax credits and loss carryforwards as of March 31, 2007. The realization of these assets is dependent upon the Company generating future taxable income. Due to the Company’s historical results it is uncertain as to when it will realize taxable income that will allow it to utilize its tax credits and loss carryforwards and, accordingly, has recorded a valuation allowance of $15,489.

Recently Issued Accounting Pronouncements

In September 2006, the SEC staff issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.” SAB 108 was issued to provide consistency between how registrants quantify financial statement misstatements. The provisions of SAB 108 are effective for the annual period ending after November 15, 2006. The company has adopted SAB 108 and has determined that the impact is immaterial.

In November 2006 the Financial Accounting Standards Board issued FASB Statement 157
Fair Value Measurements. FASB 157 was issued to increase consistency and comparability in fair value measurements. The provisions of FASB 157 are effective for years beginning after November 15, 2007. The Company is currently determining the effect, if any, the adoption of FASB 157 will have on its financial statements.

Foreign Currency

Approximately 33% of the Company’s net sales in fiscal 2006 were denominated in currencies other than U.S. dollars, principally pounds sterling, Australian dollars, Canadian dollars, Euros and Japanese yen.

A significant weakening of such currencies versus the U.S. dollar could have a material adverse effect on the Company.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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During the nine months ended March 31, 2007, 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, 2006.

Item 4. Controls and Procedures

The Company evaluated the design and operation of its disclosure controls and procedures as of March 31, 2007, to determine whether they are effective in ensuring that the disclosure of required information is timely made in accordance with the Exchange Act and the rules and forms of the Securities and Exchange Commission. This evaluation was made under the supervision and with the participation of management, including the Company’s principal executive officer and chief financial officer. The principal executive officer and chief financial officer have concluded, based on their review, that the Company’s disclosure controls and procedures, as defined at Exchange Act Rules 13a-14(c) and 15d-14(c), are effective to ensure that information required to be disclosed by the Company in reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. No significant changes were made to the Company’s internal controls or other factors that could significantly affect these controls subsequent to the date of their evaluation.

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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 6. Exhibits

Exhibit		Incorporated
Number	Title	by Reference
2.1	Venture Lighting International, Inc. et al. Fourth Amended Chapter 11 Plan of Reorganization confirmed December 8, 2003 effective December 10, 2003		(1	)
3.1	Third Amended and Restated Articles of Incorporation filed November 12, 2004		(2	)
3.2	Certificate of Amendment by Directors or Incorporators to Articles of Advanced Lighting Technologies, Inc.		(3	)
3.3	Amended and Restated Code of Regulations		(4	)
4.1	Reference is made to Exhibit 2.1
31.1	Rule 13a-14(a)/15d-14(a) Certification
31.2	Rule 13a-14(a)/15d-14(a) Certification
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1)	Incorporated by reference to Exhibit of same number in Company’s Current Report on Form 8-K dated December 8, 2003, filed December 23, 2003.
(2)	Incorporated by reference to Exhibit of same number in Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2004, filed November 12, 2004.
(3)	Incorporated by reference to Exhibit 3.1 in Company’s Current Report on Form 8-K dated December 29, 2005, filed January 5, 2006.
(4)	Incorporated by reference to Exhibit 3.2 in Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2004, filed November 12, 2004.

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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: May 15, 2007	By:	/s/ Wayne R. Hellman
		Wayne R. Hellman
		Chief Executive Officer
Date: May 15, 2007	By:	/s/ Wayne J. Vespoli
		Wayne J. Vespoli
		Chief Financial Officer

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EXHIBIT INDEX

Exhibit		Incorporated
Number	Title	by Reference
2.1	Venture Lighting International, Inc. et al. Fourth Amended Chapter 11 Plan of Reorganization confirmed December 8, 2003 effective December 10, 2003		(1	)
3.1	Third Amended and Restated Articles of Incorporation filed November 12, 2004		(2	)
3.2	Certificate of Amendment by Directors or Incorporators to Articles of Advanced Lighting Technologies, Inc.		(3	)
3.3	Amended and Restated Code of Regulations		(4	)
4.1	Reference is made to Exhibit 2.1
31.1	Rule 13a-14(a)/15d-14(a) Certification
31.2	Rule 13a-14(a)/15d-14(a) Certification
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1)	Incorporated by reference to Exhibit of same number in Company’s Current Report on Form 8-K dated December 8, 2003, filed December 23, 2003.
(2)	Incorporated by reference to Exhibit of same number in Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2004, filed November 12, 2004.
(3)	Incorporated by reference to Exhibit 3.1 in Company’s Current Report on Form 8-K dated December 29, 2005, filed January 5, 2006.
(4)	Incorporated by reference to Exhibit 3.2 in Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2004, filed November 12, 2004.