SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1996
Commission file number: 0-16960
----------------
THE GENLYTE GROUP INCORPORATED
2345 Vauxhall Road
Union, N. J. 07083-1948
(908) 964-7000
INCORPORATED IN DELAWARE I.R.S. EMPLOYER
IDENTIFICATION NO. 22-2584333
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- --------------------------------------------------------------------------------
Common Stock, par value NASDAQ National Market System
$.0l per share
Number of shares of Common Stock (par value $.0l per share) outstanding as of
March 3, 1997: 13,134,074.
Aggregate market value of Common Stock (par value $.01 per share) held by
non-affiliates on March 3, 1997: $141,191,296.
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. [X]
DOCUMENTS INCORPORATED BY REFERENCE:
DOCUMENT PART OF FORM 10-K
Annual report to stockholders for the fiscal year
ended December 31, 1996 PARTS I, II, AND IV
Proxy Statement for the Annual Meeting of Stockholders
to be held April 24, 1997 PART III
<PAGE>
PART I
- ------
ITEM 1. BUSINESS
--------
The Genlyte Group Incorporated (the "Company" or "Genlyte") designs,
manufactures and sells lighting fixtures for a wide variety of applications in
the commercial, industrial, and residential markets. The Company operates in one
industry segment (lighting fixtures and controls) through the following
divisions: Lightolier, Controls, Wide-Lite, Hadco, Diamond F, and Supply
(Crescent, ExceLine, and Stonco product lines) in the United States and Mexico,
and Canlyte in Canada. The Company markets its products under the following
brand names:
In the U.S. -- Bronzelite, Crescent, Diamond F, ExceLine, Forecast,
Genlyte Controls, Hadco, Lightolier, Stonco, and Wide-Lite
In Canada -- Keene-Widelite, Lightolier, Prodel, Stonco, and CFI
(Canadian Fluorescent Industries)
In Mexico -- Lightolier, Forecast, Wide-Lite, Bronzelite, and Hadco
Genlyte's products primarily utilize incandescent, fluorescent, and
high-intensity discharge ("HID") light sources and are marketed primarily to
distributors who resell the products for use in new residential, commercial, and
industrial construction as well as in remodeling existing structures. Because
Genlyte does not principally sell directly to the end-user of its products, the
Company cannot determine precisely the percentage of its revenues derived from
the sale of products installed in each type of building or the percentage of its
products sold for new construction versus remodeling. Genlyte's sales, like
those of the lighting fixture industry in general, are partly dependent on the
level of activity in new construction and remodeling.
1
<PAGE>
PRODUCTS AND DISTRIBUTION
- -------------------------
Genlyte designs, manufactures, and markets the following types of products:
Indoor Fixtures -- Incandescent, fluorescent, and HID lighting fixtures
and lighting controls for commercial, industrial,
institutional, medical, sports, and residential
markets, and task lighting for all markets.
Outdoor Fixtures -- HID and incandescent lighting fixtures and accessories
for commercial, industrial, institutional, sports, and
residential markets.
Genlyte's products are marketed by independent sales representatives and Company
direct sales personnel who sell to distributors, electrical wholesalers, mass
merchandisers, and national accounts. In addition, the Company's products are
promoted through architects, engineers, contractors, and building owners. The
fixtures are principally sold throughout the United States, Canada, and Mexico.
RAW MATERIALS SOURCES & AVAILABILITY
- ------------------------------------
Genlyte purchases large quantities of raw materials and components -- mainly
steel, aluminum, ballasts, sockets, wire, plastic, lenses, and glass -- from
multiple sources. No significant supply problems have been encountered in recent
years. Relationships with vendors have been satisfactory.
PATENTS AND TRADEMARKS
- ----------------------
Genlyte has a number of United States and foreign mechanical patents, design
patents, and registered trademarks. Genlyte maintains such protections by
periodic renewal of trademarks and payments of maintenance fees for issued
patents. Genlyte vigorously enforces its intellectual property rights. Genlyte
does not believe that a loss of any presently held patent or trademark is likely
to have a material adverse impact on its business.
2
<PAGE>
SEASONAL EFFECT ON BUSINESS
- ---------------------------
There are no predictable significant seasonal effects on Genlyte's results of
its operations.
WORKING CAPITAL
- ---------------
There are no unusual significant business practices at Genlyte that affect
working capital. Genlyte's terms of sale vary by division but are generally
consistent with general practices within the lighting industry. The Company
attempts to keep inventory levels at the minimum required to satisfy customer
requirements.
BACKLOG
- -------
Backlog was $42,247,005 as of December 31, 1996, $51,093,000 as of December 31,
1995, and $50,378,300 as of December 31, 1994. Substantially all of the backlog
at December 31, 1996 is expected to be shipped in 1997.
COMPETITION
- -----------
Genlyte's products are sold in competitive markets where there are numerous
producers of each type of fixture. The principal measures of competition in
indoor and outdoor fixtures for the commercial, residential, and industrial
markets are price, service, design, and product performance.
RESEARCH AND DEVELOPMENT
- ------------------------
Genlyte is constantly monitoring new light sources for incorporation into new
product development. Costs incurred for research and development activities, as
determined in accordance with generally accepted accounting principles, were
$4,148,000, $2,551,000 and $3,006,000, during 1996, 1995, 1994 respectively.
3
<PAGE>
EMPLOYEES
- ---------
At December 31, 1996, Genlyte employed approximately 1,800 unionized and
non-unionized production workers and 750 engineering, administrative, and sales
personnel. Relationships with unions have been satisfactory.
INTERNATIONAL OPERATIONS
- ------------------------
The Company has international operations in Canada and Mexico. Information on
the Company's operations by geographical area for the last three fiscal years is
set forth in the "Notes to the Consolidated Financial Statements" section of
Genlyte's 1996 Annual Report to Stockholders, which is incorporated herein by
reference.
ITEM 2. PROPERTIES
----------
The Company has the following owned and leased property locations as of December
31, 1996:
<TABLE>
<CAPTION>
OWN/ MFG. OFFICE WHSE. OTHER
LEASE SPACE SPACE SPACE SPACE
----- ----- ----- ----- -----
LOCATION
- --------
LIGHTOLIER:
<S> <C> <C> <C> <C> <C>
Atlanta, GA Lease x
Camargo, Mexico Lease x x x
Chesterfield, MO Lease x
Columbia, MD Lease x
Compton, CA Lease x x
Dallas, TX Lease x
Denver, CO Lease x
Edison, NJ Lease x x
Emeryville, CA Lease x
Fall River, MA Own x x
Farmers Branch, TX Lease x
Fontana, CA Own x x x
Jacksonville, FL Lease x
Louisville, KY Lease x
Miami, FL Lease x
New York, NY Lease x
Norwich, CT Own x x
Phoenix, AZ Lease x
Pittsburgh, PA Lease x
Portland, OR Lease x
San Diego, CA Lease x
Seattle, WA Lease x
Schiller Park, IL Lease x
Wilmington, MA Own x x x
Winter Park, FL Lease x
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
OWN/ MFG. OFFICE WHSE. OTHER
LEASE SPACE SPACE SPACE SPACE
----- ----- ----- ----- -----
LOCATION
- --------
HADCO:
<S> <C> <C> <C> <C> <C>
Cameron, WV Lease x x
Littlestown, PA Own x x x
SUPPLY:
Stonco - Union, NJ * Own x x x
Crescent - Barrington, NJ Own x x x
WIDE-LITE:
San Marcos, TX Own x x x
CONTROLS:
Garland, TX Own x x x x
DIAMOND F:
Elgin, IL Own x x x
CANLYTE:
Cambridge, Ontario (KWL) Own x x x
Montreal, Quebec
(Lachine-LOL/CHQ) Own x x x x
Toronto (LOL/CHQ) Lease x
Vancouver (LOL) Lease x
Edmonton (LOL) Lease x
Cornwall, Ontario (CFI) Own x x x
Dorval (LOL) Lease x
</TABLE>
* Includes Genlyte headquarters.
The Genlyte facility located in Garland, Texas is subject to a $278,000 mortgage
due May 1, 2001.
Genlyte believes its facilities are suitable and adequate for current and
presently projected needs.
5
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
-----------------
Genlyte has been named as one of a number of corporate and individual defendants
in an adversary proceeding filed on June 8, 1995, arising out of the Chapter 11
bankruptcy filing of Keene Corporation ("Keene"). Except for the last count, as
discussed below, the claims and causes of action are substantially the same as
were brought against Genlyte in the U.S. District Court in New York in August
1993, which have been permanently enjoined from proceeding as a result of
Keene's reorganization plan. The new complaint is being prosecuted by the
Creditors Trust created for the benefit of Keene's creditors (the "Trust"),
seeking from the defendants, collectively, damages in excess of $700 million,
rescission of certain asset sale and stock transactions, and other relief. With
respect to Genlyte, the complaint principally maintains that certain lighting
assets of Keene were sold to a predecessor of Genlyte in 1984 at less than fair
value, while both Keene and Genlyte were wholly-owned subsidiaries of Bairnco
Corporation. The complaint also challenges Bairnco's spin-off of Genlyte in
August 1988. Other allegations are that Genlyte, as well as the other corporate
defendants, are liable as corporate successors to Keene. The complaint fails to
specify the amount of damages sought against Genlyte. The complaint also alleges
a violation of the Racketeer Influenced and Corrupt Organizations Act.
Following confirmation of the Keene reorganization plan, the parties have moved
to withdraw the case from bankruptcy court to the Southern District of New York
Federal District Court. No answer or other pleading shall be due until thirty
(30) days following withdrawal of the case. Genlyte believes that it has
meritorious defenses to the adversary proceeding and will defend said action
vigorously.
Additionally, the Company is defendant and/or potentially responsible party,
with other companies, in actions and proceedings under state and federal
environment laws including the federal Comprehensive Environmental Response
Compensation and Liability Act, as amended ("Superfund"). Such actions include,
but are not limited to, the Keystone
6
<PAGE>
Sanitation Landfill site located in Pennsylvania, in which the United States
Environmental Protection Agency has sought remedial action and reimbursement for
past costs.
Management does not believe that the disposition of the lawsuits and/or
proceedings will have a material effect on the Company's financial condition or
results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
7
<PAGE>
PART II
- -------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY & RELATED STOCKHOLDER
MATTERS
---------------------------------------------------------------------
a. and c. Data regarding market price of Genlyte's common stock
is included in the "Quarterly Results of Operations"
section of Genlyte's 1996 Annual Report to
Stockholders, which is incorporated herein by
reference. Genlyte's common stock is traded on the
NASDAQ National Market System under the symbol "GLYT".
Information concerning dividends and restrictions
thereon and Preferred Stock Purchase Rights are
included in the "Notes to the Consolidated Financial
Statements" section of Genlyte's 1996 Annual Report to
Stockholders, which is incorporated herein by
reference.
b. The approximate number of common equity security
holders is as follows:
APPROXIMATE NUMBER OF
HOLDERS OF RECORD AS OF
TITLE OF CLASS YEAR-END 1996
---------------------------------------------------------------------
Common Stock,
par value $.0l per share 1,705
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
The information required for this item is included in Genlyte's 1996
Annual Report to Stockholders, which is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
-----------------------------------------------------------------
Reference is made to the "Management's Discussion and Analysis"
section of Genlyte's 1996 Annual Report to Stockholders, which is
incorporated herein by reference.
8
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
Reference is made to the "Consolidated Financial Statements" and
"Quarterly Results of Operations" sections of Genlyte's 1996 Annual
Report to Stockholders, which is incorporated herein by reference.
Financial statement schedules are included in Part IV of this filing.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
------------------------------------------------------------------
None.
9
<PAGE>
PART III
- --------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
The information required with respect to the Directors of Genlyte is
included in the "Election of Directors" section of the Proxy
Statement for the 1997 Annual Meeting of the Stockholders of Genlyte
which has been filed with the Securities and Exchange Commission and
is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
The information with respect to executive compensation is included in
the "Compensation of Directors and Executive Compensation" section of
the Proxy Statement for the 1997 Annual Meeting of Stockholders of
Genlyte which has been filed with the Securities and Exchange
Commission and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The information required with respect to security ownership is
included in the "Voting Securities and Principal Holders Thereof"
section of the Proxy Statement for the 1997 Annual Meeting of
Stockholders of Genlyte which has been filed with the Securities and
Exchange Commission and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
The information required with respect to relationships is included in
the "Compensation Committee Interlocks and Insider Participation" and
"Voting Securities and Principal Holders Thereof" section of the
Proxy Statement for the 1997 Annual Meeting of Stockholders of
Genlyte which has been filed with the Securities and Exchange
Commission and is incorporated herein by reference.
10
<PAGE>
PART IV
- -------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
---------------------------------------------------------------
a) 1) FINANCIAL STATEMENTS
The following information is incorporated herein by reference to
Genlyte's 1996 Annual Report to Stockholders:
Report of Independent Public Accountants
Consolidated Statements of Income for the years ended December
31, 1996, 1995, and 1994
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995, and 1994
Consolidated Statements of Stockholders' Investment for the years
ended December 31, 1996, 1995, and 1994
Notes to Consolidated Financial Statements
2) Financial Statement Schedule
Report of Independent Public Accountants on Financial Statement
Schedule:
Schedule II -- Valuation and Qualifying Accounts
Other schedules are omitted because of the absence of conditions
under which they are required or because the required information
is included in the consolidated financial statements or notes
thereto.
b) There were no filings on Form 8-K during the fourth quarter of
1996.
11
<PAGE>
c) EXHIBITS
- -- --------
INCORPORATED BY
DESCRIPTION REFERENCE TO
- ----------- ------------
- - Amended and Restated Exhibit 3(b) to Genlyte's
Certificate of Incorporation Registration Statement on Form 8 as
of the Registrant, dated filed with the Securities and
August 2, 1988 Exchange Commission on August 3,
1988
- - Amended and Restated Exhibit 3(a) to Genlyte's Form 10-K
Certificate of Incorporation filed with the Securities and
of the Registrant, dated May Exchange Commission in March 1993
9, 1990
- - Amended and Restated By-Laws Exhibit 3(c) to Genlyte's
of the Registrant, as adopted Registration Statement on Form 8 as
on May 16, 1988 filed with the Securities and
Exchange Commission on August 3,
1988
- - Form of Stock Certificate for Exhibit 4(a) to Genlyte's
Genlyte Common Stock Registration Statement on Form 8 as
filed with the Securities and
Exchange Commission on August 3,
1988
- - Stock Purchase Agreement Exhibit 10(a) to Genlyte's
between the Registrant and Registration Statement on Form 8 as
purchasers of Class B Stock of filed with the Securities and
the Registrant, dated as of Exchange Commission on August 3,
June 17, 1988 1988
12
<PAGE>
INCORPORATED BY
DESCRIPTION REFERENCE TO
- ----------- ------------
- - Loan Agreement between The Exhibit 10(b) to Genlyte's Form
Genlyte Group Incorporated and 10-K filed with the Securities and
the New Jersey Economic Exchange Commission in March 1991
Development Authority dated
April 1, 1990, replacing the
First Mortgage and Security
Agreement between the New
Jersey Economic Development
Authority and KCS Lighting,
Inc., dated December 20, 1984
(assigned to and assumed by
the Registrant effective
December 31, 1986)
- - Loan Agreement between The Exhibit 10(c) to Genlyte's Form
Genlyte Group Incorporated and 10-K filed with the Securities and
the New Jersey Economic Exchange Commission in March 1991
Development Authority dated
June 1, 1990, replacing the
Loan Agreement between KCS
Lighting, Inc. and the New
Jersey Economic Development
Authority, dated December 20,
1984 (assigned to and assumed
by the Registrant effective
December 31, 1986)
- - Management Incentive Exhibit 10(i) to Genlyte's
Compensation Plan Registration Statement on Form 8 as
filed with the Securities and
Exchange Commission on August 3,
1988
- - Genlyte 1988 Stock Option Plan Exhibit 10(j) to Genlyte's
Registration Statement on Form 8 as
filed with the Securities and
Exchange Commission on August 3,
1988
13
<PAGE>
INCORPORATED BY
DESCRIPTION REFERENCE TO
- ----------- ------------
- - Tax Sharing Agreement between Exhibit 10(k) to Genlyte's
Genlyte and Bairnco Corpora- Registration Statement on Form 8 as
tion, dated July 15, 1988 filed with the Securities and
Exchange Commission on August 3,
1988
- - Merger and Assumption Agree- Exhibit 10(d) to Genlyte's Form
ment, dated as of December 28, 10-K filed with the Securities and
1990, by and between Genlyte Exchange Commission in March 1991
and Lightolier
- - Form of Employment Protection Exhibit to Genlyte's Form 10-Q
Agreement entered into between filed with the Securities and
Genlyte and certain key Exchange Commission in August 1990
executives
- - Loan Agreement between The Exhibit 4(c) to Genlyte's Form 10-K
Genlyte Group Incorporated and filed with the Securities and
Jobs for Fall River, Inc., Exchange Commission in March 1995
dated as of July 13, 1994
- - Amended and Restated Credit Exhibit 4(c) to Genlyte's Form 10-K
Agreement between The Genlyte filed with the Securities and
Group Incorporated and the Exchange Commission in March 1996
applicable banks named
therein, dated as of November
15, 1995
Other Exhibits included herein:
(11) Calculation of Primary and Fully Diluted Earnings per Share
(13) Annual Report to Stockholders
(21) Subsidiaries of the Registrant
(23) Consent of Independent Public Accountants
(27) Financial Data Schedule
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Genlyte has
duly caused this Annual Report to be signed on its behalf by the undersigned
thereunto duly authorized.
THE GENLYTE GROUP INCORPORATED
------------------------------
Registrant
/s/ March 25, 1997 /s/ Neil M. Bardach
Date: -------------------- By ---------------------------
March 25, 1997 Neil M. Bardach
V.P. Finance - CFO & Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
is signed below by the following persons on behalf of Genlyte and in the
capacities and on the date indicated.
/s/ Avrum I. Drazin 3/20/97
- ------------------------------------------- ------------------
Avrum I. Drazin - Chairman of the Board March 20, 1997
/s/ Larry Powers 3/20/97
- ------------------------------------------- ------------------
Larry Powers, President and Chief March 20, 1997
Executive Officer
(Principal Executive Officer)
/s/ Glenn W. Bailey 3/20/97
- ------------------------------------------- ------------------
Glenn W. Bailey - Director March 20, 1997
/s/ Robert B. Cadwallader March 20, 1997
- ------------------------------------------- ------------------
Robert B. Cadwallader - Director March 20, 1997
/s/ David M. Engelman 3/20/97
- ------------------------------------------- ------------------
David M. Engelman - Director March 20, 1997
/s/ Fred Heller 3/20/97
- ------------------------------------------- ------------------
Fred Heller - Director March 20, 1997
/s/ Frank Metzger 3/20/97
- ------------------------------------------- ------------------
Frank Metzger - Director March 20, 1997
15
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
ON FINANCIAL STATEMENT SCHEDULE
-------------------------------
TO THE GENLYTE GROUP INCORPORATED:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in The Genlyte Group Incorporated
Annual Report to Stockholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated January 22, 1997. Our audits were made for
the purpose of forming an opinion on those statements taken as a whole. The
schedule listed in Item 14a(2) is the responsibility of the Company's management
and is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures applied
in the audits of the basic consolidated financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic consolidated financial statements
taken as a whole.
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
New York, New York
January 22, 1997
16
<PAGE>
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
($ in thousands)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
OF YEAR EXPENSES DEDUCTIONS OF YEAR
------- -------- ---------- -------
<S> <C> <C> <C> <C>
YEAR-ENDED DECEMBER 31, 1996
Allowance for Doubtful Accounts $ 5,302 $ 3,452 $ (532) $ 8,222
YEAR-ENDED DECEMBER 31, 1995
Allowance for Doubtful Accounts $ 3,551 $ 3,315 $(1,564) $ 5,302
YEAR-ENDED DECEMBER 31, 1994
Allowance for Doubtful Accounts $ 3,765 $ 1,334 $(1,548) $ 3,551
</TABLE>
17
EXHIBIT 11
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
Calculation of Primary and Fully Diluted Earnings per Share
For the Years Ended December 31, 1996, 1995 and 1994
($ in thousands - except per share data)
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
PRIMARY EARNINGS PER SHARE*
Net Income $ 12,997 $ 7,909 $ 4,217
Average common shares outstanding 12,859 12,732 12,732
Common shares issuable in respect to common
stock equivalents, with a dilutive effect 162 47 6
-------- ------- -------
Total common and equivalent shares 13,021 12,779 12,738
-------- ------- -------
-------- ------- -------
Primary Earnings Per Share $ 1.00 $ 0.62 $ 0.33
======== ======= =======
FULLY DILUTED EARNINGS PER SHARE**
Net Income $12,997 $ 7,909 $ 4,217
Total common and equivalent shares 13,021 12,779 12,738
Additional common shares issuable assuming full dilution 34 25 4
-------- ------- -------
Total common and equivalent shares assuming full dilution 13,055 12,804 12,742
-------- ------- -------
-------- ------- -------
Fully Diluted Earnings Per Share $ 1.00 $ 0.62 $ 0.33
======== ======= =======
</TABLE>
* Primary earnings per share include all common stock equivalents
** Fully diluted earnings per share include all common stock equivalents plus
the additional shares issuable assuming full dilution
18
================================================================================
GENLYTE
LIGHTING THE WAY-TOGETHER
1996
ANNUAL REPORT
[Graphic]
================================================================================
<PAGE>
The Genlyte Group Incorporated is a leading manufacturer of lighting
fixtures and controls for the commercial, industrial and residential markets.
Our products are sold under the brand names of Bronzelite, Crescent, Diamond F,
ExceLine, Forecast, Genlyte Controls, Hadco, Lightolier, Stonco and Wide-Lite in
the U.S. and CFI Fluorescent, Keene-Widelite, Lightolier, Prodel and Stonco in
Canada.
GENLYTE
<PAGE>
On the Cover: the TechCenter [trademark]
- --------------------------------------------------------------------------------
[graphic of front cover]
The TechCenter in Fall River, Massachusetts, is a 5,000 square foot,
ultra-modern interactive environment that illustrates lighting design and
applications. In its first year, the Center will attract more than 1,000
lighting professionals. Part laboratory, part demonstration facility, part sales
tool, the TechCenter exemplifies Genlyte's commitment to education and
innovation.
http://www.lightolier.com
@theForefront
At Genlyte, innovation is a tradition. From the invention of track lighting
to the first HID floodlight, to the first acrylic refractor globe for street
lighting, Genlyte companies have been consistently at the forefront. At Genlyte,
innovation is a commitment... a commitment represented by the excellence of our
design and engineering staff... by our proven ability to turn the latest
advances in lighting into commercially viable products... by our use of the
newest technology to communicate with our market. At Genlyte, innovation is a
necessity. Lifestyles and workstyles are rapidly changing, creating new lighting
needs. Today, energy efficiency and electronically "smart" lighting are the
imperatives of product development. To succeed, we must provide what the market
wants. With more style. More sophisticated electronics. Greater energy
efficiency. Higher quality.
Our results this year are a measure of our success.
<PAGE>
FINANCIAL HIGHLIGHTS
(Amounts in thousands except per share data)
1996 1995 1994
---- ---- ----
OPERATING RESULTS
Net Sales .......................... $456,860 $445,660 $432,690
Gross Margin Percentage ............ 33.9% 31.0% 29.7%
Operating Profit ................... $ 28,448 $ 21,955 $ 14,659
Net Income ......................... $ 12,997 $ 7,909 $ 4,217
Earnings Per Share ................. $ 1.00 $ 0.62 $ 0.33
BALANCE SHEET DATA
Current Assets ..................... $163,839 $151,058 $157,332
Total Assets ....................... $238,115 $231,034 $240,178
Current Liabilities ................ $ 92,473 $ 75,289 $ 70,618
Total Debt ......................... $ 41,898 $ 65,946 $ 88,997
Stockholders' Investment ........... $ 83,783 $ 69,900 $ 61,170
Book Value Per Average Share ....... $ 6.42 $ 5.46 $ 4.77
[The following table represents a graphic chart.]
NET OPERATING NET EARNINGS PER
SALES PROFIT INCOME SHARE
----- ------ ------ -----
1994 .......... 432.7 14.7 4.2 0.33
1995 .......... 445.7 22.0 7.9 0.62
1996 .......... 456.9 28.4 13.0 1.00
2
<PAGE>
TO OUR STOCK HOLDERS
@ GENLYTE
We have just completed Genlyte's best year since becoming a public company
in 1988. We want to tell you about 1996 and why we are excited about Genlyte's
future.
Over the past five years, Genlyte sales grew a modest 7% while profits have
grown eightfold from 11 cents per share to $1.00 per share; debt has decreased
from $118 million to $42 million; and the price of our shares has climbed from a
low of $2.50 to a new high of $14.00, and closed 1996 at $12.50. We are proud of
our performance but the actions that provided those results were different from
the steps we must now take to assure a bright future for the company.
Today, Genlyte manufactures more products with fewer factories and less
overhead than at any time in the company's history. We have eliminated
unprofitable product lines, marginal customers and ineffective channels of
distribution. Our balance sheet has never been stronger and we have the best
trained, most dedicated work force we have ever had. It is now time for us to
focus Genlyte on growth. Growing the company in a mature, slow-growth industry
is our major challenge. In order to grow in this type of market, we must focus
on accelerating new product development, entering into new markets and improving
service. Let us share with you our plans.
PRODUCT DEVELOPMENT
Many of Genlyte's brands have been recognized for years as leaders in
bringing new, innovative products to market utilizing the most efficient light
sources available. Competitors can copy our product designs, so we have to work
faster and more efficiently to stay ahead of them. During 1996 we increased our
spending on research and product development by 75% from 1995, and the results
were dramatic. Genlyte introduced over 1,000 new products in 1996 and we were
well rewarded for our accomplishments. New products and improved customer
service resulted in improved margins. Other industries, even other companies in
our industry, spend a greater percentage of their sales dollars on product
development, but we do not believe that any of our competitors spend that money
as productively as we do.
3
<PAGE>
GENLYTE BRAND NAMES
Lightolier High quality, innovative residential/commercial lighting:
downlighting, track lighting, decorative, fluorescent and controls.
Forecast Residential decorative lighting sold through lighting showrooms.
Controls Electronic dimming and energy-saving controls for residential/
commercial use.
Stonco, Crescent & ExceLine Standard, high-volume, contractor-friendly
indoor/outdoor lighting distributed through electrical wholesalers and sold
primarily to electrical contractors.
Wide-Lite Energy-efficient, HID indoor/outdoor lighting products and
controls for commercial, industrial, recreational use.
Bronzelite High quality, specification grade commercial landscape lighting.
Hadco Specification grade exterior architectural lighting for municipal,
industrial, commercial,landscape use.
Diamond F Decorative residential lighting sold through do-it-yourself home
centers.
Canlyte Sale in Canada of Lightolier, CFI, Keene, Wide-lite, Stonco and
Hadco product lines.
It is easy to copy a design, but few are able to copy our quality. Our
customers expect us to manufacture the best fixtures in the industry and we will
not disappoint them. We continually invest in improving the quality of our
production processes. Because of excess capacity at many of our facilities, we
have not been forced to increase our capital expenditures on plant and equipment
over the past five years. Instead, we have concentrated our dollars on a smaller
number of first-class facilities where we have used our money very effectively.
We recently expanded our manufacturing facility in Camargo, Mexico, from which
we enjoy significant cost savings as well as employees who have demonstrated
that they can consistently produce "Genlyte quality" products. We have four
plants within Genlyte that have received ISO certification and we will not rest
until every one of our facilities deserves to be called "world-class."
Finally, we are investing effectively in improving our sales process. We
have revitalized our field sales force, built a national accounts sales
organization that is the envy of our industry, and improved our coverage of and
relationships with major customers. We hired a record number of new salespeople
in 1996, and we have intensified the training we give to all of our sales staff.
Our investment in national advertising, trade advertising and sales tools
increases every year. In this annual report we highlight our Genlyte TechCenter,
unquestionably the finest facility of its kind in the world. We have described
it to you in previous letters; as you turn the pages of this annual report, you
will see for yourself what a wonderful showcase it is for all of Genlyte's
products.
SERVICE
In the past, Genlyte has not matched its product leadership with a
commitment to service. Over the last few years we have invested substantial sums
in service improvement and will continue to do so in 1997.
4
<PAGE>
We already have the most effective electronic technical support in the
industry and our Web site allows a customer access to all of Genlyte's products.
We have made a substantial investment by bringing state-of-the-art technology to
Genlyte, which, when fully implemented, will allow our customers to place one
order to include products from many Genlyte divisions in a single purchase. We
also must reduce the number of shipping points we use to supply our customers,
thereby reducing the number of shipments they receive and lowering transaction
costs for both our customers and ourselves.
In the past few years, every measure of Genlyte's performance has improved
along with our image in the lighting industry. It is exciting to be part of a
successful organization and our people are proud of our accomplishments.
Nonetheless, our fundamental goal has not changed and it has not yet been met.
Our customers have many choices - every day, every chance they get, we want them
to choose Genlyte - and until they do, our job will not be done. As always, we
thank you for your support and trust, and we will make 1997 another excellent
year for Genlyte.
[Photo of Larry K. Powers]
/s/ Larry K. Powers
- -------------------------
Larry K. Powers
President and Chief
Executive Officer
[Photo of Avrum I. Drazin]
/s/ Avrum I. Drazin
- -------------------------
Avrum I. Drazin
Chairman of the Board
5
<PAGE>
@ WORK
[Graphic photos]
The Advanced Lighting System provides computer-friendly and
energy-efficient quality lighting for today's offices. At the Stonco plant in
Union, New Jersey, GlowBay HID lights bring more sparkle, brighter light and
greater energy efficiency to the factory floor. The NASA Neutral Buoyancy Lab in
Houston, Texas, is lit by the F Series floodlight from Wide-Lite.
6
<PAGE>
TECHEXPRESS [TRADEMARK]
The most advanced information system in lighting, TechExpress includes the
new Windows version of GENESYSTM workstation (which can import CAD files,
develop a lighting plan, calculate photometrics), CD-ROM Specifier (providing
catalog information, specification sheets, IES photometric files), Electronic
Bulletin Board, 24-hour FAX-ON-DEMAND, plus an Internet Web site.
[Graphic]
LIGHT HELPS US WORK BETTER.
Quality lighting creates a more humane workplace, and when we are more
comfortable and healthy, we are also more productive. At the same time, energy
efficiency is an ever-growing concern of business, whether in the office or the
factory. While fluorescent lighting is a popular and economical choice for
commercial applications, HID and decorative lighting also come into play. The
fact is, today's work environment demands a variety of lighting, and Genlyte's
strength in this market is built on the ability of our brands to meet these
diverse and rapidly changing requirements.
OFFICE LIGHTING
Glare from overhead lights tires the eyes; too much light makes the
computer screen hard to see. These are some of the challenging visual demands
that Genlyte's Advanced Lighting System was designed to meet. Consisting of
options in overhead lighting, indirect lighting, furniture-mounted task lighting
and wall washing as well as energy-saving controls, this is the first system to
satisfy the new American Office Lighting Standard: a power density of only one
watt per square foot. Another solution is Alter Soft Lights, a family of
recessed indirect fluorescent lighting by CFI, which creates an appealing office
environment, and is a preferred lighting choice for video conferencing.
INDUSTRIAL LIGHTING
Genlyte addresses various manufacturing and warehousing requirements with a
range of lamp technologies. Fluorescent lighting still dominates this category,
and Crescent and CFI are strong players. HID lighting-providing brighter light,
especially in spaces with higher ceilings-is an alternative that is gaining
popularity. GlowBay from Stonco and SoftBay from ExceLine bring these benefits
to the industrial environment. Bi-level dimming technology from Wide-Lite offers
significant energy savings in warehouse and other spaces characterized by
intermittent use.
7
<PAGE>
@ PLAY
[Graphic photos]
A combination of unobtrusive recessed lighting from Lightolier creates the
perfect ambience in this restaurant, using wall washers to create a sense of
spaciousness and accent lighting to give each table a special glow. At the
National Baseball Hall of Fame Museum in Cooperstown, NY, new ProSpec[trademark]
track lights provide lighting befitting the brightest stars of baseball.
8
<PAGE>
AT THE TECHCENTER
A Hospitality space, including Bistro and Lobby Bar, creates the atmosphere
for multiple lighting scenes, including track, decorative, recessed, surface and
controls products. A Retail space, outfitted with a storefront window,
transaction counter, display racks, shelving, and a myriad of lighting systems,
makes it easy to evaluate and choose the right lighting equipment.
[Graphic Photos]
LIGHT ENHANCES OUR PLEASURES.
Imagine a romantic dinner in a restaurant without soft, flattering
lighting. Lighting adds drama and intrigue. Imagine a sporting event without the
excitement of the darkened stadium and spot-lit stars. Light focuses our
attention. Imagine a shop or a museum without well-lit displays to beckon to us.
In the diverse world of commercial lighting, Genlyte brands offer high
performance and mainstream options tailored to specific applications.
LIGHTING FOR SELLING, VIEWING AND ENTERTAINING
In the retail environment, lighting must not only display merchandise, but
also communicate the store's distinctive image. Genlyte brands offer lighting
solutions for retailers from specialty shops to mass merchandisers. Lightolier's
Sof-Tech[registration mark] Track series has been expanded to include metal
halide ring fixtures-ideal for merchandising areas where dramatic effects must
be achieved even with high levels of ambient light. The Constar series from
ExceLine brings cost-effective lighting and the sparkle-look of HID luminaires
to retail chains. Museums are served by Lightolier's new ProSpec [trademark]
Track, which delivers a high-performance system with a clean, unobtrusive look.
Restaurants and hotels need to look their best, and Lightolier's decorative,
track and recessed fixtures and its lighting controls offer solutions that
perform well and can be aesthetically integrate into almost any space.
LIGHTING FOR ARENA EVENTS
A leader and innovator in arena lighting, Wide-Lite was not only the first
to develop television broadcast lighting, but also the first to design a
shuttered lighting system, making it possible to create theatrical effects like
total blackouts. This year, Wide-Lite's new Eclipse II shutter system introduces
higher efficiency to help offset the increased fixture counts required in the
'90's.
9
<PAGE>
@ HOME
[Graphic photos]
A pendant light creates a dramatically luminous centerpiece that focuses
attention over the dining table while providing softly diffused illumination
that plays gently on faces. In the bedroom, the versatility of Lightolier's
Sof-Tech [registration mark] lighting is enhanced by a choice of stem length.
Hadco landscape lighting, including underwater lights, gives the power to
recreate the outdoor environment.
10
<PAGE>
ON THE AIR
[Graphic Photo]
Encouraged by the success of our first Designing with LightSM television
program, Genlyte produced a second program in 1996. The new show focuses on
lighting solutions for the living room, and aired on Lifetime Television around
the country. Another media highlight was the taping of an episode of "This Old
House" at the TechCenter. The show aired on PBS stations.
LIGHT TOUCHES US WHERE WE LIVE.
It brightens a cloudy day...keeps the early winter darkness at
bay...creates the warmth and intimacy of the evening hours....makes home more
comfortable, functional and beautiful. Home lighting both reflects our lifestyle
and enhances it. In this category, Genlyte really shines-indoors and out-with an
exceptional range of decorative lighting, recessed downlighting, track lighting,
fluorescent and landscape lighting delivered through multiple channels to reach
the widest market.
DECORATIVE LIGHTING
In the fashion-oriented decorative lighting market, styles change quickly
and success depends on being able to catch the wave with fresh designs. Genlyte
brands introduced more than 1,000 new products this year. Lightolier, known for
distinctive clean line aesthetics and sensitive use of materials, introduced a
contemporary line of pendants and wall brackets. Forecast and Diamond F,
positioned to offer the consumer high style at affordable prices, brought out
new collections featuring the latest earthtone and "weathered" finishes.
TASK, ACCENT & GENERAL LIGHTING
Lightolier, the most recognized name in track lighting and quality
downlighting in the United States and Canada, continues its innovative
tradition. Responding to the new focus on task lighting in the home, Lightolier
introduced The Illuminator [trademark], a new halogen under-cabinet light with
the unique ability to join end to end with plugs instead of requiring wiring on
the job. This exciting product has been successfully marketed to all channels
via Forecast, Crescent, Diamond F and Canlyte. Genlyte's home center brand,
Diamond F, launched the new Homelyter line, bringing a full package of lighting
and control products to this fast-growing channel.
LANDSCAPE LIGHTING
A pioneer in cast aluminum and outdoor lighting, Hadco was the first to
introduce a line of non-metallic composite fixtures designed to withstand the
harshest environments. This year, Hadco expanded this Harsh Environment line to
light the entire landscape.
11
<PAGE>
@ NIGHT
[Graphic Photos]
The Buckingham Fountain in Chicago lights up the night with glowing colors
and dramatic style using Bronzelite GM 6000's designed to withstand the harsh
environment of the windy city. Among the bright lights of Las Vegas, the MGM
Grand hotel chooses Wide-Lite F Series architectural floodlights to show off a
handsome facade.
12
<PAGE>
DECORATIVE STREET LIGHTING
[Graphic photo]
WE NEED LIGHT TO TAME THE NIGHT.
As we stroll down the sidewalks, we feel safer when the buildings and
streets are well lit and shadow free. At the ATM or in the parking lot, we care
about security. As we drive, the beauty of a dramatically lit building, monument
or bridge creates a familiar, distinctive landmark. In darkness or rain or snow,
lighting helps get us home safe and sound. Genlyte brands make unique
contributions to tame the night-enhancing the quality of life in our cities,
towns and neighborhoods.
From city streets to college campuses, from the boardwalks of Atlantic City
to the sidewalks of Main Street, Hadco's revolutionary refractive globe
luminaires are making streetscapes brighter, safer and more beautiful. This HID
lighting, mounted on Hadco decorative, durable aluminum poles, produces greater
illumination and uniformity while reducing glare, energy costs and installation
costs.
FLOODLIGHTING
This year, architectural floodlighting became a lot more colorful-as
Wide-Lite's product spectrum grew-literally-with the integration of colored lamp
technology into heavy-duty floodlights, creating brilliantly colorful dramatic
lighting possibilities for even harsh outdoor environments. Wide-Lite's
tradition of innovative, high-performance floodlighting technology-which began
with the invention of the HID floodlight-continues today with new,
state-of-the-art additions to the industry-renowned Effex series of compact
architectural HID fixtures, available in Canada through Keene-Widelite.
SITE LIGHTING
Strong optical performance, ease of installation and cost-effective designs
are the focus of outdoor lighting products from Stonco and ExceLine, making
their vertical lighting and wallpacks popular choices for schools, strip malls
and the growing ATM area of the banking industry.
[Photo]
In the Disney-created town of Celebration, custom-designed streetlights
from Hadco reflect the community's commitment to quality.
13
<PAGE>
@ THE CONTROLS
[Graphic Photos]
Controls mean more power in the boardroom, as, with the touch of a button,
the general lights dim, the screen comes down and the spotlight turns on the
speaker's podium. A "cooking" setting on the Multi-set provides bright light in
the workspaces, while a separate "dining" setting dims the counters and creates
a warm glow at the dining table. In a restaurant, "breakfast," "lunch,"
"cocktails" and "dinner" settings establish the right atmosphere-repeatable
daily with one touch.
14
<PAGE>
AT THE TECHCENTER
[Photo]
All of the TechCenter's application environments along with the
funnel-shaped theatrical lighting area are enhanced by Genlyte controls:
MultiSet Preset systems, Brilliance Central Control Systems and/or computer
interface. A separate "Controls" room graphically demonstrates the basic
principles of electronic dimming systems on a complete wall of lighting controls
technology.
WE WANT TO CONTROL OUR ENVIRONMENT.
It's human nature. No wonder electronic lighting controls are a fast
growing market for both residential and commercial users. Electronics bring a
whole new world of control to our fingertips: we can turn a ballroom into a
conference room, or a kitchen into a dining room; change the mood from work to
play; turn on the house lights before we enter; save energy by adjusting
electric light to available daylight; or simply save ourselves a trip upstairs
to turn lights off. Genlyte is a leader in the high-tech realm of digital
lighting controls and the only major manufacturer with its own research and
development department for electronics in lighting.
AESTHETIC CONTROLS
Multi-scene controls make it possible to adapt one space to multiple moods
and functions. With Lightolier's revolutionary Multi-Set [trademark] System,
five different distinctive pre-set lighting scenes can be created and re-created
with the touch of a button. Commercial users, like restaurants and hotels, were
quick to respond to this technology. Today, as family rooms become sophisticated
home entertainment centers, homeowners are also discovering the advantages of
multi-scene controls.
ENERGY-SAVING CONTROLS
Cutting down on energy consumption-and costs!-is a concern at work and at
home. EnergySmart [registration mark] controls from Lightolier use two
strategies: occupancy sensors that automatically turn lights off when a room is
vacant; and photocells that automatically dim lights when more daylight is
available. EnergySmart controls are a critical part of the Advanced Lighting
System, which combines luminaires and controls in one totally integrated,
warranteed system.
[Photo]
Brilliance Whole House Control System: The large illuminated buttons give
convenient control of lights throughout the home.
15
<PAGE>
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(Amounts in thousands except per share data)
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
SUMMARY OF OPERATIONS
<S> <C> <C> <C> <C> <C>
Net sales ....................................... $456,860 445,660 432,690 429,143 425,388
Gross profit .................................... $154,722 138,120 128,720 127,735 123,493
Facility rationalization expense ................ $ -- -- -- -- 6,150
Operating profit ................................ $ 28,448 21,955 14,659 14,256 5,144
Interest expense, net ........................... $ 5,649 7,986 7,505 8,086 8,949
Income (loss) before income taxes and
cumulative effect of a change in
accounting principle .................. $ 22,799 13,969 7,154 6,170 (3,805)
Income tax provision (benefit) .................. $ 9,802 6,060 2,937 2,697 (1,507)
Net income (loss) before cumulative effect ...... $ 12,997 7,909 4,217 3,473 (2,298)
of a change in accounting principle
Cumulative effect of a change in
accounting principle .................. -- -- -- -- (3,670)
Net income ...................................... $ 12,997 7,909 4,217 3,473 1,372
Return on:
Net sales ............................. 2.8% 1.8% 1.0% 0.8% 0.3%
Average stockholders' investment ...... 16.9% 12.1% 7.1% 6.1% 2.4%
Average capital employed .............. 12.3% 8.6% 5.6% 4.8% 1.7%
year end position
Working capital ................................. $ 71,366 75,769 86,714 83,039 97,120
Plant and equipment, net ........................ $ 60,380 64,149 68,895 73,633 82,139
Total assets .................................... $238,115 231,034 240,178 241,762 254,018
Capital employed:
Total debt ............................ $ 41,898 67,182 90,047 100,419 117,797
Stockholders' investment .............. $ 83,783 69,900 61,170 58,068 55,630
Total capital employed .............. $125,681 137,082 151,217 158,487 173,427
per share data
Net income (Primary and fully diluted) .......... $ 1.00 0.62 0.33 0.27 0.11
Stockholders' investment per average
share outstanding ..................... $ 6.42 5.46 4.77 4.53 4.33
Market range:
High .................................. $ 14 8 5 1\2 7 7 1\4
Low ................................... $ 6 4 3 1\2 2 3\8 4 1\4
Other data:
Orders on hand .................................. $ 42,247 51,093 50,379 43,246 49,495
Depreciation and amortization ................... $ 14,550 15,657 16,886 16,308 18,639
Capital expenditures (a) ........................ $ 10,474 10,368 11,884 10,261 8,850
Average shares outstanding (b) .................. 13,055 12,804 12,834 12,807 12,848
Current ratio ................................... 1.8 2.0 2.2 2.2 2.7
Interest coverage ratio ......................... 5.0 2.7 2.0 1.8 0.6
Debt to total capital employed .................. 33.3% 49.0% 59.5% 63.4% 67.9%
Number of stockholders .......................... 1,705 1,865 1,970 2,153 2,334
Average number of employees ..................... 2,581 2,657 2,838 2,999 3,051
Sales per employee .............................. $177,009 167,731 152,463 143,095 139,400
</TABLE>
- --------------
(a) Exclusive of acquired businesses' plant and equipment at date of
acquisition
(b) Including common stock equivalents
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
RESULTS OF OPERATIONS
- ---------------------
NET SALES Net sales for 1996 were $456.9 million, an $11.2 million, or 2.5
percent increase from 1995, following a $13.0 million, or 3.0 percent increase
from 1994 to 1995. A high volume of new product introduction contributed to this
growth. In addition, Lightolier's national television advertising campaign
improved name recognition as did our entrance to electronic marketing via a
World Wide Web site. We completed the Fall River TechCentertrademark, a
state-of-the-art facility that showcases products from all Genlyte divisions and
enables our sales professionals to show their customers the full capabilities of
Genlyte's lighting applications and total lighting solutions. These efforts have
favorably affected domestic net sales, which have grown from $374.7 million in
1994 to $381.5 million in 1995 and to $396.4 million in 1996. This growth has
been partially offset by a decrease in net foreign sales from $64.2 million in
1995 to $60.4 million in 1996, primarily due to a weakening Canadian economy.
GROSS PROFIT/COST OF SALES Gross profit increased to $154.7 million in 1996
from $138.1 million in 1995, a 12.0 percent increase followng a $9.4 million, or
7.3 percent growth in gross profit from 1994 to 1995. Cost of sales continued to
decrease from 70.3 percent of sales in 1994 to 69.0 percent in 1995 to 66.1
percent in 1996. These trends are a result of ongoing productivity improvements,
improved customer service, facility rationalization, and the elimination of
lower margin products.
SELLING AND ADMINISTRATIVE Selling and administrative expenses as a
percentage of sales increased to 27.6 percent in 1996 from 26.1 in 1995 after
slightly decreasing from 26.4 percent in 1994. Research and product development
spending increased 75% over 1995. A record number of new sales people were hired
in 1996, and our investment in national advertising, trade advertising and sales
tools continued to increase as we position ourselves for growth in 1997. These
increases were partially offset by the benefits generated from continued
reductions in headcount and other cost containment measures such as facility
consolidation.
OPERATING PROFIT Operating profit increased in 1996 to $28.4 million, a
29.6 percent improvement from 1995. This followed an increase from 1994 to 1995
of $7.3 million, or a 49.8 percent increase. The improvement in operating profit
was attributable to the improved product mix, principally in the commercial and
outdoor divisions, and a continued focus on costs in each of the divisions. A
significant element of this cost focus is the facility optimization plan, which
in 1996 included negotiation of a partial lease termi nation of our Compton, CA,
manufacturing facility, the sale of our Tijuana, Mexico, property, the
relocation of our corporate headquarters from a leased facility to a
company-owned facility and the termination of our long-term lease in Edison, NJ.
NET INTEREST EXPENSE Net interest expense amounted to $5.6 million,
representing a decrease of $2.3 million, or 29.3 percent, from 1995. This
decrease was attributable to lower average borrowings. Net interest expense
increased in 1995 when compared to 1994 by $0.5 million due to higher interest
rates, partially offset by lower average borrowings. The favorable impact of a
net pay down in debt since 1994 of approximately $48 million will continue into
1997.
TAXES ON INCOME The effective tax rate was approximately 43.0 percent in
1996 and 1995 and 41.0 percent in 1994. The increase in 1995 over 1994 was due
to increased federal and state rates, which remained level into 1996.
ACCOUNTING CHANGE The Company changed its method of determining the cost of
certain inventories from last-in, first-out (LIFO) to first-in, first-out
(FIFO). Prior periods have been restated to reflect this change in accounting
methodology in accordance with the requirements of generally accepted accounting
principles.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- ------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
LIQUIDITY AND CAPITAL RESOURCES The Company's financial position continues
to remain strong. Cash and cash equivalents totaled $2.9 million at December 31,
1996, compared to $0.3 million and $3.2 million at December 31, 1995 and 1994,
respectively. The Company had working capital of $71.4 million at December 31,
1996. The primary source of cash in 1996 consisted of funds provided by
operating activities of $37.4 million. The primary uses of cash in 1996
consisted of repayment of debt, $25.3 million, and capital expenditures, $10.5
million.
The Company maintains a revolving credit facility, originally entered into
on November 15, 1995, of $110.0 million, which reduces to $70.0 million by year
2000. Amounts outstanding under the facility are secured by liens on U.S.
accounts receivable, inventories and machinery and equipment, as well as the
investments in certain Company subsidiaries. The approximate fair value of the
assets subject to lien at December 31, 1996, exceeds the facility amount
outstanding. Long-term debt has decreased approximately $24.0 million since year
end 1995. This followed a reduction in 1995 from 1994 of $23.1 million.
The Company's ratio of total debt to total capitalization was 33.3 percent,
49.0 percent and 59.5 percent at December 31, 1996, 1995 and 1994, respectively,
with total capitalization defined as total debt and total stockholders'
investment. The decrease in the Company's total debt is a direct result of
generating significant internal funds.
The Company believes that currently available cash, borrowing facilities
and its ability to increase its credit line if needed, combined with internally
generated funds, should be sufficient to fund capital expenditures as well as
any increase in working capital that would be required to accommodate a higher
level of business activity.
CONSOLIDATED STATEMENTS OF INCOME
- ---------------------------------
<TABLE>
<CAPTION>
THE GENLYTE GROUP INCORPORATED & SUBSIDIARIES
(Amounts in thousands except per share data)
For the year ended December 31, 1996 1995 1994
---- ---- ----
SUMMARY OF OPERATIONS
<S> <C> <C> <C>
Net Sales .......................................$456,860 $445,660 $432,690
Cost of sales ......................... 302,138 307,540 303,970
------- ------- -------
Gross Profit .................................... 154,722 138,120 128,720
Selling & administrative expenses ..... 126,274 116,165 114,061
------- ------- -------
Operating Profit ................................ 28,448 21,955 14,659
Interest expense, net ................. 5,649 7,986 7,505
Income Before Income Taxes ...................... 22,799 13,969 7,154
Income tax provision .................. 9,802 6,060 2,937
----- ----- -----
Net Income ......................................$ 12,997 $ 7,909 $ 4,217
-------- -------- --------
Earnings Per Share ..............................$ 1.00 $ 0.62 $ 0.33
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
18
<PAGE>
CONSOLIDATED BALANCE SHEETS
- ---------------------------
<TABLE>
<CAPTION>
THE GENLYTE GROUP INCORPORATED & SUBSIDIARIES
(Amounts in thousands except per share data)
As of December 31, 1996 1995
---- ----
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents
$ 2,895 $ 263
Accounts receivable (less allowances for doubtful accounts
of $8,222 and $5,302 in 1996 and 1995, respectively) ........ 65,036 62,024
Inventories:
Raw materials and supplies .................................. 31,798 25,891
Work in progress ............................................ 6,429 9,288
Finished goods .............................................. 42,772 41,042
------- -------
80,999 76,221
Other current assets .................................................. 14,909 12,550
------- -------
Total current assets ........................................ 163,839 151,058
Plant and Equipment:
Land ........................................................ 4,969 5,831
Buildings and leasehold interests and improvements .......... 54,205 59,248
Machinery and equipment ..................................... 152,175 164,337
------- -------
211,349 229,416
Less: Accumulated depreciation and amortization ....................... 150,969 165,267
------- -------
60,380 64,149
Cost in Excess of Net Assets of Purchased Businesses .................. 11,755 12,026
Other Assets .......................................................... 2,141 3,801
-------- --------
Total Assets ................................................ $238,115 $231,034
-------- --------
Liabilities and Stockholders' Investment
Current Liabilities:
Short-term borrowings ................................................. $ -- $ 1,236
Current maturities of long-term debt .................................. 51 50
Accounts payable-trade ................................................ 44,440 38,795
Accrued expenses
Salaries and wages .......................................... 8,863 7,994
Income taxes payable ........................................ 6,963 6,254
Other accrued expenses ...................................... 32,156 20,960
-------- --------
47,982 35,208
-------- --------
Total current liabilities ................................... 92,473 75,289
Long-term Debt ........................................................ 41,847 65,896
Deferred Income Taxes ................................................. 3,368 4,662
Other Liabilities ..................................................... 16,644 15,287
Stockholders' Investment
Common stock ($.01 par value, 30,000,000 shares authorized,
13,092,900 and 12,833,928 shares issued at December 31, 1996
and 1995; 12,990,782 and 12,731,810 shares outstanding at
December 31, 1996 and 1995, respectively) ................... 131 129
Additional paid-in capital ............................................ 8,999 8,115
Retained earnings ..................................................... 74,653 61,656
-------- --------
Total stockholders' investment .............................. 83,783 69,900
-------- --------
Total Liabilities and Stockholders' Investment .............. $238,115 $231,034
-------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
19
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------
<TABLE>
<CAPTION>
THE GENLYTE GROUP INCORPORATED & SUBSIDIARIES
(Amounts in thousands)
For the year ended December 31, 1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................... $ 12,997 $ 7,909 $ 4,217
Adjustments to reconcile net income to net cash flows
provided by operating activities:
Depreciation and amortization ..................... 14,550 15,657 16,886
Gain (loss) from disposal of plant and equipment .. 41 (61) 437
(Increase) decrease in:
Accounts receivable ...................... (3,012) 3,462 (6,495)
Inventories .............................. (4,778) 2,522 832
Other current assets ..................... (2,359) (2,687) 1,492
Other assets ............................. 1,423 (2,500) (22)
Increase (decrease) in:
Accounts payable and accrued expenses .... 18,419 4,480 6,383
Deferred income tax liabilities .......... (1,294) (1,119) (1,727)
Other liabilities ........................ 1,357 1,630 1,030
All other, net .................................... 91 (291) 415
------- ------- -------
Net cash flows provided by operating activities ............... 37,435 29,002 23,448
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant and equipment ............................... (10,474) (10,368) (11,884)
Proceeds from disposal of plant and equipment ................. 69 136 620
------- ------- -------
Net cash flows used in investing activities ................... (10,405) (10,232) (11,264)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of stock, net of tax benefit ............................. 994 255 --
Repayment of debt, net ........................................ (25,284) (22,866) (10,372)
--------- --------- ---------
Net cash flows used in financing activities ................... (24,290) (22,611) (10,372)
--------- --------- ---------
EFFECT OF EXCHANGE RATE CHANGES: .............................. (108) 864 (1,891)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents .......... 2,632 (2,977) (79)
Cash and cash equivalents at beginning of year ................ 263 3,240 3,319
--------- --------- ---------
Cash and cash equivalents at end of year ...................... $ 2,895 $ 263 $ 3,240
--------- --------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR:
Interest .......................................... $ 5,286 $ 7,355 $ 7,537
--------- --------- ---------
Income taxes ...................................... $ 9,853 $ 6,043 $ 3,358
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
20
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
- ---------------------------------------------------
<TABLE>
<CAPTION>
THE GENLYTE GROUP INCORPORATED & SUBSIDIARIES
(Amounts in thousands)
PAID-IN
STOCK CAPITAL EARNING
----- ------- -------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1993, AS PREVIOUSLY REPORTED $ 128 $ 8,411 $ 52,303
Adjustment for the cumulative effect on prior years of applying
retroactively the new method of valuing certain inventories (Note 2) -- -- (2,773)
BALANCE, DECEMBER 31, 1993, AS ADJUSTED $ 128 $ 8,411 $ 49,530
-------- -------- --------
Net income -- -- 4,217
Foreign currency translation adjustments -- (1,116) --
Exercise of stock options -- -- --
BALANCE, DECEMBER 31, 1994 $ 128 $ 7,295 $ 53,747
-------- -------- --------
Net income -- -- 7,909
Foreign currency translation adjustments -- 566 --
Exercise of stock options 1 254 --
BALANCE, DECEMBER 31, 1995 $ 129 $ 8,115 $ 61,656
-------- -------- --------
Net income -- -- 12,997
Foreign currency translation adjustments -- (108) --
Exercise of stock options 2 992 --
BALANCE, DECEMBER 31, 1996 $ 131 $ 8,999 $ 74,653
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
QUARTERLY RESULTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
THE GENLYTE GROUP INCORPORATED & SUBSIDIARIES
(Amounts in Thousands except per share data)
Quarter
<S> <C> <C> <C> <C> <C>
1996 1st 2nd 3rd 4th Full Year
- ---- --- --- --- --- ---------
Net sales ........................................................... $ 108,662 $ 112,440 $ 116,036 $ 119,722 $ 456,860
Operating Profit .................................................... 5,576 6,373 7,385 9,114 28,448
Net Income .......................................................... 2,293 2,751 3,436 4,519 12,997
Earnings per Share .................................................. 0.18 0.21 0.26 0.35 1.00
Market Price:
High ...................................................... 8 1\4 8 9 7\8 14 14
Low ....................................................... 6 3\16 7 1\4 6 8 3\4 6
1995 1st 2nd 3rd 4th Full Year
Net Sales ........................................................... $ 110,238 $ 110,967 $ 112,908 $ 111,547 $ 445,660
Operating Profit .................................................... 4,790 5,302 5,610 6,253 21,955
Net Income .......................................................... 1,531 1,792 2,064 2,522 7,909
Earnings per Share .................................................. 0.12 0.14 0.16 0.20 0.62
Market Price:
High ...................................................... 5 1\8 6 1\4 6 7\8 8 8
Low ....................................................... 4 4 1\2 5 1\8 5 1\8 4
</TABLE>
21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
IN THOUSANDS EXCEPT PER SHARE DATA
NOTE
DESCRIPTION OF BUSINESS
The Genlyte Group Incorporated ("Genlyte" or the "Company") is a
United-States based multinational corporation. Genlyte designs, manufactures and
sells lighting fixtures and controls for a wide variety of applications in the
commercial, industrial and residential markets. Genlyte's products are marketed
primarily to distributors who resell the products for use in residential,
commercial and industrial construction and remodeling.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial
statements include the accounts of Genlyte after elimination of all material
intercompany accounts and transactions.
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 amounts could differ from those estimates.
INVENTORIES: Inventories are stated at the lower of cost or market and
include materials, labor and overhead. During the third quarter of 1996, the
Company changed its method of accounting for certain inventories from the
last-in, first-out ("LIFO") method of accounting to the first-in, first-out
("FIFO") method. This change, applied through the retroactive restatement of all
prior period financial statements, was made for the following reasons: (1) it
will improve the measurement of operating results in light of reduced inflation
rates; (2) it will enhance the comparability of the Company's financial
statements by changing to the predominant method utilized in the industry; and
(3) it will allow the Company to reduce the costs incurred in administering the
existing LIFO system. Although this change in method did not affect net income
in 1996, it decreased net income by $421, or 3 cents per share in 1995, and
$863, or 7 cents per share in 1994.
PLANT AND EQUIPMENT: The Company provides for depreciation of plant and
equipment principally on a straight line basis over the useful lives of the
assets. Useful lives vary among the several classifications, as well as among
the constituent items in each classification, but generally fall within the
following ranges:
Buildings and leasehold interests and improvements 10 - 40 years
Machinery and Equipment 3 - 10 years
When the Company sells or otherwise disposes of property, the asset cost
and accumulated depreciation are removed from the accounts and any resulting
gain or loss is included in the Consolidated Statement of Income.
Leasehold interests and improvements are amortized over the terms of the
respective leases, or over their estimated useful lives, whichever is shorter.
Maintenance and repairs are expensed as incurred. Renewals and betterments
are capitalized and depreciated or amortized over the remaining useful lives of
the respective assets.
Accelerated methods of depreciation are used for income tax purposes and
appropriate provisions are made for the related deferred income taxes.
COST IN EXCESS OF NET ASSETS OF PURCHASED BUSINESSES: Cost in excess of net
assets of purchased businesses acquired prior to 1971 is not amortized since, in
the opinion of management, there has been no diminution in value. For businesses
acquired subsequent to 1970, the cost in excess of net assets, aggregating
$9,801, is being amortized
22
<PAGE>
over 20-40 years. For the years ended December 31, 1996 and 1995,
accumulated amortization was $2,969 and $2,697, respectively.
RESEARCH AND DEVELOPMENT COSTS: Research and development costs are expensed
as incurred. These expenses were $4,475 in 1996, $2,551 in 1995, and $3,006 in
1994.
TRANSLATION OF FOREIGN CURRENCIES: Balance sheet accounts of foreign
subsidiaries are translated at the rates of exchange in effect as of the balance
sheet date. The cumulative effects of such adjustments were $2,126 and $2,019 at
December 31, 1996 and 1995, respectively, and have been charged to the
Additional paid-in-capital account in Stockholders' Investment. Income and
expenses are translated at the average exchange rates prevailing during the
year. Gains or losses resulting from foreign currency transactions are included
in net income.
CASH EQUIVALENTS: For the purposes of the Consolidated Statements of Cash
Flows, the Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS: The carrying amount of cash
equivalents, letters of credit, and long-term debt approximate fair value.
EARNINGS PER COMMON SHARE
Earnings per share are calculated utilizing the weighted average shares
outstanding with the fully dilutive effect of outstanding stock options taken
into account.
1996 1995 1994
---- ---- ----
Income Before Income Taxes:
Domestic .......................... $ 19,277 $ 10,992 $ 4,879
Foreign ........................... $ 3,522 $ 2,977 $ 2,275
$ 22,799 $ 13,969 $ 7,154
Provisions (Benefit) for
Income Taxes:
Domestic:
Currently Payable ............. $ 11,332 $ 7,787 $ 2,606
Deferred ...................... (2,857) (2,982) (469)
Foreign:
Currently Payable ............. $ 1,475 $ 1,230 $ 784
Deferred ...................... (148) 25 16
$ 9,802 $ 6,060 $ 2,937
INCOME TAXES
The components of income before income taxes and the provisions for income
taxes are as follows:
Undistributed earnings of non-US subsidiaries included in consolidated
retained earnings amounted to $14,903 at December 31, 1996. These earnings,
which reflected full provision for non-US income taxes, are indefinitely
reinvested in non-US operations or will be remitted substantially free of
additional tax. Accordingly, no material provision has been made for taxes that
may be payable upon remittance of such earnings nor is it practicable to
determine the amount of this liability.
The provision for income taxes includes a deferred component that arose
from the recording of certain items in different periods for financial reporting
and income tax purposes. The sources of the domestic differences and the related
tax effect are as follows:
23
<PAGE>
1996 1995 1994
---- ---- ----
Depreciation ............................ $(1,083) $(1,344) $(1,186)
Inventory Valuation ..................... 410 (134) (505)
Facility Rationalization Reserve ........ -- 386 1,500
Pension Accruals ........................ (118) (2) (470)
Bad Debt Reserve ........................ (1,259) (733) 82
Other Accruals/Reserves ................. (850) (1,201) 94
Other, Net .............................. 43 46 16
Total Domestic
Deferred Tax Provision .............. $(2,857) $(2,982) $ (469)
------- ------- -------
1996 1995 1994
---- ---- ----
Statutory Federal Rate .................. $ 7,979 $ 4,890 $ 2,432
State & Local Taxes,
Net of Federal Tax Benefit .............. 1,334 899 543
Other, Net .............................. 489 271 (38)
Total Provision for
Income Taxes ........................ $ 9,802 $ 6,060 $ 2,937
In 1996, 1995 and 1994, the Company's effective tax rates were 43%, 43% and
41%, respectively, of income before income taxes. An analysis of the differences
between the actual provision for income taxes and the provision at the U.S.
Federal statutory tax rate follows:
The Company is currently being audited by the Internal Revenue Service for
tax years 1993 and 1994. While the audit has not been finalized, the Company
believes it has adequately provided for any additional taxes that may result.
LONG-TERM DEBT
1996 1995
---- ----
Revolving Credit Notes ..................... $31,000 $55,000
Industrial Revenue Bonds ................... 10,500 10,500
Other ...................................... 398 446
$41,898 $65,946
Less: Current Maturities ................... 51 50
Total ...................................... $41,847 $65,896
The Company maintains a revolving credit facility (the "Facility") of
$110,000, which reduces to $70,000 by 2000. The total borrowings under the
Facility as of December 31, 1996 and 1995 were $31,000 and $55,000,
respectively. In addition, the Company has issued approximately $8,500 of
letters of credit, which reduce the amount available to borrow under the
Facility. The interest rate on amounts borrowed under the Facility is a floating
rate related to, at the option of the Company, either (1) a reference rate
determined by the agent bank plus a fixed spread, or (2) the London Interbank
Offered Rate (LIBOR) plus a fixed spread. The Company pays a commitment fee on
the unused portion of the Facility. In June 1996 the Company entered into a
one-year inte rest rate cap that limited the maximum interest rate to 6.0% on
$20,000 of loans under the Facility.
The amount outstanding under the Facility is secured by liens on U.S.
accounts receivable, inventories and machinery and equipment, as well as the
investments in certain subsidiaries of the Company. The approximate fair value
of assets subject to lien at December 31, 1996, was $169,802.
24
<PAGE>
The terms of the Facility include various covenants that, among others,
limit the amounts that can be expended for cash dividends and purchases of
Company stock. No dividends were paid in 1996 or 1995. At December 31, 1996 and
1995, the Company was in compliance with all provisions of the Facility. The
Company expects that funds generated from operations combined with amounts
available under the Facility will fulfill anticipated cash requirements for the
Company through 1997.
The Company has $10,500 of variable rate demand Industrial Revenue Bonds
comprised of three issues of $5,000, $4,500 and $1,000 payable in 2010, 2009 and
2009, respectively. During 1996, the average interest rate on these bonds was
3.99%. The bonds are backed by a bank's letter of credit for the life of the
bonds to guarantee payment of the bonds on the Company's behalf. The letter of
credit is subject to annual renewals by the bank. The bonds are also secured by
liens on the related facilities and equipment.
The Company has mortgages and other debt at interest rates of 4.8% to
9.1% due from 1997 through 2002.
The annual maturities of long-term debt are summarized as follows:
YEAR ENDING DECEMBER 31
- -----------------------
1998 59
1999 142
2000 31,054
2001 59
2002 and thereafter 10,533
Total Long-Term Debt $41,847
STOCK OPTIONS
The Genlyte 1988 Stock Option Plan (the "Plan") was established in 1988 for
the benefit of key employees and directors of Genlyte. The Plan provides that an
aggregate of 2,000,000 shares of Genlyte Common Stock may be granted as
nonqualified stock options, provided that no options may be granted if the
number of shares of Genlyte Common Stock that may be issued upon the exercise of
outstanding options would exceed the greater of 1,000,000 shares of Genlyte
Common Stock or 10% of the issued and outstanding shares of Genlyte Common
Stock.
The option exercise prices are established by the Board of Directors of
Genlyte and cannot be less than the higher of the book value or the fair market
value of a share of common stock on the date of the grant.
There are two types of options issued to key employees under the Plan.
Merit options are exercisable at the rate of 50% per year commencing two years
after the date of the grant. Performance options are granted as incentives to
certain key employees for obtaining specific financial goals.
25
<PAGE>
Transactions under the Plan are summarized below:
<TABLE>
<CAPTION>
OPTION PRICE PER SHARE
WEIGHTED
SHARES LOW HIGH AVERAGE
------ --- ---- -------
<S> <C> <C> <C> <C>
Outstanding December 31, 1993 930,883 $4.53 $12.75 5.16
Granted 176,750 4.75 5.50 4.82
Canceled (94,250) 4.53 12.75 5.97
Outstanding December 31, 1994 1,013,383 $4.53 $8.75 5.02
Granted 337,067 4.875 7.625 6.99
Exercised (52,985) 4.53 5.50 4.81
Canceled (218,750) 4.53 8.75 5.38
Outstanding December 31, 1995 1,078,715 $4.53 $7.625 5.58
Granted 211,750 7.50 10.25 8.44
Exercised (208,741) 4.53 7.00 4.80
Canceled (59,751) 4.53 8.00 5.48
Outstanding December 31, 1996 1,021,973 $4.53 $10.25 6.33
Exercisable at end of year 247,631 $4.53 $ 6.25 4.93
</TABLE>
The weighted average fair values of options granted in 1996 and 1995 were
$4.12 and $3.33, respectively. The options outstanding at December 31, 1996,
have a weighted average remaining contractual life of 2.83 years.
The Company accounts for this plan under APB Opinion No. 25, under which no
compensation cost has been recognized. Had compensation cost for the plan been
determined consistent with SFAS No. 123, the Company's net income and earnings
per share would have been reduced to the pro forma amounts as follows:
1996 1995
---- ----
Net Income As Reported $12,997 $7,909
Pro Forma $12,658 $7,844
EPS As Reported $ 1.00 $ 0.62
Pro Forma $ 0.97 $ 0.61
Because method of accounting in SFAS No. 123 has not been applied to
options granted prior to January 1, 1995, the resulting pro forma compensation
cost may not be representative of that to be expected in future years.
The fair value of an option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions: weighted
average risk-free interest rates of 6.34 percent and 5.82 percent in 1996 and
1995, respectively; no dividend payments; expected option lives of five years;
and expected volatility of 45.8 percent for the Company's common stock.
26
<PAGE>
PREFERRED STOCK PURCHASE RIGHTS
In August 1989, the Company declared a dividend of one preferred stock
purchase right on each share of the Company's common stock. Under certain
conditions, each right may be exercised to purchase one one-hundredth share of a
new series of junior participating cumulative preferred stock at an exercise
price of $75.00 per share. The right may only be exercised within ten (10)
business days after a person or group of persons (the "Holder") acquire, or
commence a tender offer to acquire, 20% or more of Genlyte's outstanding common
stock, or upon declaration by the Board of Directors. Upon the acquisition by
the Holder of 20% or more of the Company's outstanding common stock, each right
would represent the right to purchase, for $75.00, shares of the Company's
common stock with a market value of $150.00. The rights may be redeemed by the
Company at a price of $.01 per right and can be amended by the Company's
Directors during the 10 day period prior to the exercise date. These rights
expire in 1999.
The preferred stock purchased upon exercise of the rights will be entitled
to a minimum annual preferential dividend of $1.00 and a minimum liquidation
payment of $1.00 per one-hundredth share of preferred stock. If the Company were
to enter into certain business combination or disposition transactions with the
Holder, each right would also be entitled to purchase, for $75.00, shares of the
Holder's common stock with a market value of $150.00.
PENSION PLANS
The Company has five pension plans, which cover the majority of its
employees. The Genlyte Corporation Retirement Plan is the Company's principal
retirement plan and covers most of the employees of the Company. Benefits under
that plan are based on years of service and highest average compensation during
any five consecutive years within the last 10 years of employment. The Company's
pension plan assets consist primarily of publicly traded equity or debt
securities. Pension costs under the Company's retirement plans are actuarially
computed. Annual contributions are made to the plans in amounts approximately
equal to the amounts accrued for pension expense.
The Company's pension cost for 1996, 1995 and 1994 consists of the
following:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service cost benefits earned during the year $1,278 $1,147 $1,052
Interest cost on benefits earned in prior years 3,358 3,265 3,006
Actual return on plan assets (3,991) (5,938) (2)
Deferred gain (loss) 1,329 3,585 (2,426)
Amortization of transition amounts 442 428 289
Net pension cost $2,416 $2,487 $ 1,919
</TABLE>
27
<PAGE>
At December 31, 1996, all of the Company's pension plans had accumulated
benefit obligations that exceeded plan assets. The following table summarizes
the funded status of the Company's pension plans and the related amounts that
are recognized as liabilities in the consolidated balance sheet:
<TABLE>
<CAPTION>
1996 1995
---- ----
Actuarial present value of benefit obligations:
<S> <C> <C>
Vested benefit obligation ................................................... $ 42,061 $ 41,861
Non-vested benefit obligation ............................................... 552 536
Accumulated benefit obligation .............................................. 42,613 42,397
Effect of estimated future increases in compensation ........................ 4,048 4,342
Projected benefit obligation ................................................ 46,661 46,739
Plan assets at fair value ................................................................ 40,622 36,333
Projected benefit obligation in excess of plan assets .................................... 6,039 10,406
Unrecognized net obligation at adoption ..................................... (737) (914)
Unrecognized net benefit since adoption ..................................... 7,615 3,237
Unrecognized prior service cost ............................................. (2,109) (2,327)
Accrued pension liability as of December 31 .............................................. $ 10,808 $ 10,402
</TABLE>
The discount rates and rates of increase in future compensation levels used
in determining the actuarial present value of the liabilities recognized on the
consolidated balance sheet were 7.75% and 5.0%, respectively, at September 30,
1996, and 7.5% and 5.0%, respectively, at September 30, 1995. The expected
long-term rate of return on plan assets was 9.0% at September 30, 1996, and 8.5%
at September 30, 1995.
The Company has a number of plans for hourly personnel, primarily union
(single or multi-employer) pension plans, for which the Company's obligation is
a defined contribution amount. The basis for the contribution includes union
contract amounts, usually based on an amount per hour worked, and percentages of
employee contributions. Expense amounts recorded under these plans were $344,
$355 and $491 in 1996, 1995 and 1994, respectively.
Genlyte also maintains four defined benefit plans covering substantially
all of the employees of its Canadian subsidiary (Canlyte, Inc.). Net pension
costs for these plans included the following:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Service cost benefits earned during the year .............................. $ 145 $ 121 $ 114
Interest cost on benefits earned in prior years ........................... 264 246 222
Actual return on plan assets .............................................. (706) (183) (502)
Deferred gain (loss) ...................................................... 394 (81) 243
Amortization of transition amounts ........................................ (3) (3) (4)
Net pension cost .......................................................... $ 94 $ 100 $ 73
</TABLE>
28
<PAGE>
The funded status of the plan is as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
Actuarial present value of benefit obligations:
<S> <C> <C>
Vested benefit obligation .................................................... $ 3,060 $ 2,952
Non-vested benefit obligation ................................................ 50 100
Accumulated benefit obligation ............................................... 3,110 3,052
Effect of estimated future increases in compensation ......................... 449 284
Projected benefit obligation ................................................. 3,559 3,336
Plan assets at fair value ................................................................ 4,219 3,615
Projected benefit obligation less than of plan assets .................................... (660) (279)
Unrecognized net obligation .................................................. 46 34
Unrecognized net benefit since adoption ...................................... 227 (81)
Prepaid pension cost as of December 31 ................................................... $ (387) $ (326)
</TABLE>
The discount rates and rate of increase in future compensation levels used
in determining the actuarial present value of the projected benefit obligations
were 8% and 5%, respectively, at both December 31, 1996 and 1995. The expected
long-term rate of return on assets was 8% at both December 31, 1996 and 1995.
LEASE COMMITMENTS
The Company rents office space, equipment and computers under
noncancellable operating leases. Rental expense during 1996, 1995 and 1994
amounted to $2,446, $4,127 and $4,828, respectively. Future required minimum
rental payments as of December 31, 1996, were as follows:
1997 $3,052
1998 1,767
1999 1,067
2000 646
2001 574
After 2001 2,466
Total $9,572
29
<PAGE>
CONTINGENCIES
Genlyte has been named as one of a number of corporate and individual
defendants in an adversary proceeding filed on June 8, 1995, arising out of the
Chapter 11 bankruptcy filing of Keene Corporation ("Keene"). Except for the last
count, as discussed below, the claims and causes of action are substantially the
same as were brought against Genlyte in the U.S. District Court in New York in
August 1993, which have been permanently enjoined from proceedings as a result
of Keene's reorganization plan. The new complaint is being prosecuted by the
Creditors Trust created for the benefit of Keene's creditors (the "Trust"),
seeking from the defendants, collectively, damages in excess of $700 million,
rescission of certain asset sale and stock transactions, and other relief. With
respect to Genlyte, the complaint principally maintains that certain lighting
assets of Keene were sold to a predecessor of Genlyte in 1984 at less than fair
value, while both Keene and Genlyte were wholly-owned subsidiaries of Bairnco
Corporation. The complaint also challenges Bairnco's spin-off of Genlyte in
August 1988. Other allegations are that Genlyte, as well as other corporate
defendants, are liable as corporate successors to Keene. The complaint fails to
specify the amount of damages sought against Genlyte. The complaint also alleges
a violation of the Racketeer Influenced and Corrupt Organizations Act.
Following confirmation of the Keene reorganization plan, the parties have
moved to withdraw the case from bankruptcy court to the Southern District of New
York Federal District Court. No answer or other pleading shall be due until
thirty (30) days following withdrawal of the case. Genlyte believes that it has
meritorious defenses to the adversary proceedings and will defend said action
vigorously.
Additionally, the Company is a defendant and/or potentially responsible
party, with other companies, in actions and proceeding under state and federal
environment laws including the federal Comprehensive Environmental Response
Compensation and Liability Act, as amended ("Superfund"). Such actions include,
but are not limited to, the Keystone Sanitation Landfill site located in
Pennsylvania, in which the United States Environmental Protection Agency has
sought remedial action and reimbursement for past costs.
Management does not believe that the disposition of the lawsuits and/or
proceedings will have a material effect on the Company's financial condition or
results of operations.
Operating
Net Sales Profit Assets
--------- ------ ------
1996
United States $396,444 $25,139 $207,279
Foreign 60,416 3,309 31,286
Total $456,860 $28,448 $238,565
1995
United States $381,489 $18,960 $199,849
Foreign 64,171 2,995 31,185
Total $445,660 $21,955 $231,034
1994
United States $374,677 $12,466 $210,797
Foreign 58,013 2,193 29,381
Total $432,690 $14,659 $240,178
GEOGRAPHICAL INFORMATION
The Company has operations throughout North America. Information about the
Company's operations by geographical area for the years ended December 31, 1996,
1995 and 1994, is as follows:
30
<PAGE>
Report of Independent Public Accountants
To the Stockholders of The Genlyte Group Incorporated
We have audited the accompanying consolidated balance sheets of The Genlyte
Group Incorporated (a Delaware corporation) and subsidiaries as of December 31,
1996 and 1995, and the related consolidated statements of income, cash flows and
stockholders' investment for each of the three years in the period ended
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion of these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overal l financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Genlyte Group
Incorporated and subsidiaries as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles.
As discussed in Note 2 to the financial statements, in 1996 the Company has
given retroactive effect to the change in its method of accounting for certain
inventories from lifo to fifo.
/s/ Arthur Anderson LLP
- -------------------------
Arthur Andersen LLP
New York, New York
January 22, 1997
31
<PAGE>
BOARD OF DIRECTORS
[Photograph]
ROBERT B. CADWALLADER
DIRECTOR
[Photograph]
AVRUM I. DRAZIN*
CHAIRMAN
[Photograph]
DAVID M. ENGELMAN
DIRECTOR
[Photograph]
GLENN W. BAILEY
DIRECTOR
[Photograph]
FRANK METZGER
DIRECTOR
[Photograph]
LARRY K. POWERS*
PRESIDENT AND CHIEF EXECUTIVE OFFICER
[Photograph]
FRED HELLER
DIRECTOR & CHAIRMAN EMERITUS
EXECUTIVE COMMITTEE
[Photograph]
STEVEN R. CARSON
VICE PRESIDENT & GENERAL MANAGER CONTROLS
[Photograph]
ZIA EFTEKHAR
PRESIDENT, LIGHTOLIER
[Photograph]
MICHAEL J. FARRELL
PRESIDENT, KEENE-WIDELITE
[Photograph]
NEIL M. BARDACH+
VICE PRESIDENT & CHIEF FINANCIAL OFFICER
[Photograph]
CHARLES M. HAVERS
PRESIDENT, SUPPLY DIVISION
[Photograph]
RENE MARINEAU
PRESIDENT, LIGHTOLIER CANADA/CFI
[Photograph]
DENNIS W. MUSSELMAN
VICE PRESIDENT & GENERAL MANAGER HADCO/BRONZELITE
[Photograph]
HENRY M. GLOVER
VICE PRESIDENT & GENERAL MANAGER WIDE-LITE
[Photograph]
DONNA R. RATLIFF+
VICE PRESIDENT - ADMINISTRATION & CORPORATE SECRETARY
[Photograph]
JON SAYAH
VICE PRESIDENT & GENERAL MANAGER DIAMOND F/DECORATIVE
* Also an officer and member of the Executive Committee
+ Also an officer of the company
32
<PAGE>
Stockholder information
CORPORATE OFFICES
2345 Vauxhall Road
P.O. Box 3148
Union, NJ 07083-1948
INVESTOR RELATIONS
Information and Form 10-K Please call or write the Investor Relations
Department at (908) 810-4536
STOCK LISTING
Genlyte common stock is traded on the NASDAQ National Market System under the
symbol GLYT
TRANSFER AGENT
Bank of New York
101 Barclay Street
New York, NY 10286
(800) 524-4458
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
1345 Avenue of the Americas
New York, NY 10505
ANNUAL MEETING
The Annual Stockholders' Meeting will be held at 1345 Avenue of the Americas,
3rd floor, New York, N Yon
April 24, 1997
Credits:
page 8, bottom left: Photograph by Milo Stewart Jr.,
courtesy of the the National Baseball Hall of
Fame Library, Cooperstown, N.Y.
page 12, top left: Photograph by Ron Schramm
page 14, bottom right: Photograph courtesy of
the Hotel Inter-Continental, New York.
Design: George/Gerard Design, NYC
<PAGE>
[BACK COVER]
GENLYTE [GRAPHIC]
2345 Vauxhall Road
P.O. Box 3148
Union, NJ 07083-1948
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
The Genlyte Group Incorporated does business under the names of Bronzelite,
Crescent, Diamond F, ExceLine, Forecast, Genlyte Controls, Hadco, Lightolier,
Stonco, and Wide-Lite. Genlyte has the following subsidiaries:
1. Canlyte, Inc., a Canadian Corporation. Canlyte does business under the
names of Keene-Widelite, Lightolier, Prodel, Stonco and CFI (Canadian
Fluorescent Industries).
2. Diaman-Mexo, S.A. de C.V., a Mexican Corporation.
3. Lightolier de Mexico, S.A. de C.V., a Mexican Corporation.
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE GENLYTE GROUP INCORPORATED:
As independent public accountants, we hereby consent to the incorporation of (a)
our report dated January 22, 1997 included in The Genlyte Group Incorporated's
(the "Company's") Annual Report to Shareholders for the year ended December 31,
1996 into the Company's Annual Report on Form 10-K for the year ended December
31, 1996 (the "Form 10-K") and (b) our reports dated January 22, 1997 included
and incorporated into the Form 10-K, into the Company's previously filed
Registration Statements on Form S-8 (Registration No.'s:
33-30722 and 33-27190).
/s/ Arthur Andersen LLP
-------------------
ARTHUR ANDERSEN LLP
New York, New York
March 25, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule
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<CIK> 0000833076
<NAME> The Genlyte Group Incorporated
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<CASH> 2,895
<SECURITIES> 0
<RECEIVABLES> 65,036
<ALLOWANCES> 8,222
<INVENTORY> 80,999
<CURRENT-ASSETS> 163,839
<PP&E> 211,349
<DEPRECIATION> 150,969
<TOTAL-ASSETS> 238,115
<CURRENT-LIABILITIES> 92,473
<BONDS> 41,847
0
0
<COMMON> 131
<OTHER-SE> 83,652
<TOTAL-LIABILITY-AND-EQUITY> 238,115
<SALES> 456,860
<TOTAL-REVENUES> 456,860
<CGS> 302,138
<TOTAL-COSTS> 428,412
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,649
<INCOME-PRETAX> 22,799
<INCOME-TAX> 9,802
<INCOME-CONTINUING> 12,997
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,997
<EPS-PRIMARY> 1.00
<EPS-DILUTED> 1.00
</TABLE>
