================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
SCHEDULE 13D
------------
Under the Securities Exchange Act of 1934
JUNO LIGHTING, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE
$0.01 PAR SHARE 482047107
- ----------------------------------------- -----------------------------------
(Title of class of securities) (CUSIP number)
NELL MINOW
LENS INVESTMENT MANAGEMENT LLC
1200 G STREET, N.W., SUITE 800
WASHINGTON, D.C. 30005
(202) 783-3348
- --------------------------------------------------------------------------------
(Name, address and telephone number of person authorized to receive notices and
communications)
SEPTEMBER 8, 1998
- --------------------------------------------------------------------------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [ ].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
Note: When filing this statement in paper format, six copies of this statement,
including exhibits, should be filed with the Commission. See Rule 13d-1(a) for
other parties to whom copies are to be sent.
(Continued on following page(s))
(Page 1 of 39 Pages)
================================================================================
NYFS04...:\31\58531\0006\2225\SCH9118V.23F
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------- --------------------------------------
CUSIP No. 482047107 13D Page 2 of 39
- -------------------------------------------------------- --------------------------------------
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 NAME OF REPORTING PERSON: LENS INVESTMENT MANAGEMENT LLC
S.S. OR I.R.S. IDENTIFICATION NO. 01-0497749
OF ABOVE PERSON:
- ---------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X]
(B) [_]
- ---------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: OO
- ---------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [_]
PURSUANT TO ITEM 2(d) OR 2(e):
- ---------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF MAINE
ORGANIZATION:
- ---------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER: 777,038 AS OF THE DATE
NUMBER OF HEREOF (SEE ITEMS 5(A) AND
SHARES (B).)
----------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: NONE
OWNED BY
----------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER: 777,038 AS OF THE DATE
EACH HEREOF (SEE ITEMS 5(A) AND
REPORTING (B).)
----------------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: NONE
- ---------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 1,128,483 AS OF THE DATE
REPORTING PERSON: HEREOF (SEE ITEMS 5(A)
AND (B).)
- ---------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN [ ]
SHARES:
- ---------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 6.07%
- ---------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: OO, IA
- ---------------------------------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------- --------------------------------------
CUSIP No. 482047107 13D Page 3 of 39
- -------------------------------------------------------- --------------------------------------
- ---------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: RAM TRUST SERVICES, INC.
S.S. OR I.R.S. IDENTIFICATION NO. 01-0363642
OF ABOVE PERSON:
- ---------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X]
(B) [_]
- ---------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: OO
- ---------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [_]
PURSUANT TO ITEM 2(d) OR 2(e):
- ---------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF MAINE
ORGANIZATION:
- ---------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER: 347,120 AS OF THE DATE
NUMBER OF HEREOF (SEE ITEMS 5(A) AND
SHARES (B).)
----------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: NONE
OWNED BY
----------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER: 347,120 AS OF THE DATE
EACH HEREOF (SEE ITEMS 5(A) AND
REPORTING (B).)
----------------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: NONE
- ---------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 1,128,483 AS OF THE DATE
REPORTING PERSON: HEREOF (SEE ITEMS 5(A) AND
(B).)
- ---------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN [ ]
SHARES:
- ---------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 6.07%
- ---------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: CO, IA
- ---------------------------------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------- --------------------------------------
CUSIP No. 482047107 13D Page 4 of 39
- -------------------------------------------------------- --------------------------------------
- ---------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: ROBERT B. HOLMES
S.S. OR I.R.S. IDENTIFICATION NO. ###-##-####
OF ABOVE PERSON:
- ---------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X]
(B) [_]
- ---------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: PF
- ---------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [_]
PURSUANT TO ITEM 2(d) OR 2(e):
- ---------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF UNITED STATES OF AMERICA
ORGANIZATION:
- ---------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER: 2,800 AS OF THE DATE
NUMBER OF HEREOF (SEE ITEMS 5(A) AND
SHARES (B).)
----------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: NONE
OWNED BY
----------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER: 2,800 AS OF THE DATE
EACH HEREOF (SEE ITEMS 5(A) AND
REPORTING (B).)
----------------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: NONE
- ---------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 1,128,483 AS OF THE DATE
REPORTING PERSON: HEREOF (SEE ITEMS 5(A)
AND (B).)
- ---------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN [ ]
SHARES:
- ---------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 6.07%
- ---------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: IN
- ---------------------------------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------- --------------------------------------
CUSIP No. 482047107 13D Page 5 of 39
- -------------------------------------------------------- --------------------------------------
- ---------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: JOHN B. GOODRICH
S.S. OR I.R.S. IDENTIFICATION NO. ###-##-####
OF ABOVE PERSON:
- ---------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X]
(B) [_]
- ---------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: PF
- ---------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [_]
PURSUANT TO ITEM 2(d) OR 2(e):
- ---------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF UNITED STATES OF AMERICA
ORGANIZATION:
- ---------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER: 1,525 AS OF THE DATE
NUMBER OF HEREOF (SEE ITEMS 5(A) AND
SHARES (B).)
----------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: NONE
OWNED BY
----------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER: 1,525 AS OF THE DATE
EACH HEREOF (SEE ITEMS 5(A) AND
REPORTING (B).)
----------------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: NONE
- ---------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 1,128,483 AS OF THE DATE
REPORTING PERSON: HEREOF (SEE ITEMS 5(A)
AND (B).)
- ---------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN [ ]
SHARES:
- ---------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 6.07%
- ---------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: IN
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D (the "Statement") relates to shares
of common stock, par value $0.01 per share (the "Common Stock"), of Juno
Lighting, Inc., a Delaware corporation (the "Issuer"; also referred to herein
from time as the "Company"). The principal executive offices of the Issuer are
located at 2001 South Mt. Pleasant Road, P.O. Box 5065, Des Plaines, Illinois
60017-5065.
ITEM 2. IDENTITY AND BACKGROUND
This statement is being filed on behalf of (i) Lens Investment
Management, LLC, a Maine limited liability company ("Lens"), (ii) Ram Trust
Services, Inc., a Maine corporation ("Ram"), (iii) Robert B. Holmes, a natural
person and member of Lens ("Holmes"), and (iv) John B. Goodrich, a natural
person and
employee of Ram ("Goodrich").
Lens and Ram are engaged primarily in the investment management and
investment advisory businesses and are owned and controlled by their common
management (as identified below). Lens and Ram conduct certain of their business
under the trade name "Lens," and Lens, Ram and their management are collectively
referred to herein as the "Lens Group". The principal place of business and
principal offices of both Lens and Ram are located at 45 Exchange Street, Suite
400, Portland, Maine 04101. Lens also conducts business at 1200 G Street, N.W.,
Suite 800, Washington, D.C. 30005.
Each of Lens and Ram manages investment accounts for clients, which
include members of the management of Lens and Ram and affiliated and associated
persons as well as unaffiliated individual and institutional clients. Each of
Lens and Ram has caused investment accounts of certain of its clients
("Clients"), over which it has discretion, to acquire Common Stock. The Lens
Group has voting and disposition power over the Common Stock held in these
accounts and, accordingly, is deemed the beneficial owner for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), of the Common Stock held in such accounts. Except for such deemed
beneficial ownership, or as otherwise described in this Statement, neither Lens
nor Ram own any Common Stock or other securities of the Issuer.
Schedules I and II annexed to this Schedule 13D and incorporated
herein by reference set forth, with respect to Lens, the following information
regarding the members of Lens and, with
Page 6 of 39
<PAGE>
respect to Ram, the following information regarding its directors, executive
officers and controlling shareholder: (a) name, (b) business address, (c)
present principal employment or other occupation and the name, principal
business and address of the company in which such employment or occupation is
conducted, (d) whether or not such person has been convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors), (e) whether
or not, during the last five years, such person was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws, and (f) citizenship.
Holmes is a member of Lens who is principally occupied as a private
investor and participates in the management of Lens. Holmes' business address is
c/o Lens Investment Management LLC, 45 Exchange Street, Portland, Maine 04101.
Holmes, in the last five years, has not been (i) convicted in a criminal
proceeding or (ii) party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws. Holmes is a citizen of the
United States.
Goodrich is employed as a Research Director by Ram, which position
constitutes his principal occupation. Goodrich's business address is c/o Ram
Trust Services, Inc., 45 Exchange Street, Portland, Maine 04101. Goodrich, in
the last five years, has not been (i) convicted in a criminal proceeding or (ii)
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws. Goodrich is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
As of the date hereof, Lens and Ram, collectively, have caused their
Clients to expend $22,562,535.87 of the Clients' investment funds to purchase a
total of 1,124,158 shares of Common Stock.
Page 7 of 39
<PAGE>
Holmes is a Client of the Lens Group, and the shares of Common Stock
beneficially owned by Lens and Ram as identified herein include shares purchased
with investment funds of Holmes and his wife held in a Lens Group-managed
account. Holmes has separately used his personal funds to purchase the 2,500
additional shares of Common Stock owned by him as of the date hereof, which
additional shares of Common Stock are not held in a Lens Group-managed account
and were not purchased at the direction of the Lens Group. Holmes' spouse used
her personal funds to purchase 300 shares of Common Stock which she owns as of
the date hereof, which shares of Common Stock are not held in a Lens
Group-managed account and were not purchased at the direction of the Lens Group.
Such shares for purposes of this Statement are treated as beneficially owned by
Mr. Holmes for purposes of Section 13(d) under the 1934 Act, but Mr. Holmes
disclaims beneficial ownership thereof. Because of Mr. Holmes' relationship with
Lens and Ram, he may be deemed to be acting in concert with respect to the
Common Stock with them and may be deemed to beneficially own, for purposes of
Section 13(d) of the 1934 Act, the shares of Common Stock beneficially owned by
them, and vice versa. Mr. Holmes, Lens and Ram disclaim such beneficial
ownership.
Goodrich is not a Client of the Lens Group. Goodrich used his
personal funds to purchase 1,525 shares of Common Stock which he owns as of the
date hereof, which shares of Common Stock were not purchased at the direction of
the Lens Group. Because of Mr. Goodrich's relationship with Lens and Ram, he may
be deemed to be acting in concert with respect to the Common Stock with them and
may be deemed to beneficially own for purposes of Section 13(d) of the 1934 Act
the shares of Common Stock beneficially owned by them, and vice versa. Mr.
Goodrich, Lens and Ram disclaim such beneficial ownership.
ITEM 4. PURPOSE OF TRANSACTION
The Lens Group has invested its Clients' accounts in the Company's
Common Stock because it believes that the Company produces superior products
with superior operational efficiency, and that its product lines will be of
increasing value in its market niches. The Lens Group is supportive of the
operations, marketing and production activities of the Company. However, the
Lens Group has major concerns about certain of the Company's strategies, plans
and policies that it believes have not been adequately addressed by the
Company's directors and management. The Lens Group believes these deficiencies
greatly affect the value of the Common Stock. The Lens Group has repeatedly
raised these concerns with the Company's management and directors but is
Page 8 of 39
<PAGE>
not yet persuaded that enough is being done to address deficiencies in these
areas. It is the intention of the Lens Group to continue to try to persuade the
Company's directors and management to make improvements in the following areas:
(1) Capital allocation and structure. The Lens Group believes that
the Company has for some time misallocated its capital resources away from the
growth of the business and into the growth of low-yielding cash and marketable
securities (over $90 million on May 31, 1998, representing 24% of the market
capitalization of the Common Stock and 46% of the total assets of the Company on
that date). Further, the Lens Group believes that the Company has employed a
sub-optimal capital structure. The Company has virtually no debt, despite
consistent and strong cash flows. The Lens Group believes that this apparent
policy of rejecting the use of leverage to promote growth, coupled with the
misallocation of capital resources into cash and marketable securities, has
unduly suppressed growth of revenues and earnings. Consequently, total
stockholder returns have suffered. The Company also has not actively pursued
share repurchases or other means of returning excess (and thus underperforming)
capital to shareholders. The Lens Group intends to press for either an
acceleration of investment into the business (using excess cash and leverage), a
strategic acquisition, or a stock buy-back, among other alternatives.
(2) Corporate governance. The board of directors of the Company
currently consists of two members of management, the Company's general counsel
and corporate secretary (a partner at a Chicago law firm retained by the
Company), the Company's investment banker, and only one independent director.
Based on assurances that two new independent directors would be added to the
board, to be selected with the aid of a search firm, the Lens Group withdrew the
candidate that it had proposed for election as a director at this year's Annual
Meeting. Despite promises that such independent directors would be added by the
end of June, 1998, the board did not even enter into an agreement with a search
firm until August, 1998, and, despite repeated requests for status reports, the
Lens Group has been unable to obtain any evidence that the search is being
undertaken.
(3) Succession planning. The apparent successor to the Company's
chief executive in the management ranks, the former Chief Operating Officer, was
fired last year, and the Lens Group has seen no evidence of succession planning.
In fact, the Chairman of the Company has resumed day-to-day operational control.
The Lens Group believes that this is a crucial aspect of a board's role, which
will have great bearing on the future
Page 9 of 39
<PAGE>
value of the Common Stock, and that this board has not devoted enough attention
to it.
These matters have been addressed by the Lens Group in
correspondence with management and directors, including summary information
about the Company prepared by the Lens Group, which is attached hereto as
Exhibit 1.
In attempting to understand the prospects for the Company and the
Common Stock and determine what actions the Lens Group should take, the Lens
Group has had contact with many of the Company's major shareholders, and expects
to continue to do so, to share information and obtain a better sense of
shareholder interests, concerns and priorities. The Lens Group has not entered
into any agreement or understanding with any of these shareholders and has not
formed a group or acted in concert with any other shareholders with respect to
the Company.
Depending on its assessment of the Company's progress on the matters
discussed above and the Company's responsiveness to shareholder concerns, the
Lens Group may submit one or more proposals for action by the Company's
shareholders at the upcoming Annual Meeting of Shareholders and/or may propose
one or more candidates for election as a director at such Annual Meeting and
solicit proxies in support of his or their election. In such event, the Lens
Group, through such proposal or candidate, may support changes in the Company's
bylaws and/or a material change in the Company's present capitalization or
dividend policy, including share repurchases, or an extraordinary corporate
transaction such as a merger or business combination. In addition, the Lens
Group may promote or encourage such a business combination between the Company
and another participant in the industry or a company engaged in acquiring
businesses with underutilized assets and providing them with new leadership. Any
such business combination might involve a tender offer for shares of Common
Stock or a merger or like transaction. The Lens Group has and intends to discuss
these possibilities with interested shareholders and other parties. At this
point, the Lens Group has not yet decided whether to submit any such proposal,
solicit proxies for directors or participate alone or with other parties in any
such transaction involving the Company. Each of Holmes and Goodrich is
supportive of the activities and purposes respecting the Company of the Lens
Group identified herein.
Except as described above, the Lens Group has no plans
or proposals which relate to, or would result in, any of the
transactions described in subparagraphs (a) through (j) of Item 4
of Schedule 13D under the 1934 Act. The Lens Group reserves the
Page 10 of 39
<PAGE>
right, at any time, to acquire securities of the Company and to dispose of any
such securities, to cause its Clients to acquire additional securities of the
Company or to dispose of any securities of the Company any of them currently own
or any such securities they may hereafter acquire and/or to formulate other
purposes, plans or proposals regarding the Company or any of its securities, to
the extent deemed advisable by the Lens Group in light of developments
respecting the Company, the Lens Group's general investment and trading
policies, market conditions, the interests of its clients, or other factors.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) (i) By virtue of their management of Client accounts, on
September 8, 1998, after giving effect to purchases of Common Stock made for
Client accounts at the direction of Lens and Ram, as of the close of business,
Lens and Ram were the beneficial owners of 721,925 and 288,120 shares of Common
Stock, respectively (together, approximately 5.44% of the outstanding Common
Stock), for purposes of Section 13(d) of the 1934 Act and, by virtue of their
joint management, each may also have been the beneficial owner of the shares of
Common Stock owned by the other. Subsequent to September 8, 1998 and prior to
the date of this Statement, additional purchases of Common Stock were made for
Client accounts at the direction of Lens and Ram, and by virtue of their
management of Client accounts, on the date of this Statement, Lens and Ram were
the beneficial owners of 777,038 and 347,120 shares of Common Stock,
respectively (approximately 6.05% of the outstanding Common stock), for purposes
of Section 13(d) of the 1934 Act and, by virtue of their joint management, each
may also have been the beneficial owner of the shares of Common Stock owned by
the other.
(ii) Holmes is a Client of the Lens Group, and the shares of
Common Stock beneficially owned by Lens and Ram as identified above include
shares purchased with investment funds of Holmes. Separate from his accounts
managed by Ram, as of the date hereof, Holmes is the owner of 2,500 shares of
Common Stock. With respect to such 2,500 shares purchased separately by Holmes,
as a result of Holmes' participation in the management and ownership of Lens,
Holmes and the Lens Group may be deemed to be acting in concert and to have
beneficial ownership of the others' shares of Common Stock within the meaning of
Section 13(d) of the 1934 Act. Holmes disclaims beneficial ownership of the
shares of Common Stock owned by other clients of Lens and Ram and vice versa.
Holmes' spouse is the owner of 300 shares of Common Stock which, as of the date
hereof, are not held in a Lens Group-managed account and were not purchased at
the direction of the
Page 11 of 39
<PAGE>
Lens Group. Such 300 shares for purposes of this Statement are treated as though
beneficially owned by Mr. Holmes, but Mr. Holmes disclaims beneficial ownership
thereof.
(iii) Goodrich is an employee of Ram, but is not a Client of the
Lens Group. As of the date hereof, Goodrich is the owner of 1,525 shares of
Common Stock. As a result of Goodrich's status as an employee of Ram and
participation in the Lens Group's activities relating to the Common Stock,
Goodrich and the Lens Group may be deemed to be acting in concert and to have
beneficial ownership of the others' shares of Common Stock within the meaning of
Section 13(d) of the 1934 Act. Goodrich disclaims beneficial ownership of the
shares of Common Stock beneficially owned by Lens and Ram and vice versa.
(b) Lens has the sole power to direct the vote and the disposition
of the 777,038 shares of Common Stock (approximately 4.18% of the outstanding
Common Stock) owned by its Clients in such accounts on the date of this
Statement. Ram has the sole power to direct the vote and the disposition of the
347,120 shares of Common Stock (approximately 1.87% of the outstanding Common
Stock) owned by its Clients in such accounts on the date of this Statement.
Holmes has the sole power to direct the vote and the disposition of 2,500 shares
of Common Stock as of the date hereof; and Holmes' spouse has the sole power to
direct the vote and the disposition of 300 shares of Common Stock as of the date
hereof. Goodrich has the sole power to direct the vote and the disposition of
1,525 shares of Common Stock as of the date hereof.
The percentages of outstanding shares of Common Stock used in this
Statement are calculated based upon the 18,575,870 shares of Common Stock stated
by the Issuer to be issued and outstanding at June 30, 1998, as reflected in the
Issuer's Quarterly Report on Form 10-Q for the quarter ended May 31, 1998.
(c) Except for causing the open market transactions listed in
Schedule III hereto, there have been no transactions with respect to the Common
Stock during the past 60 days by the Lens Group, Holmes or Goodrich.
(d) No person other than the Client who is the owner of shares of
Common Stock referred to herein is known to the Lens Group to have the rights to
receive or the power to direct the receipt of dividends from or the proceeds of
sale of any of the shares of Common Stock referred to in Item 5(a)(i) hereof. No
one is known to Holmes or Goodrich to have the right to receive or the power to
direct the receipt of dividends or the proceeds
Page 12 of 39
<PAGE>
of sale of any of the shares of Common Stock referred to in Items 5(a)(ii) and
(iii) hereof.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS, OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER
As part of their respective Client relationships, Lens and Ram have
the power to direct the voting and the disposition of shares of Common Stock
owned by their respective Clients in the accounts they manage for the Clients,
pursuant to written investment management agreements with the Clients. Under
such agreements, Lens' compensation for its services thereunder may include a
share in the appreciation earned by the Client on the account's investments and
accordingly both Lens' and Ram's compensation for its services thereunder may
vary with the value of the assets (including any Common Stock) under its
management. None of such agreements, however, require that such accounts be
invested in securities of the Issuer or include in their provisions any terms
specifically relating to or varying with the investment of the accounts in
securities of the Issuer.
Other than his investment management agreement with Ram in his
capacity as a Client, as described above, and his ownership interest in Lens and
participation in the management thereof, Holmes is not a party to any contract,
arrangement, understanding or relationship (legal or otherwise) with the Lens
Group and/or Goodrich with respect to any securities of the Issuer. Other than
his employment relationship with Ram, Goodrich is not a party to any contract,
arrangement, understanding or relationship (legal or otherwise) with the Lens
Group and/or Holmes with respect to any securities of the Issuer.
Page 13 of 39
<PAGE>
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Letter dated January 15, 1998 from Robert A.G. Monks of
the Lens Group to Robert S. Fremont, Chief Executive
Officer of the Issuer, letter dated April 13, 1998 from
Nell Minow of the Lens Group to Julius Lewis, Corporate
Secretary of the Issuer, letter dated April 29, 1998
from Nell Minow to Julius Lewis, letter dated June 1,
1998 from Nell Minow to Robert S. Fremont, letter dated
June 22, 1998 from Nell Minow to Robert S. Fremont,
letter dated August 27, 1998 from Nell Minow to Robert
S. Fremont, letter dated May 19, 1998 from Robert S.
Fremont to Nell Minow and the Lens Group's Summary,
dated January 13, 1998, of the Issuer's problems and
symptoms, proposed solutions with respect thereto and
highlights of the Issuer's performance.
Page 14 of 39
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this Statement is true, complete and
correct.
September 18, 1998
LENS INVESTMENT MANAGEMENT LLC
By: /s/ John P.M. Higgins
---------------------------------------
Name: John P.M. Higgins
Title: Member
RAM TRUST SERVICES, INC.
/s/ John P.M. Higgins
---------------------------------------
Name: John P.M. Higgins
Title: President
/s/ Robert B. Holmes
---------------------------------------
Robert B. Holmes
By: /s/ John B. Goodrich
---------------------------------------
John B. Goodrich
Page 15 of 39
<PAGE>
SCHEDULE I
Lens Investment Management, LLC
(a Maine limited liability company)
45 Exchange Street, Suite 400
Portland, ME 04101
Members
Name and Business Address Position and Principal Occupation
- ------------------------- ---------------------------------
John P.M. Higgins Member/Management Participant
45 Exchange Street
Portland, ME 04101
Robert A.G. Monks Member/Management Participant
45 Exchange Street
Portland, ME 04101
Nell Minow Member/Management Participant
1200 G Street, NW
Suite 800
Washington, DC 20005
Robert B. Holmes Member/Management Participant
45 Exchange Street
Portland, ME 04101
Barbara A. Sleasman Member
1200 G Street, NW
Suite 800
Washington, DC 20005
The principal occupation of each of the individuals listed above is
participation in the management of Lens and Ram. None of the individuals listed
above in the last five years (i) has been convicted in a criminal proceeding or
(ii) was party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws. Each of the individuals listed above is
a citizen of the United States.
Page 16 of 39
<PAGE>
SCHEDULE II
Ram Trust Services, Inc.
(a Maine corporation)
45 Exchange Street
Portland, ME 04101
Executive Officers and Directors
and Controlling Shareholders
Name and Business Address Position and Principal Occupation
- ------------------------- ---------------------------------
John P.M. Higgins President, Chief Executive Officer,
45 Exchange Street Director and Controlling
Portland, ME 04101 Shareholder
Robert A.G. Monks Director
45 Exchange Street
Portland, ME 04101
William F.K. Monks Director
45 Exchange Street
Portland, ME 04101
William S. Schaffner Secretary, Treasurer and Director
45 Exchange Street
Portland, ME 04101
The principal occupation of each of the individuals listed above is
participation in the management of Ram and Lens. None of the individuals listed
above in the last five years (i) has been convicted in a criminal proceeding or
(ii) was party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, Federal or State securities laws or finding
any violation with respect to such laws. Each of the individuals listed above is
a citizen of the United States.
Page 17 of 39
<PAGE>
RECENT TRANSACTIONS IN THE COMMON STOCK
<TABLE>
<CAPTION>
Date of Nature of Number Total Cost Price
Transaction Transaction of Shares (Proceeds) Per Share
- ----------- ----------- --------- ---------- ---------
<S> <C> <C> <C> <C>
7/7/98 Purchase Ram Trust Services, Inc. 215 4,783.75 22.250
7/9/98 Sale Ram Trust Services, Inc. (100) (2,175.00) 21.750
7/9/98 Purchase Ram Trust Services, Inc. 65 1,462.50 22.500
8/7/98 Purchase Ram Trust Services, Inc. 2,000 41,660.00 20.830
8/12/98 Purchase Ram Trust Services, Inc. 500 10,500.00 21.00
9/2/98 Purchase Ram Trust Services, Inc. 75,000 1,525,934.93 20.3458
9/4/98 Purchase Ram Trust Services, Inc. 10,000 189,375.00 18.938
9/8/98 Purchase Ram Trust Services, Inc. 60,000 1,180,284.12 19.6714
9/9/98 Purchase Ram Trust Services, Inc. 55,000 1,079,375.00 19.625
9/14/98 Purchase Ram Trust Services, Inc. 4,000 80,500.00 20.125
9/8/98 Purchase Lens Investment Management 27,500 540,963.50 19.671
9/9/98 Purchase Lens Investment Management 10,000 196,250.00 19.625
9/14/98 Purchase Lens Investment Management 20,000 397,500.00 19.875
9/15/98 Purchase Lens Investment Management 113 2,288.25 20.25
9/16/98 Purchase Lens Investment Management 25,000 509,375.00 20.375
8/3/98 Purchase John B. Goodrich 400 8,500.00 21.250
9/4/98 Purchase John B. Goodrich 625 12,578.13 20.125
9/4/98 Purchase John B. Goodrich 300 5,775.00 19.250
</TABLE>
* Holmes purchases were made prior to this 60-day period
Page 18 of 39
<PAGE>
EXHIBIT 1
LENS
The Corporate Governance Investors
- --------------------------------------------------------------------------------
Focus
Investment
Management LLC
Suite 400
45 Exchange Street E-Mail
Portland, Maine 04101 [email protected]
Telephone 207.775.4296
Facsimile 202.775.4289 Web Site:
http://www.lens-inc.com
Suite 800
1200 G Street, NW
Washington, DC 20005
Telephone 202.434.8723
Facsimile 202.783.3316
Principals
Robert A.G. Monks
Nell Minow
John P.M. Higgins
Robert B. Holmes
Charles K. Woodworth
John B. Goodrich
Director of Research
Jan M. Nelligan
Administrative Officer
Barbara A. Sleasman
Executive Assistant
January 15, 1998
Via Federal Express
- -------------------
Mr. Robert S. Fremont
Chief Executive Officer
Juno Lighting Inc.
2001 S. Mt. Prospect Road
Des Plaines, IL 60017-5065
Page 19 of 39
<PAGE>
January 15, 1998 Page 2
Dear Mr. Fremont,
We are substantial shareholders in Juno Lighting. While we believe that the
company has a good product and strong underlying values, we have become
concerned about the company's poor performance and have seen no evidence of
recognition or response by management. I had hoped to meet with you in person or
speak to you on the phone about our views, and was disappointed that you were
not able to make yourself available.
I attach a memorandum that we have prepared enumerating our view of the business
problems and some possible solutions. One problem that seems clear is the lack
of independent outside directors. Four of the five incumbents are either
insiders or affiliated outsiders who are paid for their services to the company.
There is no nominating committee to evaluate the performance of the board and
find new candidates. Furthermore, the board apparently met only four times
during the course of the year, less than half the standard for most companies.
Juno needs new independent outside directors highly respected in the community
and in business circles. We suggest that you retain a professional search firm
immediately to add at least three new directors.
We hope to meet with you soon to discuss the standards and criteria for the new
directors and strategic changes in company direction. I enclose a copy of our
Annual Report and refer you to our web page [http://www.lens-inc.com] for
additional information about our investment company.
We would appreciate the favor of a response.
Respectfully yours,
/s/ Robert A.G. Monks
Robert A.G. Monks
Enc.
Page 20 of 39
<PAGE>
LENS
The Corporate Governance Investors
- --------------------------------------------------------------------------------
Focus
Investment
Management LLC
Suite 400
45 Exchange Street E-Mail
Portland, Maine 04101 [email protected]
Telephone 207.775.4296
Facsimile 202.775.4289 Web Site:
http://www.lens-inc.com
Suite 800
1200 G Street, NW
Washington, DC 20005
Telephone 202.434.8723
Facsimile 202.783.3316
Principals
Robert A.G. Monks
Nell Minow
John P.M. Higgins
Robert B. Holmes
Charles K. Woodworth
John B. Goodrich
Director of Research
Jan M. Nelligan
Administrative Officer
Barbara A. Sleasman
Executive Assistant
April 13, 1998
Mr. Julius Lewis
Corporate Secretary
Juno Lighting, Inc.
1300 South Wolf Road
P.O. Box 5065
Des Plaines, Illinois 60017-5065
Page 21 of 39
<PAGE>
April 13, 1998 Page 2
Dear Mr. Lewis,
I am looking forward to attending the Juno Lighting annual meeting later this
month, and thought it would be helpful if I let you know the questions I plan to
raise in advance, so the directors can be prepared to respond.
We are grateful for the cooperation from management and the board, particularly
your agreement to our requests for the addition of two new independent outside
directors and the appointment of a committee of independent outsiders to review
the company's capital allocation. I hope to get an update on both at the
meeting. I also plan to suggest that the board schedule at least six meetings a
year, with separate meetings for the outside directors following each board
meeting, and that the members of the board receive their pay in company stock. I
expect to ask for an outline of the procedures in place for CEO succession
planning, and I expect to ask about any procedures in place for board, director,
and CEO evaluation.
I plan to recommend that, once the two new independent outside directors are
added to the board, the Audit and Compensation Committees be made up exclusively
of independent, outside directors, and that a new Nominating and Governance
Committee, also made up of independent outsiders, be established.
I am enclosing some recent reports of the National Association of Corporate
Directors. As a member of the commissions that prepared these reports, I think
they provide a good statement of best practices for boards. I hope the members
of the Juno board will review them and consider their applicability to your
situation. It may be that a complete response to these reports is beyond the
scope of the annual meeting, in which case a written response or a separate
meeting with the board would be fine.
Page 22 of 39
<PAGE>
April 13, 1998 Page 2
If you have any questions or comments about my plans for the meeting, please
call me at (202) 434-8723. I look forward to meeting you on the 28th.
Sincerely,
/s/ Nell Minow
Nell Minow
Page 23 of 39
<PAGE>
LENS
The Corporate Governance Investors
- --------------------------------------------------------------------------------
Focus
Investment
Management LLC
Suite 400
45 Exchange Street E-Mail
Portland, Maine 04101 [email protected]
Telephone 207.775.4296
Facsimile 202.775.4289 Web Site:
http://www.lens-inc.com
Suite 800
1200 G Street, NW
Washington, DC 20005
Telephone 202.434.8723
Facsimile 202.783.3316
Principals
Robert A.G. Monks
Nell Minow
John P.M. Higgins
Robert B. Holmes
Charles K. Woodworth
John B. Goodrich
Director of Research
Jan M. Nelligan
Administrative Officer
Barbara A. Sleasman
Executive Assistant
April 29, 1998
Mr. Julius Lewis
Corporate Secretary
Juno Lighting, Inc.
1300 South Wolf Road
P.O. Box 5065
Des Plaines, Illinois 60017-5065
Page 24 of 39
<PAGE>
April 29, 1998 Page 2
Dear Mr. Lewis,
I am grateful for the courtesy and cooperation I received from everyone at Juno
at yesterday's annual meeting. I was very impressed with the company's
operations.
However, I was sorry to find that I have not been successful at communicating my
sense of urgency in addressing the issues we have raised. In particular, I find
it difficult to understand why it has taken so long to begin the search for the
two new directors. It should have taken no more than a week to select a search
firm last February, when we first agreed to drop our proxy contest.
We have had good experiences with SpencerStuart, Heidrick & Struggles, and Egon
Zehnder. I trust that you will select one of these or another comparable firm
within the next week and that you will have the person who is coordinating the
search call me so that I can provide my views on the qualifications we consider
appropriate. Mr. Fremont's commitment of 30-60 days for finding the new
directors means that we will have them in place by the end of June at the
latest, and I would like to meet with them as soon as possible after they are
appointed.
I wrote to you before the meeting so that the board would be prepared to address
the questions I raised. I was therefore also disappointed not to have more than
a general and very informal response. I would like to be confident that the
board is addressing the questions I have raised in a prompt, thorough, and
substantive manner, and I hope you will let me know when I can expect a response
to each of the recommendations I made. While I do not like to be too formulaic,
and I do not expect the board to agree to every structural and procedural change
I recommend, I do expect that any alternative selected will address the
underlying issues at least as well as the changes I have suggested.
My concerns about the governance issues would not be so pressing if I had more
confidence in the company's analysis of its use of capital. I agree with the
remarks Jim Severance of the State of Wisconsin Investment Board made at
yesterday's meeting. Shareholders do not need to buy publicly traded securities
to get the kinds of returns you are getting on the cash. On our tour of the
facility, George Bilek was unable to respond when asked what the cost of capital
was for the new building, and I did not get a sense that a careful evaluation of
the options for debt financing was conducted before making the decision to pay
cash. I would like you to apply the same kind of scrutiny and achieve the same
results in the management of your capital that you do in the development,
manufacturing, and marketing
Page 25 of 39
<PAGE>
April 29, 1998 Page 2
of your products. That is what shareholders of public companies are
entitled to expect.
Please circulate this letter to the entire board. I am going to be back in
Chicago to lecture at the University of Chicago Business School on May 29, and I
would like to meet with George M. Ball and or Allen Coleman to get an update on
these issues. I would appreciate your letting me know if that day is convenient
for them; if not, I will make a separate trip. I look forward to hearing from
you.
Sincerely,
/s/ Nell Minow
Nell Minow
Page 26 of 39
<PAGE>
LENS
The Corporate Governance Investors
- --------------------------------------------------------------------------------
Focus
Investment
Management LLC
Suite 400
45 Exchange Street E-Mail
Portland, Maine 04101 [email protected]
Telephone 207.775.4296
Facsimile 202.775.4289 Web Site:
http://www.lens-inc.com
Suite 800
1200 G Street, NW
Washington, DC 20005
Telephone 202.434.8723
Facsimile 202.783.3316
Principals
Robert A.G. Monks
Nell Minow
John P.M. Higgins
Robert B. Holmes
Charles K. Woodworth
John B. Goodrich
Director of Research
Jan M. Nelligan
Administrative Officer
Barbara A. Sleasman
Executive Assistant
June 1, 1998
Robert S. Fremont
Juno Lighting Inc.
1300 South Wolf Road
Des Plaines, IL 60017-5065
Dear Mr. Fremont,
Page 27 of 39
<PAGE>
June 1, 1998 Page 2
I appreciate your letter, but my concern about the independence of Juno's board
is only underscored by the fact that my request to meet with the outside
directors elicited a response from the CEO. I do not even know whether the other
members of the board received my previous letter, despite my request that it be
circulated, or whether they participated in the response.
LENS has no intention of interfering with the authority of the board or the
management in the conduct of their responsibilities, and we have never suggested
that the board "take direction" from the shareholders. However, we do think it
is appropriate for the outside directors to meet with the holder of just under
five percent of the company's stock to make sure they are aware of our concerns.
I would be glad to come to your office on the date of the next scheduled board
meeting so that I may have the opportunity for a brief meeting with the outside
directors.
In the meantime, we would like an update on the search for new directors. When I
discovered to my dismay that the board had not even begun to select a search
firm, I made sure that your promise to add the two new directors within "thirty
to sixty days" was stated on the record before the close of the annual meeting,
and we would like to know whether you intend to meet that commitment. I
understood that we had agreed I would be informed when the search firm had been
selected, and I would appreciate an update and the opportunity to give the
search firm's representative our views about the qualifications for prospective
directors.
I want to correct one apparent misunderstanding. All of our communications are
solely on behalf of LENS. While the questions I raise are of importance to all
shareholders, we do not represent any other group. And please do not be
distracted by any of the rather hyperbolic press my firm and I have received.
While LENS invests only in companies where we believe shareholder involvement
will add value, most of our relationships with portfolio companies have been
most cordial and cooperative. We consider Juno's operations to be exemplary, and
we have no intention of interfering. The only issues we have raised have related
to the board's composition and procedures and the company's excess cash, which
are entirely appropriate subjects for shareholders. I find it hard to understand
the delay in responding to questions like those about increasing the frequency
of meetings and having the outside directors meet in executive session. I am
deeply concerned about the delays in moving forward on our agreement of last
February. And when I ask for a meeting with the outside directors, I would like
to hear from the outside directors themselves.
Sincerely,
Page 28 of 39
<PAGE>
June 1, 1998 Page 2
/s/ Nell Minow
Nell Minow
cc: George Ball
Julius Lewis
Allan Coleman
Thomas W. Tomsovic
Page 29 of 39
<PAGE>
LENS
The Corporate Governance Investors
- --------------------------------------------------------------------------------
Focus
Investment
Management LLC
Suite 400
45 Exchange Street E-Mail
Portland, Maine 04101 [email protected]
Telephone 207.775.4296
Facsimile 202.775.4289 Web Site:
http://www.lens-inc.com
Suite 800
1200 G Street, NW
Washington, DC 20005
Telephone 202.434.8723
Facsimile 202.783.3316
Principals
Robert A.G. Monks
Nell Minow
John P.M. Higgins
Robert B. Holmes
Charles K. Woodworth
John B. Goodrich
Director of Research
Jan M. Nelligan
Administrative Officer
Barbara A. Sleasman
Executive Assistant
June 22, 1998
Robert S. Fremont
Juno Lighting Inc.
1300 South Wolf Road
Des Plaines, IL 60017-5065
Dear Mr. Fremont,
Page 30 of 39
<PAGE>
As I reminded you in my last letter, you promised that the new directors would
be added to the board by the end of this month. Can you please give me a status
report on the search as soon as possible?
Sincerely,
/s/ Nell Minow
Nell Minow
cc: George Ball
Julius Lewis
Allan Coleman
Thomas W. Tomsovic
Page 31 of 39
<PAGE>
LENS
The Corporate Governance Investors
- --------------------------------------------------------------------------------
Focus
Investment
Management LLC
Suite 400
45 Exchange Street E-Mail
Portland, Maine 04101 [email protected]
Telephone 207.775.4296
Facsimile 202.775.4289 Web Site:
http://www.lens-inc.com
Suite 800
1200 G Street, NW
Washington, DC 20005
Telephone 202.434.8723
Facsimile 202.783.3316
Principals
Robert A.G. Monks
Nell Minow
John P.M. Higgins
Robert B. Holmes
Charles K. Woodworth
John B. Goodrich
Director of Research
Jan M. Nelligan
Administrative Officer
Barbara A. Sleasman
Executive Assistant
August 27, 1998
Mr. Robert S. Fremont
Juno Lighting Inc.
1300 South Wolf Road
Des Plaines, IL 60017-5065
Dear Mr. Fremont,
Page 32 of 39
<PAGE>
I am having an increasingly harder time believing that the board of Juno is
acting in good faith with regard to your promise to appoint two new independent
outside directors. Despite the fact that you originally made the commitment to
add the new directors last March, despite the fact that at the annual meeting on
April 28 you said you were about to select a search firm and promised that they
would be added to the board within thirty to sixty days, it appears that you did
not even retain the search firm until August (following our demand for access to
your records on this matter). Furthermore, according to the contract, you have
still not provided to the search firm the criteria you will require of the
candidates. Finally, we have had additional delays and failure to keep promises
with regard to our access to the appropriate records. Ultimately, the single
record we were provided was the contract with Korn/Ferry, despite the fact that
we had been promised two documents, and despite the fact that the document we
received was not even in existence at the time that promise was made. I think
you owe the shareholders an explanation for your delay in initiating a process
that should have been concluded months ago.
I would like to speak with the Korn/Ferry partner who is handling the search, to
discuss our views on the appropriate criteria. I would like to hear from Mr.
Ball and Mr. Coleman to find out what their role in the selection process has
been and will be once Korn/Ferry begins to provide the names of potential
candidates. But most of all, I would like an end to the delay, so that the Juno
shareholders will have the independent directors we have been waiting for since
March. I look forward to a prompt reply from you and from Mr. Ball and Mr.
Coleman.
Sincerely,
/s/ Nell Minow
Nell Minow
cc: George Ball
Julius Lewis
Allan Coleman
Thomas W. Tomsovic
Page 33 of 39
<PAGE>
Juno Lighting Inc.
1300 S. Wolff Rd.
P.O. Box 5065
Des Plaines, IL 60017
Phone 847.827.9880
Fax 847.827.2925
May 19, 1998
Ms. Nell Minow
LENS
1200 G Street NW, Suite 800
Washington, D.C. 20005
Dear Ms. Minow:
I have received a copy of your April 29, 1998 letter to Julius Lewis and am
pleased to respond on behalf of Juno.
Juno appreciates the investment in Juno by the entities with which you are
affiliated and your interest in and recommendations relating to Juno, expressed
both in writing and at the recent stockholders meeting.
While the board and I are always interested in receiving input from Juno's
stockholders and are responsive to ideas that may be of value to Juno, Juno's
board and officers must exercise their own judgment in fulfilling their
responsibilities. Juno is committed to its shareholders and responsive to their
concerns. However, I do not believe it is appropriate for the board to take
direction from a representative of certain stockholders with respect to
implementing Juno's policies or managing its day-to-day operations.
As we have previously stated, Juno is committed to adding two new independent
directors and to creating a capital allocation committee to review Juno's
capital structure and use of cash and marketable securities, and to make
recommendations to the board with a view to maximizing shareholder value.
Accordingly, I think it is premature to respond to a number of your questions,
particularly those regarding Juno's use of capital.
Page 34 of 39
<PAGE>
May 19, 1998 Page 2
I would be happy to discuss with you the board's reactions to the questions that
you raised following the next regular board meeting. In the meantime, please
feel free to call me at your convenience.
Very truly yours,
JUNO LIGHTING, INC.
/s/ Robert S. Fremont
Mr. Robert S. Fremont
Chairman and CEO
RSF:lam
cc: Mr. Julius Lewis - Sonnenschein, Nath & Rosenthal
Page 35 of 39
<PAGE>
JUNO LIGHTING, INC. SUMMARY
---------------------------
JANUARY 13, 1998
PROBLEMS AND SYMPTOMS
- ---------------------
o Juno's total returns have lagged the peer group for all
three measurement periods-1, 3, and 5 years. During
the last twelve month1 Juno's return has been 7%,
compared with 29% for the Electrical Products peer
group2 and 26% for the S&P 500. Juno's returns for
the 3- and 5-year periods have been very anemic-0.4%
and 0.5%, respectively.
o Juno's FY97 and FY98 P/E ratios are 15.2x and 13.4x,
respectively, and represent 20% and 15% discounts to the peer
group.
o Sales declined 0.3% in fiscal 19953, increased 4.0% in fiscal
1996, and increased 6.7% through the 12 months ended August,
1997. This rate of increase pales in comparison with the
average rate of increase for the seven year 1987 - 1994 of
13.4%.
o Research & development expense has been grown at an average
rate of 18% per annum over the last five years, versus 10% for
sales. As this expense has not been reflected in sales growth,
management's product development plan is open to question.
o Capital expenditures have grown at an annual rate of
25% for the last five years, and totaled $47.2 million
since the end of fiscal 1991. A major portion of this
fund outflow ($23 million) has been connected with a
new combined headquarters/manufacturing facility.
Completed in August, this facility will expand and
modernize the manufacturing capacity. Again, this
heightened rate of expenditure has not been reflected
in the sales.
o Cash & equivalents of $80 million is extremely high,
representing 43% of total assets, 25% of market cap,
and 420% of total liabilities. High cash concentration
represents the historical norm for this company: cash &
- ------------------------
1. Ended 1/12/98.
2. Factset Electrical Products industry group (U.S. companies,
market capitalization $250 million).
3. Fiscal year-end is November.
Page 36 of 39
<PAGE>
JUNO LIGHTING INC.
JANUARY 13, 1998
PAGE 2 OF 2
equivalents have consistently ranged from 35% to 45% of total
assets. These assets should be redeployed in order to bring
increased value to shareholders. Even given that the expanded
business program implied by the new facility requires expanded
working capital, improved sales should obviate any need for
the current stash of excess cash.
o The company's debt has been virtually non-existent,
consisting on August 31, 1997 of $4.2 million in bond
debt. We estimate this company's borrowing capacity at
20% - 40% total debt / total capital4, which implies
debt of at least $40 million. Given Juno's level of
profitability, leverage would improve shareholder
returns substantially.
o The company's net income trend reflects the abovementioned
factors - the net income margin peaked in fiscal 1988 at
19.1%, peaked again in 1994 at 18.1%, and currently is at a
historical low of 15.1% (for fiscal 1996 and for the trailing
twelve months through August, 1997).
PROPOSED SOLUTIONS
- ------------------
(1) REDEPLOY CASH ASSETS THROUGH (A) REINVESTMENT IN
BUSINESS OR (B) SHARE REPURCHASES.
(A) Investment in Business Scenario. If excess cash of
$70mm5 and new borrowings of $40mm were reinvested in
the business, and expected return on invested capital
of 13%6 would imply additional annual net income of
$12.5mm7, or $0.67 per share. The result of the above
coupled with a 10% annual growth rate on existing sales
and EPS should be FY99 EPS of $2.07. With real growth
restored to earnings, a FY2 P/E of 15x would be very
plausible, and perhaps conservative, implying a ONE-
YEAR-OUT PRICE OF $31.05. IRR WOULD BE 83% on today's
$17 share price.
- -------------------------
4. The Peer group total debt/total capital ratio is 35%.
5. Leaving $10 million on the balance sheet.
6. Representing the low end of Juno's historical range.
7. Net of lost interest income.
Page 37 of 39
<PAGE>
JUNO LIGHTING INC.
JANUARY 13, 1998
PAGE 2 OF 2
(B) Share Repurchase Scenario. If excess cash of $70mm were
used to repurchase 3.684mm shares at an average price of $19,
shares would be reduced to 14.843 mm. FY 11/97 eps7 would rise
to $1.269, FY 11/98 eps would rise to $1.463, and FY 11/99
would rise to $1.796. The respective P/Es would decline to
13.4x, 11.6x, and 9.5x. With a less profitable and less
growth-oriented scenario than the above, a FY2 P/E might be
14x, implying a ONE-YEAR-OUT PRICE OF $25.14. IRR WOULD BE 48%
on today's $17.
(2) RADICALLY IMPROVED MARKETING EFFORTS IN ORDER TO TAKE
ADVANTAGE OF SUBSTANTIAL R&D AND CAPITAL EXPENDITURE
PROGRAMS.
(3) GET THE WORD OUT TO THE STREET. ONLY TWO OR THREE
SELL-SIDE ANALYSTS FOLLOW THIS POTENTIALLY EXCITING
SMALL CAP SITUATION.
Page 38 of 39
<PAGE>
JUNO LIGHTING INC.
JANUARY 13, 1998
PAGE 2 OF 2
COMPANY HIGHLIGHTS
- ------------------
Data as of 1/12/98
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Price (1/12) $17.00 P/E (11/97) 15.2x Peers 19.0x Cash&Eq/Sh $4.32 C&E/TotAss 43.2%
52 wk Hi-Lo 19 3/4-14 1/2 TotDebt/Sh $0.23 TD/TC 2.5%
Shares O/S (mm) 18.528 P/E (11/98) 13.4x Peers 15.8x Book/Sh $8.97 Price/Book 1.9x
Market Cap (mm) 315.0
Shares Dirs/Offs. 4.0%
-------------------------------------------------------------------------------
EPSa(11/96) $1.08 1Yr TR 6.6% Peers 28.6%
EPSe(11/97) $1.12 3Yr TR p.a. 0.4% Peers 23.9%
EPSe(11/98) $1.27 5Yr TR p.a. 0.5% Peers 18.3%
Div. Yield 2.1%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 39 of 39
