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SECURITIES AND EXCHANGE C0MMISSION
Washington, D.C. 20549
F0RM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended November 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to .
Commission file number 0-11631
JUNO LIGHTING, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2852993
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
1300 S. Wolf Road
P.0. Box 5065
Des Plaines, Illinois 60017-5065
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (847) 827-9880
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
<PAGE 2>
Common Stock, par value $.01 per share
Common Share Purchase Rights
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 .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes X No .
Aggregate market value of voting stock held by non-affiliates of the
registrant, based upon the price of the stock as reported by the National
Association of Securities Dealers Automated Quotations System, on
January 31, 1998: $292,437,670
At January 31, 1998, 18,559,770 shares of common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
1. Registrant's Proxy Statement for its 1998 Annual Meeting of
Stockholders (the "Proxy Statement"), which will be filed with the
Securities and Exchange Commission no later than 120 days after the
end of the registrant's fiscal year, is incorporated into Part III of
this Annual Report on Form l0-K, as indicated herein.
<PAGE 3>
PART I
ITEM 1. BUSINESS
General Development of Business
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Juno Lighting, Inc. began operations in 1976 and was
incorporated in Illinois. It changed its state of incorporation
to Delaware in 1983. Executive offices and principal plant are
located at 1300 S. Wolf Road, Des Plaines, Illinois 60017-5065, a
suburb of Chicago; the telephone number is (847)827-9880. Juno
also has facilities in the Los Angeles, Indianapolis, Toronto,
Philadelphia, Dallas and Atlanta areas. The term "Juno" as used
herein means Juno Lighting, Inc.; the term "Company" as used
herein means Juno Lighting, Inc. and its subsidiaries,
collectively.
Juno is a specialist in the design, manufacture and
marketing of a full line of recessed and track lighting fixtures
for use in new construction and remodeling of commercial,
institutional and residential buildings. Juno's principal
products use incandescent, high intensity discharge and
fluorescent light sources and are designed for attractive
appearance, reliable and flexible function, efficient operation
and simple installation and servicing. Through Indy Lighting,
Inc. ("Indy"), a wholly-owned subsidiary of Juno, the Company is
also engaged in the marketing, design and manufacture of other
incandescent and fluorescent lighting products with application
in the commercial lighting market, primarily in department and
chain stores. New product development is of prime importance to
the Company and the Company has been innovative and responsive to
its customers' needs both in the styling and technical
development of its products.
Approximately 94% of the Company's sales in fiscal 1997 were
in the United States and most of the balance in Canada. The
Company's sales are made primarily to electrical distributors, as
well as to certain wholesale lighting outlets.
The Company's products are marketed primarily to
distributors who resell the products for use in new residential,
commercial and institutional construction and in remodeling
existing structures. The Company therefore cannot determine with
any precision the percentage of its revenues derived from sales
of products installed in each type of building nor can it
determine the percentage of its products sold for new
construction as compared to remodeling. The Company's sales,
like those of the lighting fixture industry in general, are
<PAGE 4>
partly dependent on levels of activity in new construction and
remodeling. No assurances can be given that historic levels of
activity will increase or be maintained.
Products
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The Company produces a wide variety of lighting fixtures and
related equipment of both contemporary and traditional design,
most of which are available in a variety of styles, sizes and
finishes. Some styles differ from others only in size, light
source capacity or other minor modifications. Some fixtures
which Juno produces are designed to be installed in recesses in
ceilings, while others are designed to be mounted on electrified
tracks affixed to ceilings or walls, while still others are used
in merchandise display cases.
Each recessed type fixture is composed of a housing and a
separate trim. Housings may be fitted with a variety of trims
offering a wide choice of diffusers, lenses and louvers to
satisfy different optical and aesthetic requirements. Recessed
fixtures are generally used for down-lighting, but by special
configuration they also may be used for wall-washing and spot
lighting. Juno has designed recessed lighting fixtures, sold
under the Sloped Ceiling Down-Lights name, that provide lighting
perpendicular to a floor from a sloped ceiling. Juno also
produces a series of recessed lighting fixtures sold under the
name Air-Loc which are designed to restrict the passage of air
into and out of a residence through the fixture to minimize
energy loss.
Juno's principal track lighting system, sold under the
Trac-Master name, is made up of an electrified extruded aluminum
channel (called the trac) and a wide variety of individual
fixtures that may be connected at any point on the track. The
individual fixtures are available in different geometric styles,
light source sizes and finishes. Juno also has a line of track
lighting produced under the name of Vector by Juno to complement
its line of products under the Trac-Master name. This line is a
lower priced but high quality line of products that do not
contain some of the features of Trac-Master.
Track lighting products were originally developed for use in
store displays. While this use continues to be important, track
lighting is also popular in the residential market, particularly
in the remodeling and do-it-yourself markets. One line of Juno
trac fixtures allows each track light to be controlled by either
of two switches and includes a series of miniature low voltage
halogen track lights that provides higher lumens per watt than
standard incandescent light sources. In the fall of fiscal 1997
<PAGE 5>
Juno introduced Trac-Sign (patent pending) which is a line of
flexible, internally illuminated sign products that work in
conjunction with its existing track system. The product consists
of an aluminum enclosure which utilizes a fluorescent light
source and permits the end-user to easily and economically
display and light advertising material in the form of standard-size
transparencies.
Juno also produces and markets a line of miniature trac
lighting products under the name Trac 12. This is a low voltage
trac lighting system featuring small individual fixtures and a
miniature lamp holder used in linear lighting applications.
Pursuant to an acquisition, several years ago Juno began
manufacturing and selling a line of fixtures used in show case
lighting applications under the name Danalite. This linear
configuration which uses low voltage and fluorescent light
sources is used in show cases as well as other merchandise
display cases and certain other commercial and residential accent
lighting applications. The products are made utilizing aluminum
extruded channels in various lengths and finishes. These
products primarily utilize miniature 12 volt halogen light
sources with hinged sockets so that the process of changing the
light source can be done easily.
In June of 1997, Juno acquired Advanced Fiberoptic
Technologies, Inc., a designer and manufacturer of a system of
fiberoptic lighting products. This system consists of an
illuminator, which uses either halogen or high intensity
discharge light sources, fiberoptic cable and in some cases
fixtures. The electrically powered illuminator generates the
light and transfers it into the ends of the optical fiber. The
principal advantage of fiberoptic lighting is that it provides
light at the application level free of heat and ultraviolet
light.
Juno produces a line of energy efficient Exit and Emergency
lighting products that are electronically powered and protected.
This product line uses LED (light emitting diode) technology for
its light source.
Indy produces a wide variety of commercial lighting fixture
products for use primarily in department and chain stores. These
products use incandescent, fluorescent, high intensity discharge
and compact fluorescent light sources to provide specialty and
general purpose lighting.
The Company believes its innovations in simplifying
installation and improving the function of its lighting products
have served to increase demand for its products.
Juno, Indy, Trac-Master, Real Nail and Air-Loc are
registered trademarks of Juno.
<PAGE 6>
Production
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Substantially all of the Company's products are designed and
engineered by its staff. Tools, dies and molds are manufactured
by outside sources to the Company's designs and specifications.
Tooling is consigned to independent job shops, largely near the
Company's manufacturing facilities, which fabricate and finish
the components of the Company's products. Nevertheless, the
Company inspects the components and assembles, tests, packages,
stores and ships the finished products. Most assembly operations
are performed at the Des Plaines plant and at Indy's Indianapolis
assembly facilities.
The Company believes that utilization of sub-contractors
with specialized skills is the most efficient method of
manufacturing its products. The Company further believes that
alternate tool making specialists and fabricators are generally
available.
The Company spent approximately $4,719,000, $4,309,000 and
$3,685,000 on research, development and testing of new products
and development of related tooling in fiscal 1997, 1996 and 1995,
respectively.
Sales and Distribution
- ----------------------
The Company sells directly to distributors of lighting
products, located throughout the United States and in Canada.
Each of Juno's distributors maintains its own inventory of Juno
products and in turn, sells to electrical contractors and
builders, and in some cases, also sells at the retail level.
Sales to distributors are made through the Company's own staff of
sales managers and sales personnel and also through
manufacturers' agents who sell other electrical products of a
non-competitive character. The Company also seeks to have its
products specified by architects, engineers and contractors for
large commercial and institutional projects with actual sales
made through the Company's distributors. The Company also sells
to certain wholesale lighting outlets and national accounts.
Inventories of all items Juno produces are maintained at the
Des Plaines plant and substantially all items in the Company's
warehouses in the Atlanta, Dallas, Los Angeles, Philadelphia and
Toronto areas. Inventories of Indy's products are maintained at
Indy's Indianapolis facilities. Most orders are shipped from
stock inventory within 48 hours of receipt.
Indy sells its products primarily to the commercial
construction industry. Indy's products are generally shipped
from the factory directly to the job site.
<PAGE 7>
The Company is not dependent on any single customer or group
of customers and no single customer accounted for as much as 10%
of sales in fiscal 1997.
Competition
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There are no published figures that identify the overall
market for the Company's products. Nevertheless, the Company
believes that Juno's sales place Juno among the five
highest-selling manufacturers of track and recessed lighting
products in the United States, but that two competitors have
substantially larger sales. Since the Company introduced its
line of Exit and Emergency lighting products in fiscal 1996,
management believes that its share of this market has been
insignificant. The Company estimates that there are more than
fifty manufacturers of competing track, recessed and exit and
emergency lighting products. The Company competes not only with
manufacturers in its own fields, but also with manufacturers of a
variety of fluorescent, high intensity discharge, exit and
emergency and decorative lighting products. A number of
competitors, including the Company's two largest competitors, are
divisions or subsidiaries of larger companies which have
substantially greater resources than the Company.
There is wide price variance in competitive products and the
Company believes that Juno's line can be described as moderately
priced in order to be attractive to the high-volume commercial
and residential markets. However, lighting fixtures are often
purchased in small quantities and, as a result, product features
may be more important to a purchaser in small quantities than
cost. The Company believes that its growth has been attributable
principally to the design and construction of its products, the
quality of its sales force and its reputation for prompt delivery
and service.
Although the Company believes that it holds certain valuable
patents, the Company does not believe that any one patent is
material to its business, taken as a whole.
Employees
- ---------
The Company employs approximately 1,061 persons. Most of
the Company's factory employees are represented by one of two
unions. The expiration dates for the collective bargaining
agreements pertaining to the Company's Des Plaines, Illinois, and
Indianapolis, Indiana locations are September 1999 and September
1998, respectively.
<PAGE 8>
ITEM 2. PROPERTIES
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In October, 1997 Juno moved its executive offices, principal
assembly and warehouse operations to a newly constructed building
located in Des Plaines, Illinois of approximately 510,000 square
feet of space. This facility replaces Juno's previous facility
also located in Des Plaines, Illinois which consisted of three
buildings totalling approximately 350,000 square feet of space.
The construction cost of the new facility including furniture and
equipment was $22,470,000. The cost of the project was financed
out of existing funds. During fiscal 1997 Juno sold two of the
three buildings that comprised its previous facility which
generated proceeds of $4,322,000 and a gain of $397,000. The
Company plans to sell the remaining building.
Juno owns distribution warehouses in New Jersey, Georgia,
and Brampton, Ontario which have, in the aggregate, approximately
140,700 square feet of floor space and owns a 130,000 square foot
assembly and general office facility in Indianapolis, Indiana for
its Indy Lighting, Inc. subsidiary. The Company leases two
additional distribution warehouses for relatively short terms
which have, in the aggregate, approximately 92,000 square feet of
floor space. These warehouse leases call for an aggregate annual
rental of approximately $336,000. The Company's facilities are
modern, considered adequate for its business as presently
conducted and experience varying levels of utilization.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
On October 8, 1996, Juno Online Services, L.P. ("Juno Online") filed a
complaint (Civil Action No. 96-1505-A) in the United States District Court,
Eastern District of Virginia against Juno and Network Solutions, Inc. ("NSI")
seeking declaratory judgment that Juno Online's use of the word "Juno" does not
infringe on Juno's registered trademarks, and alleging trademark misuse and
Lanham Act violations by Juno. The complaint seeks injunctive relief and
damages (including treble damages and punitive damages of $100 million). Juno
Online voluntarily dismissed NSI from the case. The action arose after Juno
sent a letter to NSI, which is the exclusive registrar of Internet "domain
names," informing NSI of Juno's belief that Juno Online's use of the word
"JUNO" in its domain name infringes upon Juno's trademark rights under the
Lanham Act.
Juno filed a motion to dismiss based on lack of personal jurisdiction, or
in the alternative, a motion to transfer for improper venue or to a more
convenient forum. The court denied the motion to dismiss, but granted the
motion to transfer the case to the United States District Court for the
Northern District of Illinois. The transfer order was entered on January 13,
1997.
<PAGE 9>
Juno Online filed an Amended Complaint in the United States District
Court for the Northern District of Illinois on February 25, 1997. The
four-count Amended Complaint seeks a declaration of rights (Count I), and
relief for trademark misuse (Count II), for violations of Sections 43(a) of the
Lanham Act (Count III), and for unfair competition and deceptive trade
practices under Illinois state law (Count IV).
Juno answered the Amended Complaint on March 18, 1997, and filed a
Counterclaim seeking injunctive and other relief for Juno Online's violations
of the Lanham Act, for trademark dilution, for unfair competition, for
violation of Illinois' Uniform Deceptive Trade Practices Act, for violation
of Illinois' Consumer Fraud and Deceptive Trade Practices Act, and for
violation of Illinois' Anti-Dilution Act. On that same date, Juno filed a
Motion to Dismiss Counts II, III and IV of Juno Online's Amended Complaint and
to strike all of Juno Online's claims for monetary relief. On September 30,
1997, the District Court granted Juno's Motion to Dismiss Counts II, III and
IV, entered judgment in Juno's favor on Count II, dismissed Counts III and
IV, and struck all claims for monetary relief, including punitive damages in
the Amended Complaint.
Juno intends to vigorously defend itself in this action. While no
assurance can be given as to the outcome of this case, Juno believes that this
case will not have a material adverse effect on its financial condition or
results of operation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
None.
Executive Officers Of The Registrant
The following table gives certain information with respect
to the Executive Officers of the Company as of January 31, 1998:
Name Age Positions Held
- ---- --- -----------------------------------
Robert S. Fremont 73 Chairman of the Board,
Chief Executive Officer and Director
Glenn R. Bordfeld 51 Vice President, Sales
Thomas W. Tomsovic 56 Vice President, Operations and
Director
George J. Bilek 43 Vice President, Finance and Treasurer
Charles F. Huber 56 Vice President, Corporate Development
There are no family relationships among the above
officers, nor an arrangement or understanding between any
officer and any other person pursuant to which the officer was
elected. None of the officers has been involved in any legal
<PAGE 10>
proceedings of the nature described in Item 401(f) of
Regulation S-K. All officers were last elected to their
present positions with Juno on April 29, 1997. The term of
each officer of Juno expires at the meeting of the Board of
Directors on the date of the 1998 Annual Meeting of the
Stockholders.
Robert S. Fremont founded the Company in 1976, has been a
Director since 1976 and was its President through November 30,
1994. Mr. Fremont has been Chairman of the Board and Chief
Executive Officer since December 1, 1994. Mr. Fremont was
Treasurer of the Company from 1976 to April, 1990.
Glenn R. Bordfeld has been Vice President, Sales since
July, 1991. He was employed by the Company as its National
Sales Manager from November, 1988 to July, 1991; its Assistant
Sales Manager from November, 1985 to November, 1988 and its
Advertising Manager from November, 1982 to November, 1985.
Thomas W. Tomsovic has been employed by the Company since
its founding in 1976. He was elected Vice President,
Manufacturing in July, 1983 and Vice President, Operations in
June, 1986. Mr. Tomsovic has been a Director since June,
1986.
George J. Bilek has been Vice President, Finance and
Treasurer since April, 1990. He was employed by the Company
as its Comptroller from September, 1985 to April, 1990.
Charles F. Huber has been Vice President, Corporate
Development since December, 1992. From January, 1989 to
December, 1992 he was employed by the Company as the Director
of Corporate Development. From October, 1984 to January, 1989
he was employed by Reliance Electric, Inc., a manufacturer and
distributor of electrical products, as its Vice President and
General Manager.
<PAGE 11>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
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STOCKHOLDER MATTERS
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Common Stock and Dividend Information
The following table sets forth, for the fiscal years
indicated, the range of high and low sales prices as reported
by the Nasdaq Stock Market.
As of January 31, 1998 there were 417 holders of record of
Common Stock, at least 300 of which own 100 or more shares.
Fiscal 1997 Fiscal 1996
High Low Dividends High Low Dividends
Per Share Per Share
------ ------ --------- ------ --- ---------
First Quarter 16-7/8 14-1/2 $.08 18-1/2 15 $.08
Second Quarter 17-1/8 14-1/2 .08 18-1/8 13 .08
Third Quarter 17-1/2 14-7/8 .08 17-1/8 14-5/8 .08
Fourth Quarter 19-5/8 14-3/4 .08 17-1/4 14-1/2 .08
<PAGE 12>
ITEM 6. SELECTED FINANCIAL DATA
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FINANCIAL HIGHLIGHTS
(in thousands except per share amounts)
Year ended November 30, 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Net Sales $139,855 $131,479 $126,364 $126,777 $109,098
Gross Profit $ 67,974 $ 63,160 $ 61,279 $ 65,549 $ 55,861
Net income $ 20,303 $ 19,897 $ 19,974 $ 22,907 $ 18,213
Percent of net income to 14.5% 15.1% 15.8% 18.1% 16.7%
net sales
Net income per common share $1.10 $1.08 $1.08 $1.23 $.98
Cash dividends per common $ .32 $ .32 $ .30 $ .26 $.22
share
Total Assets $187,389 $178,181 $160,089 $145,756 $126,266
Long - Term Debt $ 3,385 $ 4,433 $ 5,976 $ 6,404 $ 6,856
Stockholders' Equity $170,630 $155,661 $141,368 $126,748 $107,977
Stockholders' Equity per $9.20 $8.41 $7.66 $6.87 $5.87
common share
Working Capital $110,876 $104,465 $102,294 $ 89,451 $ 72,964
Current Ratio 10.5 to 1 7.5 to 1 10.6 to 1 9.5 to 1 8.8 to 1
<PAGE 13>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
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CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Results of Operations
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This document contains various forward-looking statements. Statements in this
document that are not historical are forward-looking statements. Such
statements are subject to various risks and uncertainties that could cause
actual results to vary materially from those stated. Such risks and
uncertainties include: economic conditions generally; levels of construction
and remodeling activities, the ability to improve manufacturing efficiencies,
disruptions in manufacturing or distribution, product and price competition,
raw material prices, the ability to develop and successfully introduce new
products, technology changes, patent issues, exchange rate fluctuations, and
other risks and uncertainties. The Company undertakes no obligation to update
any such factors or to publicly announce the result of any revisions to any of
the forward looking statements contained herein to reflect future events or
developments.
Fiscal 1997 Compared to Fiscal 1996. For the fiscal year ended November 30,
1997, net sales increased approximately $8,376,000 or 6.4% to $139,855,000 from
$131,479,000 for the like period in 1996. This increase is due primarily to
sales of new products introduced in 1996. Sales through Juno's Canadian
subsidiary increased 11.2% to $8,571,000 for the year ended November 30, 1997
compared to $7,711,000 for the like period in 1996.
Gross profit expressed as a percentage of sales increased slightly to 48.6%
in fiscal 1997 compared to 48.0% in fiscal 1996 due primarily to reductions in
raw material costs and improvements in manufacturing productivity.
Selling, general and administrative expenses as a percentage of sales
increased to 29.0% in fiscal 1997 compared to 28.0% in fiscal 1996 due, in
part, to costs associated with the Company's move to its new factory and
corporate office facilities in the fourth quarter of 1997. In addition, Juno
incurred one-time charges in 1997 to effect field repairs of a defective
component in certain exit and emergency lighting fixtures. The fixtures from
this product line required the replacement of an electric component that was
supplied by a vendor.
The effective income tax rate for fiscal 1997 increased to 35.3% compared to
33.9% for fiscal 1996. Since the Company's investment portfolio consists
largely of municipal bonds, the interest earned is substantially tax exempt.
Therefore, in periods when operating earnings increase compared to prior years,
the relationship of tax-exempt income to total income decreases thus producing
a higher effective income tax rate.
Fiscal 1996 Compared to Fiscal 1995. For the fiscal year ended November 30,
1996, net sales increased approximately $5,115,000 or 4.0% to $131,479,000 from
$126,364,000 for the like period in 1995. This increase is due primarily to
sales of new products introduced in 1996 and improved sales through its wholly-
owned subsidiary, Indy Lighting, Inc. These increases were offset by
<PAGE 14>
continuing price competition and sluggish demand from certain end use markets
during the first half of 1996. Sales through Juno's Canadian subsidiary
increased 9.7% to $7,711,000 for the year ended November 30, 1996 compared to
$7,032,000 for the like period in 1995.
Gross profit expressed as a percentage of sales decreased slightly to 48.0%
in fiscal 1996 compared to 48.5% in fiscal 1995. Improvements resulting from
reductions in raw material costs and ongoing cost reductions were offset by
one-time expenditures in the first quarter of 1996 resulting from the labor
contract settlement, increases in aggregate discounting to customers, changes
in product sales mix and general inflationary cost increases incurred in the
first half of 1996.
Selling, general and administrative expenses as a percentage of sales
increased to 28.0% in fiscal 1996 compared to 26.6% in fiscal 1995 due
primarily to advertising and promotional costs associated with new product
introductions, increases in freight costs and increases in salaries and
benefits.
The effective income tax rate for fiscal 1996 decreased to 33.9% compared to
35.4% for fiscal 1995. Since the Company's investment portfolio consists
largely of municipal bonds, the interest earned is substantially tax exempt.
Therefore, in periods when operating earnings are down relative to tax exempt
income, the relationship of tax exempt income to total income increases thus
producing a lower effective income tax rate.
INFLATION While management believes it has generally been successful in
controlling the prices it pays for materials and passing on increased costs by
increasing its prices, no assurances can be given as to the Company's future
success in limiting material price increases or that it will be able to fully
reflect any material price increases in the prices it charges its customers or
fully offset such price increases through improved efficiencies.
Financial Condition
- -------------------
FISCAL 1997 The Company generated positive cash flow from operating activities
of $17,200,000 comprised principally of net income, depreciation and
amortization, and a decrease in inventory (collectively aggregating
$24,355,000), net of a decrease in accrued liabilities ($3,773,000) and an
increase in accounts receivable ($1,359,000). Miscellaneous other assets
increased to $4,456,000 from $67,000 due to the reclassification of the
Company's remaining unsold building to other assets in recognition of its
status as a non-productive asset.
The Company used the net cash provided from operating activities to finance
capital expenditures of $13,226,000, primarily for its new factory and office
facility, make principal payments on long-term debt of $1,048,000 and pay
dividends of $5,925,000, which reflected a quarterly dividend rate of $.08 per
share.
<PAGE 15>
On October 22, 1997 the Company announced the declaration of a cash dividend
of $.09 per share payable January 15, 1998 to stockholders of record December
15, 1997. This represents a 13% increase from the previous quarterly rate of
$.08 per share.
The Company has completed its new factory and corporate office facility in
Des Plaines, Illinois. Final occupancy took place on October 12, 1997. The
cost of the project, including furniture and equipment, amounted to $22,470,000
and was financed out of existing corporate funds.
The Company generated additional positive cash flow of $4,322,000 from the
sale of two of its three buildings, all of which were vacant due to the move to
the new corporate facility. The company used these proceeds to retire an
existing Industrial Development Revenue Bond of approximately $950,000.
FISCAL 1996 The Company generated positive cash flow from operating activities
of $22,162,000 comprised principally of net income, depreciation and
amortization, and an increase in accrued liabilities (collectively aggregating
$27,365,000), net of increases in inventory ($3,692,000) and accounts
receivable ($1,965,000). In order to maintain the Company's commitment to
prompt delivery of product to its customers and to support the Company's
planned move to its new facility in 1997, inventory increased by 18.9% compared
to 1995 levels. Accounts receivable increased 11.7% which approximates the
increase in the sales volume for the fourth quarter of 1996 compared to 1995.
Net property and equipment increased 32.2% and accrued liabilities increased
70.9% due primarily to construction in process for the new facility.
The Company used the net cash provided from operating activities to finance
capital expenditures of $13,316,000, increase its investment portfolio by
$5,695,000, and pay dividends of $5,903,000, which reflected a quarterly
dividend rate of $.08 per share.
FISCAL 1995 The Company generated positive cash flow from operating activities
of $20,166,000 comprised principally of net income, depreciation and
amortization, and an increase in accounts payable (collectively aggregating
$23,469,000), net of increases in inventory ($1,372,000) and prepaid expenses
($1,727,000). In order to maintain the Company's commitment to prompt delivery
of product to its customers, inventory increased by 7.5% compared to 1994
levels. Prepaid expenses increased 37.1% due primarily to expenditures for
product catalogs and sales literature associated with new product introductions
for 1996.
The Company used the net cash provided from operating activities to finance
capital expenditures of $3,708,000, increase its investment portfolio by
$7,933,000, repurchase 67,500 shares of its outstanding common stock
($1,034,000) and pay dividends of $5,546,000, which reflected an increase in
the quarterly dividend rate to $.08 per share for the third and fourth quarters
of the year from $.07 per share for the first and second quarters of the year.
<PAGE 16>
On November 1, 1995, the Board of Directors authorized the purchase by the
Company of up to 1,000,000 shares of its outstanding common stock. The
authorization is effective for a 12-month period.
OTHER MATTERS Partly in response to an assessment of the Company's exposure to
year 2000 issues, the Company has initiated a program to upgrade its business
hardware and software. The cost of this program will be capitalized for
accounting purposes and approximate $3,000,000 in fiscal 1998. Based on
management's evaluation to date, management is not aware of any other
significant costs to be incurred in connection with the resolution of year 2000
issues.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
<PAGE 17>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA PAGE
Index to Financial Statements
Financial Statements:
Report of Independent Accountants 18
Consolidated Statements of Income for the
three years ended November 30, 1997 19
Consolidated Balance Sheets at November 30,
1997 and 1996 20-21
Consolidated Statements of Stockholders' Equity
for the three years ended November 30, 1997 22
Consolidated Statements of Cash Flows for the
three years ended November 30, 1997 23
Notes to Consolidated Financial Statements 24-32
Financial Statement Schedule:
For the three years ended November 30, 1997
Valuation and Qualifying Accounts 40
<PAGE 18>
Report of Independent Accountants
---------------------------------
To the Board of Directors and
Stockholders of Juno Lighting, Inc.
In our opinion, the accompanying consolidated balance sheets and
the related consolidated statements of income, of stockholders'
equity and of cash flows present fairly, in all material
respects, the financial position of Juno Lighting, Inc. and its
subsidiaries at November 30, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years
in the period ended November 30, 1997, in conformity with
generally accepted accounting principles. These financial
statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
Chicago, Illinois
January 15, 1998
<PAGE 19>
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except share amounts)
Year ended November 30, 1997 1996 1995
-------- -------- --------
Net sales $139,855 $131,479 $126,364
Cost of sales 71,881 68,319 65,085
-------- -------- --------
Gross profit 67,974 63,160 61,279
Selling, General and Administrative 40,601 36,766 33,634
-------- -------- --------
Operating income 27,373 26,394 27,645
-------- -------- --------
Other income (expense):
Interest expense (244) (317) (374)
Interest and dividend income 3,946 3,957 3,633
Miscellaneous 318 78 10
-------- -------- --------
Total other income 4,020 3,718 3,269
-------- -------- --------
Income before taxes on income 31,393 30,112 30,914
Taxes on income 11,090 10,215 10,940
-------- -------- --------
Net income $ 20,303 $19,897 $19,974
======== ======== ========
Net income per common share $ 1.10 $ 1.08 $ 1.08
======== ======= =======
Average number of common shares 18,540,835 18,494,548 18,563,341
outstanding
See notes to consolidated financial statements.
<PAGE 20>
CONSOLIDATED BALANCE SHEET
(in thousands)
November 30, 1997 1996
-------- -------
Assets
Current:
Cash $ 6,806 $ 3,473
Marketable securities 65,766 67,622
Accounts receivable, less allowance for doubtful
accounts of $907,000 and $554,000 22,533 21,725
Inventories 22,707 23,275
Prepaid expenses and miscellaneous 4,696 4,346
------- -------
Total current assets 122,508 120,441
------- -------
Property and equipment:
Land 7,322 8,719
Building and improvements 31,372 21,694
Tools and dies 7,117 5,911
Machinery and equipment 6,299 5,422
Computer equipment 2,060 1,480
Office furniture and equipment 2,166 1,990
Construction-in-process - 12,200
------- --------
56,336 57,416
Less accumulated depreciation (11,887) ( 14,611)
------- -------
Net property and equipment 44,449 42,805
------- -------
Other assets:
Marketable securities 11,373 10,720
Goodwill and other intangibles,
net of accumulated amortization of
$1,367,000 and $1,877,000 4,603 4,148
Miscellaneous 4,456 67
-------- -------
Total other assets 20,432 14,935
Total assets $187,389 $178,181
======== ========
<PAGE 21>
CONSOLIDATED BALANCE SHEET
(in thousands)
November 30, 1997 1996
---- ----
Liabilities
Current:
Accounts payable $ 3,579 $ 4,132
Accrued liabilities 7,938 10,301
Current maturities of long-term debt 115 1,543
-------- -------
Total current liabilities 11,632 15,976
-------- -------
Long-term debt, less current maturities 3,385 4,433
-------- -------
Deferred income taxes payable 1,742 2,111
Commitments
Stockholders' Equity
Common stock, $.01 par value; 50,000,000 shares
authorized, 18,563,412 and 18,563,412
shares issued. 186 186
Paid-in capital 4,934 4,915
Cumulative marketable securities valuation
adjustment 723 670
Cumulative (loss) on foreign currency translation (395) (197)
Retained earnings 165,238 150,883
------- -------
170,686 156,457
Less: Treasury stock, at cost; 3,642 and 50,400 shares (56) (796)
------- -------
Total stockholders' equity 170,630 155,661
-------- --------
Total liabilities and stockholders' equity $187,389 $178,181
======== ========
See notes to consolidated financial statements.
<PAGE 22>
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
(in thousands)
Years ended November 30,
1995, 1996 and 1997 Cumulative Cumulative
Marketable Gain (Loss)
Common Stock Securities on Foreign
Amount Paid-In Valuation Currency Retained Treasury
$.01 PAR Capital Adjustment Translation Earnings Stock Total
-------- ------- ---------- ----------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 1, 1994 $185 $3,922 $ - $(273) $122,914 $ - $126,748
Effect of SFAS 115 Adoption - - (1,011) - - - (1,011)
Treasury stock purchased - - - - - (1,034) (1,034)
Exercise of stock options - 397 - - - - 397
Tax benefit of stock
options exercised - 96 - - - - 96
Net income for 1995 - - - - 19,974 - 19,974
Gain on foreign currency
translation - - - 72 - - 72
Cash dividend ($0.30 per share) - - - - (5,546) - (5,546)
Change in unrealized
holding gains - - 1,672 - - - 1,672
-------- ------- ------- ----------- ------- ------- -------
Balance, November 30, 1995 185 4,415 661 (201) 137,342 (1,034) 141,368
Treasury stock purchased - - - - - (637) (637)
Treasury stock reissued - - - - (453) 875 422
Exercise of stock options 1 379 - - - - 380
Tax benefit of stock options
exercised - 121 - - - - 121
Net income for 1996 - - - - 19,897 - 19,897
Gain on foreign currency
translation - - - 4 - - 4
Cash dividend ($0.32 per share) - - - - (5,903) - (5,903)
Change in unrealized holding
gains - - 9 - - - 9
-------- ------- ------- ---------- ------- ----- -------
Balance, November 30, 1996 186 4,915 670 (197) 150,883 (796) 155,661
Treasury stock reissued - - - - (23) 740 717
Tax benefit of stock options
exercised - 19 - - - - 19
Net income for 1997 - - - - 20,303 - 20,303
(Loss) on foreign currency
translation - - - (198) - - (198)
Cash dividend ($0.32 per share) - - - - (5,925) - (5,925)
Change in unrealized holding gains - - 53 - - - 53
-------- ------ ------- ------------ -------- ------ --------
Balance, November 30, 1997 $186 $4,934 $723 $(395) $165,238 $(56) $170,630
======== ====== ======= ============ ======== ====== ========
</TABLE>
See notes to financial statements.
<PAGE 23>
CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
Year ended November 30, 1997 1996 1995
------- ------- -------
Net income $20,303 $19,897 $19,974
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 3,484 3,074 2,785
Gain on sale of assets (397) - -
Increase (decrease) in allowance for doubtful 353 (300) 73
accounts
Deferred income taxes (369) (18) 79
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (1,359) (1,965) 215
Decrease (increase) in inventory 568 (3,692) (1,372)
(Increase) decrease in prepaid expenses (386) 714 (1,727)
(Increase) decrease in other assets (671) 55 (19)
(Decrease) increase in accounts payable (553) 3 710
(Decrease) increase in accrued liabilities (3,773) 4,394 (552)
------- ------ ------
Net cash provided by operating activities 17,200 22,162 20,166
------- ------ ------
Cash flows provided by (used in) investing activities:
Purchases of marketable securities (22,514) (43,226) (47,741)
Proceeds from sales of marketable securities 23,807 37,531 39,808
Proceeds from sale of assets 4,322 - -
Capital expenditures (13,226) (13,316) (3,708)
------- ------- --------
Net cash (used in) investing activities (7,611) (19,011) (11,641)
------- ------- -------
Cash flows provided by (used in) financing activities:
Principal payments on long-term debt (1,048) (458) (428)
Dividends paid (5,925) (5,903) (5,546)
Purchase of treasury stock - (637) (1,034)
Proceeds from sale of common stock through
Employee Stock Purchase Plan 202 - -
Proceeds from exercise of stock options 515 801 397
------- ------- -------
Net cash (used in) financing activities (6,256) (6,197) (6,611)
------- ------- -------
Net increase (decrease) in cash 3,333 (3,046) 1,914
Cash at beginning of year 3,473 6,519 4,605
------- ------- -------
Cash at end of year $ 6,806 $ 3,473 $ 6,519
======= ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 256 $ 320 $ 360
Income Taxes $11,781 $10,577 $11,670
See notes to consolidated financial statements.
<PAGE 24>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Juno Lighting, Inc.
Summary of Significant Accounting Policies
NATURE OF THE BUSINESS Juno Lighting, Inc. (the "Company") is a specialist in
the design, manufacture and marketing of lighting fixtures for commercial and
residential use primarily in the United States.
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated.
USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
MARKETABLE SECURITIES On December 1, 1994, the Company adopted the provisions
of Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." Consistent with the
provisions of SFAS 115, the Company has classified its current and non-current
securities as available-for-sale and reported them at their estimated market
values, which have been determined based upon published market quotes.
Unrealized gains and losses relating to available-for-sale securities are
considered to be temporary and therefore are excluded from earnings and
recorded as a separate component of stockholders' equity until realized.
Realized gains and losses on sales of marketable securities are computed using
the specific identification method.
INVENTORIES Inventories are valued at the lower of cost (first-in, first-out)
or market.
PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation
is computed over estimated useful lives using the straight-line method for
financial reporting purposes and accelerated methods for income tax reporting.
Depreciation expense in 1997 and 1996 amounted to approximately $3,287,000 and
$2,887,000, respectively.
Useful lives for property and equipment are as follows:
Buildings and improvements 20 - 40 years
Tools and dies 3 years
Machinery and equipment 7 years
Computer equipment 5 years
Office furniture and equipment 5 years
GOODWILL Goodwill is amortized using the straight-line method over a forty
year period.
<PAGE 25>
INCOME TAXES The Company uses the asset and liability approach under which
deferred taxes are provided for temporary differences between the financial
reporting and income tax bases of assets and liabilities based on enacted tax
laws and rates applicable to the periods in which the differences are expected
to affect taxable income.
RESEARCH AND DEVELOPMENT The Company spent approximately $4,719,000,
$4,309,000 and $3,685,000 on research, development and testing of new products
and development of related tooling in fiscal 1997, 1996 and 1995, respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's marketable securities are
recorded at market value. The carrying amount of the Company's other financial
instruments approximates their estimated fair value based upon market prices
for the same or similar type of financial instruments.
FOREIGN CURRENCY TRANSLATION The financial statements of the Company's
Canadian subsidiary have been translated in accordance with the provisions of
Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translation" using local currency as the functional currency.
EARNINGS PER SHARE Earnings per share are computed based on the weighted
average number of shares of common stock and common stock equivalents (stock
options) outstanding. Share and per share information have been adjusted for
all stock splits.
STOCK-BASED COMPENSATION In October 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS 123") which is effective for the Company's
year ended November 30, 1997. As permitted by SFAS 123, the Company has
elected to continue to account for its stock-based awards in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25") and has provided the pro forma disclosures as required by
SFAS 123 for the years ended November 30, 1997 and 1996.
NEW ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share," in
February 1997. This statement establishes new standards for computing and
presenting earnings per share. This statement is effective for financial
statements issued for periods ending after December 15, 1997; earlier adoption
is not permitted. Adoption of this statement will require the presentation of
basic and diluted earnings per share. If the statement had been adopted, pro
forma basic and diluted earnings per share, for fiscal years 1997, 1996 and
1995 would have been the same as that presented for the respective periods.
MARKETABLE SECURITIES Marketable securities consist principally of tax exempt
municipal bonds. The amortized cost of available-for-sale securities
approximated the estimated market value of such securities at November 30,
1997; gross unrealized holding gains and losses were not significant.
<PAGE 26>
The estimated market value of available-for-sale securities at November 30,
1997, by contractual maturity, are shown below. Actual maturities may differ
from contractual maturities as issuers have the right to call or prepay certain
of these securities.
(in thousands)
Maturity $ 6,117
After one through ten years 49,557
Over ten years 18,371
Not due at a single maturity date 3,094
-------
$77,139
=======
Gross realized gains and losses on sales were not material.
INVENTORIES
Inventories consist of the following:
(in thousands)
November 30, 1997 1996
------- -------
Finished goods $ 7,762 $11,241
Raw materials 14,945 12,034
------ ------
Total $22,707 $23,275
====== ======
Work in process inventories are not significant in amount and are included in
finished goods.
ACCRUED LIABILITIES
Accrued liabilities consist of the following:
(in thousands)
November 30, 1997 1996
------- -------
Compensation and benefits $ 3,697 $ 3,302
Current income taxes 323 427
Promotional programs 1,282 1,190
Real estate taxes 826 985
Commissions 378 394
Construction costs 923 3,787
Other 509 216
------- -------
Total $ 7,938 $10,301
======= =======
<PAGE 27>
LONG-TERM DEBT
Long-term debt consists of the following:
(in thousands)
November 30, 1997 1996
------ ------
Industrial Development Revenue
Bond, payable $17,708 per month plus
interest at 65% of prime through December 1996,
and a final payment of approximately
$1,270,000 in January 1997. $ - $ 1,293
Industrial Development Revenue
Bond, payable $11,667 per month plus interest at
67% of prime through July 2004. - 1,073
Industrial Development Revenue
Bond, payable in escalating installments through December
2016, plus interest at a variable rate, generally
approximating 67% of prime. 3,500 3,610
------ -------
$ 3,500 $ 5,976
Less current maturities 115 1,543
------- -------
Total long-term debt $ 3,385 $ 4,433
======= =======
The aforementioned bonds are collateralized by certain land, buildings, and
machinery and equipment. The aggregate amounts of existing long-term debt
maturing in each of the next five years are as follows:
1998 - $115,000; 1999 - $120,000; 2000 - $125,000;
2001 - $135,000; and 2002 - $140,000.
<PAGE 28>
TAXES ON INCOME
Provisions for federal and state income taxes in the consolidated statements of
income are comprised of the following:
(in thousands)
November 30, 1997 1996 1995
Current:
Federal $ 9,494 $ 8,789 $ 9,086
State 2,120 1,563 1,982
------- ------- -------
11,614 10,352 11,068
------- ------- -------
Deferred:
Federal (443) (117) (118)
State (81) (20) (10)
------- ------- -------
(524) (137) (128)
------- ------- -------
Total taxes on income $11,090 $10,215 $10,940
======= ======= =======
Deferred tax assets (liabilities) are comprised of the following:
(in thousands)
November 30, 1997 1996
Reserves for doubtful accounts $ 327 $ 193
Inventory costs capitalized for tax purposes 452 614
Compensation and benefits 857 716
Accrued warranty reserve 27 -
Accrued advertising 112 99
----- -----
Deferred tax assets 1,775 1,622
----- -----
Depreciation (1,264) (1,812)
Prepaid health and welfare costs (329) (329)
Basis difference of acquired assets (95) (100)
Capitalized interest (34) -
Real estate taxes (348) (280)
Unrealized holding gains (378) (342)
----- -----
Deferred tax liabilities (2,448) (2,863)
----- -----
Net deferred tax liability $ (673) $(1,241)
===== ======
<PAGE 29>
The following summary reconciles taxes at the federal statutory tax rate to the
Company's effective tax rate:
November 30, 1997 1996 1995
Income taxes at statutory rate 35.0% 35.0% 35.0%
Dividend exclusion and municipal interest (4.2) (4.3) (3.8)
State and local taxes, net of federal income
tax benefit 4.4 3.6 4.1
Other .1 (.4) .1
----- ----- -----
Effective tax rate 35.3% 33.9% 35.4%
===== ===== =====
STOCK BASED COMPENSATION PLANS
The Company maintains two stock-based compensation plans: a stock option plan
and a stock purchase plan. The Company's stock option plan provides for the
granting of stock options or stock appreciation rights ("SAR") to certain key
employees, including officers. The stock option plan is designed so that
options granted thereunder at 100% of the fair value of the common stock at
date of grant may, under certain circumstances, be treated as "incentive stock
options" as defined in Section 422 of the Internal Revenue Code as amended.
Under the stock option plan, up to 600,000 shares of the Company's common stock
may be issued upon the exercise of stock options, and SARs may be granted with
respect to up to 600,000 shares of the Company's common stock. The per-share
option price for options granted under the stock option plan may not be less
than 100% of the fair market value of the Company's common stock on the date of
grant.
The Company's stock purchase plan allows employees to purchase shares of the
Company's common stock through payroll deductions over a twelve month period.
The purchase price is equal to 85 percent of the fair market value of the
common stock on either the first or last day of the accumulation period,
whichever is lower. Purchases under the stock purchase plan are limited to the
lesser of $5,000 or 10% of an employees base salary. In connection with the
Company's stock purchase plan, 400,000 shares of common stock have been
reserved for future issuances. Under this stock purchase plan, 14,558 shares
of common stock were issued at $13.81 per share in 1997.
<PAGE 30>
A summary of activity under the Company's stock option plan is as follows:
Weighted
Shares Average
Available Options Exercise
for Grant Outstanding Price
Balance at
November 30, 1994 411,000 360,000 $13.58
Options Granted - 146,000 $14.44
Options Exercised - (55,000) $ 7.36
Options Canceled - (6,000) $19.63
Balance at ------- ------- ------
November 30, 1995 271,000 445,000 $14.53
Options Granted - 1,000 $18.25
Options Exercised - (109,000) $ 7.32
Options Canceled - (12,000) $16.75
Balance at ------- ------- ------
November 30, 1996 282,000 325,000 $16.87
Options Granted - 21,000 $16.16
Options Exercised - (32,000) $16.00
Options Canceled - (62,000) $16.76
Balance at ------- ------- ------
November 30, 1997 323,000 252,000 $16.95
======= ======= ======
A summary of outstanding and exercisable stock options as of November 30, 1997,
is as follows:
Options Outstanding Options Exercisable
-------------------------------------- --------------------
Weighted
Averaged Weighted Weighted
Range of Remaining Average Average
Exercise Number of Contractual Exercise Number of Exercise
Prices Shares Life(in years) Price Shares Price
- -------- -------- ------------- -------- -------- ---------
$14.44 108,000 8.0 $14.44 43,000 $14.44
$15.38 14,000 9.1 $15.38 - -
$16.69-18.50 47,000 7.3 $18.46 24,600 $18.48
$19.63 83,000 6.0 $19.63 49,800 $19.63
------- ------------- ------- ------- -------
252,000 7.3 $16.95 117,400 $17.49
======= ============= ======= ======= =======
As permitted under SFAS 123, the Company has elected to continue to follow APB
Opinion No. 25 in accounting for stock-based awards.
Pro forma information regarding net income and earnings per share is required
by SFAS 123 for stock-based awards granted after November 30, 1995, as if the
Company had accounted for its stock-based awards under the fair value method of
SFAS 123. The fair value of the Company's stock-based awards was estimated as
of the date of grant using the Black-Scholes option pricing model.
<PAGE 31>
The weighted average estimated grant date fair value, as defined by SFAS 123,
for options granted to employees during fiscal 1997 and 1996 was $7.54 and
$6.74 per share, respectively, under the Company's Stock Option Plan and $4.77
and $5.08, respectively, under the Company's Stock Purchase Plan. The fair
value of the Company's stock-based awards was estimated assuming the following
weighted average assumption:
1997 1996
------ ------
Expected life (in years) 8 8
Expected volatility 35.9% 38.2%
Dividend yield 2.0% 2.0%
Risk free interest rate 6.0% 6.3%
Had the Company recorded compensation based on the estimated grant date fair
value, as defined by SFAS 123, for awards granted under its stock-based
compensation plans, the Company's net income and net income per share would
have been reduced to the pro forma amounts below for the years ended November
30, 1997 and 1996:
(in thousands except per share amounts)
1997 1996
------- -------
Net income as reported $20,303 $19,897
Pro forma net income 20,223 $19,866
Earnings per share as reported $ 1.10 $ 1.08
Pro forma earnings per share 1.09 1.07
The pro forma effect on net income and earnings per common share for 1997 and
1996 is not representative of the pro forma effect on net income in future
years because it does not take into consideration pro forma compensation
expense related to grants made prior to fiscal 1996.
PROFIT SHARING PLAN
The Company has a profit sharing plan pursuant to Section 401(k) of the
Internal Revenue Code, whereby participants may contribute a percentage of
compensation, but not in excess of the maximum allowed under the Code. The
plan provides for a matching contribution by the Company which amounted to
approximately $181,000, $163,000 and $163,000 in 1997, 1996 and 1995,
respectively. In addition, the Company may make additional contributions at
the discretion of the Board of Directors. The Board authorized additional
contributions of $598,000, $569,000 and $558,000 in 1997, 1996 and 1995,
respectively.
COMMON SHARES
Pursuant to a dividend distribution declared by the Board of Directors in 1989,
each common share outstanding has one non-voting common share purchase right.
The rights, which are exercisable only under certain conditions, entitle the
holder to purchase common shares at prices specified in the Rights Agreement.
These rights expire on August 3, 1999.
<PAGE 32>
COMMITMENTS AND CONTINGENCIES
Total minimum rentals under noncancelable operating leases for distribution
warehouse space and equipment at November 30, 1997 are as follows:
November 30, (in thousands)
1998 $ 923
1999 754
2000 541
2001 154
2002 81
------
Total $2,453
======
Total rent expense charged to operations amounted to approximately $823,000,
$897,000 and $760,000 for the years ended November 30, 1997, 1996 and 1995,
respectively.
In the ordinary course of business, there are various claims and lawsuits
brought by or against the Company. In the opinion of management, the ultimate
outcome of these matters will not materially affect the Company's operations or
financial position.
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
A summary of selected quarterly information for 1997 and 1996 is as follows:
(in thousands except per share amounts)
1997 Quarter Ended Feb. 28 May 31 Aug. 31 Nov. 30 Total
- -----------------------------------------------------------------------------
Net Sales $30,804 $35,832 $37,238 $35,981 $139,855
Gross Profit 14,351 17,024 18,767 17,832 67,974
Net Income 3,890 5,298 5,812 5,303 20,303
- --------------------------------------------------------------------------------
Net Income Per Common Share $ .21 $ .29 $ .31 $ .29 $ 1.10
================================================================================
(in thousands except per share amounts)
1996 Quarter Ended Feb. 29 May 31 Aug. 31 Nov. 30 Total
- ------------------------------------------------------------------------------
Net Sales $28,186 $35,044 $34,869 $33,380 $131,479
Gross Profit 12,099 16,950 17,412 16,699 63,160
Net Income 2,956 5,327 5,892 5,722 19,897
- ------------------------------------------------------------------------------
Net Income Per Common Share $ .16 $ .29 $ .32 $ .31 $ 1.08
==============================================================================
<PAGE 33>
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to the directors of the Company will be set forth
in the Proxy Statement and is incorporated herein by this reference.
Information regarding the Executive Officers of the Company is set forth in
Part I of this Form 10-K on pages 9 and 10.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item will be set forth in the Proxy
Statement and is incorporated herein by this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this Item will be set forth in the Proxy
Statement and is incorporated herein by this reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Fremont and Mr. Tomsovic are members of the Board and are executive
officers of the Company. Mr. Lewis is a Board member and an officer of the
Company but not an executive officer. Other than the Compensation Committee
members and Mr. Fremont, who attends meetings of the Compensation Committee at
the request of the Compensation Committee and makes recommendations regarding
the compensation level of executive officers other than himself, no current or
former officer or employee of the Company or its subsidiaries participated in
the deliberations of the Board concerning executive compensation during the
fiscal year ended November 30, 1997. Mr. Lewis is a partner of the law firm of
Sonnenschein Nath & Rosenthal, which provided legal services to the Company in
the fiscal year ended November 30, 1997, and Mr. Ball is the Chairman of
Philpott, Ball & Co., an investment banking firm which provided investment
banking services to the Company in such fiscal year.
<PAGE 34>
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
- --------------------------------------------------------------
ON FORM 8-K
-----------
14(a)(1). Financial Statements - Appear as part of Item 8 of this
--------------------
Form 10-K.
Supplementary Data
------------------
The supplementary data required by Item 302 of Regulation S-K
is contained on page 32 of this Annual Report on Form 10-K.
Report of Independent Accountants
---------------------------------
The Report of the Company's Independent Accountants, Price
Waterhouse LLP, dated January 15, 1998, on the consolidated
financial statements as of and for the fiscal years ended
November 30, 1997, November 30, 1996 and November 30, 1995,
is filed as a part of this Annual Report on Form 10-K on
page 18.
14(a)(2). Financial Statement Schedule:
----------------------------
The following financial statement schedule is submitted in
response to this Item 14(a)2 on page 40 of this Annual Report on
Form 10-K.
Schedule II - Valuation and Qualifying Accounts and Reserves.
Report of Independent Accountants Relating to Schedule.
------------------------------------------------------
The Report of the Company's Independent Accountants, Price
Waterhouse LLP, on the financial statement schedule, insofar
as the information therein relates to November 30, 1997 and
November 30, 1996 and the fiscal years then ended, is filed
as a part of this Annual Report on Form 10-K on page 35.
Schedules other than those noted above have been omitted
because they are either inapplicable or the information is
contained elsewhere in the Annual Report.
<PAGE 35>
Report of Independent Accountants on
------------------------------------
Financial Statement Schedule
----------------------------
To the Board of Directors
of Juno Lighting, Inc.
Our audits of the consolidated financial statements of Juno
Lighting, Inc. referred to in our report dated January 15, 1998,
appearing on page 18 of this 1997 Annual Report on Form 10-K,
also included an audit of the Financial Statement Schedule listed
in Item 14(a)(2). In our opinion, the Financial Statement
Schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the
related consolidated financial statements.
PRICE WATERHOUSE LLP
Chicago, Illinois
January 15, 1998
<PAGE 36>
14(a)(3). Exhibits
(i) The following exhibits are filed herewith:
11.1 Computations of Net Income Per Common
Share.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Price Waterhouse.
(ii) The following exhibits are incorporated herein by
reference or have been previously reported:
3.1 Certificate of Incorporation, as amended,
of Juno Lighting, Inc. filed as
Exhibit 3.1 to the Company's Report on
Form 10-Q (SEC File No. 0-11631) for the
quarter ended May 31, 1987.
3.1(a) Amendment to Certificate of Incorporation
of Juno Lighting, Inc. filed as
Exhibit 3.1 to the Company's Annual
Report on Form 10-K (SEC File No. 0-11631) for the
fiscal year ended November 30, 1990.
3.2 By-Laws of Juno Lighting, Inc., as
amended, filed as Exhibit 3.2 to the
Company's Annual Report on Form 10-K (SEC
File No. 0-11631) for the fiscal year
ended November 30, 1987.
3.2(a) Amendment to By-Laws of Juno Lighting,
Inc. filed as Exhibit 3.1 to the
Company's quarterly report on Form 10-Q
(SEC File No. 0-11631) for the quarter
ended May 31, 1991.
10.1 Juno Lighting, Inc. 1993 Stock Option
Plan, as amended, filed as Exhibit 10.1
to the Company's quarterly report on Form
10-Q (SEC File No. 0-11631) for the
quarter ended May 31, 1994.
10.2 Loan Agreement dated as of December 1,
1991 by and between Juno Lighting, Inc.
and the Indiana Development Finance
Authority. Filed as Exhibit 10.1 to the
Company's Annual Report on Form 10-K (SEC
File No. 0-11631) for the fiscal year
ended November 30, 1992.
10.2(a) Trust Indenture dated as of December 1,
1991 by and between the Indiana
Development Finance Authority and First
Wisconsin Trust Company, as Trustee, with
respect to Industrial Development Revenue
Bonds, Series 1991 (Juno Lighting, Inc.
Project). Filed as Exhibit 10.1(a) to
the Company's Annual Report on Form 10-K
(SEC File No. 0-11631) for the fiscal
year ended November 30, 1992.
<PAGE 37>
10.3 Agreement among Juno Lighting, Inc., the
City of Des Plaines and American National
Bank and Trust Company of Chicago. Filed
as Exhibit 10.1 to the Company's
Registration Statement on Form S-1, made
effective September 1, 1983 (Registration
No. 2-85267).
10.4 Juno Lighting, Inc. 1983 Stock Option
Plan, as amended, filed as Exhibit 10.1
to the Company's Annual Report on
Form l0-K (SEC File No. 0-11631) for the
fiscal year ended November 30, 1983.
10.4(a)First Amendment to the Juno Lighting, Inc.
1983 Stock Option Plan dated April 9,
1986, filed as Exhibit 10.2(a) to the
Company's Annual Report on Form 10-K (SEC
File No. 0-11631) for the fiscal year
ended November 30, 1986.
10.4(b) Third Amendment to the Juno Lighting,
Inc. 1983 Stock Option Plan dated May 6,
1987, filed as Exhibit 10.2(b) to the
Company's Annual Report on Form 10-K
(SEC File No. 0-11631) for the fiscal
year ended November 30, 1987.
10.4(c) Fourth Amendment to the Juno Lighting,
Inc. 1983 Stock Option Plan dated
September 24, 1987, filed as Exhibit
10.2(c) to the Company's Annual Report on
Form 10-K (SEC File No. 0-11631) for the
fiscal year ended November 30, 1987.
10.4(d) Fifth Amendment to the Juno Lighting,
Inc. 1983 Stock Option Plan dated
December 13, 1988, filed as Exhibit
10.2(d) to the Company's Annual Report on
Form 10-K (SEC File No. 0-11631) for the
fiscal year ended November 30, 1988.
10.5 Agreement dated as of July 1, 1984 among
Juno Lighting, Inc., the City of Des
Plaines, Illinois and American National
Bank and Trust Company of Chicago. Filed
as Exhibit 10.1(b) to the Company's
Registration Statement on Form S-1, made
effective December 13, 1984 (Registration
No. 2-94147).
10.6 Juno Lighting, Inc. 401(K) Plan, Amended
and Restated effective December 1, 1987,
executed June 1, 1994.
<PAGE 38>
10.6(a) Juno Lighting, Inc. 401(K) Trust,
effective December 1, 1985, executed
June 1, 1994.
10.6(b) Amendment to Juno Lighting, Inc. 401(K)
Plan, effective September 1, 1994,
executed September 12, 1994.
10.7 Juno Lighting, Inc. Rights Agreement
dated as of August 3, 1989 between Juno
Lighting, Inc. and the First National
Bank of Chicago, as Rights Agent, filed
as Exhibit 1 to the Company's Current
Report on Form 8-K (SEC File No. 0-11631)
filed with the Securities and Exchange
Commission on August 9, 1989.
10.7(a) First Amendment to Juno Lighting, Inc.
Rights Agreement dated as of June 17,
1991 between Juno Lighting, Inc. and The
First National Bank of Chicago, as Rights
Agent, filed as Exhibit 10.5(a) to the
Company's Annual Report on Form 10-K (SEC
File No. 0-11631) for the fiscal year
ended November 30, 1991.
10.7(b) Second Amendment to Juno Lighting, Inc.
Rights Agreement dated as of June 17,
1991 between Juno Lighting, Inc. and The
First Chicago Trust Company of New York,
as successor Rights Agent to The First
National Bank of Chicago, filed as
Exhibit 1 to the Company's Current Report
on Form 8-K (SEC File No. 0-11631) filed
with the Securities and Exchange
Commission on July 17, 1991.
16.1 The information has been previously
reported in a Form 8 dated May 21, 1992
filed by the Company with the Securities
and Exchange Commission on May 22, 1992
(SEC File No. 0-11631).
14(b) Reports on Form 8-K
------------------------------
No reports on Form 8-K for the three months ended
November 30, 1997 were filed by the Company with the
Securities and Exchange Commission.
<PAGE 39>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned, thereunto duly
authorized on February 25, 1998.
JUNO LIGHTING, INC.
By: /s/Robert S. Fremont
--------------------
Robert S. Fremont
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934 this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signatures Title Date
----------- ----------------- -----------------
/s/Robert S. Fremont Director and Chief February 25, 1998
- -------------------- Executive Officer
Robert S. Fremont
/s/George J. Bilek Vice President, Finance February 25, 1998
- ------------------ and Treasurer (Principal
George J. Bilek Financial and Accounting
Officer)
/s/Thomas W. Tomsovic Director February 25, 1998
- ---------------------
Thomas W. Tomsovic
/s/Julius Lewis Director February 25, 1998
- ----------------
Julius Lewis
/s/Allan Coleman Director February 25, 1998
- ----------------
Allan Coleman
/s/George M. Ball Director February 25, 1998
- -----------------
George M. Ball
<PAGE 40>
<TABLE>
JUNO LIGHTING, INC. AND SUBSIDIARIES
<CAPTION>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Column A Column B Column C Column D Column E Column F
Other
Balance Charged charges
at to costs Deductions add (deduct) Balance
beginning and describe describe at end
Description of period expenses (a) (b) of period
--------- -------- ---------- ------------ ---------
Deducted from assets to which they
apply:
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended November 30, 1997 $554 $929 $574 $(2) $907
Year ended November 30, 1996 854 549 850 1 554
Year ended November 30, 1995 781 399 327 1 854
____________________________________
NOTE:
(a) Write off of bad debts, less recoveries.
(b) Foreign currency translation.
</TABLE>
<PAGE 41>
EXHIBIT INDEX
Exhibit
Number Page
The following exhibits are filed herewith:
11.1 Computations of Net Income Per Common Share. 44
21.1 Subsidiaries of the Registrant. 45
23.1 Consent of Price Waterhouse. 46
The following exhibits are incorporated herein by reference:
3.1 Certificate of Incorporation, as amended, of Juno ____
Lighting, Inc. filed as Exhibit 3.1 to the Company's
Report on Form 10-Q (SEC File No. 0-11631) for the
quarter ended May 31, 1987.
3.1(a) Amendment to Certificate of Incorporation of Juno ____
Lighting, Inc. filed as Exhibit 3.1 to the Company's
Annual Report on Form 10-K (SEC File No. 0-11631) for
the fiscal year ended November 30, 1990.
3.2 By-Laws of Juno Lighting, Inc., as amended, filed as ____
Exhibit 3.2 to the Company's Annual Report on Form
10-K (SEC File No. 0-11631) for the fiscal year ended
November 30, 1987.
3.2(a) Amendment to By-Laws of Juno Lighting, Inc. filed as ____
Exhibit 3.1 to the Company's quarterly report on
Form 10-Q (SEC File No. 0-11631) for the quarter ended
May 31, 1991.
10.1 Juno Lighting, Inc. 1993 Stock Option Plan, as amended, ____
filed as Exhibit 10.1 to the Company's quarterly report
on Form 10-Q (SEC File No. 0-11631) for the quarter
ended May 31, 1994.
10.2 Loan Agreement dated as of December 1, 1991 by and ____
between Juno Lighting, Inc. and the Indiana
Development Finance Authority. Filed as Exhibit 10.1
to the Company's Annual Report on Form 10-K (SEC File
No. 0-11631) for the fiscal year ended
November 30, 1992.
<PAGE 42>
Exhibit
Number Page
10.2(a) Trust Indenture dated as of December 1, 1991 by and ____
between the Indiana Development Finance Authority and
First Wisconsin Trust Company, as Trustee, with
respect to Industrial Development Revenue Bonds, Series
1991 (Juno Lighting, Inc. Project). Filed as
Exhibit 10.1(a) to the Company's Annual Report on
Form 10-K (SEC File No. 0-11631) for the fiscal year
ended November 30, 1992.
10.3 Agreement among Juno Lighting, Inc., the City of ____
Des Plaines and American National Bank and Trust
Company of Chicago. Filed as Exhibit 10.1 to the
Company's Registration Statement on Form S-1, made
effective September 1, 1983 (Registration No. 2-85267).
10.4 Juno Lighting, Inc. 1983 Stock Option Plan, as amended, ____
filed as Exhibit 10.1 to the Company's Annual Report on
Form l0-K (SEC File No. 0-11631) for the fiscal year ended
November 30, 1983.
10.4(a) First Amendment to the Juno Lighting, Inc. 1983 Stock ____
Option Plan dated April 9, 1986, filed as Exhibit
10.2(a) to the Company's Annual Report on Form 10-K
(SEC File No. 0-11631) for the fiscal year ended
November 30, 1986.
10.4(b) Third Amendment to the Juno Lighting, Inc. 1983 Stock____
Option Plan dated May 6, 1987, filed as Exhibit 10.2(b)
to the Company's Annual Report on Form 10-K (SEC File
No. 0-11631) for the fiscal year ended November 30, 1987.
10.4(c) Fourth Amendment to the Juno Lighting, Inc. 1983 Stock ____
Option Plan dated September 24, 1987, filed as Exhibit
10.2(c) to the Company's Annual Report on Form 10-K (SEC
File No. 0-11631) for the fiscal year ended November 30,
1987.
10.4(d) Fifth Amendment to the Juno Lighting, Inc. 1983 Stock ____
Option Plan dated December 13, 1988, filed as Exhibit
10.2(d) to the Company's Annual Report on Form 10-K (SEC
File No. 0-11631) for the fiscal year ended November 30,
1988.
10.5 Agreement dated as of July 1, 1984 among Juno ____
Lighting, Inc., the City of Des Plaines, Illinois and
American National Bank and Trust Company of Chicago.
Filed as Exhibit 10.1(b) to the Company's Registration
Statement on Form S-1, made effective December 13, 1984
(Registration No. 2-94147).<PAGE>
<PAGE 43>
Exhibit
Number Page
10.6 Juno Lighting, Inc. 401(K) Plan, Amended and Restated
effective December 1, 1987, executed June 1, 1994.
10.6(a) Juno Lighting, Inc. 401(K) Trust, effective December 1,
1985, executed June 1, 1994.
10.6(b) Amendment to Juno Lighting, Inc. 401(K) Plan, effective ____
September 1, 1994, executed September 12, 1994.
10.7 Juno Lighting, Inc. Rights Agreement dated as of ____
August 3, 1989 between Juno Lighting, Inc. and the
First National Bank of Chicago, as Rights Agent,
filed as Exhibit 1 to the Company's Current Report on
Form 8-K (SEC File No. 0-11631) filed with the Securities
and Exchange Commission on August 9, 1989.
10.7(a) First Amendment to Juno Lighting, Inc. Rights ____
Agreement dated as of June 17, 1991 between Juno
Lighting, Inc. and The First National Bank of Chicago,
as Rights Agent, filed as Exhibit 10.5(a) to the Company's
Annual Report on Form 10-K (SEC File No. 0-11631) for the
fiscal year ended November 30, 1991.
10.7(b) Second Amendment to Juno Lighting, Inc. Rights ____
Agreement dated as of June 17, 1991 between Juno
Lighting, Inc. and The First Chicago Trust Company of
New York, as successor Rights Agent to The First
National Bank of Chicago, filed as Exhibit 1 to the
Company's Current Report on Form 8-K (SEC File No. 0-11631)
filed with the Securities and Exchange Commission on
July 17, 1991.
16.1 The information has been previously reported in a ____
Form 8 dated May 21, 1992 filed by the Company with the
Securities and Exchange Commission on May 22, 1992
(SEC File No. 0-11631).
<PAGE 44>
Exhibit 11.1
JUNO LIGHTING, INC. AND SUBSIDIARIES
COMPUTATIONS OF NET INCOME PER COMMON SHARE
___________________________________________
1997 1996 1995
---------- ---------- ----------
Average number of common shares
outstanding during the year 18,522,270 18,451,366 18,483,220
---------- ---------- ----------
Common equivalents:
Shares issuable under
outstanding options 148,153 147,854 139,300
Shares which could have
been purchased based
on the average market
value for the period 129,588 104,672 59,179
---------- --------- --------
Shares for the portion of the
period that the options
were outstanding 18,565 43,182 80,121
---------- --------- --------
Average number of common and
common equivalent shares
outstanding during the
year 18,540,835 18,494,548 18,563,341
========== ========== ==========
NET INCOME $20,303,252 $19,897,162 $19,974,262
========== ========== ==========
NET INCOME PER COMMON SHARE $1.10 $1.08 $1.08
===== ===== =====
<PAGE 45>
Exhibit 21.1
SUBSIDIARIES OF JUNO LIGHTING, INC.
State or Jurisdiction
Name of Subsidiary of Incorporation
------------------------ ----------------------
Juno Manufacturing, Inc. Illinois
Indy Lighting, Inc. Indiana
Juno Lighting, Ltd. Canada
Advanced Fiberoptic
Technologies, Inc. Florida
<PAGE 46>
Exhibit 23.1
Consent of Independent Accountants
----------------------------------
We hereby consent to the incorporation by reference in
the Registration Statement on Form S-8 (No. 33-87290) of
Juno Lighting, Inc. of our report dated January 15, 1998
appearing on page 18 of this Annual Report on Form 10-K
of Juno Lighting, Inc. for the fiscal year ended November
30, 1997. We also consent to the incorporation by
reference of our report on the Financial Statement
Schedule, which appears on page 35 of this Form 10-K.
PRICE WATERHOUSE LLP
Chicago, Illinois
February 25, 1998
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<NAME> JUNO LIGHTING, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<CASH> 6806
<SECURITIES> 77139
<RECEIVABLES> 23440
<ALLOWANCES> 907
<INVENTORY> 22707
<CURRENT-ASSETS> 122508
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<TOTAL-ASSETS> 187389
<CURRENT-LIABILITIES> 11632
<BONDS> 3385
0
0
<COMMON> 186
<OTHER-SE> 170444
<TOTAL-LIABILITY-AND-EQUITY> 187389
<SALES> 139855
<TOTAL-REVENUES> 139855
<CGS> 71881
<TOTAL-COSTS> 71881
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 929
<INTEREST-EXPENSE> 244
<INCOME-PRETAX> 31393
<INCOME-TAX> 11090
<INCOME-CONTINUING> 20303
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