<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
August 30, 1998
THE GENLYTE GROUP INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-16960 22-2584333
(Commission File Number) (IRS Employer Identification No.)
2345 Vauxhall Road
P.O. Box 3148
Union, New Jersey 07083-1948
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(908)964-7000
<PAGE>
This report amends the Current Report on Form 8-K filed by The Genlyte Group
Incorporated ("Genlyte" or "Registrant") on September 11, 1998 (the "Original
Form 8-K").
ITEM 7. Financial Statements and Exhibits.
The Original Form 8-K is hereby amended to include the following financial
statements.
(a) Financial Statements of Business Acquired.
(i) Report of Independent Auditors, dated May 8, 1998./(1)/
(ii) Independent Auditors' Report, dated February 7, 1996./(1)/
(iii) Combined Statements of Operations of Thomas Industries Inc.
Lighting Group for the years ended December 31, 1997, 1996 and
1995./(1)/
(iv) Combined Balance Sheets of Thomas Industries Inc. Lighting
Group as of December 31, 1997 and 1996./(1)/
(v) Combined Statements of Equity of Thomas Industries Inc.
Lighting Group for the years ended December 31, 1997, 1996 and
1995./(1)/
(vi) Combined Statements of Cash Flows of Thomas Industries Inc.
Lighting Group for the years ended December 31, 1997, 1996 and
1995./(1)/
(vii) Notes to Combined Financial Statements./(1)/
(b) Pro Forma Financial Information.
(i) Unaudited Genlyte Pro Forma Consolidated Financial Statements.
(ii) Unaudited Genlyte Pro Forma Consolidated Statement of Income
for the six months ended July 4, 1998.
- ---------------------------
/(1)/ Incorporated herein by reference to Joint Proxy Statement of Registrant
for Special Meeting of Stockholders held on August 27, 1998.
<PAGE>
(iii) Unaudited Genlyte Pro Forma Consolidated Statement of Income
for the year ended December 31, 1997./(1)/
(iv) Notes to Unaudited Genlyte Pro Forma Consolidated Statements
of Income.
(v) Unaudited Genlyte Pro Forma Consolidated Balance Sheet as of
July 4, 1998.
(vi) Notes to Unaudited Genlyte Pro Forma Consolidated Balance
Sheet.
(vii) Unaudited Genlyte Thomas Group LLC Pro Forma Consolidated
Financial Statements.
(viii) Unaudited Genlyte Thomas Group LLC Pro Forma Consolidated
Statements of Income for the six months ended July 4, 1998.
(ix) Unaudited Genlyte Thomas Group LLC Pro Forma Consolidated
Statement of Income for the year ended December 31, 1997./(1)/
(x) Unaudited Genlyte Thomas Group LLC Pro Forma Consolidated
Balance Sheet as of July 4, 1998.
(xi) Notes to Genlyte Thomas Group LLC Unaudited Pro Forma
Consolidated Financial Statements.
(c) See Exhibit Index.
- ---------------------
/(1)/ Incorporated herein by reference to Joint Proxy Statement of Registrant
for Special Meeting of Stockholders held on August 27, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE GENLYTE GROUP INCORPORATED
(Registrant)
Dated: November __, 1998 By:____________________________
Larry K. Powers, President
and Chief Executive Officer
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description of Document
- ----------- -----------------------
23.1 Consent of Ernst & Young LLP
23.2 Consent of KPMG Peat Marwick LLP
99.1 Combined Statements of Operations of
Thomas Industries Inc. Lighting Group
for the years ended December 31, 1997,
1996 and 1995.
99.2 Combined Balance Sheets of Thomas
Industries Inc. Lighting Group as of
December 31, 1997 and 1996.
99.3 Combined Statements of Equity of Thomas
Industries Inc. Lighting Group for the
years ended December 31, 1997, 1996 and
1995.
99.4 Combined Statements of Cash Flows of
Thomas Industries Inc. Lighting Group
for the years ended December 31, 1997,
1996 and 1995.
99.5 Notes to Combined Financial Statements.
99.6 Unaudited Genlyte Pro Forma Consolidated
Financial Statements.
99.7 Unaudited Genlyte Pro Forma Consolidated
Statement of Income for the six months
ended July 4, 1998.
99.8 Unaudited Genlyte Pro Forma Consolidated
Statement of Income for the year ended
December 31, 1997.
<PAGE>
99.9 Notes to Unaudited Genlyte Pro Forma
Consolidated Statements of Income.
99.10 Unaudited Genlyte Pro Forma Consolidated
Balance Sheet as of July 4, 1998.
99.11 Notes to Unaudited Genlyte Pro Forma
Consolidated Balance Sheet.
99.12 Unaudited Genlyte Thomas Group LLC Pro
Forma Consolidated Financial Statements.
99.13 Unaudited Genlyte Thomas Group LLC Pro
Forma Consolidated Statements of Income
for the six months ended July 4, 1998.
99.14 Unaudited Genlyte Thomas Group LLC Pro
Forma Consolidated Statement of Income
for the year ended December 31, 1997.
99.15 Unaudited Genlyte Thomas Group LLC Pro
Forma Consolidated Balance Sheet as of
July 4, 1998.
99.16 Notes to Unaudited Pro Forma
Consolidated Financial Statements.
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Form 8-K/A of The Genlyte
Group Incorporated of our report dated May 8, 1998, with respect to the combined
financial statements of Thomas Industries Inc. Lighting Group at December 31,
1997 and 1996, and for each of the two years in the period ended December 31,
1997.
Ernst & Young LLP
Louisville, Kentucky
October 26, 1998
<PAGE>
EXHIBIT 23.2
Consent of Independent Auditors
We consent to the incorporation by reference of our report dated February 7,
1996, with respect to the combined statements of operations, equity, and cash
flows of Thomas Industries Inc. Lighting Group for the year ended December 31,
1995, in the Form 8-K/A of The Genlyte Group Incorporated filed with the
Securities and Exchange Commission.
KPMG Peat Marwick LLP
Louisville, Kentucky
October 26, 1998
<PAGE>
EXHIBIT 99.1
THOMAS INDUSTRIES INC. LIGHTING GROUP
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales......................................... $374,065 $340,047 $332,842
Cost of products sold............................. 269,331 250,061 252,616
-------- -------- --------
Gross profit...................................... 104,734 89,986 80,226
-------- -------- --------
Selling, general and administrative expenses...... 89,328 79,804 74,995
Interest expense.................................. 5,851 6,611 7,323
Interest income and other......................... (733) (377) 914
-------- -------- --------
94,446 86,038 83,232
-------- -------- --------
Income (loss) before income taxes................. 10,288 3,948 (3,006)
Income tax expense (benefit)...................... 3,946 1,457 (564)
-------- -------- --------
Net income (loss)................................. $ 6,342 $ 2,491 $ (2,442)
======== ======== ========
</TABLE>
See accompanying notes.
<PAGE>
EXHIBIT 99.2
THOMAS INDUSTRIES INC. LIGHTING GROUP
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 5,792 $ 3,326
Accounts receivable, net.................................. 54,014 49,530
Inventories............................................... 52,532 48,064
Deferred income taxes..................................... 3,579 4,938
Other current assets...................................... 3,641 4,482
-------- --------
Total current assets........................................ 119,558 110,340
Property, plant and equipment, net.......................... 46,642 45,584
Intangible assets, net...................................... 48,435 49,260
Other assets................................................ 8,865 6,758
-------- --------
Total assets................................................ $223,500 $211,942
======== ========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable.......................................... $ 21,396 $ 19,155
Accrued expenses and other current liabilities............ 25,062 22,405
Current portion of long-term debt......................... 7,810 7,740
-------- --------
Total current liabilities................................... 54,268 49,300
Deferred income taxes....................................... 5,669 5,582
Long-term debt, less current portion........................ 54,256 61,820
Other long-term liabilities................................. 3,738 3,898
-------- --------
Total liabilities........................................... 117,931 120,600
Equity:
Thomas' investment........................................ 109,511 94,778
Foreign currency translation.............................. (3,574) (2,656)
Minimum pension liability................................. (368) (780)
-------- --------
Total equity................................................ 105,569 91,342
-------- --------
Total liabilities and equity................................ $223,500 $211,942
======== ========
</TABLE>
See accompanying notes.
<PAGE>
EXHIBIT 99.3
THOMAS INDUSTRIES INC. LIGHTING GROUP
COMBINED STATEMENTS OF EQUITY
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996 1995
-------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Thomas' investment:
Beginning of year................................. $ 94,778 $83,693 $89,669
Net income (loss)................................. 6,342 2,491 (2,442)
Net change in Thomas advances..................... 8,391 8,594 (2,428)
Dividend paid to Thomas........................... -- -- (1,106)
-------- ------- -------
End of year..................................... 109,511 94,778 83,693
Foreign currency translation:
Beginning of year................................. (2,656) (2,423) (3,558)
Adjustment........................................ (918) (233) 1,135
-------- ------- -------
End of year..................................... (3,574) (2,656) (2,423)
Minimum pension liability:
Beginning of year................................. (780) (1,654) (991)
Adjustment........................................ 412 874 (663)
-------- ------- -------
End of year..................................... (368) (780) (1,654)
-------- ------- -------
Total equity.................................... $105,569 $91,342 $79,616
======== ======= =======
</TABLE>
See accompanying notes.
<PAGE>
EXHIBIT 99.4
THOMAS INDUSTRIES INC. LIGHTING GROUP
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996 1995
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................................. $ 6,342 $ 2,491 $ (2,442)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization................... 9,345 8,934 8,784
Deferred income taxes........................... 1,313 (71) (1,020)
Provision for losses on accounts receivable..... 327 534 477
Loss (gain) on asset disposals, net............. (822) 101 121
Changes in operating assets and liabilities, net
of effect of acquisitions:
Accounts receivable........................... (4,211) (5,908) 346
Inventories................................... (4,141) (718) 8,074
Other current assets.......................... 782 2,024 (1,028)
Accounts payable.............................. 1,954 (1,689) 2,942
Accrued expenses and other liabilities........ 2,250 2,515 5,163
Other......................................... (1,651) (673) (178)
------- ------- --------
Net cash provided by operating activities......... 11,488 7,540 21,239
INVESTING ACTIVITIES
Purchase of property, plant and equipment......... (9,006) (7,675) (5,849)
Purchase of company (net of cash acquired)........ (1,371) -- --
Proceeds from sales of property, plant and
equipment........................................ 954 61 323
------- ------- --------
Net cash used in investing activities............. (9,423) (7,614) (5,526)
FINANCING ACTIVITIES
Payments on long-term debt........................ (7,608) (7,740) (7,740)
Net change in Thomas advances..................... 8,391 8,594 (2,428)
Dividend paid to Thomas........................... -- -- (1,106)
------- ------- --------
Net cash provided by (used in) financing
activities....................................... 783 854 (11,274)
Effect of exchange rate changes................... (382) 83 (46)
------- ------- --------
Net increase in cash and cash equivalents......... 2,466 863 4,393
Cash and cash equivalents at beginning of year.... 3,326 2,463 (1,930)
------- ------- --------
Cash and cash equivalents at end of year.......... $ 5,792 $ 3,326 $ 2,463
======= ======= ========
</TABLE>
See accompanying notes.
<PAGE>
EXHIBIT 99.5
THOMAS INDUSTRIES INC. LIGHTING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1--DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
On April 28, 1998, Thomas Industries Inc. (Thomas) entered into definitive
agreements with The Genlyte Group Incorporated, providing for the formation of
a joint venture lighting company. Under the terms of the agreements, Thomas
will contribute substantially all of the assets comprising its lighting group
(Thomas Lighting) to the joint venture in exchange for a 32% interest in the
joint venture and the joint venture's assumption of certain liabilities. The
transaction is expected to be completed in the third quarter of 1998.
The accompanying financial statements pertain to the business which will be
contributed to the joint venture before certain adjustments and represent a
carve-out financial statement presentation of Thomas' contributed operations.
The financial statements include allocations and estimates of direct and
indirect Thomas corporate administrative expenses attributable to the
contributed operations. The methods by which such amounts are attributed or
allocated are deemed reasonable by management.
Thomas Lighting designs, manufactures, markets, and sells lighting products
for a broad range of applications including commercial, industrial, outdoor,
consumer, and controls. Manufacturing, sales, and distribution facilities are
located throughout North America.
NOTE 2--ACCOUNTING POLICIES
Principles of Combination
The combined financial statements include the accounts of Thomas Lighting.
Affiliates included in the combined financial statements that are not majority
owned are accounted for using the equity method, under which Thomas Lighting's
share of earnings of these affiliates is included in income as earned.
Intercompany accounts and transactions are eliminated.
Use of Estimates
Management of Thomas Lighting has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from these estimates.
Inventories
Inventories are valued at the lower of cost or market. Inventories valued
using the last-in, first-out (LIFO) method represented approximately 90% and
92% of consolidated inventories at December 31, 1997 and 1996, respectively.
Inventories not on LIFO are valued using the first-in, first-out (FIFO)
method. Inventories at December 31 consisted of the following:
<TABLE>
<CAPTION>
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Finished goods.................................................. $30,621 $28,665
Raw materials................................................... 13,454 10,449
Work in process................................................. 8,457 8,950
------- -------
Total inventories............................................... $52,532 $48,064
======= =======
</TABLE>
On a current cost basis, inventories would have been $6,466,000 and
$6,852,000 higher than reported at December 31, 1997 and 1996, respectively.
<PAGE>
Property, Plant and Equipment
The cost of property, plant and equipment is depreciated principally by the
straight-line method over their estimated useful lives. Property, plant and
equipment at December 31 consisted of the following:
<TABLE>
<CAPTION>
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land.................................................... $ 5,502 $ 5,580
Buildings............................................... 19,013 18,765
Leasehold improvements.................................. 7,954 8,298
Machinery and equipment................................. 53,495 51,142
------- -------
85,964 83,785
Accumulated depreciation and amortization............... (39,322) (38,201)
------- -------
Total property, plant and equipment, net................ $46,642 $45,584
======= =======
</TABLE>
Intangible Assets
Intangible assets represent the excess of cost over the fair value of net
assets of companies acquired and are stated net of accumulated amortization of
$16,326,000 and $14,751,000 at December 31, 1997 and 1996, respectively.
Excess of cost over the fair value of net assets acquired (or goodwill)
generally is amortized on a straight-line basis over 40 years. The carrying
amount of goodwill is reviewed if facts and circumstances suggest that it may
be impaired. If this review indicates that goodwill will not be recoverable,
as determined based on the estimated undiscounted cash flows of the entity
acquired over the remaining amortization period, the carrying amount of the
goodwill is reduced by the estimated shortfall of cash flows. In addition,
Thomas assesses long-lived assets for impairment under Financial Accounting
Standards Board Statement No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of. Under those rules,
goodwill associated with assets acquired in a purchase business combination is
included in impairment evaluations when events or circumstances exist that
indicate the carrying amount of those assets may not be recoverable.
Research and Development Costs
Research and development costs, which include costs of product improvements
and design, are expensed as incurred ($6,130,000 in 1997, $5,711,000 in 1996,
and $5,750,000 in 1995).
Financial Instruments
Various methods and assumptions are used by Thomas Lighting in estimating
its fair value disclosures for significant financial instruments. Fair values
of cash equivalents approximate their carrying amount because they are highly
liquid investments with a maturity of less than three months when purchased.
The fair value of long-term debt is based on the present value of the
underlying cash flows discounted at the current estimated borrowing rates
available to Thomas Lighting.
Foreign Currency Translation
The local currency is the functional currency for Thomas Lighting's foreign
subsidiaries. Results are translated into U.S. dollars using monthly average
exchange rates, while balance sheet accounts are translated using year-end
exchange rates. The resulting translation adjustments are included as a
foreign currency translation adjustment in equity.
<PAGE>
Income Taxes
Thomas Lighting is included in the consolidated federal income tax return of
Thomas. Under Thomas' tax sharing policy relative to companies included in the
consolidated return, the tax liability or refund shown on Thomas' consolidated
return is generally allocated to companies in the consolidated group on the
basis of separate return computations. Adjustments are generally made to
separate return computations when the consolidated group realizes tax benefits
(or incurs additional tax) which would not have been realized (or incurred) by
an individual company on a stand-alone basis. Such adjustments are allocated
to the companies giving rise to such benefits or additional tax.
Stock-Based Compensation
In 1996, Thomas adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123). In accordance with SFAS
123, Thomas and Thomas Lighting have elected to follow Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and
related interpretations, in accounting for its stock based compensation
because, as discussed below, the alternative fair value accounting provided
for under SFAS 123 requires use of option valuation models that were not
developed for use in valuing stock options. Under APB 25, because the exercise
price of Thomas' stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized.
Pro forma information regarding net income is required by SFAS 123, which
also requires that the information be determined if Thomas has accounted for
its employee stock options granted subsequent to December 31, 1994 under the
fair value method of SFAS 123. The fair value for these options was estimated
at the date of grant using a Black-Scholes option pricing model with the
following weighted-average assumptions:
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Risk-free interest rate................................. 5.5% 6.5% 6.5%
Expected life, in years................................. 6.5 8.0 8.0
Expected volatility..................................... 0.264 0.273 0.273
Expected dividend yield................................. 1.8% 2.0% 2.0%
</TABLE>
The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restriction and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions, including the expected stock price volatility.
Because Thomas' stock options have characteristics significantly different
from those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. Thomas' pro
forma information follows:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Net income (loss)
As reported...................................... $6,342 $2,491 $(2,442)
Pro forma........................................ 6,032 2,276 (2,539)
</TABLE>
Because SFAS 123 is applicable only to options granted subsequent to
December 31, 1994, its pro forma effect will not be fully reflected until
1999.
<PAGE>
A summary of stock option activity for all plans follows:
<TABLE>
<CAPTION>
1997 1996 1995
---------------- ---------------- ----------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
------- -------- ------- -------- ------- --------
(OPTIONS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Beginning of year............ 359 $11.36 304 $10.31 238 $ 8.23
Granted...................... 86 21.75 86 14.00 100 14.31
Exercised.................... (17) 8.27 (19) 6.91 (21) 6.85
Forfeited or expired......... (2) 11.84 (12) 10.94 (13) 8.58
--- ------ --- ------ --- ------
End of year.................. 426 $13.59 359 $11.36 304 $10.31
--- ------ --- ------ --- ------
Exercisable at end of year... 139 $ 9.37 106 $ 8.15 86 $ 7.54
</TABLE>
The weighted average fair value of options granted was $6.48 in 1997, $5.04
in 1996 and $4.97 in 1995 using a Black-Scholes option pricing model. Options
outstanding at December 31, 1997 had option prices ranging from $6.58 to
$21.75 and expire at various dates between October 18, 2000 and December 9,
2007 (with a weighted-average remaining contractual life of 7.9 years). There
are 274,646 shares reserved for future grant.
In addition to the options listed above, 3,999 performance share awards were
granted in December 1997 and 3,750 performance shares were granted in December
1996. Awards may be earned based on the total shareholder return of Thomas
during the three-year periods commencing January 1 following the grant date.
Recently Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement No. 130, Reporting Comprehensive Income (SFAS 130), which requires
disclosure of all items that are recognized under accounting standards as
components of comprehensive income. SFAS 130 requires companies to classify
items of other comprehensive income by their nature in a financial statement
and to display the accumulated balance of other comprehensive income
separately in the equity section of the balance sheet. SFAS 130 will be
adopted in the first quarter of 1998 and is not anticipated to affect
significantly the financial statements or disclosures therein.
Revenue Recognition
Revenue is recognized upon shipment of goods to customers.
Other
Accounts receivable at December 31, 1997 and 1996, were net of an allowance
for doubtful accounts of $1,515,000 and $1,733,000, respectively.
Long-lived assets and intangibles are evaluated regularly in accordance with
Financial Accounting Standards Board Statement No. 121. Thomas is not aware of
an impairment of any asset employed in the business. There have been no events
or circumstances that have occurred that would indicate an impairment exists.
NOTE 3--INCOME TAXES
A summary of the provision for income tax expense (benefit) follows:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal........................................ $2,315 $1,379 $ 481
State.......................................... 292 130 (44)
Foreign........................................ 26 19 19
------ ------ -------
2,633 1,528 456
Deferred--federal and state...................... 1,313 (71) (1,020)
------ ------ -------
Total income tax expense (benefit)........... $3,946 $1,457 $ (564)
====== ====== =======
</TABLE>
<PAGE>
Deferred income taxes are provided for significant income and expense items
recognized in different years for tax and financial reporting purposes.
Temporary differences which gave rise to significant deferred tax assets and
liabilities at December 31 follow:
<TABLE>
<CAPTION>
1997 1996
------ ------
(IN
THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards............................... $1,339 $2,382
Allowance for doubtful accounts receivable..................... 519 566
Inventory reserves............................................. 1,052 2,239
Accrued compensation expenses.................................. 1,529 1,562
Other.......................................................... 938 908
------ ------
5,377 7,657
Less valuation allowance......................................... 1,339 2,382
------ ------
Net deferred tax asset........................................... 4,038 5,275
Deferred tax liabilities:
Accelerated depreciation....................................... 4,285 4,193
Inventory valuation............................................ 1,190 1,205
Pension expense................................................ 1,026 930
Other.......................................................... 699 774
------ ------
7,200 7,102
------ ------
Net deferred tax liability................................... $3,162 $1,827
====== ======
Classification:
Current asset.................................................. $3,579 $4,938
Long-term asset................................................ 459 337
Current liability.............................................. 1,531 1,520
Long-term liability............................................ 5,669 5,582
------ ------
Net deferred tax liability................................... $3,162 $1,827
====== ======
</TABLE>
Deferred tax assets and liabilities are classified according to the related
asset and liability classification on the combined balance sheet.
The realization of deferred tax assets is dependent upon Thomas Lighting
generating future taxable income when temporary differences become deductible.
Based upon historical and projected levels of taxable income, management
believes it is more likely than not Thomas Lighting will realize the benefits
of the deductible differences, net of a $1,339,000 valuation allowance,
provided for income tax loss carryforwards in U.S. and foreign jurisdictions,
the realization of which is not assured within the carryforward periods. The
net future tax benefit and date of expiration of such loss carryforwards are
as follows: $269,000, January 1, 2005; 108,000, January 1, 2006; and $962,000
between January 1, 2007, and January 1, 2010.
The U.S. and foreign components of income (loss) before income taxes follow:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
United States.................................... $ 9,184 $2,544 $(3,120)
Foreign.......................................... 1,104 1,404 114
------- ------ -------
Income (loss) before income taxes................ $10,288 $3,948 $(3,006)
======= ====== =======
</TABLE>
<PAGE>
A reconciliation of the statutory federal income tax to Thomas Lighting's
provision for income taxes follows:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Income tax expense (benefit) computed at U.S.
statutory rate................................ $3,601 $1,382 $(1,052)
State income taxes, net of federal tax
benefits...................................... 190 85 (29)
Nondeductible amortization of intangible
assets........................................ 518 518 518
Foreign losses................................. (360) (467) 21
Other.......................................... (3) (61) (22)
------ ------ -------
Total provision for income taxes............. $3,946 $1,457 $ (564)
====== ====== =======
</TABLE>
Thomas Lighting's foreign subsidiaries have accumulated undistributed
earnings ($10,576,000 at December 31, 1997) on which U.S. taxes have not been
provided. Under current tax regulations and with the availability of certain
tax credits, it is management's belief that the likelihood of Thomas Lighting
incurring significant taxes on any distribution of such accumulated earnings
is remote. Dividends, if any, would be paid principally from current earnings.
Thomas Lighting was allocated from Thomas or made federal, state and foreign
income tax payments of $3,814,000 in 1997, $1,440,000 in 1996, and $19,000 in
1995.
NOTE 4--LONG-TERM DEBT AND CREDIT ARRANGEMENTS
Long-term debt consists principally of 9.36% senior notes with annual
maturities through 2005 ($54,080,000 and $61,810,000 at December 31, 1997 and
1996, respectively).
The fair value of Thomas Lighting's long-term debt at December 31, 1997 and
1996, was $59,201,000 and $65,883,000, respectively.
Maturities of long-term debt for the next five years are as follows: 1998--
$7,810,000, 1999--$7,835,000, 2000--$7,800,000, 2001--$7,800,000, and 2002--
$7,730,000.
Cash paid for interest was $6,158,000 in 1997, $6,877,000 in 1996, and
$7,611,000 in 1995.
NOTE 5--RELATED PARTY TRANSACTIONS
Thomas Lighting has operated as a segment of Thomas for the years ended
December 31, 1997, 1996, and 1995. Thomas has provided Thomas Lighting with
certain services including data processing, financial services, and other
corporate functions. Charges for these services were allocated based on usage,
or other methods that management believed to be reasonable, and amounted to
$6,195,000, $5,646,000, and $5,609,000 for the years ended December 31, 1997,
1996, and 1995, respectively. Thomas uses a centralized cash management system
under which cash receipts of Thomas Lighting were remitted to Thomas and cash
disbursements of Thomas Lighting were funded by Thomas.
For purposes of these separate financial statements, payables and
receivables related to transactions between Thomas and Thomas Lighting are
included as a component of Thomas' investment. Thomas does not charge Thomas
Lighting with interest costs associated with the intercompany balance which
averaged $37,660,000 in 1997, $30,339,000 in 1996, and $35,394,000 in 1995.
NOTE 6--RETIREMENT PLANS
Thomas Lighting has noncontributory defined benefit pension plans and
contributory defined contribution plans covering its hourly union employees.
The defined benefit plans primarily provide flat benefits of stated amounts
for each year of service. Thomas Lighting's policy is to fund pension costs
deductible for income tax purposes.
<PAGE>
Thomas Lighting also has defined contribution pension plans covering
substantially all U.S. employees whose compensation is not determined by
collective bargaining. Annual contributions are determined by Thomas' Board of
Directors.
A summary of pension expense follows:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Defined benefit plans:
Service cost-benefits earned during the period.... $ 342 $ 324 $ 264
Interest cost on projected benefit obligation..... 1,421 1,265 1,269
Actual return on plan assets...................... (4,014) (2,072) (3,623)
Net amortization and deferral..................... 2,590 731 2,647
------- ------- -------
Net pension cost of defined benefit plans........... 339 248 557
Defined contribution plans.......................... 2,133 1,852 1,634
Multi-employer plans for certain union employees and
other.............................................. 160 154 217
------- ------- -------
Total pension expense........................... $ 2,632 $ 2,254 $ 2,408
======= ======= =======
</TABLE>
The assumptions used in the accounting for the funded status of defined
benefit plans follow:
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Weighted average discount rates......................... 7.15% 8.00% 7.15%
Expected long-term rates of return on assets............ 9.00% 9.00% 9.00%
</TABLE>
The following table sets forth the funded status and amounts recognized in
the combined balance sheets for Thomas Lighting's defined benefit pension
plans:
<TABLE>
<CAPTION>
1997 1996
----------------------------- -----------------------------
ASSETS EXCEED ACCUMULATED ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS EXCEED ACCUMULATED BENEFITS EXCEED
BENEFITS ASSETS BENEFITS ASSETS
------------- --------------- ------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value
of benefit obligations:
Vested benefit
obligation........... $10,864 $ 9,021 $ 9,703 $ 8,067
------- ------- ------- -------
Accumulated benefit
obligation........... 11,304 9,490 10,009 8,266
Plan assets at fair
value.................. 13,130 8,900 11,500 7,062
------- ------- ------- -------
Accumulated benefit
obligation less than
(in excess of) plan
assets................. 1,826 (590) 1,491 (1,204)
Unrecognized net (gain)
loss................... (667) 567 (475) 780
Unrecognized net
obligation, net of
amortization........... 458 1,176 518 1,374
Additional minimum
liability.............. -- (1,743) -- (2,154)
------- ------- ------- -------
Prepaid pension
asset (liability).. $ 1,617 $ (590) $ 1,534 $(1,204)
======= ======= ======= =======
</TABLE>
The defined benefit plans' assets at December 31, 1997, consisted primarily
of listed stocks and bonds, including 51,072 shares of Thomas common stock
having a market value of $1,009,000 at that date.
NOTE 7--OTHER POSTRETIREMENT BENEFIT PLANS
Thomas Lighting provides postretirement medical and life insurance benefits
for certain retirees and employees, and accrues the cost of such benefits
during the service lives of such employees.
<PAGE>
Net periodic postretirement benefit cost includes the following components:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost on benefits earned........................... $ 18 $ 40 $ 34
Interest cost on benefits obligation...................... 273 285 351
Net amortization and deferral............................. 192 186 275
---- ---- ----
Net periodic postretirement benefit cost.................. $483 $511 $660
==== ==== ====
</TABLE>
The following table sets forth the status and amounts recognized in the
combined balance sheets for Thomas Lighting's postretirement benefit plans:
<TABLE>
<CAPTION>
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Retiree participants.................................... $ 3,072 $ 2,914
Fully eligible active participants...................... 138 182
Other active participants............................... 512 533
------- -------
Accumulated postretirement benefit obligation........... 3,722 3,629
Unrecognized prior service cost......................... (27) (29)
Unrecognized net gain................................... 416 551
Unrecognized transition obligation...................... (2,636) (2,811)
------- -------
Accrued postretirement benefit liability................ $ 1,475 $ 1,340
======= =======
</TABLE>
Assumptions used to measure expected health care costs follow:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Discount rate........................................... 7.15% 8.00% 7.15%
Initial health care cost trend rate..................... 8.00% 9.00% 9.00%
Ultimate health care cost trend rate.................... 4.50% 5.00% 5.50%
Year ultimate trend rate is achieved.................... 2006 2004 2004
</TABLE>
The health care cost trend rate assumption has a significant effect on the
amounts reported. For example, increasing the assumed health care cost trend
rates by one percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1997, by $340,000 and the
aggregate of the service and interest cost components of net periodic
postretirement benefit cost for the year ended December 31, 1997, by $28,000.
NOTE 8--LEASES, COMMITMENTS AND CONTINGENCIES
Total rental expense was $2,709,000 in 1997; $2,474,000 in 1996; and
$2,746,000 in 1995. Future minimum rentals for the five years ending December
31, 2002, and in the aggregate thereafter, are as follows: 1998--$1,595,000;
1999--$1,179,000; 2000--$702,000; 2001--$315,000; 2002--$3,000; and none
thereafter.
Thomas Lighting had letters of credit outstanding in the aggregate amount of
$1,862,000 at December 31, 1997.
Thomas Lighting, like other manufacturers, is subject to environmental rules
and regulations regarding the use, disposal and cleanup of substances
regulated under environmental protection laws. It is Thomas Lighting's policy
to comply with these rules and regulations, and Thomas Lighting believes that
its practices and procedures are designed to meet this compliance. Thomas
Lighting is involved in remedial efforts at certain of its present and former
locations; and when costs can be reasonably estimated, Thomas Lighting records
appropriate liabilities for such matters. Estimated liabilities are not
discounted to present value. Thomas does not believe that the ultimate
resolution of environmental matters will have a material adverse effect on its
financial position, results of operations or liquidity.
<PAGE>
In the normal course of business, Thomas Lighting is party to legal
proceedings and claims. When costs can be reasonably estimated, Thomas
Lighting records appropriate liabilities for such matters. While management
currently believes the amount of ultimate liability, if any, with respect to
these actions will not materially affect the financial position, results of
operations, or liquidity of Thomas Lighting, the ultimate outcome of any
litigation is uncertain. Were an unfavorable outcome to occur, the impact
could be material to Thomas Lighting.
NOTE 9--ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
A summary of accrued expenses and other current liabilities at December 31
follows:
<TABLE>
<CAPTION>
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accrued wages, taxes and withholdings.................... $ 7,328 $ 5,437
Accrued insurance........................................ 3,465 3,695
Accrued sales expense.................................... 4,987 4,492
Income taxes payable (receivable)........................ 921 (1,396)
Other current liabilities................................ 8,361 10,187
------- -------
Total accrued expenses and other current liabilities. $25,062 $22,405
======= =======
</TABLE>
NOTE 10--YEAR 2000 ISSUE (UNAUDITED)
Some of Thomas Lighting's computer programs were written using two digits
rather than four to define the applicable year. As a result, those computer
programs have time-sensitive software that recognize a date using "00" as the
year 1900 rather than the year 2000. This could cause disruptions of
operations including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.
In 1996, Thomas Lighting initiated a program to address this issue so that
computer systems will function properly with respect to dates in the year 2000
and thereafter. To date, Thomas Lighting has incurred and expensed
approximately $1.4 million for assessment and modification of software under
this program. The program is estimated to be completed not later than December
31, 1998, which is prior to any anticipated impact on operating systems.
Future expenditures to complete the project are not expected to have a
material effect on financial position or results of operations. There can be
no guarantee regarding costs or completion date, and actual results could
differ materially from those anticipated. Specific factors that might cause
such material differences include, but are not limited to, the availability
and cost of personnel trained in this area, the ability to locate and correct
all relevant computer codes, and similar uncertainties.
<PAGE>
Thomas Lighting has initiated formal communications with all significant
suppliers and large customers to determine the extent to which Thomas
Lighting's interface systems are vulnerable to those third parties' failure to
remediate their own year 2000 issues. There is no guarantee that the systems
of the companies on which Thomas Lighting relies will be converted on a timely
basis and would not have an adverse effect on Thomas Lighting.
NOTE 11--GEOGRAPHIC DATA
<TABLE>
<CAPTION>
UNITED STATES CANADA ELIMINATIONS CONSOLIDATED
------------- ------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
1997
Sales-unaffiliated
Customers.............. $331,094 $42,971 $374,065
Inter-company Sales..... 8,048 489 $(8,537) 0
-------- ------- ------- --------
Total Sales............. 339,142 43,460 (8,537) 374,065
Operating Earnings...... 21,023 1,355 22,378
Identifiable Assets..... 191,663 31,837 223,500
1996
Sales-unaffiliated
Customers.............. $301,344 $38,703 $340,047
Inter-company Sales..... 6,560 674 $(7,234) 0
-------- ------- ------- --------
Total Sales............. 307,904 39,377 (7,234) 340,047
Operating Earnings...... 15,598 750 16,348
Identifiable Assets..... 185,270 26,672 211,942
1995
Sales-unaffiliated
Customers.............. $297,792 $35,050 $332,842
Inter-company Sales..... 5,074 541 $(5,615) 0
-------- ------- ------- --------
Total Sales............. 302,866 35,591 (5,615) 332,842
Operating Earnings...... 10,696 729 11,425
Identifiable Assets..... 182,408 24,398 206,806
</TABLE>
<PAGE>
EXHIBIT 99.6
UNAUDITED GENLYTE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following pro forma consolidated financial statements of Genlyte (the
"Unaudited Genlyte Pro Forma Consolidated Financial Statements"), include the
unaudited pro forma consolidated statements of income for the six months ended
July 4, 1998 and for the year ended December 31, 1997 (the "Unaudited Genlyte
Pro Forma Consolidated Statements of Income"), and the unaudited pro forma
consolidated balance sheet as of July 4, 1998 (the "Unaudited Genlyte Pro Forma
Consolidated Balance Sheet").
The Unaudited Genlyte Pro Forma Consolidated Statements of Income are based on
the unaudited consolidated statement of income of Genlyte for the six months
ended July 4, 1998, the unaudited combined statement of income of Thomas
Lighting for the six months ended June 30, 1998, the audited consolidated
statement of income of Genlyte for the year ended December 31, 1997, and the
audited combined statement of income of Thomas Lighting for the year ended
December 31, 1997, and are adjusted to give effect to the Transaction as though
it had occurred as of January 1, 1997.
The Unaudited Genlyte Pro Forma Consolidated Balance Sheet is based on the
unaudited consolidated balance sheet of Genlyte as of July 4, 1998 and the
unaudited combined balance sheet of Thomas Lighting as of June 30, 1998, and is
adjusted to give effect to the Transaction as if it had occurred on July 4,
1998.
The Unaudited Genlyte Pro Forma Consolidated Financial Statements reflect pro
forma adjustments to give effect to the transactions whereby (a) Genlyte
contributed to the Joint Venture ("Joint Venture") substantially all of its
assets in exchange for a 68% interest in the Joint Venture and the Joint
Venture's assumption of substantially all of its liabilities and (b) Thomas
contributed to the Joint Venture substantially all of its assets comprising
Thomas Lighting in exchange for a 32% interest in the Joint Venture and the
Joint Venture's assumption of certain liabilities. For accounting purposes,
Genlyte's majority ownership of the Joint Venture requires the assets and
liabilities contributed by Thomas to the Joint Venture be valued at their fair
value in Genlyte's consolidated financial statements. Certain pro forma
adjustments result from management's preliminary determination of purchase
accounting adjustments and are based upon available information and certain
assumptions that management considers reasonable under the circumstances.
Consequently, the amounts reflected in the Genlyte Pro Forma Consolidated
Financial Statements are subject to change.
The assets contributed by Genlyte to the Joint Venture will be reflected at
their historical cost. The contribution of Genlyte's business to the Joint
Venture will trigger the recognition of a one-time gain of approximately $51
million in the period in which the Transaction occurs. Such contribution
includes, for accounting purposes, a sale of 32% of Genlyte's contributed
business to Thomas and the resultant gain represents the excess of fair value
over book value for the 32% of Genlyte's contributed business. Due to its non-
recurring nature, such gain has not been reflected in the Unaudited Genlyte Pro
Forma Consolidated Statements of Income.
The Unaudited Genlyte Pro Forma Consolidated Financial Statements and the
accompanying notes should be read in conjunction with Genlyte's historical
consolidated financial statements and the notes thereto in the Joint Proxy
Statement incorporated herein by reference.
The Unaudited Genlyte Pro Forma Consolidated Financial Statements do not purport
to be indicative of what Genlyte's financial condition or results of operations
would have been had the Transaction in fact been consummated as of the assumed
dates and for the periods presented, nor are they indicative of the results of
operation or financial condition for any future period or date. In addition,
the Unaudited Genlyte Pro Forma Consolidated Financial Statements do not reflect
the synergies expected to result from the Transaction or the related synergy
costs. As discussed in the Joint Proxy Statement incorporated herein by
reference, the synergies are expected to be in excess of $30 million per annum
and are expected to be fully realized by the end of the year 2000 as a result of
cost savings, economies of scale and revenue
<PAGE>
enhancement opportunities. It is anticipated that an aggregate of $10.5 million
of costs will be incurred by the Joint Venture during the period 1998 through
2000 related to achieving the synergies. See the Joint Proxy Statement
incorporated herein by reference for additional information.
<PAGE>
EXHIBIT 99.7
UNAUDITED GENLYTE PRO FORMA CONSOLIDATED STATEMENT OF
INCOME
FOR THE SIX MONTHS ENDED JULY 4, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Genlyte Pro Forma (a)
--------------------------------------------------------
Thomas Lighting Pro Forma (a)
-----------------------------
Historical Pro Forma
Thomas Contribution Thomas Historical Transaction Pro Forma
Lighting (b) Adjustments (c) Lighting Genlyte Adjustments (h) Genlyte
------------ ------------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $ 190,436 $ 8,131 (d) $ 198,567 $ 260,451 $ - $ 459,018
Cost of Sales 136,500 - 136,500 170,282 400 (i) 307,182
------------ ------------- --------- ---------- ----------- ----------
Gross Profit 53,936 8,131 62,067 90,169 (400) 151,836
Selling & Administrative Expenses 45,990 8,131 (d) 53,137 66,205 132 (j) 119,574
(984) (e) 100 (i)
------------ ------------- --------- ---------- ----------- ----------
Operating Profit 7,946 984 8,930 23,964 (632) 32,262
Interest Expense, net 2,497 (1,858) (f) 639 1,824 - 2,463
Other Non-Operating Expenses 365 - 365 - - 365
Minority Interest Expense - - - - 9,579 (k) 9,579
------------ ------------- --------- ---------- ----------- ----------
Income Before Income Tax 5,084 2,842 7,926 22,140 (10,211) 19,855
Income Tax Provision 1,952 (1,952) (g) - 9,519 (983) (l) 8,536
------------ ------------- --------- ---------- ----------- ----------
Net Income $ 3,132 $ 4,794 $ 7,926 $ 12,621 $ (9,228) $ 11,319
============ ============= ========= ========== =========== ==========
Earnings Per Share:
Basic (m) (m) $ 0.93 $ 0.83
Diluted (m) (m) $ 0.92 $ 0.83
THESE PRO FORMA FINANCIAL STATEMENTS DO NOT REFLECT THE SYNERGIES EXPECTED TO RESULT FROM THE TRANSACTION
OR THE RELATED SYNERGY COSTS.
</TABLE>
See Notes to Unaudited Genlyte Pro Forma Consolidated Statements of Income.
<PAGE>
EXHIBIT 99.8
UNAUDITED GENLYTE PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Genlyte Pro Forma (a)
------------------------------------------------
Thomas Lighting Pro Forma (a)
--------------------------------------------------
Historical Pro Forma
Thomas Contribution Thomas Historical Transaction Pro Forma
Lighting (b) Adjustments (c) Lighting Genlyte Adjustments (h) Genlyte
------------ ------------ ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $ 374,065 $ 16,573 (d) $ 390,638 $ 487,961 $ - $ 878,599
Cost of Sales 269,331 - 269,331 318,556 800 (i) 588,687
------------ ------------ ---------- ----------- ----------- ----------
Gross Profit 104,734 16,573 121,307 169,405 (800) 289,912
Selling & Administrative Expenses 89,328 16,573 (d) 103,451 131,784 264 (j) 235,699
(2,450) (e) 200 (i)
------------ ------------ ---------- ----------- ----------- ----------
Operating Profit 15,406 2,450 17,856 37,621 (1,264) 54,213
Interest Expense, net 5,851 (2,110) (f) 3,741 4,085 - 7,826
Other Non-Operating Expenses (733) - (733) - - (733)
Minority Interest Expense - - - - 15,398 (k) 15,398
------------ ------------ ---------- ----------- ----------- ----------
Income Before Income Taxes 10,288 4,560 14,848 33,536 (16,662) 31,722
Income Tax Provision 3,946 (3,946) (g) - 14,423 (786) (l) 13,637
------------ ------------ ---------- ----------- ----------- ----------
Net Income $ 6,342 $ 8,506 $ 14,848 $ 19,113 $(15,876) $ 18,085
============ ============ ========== =========== =========== ==========
Earnings Per Share:
Basic (m) (m) $ 1.46 $ 1.38
Diluted (m) (m) $ 1.42 $ 1.35
THESE PRO FORMA FINANCIAL STATEMENTS DO NOT REFLECT THE SYNERGIES EXPECTED TO RESULT FROM THE TRANSACTION
OR THE RELATED SYNERGY COSTS.
See Notes to Unaudited Genlyte Pro Forma Consolidated Statements of Income.
</TABLE>
<PAGE>
EXHIBIT 99.9
NOTES TO UNAUDITED GENLYTE PRO FORMA CONSOLIDATED
STATEMENTS OF INCOME
NOTE 1: BASIS OF PRESENTATION
On April 28, 1998, Genlyte and Thomas entered into definitive agreements to
combine the lighting business of Thomas with the business of Genlyte through the
Joint Venture. On August 30, 1998, Genlyte contributed substantially all of its
assets in exchange for a 68% interest in the Joint Venture and the Joint
Venture's assumption of substantially all of its liabilities and Thomas
contributed ure substantially all of its assets comprising Thomas Lighting in
exchange for a 32% interest in the Joint Venture and the Joint Venture's
assumption of certain liabilities. Genlyte and Thomas will continue to exist as
separate publicly traded companies.
Accounting Treatment
Genlyte will consolidate the results of the Joint Venture. Thomas' interest in
the Joint Venture will be reflected in Genlyte's consolidated balance sheet as a
minority interest liability.
The assets contributed by Genlyte to the Joint Venture will be reflected at
their historical cost. The contribution of Genlyte's business to the Joint
Venture will trigger the recognition of a one-time gain of approximately $51
million in the period in which the Transaction occurs. Such contribution
includes, for accounting purposes, a sale of 32% of Genlyte's contributed
business to Thomas and the resultant gain represents the excess of fair value
over book value for the 32% of Genlyte's contributed business. Due to its non-
recurring nature, such gain has not been reflected in the Unaudited Genlyte Pro
Forma Consolidated Statements of Income.
Genlyte will account for the contribution of Thomas' lighting business to the
Joint Venture as a purchase in accordance with Accounting Principles Board
Opinion No. 16. Purchase accounting for a combination is similar to the
accounting treatment used in the acquisition of any asset group. Although
Thomas will retain a 32% interest in the Joint Venture, Thomas' contributed
business will be reflected at its aggregate fair value in the financial
statements of the Joint Venture. The fair value of Thomas's contributed
business was mutually determined by the parties and was the basis for
determining the ownership interests to be issued in the Joint Venture.
NOTE 2: PRO FORMA ADJUSTMENTS
(a) These pro forma financial statements do not reflect the synergies expected
to result from the Transaction or the related synergy costs. As discussed
elsewhere in this Form 8-K, the synergies are expected to be in excess of
$30 million per annum and are expected to be fully realized by the end of
the year 2000 as a result of cost savings, economies of scale and revenue
enhancement opportunities. It is anticipated that an aggregate of $10.5
million of costs will be incurred by the Joint Venture during the period
1998 through 2000 related to achieving the synergies. See the Joint Proxy
Statement incorporated herein by reference for additional information.
(b) The Unaudited Genlyte Pro Forma Statements of Income for the six months
ended July 4, 1998 and for the year ended December 31, 1997 have been
prepared using the unaudited historical combined statement of income of
Thomas Lighting for the six months ended June 30, 1998 and the audited
combined statement of income of Thomas Lighting for the year ended December
31, 1997.
<PAGE>
(c) Includes the elimination of certain expenses included in Thomas Lighting's
historical financial statements that will not be borne by the Joint Venture
pursuant to the Transaction Documents.
(d) Represents the reclassification of freight expense of $8,131,000 and
$16,573,000 for the six months ended June 30, 1998 and the year ended
December 31, 1997, respectively, in Thomas Lighting's historical financial
statements to conform with the presentation in Genlyte's historical
financial statements.
(e) Represents the elimination of corporate overhead expenses of $984,000 and
$2,450,000, for the six months ended June 30, 1998 and the year ended
December 31, 1997, respectively, included in Thomas Lighting's historical
financial statements that will be retained by Thomas pursuant to the
Transaction Documents.
(f) The net adjustment to interest expense consists of the following (in
thousands):
<TABLE>
<CAPTION>
Six Months Ended Year Ended December
July 4, 1998 31, 1997
---------------------- ----------------------
<S> <C> <C>
Elimination of interest expense associated with the
Day-Brite Note........................ $(2,565) $(5,833)
Interest expense on the Debt Equalization Note at an
assumed weighted average interest rate of
6.25% per annum......... 707 1,414
Interest expense on the Working Capital Adjustment,
assuming a one year maturity and a weighted average
interest rate of 5.75% per annum............... - 2,309
------- -------
Net reduction in interest expense $(1,858) $(2,110)
======= =======
</TABLE>
(g) Represents the elimination of the income tax provision included in the
Thomas Lighting historical financial statements, because the income tax
attributes and liabilities generated by the Joint Venture shall accrue
directly to Genlyte and Thomas and be recorded in their respective
financial statements.
(h) Includes adjustments to Genlyte's historical financial statements related
to the contribution of Thomas Lighting to the Joint Venture.
(i) Represents the incremental depreciation expense of $400,000 and $800,000
for the six months ended July 4, 1998 and the year ended December 31, 1997,
respectively, charged to cost of sales and $100,000 and $200,000,
respectively, charged to selling and administrative expense, using an
assumed weighted average useful remaining life of 20 years, related to the
incremental fair value step-up of certain fixed assets of Thomas Lighting
(see Note 2 (l) of Unaudited Genlyte Pro Forma Consolidated Balance Sheet).
The allocation of expense between cost of sales and selling and
administrative expenses is based on Genlyte's historical depreciation mix.
(j) Represents incremental goodwill amortization of $132,000 and $264,000 for
the six months ended July 4, 1998 and the year ended December 31, 1997,
respectively, resulting from the excess of the fair market value over the
book value of Thomas Lighting. Such excess will be amortized over 40
years.
<PAGE>
(k) Represents minority interest expense related to Thomas' interest in the
Joint Venture, calculated as follows (in thousands):
<TABLE>
<CAPTION>
Six Months Ended Year Ended December
July 4, 1998 31, 1997
---------------------- ----------------------
<S> <C> <C>
Genlyte pro forma operating profit............... $32,262 $54,213
Genlyte pro forma interest expense .......... (2,463) (7,826)
Corporate expenses included in Genlyte's historical
financial statements that will not be charged to the Joint
Venture............... 500 1,000
Genlyte pro forma other non-operating expenses.......
(365) 733
------- -------
29,934 48,120
Thomas' ownership interest 32% 32%
------- -------
Minority interest expense $ 9,579 $15,398
======= =======
</TABLE>
(l) Represents the adjustment to Genlyte's historical tax provision required to
reflect Genlyte's pro forma income tax provision at an assumed effective
tax rate of 43%.
(m) Such amounts are not applicable as Thomas' Contributed Business was a
division of Thomas prior to the Transaction.
<PAGE>
EXHIBIT 99.10
UNAUDITED GENLYTE PRO FORMA CONSOLIDATED BALANCE SHEET
As of July 4, 1998
(in thousands)
<TABLE>
<CAPTION>
Gentyle Pro Forma
-----------------------------------------------------
Thomas Lighting Pro Forma
---------------------------------------------
Historical Pro Forma
Thomas Contribution Thomas Historical Transaction Pro Forma
Lighting (a) Adjustments (b) Lighting Genlyte Adjustments (k) Genlyte
------------ ----------- -------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 1,449 $ - $ 1,449 $ 327 $ - $ 1,776
Accounts Receivable, net 64,846 - 64,846 86,073 - 150,919
Inventories 57,025 - 57,025 82,891 6,488 (l) 146,404
Other current Assets 7,792 (3,264) (c) 4,528 18,320 - 22,848
------------ ------------ --------- ---------- ----------- ----------
Total Current Assets 131,112 (3,264) 127,848 187,611 6,488 321,947
Plant and Equipment, net 46,632 - 46,632 60,980 20,000 (l) 127,612
Goodwill 47,550 - 47,550 12,528 (47,550) (l) 44,139
31,611 (l)
Other Assets 9,890 (832) (d) 9,058 7,856 - 16,914
----------- ------------ --------- ---------- ----------- ----------
Total Assets $ 235,184 $ (4,096) $ 231,088 $268,975 $ 10,549 $510,612
=========== ============ =========== ======== ========= =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts Payable 19,749 - $ 19,749 $ 53,721 $ - $ 73,470
Notes Payable 136 40,158 (e) 40,294 - - 40,294
Short-Term Borrowings - - - 1,000 - 1,000
Current Maturities of Long-Term Debt 7,813 (7,730) (f) 83 58 - 141
Accrued Expenses 21,422 (5,299) (g) 16,123 37,263 - 53,386
------------ ------------ --------- ---------- ----------- ----------
Total Current Liabilities 49,120 27,129 76,249 92,042 - 168,291
Long-Term Debt 46,486 (46,350) (f) 22,764 35,755 - 58,519
22,628 (h)
Deferred Income Taxes 5,662 (5,662) (c) - 6,824 - 6,824
Other Liabilities 3,767 (575) (i) 3,192 17,782 - 20,974
Minority Interest - - - - 77,765 (m) 77,765
Stockholders' Investment
Common Stock - - - 136 - 136
Additional Paid-In Capital - - - 13,474 - 13,474
Retained Earnings 130,149 (1,266) (j) 128,883 102,962 (128,883) (n) 164,629
61,667 (o)
------------ ------------ --------- ---------- ----------- ----------
Total Stockholders' Investment 130,149 (1,266) 128,883 116,572 (67,216) 178,239
------------ ------------ --------- ---------- ----------- ----------
Total Liabilities and Stockholders'
Investment $ 235,184 $ (4,096) $ 231,088 $268,975 $ 10,549 $510,612
============ ============= ========= ========= ========== ===========
</TABLE>
See Notes to Unaudited Genlyte Pro Forma Consolidated Balance Sheet.
<PAGE>
EXHIBIT 99.11
NOTES TO UNAUDITED GENLYTE PRO FORMA CONSOLIDATED BALANCE SHEET
NOTE 1: BASIS OF PRESENTATION
On April 28, 1998, Genlyte and Thomas entered into definitive agreements to
combine the lighting business of Thomas with the business of Genlyte through the
Joint Venture. Genlyte contributed substantially all of its assets in exchange
for a 68% interest in the Joint Venture and the Joint Venture's assumption of
substantially all of its liabilities and Thomas contributed substantially all of
its assets comprising Thomas Lighting in exchange for a 32% interest in the
Joint Venture and the Joint Venture's assumption of certain liabilities.
Genlyte and Thomas will continue to exist as separate publicly traded companies.
Accounting Treatment
Genlyte will consolidate the results of the Joint Venture. Thomas' interest in
the Joint Venture will be reflected in Genlyte's consolidated balance sheet as a
minority interest liability.
The assets contributed by Genlyte to the Joint Venture will be reflected at
their historical cost. The contribution of Genlyte's business to the Joint
Venture will trigger the recognition of a one-time gain of approximately $51
million. Such contribution includes, for accounting purposes, a sale of 32% of
Genlyte's contributed business to Thomas and the resultant gain representing the
excess of fair value over book value for the 32% of Genlyte's contributed
business.
Genlyte will account for the contribution of Thomas' lighting business to the
Joint Venture as a purchase in accordance with Accounting Principles Board
Opinion No. 16. Purchase accounting for a combination is similar to the
accounting treatment used in the acquisition of any asset group. Although
Thomas will retain a 32% interest in the Joint Venture, Thomas' contributed
business will be reflected at its fair value in the financial statements of the
Joint Venture. The fair value of Thomas's contributed business was mutually
determined by the financial advisors of Genlyte and Thomas.
NOTE 2: PRO FORMA ADJUSTMENTS
(a) The Genlyte Pro Forma Balance Sheet has been prepared using the unaudited
historical combined balance sheet of Thomas Lighting as of June 30, 1998.
(b) Includes the elimination of certain assets and liabilities included in
Thomas Lighting's historical financial statements that Thomas will not
contribute to the Joint Venture pursuant to the Transaction Documents.
(c) Represents the elimination of current deferred income tax assets of
$3,264,000 and long-term deferred income tax liabilities of $5,662,000 as
the income tax attributes and liabilities generated by the Joint Venture
will accrue directly to Genlyte and Thomas and be recorded in their
respective financial statements.
(d) Represents the elimination of (i) the unamortized portion of the deferred
financing costs of $280,000 associated with the Day-Brite Note (See Note 2
(f)), (ii) certain other assets, aggregating $459,000, retained by Thomas
pursuant to the Transaction Documents and (iii) other assets aggregating
$93,000.
(e) Represents the estimated Working Capital Adjustment of $40,158,000, payable
to Thomas, assumed to be issued by the Joint Venture based upon the working
capital contributed to the Joint Venture by Thomas, exclusive of the
Working Capital Adjustment. The Working Capital Adjustment liability would
be settled approximately one year from the closing of the Transaction.
<PAGE>
(f) Represents the elimination of the current and long-term portions of the
Day-Brite Note of $7,730,000 and $46,350,000, respectively, included in the
historical financial statements that will be retained by Thomas.
(g) Represents the elimination of (i) income tax related liabilities of
$2,779,000, (ii) accrued interest of $2,119,000 associated with the Day-
Brite Note (see Note 2(f)), (iii) current Beaver Dam Liabilities
aggregating $200,000 and (iv) certain other liabilities aggregating
$201,000.
(h) Represents the estimated Debt Equalization Note of $22,628,000, payable to
Thomas, to be issued by the Joint Venture. Such note reflects 32/68ths of
the long-term portion of the $46,255,000 of indebtedness contributed to the
Joint Venture by Genlyte, plus the reimbursement for cash paid for an
acquisition during the second quarter pursuant to the Transaction
Documents. The Debt Equalization Note is assumed to be a long-term note.
(i) Represents the elimination of the long-term Beaver Dam Liabilities of
$575,000 retained by Thomas.
(j) The net adjustment to retained earnings consists of the net effect of the
following (in thousands):
Net elimination of deferred income tax
assets and liabilities(see Note 2 (c))....................... $ 2,398
Net adjustment to other assets................................. (832)
Recognition of the Working Capital Adjustment ................. (40,158)
Elimination of the Day-Brite Note (see Note 2 (f))............. 54,080
Net adjustment to accrued expenses (see Note 2 (g))............ 5,299
Recognition of the Debt Equalization Note ..................... (22,628)
Elimination of long-term Beaver Dam Liabilities................ 575
--------
Net adjustment to retained earnings...........................$ (1,266)
(k) Includes adjustments to Genlyte's historical financial statements related
to the contribution of Thomas' Contributed Business to the Joint Venture.
<PAGE>
(l) Represents the allocation of the excess of the fair market value over
tangible book value of Thomas Lighting as follows (in thousands):
<TABLE>
<S> <C>
Fair value of Thomas Lighting as mutually determined by Genlyte
and Thomas, which was the basis for determining the ownership
interests to be issued in the Joint
Venture......................................................... $139,432
Tangible book value of Thomas Lighting............................ 81,333
--------
Excess of fair value over tangible book value..................... 58,099
Less fair value allocations:
Inventory step-up............................................... 6,488
Property, plant and equipment step-up........................... 20,000
--------
Goodwill........................................................ $ 31,611
========
</TABLE>
The cost basis of properties and other assets were adjusted to fair market
value based on management's preliminary estimates which are subject to
change based upon the results of independent appraisals management intends
to have performed.
(m) Represents the minority interest liability related to Thomas' 32% interest
in the Joint Venture.
(n) Represents the elimination of the historical retained earnings of Thomas
Lighting.
(o) Represents (i) a one-time gain of $51,118,000 to be recorded during the
period in which the Transaction occurs and (ii) the excess of fair value
over book value for Thomas Lighting of $10,549,000 recognized in
connection with the purchase accounting for the Joint Venture. The one-
time gain reflects the excess of fair market value over book value for
Thomas' 32% interest in Genlyte's contributed business.
<PAGE>
EXHIBIT 99.12
UNAUDITED GENLYTE THOMAS GROUP LLC PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
Introduction
The following unaudited pro forma consolidated financial statements of Genlyte
Thomas Group LLC (the "Joint Venture") (the "Unaudited Genlyte Thomas Group LLC
Pro Forma Consolidated Financial Statements"), include the unaudited pro forma
consolidated statements of income for the six months ended July 4, 1998 and for
the year ended December 31, 1997 (the "Unaudited Joint Venture Pro Forma
Consolidated Statements of Income"), and the unaudited pro forma consolidated
balance sheet as of July 4, 1998 (the "Unaudited Joint Venture Pro Forma
Consolidated Balance Sheet").
The Unaudited Joint Venture Pro Forma Consolidated Statements of Income are
based on the unaudited consolidated statement of income of Genlyte for the six
months ended July 4, 1998, the unaudited combined statement of income of Thomas
Lighting for the six months ended June 30, 1998, the audited consolidated
statement of income of Genlyte for the year ended December 31, 1997, and the
audited combined statement of income of Thomas Lighting for the year ended
December 31, 1997, and are adjusted to give effect to the Transaction as though
it had occurred as of January 1, 1997.
The Joint Venture Pro Forma Consolidated Balance Sheet is based on the unaudited
consolidated balance sheet of Genlyte as of July 4, 1998 and the unaudited
combined balance sheet of Thomas Lighting as of June 30, 1998, and is adjusted
to give effect to the Transaction as if it had occurred on July 4, 1998.
The Joint Venture Pro Forma Consolidated Financial Statements reflect pro forma
adjustments to give effect to the transactions contemplated in the Transaction
Documents whereby (a) Genlyte contributed to the Joint Venture substantially all
of its assets in exchange for a 68% interest in the Joint Venture and the Joint
Venture's assumption of substantially all of its liabilities and (b) Thomas
contributed to the Joint Venture substantially all of its assets comprising
Thomas Lighting in exchange for a 32% interest in the Joint Venture and the
Joint Venture's assumption of certain liabilities. For accounting purposes,
Genlyte's majority ownership of the Joint Venture requires the assets and
liabilities contributed by Thomas to the Joint Venture be valued at their fair
value in the Joint Venture's consolidated financial statements. Certain pro
forma adjustments result from management's preliminary determination of purchase
accounting adjustments and are based upon available information and certain
assumptions that management considers reasonable under the circumstances.
Consequently, the amounts reflected in the Unaudited Joint Venture Pro Forma
Consolidated Financial Statements are subject to change.
The Unaudited Joint Venture Pro Forma Consolidated Financial Statements and the
accompanying notes should be read in conjunction with Genlyte's historical
consolidated financial statements and the notes thereto, and Thomas Lighting's
historical combined financial statements and notes thereto, in the Joint Proxy
Statement incorporated herein by reference.
<PAGE>
The Unaudited Joint Venture Pro Forma Consolidated Financial Statements do not
purport to be indicative of what the Joint Venture's financial condition or
results of operations would have been had the Transaction in fact been
consummated as of the assumed dates and for the periods presented, nor are they
indicative of the results of operation or financial condition for any future
period or date. In addition, the Unaudited Joint Venture Pro Forma Consolidated
Financial Statements do not reflect the synergies expected to result from the
Transaction or the related synergy costs. As discussed in the Joint Proxy
Statement incorporated herein by reference, the synergies are expected to be in
excess of $30 million per annum and are expected to be fully realized by the end
of the year 2000 as a result of cost savings, economies of scale and revenue
enhancement opportunities. It is anticipated that an aggregate of $10.5 million
of costs will be incurred by the Joint Venture during the period 1998 through
2000 related to achieving the synergies. See the Joint Proxy Statement
incorporated herein by reference for additional information.
<PAGE>
EXHIBIT 99.13
<TABLE>
<CAPTION>
UNAUDITED GENLYTE THOMAS GROUP LLC PRO FORMA CONSOLIDATED STATEMENT
OF INCOME
For the Six Months Ended July 4, 1998
(in thousands)
Pro Forma
Pro Forma Genlyte
Historical Thomas Transaction Thomas
Genlyte Lighting (a) Adjustments Group LLC
--------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
Net Sales $ 260,451 $ 198,567 $ - $ 459,018
Cost of Sales 170,282 136,500 400 (b) 307,182
Gross Profit 90,169 62,067 (400) 151,836
Selling & Administrative Expenses 66,205 53,137 132 (c) 119,074
(500) (d)
100 (b)
Operating Profit 23,964 8,930 (132) 32,762
Interest Expense, net 1,824 639 - 2,463
Other Non-Operating Expenses - 365 - 365
Income Before Income Taxes 22,140 7,926 (132) 29,934
Income Tax Provision 9,519 - (9,519) (e) -
--------- ------------ ------------ ----------
Net Income $ 12,621 $ 7,926 $ 9,387 $ 29,934
========= ============ ============ ==========
THESE PRO FORMA FINANCIAL STATEMENTS DO NOT REFLECT THE SYNERGIES
EXPECTED TO RESULT FROM THE TRANSACTION OR THE RELATED SYNERGY COSTS.
</TABLE>
<PAGE>
EXHIBIT 99.14
UNAUDITED GENLYTE THOMAS GROUP LLC PRO FORMA CONSOLIDATED
STATEMENTS OF INCOME
For the Year Ended December 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Pro Forma
Pro Forma Genlyte
Historical Thomas Transaction Thomas
Genlyte Lighting (a) Adjustments Group LLC
---------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Net Sales $ 487,961 $ 390,638 $ - $ 878,599
Cost of Sales 318,556 269,331 800 (b) 588,687
---------- ------------ ----------- ---------
Gross Profit 169,405 121,307 (800) 289,912
Selling & Administrative Expenses 131,784 103,451 264 (c) 234,699
(1,000) (d)
200 (b)
---------- ------------ ----------- ---------
Operating Profit 37,621 17,856 (264) 55,213
Interest Expense, net 4,085 3,741 - 7,826
Other Non-Operating Expenses - (733) - (733)
---------- ------------ ----------- ---------
Income Before Income Taxes 33,536 14,848 (264) 48,120
Income Tax Provision 14,423 - (14,423) (e) -
---------- ------------ ----------- ---------
Net Income $ 19,113 $ 14,848 $ 14,159 $ 48,120
========== ============ =========== =========
</TABLE>
THESE PRO FORMA FINANCIAL STATEMENTS DO NOT REFLECT THE SYNERGIES
EXPECTED TO RESULT FROM THE TRANSACTION OR THE RELATED SYNERGY COSTS.
See Notes to Unaudited Genlyte Thomas Group LLC Pro Forma Consolidated Financial
Statements.
<PAGE>
EXHIBIT 99.15
<TABLE>
<CAPTION>
UNAUDITED GENLYTE THOMAS GROUP LLC PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JULY 4, 1998
(in thousands)
Genlyte
-------------------------------------------- Pro Forma Genlyte
Contribution Thomas Transaction Thomas
Historical Adjustments As Adjusted Lighting (f) Adjustments Group LLC
---------- ------------ ----------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 327 $ (327) (g) $ - $ 1,449 $ - $ 1,449
Accounts Receivable, net 86,073 - 86,073 64,846 - 150,919
Inventories 82,891 - 82,891 57,025 6,488 (j) 146,404
Other current Assets 18,320 (13,900) (h) 4,420 4,528 - 8,948
---------- ------------ ---------- ----------- ---------- --------
Total Current Assets 187,611 (14,227) 173,384 127,848 6,488 307,720
Plant and Equipment, net 60,980 - 60,980 46,632 20,000 (j) 127,612
Goodwill 12,528 - 12,528 47,550 (47,550) (j) 44,139
31,611 (j)
Other Assets 7,856 (6,200) (h) 1,656 9,058 - 10,714
---------- ------------ ----------- ------------- ------------ ---------
Total Assets $ 268,975 $ (20,427) $ 248,548 $ 231,088 $ 10,549 $ 490,185
========== ============ =========== ============= ============ =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts Payable $ 53,721 $ - $ 53,721 $ 19,749 $ - $ 73,470
Notes Payable - - - 40,294 - 40,294
Short-Term Borrowings 1,000 - 1,000 - - 1,000
Current Maturities of
Long-Term Debt 58 - 58 83 - 141
Accrued Expenses 37,263 (614) (h) 36,649 16,123 - 52,772
---------- ----------- ----------- ------------- ------------ ---------
Total Current Liabilities 92,042 (614) 91,428 76,249 - 167,677
Long-Term Debt 35,755 - 35,755 22,764 - 58,519
Deferred Income Taxes 6,824 (6,824) (h) - - - -
Other Liabilities 17,782 - 17,782 3,192 - 20,974
Stockholders' Investment 116,572 (12,989) (i) 103,583 128,883 10,549 (k) 243,015
---------- ----------- ----------- ------------- ------------ ---------
Total Liabilities and
Stockholders' Investment $ 268,975 $ (20,427) $ 248,548 $ 231,088 $ 10,549 $ 490,185
========== =========== =========== ============= ============ =========
</TABLE>
See Notes to Unaudited Genlyte Thomas Group LLC Pro Forma Consolidated
.Financial Statements
<PAGE>
EXHIBIT 99.16
NOTES TO UNAUDITED GENLYTE THOMAS GROUP LLC PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
On April 28, 1998, Genlyte and Thomas entered into definitive agreements to
combine the lighting business of Thomas with the business of Genlyte through the
Joint Venture. On August 30, 1998, Genlyte contributed substantially all of its
assets in exchange for a 68% interest in the Joint Venture and the Joint
Venture's assumption of substantially all of its liabilities and Thomas
contributed to the Joint Venture substantially all of its assets comprising
Thomas Lighting in exchange for a 32% interest in the Joint Venture and the
Joint Venture's assumption of certain liabilities. Genlyte and Thomas will
continue to exist as separate publicly traded companies.
Accounting Treatment
For accounting purposes, Genlyte's majority ownership of the Joint Venture
requires the assets and liabilities contributed by Thomas to the Joint Venture
to be valued at their fair value in the Joint Venture's consolidated financial
statements. Certain pro forma adjustments result from the Joint Venture
management's preliminary determination of purchase accounting adjustments and
are based upon available information and certain assumptions that management
considers reasonable under the circumstances. Consequently, the amounts
reflected in the Unaudited Genlyte Thomas Group LLC Pro Forma Consolidated
Financial Statements are subject to change.
NOTE 2: PRO FORMA ADJUSTMENTS
(a) Represents the Unaudited Thomas Lighting Pro Forma Statements of Income as
presented in the Unaudited Genlyte Pro Forma Consolidated Statements of
Income included elsewhere in this Form 8-K.
(b) Represents the incremental depreciation expense of $400,000 and $800,000,
for the six months ended July 4, 1998 and the year ended December 31, 1997,
respectively, charged to cost of sales and $100,000 and $200,000,
respectively, charged to selling and administrative expense, using an
assumed weighted average useful remaining life of 20 years, related to the
incremental fair value step-up of certain fixed assets of Thomas Lighting
(see Note 2 (j)). The allocation of expenses between cost of sales and
selling and administrative expense is based on Genlyte's historical
depreciation mix.
(c) Represents incremental goodwill amortization of $132,000 and $264,000 for
the six months ended July 4, 1998 and the year ended December 31, 1997,
respectively, resulting from the excess of the fair market value over the
book value of Thomas Lighting. Such excess will be amortized over 40
years, subject to further analysis subsequent to the closing of the
Transaction.
(d) Represents estimated costs to be charged to Genlyte by the Joint Venture
for certain shareholder-related services rendered by the Joint Venture on
behalf of Genlyte.
(e) Represents the elimination of the income tax provision included in the
Genlyte's historical financial statements. The Joint Venture will be
treated as a partnership for Federal income tax purposes and therefore, the
income tax attributes and liabilities generated by the Joint Venture shall
accrue directly to Genlyte and Thomas and be recorded in their respective
financial statements.
(f) Represents the Unaudited Thomas Lighting Pro Forma Balance Sheet.
(g) Represents the elimination of cash and cash equivalents which will be
retained by Genlyte.
(h) Represents the elimination of accrued income taxes payable and deferred
income tax assets and liabilities which will be retained by Genlyte, as the
income tax attributes and liabilities generated by
<PAGE>
the Joint Venture will accrue directly to Genlyte and Thomas and be
recorded in their respective financial statements.
(i) The net adjustment to retained earnings consists of the net effect of the
adjustments described in Note 2 (g) and Note 2 (h).
(j) Represents the allocation of the excess of the fair market value over
tangible book value of Thomas Lighting as follows (in thousands):
<TABLE>
<S> <C>
Fair value of Thomas Lighting as mutually determined by
Genlyte and Thomas, which was the basis for determining the ownership
interests to be issued in the Joint Venture $139,432
Tangible book value of Thomas Lighting 81,333
--------
Excess of fair value over tangible book value 58,099
Less fair value allocations:
Inventory step-up 6,488
Property, plant and equipment step-up 20,000
--------
Goodwill $ 31,611
========
</TABLE>
The cost basis of properties and other assets was adjusted to fair market
value based on management's preliminary estimates which are subject to
change based upon the results of independent appraisals management intends
to have performed.
(k) Represents the excess of fair value over book value for Thomas Lighting
recognized in connection with the purchase accounting for the Joint
Venture.
