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, 1998
Commission file number: 0-16960
----------------
THE GENLYTE GROUP INCORPORATED
4360 Brownsboro Road
Louisville, Kentucky 40207
(502) 893-4600
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: NONE
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 1, 1999: 13,561,298.
Aggregate market value of Common Stock (par value $.01 per share) held by
non-affiliates on March 1, 1999: $250,036,432.
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. [ ]
Documents Incorporated by Reference:
Document Part of Form 10-K
Annual report to stockholders for the
fiscal year ended December 31, 1998 Parts I, II, and IV
Proxy Statement for the Annual Meeting
of Stockholders to be held April 21, 1999 Part III
<PAGE>
PART I
ITEM 1. BUSINESS
On August 30, 1998, The Genlyte Group Incorporated ("Genlyte") and Thomas
Industries Inc. ("Thomas") completed the combination of the business of Genlyte
with the lighting business of Thomas ("Thomas Lighting"), in the form of a
limited liability company named Genlyte Thomas Group LLC ("Genlyte Thomas").
Genlyte contributed substantially all of its assets and liabilities to Genlyte
Thomas and received a 68% interest in Genlyte Thomas. Thomas contributed
substantially all of its assets and certain related liabilities comprising
Thomas Lighting and received a 32% interest in Genlyte Thomas. Throughout this
Form 10-K, the term "Company" as used herein refers to The Genlyte Group
Incorporated, including the consolidation of The Genlyte Group Incorporated and
Genlyte Thomas Group LLC.
The Company designs, manufactures, markets, and sells lighting fixtures for a
wide variety of applications in the commercial, industrial, and residential
markets. The Company operates in these three industry segments through the
following divisions: Lightolier, Controls, Wide-Lite, Hadco, Diamond F, Supply
(Crescent, ExceLine, and Stonco product lines), Consumer, Indoor, Accent, and
Outdoor in the United States and Mexico, and Canlyte, Thomas Lighting Canada,
Lumec, and ZED in Canada. The Company markets its products under the following
brand names:
In the U.S. -- Bronzelite, Capri, Crescent, Day-Brite, Diamond F,
Electro/Connect, Emco, ExceLine, Forecast, Gardco,
Hadco, Lightolier, Lightolier Controls, Lumec,
Lumec-Schreder, Matrix, McPhilben, Omega, Starlight,
Stonco, Thomas, Wide-Lite, and ZED.
In Canada -- C&M, CFI (Canadian Fluorescent Industries), Capri,
Day-Brite, Hadco, Horizon, Lite-Energy,
Keene-Widelite, Lightolier, Lumec, Prodel, Stonco,
Uniglo, and ZED.
In Mexico -- Bronzelite, Capri, Day-Brite, Emco, Forecast, Gardco,
Hadco, Lightolier, Lumec, Thomas, and Wide-Lite.
The Company'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
the Company does not principally sell directly to the end-user of its products,
the Company
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<PAGE>
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. The Company's sales, like those of
the lighting fixture industry in general, are partly dependent on the level of
activity in new construction and remodeling.
PRODUCTS AND DISTRIBUTION
The Company designs, manufactures, markets, and sells 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.
The Company'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
The Company 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.
SEASONAL EFFECT ON BUSINESS
There are no predictable significant seasonal effects on the Company's results
of operations.
PATENTS AND TRADEMARKS
The Company has a number of United States and foreign mechanical patents, design
patents, and registered trademarks. The Company maintains such protections by
periodic renewal of trademarks and payments of maintenance fees for issued
patents. The Company vigorously enforces its intellectual property rights. The
Company does not believe that a loss of any presently held patent or trademark
is likely to have a material adverse impact on its business.
3
<PAGE>
WORKING CAPITAL
There are no unusual significant business practices at the Company that affect
working capital. The Company'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 $115,520,000 as of December 31, 1998; $54,206,000 as of December 31,
1997, and $42,247,000 as of December 31, 1996. The $61,314,000 increase from
December 31, 1997 to December 31, 1998 was primarily because of the formation of
Genlyte Thomas; the backlog associated with the former Thomas Lighting business
was $47,701,000 at December 31, 1998. Substantially all the backlog at December
31, 1998 is expected to be shipped in 1999.
COMPETITION
The Company's products are sold in competitive markets in which 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
The Company 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
$7,237,000; $5,195,000, and $4,475,000 during 1998, 1997, and 1996,
respectively.
EMPLOYEES
At December 31, 1998, the Company employed approximately 3,490 union and
nonunion production workers and approximately 1,800 engineering, administrative,
and sales personnel. Approximately 9% of the production workers are covered by
collective bargaining agreements that expire in 1999. Relationships with unions
have been satisfactory. Negotiation of collective bargaining agreements is not
expected to have a significant impact on 1999 production.
4
<PAGE>
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 Consolidated Financial Statements" section of
Genlyte's 1998 Annual Report to Stockholders (Exhibit 13 hereto), which is
incorporated herein by reference.
ITEM 2. PROPERTIES
The leased Corporate offices of the Company are located in Louisville, Kentucky.
Because of the large number of individual locations and the diverse nature of
the operating facilities, specific description of each property owned and leased
by the Company is not necessary to an understanding of the Company's business.
All of the buildings are of steel, masonry, or concrete construction, are
generally in good condition, provide adequate and suitable space for the
operations of each location, and provide sufficient capacity for present and
foreseeable future needs. A summary of the Company's property follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
26 Owned Facilities 31 Leased Facilities Combined Facilities
Nature of Facilities Total Square Feet Total Square Feet Total Square Feet
- -------------------- ----------------- ----------------- -----------------
Manufacturing Plants 2,191,000 473,000 2,664,000
Distribution Centers 1,194,000 334,000 1,528,000
Administrative Offices 329,000 104,000 433,000
Sales Offices -- 29,000 29,000
Other 87,000 1,000 88,000
--------- ------- ---------
Total 3,801,000 941,000 4,742,000
========= ======= =========
</TABLE>
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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 set forth in the June 8, 1995
complaint (the "complaint") are substantially the same as were brought against
Genlyte in the U.S. District Court in New York in August 1993, (which original
proceeding was permanently enjoined as a result of Keene's reorganization plan).
The 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 ("Bairnco"). 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 ("RICO").
Following confirmation of the Keene reorganization plan, the parties moved to
withdraw the case from bankruptcy court to the Southern District of New York
Federal District Court. The case is now pending before the Federal District
Court. On October 13, 1998, the Court issued an opinion dismissing certain
counts as to Genlyte and certain other corporate defendants. In particular, the
Court dismissed the count of the complaint against Genlyte that alleged that the
1988 spin-off was a fraudulent transaction, and the count alleging a violation
of RICO. The Court also denied a motion to dismiss the challenge to the 1984
transaction on statute of limitations grounds and ruled that the complaint
should not be dismissed for failure to specifically plead fraud.
On January 5 and 6, 1999, the Court rendered additional rulings further
restricting the claims by the Trust against Genlyte and other corporate
defendants, and dismissing the claims against all remaining individual
defendants except one. The primary effect of the rulings with respect to claims
against Genlyte was to require the Trust to prove that the 1984 sale of certain
lighting assets of Keene was made with actual intent to defraud present and
future creditors of Genlyte's predecessor.
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<PAGE>
Discovery, which was stayed since commencement of the action, has now been
authorized by the Court to begin. Genlyte has filed its answer to the complaint
and is in the process of responding to and requesting discovery.
Genlyte believes that it has meritorious defenses to the adversary proceeding
and will defend said action vigorously.
Additionally, the Company is a defendant and/or potentially responsible party,
with other companies, in actions and proceedings under state and Federal
environmental laws including the Federal Comprehensive Environmental Response
Compensation and Liability Act, as amended. Management does not believe that the
disposition of the lawsuits and/or proceedings will have a material effect on
the Company's financial condition, results of operations, or liquidity.
In the normal course of business, the Company is a party to legal proceedings
and claims. When costs can be reasonably estimated, appropriate liabilities for
such matters are recorded. 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 the
Company, the ultimate outcome of any litigation is uncertain. Were an
unfavorable outcome to occur, the impact could be material to the Company.
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 "Notes to Consolidated Financial
Statements" section of Genlyte's 1998 Annual Report to
Stockholders (Exhibit 13 hereto), 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 Consolidated
Financial Statements" section of Genlyte's 1998 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 1998
-----------------------------------------------------------------------
Common Stock,
par value $.0l per share 1,459
ITEM 6. SELECTED FINANCIAL DATA
The information required for this item is included in Genlyte's 1998
Annual Report to Stockholders (Exhibit 13 hereto), 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 1998 Annual Report to Stockholders (Exhibit 13 hereto),
which is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At December 31, 1998, a hypothetical 1% increase in interest rates
would result in a reduction of approximately $630,000 in pre-tax
income. The estimated reduction is based upon no change in the volume
or composition of debt at December 31, 1998.
8
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the "Consolidated Financial Statements" and "Notes
to Consolidated Financial Statements" sections of Genlyte's 1998 Annual
Report to Stockholders (Exhibit 13 hereto), 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 Director" section of the Proxy Statement
for the 1999 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 "Compensation Committee Report on
Executive Compensation" sections of the Proxy Statement for the 1999
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 1999 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" sections of the Proxy
Statement for the 1999 Annual Meeting of Stockholders of Genlyte, which
has been filed with the Securities and Exchange Commission and is
incorporated herein by reference.
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<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 1998 Annual Report to Stockholders (Exhibit 13 hereto):
Report of Independent Public Accountants
Consolidated Statements of Income for the years ended December
31, 1998, 1997, and 1996
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997, and 1996
Consolidated Statements of Stockholders' Investment for the years
ended December 31, 1998, 1997, and 1996
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) A Form 8-K/A was filed on November 5, 1998, to amend the Form 8-K
filed on September 11, 1998 announcing that Genlyte and Thomas
completed the transaction that created Genlyte Thomas Group LLC.
The amendment provided the required financial statements in
accordance with the form.
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<PAGE>
c) Exhibits
INCORPORATED BY
DESCRIPTION REFERENCE TO
- - Amended and Restated Exhibit 3(b) to Genlyte's Registration
Certificate of Incorporation of Statement on Form 8 as filed with the
the Registrant, dated August 2, Securities and Exchange Commission on
1988 August 3, 1988
- - Amended and Restated Exhibit 3(a) to Genlyte's Form 10-K
Certificate of Incorporation of filed with the Securities and Exchange
the Registrant, dated May 9, Commission in March 1993
1990
- - Amended and Restated By-laws of Exhibit 3(c) to Genlyte's Registration
the Registrant, as adopted on Statement on Form 8 as filed with the
May 16, 1988 Securities and Exchange Commission on
August 3, 1988
- - Form of Stock Certificate for Exhibit 4(a) to Genlyte's Registration
Genlyte Common Stock 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 Registration
between the Registrant and Statement on Form 8 as filed with the
purchasers of Class B Stock of Securities and Exchange Commission on
the Registrant, dated as of August 3, 1988
June 17, 1988
- - Loan Agreement between The Exhibit 10(b) to Genlyte's Form 10-K
Genlyte Group Incorporated and filed with the Securities and Exchange
the New Jersey Economic 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)
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<PAGE>
INCORPORATED BY
DESCRIPTION REFERENCE TO
- - Loan Agreement between The Exhibit 10(c) to Genlyte's Form 10-K
Genlyte Group Incorporated and filed with the Securities and Exchange
the New Jersey Economic 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)
- - ManagementIncentive Exhibit 10(i) to Genlyte's Registration
Compensation Plan 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
- - Genlyte 1998 Stock Option Plan Annex A to Genlyte's Proxy Statement
(Form DEF 14A) for the 1998 Annual
Meeting of Stockholders of Genlyte as
filed with the Securities and Exchange
Commission on March 23, 1998
- - Tax Sharing Agreement between Exhibit 10(k) to Genlyte's Registration
Genlyte and Bairnco Statement on Form 8 as filed with the
Corporation, dated July 15, Securities and Exchange Commission on
1988 August 3, 1988
- - Merger and Assumption Exhibit 10(d) to Genlyte's Form 10-K
Agreement, dated as of December filed with the Securities and Exchange
28, 1990, by and between Commission in March 1991
Genlyte and Lightolier
- - Loan Agreement between The Exhibit 4(c) to Genlyte's Form 10-K
Genlyte Group Incorporated and filed with the Securities and Exchange
Jobs for Fall River, Inc., Commission in March 1995
dated as of July 13, 1994
13
<PAGE>
INCORPORATED BY
DESCRIPTION REFERENCE TO
- - Master Transaction Agreement Exhibit 2.1 to Genlyte's Form 8-K filed
dated April 28, 1998 by and with the Securities and Exchange
between Thomas and Genlyte Commission on July 24, 1998
- - Limited Liability Company Exhibit 2.2 to Genlyte's Form 8-K filed
Agreement of GT Lighting, LLC with the Securities and Exchange
(now named Genlyte Thomas) Commission on July 24, 1998
dated April 28, 1998 by and
among Thomas, Genlyte and
Genlyte Thomas
- - Capitalization Agreement dated Exhibit 2.3 to Genlyte's Form 8-K filed
April 28, 1998 by and among with the Securities and Exchange
Genlyte Thomas and Thomas and Commission on July 24, 1998
certain of its affiliates
- - Capitalization Agreement dated Exhibit 2.4 to Genlyte's Form 8-K filed
April 28, 1998 by and between with the Securities and Exchange
Genlyte Thomas and Genlyte Commission on July 24, 1998
- - Credit Agreement between Exhibit 10 to Genlyte's Form 10-Q filed
Genlyte Thomas and the with the Securities and Exchange
applicable banks named therein, Commission in November 1998
dated as of August 30, 1998
- - Financial Statements of Exhibits 99.1 through 99.16 to Genlyte's
Business Acquired and Pro Forma Form 8-K/A filed with the Securities and
Financial Information related Exchange Commission on November 5, 1998
to the formation of Genlyte
Thomas
Other Exhibits included herein:
(11) Calculation of Basic and Diluted Earnings per Share
(13) Annual Report to Stockholders
(18) Letter re Change in Accounting Principles
(21) Subsidiaries of the Registrant
(23) Consent of Independent Public Accountants
(27) Financial Data Schedule
(99) Form of Employment Protection Agreement entered into between Genlyte
and certain key executives
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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
Date: MARCH 26, 1999
--------------------------- By /s/ WILLIAM G. FERKO
March 26, 1999 ----------------------------------
William G. Ferko
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
- ---------------------------------------------------- -------------------
Avrum I. Drazin - Chairman of the Board March 26, 1999
/s/ LARRY POWERS
- ---------------------------------------------------- -------------------
Larry Powers, President and Chief Executive Officer March 26, 1999
(Principal Executive Officer)
/s/ GLENN W. BAILEY
- ---------------------------------------------------- -------------------
Glenn W. Bailey - Director March 26, 1999
/s/ ROBERT B. CADWALLADER
- ---------------------------------------------------- -------------------
Robert B. Cadwallader - Director March 26, 1999
/s/ DAVID M. ENGELMAN
- ---------------------------------------------------- -------------------
David M. Engelman - Director March 26, 1999
/s/ FRED HELLER
- ---------------------------------------------------- -------------------
Fred Heller - Director March 26, 1999
/s/ FRANK METZGER
- ---------------------------------------------------- -------------------
Frank Metzger - Director March 26, 1999
15
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in The Genlyte Group Incorporated
Annual Report to Stockholders for the year ended December 31, 1998, incorporated
by reference in this Form 10-K, and have issued our report thereon dated
February 10, 1999. 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 the 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
Louisville, Kentucky
February 10, 1999
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THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
($ in thousands)
<TABLE>
<CAPTION>
Additions Additions
Balance at From Charged to Balance at
Beginning of Formation of Costs and of End
Year Genlyte Thomas Expenses Deductions* Year
------------ -------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED 12/31/98
Allowance for
Doubtful $6,864 $ 1,407 $3,172 $ (536) $10,907
Accounts
YEAR ENDED 12/31/97
Allowance for
Doubtful $8,222 $ -- $2,100 $(3,458) $ 6,864
Accounts
YEAR ENDED 12/31/96
Allowance for
Doubtful $5,302 $ -- $3,452 $ (532) $ 8,222
Accounts
</TABLE>
* Deductions include uncollectible accounts written off, less recoveries
of accounts previously written off and effect of foreign currency
translation in accordance with SFAS No. 52.
17
EXHIBIT 11
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CALCULATION OF BASIC AND DILUTED EARNINGS PER SHARE
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
($ in thousands, except per share data)
<TABLE>
<CAPTION>
1998 1997 1996
----------- ---------- -----------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE
Net income $ 26,760 $ 19,113 $ 12,997
Average common shares outstanding 13,671 13,127 12,859
----------- ---------- -----------
Basic Earnings Per Share $ 1.96 $ 1.46 $ 1.01
=========== ========== ===========
DILUTED EARNINGS PER SHARE *
Net income $ 26,760 $ 19,113 $ 12,997
Average common shares outstanding 13,671 13,127 12,859
Incremental common shares issuable: stock options 19 309 196
----------- ---------- -----------
Average common shares outstanding assuming dilution 13,690 13,436 13,055
----------- ---------- -----------
----------- ---------- -----------
Diluted Earnings Per Share $ 1.95 $ 1.42 $ 1.00
=========== ========== ===========
</TABLE>
* Diluted earnings per share include all average common shares outstanding
adjusted for the incremental dilution of outstanding stock options.
GENLYTE
THE GENLYTE GROUP INCORPORATED
1998 ANNUAL REPORT
LIGHTING THE WAY...TOGETHER
<PAGE>
================================================================================
GENLYTE THOMAS BRANDS AT A GLANCE
================================================================================
BRANDS PRODUCT OVERVIEW
================================================================================
BRONZELITE Specification-grade landscape and underwater lighting
- --------------------------------------------------------------------------------
GARDCO High-performance site luminaires for parking, garage,
roadway and path lighting
- --------------------------------------------------------------------------------
EMCO Economical area luminaires and poles
- --------------------------------------------------------------------------------
HADCO Specification-grade exterior architectural lighting for
municipal, institutional, commercial landscape
- --------------------------------------------------------------------------------
LUMEC Specification-grade decorative functional street and area
lighting
- --------------------------------------------------------------------------------
LUMEC-SCHREDER Tunnel lighting
- --------------------------------------------------------------------------------
ZED Decorative outdoor urban lighting
- --------------------------------------------------------------------------------
MCPHILBEN
OUTDOOR Architectural building-mounted luminaires
- --------------------------------------------------------------------------------
WIDE-LITE Energy-efficient specification-grade HID lighting and
controls
- --------------------------------------------------------------------------------
EXCELINE Contractor-friendly indoor and outdoor HID lighting
(commercial, retail, light industrial)
- --------------------------------------------------------------------------------
STONCO Contractor-friendly indoor and outdoor HID lighting
- --------------------------------------------------------------------------------
CRESCENT Contractor-friendly, cost-effective fluorescent lighting
- --------------------------------------------------------------------------------
CAPRI Downlighting and track lighting
- --------------------------------------------------------------------------------
OMEGA Architectural grade specification downlighting
- --------------------------------------------------------------------------------
MCPHILBEN Exits and electrical signage
- --------------------------------------------------------------------------------
HORIZON Energy-efficient lighting fixtures and reflectors for the
retrofit market
- --------------------------------------------------------------------------------
LIGHTOLIER High-quality downlighting, track, decorative and fluorescent
lighting for residential and commercial applications
- --------------------------------------------------------------------------------
LITE-ENERGY Decorative high-end architectural interior and exterior
lighting
- --------------------------------------------------------------------------------
DAY-BRITE Commercial and industrial HID and fluorescent lighting
- --------------------------------------------------------------------------------
FORECAST Residential decorative lighting sold through lighting
showrooms
- --------------------------------------------------------------------------------
THOMAS Decorative lighting for the home
- --------------------------------------------------------------------------------
MATRIX Microprocessor controls for interior lighting systems
- --------------------------------------------------------------------------------
LIGHTOLIER CONTROLS Electronic dimming and energy-saving controls for
residential/commercial use.
- --------------------------------------------------------------------------------
C&M Commercial and industrial fluorescent lighting for the
Canadian market
- --------------------------------------------------------------------------------
CANLYTE Sale in Canada of Lightolier, CFI, Keene-Widelite, Stonco
and Hadco
================================================================================
ON THE COVER
This 3,000 seat worship center is the new home for the 8,000 members of
Riverbend Church in Austin, Texas. Virtually all the lighting for this
spectacular job is from Genlyte Thomas Group.
<PAGE>
- --------------------
FINANCIAL HIGHLIGHTS
- --------------------
(In thousands, except share data) 1998 1997 1996
- --------------------------------------------------------------------------------
OPERATING RESULTS
Net Sales $ 664,095 $ 487,961 $ 456,860
Gross Profit Margin 35.2% 34.7% 33.9%
Operating Profit 59,290 37,621 28,448
Net Income 26,760 19,113 12,997
Earnings Per Share:
Basic 1.96 1.46 1.01
Diluted 1.95 1.42 1.00
BALANCE SHEET DATA
Current Assets $ 317,246 $ 174,106 $ 163,839
Total Assets 501,602 254,028 238,115
Current Liabilities 137,214 92, 145 92,473
Total Debt 62,784 32,785 41,847
Stockholders' Investment 166,232 103,729 83,783
Book Value Per Average Share 12.14 7.72 6.42
THE GENLYTE GROUP INCORPORATED IS A LEADING MANUFACTURER OF LIGHTING
FIXTURES AND CONTROLS FOR COMMERCIAL, INDUSTRIAL AND RESIDENTIAL MARKETS.
o 6TH CONSECUTIVE YEAR OF SALES GROWTH
o 20 QUARTERS OF EARNINGS GROWTH*
o FIVE-YEAR ANNUAL GROWTH RATE OF 49% IN EARNINGS PER SHARE
o THE MOST RECOGNIZED AND RESPECTED BRAND NAMES IN THE INDUSTRY
* Over the comparable prior year's quarter
- -----------------
TABLE OF CONTENTS
- -----------------
Letter to Shareholders 3
Selected Financial Data 14
Management's Discussion and Analysis 15
Report of Independent Public Accountants 17
Consolidated Financial Statements 17
Notes to Consolidated Financial Statements 21
Stockholder Information 32
Board of Directors and Executive Committee IBC
<PAGE>
GENLYTE THOMAS
LIGHTING THE WAY...TOGETHER
CUSTOMERS - EMPLOYEES - SHAREHOLDERS - VENDORS
o We are customer focused and strive to exceed the expectations of our
customers by providing efficient, responsive, and professional solutions
and service.
o We value each employee by listening, trusting, and serving each other with
respect and fairness.
o We provide our employees with a safe work environment, opportunities to
grow and excel, competitive compensation, and we commit to share in our
successes. We strive to promote from within.
o We design and manufacture high quality, innovative products to provide
superior lighting solutions.
o We are dedicated to the development of well trained and motivated sales
organizations to provide exceptional service to our customers.
o We have a sense of urgency and will quickly respond to opportunities and
problems.
o We are cost conscious with regard to our business decisions and
expenditures. We will utilize our resources across divisions and functions
to gain synergy and to reduce costs.
o We adopt total quality management and world class manufacturing concepts
and strive for continuous improvement in all aspects of the business.
o We will support vendors who keep us competitive and promote quality and
on-time delivery to meet our customer requirements.
o We prioritize our efforts on being the best at the essential things -
those activities which can provide the greatest benefit for our customers,
employees, and shareholders.
o We will provide our shareholders with a fair rate of return on their
investment.
<PAGE>
----------------------
LETTER TO SHAREHOLDERS
----------------------
[PHOTO OMITTED]
(Left to Right) Avrum I. Drazin,
Chairman of the Board and
Larry K. Powers, President
and Chief Executive Officer
TO OUR SHAREHOLDERS:
Nineteen Ninety Eight was a very good year and we are very
pleased with our record performance. It was also an
extremely busy and exciting year for us. On August 30, 1998,
The Genlyte Group Incorporated formally entered into an
agreement with Thomas Industries Inc. to form Genlyte Thomas
Group LLC (GTG), creating one of the top three lighting
fixture manufacturing entities in North America with assets
of over $500 million and a work force of more than 5,000
employees. GTG commands a market share of approximately 13
percent and will be a major force in the lighting industry
for many years to come.
The transaction combined substantially all of the assets and
liabilities of Genlyte and substantially all of the
lighting-related assets and liabilities of Thomas
Industries. Genlyte Group owns a 68 percent interest in GTG
and Thomas Industries owns the remaining 32 percent. Genlyte
Thomas Group is now headquartered in Louisville, Kentucky.
For the year ended December 31, 1998, we are pleased to
report record sales of $664 million and record earnings per
share of $1.95. These results compare to $488 million and
$1.42 in 1997, increases of 36 percent and 37 percent,
respectively. In addition, strong fourth quarter cash flow
results allowed us to reduce debt by $35 million to
approximately $63 million. These promising results were
attained in spite of the fact that most of the expenses
related to the formation of GTG were incurred in 1998, while
a substantial number of the financial benefits will not be
realized until later years.
Deeper and broader brand strength - as well as a strong
balance sheet creating enhanced financial flexibility - is
enabling GTG to compete on a much more effective basis with
other leaders in the lighting industry. Complementary
products, markets, and sales organizations are important
bi-products of the venture. Our customers continue to
receive the same personal and focused service and that
remains our highest priority. But perhaps the most promising
of the benefits created is the strength of the combined
management team, which has a notable record in the lighting
industry for improving revenues and profitability.
3.
<PAGE>
THE STRONG FINANCIAL POSITION OF OUR NEW COMPANY WILL ENABLE US TO BE
AGGRESSIVE IN IDENTIFYING BENEFICIAL ACQUISITIONS AND STRATEGIC ALLIANCES,
WHILE AN ENHANCED BALANCE SHEET WILL ALLOW US THE STRENGTH AND FLEXIBILITY
TO ACT ON THOSE OPPORTUNITIES IN A TIMELY MANNER.
Other benefits spawned by the new company include cost
reductions realized from the combined purchasing power of
the two companies, efficiency-driven operating
consolidations, integration of technologies, reduced freight
and warehousing expenditures, as well as overall
manufacturing synergies. Future annual savings are
anticipated to be $30 million, generated not only from the
above-mentioned efficiencies, but from revenue enhancement
opportunities. Truly, the whole is greater than the sum of
its parts.
The actions to gain the synergies are well underway. In the
first quarter of 1999 we announced that our Accent Division,
consisting of the Capri and Omega brands and headquartered
in Los Angeles, California, will be consolidated with the
Day-Brite Division in Tupelo, Mississippi. The resultant
Day-Brite/Capri/Omega Division will be a true indoor
lighting business and will streamline processes and unite
products that mesh in the marketplace. The transfer is
anticipated to be complete in April 1999.
Also in the first quarter we announced that our
Hopkinsville, Kentucky, facility will cease manufacturing by
September of 1999. This is in line with the plant
rationalization plan developed as a result of the formation
of GTG.
The strong financial position of our new company will enable
us to be aggressive in identifying beneficial acquisitions
and strategic alliances, while an enhanced balance sheet
will allow us the strength and flexibility to act on those
opportunities in a timely manner. We will not seek out
acquisitions merely for the sake of expansion. Rather, we
will make such transactions when the situation is of obvious
and specific benefit for us to do so. For instance, on
January 21, 1999, we announced an intent to form a jointly
owned limited liability company with Fibre Light
International, of Queensland, Australia. GTG will own 80% of
the new company, "Fibre Light U.S.," and Fibre Light
International will own 20%. Fibre Light U.S. will have
exclusive rights to all Fibre Light
4.
<PAGE>
International products in North America, the Caribbean and
other territories. Fibre Light's focus on the architectural
applications of fiber optics should strongly complement our
existing product line and move us into an area of lighting
that holds much promise for the future.
Subsequent sections of this report will focus on the areas
of newly enhanced brand strength, increased manufacturing
capabilities and capacity, economies in the areas of
purchasing, shipping and warehousing, and the lifeblood of
our company - new product development.
We are optimistic and genuinely excited about the many
possibilities for future growth and profitability created by
our new company's formation. Increasing shareholder value
will be the number one goal for all of us. We wish to thank
each of our many investors for their continued support and
confidence.
We would also like to thank each of the more than 5,000
employees who have shown a great deal of loyalty and
dedication during the process of making Genlyte Thomas Group
a reality. Without that dedication, the opportunities that
are now before us would never exist.
Sincerely,
/s/ LARRY K. POWERS
President and Chief Executive Officer
/s/ AVRUM I. DRAZIN
Chairman of the Board
SALES
DOLLARS IN MILLIONS
94 95 96 97 98
=================================================
432.7 445.7 456.9 488.0 664.1
OPERATING PROFIT
DOLLARS IN MILLIONS
94 95 96 97 98
=================================================
14.7 22.0 28.4 37.6 59.3
NET INCOME
DOLLARS IN MILLIONS
94 95 96 97 98
=================================================
4.2 7.9 13.0 19.1 26.8
EARNINGS PER SHARE
94 95 96 97 98
=================================================
.33 .62 1.00 1.42 1.95
5.
<PAGE>
THE BREADTH
AND DEPTH OF
OUR BRANDS
CREATE A POWERFUL
COMBINATION WITH
COMPLEMENTARY
STRENGTHS.
[PHOTO OF BOB GASKINS AND GRAPHICS OF LIGHT FIXTURES & AN AMPHITHEATER OMITTED]
Bob Gaskins, Director of Design for Gardco Emco McPhilben
outdoor lighting, has designed several leading edge products that
keep the competition playing catch-up, such as the Gardco Gullwing.
<PAGE>
LIGHTING THE WAY...
WITH STRENGTH
In 1999, our consolidated sales volume will be approximately double the
volume reported in our annual report just one year ago. Through the
combination of two strong lighting entities that have become Genlyte Thomas
Group LLC (GTG), we now have the breadth and depth of brands that are
second to none. The combined brands complement each other to form a "Who's
Who" of well known and recognized names within many segments of the
lighting industry. Lightolier, Lightolier Controls, Day-Brite, Gardco,
Hadco, Lumec, and Wide-Lite are greatly respected within the specification
market. Distributors know and trust the Capri, Crescent, Stonco, and
ExceLine names. Lighting retailers look to Forecast and Thomas for the
latest design trends and innovations. These and many other powerful names
create a rich pipeline of brands that are sold through separate and
distinct sales organizations throughout North America and internationally.
In addition, the geographic strengths of each entity overlay to
create a company with a strong presence throughout North America -
particularly in the Midwest, Northeast and Canada. As GTG moves forward,
the potential for market leadership in regions beyond its traditional
footholds presents a real opportunity.
[GRAPHIC OMITTED]
7.
<PAGE>
OUR STATE-OF-THE-ART MANUFACTURING FACILITIES ARE POISED TO
CAPITALIZE ON THE FURTHER OPERATIONAL EFFICIENCIES THAT ARE
REALIZED AS TWO POWERFUL COMPANIES MOVE FORWARD.
[PHOTO OF GILLES LEBLANC AND PICTURES OF LIGHT FIXTURES OMITTED]
Gilles Leblanc, Director of Manufacturing for Ligholier/CFI, discusses the
manufacturing initiatives at his Quebec facility, and the enthusiasm that it has
generated amongst the employees.
<PAGE>
LIGHTING
THE WAY...WITH EFFICIENCY
Genlyte Thomas Group takes great pride in its manufacturing capabilities and is
taking a leading role in developing World Class operations. Initiatives for
continuous improvement are a way of life throughout our manufacturing
facilities. In additional to capital investments in state-of-the-art
equipment, ISO certifications, and process engineering projects, the company
prides itself in its Teambuilding Training programs, where employees initiate
change with their own solutions. Driving down costs, cutting cycle times, and
improving quality and service are the objectives these teams are constantly
addressing.
Kaizen blitzes - doing more with less - and the introduction of Kanban inventory
practices continue to produce oustanding results throughout the operations.
GTG management is committed to making the work place more productive. There will
be ongoing opportunities to coordinate the manufacturing of certain products and
controls across all GTG operations. Continual review of our capabilities,
capacity, and needed resources will identify additional opportunities.
[PHOTO OMITTED]
A newly installed state-of-the-art Salvagnini
flexible fabrication machine embodies GTG's
commitment to world class manufacturing. When a
customer order calls for small quantities with a
unique combination of parts, the items can be
produced efficiently and with substantially
reduced tooling costs.
9.
<PAGE>
[PHOTOS OF DAVE CORNELIUS, SUSAN WOODRUFF, AND LARRY FOX OMITTED, AS WELL AS
LIGHTING FIXTURES IN AN AUTOMOBILE SHOWROOM.]
Dave Cornelius (left), Director of Group Purchasing; Susan Woodruff,
Purchasing Manager, Stonco; and Larry Fox, Director of Sourcing,
Lightolier, discuss various savings opportunities.
THE FORMATION OF GENLYTE THOMAS GROUP IS EXPECTED TO CREATE
FUTURE ANNUAL SYNERGIES IN EXCESS OF $30 MILLION, AS A
RESULT OF COST SAVINGS, ECONOMIES OF SCALE AND REVENUE
ENHANCEMENT OPPORTUNITIES.
<PAGE>
LIGHTING THE WAY...
WITH SYNERGY
The immediate synergies upon the formation of Genlyte Thomas were nowhere
more apparent or significant than in the area of purchasing. Purchased
materials represent a high percentage of the total cost of our products,
and with a new leverage that is now on par with other top lighting
manufacturers, GTG has already devoted considerable energy and effort to
maximize this opportunity. Purchasing contracts are being renegotiated and
the resulting cost savings are dramatic.
In shipping and distribution, the company's overall needs are being
analyzed to determine long term plans. New freight contracts based on
combined volume are being negotiated, and other opportunities for
consolidation will be considered as GTG moves forward.
The newly realized leverage extends beyond cost savings. Classic examples
of positive synergy are arising. Suppliers are offering enhanced service
in the forms of quicker response times, more proximate warehousing,
transportation concessions, and greater support in the all-important area
of product development technology.
[PHOTOS OMITTED]
11.
<PAGE>
[PHOTOS OF BILL FABBRI AND TOM LYNCH OMITTED]
Bill Fabbri (left), Vice President and General Manager of Lightolier's
Wilmington, Massachusetts, facility, and Tom Lynch, Operations Manager for the
Day-Brite/Capri/Omega facility in Tupelo, Mississippi, were involved in a joint
product development effort that benefited both the Day-Brite and Lightolier
brands.
THE COMBINATION OF THE TWO COMPANIES KNOWN FOR THEIR INNOVATION CREATES IN
GENLYTE THOMAS AN UNPRECEDENTED APTITUDE FOR CONTINUOUS NEW PRODUCT
INTRODUCTIONS-THE LIFEBLOOD OF ANY SUCCESSFUL COMPANY.
<PAGE>
LIGHTING
THE WAY...WITH
INNOVATION
The two entities that make up Genlyte Thomas Group were recognized for
their innovations in new product development - in terms of both design and
technology. Combined, they now have an opportunity to capitalize on these
strengths while reducing costs and eliminating resource duplication.
For example, at the time GTG was formed, both Thomas and Genlyte had
preliminary drawings on the board for a new fluorescent lighting fixture.
Under competitive pricing pressures, the goal for both companies was to
cost-reduce the product in order to maintain acceptable margins. GTG
melded the development technology of the two companies and quickly designed
a fixture that could be produced by both, using some of the same tooling.
The time and considerable tooling expense that were saved is an indication
of future opportunities that will arise from teamwork and strategic product
planning.
Throughout 1998 and into 1999, many GTG brands have developed new products
to meet opportunities in the marketplace. For example, the flagship
Lightolier brand, entering its 95th year, introduced over 300 new ideas in
1998, including several new families of decorative architectural products.
The ProSpec linear is a new innovation that provides a cluster of lamps in
a single housing for improved appearance and greater performance.
Capri's C1 system, a new approach to downlighting, is acclaimed
for its easy installation and unique flexibility once installed. Hadco has
introduced its Garden Art collection, an upscale exterior lighting system
for the discriminating buyer. The Supply Division - Stonco, Crescent
and ExceLine - all made major new product introductions throughout
the year. New customer programs and support technologies were also
introduced, such as Day-Brite's Quick Calc - which gives distributors
and contractors the convenience of calculating their project specifications
with a simple phone call. An easy-to-follow menu of options allows them to
calculate spacing-to-mounting-heights, light output, and a variety of other
factors - all from the actual job site if needed!
[PHOTOS OMITTED]
13.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------
SELECTED FINANCIAL DATA
- -----------------------
Genlyte Group Incorporated & Subsidiaries
Amounts in thousands, except per share data 1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales $ 664,095 487,961 456,860 445,660 432,690
Gross profit $ 233,768 169,405 154,722 138,120 128,720
Operating profit $ 59,290 37,621 28,448 21,955 14,659
Interest expense, net $ 3,857 4,085 5,649 7,986 7,505
Minority interest $ 8,485 - - - -
Income before income taxes $ 46,948 33,536 22,799 13,969 7,154
Income tax provision $ 20,188 14,423 9,802 6,060 2,937
Net income $ 26,760 19,113 12,997 7,909 4,217
Return on:
Net sales 4.0% 3.9% 2.8% 1.8% 1.0%
Average stockholders' investment 19.8% 20.4% 16.9% 12.1% 7.1%
Average capital employed 14.6% 14.6% 9.9% 5.5% 2.7%
YEAR-END POSITION
Working capital $ 180,032 81,961 71,366 75,719 86,714
Plant and equipment, net $ 105,679 59,618 60,380 64,149 68,895
Total assets $ 501,602 254,028 238,115 231,034 240,178
Capital employed:
Total debt $ 62,784 32,785 41,847 67,132 90,047
Stockholders' investment $ 166,232 103,729 83,783 69,900 61,170
-----------------------------------------------------------
Total capital employed $ 229,016 136,514 125,630 137,032 151,217
-----------------------------------------------------------
PER SHARE DATA
Net income:
Basic $ 1.96 1.46 1.01 0.62 0.33
Diluted $ 1.95 1.42 1.00 0.62 0.33
Stockholders' investment per average
share outstanding $ 12.14 7.72 6.42 5.46 4.77
Market range:
High $ 28 3/8 21 3/8 14 8 5 1/2
Low $ 15 3/4 9 7/8 6 4 3 1/2
-----------------------------------------------------------
OTHER DATA
Orders on hand $ 115,520 54,206 42,247 51,093 50,379
Depreciation and amortization $ 15,066 12,156 14,550 15,657 16,886
Capital expenditures, net $ 17,436 11,597 10,405 10,232 11,884
Average shares outstanding(*) 13,690 13,436 13,055 12,804 12,834
Current ratio 2.3 1.9 1.8 2.0 2.2
Interest coverage ratio 13.2 9.2 5.0 2.7 2.0
Debt to total capital employed 27.4% 24.0% 33.3% 49.0% 59.5%
Number of stockholders 1,459 1,567 1,705 1,865 1,970
Average number of employees 3,671 2,767 2,581 2,657 2,838
Average sales per employee $ 180,903 176,350 177,009 167,731 152,463
-----------------------------------------------------------
</TABLE>
(*)including incremental common shares issuable under stock option plans
14.
<PAGE>
-----------------------
MANAGEMENT'S
DISCUSSION AND ANALYSIS
-----------------------
Genlyte Group Incorporated & Subsidiaries
Note: Throughout this discussion the term "Company" as used herein refers
to The Genlyte Group Incorporated, including the consolidated results of
The Genlyte Group Incorporated and Genlyte Thomas Group LLC.
RESULTS OF OPERATIONS
Net sales for 1998 were $664.1 million, increasing by $176.1 million, or
36.1% from 1997. The 1998 results include the operations of the Genlyte
Thomas Group LLC ("Genlyte Thomas") since its formation on August 30, 1998,
which contributed $145.3 million to the higher sales levels. Genlyte holds
a 68% interest in Genlyte Thomas and accounts for it on a fully
consolidated basis. The remaining 32% interest in Genlyte Thomas is held by
Thomas Industries Inc. ("Thomas"). On a comparative basis, total net sales
for all product lines contributed to Genlyte Thomas for the full year
(including for the periods prior to the actual formation of Genlyte Thomas)
were 5.8% higher than 1997. Comparable product line sales for 1997 were
8.3% higher than 1996. The Company primarily serves the commercial,
residential and industrial lighting markets, the strength of which over the
past two years contributed substantially to the sales growth in both years.
New products introduced during both years have also contributed to sales
growth. The new Gullwing in 1998 and Lytening in 1997 were significant
examples of such new products.
Gross profit of the Company increased to $233.8 million in 1998 from $169.4
million in 1997, a 38.0% increase following a $14.7 million or 9.5% growth in
gross profit from 1996 to 1997. Cost of sales decreased to 64.8% of sales in
1998 from 65.3% in 1997 and 66.1% in 1996. This continued trend is the result of
ongoing productivity improvements, reductions in raw material costs, elimination
of excess capacity (two facilities were closed in both 1997 and 1996), and the
elimination of low margin products.
Selling and administrative expenses as a percent of sales decreased to 26.3% in
1998 from 27.0% in 1997 and 27.6% in 1996. The continued reduction in selling
and administrative expense as a percent of sales is a result of maintaining
existing levels of fixed costs to support increased sales, and facility closings
which reduced certain variable costs as well as fixed selling and administrative
expenses. These reductions were partially offset by increased research and
development spending to support a steady flow of innovative new products.
Net interest expense amounted to $3.9 million in 1998, a decrease of .2 million,
or 5.6% from 1997. This follows a decrease in net interest expense of $1.6
million or 27.7% from the 1996 level of $5.6 million. Net interest expense was
lower due to a reduction in interest rates as well as a reduction in average net
borrowings. During August 1998, however, the Company incurred additional debt
and related interest expense with the formation of Genlyte Thomas.
At December 31, 1998, a hypothetical 1% increase in interest rates would result
in a reduction of approximately $630 in pre-tax income. The estimated reduction
is based upon no change in the volume or composition of debt at December 31,
1998.
Minority interest represents the 32% share of Thomas in Genlyte Thomas.
The effective rate of income tax expense was approximately 43% in 1998, 1997,
and 1996.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flows from operations continue to
provide adequate capital to meet operating and capital expenditures. A
condensed consolidated statement of cash flows is as follows:
For the years ended December 31,
(Dollars in thousands) 1998 1997 1996
- -------------------------------------------------------------------------------
EBITDA $ 65,871 $ 49,777 $ 42,998
Interest expense, net (3,857) (4,085) (5,649)
Taxes on income (20,188) (14,423) (9,802)
Working capital, other 5,075 (12,684) 9,888
---------------------------------------
Cash provided by operating activities 46,901 18,585 37,435
Cash used in investing activities, net (15,555) (11,597) (10,405)
Cash used in financing activities, net (24,445) (8,229) (24,398)
---------------------------------------
Increase (decrease) in cash $ 6,901 $ (1,241) $ 2,632
=======================================
15.
<PAGE>
- -----------------------
MANAGEMENT'S DISCUSSION
AND ANALYSIS
- -----------------------
Genlyte Group Incorporated & Subsidiaries
Cash provided by operations increased $28.3 million in fiscal 1998,
reflecting higher net income and an increase in accounts payable and
accrued expenses. Cash provided by operations decreased $18.9 million in
fiscal 1997 mainly due to an increase in accounts receivable, other current
assets and other assets from 1996.
The Company had working capital of $180 million at December 31, 1998,
approximately $62 million of which was assumed in the formation of Genlyte
Thomas. The Company had working capital of $82 million at December 31,
1997.
The Company's ratio of total debt to total capitalization was 27.4, 24.0
and 33.3 percent at December 31, 1998, 1997 and 1996 respectively, with
total capitalization defined as total debt plus total stockholders'
investment. The increase during 1998 was due to additional debt incurred
with Genlyte Thomas' formation.
Genlyte Thomas entered into a $125 million revolving credit agreement with
various banks in August 1998. This replaced a $100 million agreement held
by Genlyte. At December 31, 1998 Genlyte Thomas had $28 million in
borrowings and $19 million in outstanding letters of credit.
YEAR 2000 ISSUES
All divisions in the Company have established and are in the process of
executing plans to prepare the Company's information technology (IT)
systems and non-information technology systems with embedded technology
(ET) for the year 2000 issue. These plans encompass the use of both
internal and external resources to identify, correct and test systems for
year 2000 readiness. External resources include nationally recognized
consulting firms and other specialized technology resource providers.
The identification and documentation of affected IT and ET components is
substantially complete. This inventory includes mainframe hardware and
software, personal computer hardware and software, communications hardware
and software, and various other devices controlled by ET (security systems,
telephone systems, HVAC systems, manufacturing machinery, etc.) which may
contain date processing functions. The assessment of this inventory with
regard to year 2000 readiness is currently underway. The Company has
determined or plans to determine the status of these components with regard
to year 2000 readiness by contacting third party providers of these
components or performing analyses utilizing internal or external resources.
All components identified to date as non-year 2000 compliant have either
been made compliant or are in the process of being replaced or upgraded to
be made compliant.
The Company is also currently addressing the year 2000 readiness of third
parties whose business interruption could have a material negative impact
on the Company's business. These parties include customers, raw material
vendors and other service providers. Customers, vendors and service
providers have or will be contacted to determine their readiness.
Through December 31, 1998 the Company has spent $1.9 million on external
resources, hardware and software required to address the year 2000 issue.
It is estimated that an additional $2.4 million will be spent in 1999 to
attain substantial year 2000 readiness.
Several divisions of the Company plan to replace customer service
information systems which are not year 2000 compliant with systems that are
year 2000 compliant. The inherent complexity of these systems makes the
exact implementation dates of the replacement systems somewhat uncertain.
In order to compensate for this uncertainty, the Company is in the process
of developing and, in some cases, executing, contingency plans for the
possibility that the existing customer service systems targeted for
replacement would fail before the implementation of the new systems. These
contingency plans involve handling certain business transactions outside
the system as well as correcting problems with existing systems. A portion
of the estimated additional expenditures above is for the planning and
execution of these contingency plans. The amount of the estimated
additional expenditures may increase or decrease depending on whether the
execution of additional contingency plans is deemed necessary and whether
contingency plans currently being executed are deemed no longer necessary.
Despite diligent preparation, unanticipated third-party failures, more
general public infrastructure failures or failure to successfully conclude
the Company's remediation efforts as planned could have a material adverse
impact on results of operations, financial condition and/or cash flows in
1999 and beyond.
However, management believes the execution of this plan will not cause
significant disruptions in the Company's business.
The statements contained in the foregoing year 2000 readiness disclosure
are subject to certain protection under the Year 2000 Information and
Readiness Disclosure Act.
FORWARD-LOOKING STATEMENTS
The forward-looking statements made by the Company are based on estimates
which the Company believes are reasonable. This means that the Company's
actual results could differ materially from such estimates as a result of
being negatively affected as described above or otherwise positively
affected.
16.
<PAGE>
-----------------------------------------
REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
-----------------------------------------
Genlyte Group Incorporated & Subsidiaries
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, 1998 and 1997, and the related consolidated statements of income,
stockholders' investment and cash flows for each of the three years in the
period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits 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
overall financial statement presentation. We believe that our audits
provide 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, 1998 and 1997, and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
- --------------------------------------------
Arthur Andersen LLP
Louisville, Kentucky, February 10, 1999
-----------------------------------------
CONSOLIDATED
STATEMENTS OF INCOME
-----------------------------------------
Genlyte Group Incorporated & Subsidiaries
For the years ended December 31,
---------------------------------------
Amounts in thousands, except per share data 1998 1997 1996
- --------------------------------------------------------------------------------
Net sales $ 664,095 $ 487,961 $ 456,860
Cost of sales 430,327 318,556 302,138
---------------------------------------
Gross profit 233,768 169,405 154,722
Selling and administrative expenses 174,478 131,784 126,274
---------------------------------------
Operating profit 59,290 37,621 28,448
Interest expense, net 3,857 4,085 5,649
Minority interest 8,485 - -
---------------------------------------
Income before income taxes 46,948 33,536 22,799
Income tax provision 20,188 14,423 9,802
---------------------------------------
Net income $ 26,760 $ 19,113 $ 12,997
=======================================
Earnings per share:
Basic $ 1.96 $ 1.46 $ 1.01
Diluted $ 1.95 $ 1.42 $ 1.00
The accompanying notes are an integral part of these consolidated financial
statements.
17.
<PAGE>
- -----------------------------------------
CONSOLIDATED
BALANCE SHEETS
- -----------------------------------------
Genlyte Group Incorporated & Subsidiaries
As of December 31,
--------------------------
Amounts in thousands, except share data 1998 1997
- --------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 8,555 $ 1,654
Accounts receivable (less
allowances for doubtful accounts
of $10,907 and $6,864, respectively) 146,167 73,220
Inventories 137,004 80,847
Other current assets 25,520 18,385
--------------------------
Total current assets 317,246 174,106
Plant and equipment, at cost:
Land 7,290 4,286
Buildings and leasehold interests
and improvements 82,856 55,570
Machinery and equipment 218,886 153,285
--------------------------
Total plant and equipment 309,032 213,141
Less: accumulated depreciation
and amortization 203,353 153,523
--------------------------
Net plant and equipment 105,679 59,618
Cost in excess of net assets of
acquired businesses 57,944 12,434
Other assets 20,733 7,870
--------------------------
Total assets $ 501,602 $ 254,028
==========================
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Short-term borrowings $ 1,932 $ -
Accounts payable 73,852 49,433
Accrued expenses and current
portion of long-term debt 61,430 42,712
--------------------------
Total current liabilities 137,214 92,145
Long-term debt 60,852 32,785
Deferred income taxes 30,293 6,828
Minority interest 84,649 -
Other liabilities 22,362 18,541
--------------------------
Total liabilities 335,370 150,299
STOCKHOLDERS' INVESTMENT
Common stock ($.01 par value, 30,000,000
shares authorized; 13,648,290 and
13,502,090 shares issued, respectively;
13,535,548 and 13,389,313 shares
outstanding, respectively) 136 135
Additional paid-in capital 16,207 12,891
Retained earnings 120,526 93,766
Accumulated other comprehensive income 29,363 (3,063)
--------------------------
Total stockholders' investment 166,232 103,729
--------------------------
Total liabilities and stockholders' investment $ 501,602 $ 254,028
==========================
The accompanying notes are an integral part of these consolidated financial
statements.
18.
<PAGE>
-----------------------------------------
CONSOLIDATED STATEMENTS
OF CASH FLOWS
-----------------------------------------
Genlyte Group Incorporated & Subsidiaries
For the years ended December 31,
------------------------------------
Amounts in thousands 1998 1997 1996
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 26,760 $ 19,113 $ 12,997
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 15,066 12,156 14,550
Loss (gain) from disposal of plant
and equipment 259 (237) 41
Changes in assets and liabilities,
net of effect of formation of Genlyte
Thomas (See Note 3):
(Increase) decrease in:
Accounts receivable (5,432) (8,184) (3,012)
Inventories 65 152 (4,778)
Other current assets (3,575) (3,476) (2,359)
Other assets (5,490) (6,408) 1,423
Increase (decrease) in:
Accounts payable and
accrued expenses 9,866 (328) 18,419
Deferred income taxes 1,689 3,460 (1,294)
Minority interest 5,412 - -
Other liabilities 2,521 1,897 1,357
Minimum pension liability (732) - -
All other, net 492 440 91
------------------------------------
Net cash provided by operating activities 46,901 18,585 37,435
------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition, net of cash acquired 1,881 - -
Purchases of plant and equipment,
net of disposals (17,436) (11,597) (10,405)
------------------------------------
Net cash used in investing activities (15,555) (11,597) (10,405)
------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock options exercised 3,317 1,770 994
Decrease in debt, net (26,703) (9,062) (25,284)
------------------------------------
Net cash used in financing activities (23,386) (7,292) (24,290)
------------------------------------
Effect of exchange rate changes
on cash and cash equivalents (1,059) (937) (108)
------------------------------------
Net increase (decrease) in cash and
cash equivalents 6,901 (1,241) 2,632
Cash and cash equivalents at
beginning of year 1,654 2,895 263
------------------------------------
Cash and cash equivalents at end
of year $ 8,555 $ 1,654 $ 2,895
------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 4,057 $ 3,256 $ 5,286
Income taxes $ 18,445 $ 20,350 $ 9,853
The accompanying notes are an integral part of these consolidated financial
statements.
19.
<PAGE>
- -----------------------------------------
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' INVESTMENT
- -----------------------------------------
Genlyte Group Incorporated & Subsidiaries
<TABLE>
<CAPTION>
For the years ended December 31, 1998, 1997, and 1996
--------------------------------------------------------------------
Accumulated Other Total
Common Additional Retained Comprehensive Stockholders'
Amounts in thousands Stock Paid-in Capital Earnings Income Investment
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995 $ 129 $ 10,133 $ 61,656 $ (2,018) $ 69,900
Net income - - 12,997 - 12,997
Foreign currency translation
adjustments - - - (108) (108)
--------------------------------------------------------------------
Total comprehensive income - - 12,997 (108) 12,889
Stock options exercised 2 992 - - 994
--------------------------------------------------------------------
Balance, December 31, 1996 $ 131 $ 11,125 $ 74,653 $ (2,126) $ 83,783
Net income - - 19,113 - 19,113
Foreign currency translation
adjustments - - - (937) (937)
--------------------------------------------------------------------
Total comprehensive income - - 19,113 (937) 18,176
Stock options exercised 4 1,766 - - 1,770
--------------------------------------------------------------------
Balance, December 31, 1997 $ 135 $ 12,891 $ 93,766 $ (3,063) $ 103,729
NET INCOME - - 26,760 - 26,760
GAIN ON FORMATION OF GENLYTE
THOMAS, BEFORE TAX - - - 56,984 56,984
RELATED TAX EFFECT - - - (22,767) (22,767)
--------------------------------------------------------------------
GAIN ON FORMATION OF GENLYTE
THOMAS, AFTER TAX - - - 34,217 34,217
MINIMUM PENSION LIABILITY,
BEFORE TAX - - - 1,220 1,220
RELATED TAX EFFECT - - - (488) (488)
--------------------------------------------------------------------
MINIMUM PENSION LIABILITY,
AFTER TAX - - - (732) (732)
FOREIGN CURRENCY TRANSLATION
ADJUSTMENTS - - - (1,059) (1,059)
--------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME - - 26,760 32,426 59,186
STOCK OPTIONS EXERCISED 1 3,316 - - 3,317
--------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 $ 136 $ 16,207 $ 120,526 $ 29,363 $ 166,232
====================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
20.
<PAGE>
------------------------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
------------------------------------------
Genlyte Group Incorporated & Subsidiaries
Amounts in thousands except per share data
Note: Throughout these notes, the term "Company" as used herein refers to The
Genlyte Group Incorporated including the consolidated results of The Genlyte
Group Incorporated and Genlyte Thomas Group LLC operations.
(1) DESCRIPTION OF BUSINESS
The Genlyte Group Incorporated, a Delaware corporation ("Genlyte") is a United
States based multinational corporation. The Company designs, manufactures, and
sells lighting fixtures and controls for a wide variety of applications in the
commercial, industrial, and residential markets. The Company's products are
marketed primarily to distributors who resell the products for use in
residential, commercial, and industrial construction and remodeling.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial statements
include the accounts of Genlyte and all consolidated subsidiaries, after
elimination of intercompany accounts and transactions. These statements include
the accounts of Genlyte Thomas Group LLC (Genlyte Thomas) as of December 31,
1998 and for the period from inception, August 30, 1998 through December 31,
1998. See Note 3 regarding the formation of Genlyte Thomas. Non-consolidated
affiliates are accounted for using the equity method, under which Genlyte's
share of these affiliates' earnings is included in income as earned.
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.
The Company operates in a highly competitive business environment, and its sales
could be negatively affected by its inability to maintain or increase prices,
changes in geographic or product mix or the decision of its customers to
purchase competitive products instead of the Company's products. Sales could
also be affected by pricing, purchasing, financing, operational, advertising or
promotional decisions made by purchasers of the Company's products.
As the Company's business continues to expand outside the United States, the
Company could experience changes in its ability to obtain or hedge against
foreign currency rates and fluctuations in those rates. The Company could also
be affected by nationalizations; unstable governments, economies, or legal
systems; or intergovernmental disputes. These currency, economic and political
uncertainties may affect the Company's results.
CASH EQUIVALENTS: The Company considers all highly liquid investments with a
maturity of three months or less to be cash equivalents.
INVENTORIES: Inventories are stated at the lower of cost or market and include
materials, labor and overhead. Inventories at December 31, consisted of the
following:
1998 1997
---------------------------------
Raw materials and supplies $ 43,167 $ 32,324
Work in process 14,529 5,613
Finished goods 79,308 42,910
---------------------------------
Total inventories $ 137,004 $ 80,847
=================================
Inventories valued using the last-in, first-out ("LIFO") method represented
approximately 89% of total inventories at December 31, 1998. Inventories not
valued at LIFO (primarily inventories of Canadian operations) are valued using
the first-in, first-out ("FIFO") method. All inventories were valued using the
FIFO method at December 31, 1997.
During 1998, the Company changed its method of accounting for certain
inventories from the FIFO method to the LIFO method. This change, applied
prospectively from the date of the change, was made to have a consistent method
throughout the U.S. operations because the Thomas Lighting U.S. inventories, now
consolidated with Genlyte through the Genlyte Thomas Group LLC, are valued using
the LIFO method. This change increased net income by $507 or $.04 per diluted
share.
On a FIFO basis, which approximates current cost, inventories would have been
$2,350 lower than reported at December 31, 1998.
ADVERTISING COSTS: The Company expenses advertising costs principally as
incurred. Certain catalog and literature costs are amortized over their useful
lives, generally 2 - 3 years.
Plant and Equipment: The Company provides for depreciation of plant and
equipment principally on a straight-line basis over the estimated useful lives
of the assets. Useful lives vary 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 statements of income.
21.
<PAGE>
- -----------------------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
- -----------------------------------------
Genlyte Group Incorporated & Subsidiaries
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
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 ACQUIRED 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
$75,466 as of December 31, 1998 and $10,516 as of December 31, 1997, is being
amortized on a straight-line basis over periods ranging from 20 to 40 years.
Accumulated amortization was $22,445 as of December 31, 1998 and $3,262 as of
December 31, 1997.
The Company periodically evaluates these intangible assets using discounted cash
flows to assess recoverability from future operations. An impairment would be
recognized as expense if a permanent diminution in value occurred. In the
opinion of management, no material diminution in value has occurred during the
periods presented in these consolidated financial statements.
RESEARCH AND DEVELOPMENT COSTS: Research and development costs are expensed
as incurred. These expenses were $7,237 in 1998, $5,195 in 1997 and $4,475
in 1996.
TRANSLATION OF FOREIGN CURRENCIES: Balance sheet accounts of foreign
subsidiaries are translated into U.S. dollars at the rates of exchange in effect
as of the balance sheet date. The cumulative effects of such adjustments were
$4,122 and $3,063 at December 31, 1998 and 1997, respectively, and have been
charged to the cumulative foreign currency translation adjustment component of
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.
FAIR VALUE OF FINANCIAL INSTRUMENTS: The carrying amount of cash equivalents,
short-term borrowings and long-term debt approximate fair value.
OTHER: Certain prior year amounts have been reclassified to conform to the
current year presentation.
(3) FORMATION OF GENLYTE THOMAS GROUP LLC
On August 30, 1998, Genlyte and Thomas Industries Inc. ("Thomas") completed the
combination of the business of Genlyte with the lighting business of Thomas
("Thomas Lighting"), in the form of a limited liability company named Genlyte
Thomas Group LLC ("Genlyte Thomas"). Genlyte Thomas manufactures, sells,
markets, and distributes consumer, commercial, industrial, and outdoor lighting
fixtures and controls. Genlyte contributed substantially all of its assets and
liabilities to Genlyte Thomas and received a 68% interest in Genlyte Thomas.
Thomas contributed substantially all of its assets and certain related
liabilities comprising Thomas Lighting and received a 32% interest in Genlyte
Thomas. The percentage interests in Genlyte Thomas issued to Genlyte and Thomas
were based on arms-length negotiations between the parties with the assistance
of their financial advisers.
For accounting purposes, Genlyte's majority ownership of Genlyte Thomas requires
the assets and liabilities contributed by Thomas to Genlyte Thomas to be valued
at their fair values in Genlyte Thomas' consolidated financial statements. The
fair values attributed to the Thomas assets and liabilities 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 Genlyte Thomas' opening balance sheet are subject to change. The
assets contributed by Genlyte to Genlyte Thomas are reflected at their
historical cost.
To the extent the actual net working capital contributed by Thomas Lighting
exceeded the target net working capital, Genlyte Thomas paid Thomas the
difference of approximately $34,000. The target net working capital was
determined by a formula that took into consideration Genlyte's adjusted net
working capital, Thomas Lighting's net working capital, and Genlyte's net
working capital as a percentage of net sales as of August 30, 1998.
Subject to the provisions in the Genlyte Thomas Group LLC Agreement ("the LLC
Agreement") regarding mandatory distributions described below, and the
requirement of special approval in certain instances, distributions to Genlyte
and Thomas ("the Partners"), respectively, will be made at such time and in such
amounts as determined by the Genlyte Thomas Management Board and shall be made
in cash or other property in proportion to the Partners' respective percentage
interests. Notwithstanding anything to the contrary provided in the LLC
Agreement, no distribution under the LLC Agreement shall be permitted to the
extent prohibited by Delaware law.
The LLC Agreement requires that Genlyte Thomas make the following distributions
to the Partners:
(i) a distribution to each Partner, based on its percentage interest, for tax
liabilities attributable to its participation as a Partner of Genlyte Thomas
based upon the effective tax rate of the Partner having the highest tax rate;
and
22.
<PAGE>
-----------------------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
-----------------------------------------
Genlyte Group Incorporated & Subsidiaries
(3) FORMATION OF GENLYTE THOMAS GROUP LLC (CONT.)
(ii) subject to the provisions of Delaware law and the terms of the primary
Genlyte Thomas credit facility, distributions (exclusive of the tax
distributions set forth above) to each of the Partners so that Thomas receives
at least an aggregate of $3,000 and Genlyte receives at least an aggregate of
$6,375 per fiscal year beginning in fiscal year 1999.
The formation of Genlyte Thomas and the contribution of the net assets of
Genlyte and Thomas Lighting to Genlyte Thomas in exchange for Genlyte's and
Thomas' respective interests in Genlyte Thomas described above is referred to
herein as the "Transaction."
Concurrent with the formation of Genlyte Thomas, Genlyte has recognized a
one-time after-tax gain on the Transaction, which represents the excess of the
fair market value of Thomas Lighting's contributed net assets over the
historical book value of Genlyte's contributed net assets, net of deferred
income taxes (as set forth in the table below):
68 percent of the fair value of
Thomas Lighting $ 94,547
32 percent of the historical book value of
Genlyte's net assets contributed to
Genlyte Thomas 37,563
Deferred income taxes 22,767
--------------
After-tax gain recognized on the formation
of Genlyte Thomas by Genlyte $ 34,217
==============
On an unaudited pro forma basis (assuming the Transaction described above had
occurred at the beginning of 1998 and 1997), the results would have been:
1998 1997
----------------------------------
Net sales $ 929,123 $ 878,599
Net income 26,334 19,277
Earnings per share $ 1.92 $ 1.43
----------------------------------
The pro forma results do not purport to be indicative of what Genlyte's 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 operations for any future period.
(4) EARNINGS PER SHARE
During the fourth quarter of 1997, Genlyte adopted Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128"). SFAS No.
128 requires the presentation of basic earnings per share and diluted earnings
per share. "Basic earnings per share" represents net income divided by the
weighted-average number of common shares outstanding during the period. "Diluted
earnings per share" represents net income divided by the weighted-average number
of common shares outstanding during the period, adjusted for the incremental
dilution of outstanding stock options, and is consistent with Genlyte's
historical presentation.
1998 1997 1996
- --------------------------------------------------------------------------------
Average common shares outstanding 13,671 13,127 12,859
Incremental common shares issuable:
Stock option plans 19 309 196
---------------------------------------
Average common shares
outstanding assuming dilution 13,690 13,436 13,055
=======================================
(5) INCOME TAXES
The components of income before
income taxes and the provisions
for income taxes were as follows:
1998 1997 1996
- --------------------------------------------------------------------------------
Income before income taxes:
Domestic $ 41,867 $ 29,771 $ 19,277
Foreign 5,081 3,765 3,522
---------------------------------------
$ 46,948 $ 33,536 $ 22,799
=======================================
Provision (benefit)
for income taxes:
Domestic:
Currently payable $ 18,457 $ 16,427 $ 11,332
Deferred (329) (3,411) (2,857)
Foreign:
Currently payable 1,871 1,538 1,475
Deferred 189 (131) (148)
---------------------------------------
$ 20,188 $ 14,423 $ 9,802
=======================================
23.
<PAGE>
- -----------------------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
- -----------------------------------------
Genlyte Group Incorporated & Subsidiaries
(5) INCOME TAXES (CONT.)
Undistributed earnings of non-U.S. subsidiaries included in consolidated
retained earnings amounted to $26,857 at December 31, 1998. These earnings,
which reflected full provision for non-U.S. income taxes, are indefinitely
reinvested in non-U.S. operations or will be remitted substantially free of
additional tax. Accordingly, no provision has been made for taxes that may be
payable upon remittance of such earnings.
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 were as follows:
1998 1997 1996
- --------------------------------------------------------------------------------
Depreciation $ 439 $ (1,308) $ (1,083)
Inventory valuation (82) (1,779) 410
Pension accruals 79 (293) (118)
Bad debt reserve (1,021) 622 (1,259)
Other accruals/reserves 237 (1,046) (850)
Intangible asset amortization 19 393 43
------------------------------------
Total domestic deferred tax benefit $ (329) $ (3,411) $ (2,857)
In 1998, 1997 and 1996, Genlyte's effective tax rate was 43% 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:
1998 1997 1996
- --------------------------------------------------------------------------------
Statutory federal rate $ 16,432 $ 11,738 $ 7,979
State & local taxes,
net of federal tax benefits 2,168 1,760 1,334
Other, net 1,588 925 489
------------------------------------
Total provision for income taxes $ 20,188 $ 14,423 $ 9,802
====================================
(6) LONG-TERM DEBT
Long-term debt at December 31 consisted of the following:
1998 1997
- --------------------------------------------------------------------------------
Revolving credit notes $ 28,000 $ 22,000
Industrial revenue bonds 10,500 10,500
Loan payable to Thomas 22,287 -
Other 267 343
-----------------------
$ 61,054 $ 32,843
Less: current maturities 202 58
-----------------------
Total $ 60,852 $ 32,785
=======================
Genlyte Thomas entered into a $125,000 revolving credit agreement (the
"Facility") with various banks in August 1998 that matures in 2003. Under the
most restrictive borrowing covenant, which is the fixed charge coverage ratio,
Genlyte Thomas is allowed $29,000 in fixed charges. Genlyte Thomas could incur
approximately $25,000 in additional fixed charges. Total borrowings under the
Facility as of December 31, 1998 were $28,000. Outstanding borrowings bear
interest at the option of the borrower, based on the bank's base rate or the
LIBOR rate plus a spread determined by the Facility. The borrowings have been
classified as long-term because of Genlyte Thomas' intention to refinance these
obligations on a long-term basis through its revolving credit agreement. In
addition, Genlyte Thomas has outstanding approximately $19,000 of letters of
credit, which reduce the amount available to borrow under the Facility.
The amount outstanding under the Facility is secured by liens on domestic
accounts receivable, inventories, and machinery and equipment, as well as the
investments in certain subsidiaries of Genlyte Thomas. The value of assets
subject to lien at December 31, 1998 was $297,284.
24.
<PAGE>
-----------------------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
-----------------------------------------
Genlyte Group Incorporated & Subsidiaries
(6) LONG-TERM DEBT (CONT.)
Genlyte Thomas has $10,500 of variable rate demand Industrial Revenue Bonds that
mature during 2009 to 2010. The average borrowing rate on these bonds was 3.5%
in 1998 and 4.0% in 1997. These bonds are backed by the letters of credit
mentioned above.
The loan payable to Thomas accrues interest quarterly based on the 90 day LIBOR
rate plus a spread as determined by the Facility. This loan can be prepaid in
whole or in part without penalty, ultimately maturing in 2003.
The annual maturities of long-term debt are summarized as follows:
Year ending December 31
- ---------------------------------------------------
1999 $ 202
2000 65
2001 -
2002 -
2003 50,287
Thereafter 10,500
-----------
Total long-term debt $ 61,054
===========
(7) STOCK OPTIONS
The Genlyte 1998 Stock Option Plan (the "Plan") was established for the benefit
of key employees and directors of Genlyte and its affiliates. The Plan replaced
the 1988 stock option plan, options under which are currently outstanding. 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 lesser of 1,700,000 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. Options became exercisable at
the rate of 50% per year commencing two years after the date of the grant.
Transactions under the 1998 and 1988 Stock Option Plans are summarized below:
Option or Exercise
Price per Share
-------------------------------
Weighted
Shares Low High Average
- --------------------------------------------------------------------------------
Outstanding December 31, 1995 1,078,715 4.53 7.63 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
Granted 179,000 11.50 18.00 16.71
Exercised (396,031) 4.53 7.63 5.07
Canceled (93,992) 4.53 14.50 6.54
Outstanding December 31, 1997 710,950 4.56 18.00 9.63
Granted 235,960 16.25 25.75 20.03
Exercised (146,950) 4.56 10.25 6.27
Canceled (44,625) 4.75 21.98 13.54
OUTSTANDING DECEMBER 31, 1998 755,335 4.56 25.75 13.30
Exercisable at End of Year
December 31, 1996 247,631 4.53 6.25 4.93
December 31, 1997 203,450 4.56 7.63 6.31
DECEMBER 31, 1998 369,125 4.75 10.25 7.72
25.
<PAGE>
- -----------------------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
- -----------------------------------------
Genlyte Group Incorporated & Subsidiaries
(7) STOCK OPTIONS (CONT.)
The weighted average fair values of options granted in 1998, 1997 and 1996 were
$10.05, $7.42 and $4.12, respectively. The options outstanding at December 31,
1998 have a weighted average remaining contractual life of 3.9 years.
The fair value of these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following assumptions:
1998 1997 1996
- --------------------------------------------------------
Risk free interest rate 4.74% 5.89% 6.34%
Expected life, in years 5.9 5.0 5.0
Expected volatility 45.6 45.8 45.8
Expected dividends - - -
The Black-Scholes pricing model was developed for use in estimating the fair
value of non-traded options that have a seven- year vesting restriction. In
addition, option valuation models require the input of highly subjective
assumptions, including the expected stock price volatility. Because Genlyte's
stock options have characteristics different from those of traded options, and
changes in the subjective assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measurement of the fair value of Genlyte's stock
options.
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 Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123"), the Company's net
income and earnings per share would have been reduced to the pro forma amounts
below.
Because the 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.
1998 1997 1996
- --------------------------------------------------------------------------------
Net income As reported $ 26,760 $ 19,113 $ 12,997
Pro forma $ 25,431 $ 18,610 $ 12,658
Earnings per share - basic As reported $ 1.96 $ 1.46 $ 1.01
Pro forma $ 1.86 $ 1.42 $ 0.98
Earnings per share - diluted As reported $ 1.95 $ 1.42 $ 1.00
Pro forma $ 1.86 $ 1.38 $ 0.97
(8) PREFERRED STOCK PURCHASE RIGHTS
In August 1989, Genlyte declared a dividend of one preferred stock purchase
right on each share of Genlyte'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") acquires, or commences 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 Genlyte's outstanding common stock, each right would represent the
right to purchase, for $75.00, shares of Genlyte's common stock with a market
value of $150.00. The rights may be redeemed by Genlyte at a price of $.01 per
right and can be amended by Genlyte's Directors during the 10 day period prior
to the exercise date. These rights expire on September 18,1999.
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 Genlyte 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.
26.
<PAGE>
-----------------------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
-----------------------------------------
Genlyte Group Incorporated & Subsidiaries
(9) Retirement Plans
The Company has eight defined benefit plans (excluding four such plans at a
Canadian subsidiary), which cover the majority of its employees. Benefits under
the plans are calculated on years of service; additionally, benefits for
salaried employees are based on a formula including an average salary
calculation, while benefits for union employees are based on fixed amounts for
each year of service. Genlyte Thomas uses September 30 as the measurement date
for the retirement plan disclosure of the five former Genlyte plans and December
31 for the three former Thomas plans. The Company also has other defined
contribution plans, including those covering certain former Genlyte and Thomas
employees. The 1998 contributions for such plans were determined as provided by
the Capitalization Agreement dated April 28, 1998.
The Company's policy for funded plans is to make contributions equal to or
greater than the requirements prescribed by the Employee Retirement Income
Security Act. The plans' assets consist primarily of stocks and bonds. Pension
costs for all Company defined benefit plans are actuarially computed.
The amounts included in the accompanying consolidated balance sheets based on
the funded status of the five defined benefit plans at September 30, 1998 and
1997 follow:
Retirement Benefits
1998 1997
- --------------------------------------------------------------------------------
CHANGE IN BENEFIT OBLIGATIONS
Benefit obligations at October 1, 1997 $ 52,519 $ 46,661
Service cost 1,652 1,483
Interest cost 3,809 3,633
Benefits paid (3,032) (3,027)
Plan amendments 260 504
Other-primarily actuarial loss 4,461 3,265
----------------------------
Benefit obligations at September 30, 1998 $ 59,669 $ 52,519
============================
CHANGE IN PLAN ASSETS
Plan assets at fair value at October 1, 1997 $ 49,457 $ 40,622
Actual return (loss) on plan assets (3,748) 9,646
Employer contributions 2,414 2,216
Benefits paid (3,032) (3,027)
----------------------------
Plan assets at fair value at September 30, 1998 $ 45,091 $ 49,457
============================
FUNDED STATUS OF THE PLANS
Plan assets (less than) benefit obligations $ (14,578) $ (3,062)
Unrecognized transition obligation at adoption 381 559
Unrecognized actuarial (gain) loss 332 (11,067)
Unrecognized prior service cost 2,320 2,343
----------------------------
Accrued pension liability $ (11,545) $ (11,227)
============================
BALANCE SHEET ASSETS (LIABILITIES)
Accrued benefit liability $ (14,895) $ (11,227)
Intangible asset 1,840 -
Accumulated other comprehensive income 1,510 -
----------------------------
Net liability recognized $ (11,545) $ (11,227)
============================
1998 1997
- --------------------------------------------------------------------------------
ASSUMPTIONS AS OF SEPTEMBER 30, 1998
Discount rate 6.75% 7.50%
Rate of compensation increase 5.00% 5.00%
Expected return on plan assets 8.50% 8.50%
1998 1997 1996
- --------------------------------------------------------------------------------
COMPONENTS OF NET PERIODIC BENEFIT COSTS
Service cost $ 1,652 $ 1,483 $ 1,278
Interest cost 3,809 3,633 3,358
Expected return on plan assets (3,196) (2,895) (3,991)
Amortization of prior service cost 287 269 -
Recognized actuarial loss 191 178 1,771
------------------------------------------
Net pension expense of defined
benefit plan $ 2,743 $ 2,668 $ 2,416
------------------------------------------
Multi-employer plans for certain
union employees 136 211 344
------------------------------------------
Total benefit costs $ 2,879 $ 2,879 $ 2,760
==========================================
27.
<PAGE>
- ------------------------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
- ------------------------------------------
Genlyte Group Incorporated & Subsidiaries
(9) RETIREMENT PLANS (CONT.)
A summary of the plans in which benefit obligations and accumulated benefit
obligations exceed fair value of assets follows:
1998 1997
- ---------------------------------------------------------------------------
Benefit obligation $ 59,669 $ 11,891
Accumulated benefit obligation $ 52,010 $ 11,754
Plan assets at fair value $ 45,091 $ 7,387
The Company provides post-retirement medical and life insurance benefits for
certain former Thomas retirees and employees, and accrues the cost of such
benefits during the service lives of such employees. A one-percentage-point
change in the assumed healthcare cost trend rate would have approximately a $300
effect on the post-retirement benefit obligation and an insignificant effect on
the post-retirement benefit expense.
The amounts included in the accompanying consolidated balance sheets for the
three defined benefit plans and post-retirement benefit plans assumed from
Thomas by Genlyte Thomas and based on the funded status at December 31, 1998
follow:
Retirement Post-Retirement
Benefits Benefits
1998 1998
- --------------------------------------------------------------------------------
CHANGE IN BENEFIT OBLIGATIONS
Benefit obligations at January 1, 1998 $ - $ -
Service cost 137 8
Interest cost 472 83
Benefits paid (404) (166)
Obligations assumed by Genlyte Thomas 21,223 3,638
Other-primarily actuarial loss - 94
---------------------------
Benefit obligations at December 31, 1998 $ 21,428 $ 3,657
===========================
CHANGE IN PLAN ASSETS
Plan assets at fair value at January 1, 1998 $ - $ -
Actual return on plan assets 3,967 -
Employer contributions 45 166
Benefits paid (404) (166)
Assets assumed by Genlyte Thomas 20,203 -
---------------------------
Plan assets at fair value at December 31, 1998 $ 23,811 $ -
===========================
FUNDED STATUS OF THE PLANS
Plan assets in excess of (less than)
benefit obligations $ 2,383 $ (3,657)
Unrecognized net obligation at adoption 106 3,008
Unrecognized actuarial (gain) (1,475) (973)
Unrecognized prior service cost 1,697 -
---------------------------
Prepaid pension asset (post-retirement liability) $ 2,711 $ (1,622)
===========================
BALANCE SHEET ASSETS (LIABILITIES)
Prepaid benefit costs $ 1,603 $ -
Accrued benefit liabilities (13) (1,622)
Intangible assets 1,121 -
---------------------------
Net asset (liability) recognized $ 2,711 $ (1,622)
===========================
ASSUMPTIONS AS OF DECEMBER 31,1998
Discount rate 6.75% 6.75%
Expected return on plan assets 9.00% -
Initial health care cost trend rate - 8.00%
Ultimate health care cost trend rate - 4.50%
Year ultimate trend rate is achieved - 2006
28.
<PAGE>
-----------------------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
-----------------------------------------
Genlyte Group Incorporated & Subsidiaries
(9) RETIREMENT PLANS (CONT.)
Post-
Retirement Retirement
Benefits Benefits
1998 1998
- --------------------------------------------------------------------------------
COMPONENTS OF NET PERIODIC BENEFIT COSTS
Service cost $ 137 $ 8
Interest cost 472 83
Expected return on plan assets (604) -
Amortization of transition amount 18 -
Amortization of prior service cost 58 -
Recognized actuarial loss 11 69
--------------------------
Net pension expense of defined benefit plan 92 $ 160
==========
Defined contribution plans 720
Multi-employer plans for certain union employees 71
-----
Total benefit costs $ 883
=====
The Company also maintains four defined benefit plans covering substantially all
the employees of a Canadian subsidiary. The amounts included in the accompanying
consolidated balance sheets, based on the funded status of these plans at
December 31, 1998, and 1997 follow:
Retirement Benefits
1998 1997
- -------------------------------------------------------------------------------
CHANGE IN BENEFIT OBLIGATIONS
Benefit obligations at January 1, 1998 $ 3,750 $ 3,559
Service cost 211 142
Interest cost 295 300
Benefit payments (258) (293)
Plan amendment - 73
Other-primarily actuarial (gain) loss 564 (31)
------------------------
Benefit obligations at December 31, 1998 $ 4,562 $ 3,750
========================
CHANGE IN PLAN ASSETS
Plan assets at fair value at January 1, 1998 $ 4,737 $ 4,219
Actual return on plan assets 338 751
Employer contributions 178 180
Member contributions 135 120
Benefits paid (258) (293)
Other (100) (240)
------------------------
Plan assets at fair value at December 31, 1998 $ 5,030 $ 4,737
========================
FUNDED STATUS OF THE PLAN
Plan assets in excess of benefit obligations $ 468 $ 987
Unrecognized actuarial (gain) loss (54) (390)
Unrecognized transition obligation (36) (40)
Unrecognized prior service cost (78) (84)
------------------------
Prepaid pension asset at December 31, 1998 $ 300 $ 473
========================
ASSUMPTIONS AS OF DECEMBER 31, 1998
Discount rate 6.5% 8.0%
Rate of compensation increase 4.0% 5.0%
Expected return on plan assets 6.5% 8.0%
1998 1997 1996
- -------------------------------------------------------------------------------
COMPONENTS OF NET PERIODIC BENEFIT COSTS
Service cost $ 211 $ 142 $ 145
Interest cost 295 300 264
Expected return on plan assets (315) (368) (312)
Amortization of transition amounts (5) (6) (4)
Amortization of prior service cost 5 5 1
Recognized actuarial (gain) loss 2 (1) -
-------------------------------------
Net benefit costs $ 193 $ 72 $ 94
=====================================
29.
<PAGE>
- -----------------------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
- -----------------------------------------
Genlyte Group Incorporated & Subsidiaries
(10) ACCRUED EXPENSES
Accrued expenses at December 31 consisted of the following:
1998 1997
--------------------------------
Salaries, wages, and withholdings $ 13,698 $ 9,933
Employee benefits 16,503 9,290
Advertising and sales promotion 8,168 6,103
Income and other taxes payable 6,075 2,720
Other accrued expenses 16,986 14,676
--------------------------------
Total accrued expenses $ 61,430 $ 42,712
================================
(11) LEASE COMMITMENTS
The Company rents office space, equipment and computers under non-cancelable
operating leases. Rental expense during 1998, 1997 and 1996 amounted to $4,229,
$2,903 and $2,446, respectively. Future required minimum rental payments as of
December 31, 1998 were as follows:
1999 $ 5,330
2000 3,788
2001 2,935
2002 1,131
2003 969
Thereafter 1,941
--------------
Total $ 16,094
==============
(12) 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 set forth in the June 8, 1995
complaint (the "complaint") are substantially the same as were brought against
Genlyte in the U.S. District Court in New York in August 1993, (which original
proceeding was permanently enjoined as a result of Keene's reorganization plan).
The 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 ("Bairnco"). 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 ("RICO").
Following confirmation of the Keene reorganization plan, the parties moved to
withdraw the case from bankruptcy court to the Southern District of New York
Federal District Court. The case is now pending before the Federal District
Court. On October 13, 1998, the Court issued an opinion dismissing certain
counts as to Genlyte and certain other corporate defendants. In particular, the
Court dismissed the count of the complaint against Genlyte which alleged that
the 1988 spin-off was a fraudulent transaction, and the count alleging a
violation of RICO. The Court also denied a motion to dismiss the challenge to
the 1984 transaction on statute of limitations grounds and ruled that the
complaint should not be dismissed for failure to specifically plead fraud. See
note 16 for discussion of events relative to this matter which occurred
subsequent to December 31, 1998.
Genlyte believes that it has meritorious defenses to the adversary proceeding
and will defend said action vigorously.
Additionally, the Company is a defendant and/or potentially responsible party,
with other companies, in actions and proceedings under state and Federal
environmental laws including the Federal Comprehensive Environmental Response
Compensation and Liability Act, as amended ("Superfund"). Management does not
believe that the disposition of the lawsuits and/or proceedings will have a
material effect on the Company's financial condition, results of operations, or
liquidity.
In the normal course of business, the Company is a party to legal proceedings
and claims. When costs can be reasonably estimated, appropriate liabilities for
such matters are recorded. While management currently believes the amount of
ultimate liability, if any, with respect to these actions will not materially
affect the financial condition, results of operations, or liquidity of the
Company, the ultimate outcome of any litigation is uncertain. Were an
unfavorable outcome to occur, the impact could be material to the Company.
30.
<PAGE>
-----------------------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
-----------------------------------------
Genlyte Group Incorporated & Subsidiaries
(13) SEGMENT REPORTING
During the fourth quarter of 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, "Disclosures About Segments of an Enterprise and
Related Information" (SFAS No. 131). SFAS No. 131 establishes standards for
reporting information about operating segments in annual financial statements.
It also establishes standards for related disclosures about products and
services, and geographic areas. Operating segments are defined as components of
an enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker, or decision making
group, in deciding how to allocate resources and in assessing performance. The
Company's reportable operating segments include the Commercial Segment, the
Residential Segment, and the Industrial and Other Segment. Intersegment sales
are eliminated in consolidation and therefore not presented in the table below.
OPERATING SEGMENTS:
Industrial
1998 Commercial Residential and Other Total
- --------------------------------------------------------------------------------
Net sales $ 495,249 $ 96,967 $ 71,879 $ 664,095
Operating profit 47,268 4,979 7,043 59,290
Assets 374,070 73,241 54,291 501,602
Depreciation and amortization 11,235 2,200 1,631 15,066
Expenditures for property 13,003 2,546 1,887 17,436
Industrial
1997 Commercial Residential and Other Total
- --------------------------------------------------------------------------------
Net sales $ 373,123 $ 68,088 $ 46,750 $ 487,961
Operating profit 30,602 2,839 4,180 37,621
Assets 194,244 35,446 24,338 254,028
Depreciation and amortization 9,295 1,696 1,165 12,156
Expenditures for property 8,868 1,618 1,111 11,597
Industrial
1996 Commercial Residential and Other Total
- --------------------------------------------------------------------------------
Net sales $ 348,365 $ 65,044 $ 43,451 $ 456,860
Operating profit 24,403 813 3,232 28,448
Assets 181,567 33,901 22,647 238,115
Depreciation and amortization 11,094 2,072 1,384 14,550
Expenditures for property 7,934 1,481 990 10,405
(14) GEOGRAPHICAL INFORMATION
The Company has operations throughout North America. Information about the
Company's operations by geographical area for the years ended December 31, 1998,
1997 and 1996 follows. Foreign balances represent primarily Canada and some
Mexico.
United
1998 States Foreign Total
- --------------------------------------------------------------------------------
Net sales $ 578,308 $ 85,787 $ 664,095
Operating profit 52,807 6,483 59,290
Assets 441,305 60,297 501,602
Depreciation and amortization 12,613 2,453 15,066
Expenditures for property 11,088 6,348 17,436
United
1997 States Foreign Total
- --------------------------------------------------------------------------------
Net sales $ 423,185 $ 64,776 $ 487,961
Operating profit 33,837 3,784 37,621
Assets 224,969 29,059 254,028
Depreciation and amortization 10,254 1,902 12,156
Expenditures for property 9,717 1,880 11,597
United
1996 States Foreign Total
- --------------------------------------------------------------------------------
Net sales $ 396,444 $ 60,416 $ 456,860
Operating profit 25,139 3,309 28,448
Assets 206,829 31,286 238,115
Depreciation and amortization 12,555 1,995 14,550
Expenditures for property 8,539 1,866 10,405
31.
<PAGE>
- -----------------------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
- -----------------------------------------
Genlyte Group Incorporated & Subsidiaries
(15) Quarterly Results of Operations (Unaudited)
Amounts in thousands,
except per share data
Quarter
1998 1st 2nd 3rd 4th Full Year
- --------------------------------------------------------------------------------
Net sales $ 130,124 $ 130,327 $ 174,178 $ 229,466 $ 664,095
Operating profit 11,625 12,339 16,330 18,996 59,290
Net income 6,146 6,475 6,900 7,239 26,760
Earnings per share:
Basic 0.46 0.47 0.50 0.53 1.96
Diluted 0.45 0.47 0.50 0.53 1.95
Market price:
High 20 28 3/8 27 7/8 20 3/4 28 3/8
Low 15 3/4 19 3/4 17 16 15 3/4
Quarter
1997 1st 2nd 3rd 4th Full Year
- --------------------------------------------------------------------------------
Net sales $ 113,298 $ 120,700 $ 123,981 $ 129,982 $ 487,961
Operating profit 7,104 9,386 9,718 11,413 37,621
Net income 3,494 4,689 4,927 6,003 19,113
Earnings per share:
Basic 0.27 0.36 0.38 0.45 1.46
Diluted 0.26 0.35 0.37 0.44 1.42
Market price:
High 14 1/4 14 1/8 19 5/8 21 3/8 21 3/8
Low 9 7/8 10 1/8 12 5/8 15 1/2 9 7/8
(16) SUBSEQUENT EVENT
With respect to the Keene litigation discussed in Note 12, on January 5 and 6,
1999, the Court rendered additional rulings further restricting the claims by
the Trust against Genlyte and other corporate defendants, and dismissing the
claims against all remaining individual defendants except one. The primary
effect of the rulings with respect to claims against Genlyte was to require the
Trust to prove that the 1984 sale of certain lighting assets of Keene was made
with actual intent to defraud present and future creditors of Genlyte's
predecessor.
Discovery, which was stayed since commencement of the action, has now been
authorized by the Court to begin. Genlyte has filed its answer to the complaint
and is in the process of responding to and requesting discovery.
- -----------------------------------------
STOCKHOLDER
INFORMATION
- -----------------------------------------
Genlyte Group Incorporated & Subsidiaries
CORPORATE OFFICES
4360 Brownsboro Road, Suite 300,
P.O. Box 35120, Louisville, KY 40232
INVESTOR RELATIONS
Information and Form 10-K Please call or write the Investor Relations Department
at (502) 893-4640
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
e-mail: [email protected]
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 2300 Meidinger Tower
Louisville, KY 40202
ANNUAL MEETING
The Annual Stockholders' Meeting will be held at 10:00a.m. eastern time on
Wednesday, April 21, 1999, at the Camberley Brown Hotel, 4th and Broadway,
Louisville, KY 40202.
WEB SITE
www.genlyte.com
32.
<PAGE>
- ------------------
BOARD OF DIRECTORS
- ------------------
[PHOTO OMITTED]
AVRUM I. DRAZIN
Chairman
[PHOTO OMITTED]
FRANK METZGER
Director
[PHOTO OMITTED]
DAVID M. ENGELMAN
Director
[PHOTO OMITTED]
LARRY K. POWERS
President & Chief Executive Officer
[PHOTO OMITTED]
FRED HELLER
Director & Chairman Emeritus
THE MANAGEMENT OF GENLYTE WOULD LIKE TO PAY TRIBUTE TO:
[PHOTO OMITTED]
GLENN W. BAILEY
Upon Mr. Bailey's retirement from the Board of Directors, words can not express
the contributions that he has made to this Company. He served as the first
Chairman of the Board and was instrumental in the founding of the Company. Quite
literally, the success of Genlyte is directly attributable to Glenn's
intuitiveness, integrity and persistence. Without his strategic vision and his
exceptional management skills, this Company would not exist as we now know it.
[PHOTO OMITTED]
ROBERT B. CADWALLADER
Mr. Cadwallader, who has served on Genlyte's Board since its inception, is also
retiring as a member. Bobby's influence has made a tremendous impact on the
Company. His valuable counsel and business acumen will be missed, and we want to
thank him for his valuable contributions to Genlyte.
[PHOTO OMITTED]
DONNA R. RATLIFF
Ms. Ratliff has been a key member of the Genlyte management team for many years,
having served as Senior Vice President, Vice President of Administration and
Corporate Secretary, as well as a member of the Executive Committee. With much
regret, Donna elected not to make the move to the new Genlyte headquarters in
Louisville. That regret is shared even more deeply on Genlyte's part. Having
worked her way up through the Company, Donna quickly became one of Genlyte's
most valuable assets. Her wisdom, drive and dedication will be missed by all who
have worked with her.
- -------------------
EXECUTIVE COMMITTEE
- -------------------
[PHOTO OMITTED]
Left to right (seated): Charles M. Havers, Supply Division; Dennis W. Musselman,
Hadco/Bronzelite; Larry K. Powers(o), President and Chief Executive Officer;
Richard J. Crossland, Executive Vice President, Chief Operating Officer; Ronald
D. Schneider, Vice President, Operations. (Standing, l. to r.): George V.
Preston, Day-Brite; Rene Marineau, Canlyte; William G. Ferko(o), Vice President,
Chief Financial Officer and Treasurer; Jean Francois Simard, Lumec; Zia
Eftekhar, Lightolier; Kevin J. Bonawitz, Thomas Lighting; Barry P. Thomson,
Thomas Lighting, Canada; Bill Gendron, Gardco Emco McPhilben; Henry M. Glover,
Wide-Lite; Daniel R. Fuller(o), General Counsel; Raymond L. Zaccagnini(o), Vice
President, Administration and Corporate Secretary; Steven R. Carson, Controls;
Jon Sayah, Forecast; Andy Ashley, Capri Omega.
(o) Also an officer of the Company
<PAGE>
GENLYTE
VISIT US ONLINE@
HTTP://WWW.GENLYTE.COM
4360 Brownsboro Road, Suite 300,
P.O. Box 35120, Louisville, KY 40232
EXHIBIT 18
LETTER RE CHANGE IN ACCOUNTING PRINCIPLES
TO THE GENLYTE GROUP INCORPORATED
This letter is written to meet the requirements of Regulation S-K calling for a
letter from a registrant's independent accountants whenever there has been a
change in accounting principle or practice.
As of August 30, 1998, Genlyte changed from the first-in, first-out method of
accounting for inventory to the last-in, first-out method. According to
management of Genlyte, this change was made to have a consistent method
throughout the U.S. operations because the Thomas Lighting U.S. inventories, now
consolidated with Genlyte through Genlyte Thomas, are valued using the last-in,
first-out method.
A complete coordinated set of financial and reporting standards for determining
the preferability of accounting principles among acceptable alternative
principles has not been established by the accounting profession. Thus, we
cannot make an objective determination of whether the change in accounting
described in the preceding paragraph is to a preferable method. However, we have
reviewed the pertinent factors, including those related to financial reporting,
in this particular case on a subjective basis, and our opinion stated below is
based on our determination made in this manner.
We are of the opinion that Genlyte's change in method of accounting is to an
acceptable alternative method of accounting, which, based upon the reasons
stated for the change and our discussion with you, is also preferable under the
circumstances in this particular case. In arriving at this opinion, we have
relied on the business judgment and business planning of your management.
/s/ ARTHUR ANDERSEN LLP
----------------------------
ARTHUR ANDERSEN LLP
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
The Genlyte Group Incorporated owns 68% of Genlyte Thomas Group LLC. Genlyte
Thomas Group LLC has the following subsidiaries:
1. Canlyte, Inc., a Canadian Corporation
2. Diaman-Mexo, S.A. De C.V., a Mexican Corporation
3. Genlyte Thomas Exports Inc., a Barbados Corporation
4. Lightolier De Mexico, S.A. De C.V., a Mexican Corporation
5. Lumec, Inc., a Canadian Corporation
6. Lumec-Schreder, Inc., a Canadian Corporation (50% owned)
7. Thomas Industries Corporation, a Canadian Corporation
8. Thomas De Mexico, S.A. De C.V., a Mexican Corporation
9. Thomas Schreder Co., a U.S. Partnership (50% owned)
10. Yamada Day-Brite, Ltd., a Japanese Corporation (50% owned)
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent auditors, we hereby consent to the incorporation of (a) our
report dated February 10, 1999 included in The Genlyte Group Incorporated's (the
"Company's") Annual Report to Stockholders for the year ended December 31, 1998
into the Company's Annual Report on Form 10-K for the year ended December 31,
1998 (the "Form 10-K") and (b) our reports dated February 10, 1999 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
Louisville, Kentucky
March 26, 1999
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<ARTICLE> 5
<CIK> 0000833076
<NAME> Genlyte Group Incorporated and Subsidiaries
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 8,555
<SECURITIES> 0
<RECEIVABLES> 146,167
<ALLOWANCES> 10,907
<INVENTORY> 137,004
<CURRENT-ASSETS> 317,246
<PP&E> 309,032
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<TOTAL-ASSETS> 501,602
<CURRENT-LIABILITIES> 137,214
<BONDS> 60,852
0
0
<COMMON> 136
<OTHER-SE> 166,096
<TOTAL-LIABILITY-AND-EQUITY> 501,602
<SALES> 664,095
<TOTAL-REVENUES> 664,095
<CGS> 430,327
<TOTAL-COSTS> 604,805
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,857
<INCOME-PRETAX> 46,948
<INCOME-TAX> 20,188
<INCOME-CONTINUING> 26,760
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<EPS-PRIMARY> 1.96
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</TABLE>
EXHIBIT 99
EMPLOYMENT PROTECTION AGREEMENT
THIS AGREEMENT between The Genlyte Group Incorporated, a Delaware
corporation (the "Corporation"), and _________________("the Executive"), dated
as of the______ day of _________________.
WITNESSETH:
The Board of Directors of the Corporation (the "Board") has determined
that it is in the best interests of the Corporation and its shareholders to
assure that the Corporation will have the continued dedication of the Executive,
notwithstanding the possibility, threat, or occurrence of a Change of Control
(as defined below) of the Corporation. The Board believes it is imperative to
diminish the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control, to
encourage the Executive's full attention and dedication to the Corporation
currently and in the event of any compensation arrangements upon a Change of
Control which provide the Executive with individual financial security and which
are competitive with those of other corporations and, in order to accomplish
these objectives, the Board has authorized the Corporation to enter into this
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Corporation and the
Executive as follows:
1. OPERATION OF AGREEMENT. (a) EFFECTIVE DATE. The effective date
of this Agreement shall be the date on which a Change of Control occurs (the
"Effective Date"), provided that if the Executive is not employed by the
Corporation (or by an entity which is majority-owned by the Corporation,
including any corporation, partnership, joint venture or limited liability
company, herein referred to as "a subsidiary," employment by any being deemed
employment by the Corporation for purposes of this Agreement) on the Effective
Date, this Agreement shall be void and without effect.
(b) TERM. This Agreement shall expire on December 31, 1999,
provided that this Agreement shall automatically be extended for an additional
one year period on the first of day of each calendar year commencing after 1999
unless the Corporation or the Executive shall have given the other party at
least 60 days' prior written notice that it or he does not want the term to be
so extended. Notwithstanding the foregoing, this Agreement shall not expire
earlier than the second anniversary of a Change of Control which occurs before
this Agreement shall have otherwise expired.
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2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change
of Control" shall be deemed to have occurred if: (i) any person (as defined in
Section 3(a)(9) of the Securities Exchange Act of 1934, as amended from time to
time (the "Exchange Act"), and as used in Sections 13(d) and 14(d) thereof),
excluding the Corporation, any majority owned subsidiary of the Corporation (a
"Subsidiary") and any employee benefit plan sponsored or maintained by the
Corporation or any Subsidiary (including any trustee of such plan acting as
trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange
Act (a "Person"), becomes the beneficial owner of shares of the Corporation
having at least 34% of the total number of votes that may be cast for the
election of directors of the Corporation (the "Voting Shares"); (ii) the Board
or the shareholders of the Corporation shall approve any merger or other
business combination of the Corporation, sale of the Corporation's assets or
combination of the foregoing transactions (a "Transaction") other than a
Transaction involving only the Corporation and one or more of its Subsidiaries,
or a Transaction immediately following which the shareholders of the Corporation
immediately prior to the Transaction continue to have a majority of the voting
power in the resulting entity, excluding for this purpose any shareholder owning
directly or indirectly more than 10% of the shares of the other company involved
in the merger; (iii) the Board recommends that the shareholders of the
Corporation tender or exchange their Voting Shares pursuant to a tender or
exchange offer made by a Person; or (iv) within any 24-month period beginning on
or after March 31, 1990, the persons who were directors of the Corporation
immediately before the beginning of such period (the Incumbent Directors") shall
cease (for any reason other than death) to constitute at least a majority of the
Board or the Board of Directors of any successor to the Corporation, provided
that any director who was not a director as of April 1, 1990 shall be deemed to
be an Incumbent Director if such director was elected to the Board by, or on the
recommendation of or with the approval of, at least two-thirds of the directors
who then qualified as Incumbent Directors either actually or by prior his
capacity as the Executive or as a director of the Corporation or a Subsidiary,
where applicable in actions or events which give rise to a Change of Control, no
Change of Control shall be deemed to have occurred for purposes of this
agreement, provided that nothing in this sentence shall be construed to prohibit
the Executive from participating in any compensation program which is reasonable
in light of competitive practices.
3. EMPLOYMENT PERIOD. Subject to Section 6 of this Agreement, if
the Executive is employed on the Effective Date, the Corporation agrees to
continue the Executive in its employ, and the Executive agrees to remain in the
employ of the Corporation (or a majority-owned subsidiary of the Corporation),
for the period (the "Employment Period") commencing on the Effective Date and
ending on the second
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anniversary of the Effective Date. Notwithstanding the foregoing, if, prior to a
Change of Control, the Executive is demoted to a lower position than the
position held on the date first set forth above, the Board may declare that this
Agreement shall be without force and effect by written notice delivered to
Executive within 30 days following such demotion and prior to the occurrence of
a Change of Control.
4. DUTIES AND RESPONSIBILITIES. (a) NO REDUCTION IN POSITION.
During the Employment Period, the Executive's duties and responsibilities shall
be at least commensurate with those held, exercised and assigned immediately
prior to the Effective Date, and the Executive's services shall be performed at
the location where the Executive was employed immediately preceding the
Effective Date. It is understood that, for purposes of this Agreement, such
duties and responsibilities shall not be regarded as not commensurate merely by
virtue of the fact that a successor shall have acquired all or substantially all
of the business and/or assets of the Corporation as contemplated by Section
13(b) of this Agreement, provided that the Executive shall continue to have
duties and responsibilities with respect to such successor or affiliated company
commensurate with those of the Executive with respect to the Corporation prior
to such acquisition. As used in this Agreement, the term "affiliated company"
means any company controlling, controlled by, or under common control with the
Corporation.
(b) BUSINESS TIME. From and after the Effective Date, the Executive
agrees to devote his full business time during normal business hours to the
business and affairs of the Corporation (or a majority-owned subsidiary of the
Corporation) and to use his best efforts to perform faithfully and efficiently
the responsibilities assigned to him hereunder, to the extent necessary to
discharge such responsibilities, except for
(i) time spent in managing his personal, financial and legal
affairs and serving on corporate, civic or charitable boards or
committees, in each case only if and to the extent permitted
prior to the Effective Date and not substantially interfering
with the performance of such responsibilities, and
(ii) periods of vacation and sick leave to which he is entitled.
It is expressly understood and agreed that the Executive's continuing to serve
on any boards and committees on which he is serving or with which he is
otherwise associated immediately preceding the Effective Date shall not be
deemed to interfere with the performance of the Executive's services to the
Corporation (or a majority-owned subsidiary of the Corporation)
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unless the Corporation shall have objected in writing to such service prior to
the Effective Date.
5. COMPENSATION. (a) BASE SALARY. During the Employment Period,
the Executive shall receive as base salary ("Base Salary") at a monthly rate at
least equal to the monthly salary paid to the Executive by the Corporation and
any of its affiliated companies immediately prior to the Effective Date. The
Base Salary shall be reviewed at least once each year after the Effective Date,
and may be increased (but not decreased) at any time and from time to time by
action of the Board or any committee thereof or any individual having authority
to take such action in accordance with the Corporation's regular practices.
Neither the Base Salary nor any increase in Base Salary after the Effective Date
shall serve to limit or reduce any other obligation of the Corporation
hereunder.
(b) MIC PROGRAM. In addition to the Base Salary, during each fiscal
year of the Corporation ending during the Employment period the Executive shall
be eligible to participate in the Organization Management Goals/ Management
Incentive Compensation Program (the "MIC Program") as in effect immediately
prior to the Effective Date. In no event shall the amount payable to the
Executive under the MIC Program be less than the average of the amounts paid to
the Executive under the MIC Program in respect to the three fiscal years of the
Corporation ending immediately prior to the Effective Date (the "Average MIC
Payment"). If a fiscal year of the Corporation begins, but does not end, during
the Employment Period, the Executive shall receive an amount with respect to
such fiscal year at least equal to the Average MIC Payment multiplied by a
fraction, the numerator of which is the number of days of such fiscal year
occurring during the Employment Period and the denominator of which is 365. Each
amount payable pursuant to this Section 4(b) shall be paid in January of the
year next following the year for which such amount is earned or awarded, unless
electively deferred by the Executive pursuant to any deferral programs or
arrangements that the Corporation may make available to the Executive.
(c) INCENTIVE, SAVINGS AND RETIREMENT PLANS. In addition to the
Base Salary and the participation in the MIC Program as hereinabove provided,
during the Employment Period, the Executive shall be entitled to participate in
all incentive and savings plans and programs, including stock option plans and
other equity based compensation plans, and in all retirement plans, on a basis
providing him with the opportunity to receive compensation [without duplication
of the amount payable under Section 4(b)] and benefits equal to the average of
those provided by the Corporation to the Executive during the three years
preceding the Effective Date under such plans and programs as in effect
immediately prior to the Effective Date.
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(d) BENEFIT PLANS. During the Employment Period, the Executive and
his eligible dependents, as the case may be, shall be entitled to participate in
or be covered under all medical, dental, disability, group life (including
optional life), accidental death (including family accident) and travel accident
insurance plans and programs of the Corporation as in effect immediately prior
to the Effective Date.
(e) EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the policies and procedures of the Corporation
as in effect immediately prior to the Effective Date.
(f) VACATION AND FRINGE BENEFITS. During the Employment Period, the
Executive shall be entitled to paid vacation and fringe benefits (including,
without limitation, the use of a Company provided automobile) in accordance with
the policies of the Corporation as in effective immediately prior to the
Effective Date.
(g) OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistance, at
least equal to those provided to other key executives of the Corporation having
comparable responsibilities.
(h) COMPARABLE OPPORTUNITY. If any plan, program or arrangement
described in this Section 5 is modified or terminated, such plan, program or
arrangement or a replacement plan, program or arrangement must continue to
provide the Executive with substantially comparable benefits or opportunities,
as the case may be.
6. TERMINATION. (a) DEATH OR DISABILITY. Subject to the
provisions of Section 1 hereof, this Agreement shall terminate automatically
upon the Executive's death. The Corporation may terminate this Agreement, after
having established the Executive's Disability, by giving to the Executive
written notice of its intention to terminate his employment. For purposes of
this Agreement, "Disability" means disability which entitles the Executive to
receive long-term disability benefits under the Corporation's long-term
disability plan.
(b) VOLUNTARY TERMINATION. Notwithstanding anything in this
Agreement to the contrary, at any time more than 180 days after the Effective
Date the Executive may voluntarily terminate employment for any reason
(including early or normal retirement under the terms of the Corporation's
retirement plan as in effect from time to time); provided,
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however, that if the Executive has notified the Corporation of his intended
retirement date prior to the occurrence of a Change of Control and such date is
within such 180 day period, the Executive may retire on such date without
breaching this Agreement. To voluntarily terminate employment (other than
pursuant to the provision in the preceding sentence) the Executive must provide
30 days' written notice to the Corporation, which notice may be given prior to
the 180th day after the Effective Date. The Executive agrees that the
Corporation shall be entitled to receive, as liquidated damages for breach of
his obligation to remain employed for 180 days following a Change of Control [or
such shorter period permitted under this Section 6(b)], an amount equal to any
amounts paid to the Executive during the Employment Period under the MIC Program
or any other incentive plan described in Section 5(c). Nothing in this Section
6(b) shall be construed to treat any termination by Executive pursuant to
Section 6(d) on account of Good Reason (as defined therein) as a voluntary
termination under this Section 6(b).
(c) CAUSE. The Corporation may terminate the Executive's employment
for Cause. For purposes of this Agreement, "Cause" means (i) an act or acts of
dishonesty or gross misconduct on the Executive's part which result or are
intended to result in material damage to the Corporation's business or
reputation, (ii) repeated material violations by the Executive of his
obligations under Section 4 of this Agreement which violations are demonstrably
willful and deliberate on the Executive's part and which result in material
damage to the Corporation's business or reputation or (iii) conviction of a
felony.
(d) GOOD REASON. The Executive may terminate his employment for
Good Reason. For purposes of this Agreement, "Good Reasons" means
(i) without the express written consent of the Executive, the
assignment to the Executive of any duties which are not commensurate with
or better than the Executive's duties and responsibilities as contemplated
by Section 4 of this Agreement;
(ii) any failure by the Corporation to comply with any of the
provisions of Section 5 of this Agreement, other than an insubstantial or
inadvertent failure remedied by the Corporation promptly after receipt of
notice thereof given by the Executive; or
(iii) without the express written consent of the Executive, the
Corporation's requiring the Executive to be based at any office or location
more than 35 miles from that specified under the provisions of Section 4
except for travel reasonably required in the performance
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of the Executive's responsibilities or at any office or location which has
been selected primarily to harass or otherwise inconvenience the Executive.
(e) NOTICE OF TERMINATION. Any termination by the Company for Cause
or by the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 15(c).
For purposes of this Agreement, a "Notice of Termination" means a written notice
given, in the case of a termination for Cause, within 30 days of the
Corporation's having actual knowledge of the events giving rise to such
termination, and in the case of a termination for Good Reason, within 120 days
of the Executive' having actual knowledge of the events giving rise to such
termination, and which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (ii) if the termination date is
other than the date of receipt of such notice, specifies the termination date of
this Agreement (which date shall be not more than 15 days after the giving of
such notice). The failure by the Company or the Executive to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Cause or Good Reason shall not waive any right of the Company or the Executive
hereunder or preclude the Company or the Executive from asserting such fact or
circumstance in enforcing any rights hereunder.
(f) DATE OF TERMINATION. For the purpose of this Agreement, the
term "Date of Termination" means (i) in the case of a termination for which a
Notice of Termination is required, the date of receipt of such Notice of
Termination or, if later, the date specified therein, as the case may be, and
(ii) in all other cases, the actual date on which the Executive's employment
terminates during the Employment Period.
7. OBLIGATIONS OF THE CORPORATION UPON TERMINATION.
(a) DEATH. If the Executive's employment is terminated during the
Employment Period by reason of the Executive's death, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement other than those obligations accrued hereunder at the date
of his death, including, for this purpose (i) the Executive's full Base Salary
through the Date of Termination, (ii) any compensation previously deferred by
the Executive (together with any accrued earnings thereon) and not yet paid by
the Corporation and any accrued vacation pay not yet paid by the Corporation and
(iii) any other amounts or benefits owing to the Executive under the then
applicable employee benefit plans or policies of the Corporation (such amounts
specified in clauses (i), (ii) and (iii) are hereinafter referred to as "Accrued
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Obligations"). Unless otherwise directed by the Executive (or, in the case of
any employee benefit plan qualified (a "Qualified Plan") under Section 401(a) of
the Internal Revenue Code of 1986, as amended the ("Code"), as may be required
by such plan) all such Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination. Anything in this
Agreement to the contrary notwithstanding, the Executive's family shall be
entitled to receive benefits at least equal to the level of benefits available
to surviving families of executives of the Corporation under such plans,
programs and policies relating to family death benefits, if any, in accordance
with the policies of the Corporation in effect immediately prior to the
Effective Date.
(b) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability, unless otherwise directed by the Executive
(or, in the case of any Qualified Plan, as may be required by such plan), the
Executive shall be paid all Accrued Obligations in a lump sum in cash within 30
days of the Date of Termination. Anything in this Agreement to the contrary
notwithstanding, the Executive shall be entitled to receive disability and other
benefits at least equal to the level of benefits available in accordance with
the plans, programs and policies maintained by the Corporation relating to
disability immediately prior to the Effective Date.
(c) CAUSE AND VOLUNTARY TERMINATION. If, during the Employment
Period, the Executive's employment shall be terminated for Cause or voluntarily
terminated by Executive (other than on account of Good Reason), the Corporation
shall pay the Executive the Accrued Obligations. Unless otherwise directed by
the Executive (or, in the case of any Qualified Plan, as may be required by such
plan), the Executive shall be paid all such Accrued Obligations in a lump sum in
cash within 45 days of the Date of Termination and the Corporation shall have no
further obligations to the Executive under this Agreement.
(d) TERMINATION BY CORPORATION OTHER THAN FOR CAUSE OR DISABILITY
AND TERMINATION BY THE EXECUTIVE FOR GOOD REASON.
(i) LUMP SUM PAYMENTS. Subject to the provisions of Section 9
hereof, if during the Employment Period the Corporation terminates the
Executive's employment other than for Cause or Disability, or the Executive
terminates his employment for Good Reason, the Corporation shall pay to the
Executive in a lump sum in cash within 15 days after the Date of
Termination the aggregate of the following amounts:
(A) if not therefore paid, the Executive's Base Salary
through the Date of Termination;
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(B) a cash amount equal to two times the sum of
(1) The Executive's annual Base Salary at the rate
specified in Section 5(d)(i)(A); and
(2) The Average MIC Payment as defined in Section
5(b).
(C) a cash amount equal to the present value of the
incremental retirement benefits (including, without
limitation, any pension, retiree life or retiree
medical benefits) that would have been payable or
available to the Executive under any Qualified Plan,
or under any supplemental retirement, life or medical
plan or arrangement, whether or not qualified,
maintained by the Corporation or a Subsidiary based on
the age and service the Executive would have attained
or completed had the Executive continued in the
Corporation's employ until the expiration of the
Employment Period, determined using, where
compensation at the Date of Termination, with such
present value being calculated using the Discount Rate
(as defined below); provided, however, that in lieu of
any cash payment in respect of retirees life or
medical coverage for which the Executive would have
qualified by remaining in the Corporation's employ
until the expiration of the Employment Period, the
Corporation may arrange for such coverage to continue
for the Executive (or may secure equivalent conversion
coverage) and shall pay the cost of such coverage. For
purposes of this Agreement, the Discount Rate shall
mean the average of the rate payable on U.S. Treasury
notes having a term of one year and the rate payable
on high quality corporate bonds having a term of not
more than 10 years as reported on the Merrill Lynch
Bond indexes (or other comparable indexes);
(D) a cash amount equal to the present value (determined
using the Discount Rate) of any supplemental
retirement benefits with respect to
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which the Executive had not become vested prior to the
Date of Termination; and
(E) a cash amount equal to any amounts (other than amounts
payable to Executive under any Qualified Plans)
described in Sections 7(a)(ii) and (iii).
(ii) INTEREST. In the event that the Company fails to pay the
Executive the amount payable under Section 7(d)(i) when due, the Company
shall also pay the Executive interest on such amount for each calendar
quarter (or part thereof) during which a payment is overdue hereunder at a
rate equal to the prime rate in effect at The Chase Manhattan Bank, N.A. on
the first day of such calendar quarter, plus 3%. Any interest payable under
this Section 7(d)(ii) which is not paid on the last day of the calendar
quarter in which such interest accrues shall be added to the amount due
under Section 7(d)(i) and shall also be payable with interest calculated in
accordance with this Section 7(d)(ii).
(iii) BENEFITS. The Executive shall be entitled to continue for two
years to participate at the level at which the Executive was participating
at the Date of Termination in the Corporation's health, accident,
disability and life insurance plans in effect immediately prior to the
Effective Date (the "Additional Benefits") or, to the extent that Employee
is no longer eligible to participate in any plan that provides such
Additional Benefits, to receive benefits of equal value to the Additional
Benefits to which he would otherwise be entitled, PROVIDED, HOWEVER, that
any payments to which Employee would otherwise be entitled under this
Section 7(d)(iii) shall be reduced by an amount equal to the value of any
comparable benefits provided Employee by a subsequent employer;
(iv) PAYMENTS WITH RESPECT TO STOCK OPTIONS HELD BY EXECUTIVES. Upon
the earlier to occur of (A) the merger of the Corporation with or into
another corporation following a Change of Control, or (B) the date which is
six months after the Date of Termination, Executive shall be paid an amount
equal to the sum of (i) the product of (a) the excess of (x) the highest
price offered for a share of common stock of the Corporation in conjunction
with any tender offer or during the 60 day period immediately preceding the
Effective Date, if the Change of Control occurs other than pursuant to a
tender offer, over (v) the exercise price of any stock option held by the
Executive at the Effective Date times (b) the number of shares of common
stock of the Corporation subject to such options. Notwithstanding the
foregoing, if the Executive otherwise receives the
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value of any such stock option under the general provisions of any such
award or any generally applicable provisions of any plan under which
options are issued, the number of shares of common stock taken into account
in determining the amount payable under this Section 7(d)(iv) shall be
appropriately reduced.
(v) DISCHARGE OF CORPORATION'S OBLIGATIONS. Subject to the
performance of its obligations under this Section 7(d), the Corporation
shall have no further obligations to the Executive in respect of any
termination by the Executive for Good Reason or by the Corporation other
than for Cause or Disability, except to the extent expressly provided under
any of the plans referred to in Section 5(c) or 5(d) or as otherwise
provided under Section 8.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Corporation
or any of its affiliated companies and for which the Executive may qualify, nor
shall anything herein limit or otherwise prejudice such rights as the Executive
may have under any other agreements with the Corporation or any of its
affiliated companies, including employment agreements or stock option
agreements. Amount which are vested benefits or which the Executive is otherwise
entitled to receive under any plan or program of the Corporation or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan or program.
9. CERTAIN REDUCTION OF PAYMENTS BY THE CORPORATION. (a) For
purposes of this section, (i) a Payment shall mean any payment or distribution
in the nature of compensation to or for the benefit of the Executive, whether
paid or payable pursuant to this Agreement or otherwise; (ii) Agreement Payment
shall mean a Payment paid or payable pursuant to this Agreement (disregarding
this Section 9); (iii) Net After Tax Receipt shall mean the Present Value of a
Payment net of all taxes imposed on the Executive with respect thereto under
Section 1 and 4999 of the Code, determined by applying the highest marginal rate
under Section 1 of the Code which applied to the Executive's taxable income for
the current taxable year; (iv) "Present Value" shall mean such value determined
in accordance with Section 280G(d)(4) of the Code; and (v) "Reduced Amount"
shall mean the smallest aggregate amount of Payments which (a) is less than the
sum of all Payments and (b) results in aggregate Net After Taxes Receipts which
would result if the aggregate Payments were any other amount less than the sum
of all Payments.
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(b) Anything in this Agreement to the contrary notwithstanding, in
the event the Corporation's independent public accounting firm immediately prior
to the Change of Control (the "Accounting Firm") shall determine that receipt of
all Payments would subject the Executive to tax under Section 4999 of the Code,
it shall determine whether some amount of Payments would meet the definition of
a "Reduced Amount". If the Accounting Firm determines that there is a Reduced
Amount, the aggregate Agreement Payments shall be reduced to such Reduced
Amount; provided, however, that if the Reduced Amount exceeds the aggregate
Agreement Payments, the aggregate Payments shall, after the reduction of all
Agreement Payments, be reduced (but not below zero) in the amount of such
excess.
(c) If the Accounting Firm determines that aggregate Agreement
Payments or Payments, as the case may be, should be reduced to the Reduced
Amount, the Corporation shall promptly give the Executive notice to that effect
and a copy of the detailed calculation thereof, and the Executive may then
elect, in his sole discretion, which and how much of the Payments shall be
eliminated or reduced (as long as after such election the present value of he
aggregate Payments equals the Reduced Amount), and shall advise the Corporation
in writing of his election within 10 days of his receipt of notice. If no such
election is made by the Executive within such 10 day period, the Corporation may
elect which of the Agreement Payments or Payments, as the case may be, shall be
eliminated or reduced (as long as after such election the present value of the
aggregate Agreement Payments or Payments, as the case may be, equals the Reduced
Amount) and shall notify the Employee promptly of such election. All
determinations made by the Accounting Firm under this Section shall be binding
upon the Corporation and the Executive and shall be made within 60 days of a
termination of employment of the Executive. As promptly as practicable following
such determination, the Corporation shall pay to or distribute for the benefit
of the Executive such Payments as are then due to the Executive under this
Agreement and shall promptly pay to or distribute for the benefit of the
Executive in the future such Payments as become due to the Executive under this
Agreement.
(d) While it is the intention of the Corporation and the Executive
to reduce the amounts payable or distributable to the Executive hereunder only
if the aggregate Net After Tax Receipts to the Executive would thereby be
increased, as a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that amounts will have been paid or distributed by the
Corporation to or for the benefit of the Executive pursuant to this Agreement
which should not have been so paid or distributed ("Overpayment") or that
additional amounts which will not have been paid or
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distributed by the Corporation to or for the benefit of the Executive pursuant
to this Agreement should have been so paid or distributed ("Underpayment"), in
each case, consistent with the calculation of the Reduced Amount hereunder. In
the event that the Accounting Firm, based either upon the assertion of a
deficiency by the Internal Revenue Service against the Corporation or the
Executive which the Accounting Firm believes has a high probability of success
or controlling precedent or other substantial authority, determines that an
Overpayment has been made, any such Overpayment paid or distributed by the
Corporation to or for the benefit of the Executive shall be treated for all
purposes as a loan AB INITIO to the Executive which the Executive shall repay to
the Corporation together with interest at the applicable federal rate provided
for in Section 7872(f)(2) of the Code; provided, however, that no such loan
shall be deemed to have been made and no amount shall be payable to the
Executive to the Corporation if and to the extent such deemed loan and payment
would not either reduce the amount on which the Executive is subject to tax
under Section 1 and Section 4999 of the Code or generate a refund of such taxes.
In the event that the Accounting Firm, based upon controlling precedent or other
substantial authority, determines that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Corporation to or for the benefit of
the Executive together with interest at the applicable federal rate provided for
in Section 7872(f)(2) of the Code.
10. FULL SETTLEMENT. The Corporation's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Corporation may have against the Executive or others whether by reason of
the subsequent employment of the Executive or otherwise. In no event shall the
Executive be obligated to seek other employment by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement.
In the event that the Executive shall in good faith give a Notice of Termination
for Good Reason and it shall thereafter be determined that Good Reason did not
exist, the employment of the Executive shall, unless the Corporation and the
Executive shall otherwise mutually agree, be deemed to have terminated, at the
date of giving such purported Notice of Termination, by mutual consent of the
Corporation and the Executive and, except as provided in the last preceding
sentence, the Executive shall be entitled to receive only those payments and
benefits which he would have been entitled to receive at such date otherwise
than under this Agreement.
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11. LEGAL FEES AND EXPENSES. In the event that a claim for payment
or benefits under this Agreement is disputed, the Corporation shall pay all
reasonable attorney fees and expenses incurred by the Executive in pursuing such
claim, provided that Executive is successful as to at least part of the disputed
claim by reason of litigation, arbitration or settlement.
12. CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Corporation all secret or confidential
information, knowledge or data relating to the Corporation or any of its
affiliated companies, and their respective businesses, (i) obtained by the
Executive during his employment by the Corporation or any of its affiliated
companies and (ii) not otherwise known by the public (other than by reason of an
unauthorized act by the Executive). After termination of the Executive's
employment with the Corporation, the Executive shall not, without the prior
written consent of the Corporation, unless compelled pursuant to an order of a
court or other body having jurisdiction over such matters, communicate or
divulge any such information, knowledge or data to anyone other than the
Corporation and those designated by it. In no event shall an asserted violation
of the provisions of this Section 11 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this Agreement.
The Executive acknowledges that, if a court of competent jurisdiction shall
determine that the Executive shall have breached his obligation under this
Section 12, it would be an appropriate remedy for such court to cause the
Executive to remit to the Corporation any termination benefits paid to him under
Section 7 in excess of the Accrued Obligations.
13. DISPUTES. Any controversy or claim arising out of or relating
to this Agreement, or any breach thereof, shall be settled by arbitration in
accordance with the rules of the American Arbitration Association then in effect
in the State of New Jersey, and judgment upon such award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. The
arbitration shall be held in Secaucus, New Jersey (or such other location as
shall be mutually agreed upon between the parties). The cost of the arbitration
shall be borne among the parties to the arbitration as determined by the
arbitrator(s).
14. SUCCESSORS. (a) This Agreement is personal to the Executive
and, without the prior written consent of the Corporation, shall not be
assignable by the Executive otherwise than by will or by the laws of
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descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Corporation and its successors. Excluding Genlyte Thomas Group LLC, the
Corporation shall require any successor to all or substantially all of the
business and/or assets of the Corporation, whether direct or indirect, by
purchase, merger, consolidation, acquisition of stock, or otherwise, by an
agreement in form and substance satisfactory to the Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent as the Corporation would be required to perform if no such succession had
taken place.
15. MISCELLANEOUS. (a) APPLICABLE LAW. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
applied without reference to principles of conflict of laws.
(b) AMENDMENTS. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(c) NOTICES. All notices and other communications hereunder shall
be in writing and shall be given by hand-delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive: at the address listed on the last page hereof
If to the Corporation: The Genlyte Group Incorporated
4360 Brownsboro Road, Suite 300
Louisville, KY 40207
Attention: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(d) TAX WITHHOLDING. The Corporation may withhold from any amounts
payable under this agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
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(e) SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(f) GENDER. For purposes of this Agreement, where the context so
requires, the masculine shall mean the feminine.
(g) CAPTIONS. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Corporation has caused this Agreement to be executed in its name on its behalf,
and its corporate seal to be hereunto affixed and attested by its Secretary, all
as of the day and year first above written.
ATTEST: GENLYTE GROUP INCORPORATED
- ----------------------------------- By:---------------------------
Secretary
(Seal) Title:------------------------
EXECUTIVE
------------------------------
Address:
------------------------------
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