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, 1999
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 6, 2000: 13,686,190.
Aggregate market value of Common Stock (par value $.01 per share) held by
non-affiliates on March 6, 2000: $278,856,121.
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
Portions of Annual Report to Stockholders
for the year ended December 31, 1999 Parts I, II, and IV
Proxy Statement for the Annual Meeting of
Stockholders to be held April 27, 2000 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 all majority-owned subsidiaries.
The Company designs, manufactures, markets, and sells lighting fixtures and
controls for a wide variety of applications in the commercial, residential, and
industrial markets. The Company operates in these three industry segments
through the following divisions: Lightolier, Day-Brite, Crescent, Capri,
Controls, Hadco, Gardco, Wide-Lite, Stonco, and Consumer in the United States
and Mexico, and Canlyte, Thomas Lighting Canada, Lumec, and Ledalite 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, Fibre Light,
Forecast, Gardco, Hadco, Ledalite, 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, Keene-Widelite, Ledalite,
Lightolier, Lite-Energy, Lumec, Prodel, Stonco,
Uniglo, Wide-Lite, 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 commercial, residential, and
industrial construction as well as in remodeling existing structures.
2
<PAGE>
Because the Company does not principally sell directly to the end-user of its
products, the Company cannot determine precisely the percentage of its revenues
derived from the sale of products installed in each type of building or the
percentage of its products sold for new construction versus remodeling. 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, residential, industrial,
institutional, medical, and sports markets, and task
lighting for all markets.
Outdoor Fixtures: HID and incandescent lighting fixtures and accessories for
commercial, residential, industrial, institutional, and
sports 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 $102,080,000 as of December 31, 1999; $90,474,000 as of December 31,
1998, and $54,206,000 as of December 31, 1997. The $36,268,000 increase from
December 31, 1997 to December 31, 1998 was primarily because of the inclusion of
Thomas Lighting following the formation of Genlyte Thomas. Substantially all the
backlog at December 31, 1999 is expected to be shipped in 2000.
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 continues to develop new products to provide innovative lighting
solutions to meet the needs of its customers. Costs incurred for research and
development activities, as determined in accordance with generally accepted
accounting principles, were $8,086,000; $7,237,000; and $5,195,000 during 1999,
1998, and 1997, respectively.
EMPLOYEES
At December 31, 1999, the Company employed approximately 3,370 union and
nonunion production workers and approximately 2,000 engineering, administrative,
and sales personnel. Approximately 42% of the production workers are covered by
collective bargaining agreements that expire in 2000. Relationships with unions
have been satisfactory. Negotiation of collective bargaining agreements is not
expected to have a significant impact on 2000 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 1999 Annual Report to Stockholders (Exhibit 13 hereto), which is
incorporated herein by reference.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward looking statements. Certain information in Items 1, 2, 3, 7 and 8 of
this Form 10-K include information that is forward looking. The matters referred
to in such information could be affected by the risks and uncertainties involved
in the Company's business. These risks and uncertainties include, but are not
limited to, the effect of economic and market conditions, new building
construction cycles, the impact of seasonal weather conditions on construction
activity, currency exchange rates, the level and volatility of interest rates,
economic and political conditions in international markets, including civil
unrest, government changes and restrictions on the ability to transfer capital
across borders, the impact of legislative enactments, regulatory action and
changes in accounting standards and taxation requirements, environmental laws in
domestic and foreign jurisdictions, as well as certain other risks described in
this Form 10-K.
5
<PAGE>
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>
27 Owned Facilities 46 Leased Facilities Combined Facilities
Nature of Facilities Total Square Feet Total Square Feet Total Square Feet
- -------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Manufacturing Plants 2,079,000 342,000 2,421,000
Distribution Centers 1,523,000 351,000 1,874,000
Administrative Offices 329,000 164,000 493,000
Sales Offices -- 61,000 61,000
Other 105,000 4,000 109,000
----------- ---------- ----------
Total 4,036,000 922,000 4,958,000
=========== ========== ==========
</TABLE>
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 (some of
the claims of which have since been restricted, as noted below) 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").
6
<PAGE>
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 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.
Discovery, which was stayed since commencement of the action, is now ongoing.
Genlyte has filed its answer to the complaint, denying liability, 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 or
reserves 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.
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
1999 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 1999 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 1999
------------------------------------------------------------------
Common Stock,
par value $.0l per share 1,329
ITEM 6. SELECTED FINANCIAL DATA
The information required for this item is included in Genlyte's 1999 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 1999 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, 1999, a hypothetical 1% increase in interest rates would result
in a reduction of approximately $560,000 in pre-tax income. The estimated
reduction is based upon no change in the volume or composition of debt at
December 31, 1999.
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 1999 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 Directors" section of the Proxy Statement for the 2000 Annual
Meeting of 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 required 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 2000 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 2000 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 2000 Annual Meeting of Stockholders of Genlyte, which has been filed with
the Securities and Exchange Commission and is incorporated herein by reference.
10
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
a) 1) FINANCIAL STATEMENTS
The following information is incorporated herein by reference to
Genlyte's 1999 Annual Report to Stockholders (Exhibit 13 hereto):
Report of Independent Public Accountants
Consolidated Statements of Income for the years ended December 31,
1999, 1998, and 1997
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Cash Flows for the years ended December
31, 1999, 1998, and 1997
Consolidated Statements of Stockholders' Investment for the years
ended December 31, 1999, 1998, and 1997
Notes to Consolidated Financial Statements
2) FINANCIAL STATEMENT SCHEDULE
Report of Independent Public Accountants on Financial Statement
Schedule
Schedule II -- Valuation and Qualifying Accounts for the years ended
December 31, 1999, 1998, and 1997.
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) REPORTS ON FORM 8-K
There were no reports on Form 8-K for the three months ended December 31, 1999.
11
<PAGE>
c) EXHIBITS
Incorporated By
Description Reference To
- ----------- ------------
- - Amended and Restated Certificate of Exhibit 3(b) to Genlyte's
Incorporation of Genlyte, dated Registration Statement on Form
August 2, 1988 8 as filed with the Securities
and Exchange Commission on
August 3, 1988
- - Amended and Restated Certificate of Exhibit 3(a) to Genlyte's Form
Incorporation of Genlyte, dated May 10-K filed with the Securities
9, 1990 and Exchange Commission in
March 1993
- - Amended and Restated By-laws of Exhibit 3(c) to Genlyte's
Genlyte, as adopted on May 16, 1988 Registration Statement on Form
8 as filed with the Securities
and Exchange Commission on
August 3, 1988
- - Form of Stock Certificate for Exhibit 4(a) to Genlyte's
Genlyte Common Stock Registration Statement on Form
8 as filed with the Securities
and Exchange Commission on
August 3, 1988
- - Loan Agreement between Genlyte and Exhibit 4(c) to Genlyte's Form
Jobs for Fall River, Inc., dated as 10-K filed with the Securities
of July 13, 1994 and Exchange Commission in
March 1995
- - Rights Agreement between Genlyte Exhibit 4.1 to Genlyte's Form
and The Bank of New York, as 8-A filed with the Securities
Rights Agent, dated as of September and Exchange Commission on
13, 1999 September 15, 1999
- - Stock Purchase Agreement between Exhibit 10(a) to Genlyte's
Genlyte and purchasers of Genlyte Registration Statement on Form
Class B Stock, dated as of June 17, 8 as filed with the Securities
1988 and Exchange Commission on
August 3, 1988
- - Loan Agreement between Genlyte and Exhibit 10(b) to Genlyte's Form
the New Jersey Economic Development 10-K filed with the Securities
Authority dated April 1, 1990, and Exchange Commission in
replacing the First Mortgage and March 1991
Security Agreement between the New
Jersey Economic Development
Authority and KCS Lighting, Inc.,
dated December 20, 1984 (assigned
to and assumed by Genlyte effective
December 31, 1986)
12
<PAGE>
Incorporated By
Description Reference To
- ----------- ------------
- - Loan Agreement between Genlyte and Exhibit 10(c) to Genlyte's Form
New Jersey Economic Development 10-K filed with the Securities
Authority dated June 1, 1990, and Exchange Commission in
replacing the Loan Agreement March 1991
between KCS Lighting, Inc. and the
New Jersey Economic Development
Authority, dated December 20, 1984
(assigned to and assumed by Genlyte
effective December 31, 1986)
- - Merger and Assumption Agreement, Exhibit 10(d) to Genlyte's Form
dated as of December 28, 1990, by 10-K filed with the Securities
and between Genlyte and Lightolier and Exchange Commission in
March 1991
- - Management Incentive Compensation Plan Exhibit 10(i) to Genlyte's
Registration Statement on Form
8 as filed with the Securities
and Exchange Commission on
August 3, 1988
- - Genlyte 1988 Stock Option Plan Exhibit 10(j) to Genlyte's
Registration Statement on Form
8 as filed with the Securities
and Exchange Commission on
August 3, 1988
- - 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
Genlyte and Bairnco Corporation, Registration Statement on Form
dated July 15, 1988 8 as filed with the Securities
and Exchange Commission on
August 3, 1988
- - Master Transaction Agreement dated Exhibit 2.1 to Genlyte's Form
April 28, 1998 by and between 8-K filed with the Securities
Thomas and Genlyte and Exchange Commission on July
24, 1998
13
<PAGE>
Incorporated By
Description Reference To
- ----------- ------------
- - Limited Liability Company Agreement Exhibit 2.2 to Genlyte's Form
of GT Lighting, LLC (now named 8-K filed with the Securities
Genlyte Thomas) dated April 28, and Exchange Commission on July
1998 by and among Thomas, Genlyte 24, 1998
and Genlyte Thomas
- - Capitalization Agreement dated Exhibit 2.3 to Genlyte's Form
April 28, 1998 by and among Genlyte 8-K filed with the Securities
Thomas and Thomas and certain of and Exchange Commission on July
its affiliates 24, 1998
- - Capitalization Agreement dated Exhibit 2.4 to Genlyte's Form
April 28, 1998 by and between 8-K filed with the Securities
Genlyte Thomas and Genlyte and Exchange Commission on July
24, 1998
- - Credit Agreement between Genlyte Exhibit 10 to Genlyte's Form
Thomas and the applicable banks 10-Q filed with the Securities
named therein, dated as of August and Exchange Commission in
30, 1998 November 1998
- - Financial Statements of Business Exhibits 99.1 through 99.16 to
Acquired and Pro Forma Financial Genlyte's Form 8-K/A filed with
Information related to the the Securities and Exchange
formation of Genlyte Thomas Commission on November 5, 1998
- - Form of Employment Protection Exhibit 99 to Genlyte's Form
Agreement between Genlyte and 10-K filed with the Securities
certain key executives and Exchange Commission on
March 26, 1999
Other Exhibits included herein:
10(a) Financing agreement between Genlyte Thomas Group Nova Scotia ULC and Bank
of Montreal dated December 22, 1999.
10(b) Financing agreement between Genlyte Thomas Group Nova Scotia ULC and The
Toronto-Dominion Bank dated December 22, 1999.
10(c) Financing agreement between Genlyte Thomas Group Nova Scotia ULC and
Royal Bank of Canada dated December 22, 1999.
11 Calculation of Basic and Diluted Earnings per Share
13 Portions of the Annual Report to Stockholders for the year ended December
31, 1999, incorporated herein by reference
18 Letter re Change in Accounting Principle
21 Subsidiaries of The Genlyte Group Incorporated
23 Consent of Independent Public Accountants
27 Financial Data Schedule
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Genlyte has
duly caused this Annual Report to be signed on its behalf by the undersigned
thereunto duly authorized.
THE GENLYTE GROUP INCORPORATED
Registrant
Date: March 24, 2000 By /s/ WILLIAM G. FERKO
----------------------- -----------------------------------------
March 24, 2000 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 March 24, 2000
- --------------------------------------------------- ------------------
Avrum I. Drazin - Chairman of the Board
/s/ LARRY POWERS March 24, 2000
- --------------------------------------------------- ------------------
Larry Powers, President and Chief Executive Officer
(Principal Executive Officer)
/s/ DAVID M. ENGELMAN March 17, 2000
- --------------------------------------------------- ------------------
David M. Engelman - Director
/s/ FRED HELLER March 24, 2000
- --------------------------------------------------- ------------------
Fred Heller - Director
/s/ FRANK METZGER March 24, 2000
- --------------------------------------------------- ------------------
Frank Metzger - Director
15
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
TO THE GENLYTE GROUP INCORPORATED:
We have audited in accordance with auditing standards generally accepted in the
United States the consolidated financial statements included in The Genlyte
Group Incorporated Annual Report to Stockholders for the year ended December 31,
1999, incorporated by reference in this Form 10-K, and have issued our report
thereon dated February 2, 2000. Our audits were made for the purpose of forming
an opinion on those statements taken as a whole. The schedule listed in Item
14a(2) is the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic consolidated financial statements. This schedule has been
subjected to the auditing procedures applied in the audits of the basic
consolidated financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Louisville, Kentucky
February 2, 2000
16
<PAGE>
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
($ in thousands)
<TABLE>
<CAPTION>
Additions Additions Additions
Balance at From Charged to Charged Balance
Beginning Companies Costs and to Other at End
of Year Acquired Expenses Accounts Deductions of Year
------- -------- -------- -------- ---------- -------
(1) (2)
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED 12/31/99
Allowance for
Doubtful Accounts $10,907 $ 2,986 $ 4,113 $ 824 $(3,920) $14,910
YEAR ENDED 12/31/98
Allowance for
Doubtful Accounts $ 6,864 $ 1,407 $ 3,172 $ - $ (536) $10,907
YEAR ENDED 12/31/97
Allowance for
Doubtful Accounts $ 8,222 $ - $ 2,100 $ - $(3,458) $ 6,864
</TABLE>
(1) The amount in 1998 represents the balance acquired from Thomas Lighting.
The amount in 1999 represents $360 acquired from Ledalite and $2,626 of
adjustments to the Thomas Lighting balance.
(2) Represents uncollectible accounts written off, less recoveries of accounts
previously written off.
17
BANK OF MONTREAL
CORPORATE FINANCE
PERSONAL AND COMMERCIAL FINANCIAL SERVICES
105 St. Jacques Street, 3rd floor
Montreal, Quebec
H2Y 1L6
Telephone No (514) 877-7262
Telecopier No (514) 877-7704
December 15th, 1999
Mr. Terry Lange
Genlyte Thomas Group Nova Scotia ULC
4360 Brownsboro Road, Suite 300
P.O. Box 35120
Louisville, Kentucky
USA, 40232
SUBJECT: FINANCING AGREEMENT
Dear Mr. Lange,
We are pleased to offer Genlyte Thomas Group Nova Scotia ULC the
following credit facility, subject to the terms and conditions outlined below.
This Financing Agreement replaces and supercedes our initial Offer dated
November 23rd, 1999:
BORROWER: Genlyte Thomas Group Nova Scotia ULC (referred to
herein as the "Borrower").
LENDER: Bank of Montreal, at its Branch located 115 South LaSalle
Street, Chicago, Illinois, USA, 60603 (the "Bank").
TYPE OF CREDIT
AND AMOUNT:
364 day, Committed non-revolving facility for up to
CDN$10,000,000 and/or its US $ equivalent, by way of:
Canadian Prime Rate Based Loan in CDN $ ("Prime Based
Loan"); and/or
US Prime Rate Based Loan in US$ ("US Prime Based Loan");
and/or
London InterBank Offered Rate Notes in CDN $ and/or US $
("LIBOR");
(called the "Facility")
Page 1 of 14
<PAGE>
Genlyte Thomas Group Nova Scotia ULC
Financing Agreement - December 15th, 1999
PURPOSE: To provide funds to repay 33.3% of a Bridge Loan
outstanding with The Toronto-Dominion Bank used for the
acquisition of the assets (including goodwill) of Ledalite
Architectural Products Inc.
AVAILABILITY: By way of one single advance (referred to herein as the
"Loan").
REPAYMENT: The loan shall be repayable on the Maturity Date.
MATURITY
DATE: 1 Business day prior to the first anniversary date of the
acceptance by the Borrower of this Financing Agreement
unless extended as provided herein (the "Maturity Date").
Any extension (Maximum 4) of the Maturity Date shall be
conditional upon the Borrower repaying on the last day of
the then current Maturity Date an amount equal to:
First extension: CDN$ 500,000
Second extension CDN$1,000,000
Third extension CDN$1,500,000
Fourth extension CDN$2,000,000
Final Maturity Date CDN$5,000,000
EXTENSION OF
MATURITY DATE:
The Borrower is deemed to have requested the Bank at least
60 days prior to the then current Maturity Date to extend
the Maturity Date for a period of no more than 364 days
starting on the day of the then current Maturity Date.
The Bank shall be deemed to have granted such extension if
the Bank has not otherwise advised the Borrower in writing
30 days prior to the current Maturity Date. The Bank shall
have entire discretion to grant or not to grant any such
extension and upon such terms and conditions as it deems
appropriate.
Page 2 of 14
<PAGE>
Genlyte Thomas Group Nova Scotia ULC
Financing Agreement - December 15th, 1999
INTEREST RATES
AND SPREADS: CDN Prime / US Prime Spread: 0 Basis points
LIBOR Spread: 50 Basis points
US Prime Rate means the rate of interest per annum (based
on a 365/366 day year) established by the Bank from time to
time as the reference rate of interest for the
determination of interest rates that the Bank charges to
customers of varying degrees of creditworthiness for US
dollar loans made by it in the United States.
CDN Prime Rate means the rate of interest per annum (based
on a 365/366 day year) established by the Bank from time to
time as the reference rate of interest for determination of
interest rates that the Bank charges to customers of
varying degrees of creditworthiness for Canadian dollar
loans made by it in the United States.
LIBOR in respect of a LIBOR advance means the rate of
interest per annum (based on a 360 day year) as determined
by the Bank (rounded upwards, if necessary to the nearest
whole multiple of 1/16th of 1%) at which the Bank may make
available United States dollars or Canadian Dollars, as the
case may be, which are obtained by the Bank in the
InterBank Euro Currency Market, London, England at
approximately 11:00 a.m. (Toronto time) on the second
business day before the first day of, and in an amount
similar to, and for the period similar to the interest
period of, such LIBOR advance.
Any interest rate based on a period less than a year
expressed as an annual rate for the purposes of the
Interest Act (Canada) is equivalent to such determined rate
multiplied by the actual number of days in the calendar
year in which the same is to be ascertained and divided by
the number of days in the period upon which it was based.
INTEREST
CALCULATION
AND PAYMENT: Interest on CDN Prime Based Loans and US Prime Based Loans
is calculated daily and payable monthly in arrears based on
the number of days which the loan is outstanding.
Interest on LIBOR Loans is calculated and payable on the
earlier of contract maturity or quarterly in arrears and on
contract maturity, for the number of days in the LIBOR
interest period.
Interest is payable both before and after demand, default
and judgment. All interest shall be payable at the above
referred to rates plus applicable spreads mentioned above.
Page 3 of 14
<PAGE>
Genlyte Thomas Group Nova Scotia ULC
Financing Agreement - December 15th, 1999
DRAWDOWN: As required upon satisfaction of conditions precedent, but
no later than December 31st, 1999 (to coincide with expiry
of the 90 day Bridge loan with the Toronto-Dominion Bank).
CDN PRIME RATE BASED LOANS AND/OR
US PRIME RATE BASED LOANS
The minimum amount of drawdown by way of CDN Prime Based
Loans and/or US Prime Based Loans is $500,000.
LIBOR
The Borrower shall advise the Bank of the requested LIBOR
contract maturity or interest period. The Bank shall have
the discretion to restrict the LIBOR contract maturity, for
periods between 30 to 180 days, subject to availability.
The minimum amount of a drawdown by way of a LIBOR loan is
$1,000,000, and shall be in multiples of $500,000
thereafter.
The Borrower will provide the Bank with 2 business days
notice of a requested LIBOR loan.
TAXATION
ON PAYMENTS: All payments made be the Borrower to the Bank will be made
free and clear of all present and future taxes (excluding
the taxes on the net income of the Bank), withholdings or
deductions of whatever nature. If these taxes, withholdings
or deductions are required by applicable law and are made,
the Borrower, shall as a separate and independent
obligation pay to the Bank all such additional amounts as
shall fully indemnify the Bank from any such taxes,
withholding or deduction.
SECURITY: The following security shall be provided prior to first
drawdown, and shall be acceptable to the Bank and its legal
counsel:
1) Irrevocable and Unconditional Standby Letter of Credit
(L/C) in favour of the Bank for an amount of
CDN$10,000,000 or its US$ equivalent issued by Bank of
America, N.A. The letter shall bear an initial term of
no less than 364 days, with a provision for automatic
renewal without amendment unless notified via tested
telex/authenticated swift at least 60 days prior to the
Maturity Date, subject to the satisfaction of the Bank.
Page 4 of 14
<PAGE>
Genlyte Thomas Group Nova Scotia ULC
Financing Agreement - December 15th, 1999
If the Letter of Credit is issued in US$, to the extent
if any, that at any time the Letter of Credit value is
less than the equivalent amount of the facility due to
fluctuations in the exchange rate by which such
equivalence is determined (a "deficiency"), then upon
demand by the Bank the Borrower shall:
a) Immediately prepay the amount of the deficiency, or
b) Deposit the amount of the deficiency with the Bank
and grant it a security interest in the cash
collateral, or
c) Immediately increase the amount of the outstanding
Letter of Credit sufficient enough to satisfy the
Bank.
2) To ensure that there is appropriate coverage in favor of
the Bank in the event of an adverse currency fluctuation
between the US$ and CDN$, Genlyte Thomas Group LLC shall
upon issuance of the Letter of Credit, provide the Bank
with a written undertaking to pay to the Bank on the
date the Bank demands payment from Bank of America, N.A.
under the Letter of Credit, a sum equal to the
difference, if any, between the proceeds received from
the financial institution which issued the letter of
credit and the then outstanding indebtedness owing by
the Borrower to the Bank as expressed in CDN$. This
undertaking shall remain in full force and effect as
long as there exists any outstanding indebtedness owing
to the Bank by the Borrower.
(All of the above security shall be referred to
collectively in this agreement as "Bank Security").
CONDITIONS
PRECEDENT: The obligation of the Bank to make and keep on its books
any loan hereunder is subject to the following conditions
precedent :
a) The Bank shall have received the following documents
which shall be in form and substance satisfactory to
the Bank and its legal counsel :
i) Duly executed copy of this Financing Agreement
signed by all parties, with the appropriate
resolutions and legal opinions.
ii) A copy of The Genlyte Thomas Group Incorporated
September 30th, 1999 quarterly financial
statements, and related Genlyte Thomas Group LLC
attachments, accompanied by a compliance
certificate from the Chief Financial Officer
confirming that they are in compliance with the
credit agreement dated August 30th, 1999.
Page 5 of 14
<PAGE>
Genlyte Thomas Group Nova Scotia ULC
Financing Agreement - December 15th, 1999
iii) A copy of the last form 10-Q and 10-K for The
Genlyte Group Incorporated and Thomas Industries
Inc, respectively;
iv) All of the Bank Security and supporting
resolutions required hereunder and solicitors
letter of opinion;
v) Any other documents deemed necessary by the Bank
and its legal counsel.
b) The Borrower has paid the Arrangement Fee and all legal
expenses incurred by the Bank in connection with this
Financing Agreement and/or the Bank Security.
c) No Event of Default shall have occurred.
REPRESENTATIONS
AND WARRANTIES:
The Borrower hereby represents and warrants, which
representations and warranties shall be deemed to be
continually repeated so long as any amounts remain
outstanding and unpaid under this agreement or so long as
the commitment under this Agreement remains in effect,
that :
a) The Borrower is a corporation duly incorporated and
organized, validly existing and in good standing under
the laws of Nova Scotia and has adequate corporate
power and authority to carry on its business, own
property, borrow monies and enter into agreements
therefor, execute and deliver the documents required
hereunder, and observe and perform the terms and
provisions of this Agreement.
b) There are no laws, statutes or regulations applicable
to or binding upon the Borrower and no provisions in
its Articles or in any by-laws, resolutions, contracts,
agreements, or arrangements which would contravene,
breach, default or violate the execution, delivery,
performance, observance, of any terms of this
Agreement.
c) No Event of Default has occurred nor has any event
occurred which, in time, would constitute an Event of
Default under this Agreement or which would constitute
a default under any other agreement.
Page 6 of 14
<PAGE>
Genlyte Thomas Group Nova Scotia ULC
Financing Agreement - December 15th, 1999
d) There are no actions, suits or proceedings, including
appeals or applications for review, or any knowledge of
pending actions, etc..., against the Borrower and its
subsidiaries, before any court or administrative agency
which would result in any material adverse change in
the property, assets, financial conditions, and
business or operations of the Borrower.
e) All material authorizations, approvals, consents,
licenses, exemptions, filings, registrations,
notarizations and other requirements of governmental,
judicial and public bodies and authorities required
reasonably necessary to carry on its business have been
or will be obtained or effected and are or will be in
full force and effect.
f) The financial statements delivered to the Bank fairly
present the present financial position of the Borrower
and Genlyte Thomas Group LLC, and have been prepared by
their auditors in accordance with Generally Accepted
Accounting Principles.
g) All the remittances required to be made by the Borrower
to the federal, provincial and municipal governments
have been made, are currently up to date and there are
no outstanding arrears. Without limiting the foregoing,
all employee deductions (including Income Taxes,
Unemployment, insurance and Canada Pension Plan), sales
taxes (both provincial and federal), corporate income
taxes, payroll taxes and workmen's compensation dues
are currently paid and up to date.
POSITIVE
COVENANTS: As long as any loans or commitment of the Bank remain
outstanding, the Borrower and Genlyte Thomas Group LLC
will :
a) Cause to be paid all amounts, interest and fees on the
dates, times and place specified herein or under any
other agreement between the Bank and the Borrower.
b) Provide The Genlyte Group Incorporated quarterly
audited consolidated financial statements and annual
audited consolidated financial statements within 60 and
120 days of each respective period and related Genlyte
Thomas Group LLC attachments, accompanied by a
compliance certificate from the Chief Financial Officer
confirming that all terms and conditions are in
compliance with this
Page 7 of 14
<PAGE>
Genlyte Thomas Group Nova Scotia ULC
Financing Agreement - December 15th, 1999
Agreement and that no event has occurred that is, or
with the passing of time may become, an Event of
Default under this Agreement or a default under any
other agreement.
c) Provide the Bank with information and financial data as
it may reasonably request from time to time.
d) The Borrower agrees that in the event it provides any
security interest, assignment or other interest in any
of its assets or more favorable covenants and/or
pricing to any other secured party or secured lender,
that it shall provide equal ranking and equal value
security over such assets and covenants and/or pricing
to the Bank.
EVENTS
OF DEFAULT: The Bank has the right to accelerate the payment of
principal and accrued interest under the credit facility
at any time after the occurrence of any one of the
following Events of Default:
a) The failure of the Borrower to provide to the Bank the
renewal of the irrevocable and unconditional standby
letter of credit without amendment as referred to under
the heading "Security", 60 days prior to the then
current expiry date of the said letter of credit.
b) Non-payment of principal when due or non-payment of
interest or fees within 3 business days of when due or
when demanded.
c) The failure of the Borrower and/or Genlyte Thomas Group
LLC to fulfill any of the terms and conditions
contained in this Agreement or any security document(s)
or any other agreement with the Bank and such default
continues unremedied for five (5) business days after
the occurrence.
d) The Borrower or Genlyte Thomas Group LLC become
insolvent or Bankrupt.
e) Any representation or warranty is inaccurate in any
material respect.
f) The Borrower (i) has an order for relief entered with
respect to it under Canadian or United States
bankruptcy laws or any other law, domestic or foreign,
relating to bankruptcy, insolvency or reorganization or
relief of debts as now or hereafter in effect, (ii)
makes an assignment for the benefit of creditors, (iii)
applies for, seeks, consents to, or acquiesces in, the
appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it
Page 8 of 14
<PAGE>
Genlyte Thomas Group Nova Scotia ULC
Financing Agreement - December 15th, 1999
or any material part of its property, (iv) institutes
any proceeding seeking an order for relief under
Canadian or United States bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a
bankruptcy or insolvent, or seeking dissolution,
winding up, disestablishment, liquidation,
reorganization, arrangement, adjustment or composition
of it or suspension of its general operations under the
law, domestic or foreign, relating to bankruptcy,
insolvency or reorganization or relief of debtors or
fails to file an answer or other pleading denying the
material allegations of any such proceeding filed
against it, (v) takes any company action to authorize
or effect any of the foregoing actions set forth in
this paragraph (e); (vi) fails to contest in good faith
any appointment or proceeding described in the
following paragraph (f); or (vii) does not pay, or
admits in writing its inability to pay, its debts
generally as they become due;
g) Without application, approval or consent of the
Borrower, a receiver, trustee, examiner, liquidator or
similar official is appointed for the Borrower or any
material part of its property, or any of the proceeding
described above is to be instituted against the
Borrower and such appointment constitutes undischarged
or such proceeding continues undismissed or unstayed
for a period of 60 consecutive days; or
h) Any court, government or governmental agency condems,
seizes or otherwise appropriates, or takes custody or
control of, all or any substantial portion of the
property of the Borrower;
Then, at any time during the existence of such event,
the Bank may, by notice to the Borrower or, in the case
of events under paragraph (f), (g) or (h),
automatically without notice, terminate the credit
facility and/or declare the advance and all other
amount owing under this Financing Agreement to be
immediately due and payable without presentment,
demand, protest, or other notice of any kind, all of
which are hereby expressly waived.
NON-WAIVER: Should there be a breach of or non-compliance with any
term or condition hereof, or should an Event of Default
occur, the Bank may at its option exercise any rights or
remedies it may have hereunder or which may be available
to it and the failure of the Bank to exercise any such
rights or remedies shall not be deemed to be a waiver of
such term or condition and will not prevent the Bank from
exercising such rights and remedies pursuant to that
default or subsequent defaults at any later time.
Page 9 of 14
<PAGE>
Genlyte Thomas Group Nova Scotia ULC
Financing Agreement - December 15th, 1999
REPRESENTATIONS:
No representation or warranty or other statement made by
the Bank concerning the credit shall be binding on the
Bank unless made by it in writing as a specific amendment
to this letter.
ADDED COST: If the introduction of or any change in any present or
future law, regulation, treaty, official or unofficial
directive, or regulatory requirement, (whether or not
having the force of law) or in the interpretation or
application thereof, relates to :
i) the imposition or exemption of payments due to the
Bank or on reserves or deemed reserves in respect of
the undrawn portion of any loan made available
hereunder; or
ii) any reserve, special deposit, regulatory or similar
requirement against assets, deposits, or loans or
other acquisition of funds for loans by the Bank; or
iii) the amount of capital required or expected to be
maintained by the Bank as a result of the existence
of the advances or the commitment made hereunder;
and the result or such occurrence is, in the sole
determination of the Bank, to increase the cost of the
Bank or to reduce the income received by the Bank
hereunder, the Borrower shall, on demand by the Bank, pay
to the Bank that amount which the Bank estimates will
compensate it for such additional cost or reduction in
income and the Bank's estimate shall be conclusive, absent
manifest error.
PREPAYMENT: Any portion of the loan which bears interest based on
floating rate may be prepaid at any time without penalty.
No prepayments shall be authorized on LIBOR loan except on
the last day of the applicable interest period of such
LIBOR loan. The Borrower shall compensate the Bank for all
losses, expenses and liabilities which the Bank may
sustain as the result of any prepayment.
YEAR 2000
REPRESENTATION:
1) The Borrower and Genlyte Thomas Group LLC shall use
commercially reasonable efforts to ensure that the
Borrower's products, business systems and revenue
generating systems (the "Systems") are Year 2000
compliant (as defined below) as soon as reasonably
practicable. Upon reasonable
Page 10 of 14
<PAGE>
Genlyte Thomas Group Nova Scotia ULC
Financing Agreement - December 15th, 1999
request by the Bank, Borrower shall provide
documentation relating to or evidencing such Year 2000
Compliance.
2) The Borrower and Genlyte Thomas Group LLC shall test
the Systems for Year 2000 Compliance and shall provide
the Bank with the opportunity to review test results at
such date or dates to be mutually agreed by the Bank
and Borrower.
3) The Borrower and Genlyte Thomas Group LLC have taken
the reasonable steps to ensure to their satisfaction
that third party suppliers, subcontractors, agents of
Borrower are Year 2000 Compliant.
"Year 200 Compliant" or "Year 2000 Compliance" means
the Systems will :
a) process, calculate, accept, maintain, store and
output date and time data accurately and without
delay, interruption or error at all times from, into
and between the Twentieth and twenty-first centuries
and in particular during the years 1999 and 2000,
including the leap year calculations; and
b) function accurately and without interruption at all
times before, on and after January 1, 2000
(including through February 29, 2000) without any
change in operations associated with the advent of
1999 or the twenty-first century.
EXPENSES: The Borrower shall pay all reasonable fees (including but
not limited to all legal and documentation fees) and
expenses incurred by the Bank or the Borrower in
connection with the preparation and registration of this
Agreement, Bank Security, and any other document
contemplated thereby, and with the enforcement of the
Bank's rights under this Agreement, the Bank Security and
any other document, whether or not any amounts are
advanced under the Agreement. These fees and expenses
shall include, but not be limited, to all outside counsel
expenses and all in-house legal expenses, if in-house
counsel are used.
The Borrower shall pay interest on unpaid amounts due
pursuant to this paragraph at the CDN Prime Rate plus 2%
per annum.
Page 11 of 14
<PAGE>
Genlyte Thomas Group Nova Scotia ULC
Financing Agreement - December 15th, 1999
ARRANGEMENT
FEE: The Borrower will pay prior to initial drawdown a
non-refundable Arrangement Fee of $25,000 (25 Basis
points).
ANNUAL
REVIEW FEE: For the next year and thereafter, the Borrower will pay a
non refundable Annual Review Fee of $10,000 for the Bank
to consider the Borrower's deemed request for extension of
the Maturity Date. Should the review involve any material
change in the general terms and conditions of the Loan,
then this fee could be renegotiated.
INDEMNITY: The Borrower shall indemnify and hold the Bank harmless
for all costs, expenses and liabilities in connection with
this credit including the prepayment of any LIBOR loan
prior to the last day of the interest period applicable to
such LIBOR loan.
EVIDENCE OF
INDEBTEDNESS: The Bank shall record on its records the amount of all
loans made hereunder, payments made in respect thereto,
and all other amounts becoming due to the Bank under this
Agreement. The Bank's records constitute, in the absence
of manifest error, conclusive evidence of the indebtedness
of the Borrower to the Bank pursuant to this Agreement.
PROMISSORY
NOTE: The Bank may request that loan made by it be evidenced by
a promissory note. In such event, the Borrower shall
prepare, execute and deliver to the Bank a promissory note
payable to the order of the Bank (or, if requested by the
Bank, to its assigns) and in a form approved by the Bank
and its legal counsel.
OTHER
AGREEMENTS: The Borrower acknowledges that it will sign other Bank
documents relating to the credit facility made available
hereunder, including without limitation the evidence of
debt, and that the terms and conditions contained in such
other documents shall be deemed to be incorporated herein
by reference and shall also apply to the credit facility.
Page 12 of 14
<PAGE>
Genlyte Thomas Group Nova Scotia ULC
Financing Agreement - December 15th, 1999
ASSIGNMENT: The Bank may assign or grant participation in all or part
of this Agreement or in any loan made hereunder to any
Canadian financial institution with the Borrower's prior
consent, which shall not be withheld unreasonably.
The Borrower may not assign or transfer all or any part of
its rights or obligations under this Agreement.
LANGUAGE
PREFERENCE: This Agreement has been drawn up in the English language
at the request of all parties. (Cet acte a ete redige en
langue anglaise a la demande de toutes les parties).
GOVERNING LAWS:
The laws of the Province of Quebec and of Canada.
In accepting this commitment you acknowledge that, if in the opinion of
the Bank, a material adverse change in risk occurs, including without limiting
the generality of the foregoing, any material adverse change in the financial
condition of the Borrower and/or Genlyte Thomas Group LLC, any obligation to
advance some or all of the above facility may be withdrawn or cancelled.
On this understanding, we request your acceptance of the following by
signing and returning the enclosed copy of this Financing Agreement by December
24th, 1999. At that point, security documentation will be prepared.
We wish to thank you for approaching Bank of Montreal for you company's
requirements and we look forward to an ongoing mutually beneficial relationship.
Yours truly,
/s/ PIERRE GERMAIN
-------------------------------------
Pierre Germain
Senior Manager
Page 13 of 14
<PAGE>
Genlyte Thomas Group Nova Scotia ULC
Financing Agreement - December 15th, 1999
ACKNOWLEDGED AND ACCEPTED BY:
Genlyte Thomas Group Nova Scotia ULC
Per : /s/ TERRY L. LANGE - TREASURER Date: 12/22/99
--------------------------------------- --------
Terry L. Lange
Per : /s/ WILLIAM G. FERKO Date: 12/22/99
--------------------------------------- --------
William G. Ferko
Genlyte Thomas Group LLC hereby intervenes in the present Agreement and
acknowledges that it has taken cognizance of the terms and conditions therein
contained and in particular the provisions contained under the headings
"Security" and "Positive Covenants" by these presents, discloses itself to be
content and satisfied therewith and further agrees and consents to the punctual
fulfillment of all of our obligations in favor of the Bank.
Genlyte Thomas Group LLC
Per : /s/ TERRY L. LANGE - TREASURER Date: 12/22/99
--------------------------------------- --------
Terry L. Lange
Per : /s/ WILLIAM G. FERKO - VP & CFO Date: 12/22/99
------------------------------- --------
William G. Ferko
Page 14 of 14
1
December 13, 1999
GENLYTE THOMAS GROUP NOVA SCOTIA ULC
4360 Brownsboro road, suite 300
P.O. Box 35120
Louisville, Kentucky, 40232
ATTENTION: MR. TERRY LANGE
FINANCING AGREEMENT
Dear Terry,
We are pleased to offer the Borrower Genlyte Thomas Group Nova Scotia ULC, the
following credit facility, subject to the terms and conditions outlined below:
BORROWER: GENLYTE THOMAS GROUP NOVA SCOTIA,
UNLIMITED LIABILITY COMPANY.
(referred to herein as the "Borrower")
LENDER: The Toronto-Dominion Bank, through its Houston
Agency, 909 Fannin, suite 1700, Houston, Texas,
U.S.A., 77010 (the "Bank")
TYPE OF CREDIT
AND AMOUNT:
1) 364 days, Committed non-revolving facility for up
to C$10,000,000.
Available at the Borrower's option by way of:
Prime Rate Based Loans in C$ ("Prime Based
Loans"); New York Prime Rate Based Loans in US$
("NY Prime Based Loans"); London Interbank
Offered Rate Loans in C$ and/or US$ ("LIBOR").
Libor: Terms between 30 and 180 days;
(the "Facility")
PURPOSE: 1) To provide funds to repay 33.3% of the Bridge
Loan used for the acquisition of the assets
(including goodwill) of Ledalite Architectural
Products Inc.
AVAILABILITY: 1) The facility shall be drawn on a Business day, no
later than December 31st, 1999 (the "Maturity
date"), unless otherwise extended at the sole
discretion of the Bank, as herein provided.
<PAGE>
2
REPAYMENT: Principal shall be repayable on the Maturity
Date.
MATURITY DATE
AND EXTENSION: a) Upon written notice from the Borrower to Bank,
received no earlier than 60 days and no later
than 30 days prior to the Maturity Date, the
Borrower may request an extension of the facility
for another period of 364 days and, provided no
Event of Default or default which, with notice or
the lapse of time would become an Event of
Default, shall then have occurred and be
continuing, if the Bank in its sole discretion
agrees to such an extension, the extended
Maturity Date shall be the date which is 364 days
from the Maturity Date in effect prior to such
extension, subject to the payment of such
administrative fees and expenses as the Bank may
require.
b) Any extended Maturity Date may be extended for a
further period of 364 days upon the Borrower's
request, subject to the conditions set forth in
paragraph (a) preceding, if the Bank, in its sole
discretion, shall agree, provided, however, that
no such extended Maturity Date shall be later
than December 17th, 2004.
c) Not in derogation but in furtherance of the
Bank's sole discretion to agree to any such
extension, no such extension shall be made unless
there shall be a Letter of Credit in an amount
and for a term at least coextensive with such
extension.
d) At the initial Maturity Date provided herein and
on every Maturity Date as extended hereunder, the
entire advance shall be due and payable in full
together with accrued interest, fees and any
other expenses hereunder unless extended;
provided, if the Bank shall agree to any such
extension, there shall be a mandatory prepayment
on the last day of the Maturity Date prior to
extension, in the amount which is the lesser of
the amount set forth below for such Maturity Date
and the entire amount then outstanding and due,
as a condition to any such extension:
Maturity Date 2000: C$ 500,000
Maturity Date 2001: C$1,000,000
Maturity date 2002: C$1,500,000
Maturity Date 2003: C$2,000,000
Maturity Date 2004: C$5,000,000
PREPAYMENT Any portion of the loan which bears interest
based on floating rate may be prepaid upon five
days' prior written notice to Bank; provided
however, that the LIBOR advance may be prepaid
only on an interest payment date and the Borrower
shall compensate Bank for all losses, expenses
and liabilities which Bank may sustain as the
<PAGE>
3
result of any prepayment. Any portion of the
advance prepaid may not to be reborrowed within
the term hereof, including for this purpose, any
extension in accordance with the terms hereof,
unless the Bank shall otherwise agree in writing.
INTEREST RATES
AND FEES
1) PRIME / NY PRIME SPREAD: 0 bp
LIBOR SPREAD: 50 bp per annum
NY Prime Rate means the rate of interest per
annum (based on a 365/366 day year) established
by the Bank from time to time as the reference
rate of interest for the determination of
interest rates that the Bank charges to customers
of varying degrees of creditworthiness for US
dollar loans made by it in Canada.
Prime Rate means the rate of interest per annum
(based on a 365/366 day year) established and
reported by the Bank to the Bank of Canada from
time to time as the reference rate of interest
for determination of interest rates that the Bank
charges to customers of varying degrees of
creditworthiness in Canada for Canadian dollar
loans made by it in Canada.
LIBOR means the rate of interest per annum (based
on a 360 day year) as determined by the Bank
(rounded upwards, if necessary to the nearest
whole multiple of 1/16th of 1%) at which the Bank
may make available United States dollars which
are obtained by the Bank in the Interbank Euro
Currency Market, London, England at approximately
11:00 a.m. (Toronto time) on the second business
day before the first day of, and in an amount
similar to, and for the period similar to the
interest period of, such advance.
Any interest rate based on a period less than a
year expressed as an annual rate for the purposes
of the Interest Act (Canada) is equivalent to
such determined rate multiplied by the actual
number of days in the calendar year in which the
same is to be ascertained and divided by the
number of days in the period upon which it was
based.
INTEREST
CALCULATION
AND PAYMENT Interest on Prime Based Loans and NY Prime Based
Loans is calculated daily and payable monthly in
arrears based on the number of days which the
loan is outstanding.
<PAGE>
4
Interest on LIBOR Loans is calculated and payable
on the earlier of contract maturity or quarterly
in arrears, for the number of days in the LIBOR
interest period.
Interest is payable both before and after demand,
default and judgment.
DRAWDOWN: 1) As required upon satisfaction of conditions
precedent, but no later than December 31st, 1999.
PRIME RATE BASED LOANS AND/OR NEW YORK PRIME RATE
BASED LOANS
The minimum amount of drawdown by way of Prime
Based Loans and/or NY Prime Based loans is
$500,000.
LIBOR
The Borrower shall advise the Bank of the
requested LIBOR contract maturity or interest
period. The Bank shall have the discretion to
restrict the LIBOR contract maturity.
The minimum amount of a drawdown by way of a
LIBOR loan is $1,000,000, and shall be in
multiples of $500,000 thereafter.
The Borrower will provide the Bank with 3
business days notice of a requested LIBOR Loan.
The Borrower shall give the Bank in the case of
LIBOR advances at least 3 business days
irrevocable prior written notice in the form of a
Request for advance; or telephonic notice
immediately followed by a Request for advance;
provided, however, that the Borrower's failure to
confirm any telephonic notice with a Request for
advance shall not invalidate any notice so given.
TAXATION
ON PAYMENTS All payments made by the Borrower to the Bank
will be made free and clear of all present and
future taxes (excluding the Bank's income taxes),
withholdings or deductions of whatever nature. If
these taxes, withholdings or deductions are
required by applicable law and are made, the
Borrower, shall as a separate and independent
obligation pay to the Bank all such additional
amounts as shall fully indemnify the Bank from
any such taxes, withholding or deduction.
SECURITY The following security shall be provided prior to
first drawdown, and shall be acceptable to the
Bank and its legal counsel:
<PAGE>
5
Irrevocable and Unconditional Standby Letter of
Credit in favor of the Bank as the beneficiary
thereof for an amount of C$10,000,000 or its US$
equivalent, issued by a recognized financial
institution satisfactory to the Bank in its sole
discretion. The letter of Credit shall bear an
initial term of no less than 364 days.
If the Letter of Credit is issued in US dollars,
to the extent, if any that at any time the Letter
of Credit value is less than the equivalent
amount of the facility due to fluctuations in the
exchange rate by which such equivalence is
determined (a "deficiency"), then upon demand by
Bank:
(1) Borrower shall immediately prepay the amount
of the deficiency, or
(2) deposit the amount of the deficiency with
the Bank and grant it a security interest in
the cash collateral, or
(3) immediately increase the amount of the
outstanding Letter of Credit, sufficient
enough to satisfy the Bank.
To ensure that there is appropriate coverage in
favor of the Bank in the event of an adverse
currency fluctuation between the US$ and CDN$,
Genlyte Thomas Group LLC shall upon issuance of
the LC, provide to the Bank a written undertaking
to pay to the Bank on the date the Bank demands
payment from the financial institution which
issued the letter of credit, a sum equal to the
difference, if any, between the proceeds received
from the financial institution which issued the
letter of credit and the then outstanding
indebtedness owing by the Borrower to the Bank as
expressed in CDN$. This undertaking shall remain
in full force and effect so long as there exists
any outstanding indebtedness owing to the Bank by
the Borrower.
(All of the above security shall be referred to
collectively in this agreement as "Bank
Security").
CONDITIONS
PRECEDENT The obligation of the Bank to make and keep on
its books any loan hereunder is subject to the
following conditions precedent:
a) The Bank shall have received the following
documents which shall be in form and substance
satisfactory to the Bank and its legal counsel:
i) Copy of this Financing Agreement and the
note, if any, each duly executed and
delivered by the Borrower, with the
Letter of Credit attached in form and
substance satisfactory to the Bank and
duly executed by an authorized officer
of the issuer thereof;
<PAGE>
6
ii) Certified copies of the Board
resolutions authorizing the Borrower's
borrowing hereunder and the execution,
delivery and performance of this
Financing Agreement and the note, if
any;
iii) Incumbency certificates showing the
names, titles and signatures of the
Borrower's officers authorized to
execute and deliver this Financing
Agreement and the note, if any, and
otherwise to act with respect to this
Financing Agreement and the note, if
any;
iv) A copy of The Genlyte Group Incorporated
September 30th, 1999 quarterly financial
statements, and related Genlyte Thomas
Group LLC attachments, accompanied by a
compliance certificate from the Chief
Financial Officer of Genlyte Thomas
Group LLC confirming that they are in
compliance with the Credit Agreement
dated August 30th, 1998 among Genlyte
Thomas Group LLC and its Banking
syndicate;
v) A copy of the last Form 10-Q and 10-K
for The Genlyte Group Incorporated and
Thomas Industries Inc, respectively;
vi) All of the Bank Security (including the
guarantee of Genlyte Thomas Group LLC)
and supporting resolutions and
solicitors letter of opinion required
hereunder;
vii) Any other documents deemed necessary by
the bank and its legal counsel;
b) The Borrower has paid the Arrangement fees,
Administration fees and all legal expenses
incurred by the Bank in connection with this
Financing and/or the Bank Security.
c) No Event of Default have occurred.
REPRESENTATIONS
AND WARRANTIES The Borrower hereby represents and warrants, which
representations and warranties shall be deemed to be
continually repeated so long as any amounts remain
outstanding and unpaid under this agreement or so long
as the commitment under this Agreement remains in
effect, that:
a) The Borrower is a corporation duly incorporated
and organized, validly existing and in good
standing under the laws of Nova Scotia and has
adequate corporate power and authority to carry
on its business, own property, borrow monies and
enter into agreements therefor, execute and
deliver the documents required hereunder, and
observe and perform the terms and provisions of
this agreement.
<PAGE>
7
b) There are no laws, statutes or regulations
applicable to or binding upon the Borrower and no
provisions in its Articles or in any by-laws,
resolutions, contracts, agreements, or
arrangements which would contravene, breach,
default or violate the execution, delivery,
performance, observance, of any terms of this
Agreement.
c) No Event of Default has occurred nor has any
event occurred which, in time, would constitute
an Event of Default under this Agreement or which
would constitute a default under any other
agreement.
d) There are no actions, suits or proceedings,
including appeals or applications for review, or
any knowledge of pending actions etc., against
the Borrower and its subsidiaries, before any
court or administrative agency which would result
in any material adverse change in the property,
assets, financial conditions, and business or
operations of the Borrower.
e) All material authorizations, approvals, consents,
licenses, exemptions, filings, registrations,
notarizations and other requirements of
governmental, judicial and public bodies and
authorities required reasonably necessary to
carry on its business have been or will be
obtained or effected and are or will be in full
force and effect.
f) The financial statements delivered to the Bank
fairly present the present financial position of
the Borrower and Genlyte Thomas Group LLC, and
have been prepared by their auditors in
accordance with Generally Accepted Accounting
Principles.
g) All the remittances required to be made by the
Borrower to the federal, provincial and municipal
governments have been made, are currently up to
date and there are no outstanding arrears.
Without limiting the foregoing, all employee
deductions (including Income Taxes, Unemployment,
insurance and Canada Pension Plan), sales taxes
(both provincial and federal), corporate income
taxes, payroll taxes and workmen's compensation
dues are currently paid and up to date.
POSITIVE
COVENANTS As long as any loans or commitment of the Bank remain
outstanding, the Borrower will:
a) Cause to be paid all amounts, interest and fees
on the dates, times and place specified herein or
under any other agreement between the Bank and
the Borrower.
<PAGE>
8
b) Cause The Genlyte Group Incorporated to provide
quarterly audited consolidated financial
statements and annual audited consolidated
financial statements within 60 and 120 days of
each respective period and related Genlyte Thomas
Group LLC attachments, accompanied by a
compliance certificate from the Chief Financial
Officer confirming that all terms and conditions
are in compliance with this Agreement and that no
event has occurred that is, or with the passing
of time may become, an Event of Default under
this Agreement or a default under any other
agreement.
c) Provide the Bank with information and financial
data as it may reasonably request from time to
time.
d) The Borrower agrees that in the event it provides
any security interest, assignment or other
interest in any of its assets or more favorable
covenants and/or pricing to any other secured
party or secured lender, that it shall provide
equal ranking and equal value security over such
assets and covenants and/or pricing to the Bank.
EVENTS OF
DEFAULT The Bank has the right to accelerate the payment of
principal and accrued interest under the facility, and
to cancel any undrawn portion of the facility
hereunder, at any time after the occurrence of any one
of the following Events of Default:
a) The failure of the Borrower to provide to the
Bank the irrevocable and unconditional standby
letter of credit as referred to under the heading
"Security".
b) Nonpayment of principal when due or nonpayment of
interest or fees within 3 business days of when
due or when demanded.
c) The failure of the Borrower and/or Genlyte Thomas
Group LLC to fulfill any of the terms and
conditions contained in this agreement or any
security document(s) or any other agreement with
the Bank and such default continues unremedied
for five (5) business days after the occurrence.
d) The Borrower or Genlyte Thomas Group LLC become
insolvent or bankrupt.
e) Any representation or warranty is inaccurate in
any material respect.
f) The Borrower (i) has an order for relief entered
with respect to it under Canadian or United
States bankruptcy laws or any other law, domestic
<PAGE>
9
or foreign, relating to bankruptcy, insolvency or
reorganization or relief of debtors as now or
hereafter in effect, (ii) makes an assignment for
the benefit of creditors, (iii) applies for,
seeks, consents to, or acquiesces in, the
appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it
or any material part of its property, (iv)
institutes any proceeding seeking an order for
relief under Canadian or United States bankruptcy
laws as now or hereafter in effect or seeking to
adjudicate it a bankrupt or insolvent, or seeking
dissolution, winding up, disestablishment,
liquidation, reorganization, arrangement,
adjustment or composition of it or suspension of
its general operations under the law, domestic or
foreign, relating to bankruptcy, insolvency or
reorganization or relief of debtors or fails to
file an answer or other pleading denying the
material allegations of any such proceeding filed
against it, (v) takes any company action to
authorize or effect any of the foregoing actions
set forth in this paragraph (e); (vi) fails to
contest in good faith any appointment or
proceeding described in the following paragraph
(f); or (vii) does not pay, or admits in writing
its inability to pay, its debts generally as they
become due;
g) Without application, approval or consent of the
Borrower, a receiver, trustee, examiner,
liquidator or similar official is appointed for
the Borrower or any material part of its
property, or any of the proceeding described
above is to be instituted against the Borrower
and such appointment continues undischarged or
such proceeding continues undismissed or unstayed
for a period of 60 consecutive days; or
h) Any court, government or governmental agency
condemns, seizes or otherwise appropriates, or
takes custody or control of, all or any
substantial portion of the property of the
Borrower;
then, at any time during the existence of such
event, the Bank may, by notice to the Borrower
or, in the case of events under paragraph (f),
(g) or (h), automatically without notice,
terminate the Facility and/or declare the advance
and all other amount owing under this agreement
to be immediately due and payable without
presentment, demand, protest, or other notice of
any kind, all of which are hereby expressly
waived.
NON-WAIVER Should there be a breach of or non-compliance with
any term or condition hereof, or should an Event of
Default occur, the Bank may at its option exercise
any rights or remedies it may have hereunder or which
may be available to it and the failure of the Bank to
exercise any such rights or remedies shall not be
deemed to be a waiver of such term or condition and
will not prevent the Bank from exercising such rights
and remedies pursuant to that default or subsequent
defaults at any later time.
<PAGE>
10
REPRESENTATIONS No representation or warranty or other statement made
by the Bank concerning the credit shall be binding on
the Bank unless made by it in writing as a specific
amendment to this letter.
ADDED COST If the introduction of or any change in any present
or future law, regulation, treaty, official or
unofficial directive, or regulatory requirement,
(whether or not having the force of law) or in the
interpretation or application thereof, relates to:
i) the imposition or exemption of payments due to
the Bank or on reserves or deemed reserves in
respect of the undrawn portion of any loan made
available hereunder; or,
ii) any reserve, special deposit, regulatory or
similar requirement against assets, deposits, or
loans or other acquisition of funds for loans by
the Bank; or,
iii) the amount of capital required or expected to be
maintained by the Bank as a result of the
existence of the advances or the commitment made
hereunder;
and the result of such occurrence is, in the sole
determination of the Bank, to increase the cost of
the Bank or to reduce the income received by the Bank
hereunder, the Borrower shall, on demand by the Bank,
pay to the Bank that amount which the Bank estimates
will compensate it for such additional cost or
reduction in income and the Bank's estimate shall be
conclusive, absent manifest error.
YEAR 2000
REPRESENTATION
1) The Borrower and Genlyte Thomas Group LLC shall use
commercially reasonable efforts to ensure that the
borrower's products, business systems and revenue
generating systems (the "Systems") are Year 2000
compliant (as defined below) as soon as reasonably
practicable. Upon reasonable request by the Bank,
Borrower shall provide documentation relating to or
evidencing such Year 2000 Compliance.
2) The Borrower and Genlyte Thomas Group LLC shall test
the Systems for Year 2000 Compliance and shall
provide the Bank with the opportunity to review test
results at such date or dates to be mutually agreed
by the Bank and Borrower.
3) The Borrower and Genlyte Thomas Group LLC has taken
the reasonable steps to ensure to its satisfaction
that third party suppliers, subcontractors, agents of
Borrower are Year 2000 Compliant.
<PAGE>
11
"Year 2000 Compliant" or "Year 2000 Compliance" means
the Systems will:
a) process, calculate, accept, maintain, store and
output date and time data accurately and without
delay, interruption or error at all times from, into
and between the Twentieth and twenty-first centuries
and in particular during the years 1999 and 2000,
including the leap year calculations; and
b) function accurately and without interruption at all
times before, on and after January 1, 2000 (including
through February 29, 2000) without any change in
operations associated with the advent of 1999 or the
twenty-first century.
EXPENSES The Borrower shall pay all reasonable fees (including
but not limited to all legal and documentation fees)
and expenses incurred by the Bank or the Borrower in
connection with the preparation and registration of
this Agreement and Bank Security and with the
enforcement of the Bank's rights under this Agreement
or the Bank Security, whether or not any amounts are
advanced under the Agreement. These fees and expenses
shall include, but not be limited, to all outside
counsel expenses and all in-house legal expenses, if
in-house counsel are used.
The Borrower shall pay interest on unpaid amounts due
pursuant to this paragraph at the Prime Rate plus 2%
per annum.
ARRANGEMENT FEE Upon initial drawdown, the Borrower will pay prior to
any drawdown a non-refundable arrangement fee of
$35,000 (35 basis points).
ADMINISTRATION
FEE Upon initial drawdown, the Borrower will pay an
administration fee of $25,000.
ANNUAL REVIEW
FEE For the next year and thereafter, the Borrower will
pay an annual review fee of $10,000 for the Bank to
consider the Borrower's request for an extension of
the Maturity Date. Should the review involve any
material change in the general terms and conditions
of the loan, then this fee could be renegotiated.
INDEMNITY The Borrower shall indemnify and hold harmless the
Bank for all costs, expenses and liabilities in
connection with this credit including the prepayment
of any LIBOR loan prior to the last day of the
interest period applicable to such LIBOR loan.
EVIDENCE OF
INDEBTEDNESS The Bank shall record on its records the amount of
all loans made hereunder, payments made in respect
thereto, and all other amounts becoming due to the
Bank under this Agreement. The Bank's records
<PAGE>
12
constitute, in the absence of manifest error,
conclusive evidence of the indebtedness of the
Borrower to the Bank pursuant to this Agreement.
PROMISSORY NOTE The Bank may request that loan made by it be
evidenced by a promissory note. In such event, the
Borrower shall prepare, execute and deliver to the
Bank a promissory note payable to the order of the
Bank (or, if requested by the Bank, to its assigns)
and in a form approved by the Bank.
OTHER AGREEMENTS The Borrower acknowledges that it will sign other
Bank documents relating to the credit facility made
available hereunder, including without limitation,
the commercial term loan note, and that the terms and
conditions contained in such other documents shall be
deemed to be incorporated herein by reference and
shall also apply to the credit facility.
ASSIGNMENT The Bank may assign or grant participation in all or
part of this Agreement or in any loan made hereunder
to any Canadian financial institution with the
Borrower's prior consent, which shall not be withheld
unreasonably.
The Borrower may not assign or transfer all or any
part of its rights or obligations under this
Agreement.
LANGUAGE
PREFERENCE This Agreement has been drawn up in the English
language at the request of all parties. (Cet acte a
ete redige en langue anglaise a la demande de toutes
les parties).
SUBMISSION TO
JURISDICTION For purposes of any suit, action or proceeding
involving this Financing Agreement, any note or any
other document or instrument contemplated hereby or
required hereunder or any judgment entered by any
court in respect of such suit, action or proceeding,
the Borrower expressly submits to the non-exclusive
jurisdiction of any state or U.S. Federal court
sitting in the borough of Manhattan in the city of
New York and agrees that any order, process or other
paper may be served upon the Borrower within or
without such court's jurisdiction by mailing a copy
to the Borrower at the Borrower's address for notices
provided in this Financing Agreement, provided that a
reasonable time for appearance is allowed. The
Borrower irrevocably waives any objection it may now
or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to
this Financing Agreement or any other credit document
brought in any such court and further irrevocably
waives any claim that any such suit, action or
proceeding brought in any such court has been brought
in an inconvenient forum.
<PAGE>
13
Nothing contained in this Financing Agreement or any
other document shall affect the Bank's right to serve
legal process in any other manner permitted by law to
bring any action or proceeding against the Borrower
or the Borrower's property in the courts of other
jurisdictions.
WAIVER OF
JURY TRIAL The Borrower and the Bank hereby knowingly,
voluntarily and intentionally waive any right to
trial by jury in any judicial proceeding involving,
directly or indirectly, any matter (whether sounding
in tort, contract or otherwise) in any way arising
out of, related to or connected with any credit
document or the relationship established thereunder
and agree that any such proceeding shall be tried
before a judge sitting without a jury.
SEVERABILITY If any provision of this Financing Agreement is or
becomes prohibited or unenforceable in any
jurisdiction, such prohibition or unenforceability
shall not invalidate or render unenforceable the
provision concerned in any other jurisdiction nor
invalidate, affect or impair any of the remaining
provisions hereof.
We trust you will find this facility helpful in meeting your ongoing financing
requirements. We ask that if you wish to accept this offer of financing please
do so by signing and returning the attached duplicate copy of this letter to the
undersigned. This offer will expire if not accepted in writing and received by
the Bank on or before December 20th, 1999.
Yours truly,
Sylvie Demers Normand Belcourt
Relationship Manager Manager, Commercial Credit
TD New York Branch
<PAGE>
14
TO THE TORONTO-DOMINION BANK:
Genlyte Thomas Group Nova Scotia ULC hereby accepts the foregoing offer this
22nd day of December , 1999.
- ---- --------
Genlyte Thomas Group Nova Scotia ULC
Per: Terry L. Lange - Treasurer
--------------------------
Per: William G. Ferko - VP & CFO
---------------------------
ROYAL BANK
OF CANADA
U.S.A. Headquarters
1 Liberty Plaza
New York, N.Y. 10006-1404
Tel.: (212) 428-6200
as of December 22, 1999
Genlyte Thomas Group Nova Scotia ULC
4360 Brownsboro Road, Suite 300
P.O. Box 35120
Louisville, KY 40232
Attention: Mr. Terry Lange
Ladies and Gentlemen:
Royal Bank of Canada (the "BANK") is pleased to offer to Genlyte Thomas
Group Nova Scotia ULC (the "BORROWER") on the terms and conditions set forth
herein an Advance (as defined below) in Canadian or U.S. Dollars (as the
Borrower shall request) in a principal amount not to exceed C$10,000,000 or the
Equivalent Amount (as defined below) in U.S. Dollars. Defined terms not
otherwise defined in this letter agreement (the "AGREEMENT") shall have the
meanings provided in Annex A attached hereto and made a part hereof.
1. THE ADVANCE
(a) Upon satisfaction of the conditions below, Borrower may, upon
notice as set forth below, request, on or after December 22, 1999, a single
advance hereunder in such currency as Borrower shall request (which may be
either Canadian Dollars or U.S. Dollars) for an amount not to exceed
C$10,000,000 or the Equivalent Amount in U.S. Dollars (the "ADVANCE"). As
between Canadian and U.S. Dollars, the currency in which the Advance is funded
is the "CURRENCY" and the currency in which the Advance is not funded is the
"OTHER CURRENCY." There shall be no conversion of the Advance from the Currency
to the Other Currency during the term of this Agreement.
(b) The interest rate basis for the Advance may be converted or
continued from time to time based on Libor or the Prime Rate applicable to the
Currency. At such time as interest is based on the applicable Libor rate, the
Advance shall be referred to as the Libor Advance and, at such time as interest
is based on the applicable Prime Rate, the Advance shall be referred to as the
Prime Rate Advance; PROVIDED, HOWEVER, any such characterization shall always
constitute but one and the same Advance hereunder in the Currency. If Libor is
selected and no Interest Period is specified, Borrower will be deemed to have
<PAGE>
Genlyte Thomas Group Nova Scotia ULC Page 2
December 22, 1999
requested an Interest Period of one month. If no interest rate basis is
specified, Borrower will be deemed to have requested a Prime Rate Advance. The
principal amount of the Advance at any time that it shall be a Libor Advance
shall be no less than C$500,000 or larger whole multiples of C$100,000 for the
Advance in Canadian Dollars and US$500,000 or larger whole multiples of
US$100,000 for the Advance in U.S. Dollars.
2. PURPOSE
Borrower will use the Advance to repay a portion of one or more loans
made by the Toronto Dominion Bank to Borrower, originally for the purpose of the
acquisition by Borrower of Ledalite Architectural Products Inc.
3. AVAILABILITY
The Advance shall be drawn on a Business Day (as defined below) no
later than December 31, 1999 and shall mature on the date which is 364 days
thereafter (the "MATURITY DATE"), unless otherwise extended at the sole
discretion of Bank, as herein provided.
4. NOTICE OF BORROWING OR CONVERSION
Notice of the date on which the Advance shall be made, the Currency
requested, the amount to be borrowed, the interest rate basis and, for Libor
Advance, the Interest Period, shall be given by Borrower to Bank in accordance
with the applicable provisions of Schedule A attached hereto and made a part
hereof. Conversions to a different interest rate basis may be made upon notice
as provided in such Schedule; PROVIDED, HOWEVER, in no case shall any Interest
Period extend beyond the Maturity Date.
5. REPAYMENT
The Advance shall be payable in full, together with all accrued
interest thereon not previously paid and any other fees or expenses due
hereunder on the Maturity Date. All amounts payable and due from the Borrower
pursuant to this Agreement shall be paid in immediately available funds in the
Currency. If a day on which an amount is due is not a Business Day, such amount
shall be deemed for all purposes of this Agreement to be due on next following
Business Day unless such next following Business Day is in the next calendar
month in which event such amount shall be due on the Business Day next
preceding, and all interest and other fees shall continue to accrue until
payment. Interest and fees payable under this Agreement are payable both before
and after any or all of default, demand and judgment.
<PAGE>
Genlyte Thomas Group Nova Scotia ULC Page 3
December 22, 1999
6. INTEREST RATES AND FEES
(a) The following rates of interest and fees shall apply:
(1) For the Advance in Canadian Dollars:
Prime Advance - RBP
Libor Advance - Canadian Libor + 0.50% per annum
(2) For the Advance in U.S. Dollars:
Prime Advance - RBUSBR
Libor Advance - U.S. Libor + 0.50% per annum
(b) Upon Borrower's acceptance of this Agreement, Borrower shall
pay Bank an arrangement fee of Cdn$25,000.
(c) If Borrower shall request an extension of the Advance in
accordance with Section 13 hereof and if Bank, in its sole
discretion, shall agree to such an extension, then, on and at
the effective date of such extension, Borrower shall pay to
Bank an extension fee of Cdn$10,000.
7. INTEREST PAYMENT AND CALCULATION
(a) PRIME ADVANCE
Interest on the Prime Advance will accrue daily on the basis of a year
of 365 days and will be calculated, payable and compounded monthly on such day
of the month as the Bank shall specify. Any change in RBP or RBUSBR shall be
effective as of the opening of business on the day such change takes place.
(b) LIBOR ADVANCE
For the Libor Advance, interest or fees, as applicable, will be
calculated and payable in the manner set forth in Schedule A attached hereto and
made a part hereof.
<PAGE>
Genlyte Thomas Group Nova Scotia ULC Page 4
December 22, 1999
(c) INTEREST ACT (CANADA)
The annual rates of interest or fees to which the rates calculated in
accordance with this Agreement are equivalent are the rates so calculated
multiplied by the actual number of days in the calendar year in which such
calculation is made and divided by 365 or, in the case of the Libor Advance,
360. In no event will interest exceed the rate permitted by law. Interest will
be calculated on the basis of a 365-day year and actual days elapsed, and
payable quarterly in arrears on the last Business Day of each March, June,
September and December following the Advance, and on the Maturity Date. The
annual rates of interest to which the rates calculated in accordance with this
Agreement are equivalent, are the rates so calculated multiplied by the actual
number of days in the calendar year in which such calculation is made and
divided by 365. The Borrower shall not be obligated to pay any interest under or
in connection with this letter agreement to the extent such interest exceeds the
effective annual rate of interest on the credit advanced hereunder that would be
lawfully permitted under the CRIMINAL CODE. For purposes of this section,
"interest" and "credit advanced" have the meanings ascribed to such terms in the
CRIMINAL CODE (Canada) and the "effective annual rate of interest" shall be
calculated in accordance with generally accepted actuarial practices and
principles.
8. PREPAYMENT
The Advance may be prepaid in whole or in part upon five days' prior
written notice to Bank; PROVIDED, HOWEVER, that the Libor Advance may be prepaid
only on an Interest Payment Date and the Borrower shall compensate Bank for all
losses, expenses and liabilities which Bank may sustain as the result of any
prepayment. Each prepayment shall be accompanied by payment of interest accrued
on the amount prepaid to the date of prepayment and shall be made in immediately
available funds in the Currency. Any portion of the Advance prepaid may not be
reborrowed within the term hereof, including for this purpose, any extension in
accordance with the terms hereof, unless the Bank shall otherwise agree in
writing.
9. EVIDENCE OF INDEBTEDNESS
(a) The Bank shall maintain on its records, accounts evidencing the
Borrower's liability to the Bank in respect of principal of and interest on the
Advance and all other amounts payable under this letter agreement. The Bank's
accounts shall constitute, in the absence of manifest error, PRIMA FACIE
evidence of the indebtedness of the Borrower to the Bank pursuant to this
Agreement.
(b) If the Advance is made in U.S. Dollars, it shall be evidenced by a
promissory note of the Borrower in form and substance satisfactory to the Bank,
in its sole discretion (the "Note").
<PAGE>
Genlyte Thomas Group Nova Scotia ULC Page 5
December 22, 1999
10. INDEMNIFICATION AND INCREASED COSTS
(a) If any payment of the Libor Advance occurs on a date that is not
the last day of the applicable Interest Period, whether because of acceleration,
mandatory prepayment or otherwise, or the Libor Advance is not made or converted
or continued on the date specified by the Borrower for any reason other than
default by the Bank, the Borrower will indemnify the Bank for any loss or cost
incurred by it resulting therefrom, including (but not limited to) any loss or
cost in liquidating or employing deposits acquired to fund or maintain such
Libor Advance. The Bank's written statement as to the amount of any such loss
(such statement to set forth in reasonable detail the manner in which such
amount was calculated) will be conclusive, absent manifest error.
(b) If the Bank's cost of making or maintaining the Advance is
increased, any amount received or receivable by the Bank hereunder is reduced or
the rate of return on the Bank's capital in respect of the Advance is reduced by
an amount deemed by the Bank to be material, by reason of any tax not in effect
on the date hereof (other than any increase in the rate of tax on the net
income, gains or profits of the Bank), any reserve or capital adequacy
requirement, liquidity ratio, special deposit requirement or otherwise, then the
Borrower shall either (i) promptly pay the Bank, on demand, any additional
amounts necessary to compensate the Bank for such additional cost or reduced
amount received or receivable or reduction in rate of return with respect to the
Advance or (ii) promptly prepay the outstanding amount of the Advance as
provided in this Agreement, together with such additional amounts for the period
up to such prepayment. The Bank's written statement as to the amount of any such
cost, loss or requirement (such statement to set forth in reasonable detail the
manner in which such amount was calculated) will be conclusive, absent manifest
error.
(c) If the Bank determines that the making or maintenance of the Libor
Advance would violate any applicable law, rule, regulation or directive, whether
or not having the force of law, or if the Bank determines that funds of a type
and maturity appropriate to match fund a requested conversion to or continuation
of the Libor Advance are not available, then the availability of the Libor
Advance shall be suspended and the Advance shall be converted to or continued as
the Prime Advance at the end of the then current Interest Period therefor or at
such earlier time as may be required by applicable law, rule, regulation or
directive. The Bank's written statement as to the such circumstances or
requirements (such statement to set forth in reasonable detail the manner in
which such amount was calculated) will be conclusive, absent manifest error.
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Genlyte Thomas Group Nova Scotia ULC Page 6
December 22, 1999
11. TAXES
Payments of all amounts to the Bank hereunder shall be made free and
clear of, and without deduction for, any present or future taxes, levies,
imposts, duties or withholding charges imposed by any governmental authority in
any jurisdiction or political subdivision or taxing authority therein( any such
taxes, levies, imposts, duties, withholding charges, collectively, "TAXES"). If
any such Taxes, withholdings or deductions are required by Applicable Law to be
made and are made, the Borrower shall, as a separate and independent obligation,
pay to the Bank all such additional amounts as shall fully indemnify the Bank
from, and hold the Bank harmless against, any such Taxes, withholding or
deduction.
12. LETTER OF CREDIT AND GUARANTY
(a) Borrower shall provide an Irrevocable Standby Letter of Credit in
favor of Bank as the beneficiary thereof for a face amount (the "LETTER OF
CREDIT AMOUNT") at least equal to the Advance, issued by a recognized financial
institution satisfactory to the Bank in its sole discretion, having a term of at
least 364-days from the date of the Advance with such provisions for renewal, if
any, as Bank may agree to (the "LETTER OF CREDIT").
(b) The Letter of Credit may be issued in the Currency or the Other
Currency.
(c) The Letter of Credit shall be in substantially a form submitted to
the Bank for approval and approved by the Bank, in its sole discretion ,
executed and delivered by the issuing bank on or prior to the date of the
Advance and shall be attached hereto and made a part hereof.
(d) If the Letter of Credit is issued in the Other Currency, to the
extent, if any that at any time the Letter of Credit Amount is less than the
Equivalent Amount of the Advance due to fluctuations in the exchange rate by
which such equivalence is determined (a "DEFICIENCY"), upon demand by Bank:
(1) Borrower shall immediately prepay the Advance in the amount of
such Deficiency;
(2) deposit with the Bank and grant to the Bank a security
interest in cash collateral in the Currency in the amount of the
Deficiency; or
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Genlyte Thomas Group Nova Scotia ULC Page 7
December 22, 1999
(3) cause the Letter of Credit immediately to be increased in an
amount at least equal to the Deficiency plus any such additional
amount which Bank shall reasonably request to cover reasonably
foreseeable adverse fluctuations in the exchange rate at the time
of such increase and to avoid the need for subsequent repeated
increases. (The Letter of Credit so increased shall be the Letter
of Credit hereunder as and from the date of such increase and any
subsequent Deficiency in respect of such Letter of Credit shall,
accordingly, be subject to this Section 12.)
(e) Further to protect Bank against any such adverse currency
fluctuation, Borrower shall cause Genlyte Thomas Group LLC (the "GUARANTOR") to
deliver to Bank, and it shall be a condition to the effectiveness hereof that
the Guarantor shall so deliver, concurrent with the execution and delivery
hereof by Borrower, a written guaranty (the "GUARANTY") in form and substance
satisfactory to Bank which guarantees payment of the Deficiency to the Bank by
the Guarantor on the date of any drawing under the Letter of Credit,
notwithstanding whether Bank shall have made any demand upon Borrower pursuant
to paragraph (d) preceding.
13. EXTENSION
(a) Upon written notice from Borrower to Bank, received no earlier than
60 days and no later than 30 days prior to the Maturity Date, Borrower may
request an extension of the Advance (in the Currency only) for another period of
364-days and, PROVIDED no Event of Default or default which, with notice or the
lapse of time would become an Event of Default, shall then have occurred and be
continuing, if the Bank in its sole discretion agrees to such an extension, the
extended Maturity Date shall be the date which is 364 days from the Maturity
Date in effect prior to such extension, subject to the payment of such
administrative fees and expenses as Bank may require. For the avoidance of all
doubt, it is hereby confirmed, acknowledged and agreed by Borrower that the Bank
shall have entire and sole discretion at the time of any extension request as
provided herein to agree or not to agree to such extension and upon such
additional or different terms and conditions as Bank may deem appropriate at
such time and under such circumstances, notwithstanding anything to the contrary
herein or otherwise.
(b) Any extended Maturity Date may be extended for a further period of
364 days upon the Borrower's request, subject to the conditions set forth in
paragraph (a) preceding, if the Bank, in its sole discretion, shall agree;
PROVIDED, HOWEVER, that no such extended Maturity Date shall be later than 6
days prior to the anniversary of the initial Maturity Date in the year 2004.
(c) Not in derogation but in furtherance of the Bank's sole discretion
to agree to any such extension, no such extension shall be made unless there
shall be a Letter of Credit in an amount and for a term at least coextensive
with such extension.
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Genlyte Thomas Group Nova Scotia ULC Page 8
December 22, 1999
(d) At the initial Maturity Date provided herein and on every Maturity
Date as extended hereunder, the entire Advance shall be due and payable in full
together with accrued interest, fees and any other expenses hereunder unless
extended; PROVIDED, if the Bank shall agree to any such extension, there shall
be a mandatory prepayment on the Maturity Date prior to extension, in the amount
which is the lesser of the amount set forth below for such Maturity Date and the
entire amount then outstanding and due, as a condition to any such extension:
Maturity Date 2000: C$ 500,000
Maturity Date 2001: C$1,000,000
Maturity Date 2002: C$1,500,000
Maturity Date 2003: C$2,000,000
Maturity Date 2004: C$5,000,000
14. CONDITIONS PRECEDENT
The Bank's obligation to fund the Advance is subject at the time of
such funding to the following conditions:
(a) The Bank shall have received:
(1) This Agreement and, if the Advance is requested to be made
in U.S. Dollars, the Note, each duly executed and delivered by
Borrower, and the Letter of Credit in form and substance satisfactory
to the Bank, duly executed by an authorized officer of the issuer
thereof;
(2) The Guaranty, duly executed and delivered by the
Guarantor;
(3) Certified copies of Board resolutions authorizing the
Borrower's borrowing hereunder and the execution, delivery and
performance of this Agreement and the Note, if any, and certified
copies of Board resolutions of the Guarantor authorizing the
Guarantor's Guaranty as provided herein and therein;
(4) Incumbency certificates showing the names, titles and
signatures of the Borrower's officers authorized to execute and deliver
this Agreement and the Note, if any, and otherwise to act with respect
to this Agreement and the Note, if any, and incumbency certificates
showing the names, titles and signatures of Guarantor's officers
authorized to execute and deliver the Guaranty;
(5) An opinion of counsel to the Borrower, in form and
substance satisfactory to the Bank;
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Genlyte Thomas Group Nova Scotia ULC Page 9
December 22, 1999
(6) A copy of the Genlyte Group Incorporated financial
statements for the latest fiscal quarter and related Genlyte Thomas
Group LLC attachments, accompanied by a compliance certificate from the
Chief Financial Officer of Genlyte Thomas Group LLC confirming that all
terms and conditions are in compliance with the Credit Agreement dated
August 30, 1998 by and among Genlyte Thomas Group LLC and the Banks
named therein and Bank of America National Trust and Savings
Association, as Agent and Issuing Bank (as amended, modified or
supplemented);
(7) A copy of the latest Forms 10-Q and 10-K for The Genlyte
Group Incorporated and Thomas Industries Inc., respectively;
(8) Such other documents, instruments, opinions or assurances
as the Bank may require; and
(9) Payment of the administrative fee provided herein and all
legal expenses incurred by the Bank in connection with this Agreement,
the Note, if any, the Letter of Credit, the Guaranty or any related
matters contemplated hereby.
(b) At the time the Borrower requests the Advance, upon acceptance of
the proceeds and after giving effect thereto, there shall exist no Event of
Default (as specified below) and no condition or event that, with or without the
giving of notice or lapse of time or both, would become an Event of Default, and
all representations and warranties made herein shall be true and correct with
the same effect as though made on and as of such date.
15. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank as of the date hereof,
the date on which the Advance is made, any date on which an extension is
requested hereunder and any date on which such extension is made, that:
(a) Borrower is a corporation, duly incorporated and organized, validly
existing and in good standing under the laws of Nova Scotia, has adequate
corporate power and authority to carry on its business, own property, borrow
monies and enter into agreements therefor, executed and deliver this Agreement
and any other document or instrument required hereunder or contemplated hereby,
observe and perform the terms and conditions of this Agreement and that it is
duly registered or qualified to carry on business in all jurisdictions where the
nature of its properties, assets or business makes such registration or
qualification necessary or desirable.
<PAGE>
Genlyte Thomas Group Nova Scotia ULC Page 10
December 22, 1999
(b) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary actions, this Agreement has been duly executed
by Borrower and such execution, delivery and performance do not and will not (i)
violate any law, regulation or rule by which it is bound, (ii) violate any
provision of its charter documents, by-laws or any shareholders' agreement to
which it is subject, (iii) contravene or result in a breach of, or a default
under, any agreement or instrument to which it is a party or by which it or any
of its properties or assets may be bound or affected or (iv) result in the
creation of any encumbrance on any of its properties or assets.
(c) Subject to applicable bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting creditors' rights generally, and
to the equitable and statutory powers of courts to stay proceedings before them
and to stay the execution of judgments, this Agreement constitutes a legal,
valid and binding obligation of the Borrower, enforceable in accordance with its
terms.
(d) The most recent audited, consolidated financial statements of
Borrower and Genlyte Thomas Group LLC delivered to the Bank fairly present in
conformity with GAAP the consolidated financial position of the Borrower and
Genlyte Thomas Group LLC as of the date thereof and the consolidated results of
operations and cash flows for the fiscal year covered thereby, and since the
date of such financial statements there has occurred no material adverse change
in the business or financial condition of the Borrower or Genlyte Thomas Group
LLC.
(e) Borrower is in compliance in every material respect with all
Applicable Laws, including, without limitation, all Environmental Laws and there
are no actions, suits or proceedings, initiated or threatened, against the
Borrower and its subsidiaries, before any court or administrative agency or
otherwise which would result in any material adverse effect on the property,
assets, financial condition and business or operations of the Borrower.
(f) No event has occurred which constitutes, or which with giving of
notice, lapse of time or other condition would constitute, a default having a
material adverse effect on the financial condition of the Borrower under or in
respect of any agreement, undertaking or instrument to which the Borrower is a
party or to which the Borrower or any of its properties or assets may be
subject.
(g) All material authorizations, approvals, consents, licenses,
exemptions, filings, registrations, notarizations and other requirements of
governmental, judicial and public bodies and authorities required to carry on
Borrower's business have been obtained or effected and will, as such
requirements arise in the future, be obtained and effected and are or will be,
respectively, in full force and effect.
<PAGE>
Genlyte Thomas Group Nova Scotia ULC Page 11
December 22, 1999
(h) All payments required to be made by Borrower to any taxing or
regulating governmental authority in respect of taxes, fees, licenses or other
payments have been paid and there are no outstanding arrears. Without limiting
the foregoing, all employee deductions (including income taxes, unemployment
insurance and Canada Pension Plan), sales taxes (provincial, state or federal),
corporate income taxes in any jurisdiction, payroll taxes and worker's
compensation are fully and currently paid.
(i) All remittances required to be made by the Borrower to any federal,
provincial or state and municipal governments have been made, are currently up
to date and there are no outstanding arrears. Without limiting the foregoing,
all employee deductions (including income taxes, unemployment, insurance and
Canada Pension Plan, sales taxes (provincial, state or federal), corporate
income taxes, payroll taxes and worker's compensation amounts due are currently
paid and up to date.
(j) The Borrower and Genlyte Thomas Group LLC have used and shall
continue to use commercially reasonable practices and judgment to ensure that
the Borrower's products, business systems and revenue generating systems (the
"SYSTEMS") are "Year 2000 Compliant" as defined below. Upon request by Bank,
Borrower shall provide documentation relating to or evidencing such Year 2000
Compliance. The Borrower and Genlyte Thomas Group LLC have each taken, and will
continue to take as necessary, reasonable steps to ensure to the satisfaction of
each that third party suppliers, subcontractors, or Agents of either of them are
Year 2000 Compliant. "YEAR 2000 COMPLIANT" or "YEAR 2000 COMPLIANCE" means the
Systems will process, calculate, accept, maintain, store and produce date and
time data and data dependent thereon accurately and without delay, interruption
or error at all times from, the date of this Agreement forward for so long as
this Agreement shall be in effect, including without limitation, for dates
before, on and after January 1, 2000, including leap year calculations, and will
function accurately and with out interruption at all times before, on and after
January 1, 2000 (including through February 29, 2000) without any adverse change
in operations associated with the advent of the year 2000.
16. COVENANTS
The Borrower agrees that, until all obligations to the Bank hereunder
are paid in full, the Borrower will:
(a) Pay when due all amounts owing under this Agreement.
<PAGE>
Genlyte Thomas Group Nova Scotia ULC Page 12
December 22, 1999
(b) Furnish to the Bank not later than 120 days after the close of each
of its fiscal years, and within 60 days of the close of each fiscal quarter,
copies of annual audited and quarterly audited, consolidated financial
statements for such period and related Genlyte Thomas Group LLC attachments,
prepared in accordance with generally accepted accounting principles, reported
on by the Borrower's independent certified public accountants, together with a
compliance certificate from the Chief Financial Officer confirming that all
terms and conditions are in compliance with this Agreement and that no even has
occurred that is, or with the passing of time may become, an Event of Default
hereunder or a default under any other agreement.
(c) Provide the Bank with any information and financial data as it may
reasonably request from time to time.
(d) Promptly give notice to the Borrower of the existence of any
condition or the occurrence of any event or act that, with or without the giving
of notice or lapse of time, or both, would constitute an Event of Default.
(e) In the event, after the date hereof, Borrower grants any security
interest, or otherwise pledges, assigns or transfers property or rights in any
of its assets as security to, or agrees to covenants or pricing more favorable
than provided herein with, any other lender or secured creditor, grant, pledge,
assign or transfer an interest in such property or rights or in property and
rights equivalent in value at such time to such property and rights (up to the
U.S. Dollar Equivalent Amount of the obligations of Borrower hereunder), or
otherwise amend this Agreement to provide for covenants or pricing, in any case
ranking at least equal and PARI PASSU to such interests in favor of such other
lenders or secured creditors.
17. EVENTS OF DEFAULT
If any of the following events occurs:
(a) any principal (including any prepayment) of the Advance, any
interest on the Advance, or any other amount due hereunder is not paid when due
and such failure continues for three Business Days;
(b) the Borrower defaults in the due performance or observance of any
other term, covenant or agreement to be performed or observed by it contained
herein and such default, if capable of cure, is not cured within 30 Business
Days after the Borrower's receipt of notice thereof;
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Genlyte Thomas Group Nova Scotia ULC Page 13
December 22, 1999
(c) any representation made herein or in any document or financial or
other statement delivered in connection herewith proves to have been incorrect
or misleading in any material respect as of the date at which it was made or
deemed to be made and such representation shall be material at the time it shall
have been determined to have been false or incorrect; or
(d) any default or similar event occurs or condition exists that would
permit and in fact causes the Bank to declare immediately due and payable, or
the Borrower or the Guarantor fails to pay at its stated maturity, any amount
owed to the Bank by the Borrower or the Guarantor under any other loan or credit
agreement;
(e) the Letter of Credit is terminated or the rating of the issuer
thereof changes unfavorably, in the Bank's opinion, or the Guaranty ceases to be
in full force and effect, enforceable in accordance with its terms against the
Guarantor;
(f) Borrower (i) has an order for relief entered with respect to it
under Canadian or United States bankruptcy laws or any other law, domestic or
foreign, relating to bankruptcy, insolvency or reorganization or relief of
debtors as now or hereafter in effect, (ii) makes an assignment for the benefit
of creditors, (iii) applies for, seeks, consents to, or acquiesces in, the
appointment of a receiver, custodian, trustee, examiner, liquidator or similar
official for it or any material part of its property, (iv) institutes any
proceeding seeking an order for relief under Canadian or United States
bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up, disestablishment,
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts or suspension of its general operations under any law, domestic or
foreign, relating to bankruptcy, insolvency or reorganization or relief of
debtors or fails to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (v) takes any company
action to authorize or effect any of the foregoing actions set forth in this
paragraph (e); (vi) fails to contest in good faith any appointment or proceeding
described in the following paragraph (f); or (vii) does not pay, or admits in
writing its inability to pay, its debts generally as they become due;
(g) without application, approval or consent of the Borrower, a
receiver, trustee, examiner, liquidator or similar official is appointed for the
Borrower or any material part of its property, or a proceeding described in the
preceding paragraph (f) is be instituted against the Borrower and such
appointment continues undischarged or such proceeding continues without being
dismissed or is unstayed for a period of 60 consecutive days; or
(h) any court, government or governmental agency condemns, seizes or
otherwise appropriates, or takes custody or control of, all or any substantial
portion of the property of the Borrower;
<PAGE>
Genlyte Thomas Group Nova Scotia ULC Page 14
December 22, 1999
then, at any time during the existence of such event, the Bank may, by notice to
the Borrower or, in the case of events under paragraphs (f), (g) or (h),
automatically without notice, terminate the Agreement and the obligations of the
Bank hereunder and/or declare the Advance and all other amounts owing under this
Agreement to be immediately due and payable without presentment, demand,
protest, or other notice of any kind, all of which are hereby expressly waived.
18. NOTICES
Except as otherwise specified herein, all notices, requests, demands or
other communications to or upon the respective parties hereto shall be in
writing and shall be deemed to have been duly given or made five Business Days
after being mailed (by registered or certified mail, return receipt requested)
or when delivered by hand or overnight courier or by telefax, such telefax to be
telephonically confirmed by the sender, to the party to which such notice,
request, demand or other communication is required or permitted to be given or
made under this letter agreement, addressed to such party at its address or
telefax number set forth on Annex B attached hereto and made a part hereof or at
such other address or telefax number as such party may hereafter specify by a
notice to the other party.
19. NO WAIVER; NO ORAL MODIFICATIONS
(a) No failure or delay on the part of Bank in exercising any right
hereunder or under the Guaranty, and no course of dealing between the Borrower
and the Bank, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder or under the Guaranty preclude any other or
further exercise thereof or the exercise of any other right hereunder or
thereunder. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies that the Bank would otherwise have.
(b) This Agreement may not be amended, supplemented, waived or
otherwise modified orally.
20. BINDING EFFECT
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns; PROVIDED,
HOWEVER, that the Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Bank.
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Genlyte Thomas Group Nova Scotia ULC Page 15
December 22, 1999
(b) Bank may sell, assign, transfer, negotiate or otherwise dispose of
its rights hereunder (a) with the prior written consent of the Borrower, which
consent shall not be unreasonably withheld or delayed, to a Canadian financial
institution, or (b) without any such consent, to a Canadian affiliate of the
Bank; PROVIDED, the consent of the Borrower under clause (i) shall not be
required if an Event of Default shall have occurred and be continuing.
21. EXPENSES
The Borrower shall pay on demand all out-of-pocket expenses (including
fees and disbursements of counsel) reasonably incurred by Bank in connection
with the preparation of this Agreement, the Letter of Credit, the Guaranty, any
promissory note made hereunder or any other document, instrument or action
arising hereunder or contemplated hereby, and the preservation and enforcement
of Bank's rights hereunder.
22. CURRENCY
The Currency in which the Advance is funded, whether Cdn. Dollars or
U.S. Dollars is of the essence. The obligations of Borrower hereunder shall,
notwithstanding any payment in any currency other than the Currency (whether
pursuant to judgment or award or otherwise), be discharged only to the extent of
the amount of the Currency that the Bank may, in accordance with normal banking
procedures, purchase and receive with the sum paid in such different currency,
including without limitation, the Other Currency (including any premium and
costs of exchange) on the Business Day immediately following the day on which
the Bank receives such payment in such different currency. If the conversion
rate actually applied differs from the rate of exchange prevailing on such
Business Day and, as a result, the amount of the Currency so purchased falls
short of the amount originally due in the Currency, the Borrower agrees to pay
such additional amount in the Currency as may be necessary to indemnify the Bank
against such shortfall (and if the amount of the Currency so purchased exceeds
the amount originally due, the excess shall be refunded to the Borrower). Any
obligation not discharged by such payment shall be due as a separate and
independent obligation and, until discharged as provided in this Section, shall
continue in full force and effect. No such obligation shall be affected by any
judgment being obtained for any amount due under or in respect of this Agreement
or by any time or indulgence granted to the Borrower from time to time.
23. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the law of the State of New York.
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Genlyte Thomas Group Nova Scotia ULC Page 16
December 22, 1999
24. SUBMISSION TO JURISDICTION.
FOR PURPOSES OF ANY SUIT, ACTION OR PROCEEDING INVOLVING THIS
AGREEMENT, ANY NOTE OR ANY OTHER DOCUMENT OR INSTRUMENT CONTEMPLATED HEREBY OR
REQUIRED HEREUNDER OR ANY JUDGMENT ENTERED BY ANY COURT IN RESPECT OF SUCH SUIT,
ACTION OR PROCEEDING, THE BORROWER EXPRESSLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY STATE OR U.S. FEDERAL COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK AND AGREES THAT ANY ORDER, PROCESS OR OTHER
PAPER MAY BE SERVED UPON THE BORROWER WITHIN OR WITHOUT SUCH COURT'S
JURISDICTION BY MAILING A COPY TO THE BORROWER AT THE BORROWER'S ADDRESS FOR
NOTICES PROVIDED IN THIS AGREEMENT, PROVIDED THAT A REASONABLE TIME FOR
APPEARANCE IS ALLOWED. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OF PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
BROUGHT IN ANY SUCH COURT AND FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING CONTAINED IN THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT SHALL AFFECT THE BANK'S RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR PROCEEDING AGAINST THE
BORROWER OR THE BORROWER'S PROPERTY IN THE COURTS OF OTHER JURISDICTIONS.
25. WAIVER OF JURY TRIAL.
THE BORROWER AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH
ANY CREDIT DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER AND AGREE THAT
ANY SUCH PROCEEDING SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
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Genlyte Thomas Group Nova Scotia ULC Page 17
December 22, 1999
26. SEVERABILITY
If any provision of this Agreement is or becomes prohibited or
unenforceable in any jurisdiction, such prohibition or unenforceability shall
not invalidate or render unenforceable the provision concerned in any other
jurisdiction nor invalidate, affect or impair any of the remaining provisions
hereof.
27. WHOLE AGREEMENT
This Agreement and any agreements delivered pursuant to or referred to
in this Agreement constitute the whole and entire agreement between the parties
in respect hereof.
If you agree to all of the terms and conditions set forth herein,
please accept and agree by signing in the place provided below and return one
original to the attention of the undersigned. This offer is open for acceptance
until the conclusion of two weeks from the date hereof and if not accepted by
the execution and delivery hereof by such date, shall expire as of close of
business on such date.
Yours truly,
ROYAL BANK OF CANADA
By
Name: N.G. Millar
Title: Senior Manager
Accepted and agreed, this 22nd day of December , 1999:
---- -----------
GENLYTE THOMAS GROUP
NOVA SCOTIA ULC
By W.G. FERKO
---------------------------
Name: William G. Ferko
Title: Vice President
By T.L. LANGE
---------------------------
Name: Terry Lange
Title: Treasurer
<PAGE>
Annex A
DEFINITIONS
"APPLICABLE LAW" means, in respect of any Person, property, transaction or
event, all present or future applicable laws, statutes, regulations, treaties,
judgments and decrees and (whether or not having the force of law) all
applicable official directives, rules, guidelines, orders, by-laws, approvals,
permits, consents and policies of any governmental or regulatory body, stock
exchange or securities commission having jurisdiction.
"BUSINESS DAY" means a day, excluding Saturday, Sunday and any other day which
shall be in The City of New York or in The City of Toronto a legal holiday or a
day on which banking institutions are closed and means, with respect to the
Libor Advance, a Business Day which is also a day on which dealings in the
applicable currency, U.S. or Canadian, as the case may be by and between leading
banks in the London interbank market may be conducted.
"CANADIAN DOLLARS" and the symbols "CDN$" and "$" each means lawful money of
Canada.
"CANADIAN LIBOR" means, with respect to each Libor Interest Period applicable to
the Advance in Canadian Dollars, the annual rate of interest (rounded upwards,
if necessary, to the nearest whole multiple of one sixteenth of one percent
(1/16th%)), at which the Bank, in accordance with its normal practice, would be
prepared to offer to leading banks in the London interbank market (or such other
interbank market as Bank shall deem appropriate under the circumstances) for
delivery on the first day of such Libor Interest Period and for a period equal
to such Libor Interest Period, deposits in Canadian Dollars of amounts
comparable to such Libor Advance to be outstanding during such Libor Interest
Period, at or about 10:00 a.m. (Toronto time) on the Interest Determination
Date.
"CONTAMINANT" includes, without limitation, any pollutant, dangerous substance,
liquid waste, industrial waste, hazardous material, hazardous substance or
contaminant including any of the foregoing as defined in any Environmental Law.
"ENVIRONMENTAL ACTIVITY" means any past, present or future activity, event or
circumstance in respect of a Contaminant, including, without limitation, its
storage, use, holding, collection, purchase, accumulation, assessment,
generation, manufacture, construction, processing, treatment, stabilization,
disposition, handling or transportation, or its Release, escape, leaching,
dispersal or migration into the natural environment, including the movement
through or in the air, soil, surface water or groundwater.
"ENVIRONMENTAL LAW" means any and all applicable international, federal,
provincial, state, municipal or local laws, statutes, regulations, treaties,
orders, judgments, decrees, ordinances and official directives and all
authorizations relating to the environment, occupational health and safety or
any Environmental Activity.
<PAGE>
A-2
"EQUIVALENT AMOUNT" means, with respect to any amount of the Currency or the
Other Currency, the amount of, respectively, the Other Currency or the Currency
required to purchase that amount of the first currency through the Bank at the
Bank's noon spot rate in either New York City or Toronto as applicable, in
accordance with normal banking procedures.
"GAAP" means generally accepted accounting principles in effect from time to
time in Canada applied in a consistent manner from period to period.
"INTEREST DETERMINATION DATE" means, with respect to a Libor Advance, the date
which is 2 Business Days prior to the first day of the Libor Interest Period
applicable to such Libor Advance.
"INDEBTEDNESS" means, (a) indebtedness for borrowed money or for the deferred
purchase price of goods or services (including trade obligations), (b)
obligations under leases which are or should be reported, in accordance with
generally accepted accounting principles, as capital leases, (c) obligations
under letters of credit or guarantee, whether issued for the benefit of the
Borrower or another or others, (d) obligations arising pursuant to bankers'
acceptance facilities, and (e) obligations under guarantees, endorsements (other
than for collection or deposit in the ordinary course of business) and other
obligations to purchase, provide funds for payment, provide funds for investment
in or otherwise provide financial assistance to any other party but
"INDEBTEDNESS" does not include deferred taxes.
"LIBOR" means, as applicable, Canadian Libor or U.S. Libor.
"LIBOR INTEREST DATE" means, with respect to the Libor Advance, the last day of
each Libor Interest Period and, if the Borrower selects a Libor Interest Period
longer than 3 months, the Libor Interest Date shall be the date falling every 3
months after the beginning of such Libor Interest Period as well as the last day
of such Libor Interest Period.
"LIBOR INTEREST PERIOD" means, with respect to any Libor Advance, a period of
one, two, three or six months as selected by Borrower, subject to availability,
commencing with the date on which such Libor Advance is made or converted from
the Prime Advance, or the last day of the immediately prior Libor Interest
Period.
"PERSON" means any individual, firm, partnership, company, corporation,
government, governmental body or agency, instrumentality and unincorporated body
of persons or association.
"RELEASE" includes discharge, spray, inject, inoculate, abandon, deposit, spill,
leak, seep, pour, emit, empty, throw, dump, place and exhaust, and when used as
a noun has a similar meaning.
<PAGE>
A-3
"RBP" and "ROYAL BANK PRIME" each means, with respect to the Prime Advance in
Canadian Dollars, the annual rate of interest announced by the Bank from time to
time as being a reference rate then in effect for determining interest rates on
Canadian Dollar commercial loans made in Canada.
"RBUSBR" and "ROYAL BANK US BASE RATE" each means, with respect to the Prime
Advance in U.S. Dollars, the annual rate of interest determined by the Bank in
New York City from time to time as its prime rate then in effect for determining
interest rates on US Dollar commercial loans.
"US DOLLARS," "U.S. DOLLARS" and "US$" each means lawful money of the United
States of America in immediately available funds.
"U.S. LIBOR" means, with respect to each Libor Interest Period applicable to the
Advance in U.S. Dollars, the annual rate of interest (rounded upwards, if
necessary, to the nearest whole multiple of one sixteenth of one percent
(1/16th%)), at which the Bank, in accordance with its normal practice, would be
prepared to offer to leading banks in the London interbank market for delivery
on the first day of such Libor Interest Period and for a period equal to such
Libor Interest Period, deposits in US Dollars of amounts comparable to such
Libor Advance to be outstanding during such Libor Interest Period, at or about
10:00 a.m. (New York City time) on the Interest Determination Date.
<PAGE>
ANNEX B
ADMINISTRATIVE DETAILS
PAYMENTS TO BANK: For U.S. Dollar payments:
Royal Bank of Canada
Grand Cayman (North America No. 1) Branch
c/o New York Branch
Attention: Loans Administration
The Chase Manhattan Bank, New York
ABA # 021000021
Account of Royal Bank of Canada, New York
Account No.: 920-1-033363 for further credit to account
no. 218-599-9 (loans), Ref: Genlyte Thomas Group
For Canadian Dollar payments: as Bank shall advise Borrower
in writing prior to any such payment.
BORROWER'S ADDRESS
FOR NOTICES: Genlyte Thomas Group Nova Scotia ULC
4360 Brownsboro Road, Suite 300
P.O. Box 35120
Louisville, KY 40232
Attention: Mr. Terry Lange
Telephone No.:
Facsimile No.:
BANK'S ADDRESS
FOR NOTICES: Royal Bank of Canada
Grand Cayman (North America No.1) Branch
c/o New York Branch
One Liberty Plaza, 4th Floor
New York, New York 10006-1404
Attention: Linda Joannou
Telephone No.: (212) 428-6212
Facsimile No.: (212) 428-2372
with a copy to: Royal Bank of Canada
One Liberty Plaza, 4th Floor
New York, New York 10006-1404
Attention: Mr. N. G. Millar, Senior Manager
Telefax No.: (212) 428-6363
Telephone No.: (212) 809-7148
<PAGE>
Schedule A
NOTICE REQUIREMENTS FOR DRAWDOWN,
CONVERSIONS OR CONTINUATIONS
THE PRIME ADVANCE
Borrower shall request the Prime Advance or conversion to Prime Advance by 10:00
AM (Toronto or New York City time, as applicable to the Currency) on the day of
the Advance, conversion or continuation.
THE LIBOR ADVANCE
Borrower shall request the Libor Advance by 10:00 a.m. (Toronto or New York City
time, as applicable to the Currency) on the Interest Determination Date.
LIBOR ADVANCE CONDITIONS
The Borrower may borrow by way of the Libor Advance subject to the following
further conditions:
(a) The Borrower may select the Libor Interest Period applicable to the Libor
Advance and shall notify the Bank of such Libor Interest Period when giving
notice pursuant to Schedule "A".
(b) The Borrower shall pay interest on the Libor Advance in the Currency on
each Libor Interest Date, calculated in arrears. Such interest will accrue
daily on the basis of the actual number of days elapsed and a year of 360
days.
EXHIBIT 11
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
CALCULATION OF BASIC AND DILUTED EARNINGS PER SHARE
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
($ in thousands, except per share data)
1999 1998 1997
------- ------- -------
BASIC EARNINGS PER SHARE
Net income $32,781 $26,760 $19,113
Average common shares outstanding 13,831 13,671 13,127
------- ------- -------
Basic Earnings Per Share $ 2.37 $ 1.96 $ 1.46
======= ======= =======
DILUTED EARNINGS PER SHARE (1)
Net income $32,781 $26,760 $19,113
Average common shares outstanding 13,831 13,671 13,127
Incremental common shares issuable: stock options 18 19 309
------- ------- -------
Average common shares outstanding assuming dilution 13,849 13,690 13,436
------- ------- -------
------- ------- -------
Diluted Earnings Per Share $ 2.37 $ 1.95 $ 1.42
======= ======= =======
(1) Diluted earnings per share include all average common shares outstanding
adjusted for the incremental dilution of outstanding stock options.
SELECTED FINANCIAL DATA
GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
Amounts in thousands, except per share data
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales $978,302 664,095 487,961 456,860 445,660
Gross profit $329,676 230,653 169,405 154,722 138,120
Operating profit $ 86,861 59,290 37,621 28,448 21,955
Interest expense, net $ 4,584 3,857 4,085 5,649 7,986
Minority interest $ 25,268 8,485 -- -- --
Income before income taxes $ 57,009 46,948 33,536 22,799 13,969
Income tax provision $ 24,228 20,188 14,423 9,802 6,060
Net income $ 32,781 26,760 19,113 12,997 7,909
Return on:
Net sales 3.4% 4.0% 3.9% 2.8% 1.8%
Average stockholders' investment 17.8% 19.8% 20.4% 16.9% 12.1%
Average capital employed 13.5% 14.6% 14.6% 9.9% 5.5%
-------- ------- -------- ------- -------
YEAR-END POSITION
Working capital $175,702 180,032 81,961 71,366 75,719
Plant and equipment, net $104,989 105,679 59,618 60,380 64,149
Total assets $575,710 493,501 254,028 238,115 231,034
Capital employed:
Total debt $ 55,611 62,986 32,785 41,847 67,132
Stockholders' investment $202,542 166,232 103,729 83,783 69,900
-------- ------- -------- ------- -------
Total capital employed $258,153 229,218 136,514 125,630 137,032
-------- ------- -------- ------- -------
PER SHARE DATA
Net income:
Basic $ 2.37 1.96 1.46 1.01 0.62
Diluted $ 2.37 1.95 1.42 1.00 0.62
Stockholders' investment per average
share outstanding $ 14.63 12.14 7.72 6.42 5.46
Market range:
High $ 26 28 3/8 21 3/8 14 8
Low $ 16 15 3/4 9 7/8 6 4
-------- ------- -------- ------- -------
OTHER DATA
Orders on hand $102,080 90,474 54,206 42,247 51,093
Depreciation and amortization $ 23,835 15,066 12,156 14,550 15,657
Capital expenditures, net $ 20,514 17,436 11,597 10,405 10,232
Average shares outstanding(*) 13,849 13,690 13,436 13,055 12,804
Current ratio 2.0 2.3 1.9 1.8 2.0
Interest coverage ratio 13.4 13.2 9.2 5.0 2.7
Debt to total capital employed 21.5% 27.5% 24.0% 33.3% 49.0%
Number of stockholders 1,329 1,459 1,567 1,705 1,865
Average number of employees 5,343 3,671 2,767 2,581 2,657
Average sales per employee $ 183 181 176 177 168
-------- ------- -------- ------- -------
</TABLE>
(*) including incremental common shares issuable under stock option plans
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Genlyte Group Incorporated And 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 1999 were $978.3 million, increasing by $314.2 million, or 47.3%
from 1998. Net sales for 1998 were 36.1% higher than 1997. The 1999 results
include the operations of Fibre Light U.S. LLC ("Fibre Light"), subsequent to
its formation on May 10, 1999, and Ledalite Architectural Products, Inc.
("Ledalite"), subsequent to its acquisition on June 30, 1999. The 1998 results
include the operations of Genlyte Thomas Group LLC ("Genlyte Thomas")
subsequent to its formation on August 30, 1998. 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").
Total net sales on a comparative, unaudited basis for all current Genlyte
businesses (including for the periods prior to the actual formation of Genlyte
Thomas) were approximately 4.1% higher in 1999 over 1998, which were
approximately 6.2% higher than the comparable 1997. 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.
Gross profit of the Company increased to $329.7 million in 1999 from $230.7
million in 1998, a 42.9% increase following a $61.2 million or 36.2% growth in
gross profit from 1997 to 1998. Cost of sales increased to 66.3% of sales in
1999 from 65.3% in both 1998 and 1997. This is due to the higher mix of
commodity fluorescent lighting fixtures in 1999 from Genlyte Thomas sales
compared to the former Genlyte divisions for the first eight months of 1998.
This impact is being offset partially by the elimination of excess capacity with
the closing of a manufacturing facility in mid 1999.
Selling and administrative expenses as a percent of sales decreased to 24.8% in
1999 from 25.8% in 1998 and 27.0% in 1997. 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 new product introductions.
Net interest expense amounted to $4.6 million in 1999, an increase over 1998 of
$0.7 million, after a decrease of $0.2 million from 1997. Net interest expense
was higher in 1999 due to the additional debt and related interest expense from
the Fibre Light and Ledalite acquisitions. The decrease in 1998 was due to a
reduction in interest rates from 1997 as well as a reduction in average net
borrowings for the year.
At December 31, 1999, a hypothetical 1% increase in interest rates would result
in a reduction of approximately $560 in pre-tax income. The estimated reduction
is based upon no change in the volume or composition of debt at December 31,
1999.
Minority interest represents the 32% share of Thomas in Genlyte Thomas.
The effective rate of income tax expense was approximately 42.5% in 1999, down
from the 43% rate for 1998 and 1997.
2
<PAGE>
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 follows:
<TABLE>
<CAPTION>
For the years ended December 31,
---------------------------------
(Amounts in thousands) 1999 1998 1997
---------------------------------
<S> <C> <C> <C>
EBITDA* $ 85,428 $ 65,871 $ 49,777
Interest expense, net (4,584) (3,857) (4,085)
Taxes on income (24,228) (20,188) (14,423)
Working capital, other 14,906 4,873 (12,684)
-------- -------- --------
Cash provided by operating activities 71,522 46,699 18,585
Cash used in investing activities, net (51,448) (15,555) (11,597)
Cash used in financing activities, net (5,969) (24,243) (8,229)
-------- -------- --------
Increase (decrease) in cash $ 14,105 $ 6,901 $ (1,241)
======== ======== ========
</TABLE>
*Earnings before interest, taxes, depreciation, and amortization
Cash provided by operating activities increased $24.8 million and $28.1 million
in fiscal 1999 and 1998, respectively, reflecting higher net income and
increases in accounts payable and accrued expenses.
The Company had working capital of $175.7 million at December 31, 1999, a
reduction of $4.3 million from the $180.0 million at December 31, 1998.
The Company's ratio of total debt to total capitalization was 21.5, 27.5 and
24.0 percent at December 31, 1999, 1998 and 1997 respectively, with total
capitalization defined as total debt plus total stockholders' investment. The
decrease during 1999 was due to the significant increase in cash provided by
operating activities, used in part to reduce outstanding debt, following an
increase in debt during 1998 incurred with the Genlyte Thomas formation.
Genlyte Thomas has a $150 million revolving credit agreement with various banks,
increasing it $25 million during 1999. At December 31, 1999, Genlyte Thomas had
zero outstanding borrowings and $39.4 million in outstanding letters of credit
under this agreement.
YEAR 2000 ISSUE
The Company developed and executed plans to prepare its information technology
systems and non-information technology systems with embedded technology for the
year 2000 conversion. The company experienced no significant disruptions as a
result of the date change to January 1, 2000, and is not currently aware of any
significant adverse impact affecting its major vendors or customers. The cost
for the year 2000 project was approximately $3.0 million, which was incurred
from 1996 through 1999. While there is no assurance that additional issues
related to the 2000 calendar will not develop, management believes the Company's
business will not be significantly affected in the future due to the year 2000
issue.
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.
3
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Genlyte Group Incorporated And 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,
1999 and 1998, and the related consolidated statements of income, stockholders'
investment and cash flows for each of the three years in the period ended
December 31, 1999. 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 auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
Arthur Andersen LLP
Louisville, Kentucky
February 2, 2000
4
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net sales $978,302 $664,095 $487,961
Cost of sales 648,626 433,442 318,556
-------- -------- --------
Gross profit 329,676 230,653 169,405
Selling and administrative expenses 242,815 171,363 131,784
-------- -------- --------
Operating profit 86,861 59,290 37,621
Interest expense, net 4,584 3,857 4,085
Minority interest 25,268 8,485 --
-------- -------- --------
Income before income taxes 57,009 46,948 33,536
Income tax provision 24,228 20,188 14,423
-------- -------- --------
Net income $ 32,781 $ 26,760 $ 19,113
======== ======== ========
Earnings per share:
Basic $ 2.37 $ 1.96 $ 1.46
Diluted $ 2.37 $ 1.95 $ 1.42
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
<PAGE>
CONSOLIDATED BALANCE SHEETS
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
As of December 31,
-------------------------
1999 1998
----------- -----------
<S> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 22,660 $ 8,555
Accounts receivable, less allowance for doubtful
accounts of $14,910 and $10,907, respectively 155,428 146,167
Inventories 136,041 137,004
Other current assets 29,938 25,520
----------- -----------
Total current assets 344,067 317,246
Plant and equipment, at cost
Land 6,537 7,290
Buildings and leasehold interests and improvements 87,951 82,856
Machinery and equipment 228,379 218,886
----------- -----------
Total plant and equipment 322,867 309,032
Less: accumulated depreciation and amortization 217,878 203,353
----------- -----------
Net plant and equipment 104,989 105,679
Cost in excess of net assets of acquired businesses 111,426 57,944
Other assets 15,228 12,632
----------- -----------
TOTAL ASSETS $ 575,710 $ 493,501
=========== ===========
LIABILITIES & STOCKHOLDERS' INVESTMENT:
CURRENT LIABILITIES:
Short-term borrowings and current portion of long-term debt $ 1,647 $ 2,134
Accounts payable 86,717 73,852
Accrued expenses 80,001 61,228
----------- -----------
Total current liabilities 168,365 137,214
Long-term debt 53,964 60,852
Deferred income taxes 31,797 22,192
Minority interest 98,940 84,649
Other liabilities 20,102 22,362
----------- -----------
Total liabilities 373,168 327,269
STOCKHOLDERS' INVESTMENT:
Common stock ($.01 par value, 30,000,000 shares authorized;
13,802,071 and 13,648,290 shares issued, respectively;
13,675,726 and 13,535,548 shares outstanding,
respectively) 137 136
Additional paid-in capital 17,761 16,207
Retained earnings 153,307 120,526
Accumulated other comprehensive income 31,337 29,363
----------- -----------
Total stockholders' investment 202,542 166,232
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' INVESTMENT $ 575,710 $ 493,501
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
(Amounts in thousands)
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------
1999 1998 1997
--------- -------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 32,781 $ 26,760 $ 19,113
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 23,835 15,066 12,156
Loss (gain) from disposal of plant and equipment (20) 259 (237)
Changes in assets and liabilities, net of effect of acquisitions:
(Increase) decrease in:
Accounts receivable (5,354) (5,432) (8,184)
Inventories 3,039 65 152
Other current assets (3,823) (3,575) (3,476)
Other assets (32,341) 2,611 (6,408)
Increase (decrease) in:
Accounts payable and accrued expenses 27,611 9,664 (328)
Deferred income taxes 9,481 (6,412) 3,460
Minority interest 14,291 5,412 --
Other liabilities (2,260) 2,521 1,897
Minimum pension liability 732 (732) --
All other, net 3,550 492 440
-------- -------- -------
Net cash provided by operating activities 71,522 46,699 18,585
-------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired (30,934) 1,881 --
Purchases of plant and equipment (20,514) (17,436) (11,597)
-------- -------- -------
Net cash used in investing activities (51,448) (15,555) (11,597)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term borrowings (1,932) (32,281) --
Proceeds from long-term debt 20,956 6,000 --
Payments on long-term debt (28,202) (220) (9,062)
Purchases of treasury stock (271) -- --
Stock options exercised 1,826 3,317 1,770
-------- -------- -------
Net cash used in financing activities (7,623) (23,184) (7,292)
-------- -------- -------
Effect of exchange rate changes on cash and cash equivalents 1,654 (1,059) (937)
-------- -------- -------
Net increase (decrease) in cash and cash equivalents 14,105 6,901 (1,241)
Cash and cash equivalents at beginning of year 8,555 1,654 2,895
-------- -------- -------
Cash and cash equivalents at end of year 22,660 8,555 1,654
======== ======== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 4,517 $ 4,057 $ 3,256
Income taxes $ 20,275 $ 18,445 $ 20,350
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
7
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Common Paid-in Retained Comprehensive Stockholders'
(Amounts in thousands) Stock Capital Earnings Income Investment
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
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
Increase in minimum pension liability, before tax -- -- -- (1,220) (1,220)
Related tax effect -- -- -- 488 488
------------ ------------ ------------ --------- -----------
Increase in 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
Net income -- -- 32,781 -- 32,781
Gain on formation of Genlyte Thomas, before tax -- -- -- (688) (688)
Related tax effect -- -- -- 276 276
------------ ------------ ------------ --------- -----------
Gain on formation of Genlyte Thomas, after tax -- -- -- (412) (412)
Decrease in minimum pension liability, before tax -- -- -- 1,220 1,220
Related tax effect -- -- -- (488) (488)
------------ ------------ ------------ --------- -----------
Decrease in minimum pension liability, after tax -- -- -- 732 732
Foreign currency translation adjustments -- -- -- 1,654 1,654
------------ ------------ ------------ --------- -----------
Total comprehensive income -- -- 32,781 1,974 34,755
Stock options exercised 1 1,825 -- -- 1,826
Treasury stock purchased -- (271) -- -- (271)
------------ ------------ ------------ --------- -----------
Balance, December 31, 1999 $ 137 $ 17,761 $ 153,307 $ 31,337 $ 202,542
============ ============ ============ ========= ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Genlyte Group Incorporated And 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, residential, and industrial markets. The Company's products are
marketed primarily to distributors who resell the products for use in
commercial, residential, 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 majority-owned subsidiaries, after
elimination of intercompany accounts and transactions. These statements include
the accounts of Genlyte Thomas Group LLC (Genlyte Thomas) from inception, August
30, 1998, through December 31, 1999. See Note 3 regarding the formation of
Genlyte Thomas. Investments in affiliates owned less than 50% 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:
1999 1998
------------ ------------
Raw materials and supplies $ 46,717 $ 43,167
Work in process 14,027 14,529
Finished goods 75,297 79,308
------------ ------------
Total inventories $ 136,041 $ 137,004
============ ============
9
<PAGE>
Inventories valued using the last-in, first-out ("LIFO") method represented
approximately 83% and 89% of total inventories at December 31, 1999 and 1998,
respectively. Inventories not valued at LIFO (primarily inventories of Canadian
operations) are valued using the first-in, first-out ("FIFO") method.
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, in 1998.
On a FIFO basis, which approximates current cost, inventories would have been
$3,083 and $2,350 lower than reported at December 31, 1999 and 1998,
respectively.
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. Advertising expenses were $13,416 in 1999, $9,480
in 1998, and 8,382 in 1997.
PLANT AND EQUIPMENT: The Company provides for depreciation of plant and
equipment, which also includes amortization of assets recorded under capital
leases, principally on a straight-line basis over the estimated useful lives of
the assets. Useful lives vary among the items in each classification, but
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 plant and equipment, 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.
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 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
$132,587 as of December 31, 1999 and $75,466 as of December 31, 1998, is being
amortized on a straight-line basis over periods ranging from 10 to 40 years.
Accumulated amortization was $26,083 and $22,445 as of December 31, 1999 and
1998, respectively.
The Company periodically evaluates these intangible assets using discounted cash
flows to assess recoverability from future operations. 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 $8,086 in 1999, $7,237 in 1998, and $5,195 in
1997.
10
<PAGE>
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 dates. The cumulative effects of such adjustments were
$2,468 and $4,122 at December 31, 1999 and 1998, 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 amounts of cash equivalents,
short-term borrowings and long-term debt approximate fair value.
RECLASSIFICATIONS: Certain prior year amounts have been reclassified to conform
to the current year presentation. These changes had no impact on previously
reported net income or stockholders' investment.
(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 commercial, residential, and industrial 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.
Under the purchase method of accounting, 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, as of the acquisition date, in the
Company's consolidated financial statements. The fair values attributed to the
Thomas assets and liabilities result from management's determination of purchase
accounting adjustments and are based upon available information and certain
assumptions that management considers reasonable under the circumstances. The
resulting cost in excess of the fair market value of net assets contributed by
Thomas of $32,412 is being amortized on a straight-line basis over 30 years. 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 $35,189. Of this amount, $34,175 was paid in 1998 and $1,014 was
paid in 1999, based on an adjustment to the Thomas net working capital. The
target net working capital was determined by a formula that considered 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
11
<PAGE>
(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 an
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). Because of the 1999 adjustment of $1,014 to the
Thomas contribution referred to above, the after-tax gain initially recorded in
1998 was adjusted by $412 in 1999.
68 percent of the fair value of
Thomas Lighting $ 93,859
32 percent of the historical book value of
Genlyte's net assets contributed to
Genlyte Thomas 37,563
Deferred income taxes 22,491
--------
After-tax gain recognized by Genlyte on the formation
of Genlyte Thomas $ 33,805
========
The operating results of Genlyte Thomas have been included in Genlyte's
consolidated financial statements since August 30, 1998. On an unaudited pro
forma basis, assuming the Transaction described above had occurred at the
beginning of 1998, the results would have been:
Actual Pro-forma
1999 1998
------------ ------------
Net sales $ 978,302 $ 929,123
Net income 32,781 26,334
Earnings per share $ 2.37 $ 1.92
============ ============
The pro forma results do not purport to state exactly what Genlyte's results of
operations would have been had the Transaction in fact been consummated as of
the assumed date and for the period presented.
(4) INVESTMENT IN FIBRE LIGHT AND ACQUISITION OF LEDALITE
On May 10, 1999, Genlyte Thomas acquired a 2% interest (with rights to acquire
an additional 6%) in Fibre Light International, based in Burleigh Heads,
Queensland, Australia. Fibre Light International is in the business of
commercializing fiber optic lighting technology. The two companies then formed a
jointly owned limited liability company named Fibre Light U.S. LLC ("Fibre
Light"), of which Genlyte Thomas owns 80%. Fibre Light will manufacture, market
and sell fiber optic lighting systems in the U.S.
On June 30, 1999, Genlyte Thomas acquired the assets and liabilities of
privately held Ledalite Architectural Products Inc. ("Ledalite"), located in
Vancouver, Canada. Ledalite designs, manufactures, and sells architectural
linear lighting systems for offices, schools, transportation facilities, and
other commercial buildings. The purchase prices of these acquisitions totaled
$31,469 (including costs of acquisition), consisting of approximately $8.5
million in cash payments and approximately $23 million in borrowings.
The Ledalite acquisition has been accounted for using the purchase method of
accounting. The preliminary determination of the excess of the purchase price
over the fair market value of net assets acquired of $22,392 is being amortized
12
<PAGE>
on a straight-line basis over 30 years. The determination of these fair market
values as reflected in the balance sheet is subject to change.
The operating results of Fibre Light and Ledalite have been included in the
Company's consolidated financial statements since the dates of acquisition. On
an unaudited pro forma basis, assuming these acquisitions had occurred at the
beginning of 1999 and 1998, Genlyte's results would have been:
1999 1998
------------ ------------
Net sales $ 990,326 $ 686,069
Net income 32,492 25,913
Earnings per share $ 2.35 $ 1.89
============ ============
The pro forma results do not purport to state exactly what Genlyte's results of
operations would have been had the acquisitions in fact been consummated as of
the assumed dates and for the periods presented, nor are they necessarily
indicative of future consolidated results.
(5) EARNINGS PER SHARE
In 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.
1999 1998 1997
------ ------ ------
Average common shares outstanding 13,831 13,671 13,127
Incremental common shares issuable:
Stock option plans 18 19 309
------ ------ ------
Average common shares
outstanding assuming dilution 13,849 13,690 13,436
====== ====== ======
(6) INCOME TAXES
The components of income before income taxes and the provisions for income taxes
for the years ended December 31 were as follows:
1999 1998 1997
-------- -------- --------
Income before income taxes:
Domestic $ 46,974 $ 41,867 $ 29,771
Foreign 10,035 5,081 3,765
-------- -------- --------
Income before income taxes $ 57,009 $ 46,948 $ 33,536
======== ======== ========
Income tax provision (benefit):
Domestic:
Currently payable $ 19,658 $ 18,457 $ 16,427
Deferred 89 (329) (3,411)
Foreign:
Currently payable 3,839 1,871 1,538
Deferred 642 189 (131)
-------- -------- --------
Income tax provision $ 24,228 $ 20,188 $ 14,423
======== ======== ========
13
<PAGE>
A reconciliation of the statutory federal income tax rate to the Company's
effective income tax rate follows:
1999 1998 1997
---- ---- ----
Statutory federal rate 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefits 3.1% 4.6% 5.2%
Minority interest share of foreign taxes 1.4% 0.8% --
Nondeductible portion of amortization and expenses 1.1% 1.0% 1.0%
Other 1.9% 1.6% 1.8%
---- ---- ----
Effective income tax rate 42.5% 43.0% 43.0%
==== ==== ====
Deferred income taxes are provided for significant income and expense items
recognized in different years for tax and financial reporting purposes.
Significant temporary differences creating deferred tax assets and liabilities
at December 31 follow:
1999 1998
------- -------
Deferred tax assets:
Allowance for doubtful accounts receivable $ 3,297 $ 2,830
Inventory reserves 5,281 6,145
Accrued compensation expenses 7,719 8,522
Other 4,270 8,705
------ ------
Total deferred tax assets 20,567 26,202
Deferred tax liabilities:
Accelerated depreciation 6,330 7,016
Gain on formation of Genlyte Thomas 22,491 22,767
Other 1,254 510
------- -------
Total deferred tax liabilities 30,075 30,293
------- -------
Net deferred tax liability $ 9,508 $ 4,091
======= =======
Classification:
Current asset $22,289 $18,101
Net long-term liability 31,797 22,192
------- -------
Net deferred tax liability $ 9,508 $ 4,091
======= =======
Deferred tax assets and liabilities are classified according to the related
asset and liability classification on the consolidated balance sheets.
Undistributed earnings of non-U.S. subsidiaries included in consolidated
retained earnings amounted to $32,133 at December 31, 1999. 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.
(7) LONG-TERM DEBT
Long-term debt at December 31 consisted of the following:
1999 1998
---------- ----------
Revolving credit notes $ -- $ 28,000
Canadian dollar notes 20,772 --
Industrial revenue bonds 10,500 10,500
Loan payable to Thomas 22,287 22,287
Capital leases and other 2,052 267
---------- ----------
55,611 61,054
Less: current maturities 1,647 202
---------- ----------
Total long-term debt $ 53,964 $ 60,852
========== ==========
14
<PAGE>
Genlyte Thomas has a $150,000 revolving credit agreement (the "Facility") with
various banks that matures in 2003. Under the most restrictive borrowing
covenant, which is the fixed charge coverage ratio, Genlyte Thomas could incur
approximately $25,000 in additional fixed charges.
Total borrowings under the Facility as of December 31, 1999 and 1998, were $0
and $28,000, respectively. Outstanding borrowings bear interest at the option of
Genlyte Thomas based on the bank's base rate or the LIBOR rate plus a spread as
determined by total indebtedness. The borrowings as of December 31, 1998 were
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 $39,400 of letters of
credit, which reduce the amount available to borrow under the Facility.
The amount outstanding under the Facility is secured, if requested by the
banking group, by liens on domestic accounts receivable, inventories, and
machinery and equipment, as well as the investments in certain subsidiaries of
Genlyte Thomas. The net book value of assets subject to lien at December 31,
1999 was $294,770.
Genlyte Thomas has CDN$30,000 of borrowings through its Canadian subsidiary
Genlyte Thomas Group Nova Scotia ULC. These borrowings will be repaid in
installments in each of the next five years. Interest rates on these borrowings
can be either the Canadian prime rate or the Canadian LIBOR rate plus a spread
of 50 basis points. These borrowings are backed by the letters of credit
mentioned above.
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 3.3%
in 1999 and 3.5% in 1998. 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
- --------------------------------------------------------------
2000 $ 1,647
2001 2,624
2002 3,402
2003 26,584
2004 10,541
Thereafter 10,813
---------
Total long-term debt $ 55,611
=========
(8) STOCK OPTIONS
The Genlyte 1998 Stock Option Plan (the "Plan") was established for the benefit
of key employees of Genlyte Thomas and directors of Genlyte. 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 become exercisable at
15
<PAGE>
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:
Weighted Average
Exercise Price
Shares Per Share
------ ----------------
Outstanding December 31, 1996 1,021,973 $ 6.33
Granted 179,000 16.71
Exercised (396,031) 5.07
Canceled (93,992) 6.54
Outstanding December 31, 1997 710,950 9.63
Granted 235,960 20.03
Exercised (146,950) 6.27
Canceled (44,625) 13.54
Outstanding December 31, 1998 755,335 13.30
Granted 202,550 19.55
Exercised (152,800) 7.58
Canceled (45,175) 17.67
Outstanding December 31, 1999 759,910 15.86
Exercisable at End of Year
December 31, 1997 203,450 6.31
December 31, 1998 279,750 7.72
December 31, 1999 289,450 10.27
The weighted average fair values of options granted in 1999, 1998 and 1997 were
$9.51, $10.05, and $7.42, respectively. The options outstanding at December 31,
1999 have a weighted average remaining contractual life of 4.06 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:
1999 1998 1997
---- ---- ----
Risk free interest rate 5.78% 4.74% 5.89%
Expected life, in years 6.0 5.9 5.0
Expected volatility 40.5 45.6 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.
16
<PAGE>
1999 1998 1997
-------- -------- --------
Net income As reported $ 32,781 $ 26,760 $ 19,113
Pro forma 31,673 25,431 18,610
Earnings per share - basic As reported 2.37 1.96 1.46
Pro forma 2.29 1.86 1.42
Earnings per share - diluted As reported 2.37 1.95 1.42
Pro forma 2.29 1.86 1.38
(9) PREFERRED STOCK PURCHASE RIGHTS
On September 13, 1999, Genlyte declared a dividend, as of the expiration
(September 18, 1999) of the rights issued under the Stockholder Rights Plan
dated as of August 29, 1989, of one preferred stock purchase right for each
outstanding share of Genlyte's common stock. Under certain conditions, each
right may be exercised to purchase one one-hundredth of a share of junior
participating cumulative preferred stock at a price of $105.00 per share. The
preferred stock purchased upon exercise of the rights will have a minimum
preferential quarterly dividend of $25.00 per share and a minimum liquidation
payment of $100.00 per share. Each share of preferred stock will have one
hundred votes.
Rights become exercisable when a person, entity, or group of persons or entities
("Acquiring Person") acquires, or 10 business days following a tender offer to
acquire, ownership of 20% or more of Genlyte's outstanding common stock. In the
event that any person becomes an Acquiring Person, each right holder will have
the right to receive the number of shares of common stock having a then current
market value equal to two times the aggregate exercise price of such rights. If
Genlyte were to enter into certain business combination or disposition
transactions with an Acquiring Person, each right holder will have the right to
receive shares of common stock of the acquiring company having a value equal to
two times the aggregate exercise price of the rights.
Genlyte may redeem these rights in whole at a price of $.01 per right. The
rights expire on September 12, 2009.
(10) RETIREMENT PLANS
The Company has defined benefit plans which cover the majority of its full-time
employees. 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
Company also has other defined contribution plans, including those covering
certain former Genlyte and Thomas employees.
The amounts included in the accompanying consolidated balance sheets based on
the funded status of the defined benefit plans at September 30, 1999 and 1998
17
<PAGE>
(September 30, 1999 and December 31, 1998 for the Canadian plans) follow:
<TABLE>
<CAPTION>
U.S. Plans Canadian Plans
-------------------- --------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATIONS
Benefit obligations, beginning $ 81,097 $ 52,519 $ 4,562 $ 3,750
Service cost 2,310 1,789 252 211
Interest cost 5,358 4,281 339 295
Benefits paid (4,101) (3,436) (221) (258)
Amendments -- 260 38 --
Obligations assumed by Genlyte Thomas -- 21,223 -- --
Other-primarily actuarial (gain) loss (10,737) 4,461 (440) 564
-------- -------- -------- --------
Benefit obligation, ending $ 73,927 $ 81,097 $ 4,530 $ 4,562
======== ======== ======== ========
CHANGE IN PLAN ASSETS
Plan assets at fair value, beginning $ 68,902 $ 49,457 $ 5,030 $ 4,737
Actual return on plan assets 6,965 219 80 338
Employer contributions 1,611 2,459 123 178
Member contributions -- -- 148 135
Assets assumed by Genlyte Thomas -- 20,203 -- --
Benefits paid (4,101) (3,436) (221) (258)
Other -- -- 336 (100)
-------- -------- -------- --------
Plan assets at fair value, ending $ 73,377 $ 68,902 $ 5,496 $ 5,030
======== ======== ======== ========
FUNDED STATUS OF THE PLANS
Plan assets (less than) benefit obligations
$ (550) $(12,195) $ 966 $ 468
Unrecognized transition obligation at adoption 200 487 (33) (36)
Unrecognized actuarial (gain) (11,563) (1,143) (718) (52)
Unrecognized prior service cost 2,024 4,017 110 78
Contributions subsequent to measurement date 946 -- 259 --
-------- -------- -------- --------
Net pension asset (liability) $ (8,943) $ (8,834) $ 584 $ 458
======== ======== ======== ========
BALANCE SHEET ASSET (LIABILITY)
Accrued pension liability $(13,763) $(14,908) $ -- $ (12)
Prepaid pension cost 4,468 1,603 584 470
Intangible asset 339 2,961 -- --
Accumulated other comprehensive income 13 1,510 -- --
-------- -------- -------- --------
Net asset (liability) recognized $ (8,943) $ (8,834) $ 584 $ 458
======== ======== ======== ========
WEIGHTED AVERAGE ASSUMPTIONS
Discount rate 7.75% 6.75% 7.75% 6.50%
Rate of compensation increase 4.00% 5.00% 4.00% 4.00%
Expected return on plan assets 8.50% 8.50% 7.75% 6.50%
18
<PAGE>
U.S. Plans
-----------------------------------
1999 1998 1997
---------- ---------- ----------
COMPONENTS OF NET PERIODIC BENEFIT COSTS
Service cost $ 2,310 $ 1,789 $ 1,483
Interest cost 5,358 4,281 3,633
Expected return on plan assets (5,536) (3,800) (2,895)
Amortization of transition amounts 181 18 --
Amortization of prior service cost 293 345 269
Recognized actuarial loss 60 202 178
---------- --------- ---------
Net pension expense of defined benefit plans 2,666 2,835 2,668
Defined contribution plans 671 720 --
Multi-employer plans 294 207 211
---------- --------- ---------
Total benefit costs $ 3,631 $ 3,762 $ 2,879
========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
Canadian Plans
-----------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
COMPONENTS OF NET PERIODIC BENEFIT COSTS
Service cost $ 252 $ 211 $ 142
Interest cost 339 295 300
Expected return on plan assets (368) (315) (368)
Amortization of transition amounts (6) (5) (6)
Amortization of prior service cost 5 5 5
Recognized actuarial (gain) loss (1) 2 (1)
---------- --------- ---------
Net pension expense of defined benefit plans 221 193 72
Multi-employer plans -- -- --
---------- --------- ---------
Total benefit costs $ 221 $ 193 $ 72
========== ========= =========
</TABLE>
A summary of the plans in which benefit obligations and accumulated benefit
obligations exceed fair value of assets follows:
1999 1998
---------- ----------
Benefit obligation $ 6,830 $ 59,669
Accumulated benefit obligation 6,569 52,010
Plan assets at fair value 3,470 45,091
Effective January 1, 2000, the Company has frozen the salaried pension plan of
certain employees. These employees will be eligible for Company matching on
their 401(k) contributions as well as being a participant in the Genlyte Thomas
Retirement Savings and Investment Plan. This will result in a curtailment credit
of $603, which will be a reduction of net pension expense in 2000.
(11) POST-RETIREMENT PLANS
The Company provides post-retirement medical and life insurance benefits for
certain retirees and employees, and accrues the cost of such benefits during the
service lives of such employees.
The amounts included in the accompanying consolidated balance sheets for the
post-retirement benefit plans based on the funded status at September 30, 1999
and December 31, 1998, follow:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CHANGE IN BENEFIT OBLIGATIONS
Benefit obligations, beginning $ 3,657 $ --
Service cost 39 8
Interest cost 294 83
Benefits paid (413) (166)
Obligations assumed by Genlyte Thomas -- 3,638
Other-primarily actuarial loss 574 94
----------- -----------
Benefit obligations, ending $ 4,151 $ 3,657
=========== ===========
FUNDED STATUS OF THE PLANS
Plan assets (less than) benefit obligation $ (4,151) $ (3,657)
Unrecognized net obligation at adoption -- 3,008
Unrecognized actuarial (gain) loss 574 (973)
----------- -----------
Accrued liability $ (3,577) $ (1,622)
=========== ===========
Employer contributions $ 413 $ 166
Benefits paid $ (413) $ (166)
COMPONENTS OF NET PERIODIC BENEFIT COSTS
Service cost $ 39 $ 8
Interest cost 294 83
Recognized actuarial loss -- 69
----------- -----------
Net expense of post-retirement plans $ 333 $ 160
=========== ===========
</TABLE>
19
<PAGE>
The assumed discount rates used in measuring the obligations as of September 30,
1999, and December 31, 1998 were 7.75% and 6.75%, respectively. The assumed
health care cost trend rate for 2000 was 7%, declining to 4.5% in 2006. A
one-percentage-point increase or decrease in the assumed health care cost trend
rate for each year would increase or decrease the obligation at September 30,
1999 by approximately $300, and the 1999 post-retirement benefit expense by
approximately $27.
(12) ACCRUED EXPENSES
Accrued expenses at December 31 consisted of the following:
1999 1998
---------- ----------
Employee related costs and benefits $ 30,267 $ 30,201
Advertising and sales promotion 8,331 8,168
Income and other taxes payable 9,043 6,075
Other accrued expenses 32,360 16,986
---------- ----------
Total accrued expenses $ 80,001 $ 61,430
========== ==========
(13) LEASE COMMITMENTS
The Company rents office space, equipment and computers under non-cancelable
operating leases. Rental expense for operating leases during 1999, 1998 and 1997
amounted to $6,184, $4,229, and $2,903, respectively. One division of the
Company also rents manufacturing and computer equipment and software under
agreements that are classified as capital leases. Future required minimum lease
payments as of December 31, 1999 were as follows:
<TABLE>
<CAPTION>
Operating Capital
Leases Leases
------------ ------------
<S> <C> <C>
2000 $ 5,872 $ 746
2001 4,652 582
2002 2,896 448
2003 1,811 232
2004 1,697 300
Thereafter 1,499 --
------------ ------------
Total minimum lease payments $ 18,427 2,308
============
Less amount representing interest 344
------------
Present value of net minimum lease payments $ 1,964
============
</TABLE>
(14) 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 (some of
the claims of which have since been restricted, as noted below) principally
20
<PAGE>
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 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.
Discovery, which was stayed since commencement of the action, is now ongoing.
Genlyte has filed its answer to the complaint, denying liability, 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 ("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 or
reserves 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.
(15) SEGMENT REPORTING
In 1998, the Company adopted Statement of Financial Accounting Standards No.
131, "Disclosures About Segments of an Enterprise and Related Information"
("SFAS No. 131"). 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
1999 Commercial Residential and Other Total
- ---- ---------- ----------- ---------- --------
Net sales $689,167 $145,040 $144,095 $978,302
Operating profit 65,938 7,898 13,025 86,861
Assets 391,493 96,007 88,210 575,710
Depreciation and amortization 16,595 3,532 3,708 23,835
Expenditures for plant and equipment 14,399 3,023 3,092 20,514
21
<PAGE>
Industrial
1998 Commercial Residential and Other Total
- ---- ---------- ----------- ---------- --------
Net sales $463,761 $102,327 $ 98,007 $664,095
Operating profit 44,565 5,439 9,286 59,290
Assets 344,629 76,041 72,831 493,501
Depreciation and amortization 10,522 2,321 2,223 15,066
Expenditures for plant and equipment 12,176 2,687 2,573 17,436
Industrial
1997 Commercial Residential and Other Total
- ---- ---------- ----------- ---------- --------
Net sales $342,675 $ 73,270 $ 72,016 $487,961
Operating profit 28,189 3,249 6,183 37,621
Assets 178,393 38,144 37,491 254,028
Depreciation and amortization 8,537 1,825 1,794 12,156
Expenditures for plant and equipment 8,144 1,741 1,712 11,597
(16) GEOGRAPHICAL INFORMATION
The Company has operations throughout North America. Information about the
Company's operations by geographical area for the years ended December 31, 1999,
1998 and 1997 follows. Foreign balances represent primarily Canada and some
Mexico.
1999 U.S. FOREIGN TOTAL
- ---- -------- -------- --------
Net sales $855,199 $123,103 $978,302
Operating profit 73,719 13,142 86,861
Assets 441,008 134,702 575,710
Depreciation and amortization 19,178 4,657 23,835
Expenditures for plant and equipment 16,506 4,008 20,514
1998 U.S. FOREIGN TOTAL
- ---- -------- -------- --------
Net sales $578,308 $ 85,787 $664,095
Operating profit 52,807 6,483 59,290
Assets 433,204 60,297 493,501
Depreciation and amortization 12,613 2,453 15,066
Expenditures for plant and equipment 11,088 6,348 17,436
1997 U.S. 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 plant and equipment 9,717 1,880 11,597
22
<PAGE>
(17) QUARTERLY RESULTS OF OPERATIONS
Quarter
-----------------------------------------
1999 1st 2nd 3rd 4th Full Year
- ---- -------- -------- -------- -------- ---------
Net sales $237,476 $243,645 $257,811 $239,370 $978,302
Operating profit 18,912 21,044 24,276 22,629 86,861
Net income 6,955 7,860 9,258 8,708 32,781
Earnings per share:
Basic .50 .57 .67 .63 2.37
Diluted .50 .57 .66 .63 2.37
Market price
High 19 3/8 23 9/16 26 25 7/8 26
Low 16 16 1/2 21 7/16 20 1/8 16
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 .46 .47 .50 .53 1.96
Diluted .45 .47 .50 .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
(18) SUBSEQUENT EVENTS
On February 8, 2000, the Company announced that it has reached a tentative
agreement to acquire Translite Systems, Inc., a San Carlos, California based
manufacturer and marketer of low-voltage cable and track lighting systems.
Translite Systems, Inc. is one of the leading designers and manufacturers of
accent track systems for commercial, retail and residential applications.
On February 22, 2000, Genlyte announced that it plans to repurchase up to 5%, or
approximately 700,000 shares, of its outstanding shares of common stock in the
open market or through privately negotiated transactions at the prevailing
market price. Shares purchased will be held in the corporate treasury and will
be used for general corporate purposes.
23
EXHIBIT 18
LETTER RE CHANGE IN ACCOUNTING PRINCIPLE
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
EXHIBIT 21
SUBSIDIARIES OF THE GENLYTE GROUP INCORPORATED
DECEMBER 31, 1999
The Genlyte Group Incorporated has the following subsidiaries, 100% owned,
except as noted:
Genlyte Thomas Group LLC, a Delaware limited liability company (68% owned)
Diaman-Mexo, S.A. De C.V., a Mexican corporation
Fibre Light U.S. LLC, a Delaware limited liability company (80% owned)
Genlyte Thomas Exports Inc., a Barbados corporation
Genlyte Thomas Group Nova Scotia ULC, a Nova Scotian unlimited
liability company
GTG International Acquisitions LP, a Canadian limited
partnership
Lumec Holding Corp., a Canadian corporation
Lumec, Inc., a Canadian corporation
Lumec-Schreder, Inc., a Canadian corporation (50% owned)
Lightolier De Mexico, S.A. De C.V., a Mexican corporation
Thomas De Mexico, S.A. De C.V., a Mexican corporation
Thomas Schreder Co., a U.S. partnership (50% owned)
Yamada Day-Brite, Ltd., a Japanese corporation (50% owned)
Genlyte Canadian Holdings, Inc., a Kentucky corporation
GTG Intangible Holdings, LLP, a Kentucky limited liability
partnership (68% owned)
Canlyte Inc., a Canadian corporation
Ledalite Architectural Products LP, a Canadian
limited partnership
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the inclusion of or
incorporation by reference in (a) The Genlyte Group Incorporated's (the
"Company's") previously filed Registration Statements on Form S-8 (Registration
No. 333-30066, No. 333-93369, No. 33-30722 and No. 33-27190) and (b) the
Company's Form 10-K for the year ended December 31, 1999 of our reports dated
February 2, 2000 included in the Company's Annual Report to Stockholders for the
year ended December 31, 1999.
/s/ ARTHUR ANDERSEN LLP
Louisville, Kentucky
March 24, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<CIK> 0000833076
<NAME> THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 22,660
<SECURITIES> 0
<RECEIVABLES> 155,428
<ALLOWANCES> 14,910
<INVENTORY> 136,041
<CURRENT-ASSETS> 344,067
<PP&E> 322,867
<DEPRECIATION> 217,878
<TOTAL-ASSETS> 575,710
<CURRENT-LIABILITIES> 168,365
<BONDS> 53,964
0
0
<COMMON> 137
<OTHER-SE> 202,405
<TOTAL-LIABILITY-AND-EQUITY> 575,710
<SALES> 978,302
<TOTAL-REVENUES> 978,302
<CGS> 648,626
<TOTAL-COSTS> 891,441
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,584
<INCOME-PRETAX> 57,009
<INCOME-TAX> 24,228
<INCOME-CONTINUING> 32,781
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,781
<EPS-BASIC> 2.37
<EPS-DILUTED> 2.37
</TABLE>
