FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1998
Commission File Number 1-5426
THOMAS INDUSTRIES INC.
(Exact name of Registrant as specified in its Charter)
DELAWARE 61-0505332
(State of incorporation) (I.R.S. Employer Identification Number)
4360 BROWNSBORO ROAD, LOUISVILLE, KENTUCKY 40207
(Address of principal executive offices) (Zip Code)
502/893-4600
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE
SECURITIES EXCHANGE ACT OF 1934:
Title of Each Class Name of Each Exchange on which Registered
Common Stock, $1 Par Value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
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. [X]
As of March 12, 1999, 15,758,789 shares of the registrant's Common Stock were
outstanding.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant at March 12, 1999, was approximately $261,004,943.
Portions of the Proxy Statement for the Annual Meeting of Shareholders on April
15, 1999, are incorporated by reference in Part III of this report.
Portions of the Annual Report to Shareholders for fiscal year ended December 31,
1998, are incorporated by reference in Parts I and II of this report.
<PAGE>
PART I.
ITEM 1. BUSINESS
a. General Development of Business.
The company that was eventually to become known as Thomas Industries
("Thomas"or the "Company") was founded in 1928 as the Electric Sprayit
Company. Electric Sprayit manufactured spraying machines, blowers, and
air compressors in Chicago, Illinois. In 1948, Mr. Lee B. Thomas and a
group of investors acquired Moe Brothers Manufacturing of Fort
Atkinson, Wisconsin, a manufacturer of residential lighting products.
In 1953, Moe Lighting and The Electric Sprayit Company merged to become
Thomas Industries Inc.
Although its roots are in lighting products and air compressors, Thomas
began to diversify further in the 1960's and 1970's, acquiring
different types of consumer products along with tools, hardware, and
specialty products. A new strategic focus that began in the 1980's was
finalized in 1994 and led the Company to divest its non-core businesses
and concentrate on Lighting and Compressors & Vacuum Pumps. Significant
additions to these businesses on the Lighting side included the Lumec
and Day-Brite Lighting acquisitions in 1987 and 1989 and Compressor &
Vacuum Pump acquisitions which included ASF, Pneumotive, Brey, WISA,
and Welch, made from 1987 through 1996.
On August 30, 1998, Thomas and The Genlyte Group ("Genlyte") formed a
lighting joint venture that combined substantially all of the assets
and liabilities of Genlyte and substantially all of the lighting assets
and related liabilities of Thomas to create Genlyte Thomas Group LLC,
estimated to be the third largest lighting fixture manufacturer in
North America. Thomas owns a 32% interest in the joint venture, and
Genlyte owns a 68% interest.
b. Financial Information about Industry Segments.
The information required by this item is set forth in Exhibit 13 under
the heading "Notes to Consolidated Financial Statements," which
information is contained in the Company's Annual Report to Shareholders
and incorporated herein by reference.
c. Narrative Description of Business.
Compressor & Vacuum Pump Segment
With the lighting joint venture in place, Thomas is now focused on its
Compressor & Vacuum Pump business. Thomas is the leading supplier to
the original equipment manufacturer (OEM) market in such applications
as medical equipment, gasoline vapor and refrigerant recovery,
automotive and transportation applications, printing, tape drives,
laboratory equipment, and many other applications for consumer,
commercial, and industrial uses. The Company designs, manufactures,
markets, and sells these products through operations worldwide. Group
headquarters are as follows: North American Group--Sheboygan,
Wisconsin; European Group-- Puchheim, Germany; and Asia Pacific
Group--Hong Kong,China.
The Company has three manufacturing operations in the United States
which manufacture rotary vane, linear, piston, and diaphragm
compressors and vacuum pumps, and vacuum ejectors. These products are
distributed worldwide to original equipment manufacturers, as well as
through fluid power and large compressor distributors.
Three German operations manufacture a complementary line of rotary
vane, miniature rotary vane, piston, linear, and diaphragm compressors
and vacuum pumps. These products are currently distributed worldwide.
The Company also maintains sales offices in England, Italy, Hong Kong,
Japan, and Taiwan. The Corporate Office is in Louisville, Kentucky.
The Company offers a wide selection of standard air compressors and
vacuum pumps and will modify or design its products to meet exacting
OEM applications. For the OEM market, the Company's compressors and
vacuum pump products are manufactured under the names Thomas in the
U.S. and ASF Thomas in Europe. Other vertically integrated products are
marketed under the Welch (high vacuum systems for laboratory and
chemical markets), Air-Pac (pnueumatic construction equipment),
Vakuumatic (leakage detection systems) and Medi-Pump (respiratory
products) brand names.
The medical equipment market, which includes oxygen concentrators,
nebulizers, aspirators, and other devices, is important to the Company.
Worldwide sales to medical equipment OEM's were approximately $65
million in 1998 and $60 million in 1997. Oxygen concentrator OEM's
represent approximately 50 percent of the total sales in the medical
equipment market. The Company believes it has a major share in the
oxygen concentrator OEM market worldwide.
No single customer of the Company accounted for 10 percent or more of
consolidated net sales or 10 percent or more of the Company's net sales
in 1998, and no material part of the business is dependent upon a
single customer the loss of which could have a materially adverse
effect on the business of the Company.
The backlog of unshipped orders was $47 million at December 31, 1998,
and $48 million at December 31, 1997. The Company believes
substantially all of such orders are firm, although some orders are
subject to cancellation. Substantially all of these orders are expected
to be filled in 1999.
The Company believes that it has adequate sources of materials and
supplies for its business.
There is no significant seasonal impact on the business of the Company.
Lighting Segment
On August 30, 1998, Thomas and Genlyte formed a lighting joint venture
that combined substantially all of the assets and liabilities of
Genlyte and substantially all of the lighting assets and related
liabilities of Thomas to create Genlyte Thomas Group LLC ("GTG"),
estimated to be the third largest lighting fixture manufacturer in
North America. Thomas owns a 32% interest in the joint venture, and
Genlyte owns a 68% interest.
GTG designs, manufactures, markets, and sells lighting fixtures for a
wide variety of applications in the commercial, industrial, and
residential markets. GTG operates in these three industry segments
through the following divisions: Lightolier, Controls, Wide-Lite,
Hadco, Diamond F, Supply (Crescent, ExceLine, and Stonco product
lines), Consumer, Indoor, Accent, and Outdoor in the United States and
Mexico; and Canlyte, Thomas Lighting Canada, Lumec, and ZED in Canada.
GTG's products primarily utilize incandescent, fluorescent, and
high-intensity discharge (HID) light sources and are marketed primarily
to distributors who resell the products for use in new residential,
commercial, and industrial construction as well as in remodeling
existing structures. Because GTG does not principally sell directly to
the end user of its products, it 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. GTG's sales, like those of the lighting
fixture industry in general, are partly dependent on the level of
activity in new construction and remodeling.
GTG designs, manufactures, markets, and sells the following types of
products:
Indoor fixtures - Incandescent, fluorescent, and HID lighting
fixtures and lighting controls for commercial, industrial,
institutional, medical, sports, and residential markets, and task
lighting for all markets.
Outdoor fixtures - HID and incandescent lighting fixtures and
accessories for commercial, industrial, institutional, sports, and
residential markets.
GTG's products are marketed by independent sales representatives and
GTG direct sales personnel who sell to distributors, electrical
wholesalers, mass merchandisers, and national accounts. In addition,
GTG's products are promoted through architects, engineers, contractors,
and building owners. The fixtures are principally sold throughout the
United States, Canada, and Mexico.
d. Other
Working capital is financed principally from operating profits. The
Company maintains adequate lines of credit and financial resources to
meet the anticipated cash requirements in the year ahead.
The Company has various patents and trademarks but does not consider
its business to be materially dependent upon any individual patent or
trademark.
During 1998,the Company spent $9,085,000 on research activities
relating to the development of new products and the improvement of
existing products. Substantially all of this amount was
Company-sponsored activity. During 1997, the Company spent $14,873,000
on these activities and during 1996, $14,338,000. The reduction in
current-year research and development is primarily due to the formation
of GTG.
Continued compliance with present and reasonably expected federal,
state, and local environmental regulations is not expected to have any
material effect upon capital expenditures, earnings, or the competitive
position of the Company and its subsidiaries.
The Company employed approximately 1,050 people at December 31, 1998.
e. Financial Information about Foreign and Domestic Operations and
Export Sales.
See Notes to Consolidated Financial Statements, as set forth in Exhibit
13, which information is contained in the Company's 1998 Annual Report
to Shareholders, and incorporated herein by reference, for financial
information about foreign and domestic operations. Export sales for the
years 1998, 1997, and 1996, were $28,500,000, $45,900,000, and
$41,400,000, respectively.
f. Executive Officers of the Registrant.
Year
Office or Position First Elected
Name with Company Age as an Officer
Timothy C. Brown Chairman of the Board, 48 1984
(A) President, Chief Executive
Officer, and Director
Cliff C. Moulton Vice President, 51 1993
(B) Business Development
Phillip J. Stuecker Vice President of Finance, 47 1984
(C) Chief Financial Officer,
and Secretary
Bernard R. Berntson Vice President; General 59 1992
(D) Manager, North American
Compressor & Vacuum Pump Group
Peter H. Bissinger Vice President; General 53 1992
(E) Manager, European
Compressor & Vacuum Pump Group
(A) TimothyC. Brown was elected Chairman of the Board on April 20, 1995, in
addition to his other duties of President and Chief Executive Officer.
Prior to this, Mr. Brown held various management positions in the
Company including Chief Operating Officer, Executive Vice President, and
Vice President and Group Manager of the Specialty Products Group.
(B) Cliff C. Moulton was elected an officer effective March 1, 1993, and
held the position of Vice President; Compressor and Vacuum Pump Group
Manager. Mr. Moulton spent the previous 23 years with Honeywell
Corporation in various management positions, most recently as Vice
President and General Manager of the Skinner Valve Division, since 1987.
(C) PhillipJ. Stuecker was elected Vice President of Finance, Chief
Financial Officer, and Secretary on October 23, 1989. Prior to this, Mr.
Stuecker held various management positions in the Company including Vice
President and Treasurer.
(D) Bernard R. Berntson was elected an officer effective December 14, 1992.
Mr. Berntson had held the position of General Manager of the North
American Compressor & Vacuum Pump Group since 1987.
(E) Peter H. Bissinger was elected an officer effective December 14, 1992,
in addition to his position of President of ASF Thomas GmbH, a wholly
owned subsidiary of the Company. Mr. Bissinger had held the position of
President of ASF GmbH since 1979.
ITEM 2. PROPERTIES
The Corporate offices of the Company are located in Louisville, Kentucky.
Due to the large number of individual locations and the diverse nature of
the operating facilities, specific description of the properties 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, and concrete
construction, are in generally good condition, provide adequate and suitable
space for the operations at each location, and are of sufficient capacity
for present and foreseeable future needs.
The following listing summarizes the Company's properties.
Number
of Facilities Combined
Segment Owned Leased Square Feet Nature of Facilities
Compressors
and Vacuum 3 4 659,464 Manufacturing plants
Pumps 0 3 11,000 Distribution centers
Corporate 0 1 5,500 Corporate headquarters
2 1 279,700 Leased to third parties
2 0 203,000 Property for sale
ITEM 3. LEGAL PROCEEDINGS
In the normal course of business, the Company is a party to legal
proceedings and claims. When costs can be reasonably estimated, appropriate
liabilities for such matters are recorded. While management currently
believes the amount of ultimate liability, if any, with respect to these
actions will not materially affect the financial position, results of
operations, or liquidity of the Company, the ultimate outcome of any
litigation is uncertain. Were an unfavorable outcome to occur, the impact
could be material to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
The information required by this item is set forth in Exhibit 13 under the
headings "Common Stock Market Prices and Dividends," and "Notes to
Consolidated Financial Statements," which information is contained in the
Company's 1998 Annual Report to Shareholders and incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is set forth in Exhibit 13 under the
heading "Five-Year Summary of Operations and Statistics," which information
is contained in the Company's 1998 Annual Report to Shareholders and
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item is set forth in Exhibit 13 under the
heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations," which information is contained in the Company's 1998
Annual Report to Shareholders and incorporated herein by reference.
ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's long-term debt bears interest at fixed rates; therefore, the
Company's results of operations would only be affected by interest rate
changes to the extent that variable rate, short-term notes payable are
outstanding. At December 31, 1998, short-term notes payable are not
significant.
The Company has significant operations consisting of sales and
manufacturing activities in foreign countries. As a result, the Company's
financial results could be significantly affected by factors such as
changes in foreign currency exchange rates or weak economic conditions in
the foreign markets in which the Company manufactures or distributes its
products. Currency exposures are concentrated in Germany but exist to a
lesser extent in other parts of Western Europe and Asia.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and notes to consolidated financial
statements of the registrant and its subsidiaries are set forth in Exhibit
13 under the headings "Consolidated Financial Statements" and "Notes to
Consolidated Financial Statements," which information is contained in the
Company's 1998 Annual Report to Shareholders and incorporated herein by
reference. The Report of Independent Auditors is also set forth in Exhibit
13 and hereby incorporated herein by reference. In addition, financial
statements of GTG are included in this Form 10-K on pages F-1 to F-17.
The supplementary data regarding quarterly results of operations is set
forth in Exhibit 13 under the heading "Notes to Consolidated Financial
Statements," which information is contained in the Company's 1998 Annual
Report to Shareholders and incorporated herein by reference.
<PAGE>
Restated results for Thomas for the quarters ended March 31 and June 30, and
results for the quarters ended September 30 and December 31, 1998, are shown
below:
THOMAS INDUSTRIES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except amounts per share)
Three Months Ended
March 31 June 30 Sept 30 Dec 30 Year-End
1998 1998 1998 1998 1998
Net sales $48,209 $46,336 $43,146 $39,529 $177,220
Cost of products sold 30,581 29,058 27,301 25,378 112,318
------ ------ ------ ------ -------
Gross profit 17,628 17,278 15,845 14,151 64,902
SG&A expenses 10,855 9,945 9,898 9,674 40,805
Equity income (loss) 2,858 5,081 6,858 5,093 20,323
------ ------ ------ ------ -------
Operating income 9,631 12,414 12,805 9,570 44,420
Interest expense 1,476 1,581 1,593 1,549 6,199
Other 179 79 78 849 1,185
------ ------ ------ ------ -------
Income before taxes 8,334 10,912 11,290 8,870 39,406
Income tax provision 3,084 4,037 4,240 3,535 14,896
------ ------ ------ ------ -------
Net income $ 5,250 $ 6,875 $ 7,050 $ 5,335 $ 24,510
====== ====== ====== ====== =======
Net income per share
-- Basic $0.33 $0.43 $0.44 $0.34 $1.54
-- Diluted $0.32 $0.42 $0.43 $0.33 $1.50
Dividends declared per
share $.075 $.075 $.075 $.075 $.300
Weighted average number
of common shares
outstanding:
-- Basic 15,864 15,874 15,881 15,889 15,877
-- Diluted 16,405 16,524 16,461 16,304 16,383
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
a. Directors of the Company
The information required by this item is set forth in registrant's
Proxy Statement for the Annual Meeting of Shareholders to be held on
April 15, 1999, under the headings "Election of Directors" and "Section
16(a), Beneficial Ownership Reporting Compliance," which information is
incorporated herein by reference.
b. Executive Officers of the Company
Reference is made to "Executive Officers of the Registrant" in Part I,
Item 1.e.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is set forth in registrant's Proxy
Statement for the Annual Meeting of Shareholders to be held on April 15,
1999, under the headings "Executive Compensation," "Compensation Committee
Interlocks and Insider Participation," and "Board of Directors," which
information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is set forth in registrant's Proxy
Statement for the Annual Meeting of Shareholders to be held on April 15,
1999, under the heading "Securities Beneficially Owned by Principal
Shareholders and Management," which information is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is set forth in registrant's Proxy
Statement for the Annual Meeting of Shareholders to be held on April 15,
1999, under the headings "Board of Directors" and "Compensation Committee
Interlocks and Insider Participation," which information is incorporated
herein by reference.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
a. (1) Financial Statements
The following consolidated financial statements of Thomas Industries
Inc. and subsidiaries, included in the Company's 1998 Annual Report
to Shareholders, are included in Part II, Item 8:
Consolidated Balance Sheets -- December 31, 1998 and 1997
Consolidated Statements of Income -- Years ended December 31,
1998, 1997, and 1996
Consolidated Statements of Shareholders' Equity -- Years ended
December 31, 1998, 1997, and 1996
Consolidated Statements of Cash Flows -- Years ended December 31,
1998, 1997, and 1996
Notes to Consolidated Financial Statements -- December 31, 1998
(2) Financial Statement Schedule
Schedule II -- Valuation and Qualifying Accounts
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable and, therefore, have been
omitted.
(3) Listing of Exhibits
Exhibit No. Exhibit
3(a) Restated Certificate of Incorporation, as
amended, filed as Exhibit 3(a) to
registrant's report on Form 10-Q dated
August 11, 1998, hereby incorporated by
reference.
3(b) Bylaws, as amended to be effective April
15, 1999.
4(a) Note Agreement dated January 19, 1990, by
and among the Company and Day-Brite
Lighting, Inc., Allstate Life Insurance
Company, and other investors filed as
Exhibit 4 to report on Form 10-K dated
March 22, 1990, hereby incorporated by
reference. First Amendment to Note
Agreement dated April 8, 1992, and Second
Amendment to Note Agreement dated July 31,
1992, filed as Exhibit 4 to Form 10-Q
filed August 12, 1992, herein incorporated
by reference. Third Amendment to Note
Agreement dated July 7, 1998, filed as
Exhibit 4 to Form 10-Q filed November 16,
1998, herein incorporated by reference.
Copies of debt instruments for which the
related debt is less than 10% of
consolidated total assets will be
furnished to the Commission upon request.
4(b) Rights Agreement filed as Exhibit 1 to
registrant's report on Form 8-K dated
December 12, 1997, hereby incorporated by
reference.
10(a) Employment Agreement with Phillip J.
Stuecker filed as Exhibit 3(j) to
registrant's report on Form 10-Q dated
November 11, 1988, hereby incorporated by
reference.
10(b) Employment Agreement with Cliff C. Moulton
filed as Exhibit 10(b) to registrant's
report on Form 10-K dated March 25, 1993,
hereby incorporated by reference.
10(c) Trust Agreement, filed as Exhibit 10(1) to
registrant's report on Form 10-Q dated
November 11, 1988, hereby incorporated by
reference.
10(d) Form of Indemnity Agreement and Amendment
thereto entered into by the Company and
each of its Executive Officers filed as
Exhibits 10 (g) and (h) to registrant's
report on Form 10-K dated March 23, 1988,
hereby incorporated by reference.
10(e) Severance pay policy of the Company,
effective October 1, 1988, covering all
Executive Officers, filed as Exhibit 10(d)
to registrant's report on Form 10-K dated
March 23, 1989, hereby incorporated by
reference.
10(f) 1987 Incentive Stock Plan as Amended,
filed as Annex A to the registrant's Proxy
Statement on March 17, 1989, hereby
incorporated by reference.
10(g) Nonemployee Director Stock Option Plan as
Amended and Restated as of February 5,
1997, filed as Exhibit Exhibit 10(h) to
registrant's report on Form 10-K dated
March 20, 1997, hereby incorporated by
reference.
10(h) 1995 Incentive Stock Plan as Amended and
Restated as of December 11, 1996, filed as
Exhibit 10(i) to registrant's report on
Form 10-K dated March 20, 1997, hereby
incorporated by reference.
10(i) Employment Agreement with Timothy C. Brown
dated January 29, 1997, filed as Exhibit
10(j) to registrant's report on Form 10-K
dated March 20, 1997, hereby incorporated
by reference.
10(j) Master Transaction Agreement by and
between Thomas Industries Inc. and The
Genlyte Group Incorporated dated April 28,
1998, filed as Exhibit 2.1 to registrant's
report on Form 8-K dated July 24, 1998,
hereby incorporated by reference.
10(k) Limited Liability Company Agreement of GT
Lighting, LLC dated April 28, 1998, filed
as Exhibit 2.2 to registrant's report on
Form 8-K dated July 24, 1998, hereby
incorporated by reference.
10(l) Capitalization Agreement among GT
Lighting, LLC and Thomas Industries Inc.,
Tupelo Holdings Inc., Thomas Industries
Holdings Inc., Gardco Mfg, Inc., Capri
Lighting, Inc., Thomas Improts, Inc. and
TI Industries Corporation dated April 28,
1998, filed as Exhibit 2.3 to registrant's
report on Form 8-K dated July 24, 1998,
hereby incorporated by reference.
10(m) Capitalization Agreement between GT
Lighting, LLC and The Genlyte Group
Incorporated dated April 28, 1998, filed
as Exhibit 2.4 to registrant's report on
Form 8-K dated July 24, 1998, hereby
incorporated by reference.
13 Certain portions of the Company's 1998
Annual Report to Shareholders as specified
in Parts I and II, hereby incorporated by
reference in this Annual Report on Form
10-K.
21 Subsidiaries of the Registrant.
23(a) Consent of Ernst & Young LLP.
23(b) Consent of Arthur Andersen LLP.
27 Financial Data Schedule.
b. Reports on Form 8-K
There were no reports on Form 8-K for the three months ended December
31, 1998.
c. Exhibits
The exhibits filed as part of this Annual Report on Form 10-K are as
specified in Item 14(a)(3) herein.
<PAGE>
S I G N A T U R E S
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, there unto duly authorized.
THOMAS INDUSTRIES INC.
Date: March 29, 1999 By /s/ Timothy C. Brown
Timothy C. Brown, Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
/s/ Timothy C. Brown Chairman of the Board; 3/29/99
Timothy C. Brown President; Chief Executive
Officer; Director
(Principal Executive Officer)
/s/ Phillip J. Stuecker Vice President of Finance; 3/29/99
Phillip J. Stuecker Chief Financial Officer;
Secretary
(Principal Financial Officer)
/s/ Roger P. Whitton Controller; 3/29/99
Roger P. Whitton (Principal Accounting Officer)
/s/ Wallace H. Dunbar Director 3/29/99
Wallace H. Dunbar
/s/ H. Joseph Ferguson Director 3/29/99
H. Joseph Ferguson
/s/ Gene P. Gardner Director 3/29/99
Gene P. Gardner
/s/ Lawrence E. Gloyd Director 3/29/99
Lawrence E. Gloyd
/s/ William M. Jordan Director 3/29/99
William M. Jordan
/s/ Ralph D. Ketchum Director 3/29/99
Ralph D. Ketchum
/s/ Franklin J. Lunding, Jr. Director 3/29/99
Franklin J. Lunding, Jr.
/s/ Anthony A. Massaro Director 3/29/99
Anthony A. Massaro
<PAGE>
Report of Independent Auditors
The Board of Directors and Shareholders
Thomas Industries Inc.
We have audited the consolidated balance sheets of Thomas Industries Inc. and
subsidiaries as of December 31, 1998 and 1997, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the three
years in the period ended December 31, 1998. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and schedule based on our audits. The financial statements of Genlyte
Thomas Group LLC (GTG), a partnership formed on August 30, 1998 in which the
Company has a 32% interest, have been audited by other auditors whose report has
been furnished to us; insofar as our opinion on the consolidated financial
statements relates to data included for GTG, it is based solely on their report.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Thomas Industries Inc.
and subsidiaries at December 31, 1998 and 1997, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
/s/ Ernst & Young LLP
Louisville, Kentucky
February 11, 1999
<PAGE>
<TABLE>
Schedule II
VALUATION AND QUALIFYING
ACCOUNTS
THOMAS INDUSTRIES INC.
AND SUBSIDIARIES
DECEMBER 31, 1998
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
DESCRIPTION BEGINNING COSTS OTHER ACCOUNTS- DEDUCTIONS- END OF
OF PERIOD AND EXPENSES DESCRIBE DESCRIBE PERIOD
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1998
Allowance for doubtful accounts 2,046,000 273,000 1,515,000 (3) 148,000 (1) 656,000
Allowance for obsolete and slow moving inventory 5,518,000 539,000 3,841,000 (3) 284,000 (2) 1,932,000
--------- ------- ------- -- ---------
7,564,000 812,000 432,000 2,588,000
========= ======= ======= =========
Year ended December 31, 1997
Allowance for doubtful accounts 2,243,000 441,000 638,000 (1) 2,046,000
Allowance for obsolete and slow moving inventory 8,871,000 1,420,000 4,773,000 (2) 5,518,000
--------- ------- ------- -- ---------
11,114,000 1,861,000 5,411,000 7,564,000
========= ======= ======= =========
Year ended December 31, 1996
Allowance for doubtful accounts 2,014,000 451,000 222,000 (1) 2,243,000
Allowance for obsolete and slow moving inventory 7,751,000 3,260,000 2,140,000 (2) 8,871,000
--------- ------- ------- -- ---------
9,765,000 3,711,000 2,362,000 11,114,000
========= ======= ======= =========
(1) Uncollectible accounts written off, less recoveries on accounts previously written off and effect of translation in accordance
with SFAS No. 52.
(2) Disposal of obsolete inventory and effect of translation in accordance with SFAS No. 52.
(3) Transfer of lighting reserve to GTG joint venture.
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Page
3(b) Bylaws, as amended to be effective
April 15, 1999 19
13 Certain portions of the Company's 1998
Annual Report to Shareholders as
specified in Parts I and II hereof to
be incorporated by reference in this
Annual Report on Form 10-K 32
21 Subsidiaries of the Registrant 78
23(a) Consent of Ernst & Young LLP 79
23(b) Consent of Arthur Andersen LLP 80
27 Financial Data Schedule 81
<PAGE>
On August 30, 1998, Thomas and Genlyte formed a lighting joint venture that
combined substantially all of the assets and liabilities of Genlyte and
substantially all of the lighting assets and related liabilities of Thomas to
create Genlyte Thomas Group LLC ("GTG"), estimated to be the third largest
lighting fixture manufacturer in North America. Thomas owns a 32% interest in
the joint venture, and Genlyte owns a 68% interest.
Following are audited financial statements of GTG for the period from inception,
August 30, through December 31, 1998.
<PAGE>
Report of Independent Public Accountants
To the Partners of the Genlyte Thomas Group LLC:
We have audited the accompanying consolidated balance sheet of the Genlyte
Thomas Group LLC (a Delaware limited liability corporation) ("the Company")
as of December 31, 1998, and the related consolidated statements of income,
partners' equity and cash flows for the period from inception (August 30,
1998) through December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Genlyte Thomas
Group LLC as of December 31, 1998, and the results of its operations and
its cash flows for the period from inception (August 30, 1998) through
December 31, 1998, in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Louisville, Kentucky
February 10, 1999
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
GENLYTE THOMAS GROUP LLC AND SUBSIDIARIES
FOR THE PERIOD FROM INCEPTION, AUGUST 30,
THROUGH DECEMBER 31, 1998
AMOUNTS IN THOUSANDS
1998
--------------
Net sales $ 324,111
Cost of sales 210,190
--------------
Gross profit 113,921
Selling and administrative expenses 85,144
--------------
Operating profit 28,777
Interest expense, net 1,252
--------------
Income before income taxes 27,525
Foreign income tax provision 1,009
--------------
Net income $ 26,516
==============
<PAGE>
CONSOLIDATED BALANCE SHEET
GENLYTE THOMAS GROUP LLC AND SUBSIDIARIES
AS OF DECEMBER 31, 1998
AMOUNTS IN THOUSANDS
1998
---------------
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 8,533
Accounts receivable (less allowance for doubtful
accounts of $10,907) 146,167
Inventories 137,004
Other current assets 9,305
---------------
Total current assets 301,009
Plant and equipment, at cost:
Land 7,290
Buildings and leasehold interests and improvements 82,856
Machinery and equipment 218,639
---------------
Total plant and equipment 308,785
Less: Accumulated depreciation and amortization 203,106
---------------
Net plant and equipment 105,679
Cost in excess of net assets of acquired businesses 61,549
Other assets 12,632
---------------
TOTAL ASSETS $ 480,869
===============
LIABILITIES & PARTNERS' EQUITY:
CURRENT LIABILITIES:
Short-term borrowings $ 1,932
Accounts payable 73,797
Accrued expenses and current portion of long-term debt 58,339
---------------
Total current liabilities 134,068
Long-term debt 60,852
Accrued pension 14,895
Deferred foreign income taxes 597
Other liabilities 5,929
---------------
Total liabilities 216,341
PARTNERS' EQUITY
Accumulated other comprehensive income (1,075)
Other partners' equity 265,603
---------------
Total partners' equity 264,528
---------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 480,869
===============
The accompanying notes are an integral part of this consolidated financial
statement.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF PARTNERS' EQUITY
GENLYTE THOMAS GROUP LLC AND SUBSIDIARIES
FOR THE PERIOD FROM INCEPTION, AUGUST 30, THROUGH DECEMBER 31, 1998
AMOUNTS IN THOUSANDS
<CAPTION>
Accumulated
Other
Comprehensive Other Total
Income Partners' Equity Partners' Equity
---------------------------------------------------------------
<S> <C> <C> <C>
Contribution by Genlyte, August 30, 1998 $ - $ 168,379 $ 168,379
Contribution by Thomas, August 30, 1998 - 79,237 79,237
---------------------------------------------------------------
Total contributions - 247,616 247,616
Net income - 26,516 26,516
Minimum pension liability (1,793) - (1,793)
Foreign currency translation adjustments 718 - 718
---------------------------------------------------------------
Total comprehensive income (1,075) 26,516 25,441
Distributions to partners - (8,529) (8,529)
---------------------------------------------------------------
Partners' equity, December 31, 1998 $ (1,075) $ 265,603 $ 264,528
===============================================================
The accompanying notes are an integral part of this consolidated financial
statement.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION, AUGUST 30, THROUGH DECEMBER 31, 1998
AMOUNTS IN THOUSANDS
1998
-----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $26,516
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,305
Loss from disposal of plant and equipment 257
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 2,435
Inventories 1,344
Other current assets (1,336)
Other assets (3,650)
Increase (decrease) in:
Accounts payable and accrued expenses 20,853
Deferred foreign income taxes 188
Accrued pension and other liabilities 4,730
Minimum pension liability (1,793)
All other, net (359)
-----------
Net cash provided by operating activities 56,490
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment, net of disposals (8,086)
-----------
Net cash used in investing activities (8,086)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in debt, net (39,576)
Distributions to partners (8,529)
-----------
Net cash used in financing activities (48,105)
-----------
Effect of exchange rate changes on cash and cash equivalents 718
-----------
Net increase in cash and cash equivalents 1,017
Cash and cash equivalents at beginning of period 7,516
-----------
Cash and cash equivalents at end of period $8,533
-----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD FOR:
Interest $1,693
Income taxes $ 469
The accompanying notes are an integral part of this consolidated financial
statement.
<PAGE>
Genlyte Thomas Group LLC
Notes to Financial Statements
(Amounts in thousands)
(1) DESCRIPTION OF BUSINESS
The Genlyte Thomas Group LLC ("Genlyte Thomas" or the "Company") is a
Delaware limited liability company. Genlyte Thomas designs,
manufactures and sells lighting fixtures and controls for a wide
variety of applications in the commercial, industrial and residential
markets. Genlyte Thomas's products are marketed primarily to
distributors who resell the products for use in residential, commercial
and industrial construction and remodeling. The Company is the result
of the business combination more fully discussed in Note 3.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The accompanying consolidated financial
statements include the accounts of Genlyte Thomas and all consolidated
subsidiaries, after elimination of intercompany accounts and
transactions. Non-consolidated affiliates are accounted for using the
equity method, under which the Company'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.
Cash Equivalents: The Company considers all highly liquid investments
with a maturity of three months or less to be cash equivalents.
Inventories: Inventories are stated at the lower of cost or market and
include materials, labor and overhead. Inventories at December 31
consisted of the following:
1998
Raw materials and supplies $43,167
Work in process 14,529
Finished goods 79,308
-------
Total inventories $137,004
=======
Inventories valued using the last-in, first-out ("LIFO") method
represented approximately 89% of total inventories at December 31,
1998. Inventories not valued at LIFO are valued using the first-in,
first-out ("FIFO") method. On a FIFO basis, which approximates current
cost, inventories would have been $2,350 lower than reported at
December 31, 1998.
Advertising Costs: The Company expenses advertising costs principally
as incurred. Certain catalog and literature costs are amortized over
their useful lives, generally 2 - 3 years.
Plant and Equipment: The Company provides for depreciation of plant and
equipment principally on a straight-line basis over the estimated
useful lives of the assets. Useful lives vary among the items in each
classification, but generally fall within the following ranges:
Buildings and leasehold interests and improvements 10 - 40 years
Machinery and equipment 3 - 10 years
When the Company sells or otherwise disposes of property, the asset
cost and accumulated depreciation are removed from the accounts, and
any resulting gain or loss is included in the consolidated statement of
income.
Leasehold interests and improvements are amortized over the terms of
the respective leases, or over their estimated useful lives, whichever
is shorter.
Maintenance and repairs are expensed as incurred. Renewals and
betterments are capitalized and depreciated or amortized over the
remaining useful lives of the respective assets.
Cost in Excess of Net Assets of Acquired Businesses: Cost in excess of
net assets of purchased businesses acquired prior to 1971 is not
amortized since, in the opinion of management, there has been no
diminution in value. For businesses acquired subsequent to 1970, the
cost in excess of net assets, aggregating $79,071, is being amortized
on a straight-line basis over periods ranging from 20 to 40 years. As
of December 31, 1998, accumulated amortization was $22,445.
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 such diminution in
value has occurred during the period presented in these consolidated
financial statements.
Research and Development Costs: Research and development costs are
expensed as incurred. These expenses were $3,792 for the period from
inception through December 31, 1998.
Translation of Foreign Currencies: Balance sheet accounts of foreign
subsidiaries are translated into U.S. dollars at the rates of exchange
in effect as of the balance sheet date. The cumulative effects of such
adjustments were $718 at December 31, 1998, and have been credited to
partners' equity in the consolidated balance sheet. Income and expenses
are translated at the average exchange rates prevailing during the
year. Gains or losses resulting from foreign currency transactions are
included in net income.
Fair Value of Financial Instruments: The carrying amount of cash
equivalents, short-term borrowings, and long-term debt approximate fair
value due to the short maturities of these instruments.
(3) FORMATION OF GENLYTE THOMAS GROUP LLC
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 contributed substantially all of its assets
and liabilities to Genlyte Thomas and received a 68% interest in
Genlyte Thomas. Thomas contributed substantially all of its assets and
certain related liabilities comprising Thomas Lighting and received a
32% interest in Genlyte Thomas. The percentage interests in Genlyte
Thomas issued to Genlyte and Thomas were based on arms-length
negotiations between the parties with the assistance of their financial
advisers.
For accounting purposes, Genlyte's majority ownership of Genlyte Thomas
requires the assets and liabilities contributed by Thomas Lighting to
Genlyte Thomas to be valued at their fair values in Genlyte Thomas's
consolidated financial statements. The fair values attributed to the
Thomas Lighting assets and liabilities result from management's
preliminary determination of purchase accounting adjustments and are
based upon available information and certain assumptions that
management considers reasonable under the circumstances. Consequently,
the amounts reflected in Genlyte Thomas's opening balance sheet are
subject to change. The assets contributed by Genlyte to Genlyte Thomas
are reflected at their historical cost.
To the extent the actual net working capital contributed by Thomas
Lighting exceeded the target net working capital, Genlyte Thomas paid
Thomas the difference in a one-time cash payment of $34,175. The target
net working capital was determined by a formula that took into
consideration Genlyte's adjusted net working capital, Thomas Lighting's
net working capital, and Genlyte's net working capital as a percentage
of net sales as of August 30, 1998.
Subject to the provisions in the Genlyte Thomas Group LLC Agreement
("the LLC Agreement") regarding mandatory distributions described
below, and the requirement of special approval in certain instances,
distributions to Genlyte and Thomas ("the Partners"), respectively,
will be made at such time and in such amounts as determined by the
Company's 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 the Company 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
(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.
(4) INCOME TAXES
The results of operations are included in the tax returns of the
Partners, and accordingly, no provision has been recognized by the
Company for U.S. federal or state income taxes. The Company's foreign
subsidiaries are taxable corporations and current and deferred taxes
are provided on their income.
(5) LONG-TERM DEBT
Long-term debt at December 31 consisted of the following:
1998
----
Revolving credit notes $28,000
Industrial revenue bonds 10,500
Loan payable to Thomas 22,287
Other 267
------
61,054
------
Less: Current maturities 202
------
Total $60,852
======
The Company entered into a $125,000 revolving credit agreement (the
"Facility") with various banks in August 1998 that matures in 2003. The
Facility contains several covenants, including a limitation on cash
distributions to the Partners equal to the greater of $9,375 annually
or 50% of the Company's cumulative net income since August 30, 1998.
Under the most restrictive financial covenant, which is the fixed
charge coverage ratio, the Company is allowed $29,000 in fixed charges,
as defined in the Facility. The Company could incur approximately
$25,000 in additional fixed charges.
Total borrowings under the Facility as of December 31, 1998 were
$28,000. Outstanding borrowings bear interest at the option of the
Company based on the bank's base rate or the LIBOR rate plus a spread
as determined by the Facility. The borrowings have been classified as
long-term because of the Company's intention to refinance these
obligations on a long-term basis through its revolving credit
agreement. In addition, the Company has outstanding approximately
$19,000 of letters of credit, which reduce the amount available to
borrow under the Facility.
The amount outstanding under the Facility is secured by liens on
domestic accounts receivable, inventories, and machinery and equipment,
as well as the investments in certain subsidiaries of the Company. The
value of assets subject to lien at December 31, 1998 was $297,284.
The Company has $10,500 of variable rate demand Industrial Revenue
Bonds that mature during 2009 to 2010. The average borrowing rate on
these bonds was 3.4% 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
1999 $ 202
2000 65
2001 --
2002 --
2003 50,287
Thereafter 10,500
------
Total long-term debt $61,054
======
(6) RETIREMENT PLANS
The Company has eight defined benefit plans (excluding four such plans
at a Canadian subsidiary), which cover the majority of its employees.
Benefits under the plans are calculated on years of service;
additionally, benefits for salaried employees are based on a formula
including an average salary calculation, while benefits for union
employees are based on fixed amounts for each year of service. Genlyte
Thomas uses September 30 as the measurement date for the retirement
plan disclosure of the five former Genlyte plans, and December 31 for
the three former Thomas plans. The Company also has other defined
contribution plans, including those covering certain former Genlyte and
Thomas employees. The 1998 contributions for such plans were determined
as provided by the Capitalization Agreement dated April 28, 1998.
The Company's policy for funded plans is to make contributions equal to
or greater than the requirements prescribed by the Employee Retirement
Income Security Act. The plans' assets consist primarily of stocks and
bonds.
The amounts included in the consolidated balance sheet, based on the
funded status of the five former Genlyte defined benefit plans at
September 30, 1998 follow:
Retirement Benefits
1998
Change in Benefit Obligations
Benefit obligations at October 1, 1997 $ --
Service cost 636
Interest cost 1,331
Benefits paid (259)
Obligations assumed by Genlyte Thomas 59,456
Other--primarily actuarial gain (1,495)
-------
Benefit obligations at September 30, 1998 $59,669
======
Change in Plan Assets
Plan assets at fair value at October 1, 1997 $ --
Actual return on plan assets 742
Employer contributions 380
Benefits paid (259)
Assets assumed by Genlyte Thomas 44,228
------
Plan assets at fair value at September 30, 1998 $45,091
======
Funded Status of the Plans
Plan assets (less than) benefit obligations $(14,587)
Unrecognized transition obligation at adoption 381
Unrecognized actuarial loss 332
Unrecognized prior-service cost 2,320
------
Accrued pension liability $(11,545)
======
Balance Sheet Asset (Liability)
Accrued benefit liability $(14,895)
Intangible asset 1,840
Accumulated other comprehensive income 1,510
------
Net liability recognized $(11,545)
======
Assumptions as of September 30, 1998
Discount rate 6.75%
Rate of compensation increase 5.00%
Expected return on Plan assets 8.50%
Components of Net Periodic Benefit Costs
Service cost $ 636
Interest cost 1,331
Expected return on Plan assets (1,120)
Amortization of prior-service cost 96
Recognized actuarial loss 93
-----
Net pension expense of defined benefit plan 1,036
-----
Multi-employer plans for certain union employees 45
-----
Total benefit costs from inception through December 31, 1998 $1,081
=====
A summary of the plans in which benefit obligations and accumulated benefit
obligations exceed fair value of assets follows:
Benefit obligation $59,669
Accumulated benefit obligation $52,010
Plan assets at fair value $45,091
The Company provides post-retirement medical and life insurance benefits for
certain former Thomas retirees and employees and accrues the cost of such
benefits during the service lives of such employees. A 1 percent change in the
assumed health care cost trend rate would have approximately a $300 effect on
the post-retirement benefit obligation and an insignificant effect on the
post-retirement benefit expense.
The amounts included in the consolidated balance sheet for the three defined
benefit plans and post-retirement benefit plans assumed from Thomas and based on
the funded status at December 31, 1998, follow:
Retirement Post-Retirement
Benefits Benefits
1998 1998
---- ----
Change in Benefit Obligations
Benefit obligations at January 1, 1998 $ -- $ --
Service cost 137 8
Interest cost 472 83
Benefits paid (404) (166)
Obligations assumed by Genlyte Thomas 21,223 3,638
Other--primarily actuarial loss -- 94
------ -----
Benefit obligations at December 31, 1998 $21,428 $3,657
====== =====
Change in Plan Assets
Plan assets at fair value at
January 1, 1998 $ -- $ --
Actual return on Plan assets 3,967 --
Employer contributions 45 166
Benefits paid (404) (166)
Assets assumed by Genlyte Thomas 20,203 --
------ ---
Plan assets at fair value at
December 31, 1998 $23,811 $ --
====== ===
Funded Status of the Plans
Plan assets in excess of (less than)
benefit obligations $2,383 $(3,657)
Unrecognized net obligation at adoption 106 3,008
Unrecognized actuarial (gain) (1,475) (973)
Unrecognized prior-service cost 1,697 --
----- ----
Prepaid pension asset (post-retirement
liability) $2,711 $(1,622)
===== =====
Balance Sheet Asset (Liability)
repaid benefit costs $1,603 $ --
Accrued benefit liabilities (13) (1,622)
Intangible assets 1,121 --
----- ----
Net asset (liability) recognized $2,711 $(1,622)
===== =====
Assumptions as of December 31, 1998
Discount rate 6.75% 6.75%
Expected return on Plan assets 9.00% --
Initial health care cost trend rate -- 8.00%
Ultimate health care cost trend rate -- 4.50%
Year ultimate trend is achieved -- 2006
Components of Net Periodic Benefit Costs
Service cost $137 $ 8
Interest costs 472 83
Expected return on Plan assets (604) --
Amortization of transition amount 18 --
Amortization of prior-service cost 58 --
Recognized actuarial loss 11 69
--- ---
Net pension expense of defined benefit plan 92 $160
===
Defined contribution plans 720
Multi-employer plans for certain union
employees 71
--
Total benefit costs from inception
through December 31, 1998 $883
===
The Company also maintains four defined benefit plans covering substantially all
the employees of a Canadian subsidiary. The amounts included in the consolidated
balance sheet, based on the funded status of these defined benefit plans at
December 31, 1998, follow:
1998
----
Change in Benefit Obligations
Benefit obligations at January 1, 1998 $ --
Service cost 70
Interest cost 102
Benefit payments (72)
Obligations assumed by Genlyte Thomas 4,418
Member contributions 44
-----
Benefit obligations at December 31, 1998 $4,562
=====
Change in Plan Assets
Plan assets at fair value at January 1, 1998 $ --
Actual return on Plan assets 468
Employer contributions 60
Member contributions 45
Benefits paid (72)
Assets assumed by Genlyte Thomas 4,629
Other (100)
-----
Plan assets at fair value at December 31, 1998 $5,030
=====
Funded Status of Plans
Plan assets in excess of benefit obligations $468
Unrecognized actuarial loss (54)
Unrecognized transition obligation at adoption (36)
Unrecognized prior-service credit (78)
---
Prepaid pension asset at December 31, 1998 $300
===
Assumptions as of December 31, 1998
Discount rate 6.5%
Rate of compensation increase 4.0%
Expected return on Plan assets 6.5%
Components of Net Periodic Benefit Costs
Service cost $ 70
Interest cost 102
Expected return on Plan assets (103)
Amortization of transition amounts (1)
Amortization of prior-service cost 2
---
Net benefit costs from inception through December 31, 1998 $ 70
===
(7) ACCRUED EXPENSES
Accrued expenses at December 31 consisted of the following:
1998
Salaries, wages, and withholdings $13,698
Employee benefits 16,503
Advertising and sales promotion 8,168
Foreign income and other taxes payable 4,227
Other accrued expenses 15,743
------
Total accrued expenses $58,339
======
(8) LEASE COMMITMENTS
The Company rents office space, equipment, and computers under
non-cancelable operating leases. Rental expense during the period from
inception through December 31, 1998, amounted to $1,398. Future
required minimum rental payments as of December 31, 1998, were as
follows:
1999 $ 5,330
2000 3,788
2001 2,935
2002 1,131
2003 969
Thereafter 1,941
------
Total $16,094
======
(9) CONTINGENCIES
In the normal course of business, the Company is a party to legal
proceedings and claims. When costs can be reasonably estimated,
appropriate liabilities for such matters are recorded. While management
currently believes the amount of ultimate liability, if any, with
respect to these actions will not materially affect the financial
position, results of operations, or liquidity of the Company, the
ultimate outcome of any litigation is uncertain. Were an unfavorable
outcome to occur, the impact could be material to the Company.
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.
(10) SEGMENT REPORTING
During the fourth quarter of 1998, the Company adopted Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of
an Enterprise and Related Information" (SFAS No. 131). SFAS No. 131
establishes standards for reporting information about operating
segments in annual financial statements and requires selected
information about operating segments in interim financial reports
issued to stockholders. It also establishes standards for related
disclosures about products and services and geographic areas. Operating
segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly
by the chief operating decision maker, or decision making group, in
deciding how to allocate resources and in assessing performance. The
Company's reportable operating segments include the Commercial Segment,
the Residential Segment, and the Industrial and Other Segment.
Intersegment sales are eliminated in consolidation and, therefore, are
not presented in the table below.
OPERATING SEGMENTS:
<TABLE>
<CAPTION>
Commercial Residential Industrial
and Other Total
------------------ ------------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Net sales $236,823 $49,300 $37,988 $324,111
Operating profit 22,891 2,293 3,593 28,777
Assets 351,364 73,144 56,361 480,869
Depreciation and amortization 5,338 1,111 856 7,305
Expenditures for property $ 5,908 $ 1,230 $ 948 $ 8,086
</TABLE>
(11) GEOGRAPHICAL INFORMATION
The Company has operations throughout North America. Information about
the Company's operations by geographical area for the period from
inception through December 31, 1998, follows. Foreign balances
represent primarily Canada and some Mexico:
<TABLE>
<CAPTION>
United
States Foreign Total
-------------- --------------- ---------------
<S> <C> <C> <C>
Net sales $283,052 $41,059 $324,111
Operating profit 25,393 3,384 28,777
Assets 420,572 60,297 480,869
Depreciation and amortization 6,185 1,120 7,305
Expenditures for property $ 6,357 $ 1,729 $ 8,086
</TABLE>
(12) Related-Party Transactions
The Company in the normal course of business has transactions with
Genlyte and Thomas. These transactions consist primarily of interest
payments to Thomas under the loan discussed in Note 5 and reimbursement
for shared corporate expenses such as rent, office services,
professional services, and shared personnel.
For the period from inception through December 31, 1998, the Company
had the following related party transactions:
Payments to Thomas for:
a) Interest under the loan agreement $461
Reimbursement of corporate expenses $170
Payments from Genlyte for reimbursement of corporate expenses $ 31
Exhibit 3(b)
BYLAWS
OF
THOMAS INDUSTRIES INC.
ARTICLE I
Offices
The principal office of the Corporation in the State of Delaware is
located at No. 306 South State Street, City of Dover, 19901, County of Kent,
State of Delaware; and the name of the resident agent in charge thereof is the
United States Corporation Company. The Company may also have offices at such
other places, within or without the State of Delaware, as the Board of Directors
may from time to time determine.
ARTICLE II
Shareholders
Section 1. Annual Meeting. An annual meeting of the shareholders of the
Corporation for the election of directors and for the transaction of such other
business as may properly come before the meeting shall be held each year on such
day during the month of April or May, and at such time and place, as may be
fixed from time to time by the Board of Directors of the Corporation.
Section 2. Special Meetings. Special meetings of the shareholders of the
Corporation for any purpose or purposes may be called at any time by the Board
of Directors or by a committee of the Board of Directors which has been duly
designated by the Board of Directors and whose powers and authority, as provided
in a resolution of the Board of Directors or in these Bylaws, include the power
to call such meetings, but such special meetings may not be called by any other
person or persons; provided, however, that if and to the extent that any special
meeting of shareholders may be called by any other person or persons by the
terms of any series of Preferred Stock then outstanding, then such special
meeting may also be called by the person or persons, in the manner, at the
times, and for the purposes so specified. Special meetings shall be held at such
place within or without the State of Delaware as may be specified in the call
thereof. Business transacted at all special meetings shall be confined to the
objects stated in the call.
Section 3. Notice of Meetings. Written notice of the annual meeting of
the shareholders shall be served by the Secretary, either personally or by mail,
upon each shareholder of record entitled to vote at such meeting, at least ten
days before the meeting. Written notice of any special meeting of the
shareholders shall be so served at least five days before the meeting. If
mailed, the notice of a meeting shall be directed to a shareholder at his last
known post office address. The notice of every meeting of the shareholders shall
state the purpose or purposes for which the meeting is called and the time when
and the place where it is to be held. Failure to serve personally or by mail
such notice, or any irregularity therein, shall not affect the validity of such
meeting or any of the proceedings thereat. Such notice may be waived in writing.
Section 4. Quorum. At all meetings of the shareholders, the presence, in
person or by proxy, of the holders of record of a majority of the shares of
stock issued and outstanding, and entitled to vote thereat, shall be necessary
and sufficient to constitute a quorum for the transaction of business, except as
otherwise provided by law, by the Certificate of Incorporation, or by these
Bylaws. In the absence of a quorum, the holders of record of a majority of the
shares of stock present in person or by proxy, and entitled to vote thereat, or
if no such shareholder is present in person or by proxy, any officer entitled to
preside at, or act as secretary of, such meeting, without notice other than by
announcement at the meeting, may adjourn the meeting from time to time, for a
period of not more than thirty days at any one time until a quorum shall attend.
At any such adjourned meeting at which a quorum shall be present in person or by
proxy, any business may be transacted that might have been transacted at the
meeting as originally called.
Section 5. Voting. At each meeting of the shareholders, except as may be
provided by the Certificate of Incorporation, as amended, or in a certificate
filed by the Corporation pursuant to Section 151(g) of the Delaware General
Corporation Law, each shareholder entitled to vote at such meeting shall be
entitled to one vote for each share of stock standing in his name in the stock
ledger of the Corporation and may vote either in person or by proxy, but no
proxy shall be voted after three years from its date unless such proxy provides
for a longer period. Every proxy must be executed in writing by the shareholder
or by his duly authorized attorney and dated, but need not be sealed, witnessed,
or acknowledged.
At each meeting of the shareholders, if there shall be a quorum, the
vote of the holders of a majority of the shares of stock present in person or by
proxy, and entitled to vote thereat, shall decide all matters brought before
such meeting, except as otherwise provided by law, by the Certificate of
Incorporation, or by these Bylaws.
Upon demand of any shareholder entitled to vote at a meeting of the
shareholders or upon the direction of the presiding officer at such meeting, the
vote upon any matter brought before such meeting shall be by ballot; but
otherwise no such vote need be by ballot except as is provided in Article II,
Section 10, of these Bylaws.
Section 6. Presiding Officer and Secretary. At all meetings of the
shareholders, the Chairman of the Board of Directors, or in his absence the
President of the Corporation, or in his absence a Vice President, or if none be
present, the appointee of the meeting, shall preside. The Secretary of the
Corporation, or in his absence an Assistant Secretary, or if none be present,
the appointee of the presiding officer of the meeting, shall act as secretary of
the meeting.
Section 7. Inspectors of Election. At each meeting of the shareholders
at which any matter brought before the meeting is to be voted upon by ballot,
the presiding officer of such meeting may, and if so required by Article II,
Section 10, of the Bylaws shall, appoint two persons, who need not be
shareholders, to act as Inspectors of Election at such meeting. The Inspectors
so appointed, before entering on the discharge of their duties, shall take and
subscribe an oath or affirmation faithfully to execute the duties of Inspectors
at such meeting with strict impartiality and according to the best of their
ability; and thereupon the Inspectors shall take charge of the polls and after
the balloting shall canvass the votes and determine in accordance with law, and
make a certificate to the Corporation of, the results of the vote taken. No
director or candidate for the office of director shall be appointed an
Inspector.
Section 8. Nomination of Director Candidates and Other Shareholder
Proposals. Nominations of candidates for election to the Board of Directors of
the Corporation or any other matters to be considered at any meeting of the
shareholders called for election of directors or for the consideration of any
other matters (an "Election Meeting") may be made only by or at the direction of
the Board of Directors or by a shareholder entitled to vote at such Election
Meeting. All such nominations, or any other proposals, except those made by or
at the direction of the Board of Directors, shall be made pursuant to timely
notice in writing to the Secretary of the Corporation. To be timely, any such
notice must be received at the principal executive offices of the Corporation
not less than ninety days prior to the date of the Election Meeting and must set
forth (i) the name, age, business address and residence address, and the
principal occupation or employment of any nominee proposed in such notice, (ii)
the name and address of the shareholder giving the notice as the same appears in
the Corporation's stock ledger, (iii) the number of shares of capital stock of
the Corporation which are beneficially owned by any such nominee and by such
shareholder, (iv) such other information concerning any such nominee as would be
required, under the rules of the Securities and Exchange Commission, in a proxy
statement soliciting proxies for the election of such nominee, and (v) a
description of any other matter proposed to be voted upon at the Election
Meeting.
If the presiding officer of an Election Meeting determines that
a director nomination, or any other proposal, was not made in accordance with
the foregoing procedures, such nomination or other proposal shall be void and
shall be disregarded for all purposes.
Section 9. List of Shareholders. At least ten days prior to every
election of directors, a complete list of the shareholders entitled to vote at
such election, arranged in alphabetical order and indicating the number of
voting shares held by each, shall be prepared and certified by the Secretary or
an Assistant Secretary. Such list shall be filed at the place where the election
is to be held and shall at all times during the usual hours for business, and
during the whole time of said election, be open to the examination of any
shareholder.
Section 10. Determination of Contested Elections. In the event that
there are more candidates for election to the Board of Directors at a meeting of
the shareholders than there are directors to be elected at such meeting (a
"Contested Election"), the vote for election of directors shall be by ballot,
and two Inspectors of Election for such meeting shall be appointed by the
presiding officer of such meeting.
ARTICLE III
Directors
Section 1. Number/Terms of Office. Except as provided by law or by the
Certificate of Incorporation, or by these Bylaws, the powers, business,
property, and affairs of the Corporation shall be exercised and managed by a
Board of eight directors. The number of directors may be altered from time to
time by an amendment of these Bylaws as hereinafter provided, but no reduction
in the number of directors shall affect any director whose term of office shall
not have expired. No director need be a shareholder.
The directors shall be divided into three classes as follows:
Class I -- three members
Class II -- three members
Class III -- two members
The term of office of directors of Class I shall expire at the 2002
annual meeting of shareholders; the term of office of directors of Class II
shall expire at the 2000 annual meeting of shareholders; and the term of office
of directors of Class III shall expire at the 2001 annual meeting of
shareholders. At each annual meeting of shareholders, directors of the class
whose term then expires shall be elected for a full term of three years to
succeed the directors of such class so that the term of office of the directors
of one class shall expire in each year, provided that nothing herein shall be
construed to prevent (a) the election of a director to succeed himself, (b) the
election of a director for the remainder of an unexpired term in the class of
directors to which he is elected, and (c) amendment of the Bylaws to increase or
decrease the number of directors.
Notwithstanding any other provision of these Bylaws, each director shall
continue in office until his successor shall have been duly elected and shall
qualify, or until his earlier resignation or removal in the manner provided in
these Bylaws, or death.
Section 2. Election of Directors/Vacancies. The members of each class of
directors shall be elected at the annual meeting of the shareholders at which
the term of office of such class expires, as provided herein. If for any reason
any annual election of directors shall not be held on the day designated by
these Bylaws, the directors shall cause such election to be held as soon
thereafter as conveniently may be.
Newly created directorships resulting from any increase in the
authorized number of directors and vacancies in the Board of Directors from
death, resignation, retirement, disqualification, removal from office, or other
cause, shall be filled by a majority vote of the directors then in office; and
directors so chosen shall hold office for a term expiring at the annual meeting
at which the term of the class to which they shall have been elected expires. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
Subject to the rights of the holder of any series of Preferred Stock
then outstanding, (a) any director, or the entire Board of Directors, may be
removed at any time, but only for cause; and (b) the affirmative vote of the
holders of 75 percent of the voting power of all of the stock of the Corporation
entitled to vote in the election of directors shall be required to remove a
director from office. The shareholders of the Corporation are expressly
prohibited from cumulating their votes in any election of directors of the
Corporation.
Section 3. Resignations. Any director may resign from his office at any
time by delivering his resignation in writing to the Corporation; and the
acceptance of such resignation, unless required by the terms thereof, shall not
be necessary to make such resignation effective.
Section 4. Meetings. The Board of Directors may hold its meetings in
such place or places within or without the State of Delaware as the Board from
time to time by resolution may determine or as shall be specified in the
respective notices or waivers of notice thereof; and the directors may adopt
such rules and regulations for the conduct of their meetings and the management
of the Corporation, not inconsistent with these Bylaws, as they may deem proper.
An annual meeting of the Board for the election of officers shall be held within
three days following the day on which the annual meeting of the shareholders for
the election of directors shall have been held. The Board of Directors, from
time to time by resolution, may fix a time and place (or varying times and
places) for the annual and other regular meetings of the Board provided that,
unless a time and place is so fixed for any annual meeting of the Board, the
same shall be held immediately following the annual meeting of the shareholders
at the same place at which such meeting shall have been held. No notice of the
annual or other regular meetings of the Board need be given. Other meetings of
the Board of Directors shall be held whenever called by the Chairman of the
Board or by any two of the directors for the time being in office; and the
Secretary shall give notice of each such meeting to each director by mailing the
same not later than the third day before the meeting, or personally, or by
telegraphing, cabling, or telephoning, the same not later than two hours before
the meeting. No notice of a meeting need be given if all the directors are
present in person. Any business may be transacted at any meeting of the Board of
Directors, whether or not specified in a notice of the meeting.
Section 5. Quorum. A majority of the total number of directors
constituting the whole Board shall constitute a quorum for the transaction of
business. If there be less than a quorum at any meeting of the Board, a majority
of those present (or if only one be present, then that one) may adjourn the
meeting from time to time; and no further notice thereof need be given other
than announcement at the meeting which shall be so adjourned. The act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by law or by the Certificate of Incorporation or by these
Bylaws.
Section 6. Compensation of Directors. The Board of Directors shall have
the authority to fix the compensation of the directors. A director may serve the
Corporation in other capacities and receive compensation therefor.
Section 7. Indemnification of Directors and Officers.
(a) Each person who was or is a party or is threatened to be made a
party to or is involved in any action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (hereinafter a "proceeding"), by
reason of the fact that he, or a person of whom he is the legal representative,
is or was a director or officer of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee, or agent of another
corporation or of a partnership, joint venture, trust, or other enterprise,
including service with respect to employee benefit plans, shall be indemnified
and held harmless by the Corporation to the fullest extent permitted by the laws
of Delaware as the same now or may hereafter exist (but, in the case of any
change, only to the extent that such change permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such change) against all costs, charges, expenses, liabilities,
and losses (including attorneys' fees, judgments, fines, ERISA excise taxes, or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of his heirs, executors, and
administrators. The right to indemnification conferred in this Section shall be
a contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition upon receipt by the Corporation of an undertaking, by or on behalf
of such director or officer, to repay all amounts so advanced if it shall
ultimately be determined that the director or officer is not entitled to be
indemnified under this section or otherwise. The Corporation may, by action of
its Board of Directors, provide indemnification to employees and agents of the
Corporation with the same scope and effect as the foregoing indemnification of
directors and officers.
(b) If a claim under subsection (a) of this Section is not paid in full
by the Corporation within thirty days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall also be entitled to be paid the expense of
prosecuting such claim. It shall be a defense to any action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking
has been tendered to the Corporation) that the claimant has failed to meet a
standard of conduct which makes it permissible under Delaware law for the
Corporation to indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
shareholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is permissible in the circumstances
because he has met such standard of conduct, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
shareholders) that the claimant has not met such standard of conduct, nor the
termination of any proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall be a defense to the
action or create a presumption that the claimant has failed to meet the required
standard of conduct.
(c) The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Section shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaw, agreement, vote of shareholders or disinterested
directors, or otherwise.
(d) The Corporation may maintain insurance at its expense to protect
itself and any director, officer, employee, or agent of the Corporation or
another corporation, partnership, joint venture, trust, or other enterprise
against any expense, liability, or loss whether or not the Corporation would
have the power to indemnify such person against such expense, liability, or loss
under Delaware law.
(e) To the extent that any director, officer, employee, or agent of the
Corporation is by reason of such position, or a position with another entity at
the request of the Corporation, a witness in any proceeding, he shall be
indemnified against all costs and expenses actually and reasonably incurred by
him or on his behalf in connection therewith.
(f) The Corporation may enter into indemnity agreements with the persons
who are members of its Board of Directors from time to time, and with such
officers, employees, and agents as the Board may designate, indemnity agreements
providing in substance that the Corporation shall indemnify such persons to the
fullest extent permitted by the laws of Delaware.
(g) Any amendment, repeal, or modification of any provision of this
Section by the shareholders or the Directors of the Corporation shall not
adversely affect any right or protection of a director or officer of the
Corporation existing at the time of such amendment, repeal, or modification.
Section 8. Committees. The Board of Directors may, by resolution or
resolutions, passed by a majority of the whole Board, from time to time
designate an Executive Committee and such other committee or committees as it
may determine, each committee to be headed by a chairman who shall be a member
of the Board of Directors and elected by the Board of Directors. The committee
or committees shall exercise only such powers of the Board of Directors as are
specifically provided in said resolution or resolutions. The chairman of the
Executive Committee, if any, shall report to the Board at its meetings upon the
affairs of the Corporation.
ARTICLE IV
Officers and Agents
Section 1. General Provisions. The officers of the Corporation shall be
a President, a Treasurer, and a Secretary, and may include a Chairman of the
Executive Committee, one or more Vice Presidents, any of which may be an
Executive Vice President, one or more Assistant Treasurers, and one or more
Assistant Secretaries. The Chairman of the Board of Directors and the President
shall be chosen from among the directors. Any two offices, except those of
President and Vice President, may be held by the same person; but no officer
shall execute, acknowledge, or verify any instrument in more than one capacity
if such instrument is required by law or by these Bylaws to be executed,
acknowledged, or verified by any two or more officers. Each of such officers
shall serve until the annual meeting of the Board of Directors next succeeding
his appointment and until his successor shall have been chosen and shall have
qualified. The Board of Directors may appoint such other officers, agents, and
employees as it may deem necessary or proper, who shall respectively have such
authority and perform such duties as may from time to time be prescribed by the
Board of Directors. All officers, agents, and employees appointed by the Board
of Directors shall be subject to removal at any time by the affirmative vote of
a majority of the whole Board. Other agents and employees may be removed at any
time by the Board of Directors, by the officer appointing them, or by any other
superior officer upon whom such power of removal may be conferred by the Board
of Directors. The salaries of the officers of the Corporation shall be fixed by
the Board of Directors, but this power may be delegated to any officer.
Section 2. The Chairman of the Board of Directors. The Chairman of the
Board of Directors shall preside at all meetings of the shareholders and of the
Board of Directors of the Corporation. At each annual meeting of the
shareholders, he shall present a statement of the business of the Corporation
for the preceding year and a report of its financial condition.
Section 3. The President. The President shall be the Chief Executive
Officer of the Corporation. He shall have general and active supervision of its
business and affairs, and general charge of its property and employees, subject,
however, to the control of the Board of Directors. He shall see that all
resolutions and orders of the Board of Directors or of any committee thereof are
carried into effect. He shall have power in the name of the Corporation and on
its behalf to execute any and all deeds, mortgages, contracts, agreements, and
other instruments in writing, and shall have such other powers as may be
assigned to him by the Board of Directors. He shall have full power and
authority on behalf of the Corporation to execute any shareholder's consent and
to attend and vote in person or by proxy at any meeting of shareholders of any
corporation in which the Corporation may own stock, and at any such meeting
shall possess and may exercise any and all rights and powers incident to the
ownership of such stock and which, as the owner thereof, the Corporation might
have possessed and exercised if present.
Section 4. Vice Presidents. Each Vice President shall have such powers
and perform such duties as the Board of Directors, Chairman of the Board, or the
President may from time to time prescribe, and shall perform such other duties
as may be prescribed in these Bylaws. In the absence or inability to act of the
Chairman of the Board or the President, the Vice President next in order as
designated by the Board of Directors or, in the absence of such designation,
senior in length of service in such capacity, shall perform all the duties and
may exercise any of the powers of the President, subject to the control of the
Board of Directors. The performance of any duty by a Vice President shall be
conclusive evidence of his power to act.
Section 5. The Treasurer. The Treasurer shall have the care and custody
of all funds and securities of the Corporation which may come into his hands and
shall deposit the same to the credit of the Corporation in such bank or banks or
other depositary or depositaries as the Board of Directors may designate. He may
endorse all commercial documents requiring endorsements for or on behalf of the
Corporation and may sign all receipts and vouchers for payments made to the
Corporation. He shall render an account of his transactions to the Board of
Directors as often as they shall require the same and shall at all reasonable
times exhibit his books and accounts to any director; shall cause to be entered
regularly in books kept for that purpose full and accurate account of all monies
received and paid by him on account of the Corporation; and shall have such
further powers and duties as are incident to the position of Treasurer, subject
to the control of the Board of Directors. He may be required by the Board of
Directors to give a bond for the faithful discharge of his duties in such sum
and with such surety as the Board may require.
Section 6. The Secretary. The Secretary shall keep the minutes of all
meetings of the Board of Directors and of the shareholders and shall attend to
the giving and serving of all notices of the Corporation. He shall have custody
of the seal of the Corporation and shall affix the seal to all certificates of
shares of stock of the Corporation and to such other papers or documents as may
be proper and, when the seal is so affixed, he shall attest the same by his
signature whenever required. He shall have charge of the stock certificate book,
transfer book, and stock ledger, and such other books and papers as the Board of
Directors may direct. He shall, in general, perform all the duties of Secretary,
subject to the control of the Board of Directors.
Section 7. Assistant Treasurers. In the absence or inability of the
Treasurer to act, any Assistant Treasurer may perform all the duties and
exercise all of the powers of the Treasurer, subject to the control of the Board
of Directors. The performance of any such duty shall be conclusive evidence of
his power to act. Any Assistant Secretary shall also perform such other duties
as the Secretary or the Board of Directors may from time to time assign to him.
Section 8. Assistant Secretaries. In the absence or inability of the
Secretary to act, any Assistant Secretary may perform all the duties and
exercise all the powers of the Secretary, subject to the control of the Board of
Directors. The performance of any such duty shall be conclusive evidence of his
power to act. Any Assistant Secretary shall also perform such other duties as
the Secretary or the Board of Directors may from time to time assign to him.
Section 9. Other Officers. Other officers shall perform such duties and
have such powers as may from time to time be assigned to them by the Board of
Directors.
Section 10. Delegation of Duties. In case of the absence of any officer
of the Corporation, or for any other reason that the Board may deem sufficient,
the Board may confer, for the time being, the powers or duties, or any of them,
of such officer upon any other officer, or upon any director.
ARTICLE V
Capital Stock
Section 1. Certificates for Shares. Certificates for shares of stock of
the Corporation certifying the number and class of shares owned shall be issued
to each shareholder in such form, not inconsistent with the Certificate of
Incorporation and these Bylaws, as shall be approved by the Board of Directors.
The certificates for the shares of each class shall be numbered and registered
in the order in which they are issued and shall be signed by the Chairman of the
Board of Directors or the President or a Vice President and by the Secretary or
an Assistant Secretary or the Treasurer or an Assistant Treasurer; and the seal
of the Corporation shall be affixed thereto. However, where any such certificate
is signed by a transfer agent and by a registrar of the Corporation, other than
the Corporation itself or its employee, the signature of either the transfer
agent or the registrar and of any such corporate officer or officers and the
seal of the Corporation upon such certificate may be facsimiles, engraved, or
printed. All certificates exchanged or returned to the Corporation shall be
cancelled.
Section 2. Transfer of Shares of Stock. Transfers of shares shall be
made only upon the books of the Corporation by the holder, in person or by
attorney lawfully constituted in writing, and on the surrender of the
certificate or certificates for such shares properly assigned. The Board of
Directors shall have the power to make all such rules and regulations, not
inconsistent with the Certificate of Incorporation and these Bylaws, as they may
deem expedient concerning the issue, transfer, and registration of certificates
for shares of stock of the Corporation.
Section 3. Lost, Stolen, or Destroyed Certificates. The Board of
Directors, in their discretion, may require the owner of any certificate of
stock alleged to have been lost, stolen, or destroyed, or his legal
representatives, to give the Corporation a bond in such sum as they may direct,
to indemnify the Corporation against any claim that may be made against it on
account of the alleged loss, theft, or destruction of any such certificate, as a
condition of the issue of a new certificate of stock in the place of any
certificate theretofore issued alleged to have been lost, stolen, or destroyed.
Proper and legal evidence of such loss, theft, or destruction shall be procured
for the Board, if required. The Board of Directors in their discretion may
refuse to issue such new certificate, save upon the order of some court having
jurisdiction in such matters.
Section 4. Record Date. The Board of Directors may fix in advance a
date, not more than sixty days nor less than ten days preceding the date of any
meeting of the shareholders and not more than sixty days preceding the date for
the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, as a record date for the determination of the shareholders entitled to
notice of, and to vote at, any such meeting and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of capital stock; and in such case such shareholders and only such
shareholders as shall be shareholders of record on the date so fixed shall be
entitled to such notice of, and to vote at, such meeting and any adjournment
thereof, or to receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any such record date
fixed as aforesaid.
Section 5. Maintenance and Inspection of Stock Ledger. The original or a
duplicate stock ledger containing a list of the shareholders shall be maintained
at the principal office or place of business of the Corporation and shall upon
written demand under oath stating the purpose thereof, be available for
inspection by any shareholder of record for any proper purpose in person or by
attorney or other agent during the usual hours of business. A proper purpose
shall mean a purpose reasonably related to such person's interest as a
shareholder. In every instance where an attorney or other agent shall be the
person who seeks the right to inspection, the demand under oath shall be
accompanied by a power of attorney or such other writing which authorizes the
attorney or other agent to so act on behalf of the shareholder. The demand under
oath shall be directed to the Corporation at its registered office in Delaware
or at its principal place of business.
Section 6. Record Ownership. The Corporation shall be entitled to
recognize the exclusive right of a person registered as such in the stock ledger
of the Corporation as the owner of shares of the Corporation's stock to receive
dividends and to vote as such owner and shall not be bound to recognize any
equitable or other claim to or interest in such shares on the part of any other
person, whether or not the Corporation shall have express or other notice
thereof, except as otherwise provided by law.
ARTICLE VI
Seal
The seal of the Corporation shall consist of a flat-faced, circular die
with the name of the Corporation, the year of its incorporation, and the words
"Corporate Seal" and "Delaware" inscribed thereon.
ARTICLE VII
Waiver
Whenever any notice whatever is required to be given by statute, or
under the provisions of the Certificate of Incorporation or Bylaws of this
Corporation, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE VIII
Checks, Notes, Drafts, Etc.
Checks, notes, drafts, acceptances, bills of exchange, and other orders
or obligations for the payment of money shall be signed by such officer or
officers or person or persons as the Board of Directors shall from time to time
determine.
ARTICLE IX
Amendments
These Bylaws may be amended or repealed and new Bylaws adopted by the
affirmative vote of a majority of the total number of directors (fixed by the
Bylaws as in effect immediately prior to such vote) or by the affirmative vote
of the holders of 75 percent of the voting power of the Corporation's stock
outstanding and entitled to vote thereon. Such Bylaws may contain any provision
for the regulation and management of the affairs of the Corporation and the
rights or powers of its shareholders, directors, officers, or employees not
inconsistent with the laws of the State of Delaware.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
BASIS OF PRESENTATION
Effective August 30, 1998, Thomas Industries and The Genlyte Group formed the
Genlyte Thomas Group (GTG), combining the Thomas Lighting business and Genlyte.
Genlyte has a 68% interest in GTG, and Thomas holds a 32% interest, which is
accounted for using the equity method of accounting. Thomas changed its method
of accounting for the lighting business contributed to GTG to the equity method
effective January 1, 1998, the beginning of Thomas' current fiscal year. These
changes had no effect on Thomas' net income or common shareholders' equity but
did reduce its revenues, costs, assets and liabilities, and changed certain
components of cash flow (See Note 2). Restatement of financial statements for
years prior to 1998 is not permitted under generally accepted accounting
principles; therefore, Thomas' financial statements for 1998 are not comparable
to 1997 and 1996.
RESULTS OF OPERATIONS
The Company achieved record net income in 1998 of $24.5 million, which
represents an increase of $2.0 million, or 9.1%, over 1997. Net income for 1997
was $22.5 million, an increase of $5.1 million, or 29.0%, over 1996.
COMPRESSORS AND VACUUM PUMPS
The Compressors and Vacuum Pumps Segment achieved record net sales of $177.2
million in 1998, an increase of 2.1% over 1997. Net sales in 1997 were $173.6
million, an increase of 2.1% compared to 1996. The increases in both years were
due to the continued successful introduction of new products for new
applications, which offset pricing pressure in the medical markets.
Operating income for the Segment in 1998 decreased slightly to $30.7 million
from the record $30.9 million achieved in 1997 primarily due to pricing
pressures in the medical markets and the general weakness in OEM and distributor
business as a result of the current global economic situation. For 1997,
operating income increased by 7.0%, from 1996, due to increased sales, improved
efficiencies, cost containment in the manufacturing operations and favorable
exchange rate conditions between the U.S. and Europe.
LIGHTING SEGMENT
Operating income from lighting was $20.3 million in 1998 compared to $22.4
million in 1997. Results for 1998 include the operating income of the former
Thomas Lighting group for the period ended August 29 prior to the formation of
GTG, Thomas' 32% interest in GTG for the four months ended December 31, 1998,
and amortization of Thomas' excess investment in GTG. The decrease in operating
income of $2.1 million in 1998 was offset by a $5.7 million reduction of
corporate expenses formerly needed to support the lighting operations.
Operating income for the Lighting Segment in 1997 of $22.4 million represented a
36.9% improvement over 1996. The improvements were due to the additional volume,
improved manufacturing efficiencies and continued implementation of cost
containment programs.
CORPORATE
Interest expense for 1998 declined $.3 million, or 4.6%, from 1997 due primarily
to the lower levels of long-term debt offset partially by higher levels of
short-term borrowings in the first half of 1998. Interest expense for 1997
declined $.9 million, or 12.3%, from 1996 due principally to the lower levels of
long-term debt.
Income tax provisions were $14.9 million, $13.2 million, and $10.3 million in
1998, 1997 and 1996, respectively. The effective income tax rate was 37.8% in
1998, compared to 37.0% in 1997, and 37.1% in 1996.
The Company, like other manufacturers, is subject to environmental rules and
regulations regarding the use, disposal and cleanup of substances regulated
under environmental protection laws. It is the Company's policy to comply with
these rules and regulations, and the Company believes that its practices and
procedures are designed to meet this compliance. The Company is involved in
remedial efforts at certain of its present and former locations; and when costs
can be reasonably estimated, the Company records appropriate liabilities for
such matters. Estimated liabilities are not discounted to present value. The
Company does not believe that the ultimate resolution of environmental matters
will have a material adverse effect on its financial position, results of
operations or liquidity.
At December 31, 1998, the Company employed approximately 1,050 people.
LIQUIDITY AND SOURCES OF CAPITAL
Cash and cash equivalents increased to $18.2 million at December 31, 1998,
compared to $17.4 million and $18.8 million at December 31, 1997 and 1996,
respectively. Cash flows from operations were $24.2 million in 1998 compared to
$32.3 million in 1997 and $30.1 million in 1996. These funds have been utilized
in funding of capital expenditures and dividends over the three-year period,
along with the net reductions of long-term and short-term debt during 1998, 1997
and 1996 totaling $33.5 million.
Dividends paid in 1998 were $4.8 million compared with $4.2 million in 1997 and
$4.1 million in 1996. In October 1997, the Board of Directors authorized a
three-for-two stock split on all shares of Common Stock payable December 1,
1997. Also, in October 1997, the Board of Directors declared a cash dividend of
7 1/2 cents per post-split share which, giving effect to the stock split,
creates a 12 1/2 % increase in the cash dividend.
Working capital decreased to $29.8 million at December 31, 1998, from $92.3
million at December 31, 1997, due to the transfer of working capital to GTG.
During 1997, working capital increased $6.4 million from the December 31, 1996,
level.
(Dollars in thousands) 1998 1997 1996
- --------------------------------------------------------------------------------
Working capital $29,840 $92,258 $85,838
Current ratio 1.87 2.09 2.02
Long-term debt, less current portion $48,298 $55,006 $62,632
Long-term debt to total capital 20.2% 24.1% 28.4%
Certain loan agreements of the Company include restrictions on working capital,
operating leases, tangible net worth, and the payment of cash dividends and
stock distributions. Under the most restrictive of these arrangements, retained
earnings of $52.8 million are not restricted at December 31, 1998.
As of December 31, 1998, the Company had available credit of $13.6 million with
banks under short-term borrowing arrangements which was unused and a $30.0
million revolving line of credit that expires in 2002 which was unused.
Anticipated funds from operations, along with available short-term credit, are
expected to be sufficient to meet cash requirements in the year ahead. Cash in
excess of operating requirements will continue to be invested in high grade,
short-term securities.
YEAR 2000 ISSUE
In the third quarter of 1996, the Company recognized the need to insure that its
operations would not be adversely affected by Year 2000 computer hardware and
software failures. Certain systems would fail, unless modified, to properly
handle date-sensitive calculations for dates that crossed the century. Such
systems could fail because the systems use only two digits rather than four to
define a specific year. These failures would pose known risks to the future
integrity of the Company's financial reports to virtually all aspects of the
Company's operations, including the Company's ability to process sales
transactions, fulfill customer orders and receive and manage inventories and
other assets.
Plans for achieving Year 2000 compliance were finalized during 1996 and included
a goal to be complete by the end of the third quarter 1998. Accordingly, the
Company completed a high-level analysis of the scope of the issues to be
addressed, created a team of IT resources and contracted with a major software
consulting firm to assist in the Year 2000 remediation efforts. The discovery
phase of the problems and the plan for remediation were completed in 1997.
Remediation and testing have been completed on most systems during the first
nine months of 1998. The objective of these efforts is to achieve Year 2000
compliance with minimal effect on customer service or other disruption to, or
loss of integrity in, business or financial operations. At this date, sources of
potential failure have been identified with most of them having been remediated.
We are currently awaiting one third-party payroll software provider to provide a
compliant version of its software. We believe this software will be compliant
before our known failure date.
The Company has performed a preliminary assessment of its material
non-information technology systems such as CAD systems, PBX systems,
environmental control systems, elevator control systems and NC devices and,
based upon this preliminary assessment, believes that these systems are Year
2000 compliant.
The Company has initiated communications with all its major suppliers and
customers to determine their Year 2000 compliant status and to identify any
issues or problems with respect to their Year 2000 preparedness that might
adversely affect their companies. The Company is continuing its efforts to
obtain such assurances from all critical suppliers. Failure of these third
parties could have a material impact on operations and/or the Company's ability
to deliver products. Contingency planning will be established and implemented in
an effort to minimize any impact from Year 2000 related failures.
Through December 1998, approximately $2.35 million in costs, which includes
Compressors and Vacuum Pumps and Lighting costs, have been incurred in the
Company's efforts to achieve Year 2000 compliant systems. These costs have been
incurred over the 1996-1998 timeframe and have not been, nor are expected to be,
a material incremental cost having an impact on the Company's operations,
financial condition or liquidity and include the costs for both its Vacuum Pump
and Compressor business and the Company's former Lighting business. These costs
consist primarily of outsourced consulting and remediation efforts. Any
remaining costs for the Company are expected to be less than $75,000 and do not
include any costs to be incurred by GTG. There have been no major system
projects cancelled or delayed as a result of the Company's Year 2000 costs.
The above expectations are subject to uncertainties. For example, if the Company
is unsuccessful in identifying or fixing all Year 2000 problems in our critical
operations, or if we are affected by the inability of our suppliers or major
customers to continue operations due to such problems, our results of operations
or financial condition could be materially impacted.
The Company has a minority interest in GTG which has advised the Company that it
is currently in the process of identifying and remediating its Year 2000 issues,
as well as conducting a review to gain reasonable assurances that its business
partners are addressing Year 2000 issues. If GTG is unsuccessful in identifying
or remediating all Year 2000 problems in its critical operations, or if it is
affected by the inability of its suppliers or major customers to continue
operations due to such problems, this could have an impact on the Company's
financial results and condition.
NEW EUROPEAN CURRENCY
Eleven European countries (The European Monetary Union) have implemented a
single currency zone as of January 1, 1999. The new currency (Euro) will
eventually replace the existing currencies of the participating countries. It is
expected that this transition from the various currencies to the Euro will occur
over a three-year period. Since the Company's European Operations may have to
accommodate dual currencies during this period, modifications to our third-party
software at our European locations may be necessary. A team has been formed to
monitor EMU developments, evaluate the requirements, develop and execute action
plans and work with our third-party software providers to address this issue.
While management currently believes the Company will be able to accommodate any
required changes in its operations without significant costs, there can be no
assurance that the Company, its customers, suppliers and service providers or
government agencies will all meet the Euro currency requirements in a timely
manner. Such failure to complete the necessary work on a timely basis could
result in material financial risk.
FORWARD-LOOKING STATEMENTS
The Company makes forward-looking statements from time to time and desires to
take advantage of the "safe harbor" which is afforded such statements under the
Private Securities Litigation Reform Act of 1995 when they are accompanied by
meaningful cautionary statements identifying important factors that could cause
actual results to differ materially from those in the forward-looking
statements.
The statements contained in the foregoing "Management's Discussion and Analysis
of Financial Condition and Results of Operations," as well as other statements
contained in this annual report, and statements contained in future filings with
the Securities and Exchange Commission and publicly disseminated press releases,
and statements which may be made from time to time in the future by management
of the Company in presentations to shareholders, prospective investors and
others interested in the business and financial affairs of the Company which are
not historical facts, are forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those
set forth in the forward-looking statements. Any projections of financial
performances or statements concerning expectations as to future developments
should not be construed in any manner as a guarantee that such results or
developments will, in fact, occur. There can be no assurance that any
forward-looking statement will be realized or that actual results will not be
significantly different from those set forth in such forward-looking statement.
In addition to the risks and uncertainties of ordinary business operations, the
forward-looking statements of the Company referred to above are also subject to
the following risks and uncertainties:
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.
The Compressor and Vacuum Pump Segment operates in a market where technological
improvements and the introduction of products for new applications are necessary
for future growth. The Company could experience difficulties or delays in the
development, production, testing and marketing of new products. As an original
equipment supplier, the Company's results of operations are directly affected by
the success of customer products.
GTG, which comprises the Company's Lighting Segment, participates in a highly
competitive market that is dependent on the level of residential, commercial and
industrial construction activity. Changes in consumer preferences and acceptance
of new products affect the Lighting Segment.
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.
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.
COMMON STOCK MARKET PRICES
AND DIVIDENDS
The Company's common stock is traded on the New York Stock Exchange (ticker
symbol TII). On February 11, 1999, there were 1,925 security holders of record.
High and low stock prices and dividends for the last two years were:
1998 1997
-----------------------------------------------------
Cash Cash
Market Price Dividends Market Price Dividends
Quarter Ended High Low Declared High Low Declared
- --------------------------------------------------------------------------------
March 31 $23.75 $18.88 $.075 $17.33 $13.67 $.067
June 30 26.38 22.19 .075 19.33 14.33 .067
September 30 26.63 18.56 .075 20.42 18.50 .067
December 31 21.19 17.06 .075 22.33 19.38 .075
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31
------------------------------
(In thousands, except share data) 1998 1997 1996
- --------------------------------------------------------------------------------
Net sales $177,220 $547,702 $510,111
Cost of products sold 112,318 378,746 358,778
- --------------------------------------------------------------------------------
GROSS PROFIT 64,902 168,956 151,333
Selling, general and administrative expenses 40,805 127,969 117,659
Equity income from Lighting 20,323 -- --
- --------------------------------------------------------------------------------
Operating income 44,420 40,987 34,642
Interest expense 6,199 6,480 7,333
Interest income and other 1,185 1,137 379
- --------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 39,406 35,644 27,688
Income taxes 14,896 13,174 10,272
- --------------------------------------------------------------------------------
NET INCOME $ 24,510 $ 22,470 $ 17,416
- --------------------------------------------------------------------------------
NET INCOME PER SHARE - BASIC $ 1.54 $ 1.42 $ 1.11
- DILUTED 1.50 1.38 1.09
See accompanying notes.
CONSOLIDATED BALANCE SHEETS
December 31
----------------------
(In thousands, except share data) 1998 1997
- --------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 18,205 $ 17,352
Accounts receivable, net 19,205 71,385
Inventories, net 20,186 74,128
Deferred income taxes 2,997 6,694
Other current assets 3,650 7,052
- --------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 64,243 176,611
Property, plant and equipment, net 34,001 80,197
Investment in GTG 147,386 --
Note receivable from GTG 22,287 --
Intangible assets, net 8,248 56,333
Other assets 6,194 14,498
- --------------------------------------------------------------------------------
TOTAL ASSETS $ 282,359 $ 327,639
- --------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 235 $ 2,564
Accounts payable 5,794 31,094
Accrued expenses and other current liabilities 19,397 41,646
Dividends payable 1,195 1,189
Current portion of long-term debt 7,782 7,860
- --------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 34,403 84,353
Deferred income taxes 5,863 8,802
Long-term debt, less current portion 48,298 55,006
Other long-term liabilities 3,108 6,073
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 91,672 154,234
Shareholders' equity:
Preferred stock, $1 par value, 3,000,000 shares
authorized - none issued -- --
Common stock, $1 par value, shares authorized:
60,000,000; shares issued: 1998 - 17,485,909;
1997 - 17,394,198 17,486 17,394
Capital surplus 110,412 109,750
Retained earnings 88,277 68,533
Accumulated other comprehensive income (4,351) (5,060)
Less cost of treasury shares: 1,744,400 shares in 1998;
1,535,469 shares in 1997 (21,137) (17,212)
TOTAL SHAREHOLDERS' EQUITY 190,687 173,405
- --------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 282,359 $ 327,639
- --------------------------------------------------------------------------------
See accompanying notes.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years ended December 31
------------------------------------
(In thousands) 1998 1997 1996
- --------------------------------------------------------------------------------
COMMON STOCK:
Beginning of year $ 17,394 $ 17,325 $ 17,229
Stock options exercised 92 69 96
- --------------------------------------------------------------------------------
END OF YEAR 17,486 17,394 17,325
CAPITAL SURPLUS:
Beginning of year 109,750 109,431 112,231
Treasury stock retired and other 12 -- (3,866)
Welch pooling of interests -- -- 347
Stock options exercised 650 319 719
- --------------------------------------------------------------------------------
END OF YEAR 110,412 109,750 109,431
RETAINED EARNINGS:
Beginning of year 68,533 50,420 40,003
Welch pooling of interests -- -- (928)
Net income 24,510 22,470 17,416
Treasury stock retired -- -- (1,902)
Cash dividends (4,766) (4,357) (4,169)
- --------------------------------------------------------------------------------
END OF YEAR 88,277 68,533 50,420
ACCUMULATED OTHER COMPREHENSIVE INCOME:
Beginning of year (5,060) (2,262) (3,306)
Other comprehensive income (1) 709 (2,798 1,044
- --------------------------------------------------------------------------------
END OF YEAR (4,351) (5,060) (2,262)
TREASURY STOCK:
Beginning of year (17,212) (17,212) (22,980)
Treasury stock purchased (3,938) -- --
Treasury stock retired and other 13 -- 5,768
- --------------------------------------------------------------------------------
END OF YEAR (21,137) (17,212) (17,212)
- --------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY $ 190,687 $ 173,405 $ 157,702
- --------------------------------------------------------------------------------
(1) A reconciliation of net income to total comprehensive income follows.
Years ended December 31
-------------------------------------
(In thousands) 1998 1997 1996
- --------------------------------------------------------------------------------
Net income $ 24,510 $ 22,470 $ 17,416
Other comprehensive income:
Minimum pension liability 57 495 1,910
Related tax expense (22) (188) --
Foreign currency translation 674 (3,105) (866)
- --------------------------------------------------------------------------------
Total comprehensive income $ 25,219 $ 19,672 $ 18,460
- --------------------------------------------------------------------------------
At December 31, 1998, accumulated other comprehensive income was a loss of
$4,351,000, comprised of foreign currency translation losses of $3,913,000 and a
minimum pension liability of $438,000.
See accompanying notes.
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Years ended December 31
----------------------------------
(In thousands) 1998 1997 1996
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 24,510 $ 22,470 $ 17,416
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 7,176 16,049 15,682
Deferred income taxes 74 1,410 198
Equity income from Lighting (20,323) -- --
Distributions from Lighting 19,053 -- --
Other items 182 (397) 550
Changes in operating assets and
liabilities net of effect of acquisitions:
Accounts receivable (1,700) (3,492) (5,434)
Inventories 2,249 (6,048) 766
Accounts payable (4,032) 3,687 (174)
Accrued expenses and other liabilities (1,232) 100 (366)
Other (1,760) (1,514) 1,477
Net cash provided by operating activities 24,197 32,265 30,115
INVESTING ACTIVITIES
Purchases of property, plant and equipment (6,978) (17,696) (15,071)
Sales of property, plant and equipment 367 1,117 159
Purchase of companies (net of cash acquired) -- (1,371) --
Net cash used in investing activities (6,611) (17,950) (14,912)
FINANCING ACTIVITIES
Payments on notes payable to banks, net (2,408) (3,721) (704)
Payments on long-term debt, net (6,530) (7,638) (12,458)
Treasury stock purchased (3,938) -- --
Dividends paid (4,760) (4,221) (4,127)
Other 767 388 925
Net cash used in financing activities (16,869) (15,192) (16,364)
Effect of exchange rate change 136 (597) 1,682
Net increase (decrease) in cash
and cash equivalents 853 (1,474) 521
Cash and cash equivalents at beginning of year 17,352 18,826 18,305
Cash and cash equivalents at end of year $ 18,205 $ 17,352 $ 18,826
See accompanying notes.
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF BUSINESS
Thomas Industries Inc. and subsidiaries (the Company or Thomas) and affiliates
operate in two business segments: the compressors and vacuum pumps segment and
the lighting segment. The Company designs, manufactures and sells compressors
and vacuum pumps for use in global original equipment manufacturing applications
as well as construction equipment, leakage detection systems and laboratory
equipment. Manufacturing facilities are located in North America and Europe,
with additional sales and distribution operations located in Asia. The Company
operates in the lighting segment through its 32% interest in the Genlyte Thomas
Group LLC (GTG). GTG, which was formed during 1998 as discussed below, designs,
manufactures, markets and sells lighting products principally in North America
for consumer, commercial, industrial and outdoor applications.
NOTE 2. ACCOUNTING POLICIES
BASIS OF PRESENTATION
Effective August 30, 1998, the Company and The Genlyte Group (Genlyte) formed
GTG, combining Thomas' and Genlyte's lighting businesses. Genlyte has a 68%
interest in GTG, and Thomas holds a 32% interest, which is accounted for using
the equity method of accounting. Thomas changed its method of accounting for its
lighting business to the equity method effective January 1, 1998, the beginning
of Thomas' current fiscal year. This change had no effect on Thomas' net income
or common shareholders' equity but did reduce its revenues, costs, assets,
liabilities, and number of employees. Financial statements for years prior to
1998 were not restated; therefore, Thomas' financial statements for 1998 are not
comparable to 1997 and 1996.
At December 31, 1998, Thomas' investment in GTG exceeded its underlying equity
in net assets by $62,737,000. For the four months ended December 31, 1998,
equity income was reduced by $733,000 which represents straight-line
amortization of the excess investment.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company.
Affiliates not required to be consolidated are accounted for using the equity
method, under which the Company's share of earnings of these affiliates is
included in income as earned. Intercompany accounts and transactions are
eliminated.
USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from these estimates.
INVENTORIES
Inventories are valued at the lower of cost or market. Inventories valued using
the last-in, first-out (LIFO) method represented approximately 46% and 79% of
consolidated inventories at December 31, 1998 and 1997, respectively.
Inventories not on LIFO are valued using the first-in, first-out (FIFO) method.
Inventories at December 31 consist of the following:
NOTE 2. ACCOUNTING POLICIES (CONTINUED)
(In thousands) 1998 1997
- --------------------------------------------------------------------------------
Finished goods $ 5,352 $35,472
Raw materials 9,196 23,620
Work in process 5,638 15,036
- --------------------------------------------------------------------------------
Total inventories $20,186 $74,128
- --------------------------------------------------------------------------------
On a current cost basis, inventories would have been $4,341,000 and $11,007,000
higher than reported at December 31, 1998 and 1997, respectively. The reduction
in current-year inventory is primarily due to the formation of GTG.
PROPERTY, PLANT AND EQUIPMENT
The cost of property, plant and equipment is depreciated principally by the
straight-line method over their estimated useful lives. Property, plant and
equipment consisted of the following:
(In thousands) 1998 1997
- --------------------------------------------------------------------------------
Land $ 722 $ 6,195
Buildings 13,466 31,564
Leasehold improvements 3,581 11,241
Machinery and equipment 55,346 105,977
- --------------------------------------------------------------------------------
73,115 154,977
Accumulated depreciation and amortization (39,114) (74,780)
- --------------------------------------------------------------------------------
Total property, plant and equipment, net $34,001 $80,197
- --------------------------------------------------------------------------------
The reduction in current-year property, plant and equipment is primarily due to
the formation of GTG.
INTANGIBLE ASSETS
Intangible assets represent the excess of cost over the fair value of net assets
of companies acquired and are stated net of accumulated amortization of
$4,187,000 and $19,916,000 at December 31, 1998 and 1997, respectively. Excess
of cost over the fair value of net assets acquired (or goodwill) generally is
amortized on a straight-line basis over 40 years.
LONG-LIVED ASSETS
The carrying amount of long-lived assets, including goodwill, is reviewed if
facts and circumstances suggest that it may be impaired. If this review
indicates that long-lived assets will not be recoverable, as determined based on
the estimated undiscounted cash flows of the entity acquired over the remaining
amortization period, the carrying amount of the long-lived assets is reduced by
the estimated shortfall of cash flows. The Company assesses long-lived assets
for impairment under Financial Accounting Standards Board Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs, which include costs of product improvements and
design, are expensed as incurred ($9,085,000 in 1998, $14,873,000 in 1997 and
$14,338,000 in 1996). The reduction in current-year research and development is
primarily due to the formation of GTG.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. ACCOUNTING POLICIES (CONTINUED)
FINANCIAL INSTRUMENTS
Various methods and assumptions are used by the Company in estimating its fair
value disclosures for significant financial instruments. Fair values of cash
equivalents approximate their carrying amount because they are highly liquid
investments with a maturity of less than three months when purchased. The fair
value of notes payable to banks approximates its carrying amount. The fair value
of long-term debt is based on the present value of the underlying cash flows
discounted at the current estimated borrowing rates available to the Company.
FOREIGN CURRENCY TRANSLATION
The local currency is the functional currency for the Company's foreign
subsidiaries. Results are translated into U.S. dollars using monthly average
exchange rates, while balance sheet accounts are translated using year-end
exchange rates. The resulting translation adjustments are included as a
component of accumulated other comprehensive income in shareholders' equity.
OTHER
Accounts receivable at December 31, 1998 and 1997, was net of an allowance for
doubtful accounts of $656,000 and $2,046,000, respectively. The reduction in
current-year allowance for doubtful accounts is primarily due to the formation
of GTG.
Certain prior-year amounts have been reclassified to conform to the current-year
presentation.
NOTE 3. NET INCOME PER SHARE
The computation of the numerator and denominator in computing basic and diluted
net income per share follows:
(In thousands) 1998 1997 1996
- --------------------------------------------------------------------------------
Numerator:
Net income $24,510 $22,470 $17,416
- --------------------------------------------------------------------------------
Denominator:
Weighted average shares outstanding 15,877 15,837 15,756
Effect of dilutive securities:
Director and employee stock options 474 422 265
Employee performance shares 32 13 --
- --------------------------------------------------------------------------------
Dilutive potential common shares 506 435 265
- --------------------------------------------------------------------------------
Denominator for diluted earnings per share-
adjusted weighted-average shares
and assumed conversions 16,383 16,272 16,021
- --------------------------------------------------------------------------------
NOTE 4. EQUITY INVESTMENT
Genlyte Thomas Group LLC (GTG) is an affiliated company accounted for on the
equity method. See Notes 1 and 2 for a description of GTG, as well as a
discussion of the adoption of the equity method of accounting. Summarized
financial information reported by the affiliate and a summary of the amounts
recorded on Thomas' consolidated financial statements follow. GTG is organized
as a limited liability corporation (LLC) that has elected to be taxed as a
partnership for U.S. income tax purposes. Therefore, Thomas and Genlyte are
responsible for income taxes applicable to their share of GTG's taxable income.
The net income reflected below for GTG does not include any provision for U.S.
income taxes which will be incurred by Thomas and Genlyte. At December 31, 1998,
Thomas' retained earnings include $4,320,000 of after-tax undistributed earnings
from GTG accounted for on the equity method.
NOTE 4. EQUITY INVESTMENT (CONTINUED)
(In thousands)
- --------------------------------------------------------------------------------
GTG BALANCE SHEET AT DECEMBER 31, 1998:
Cash & cash equivalents $ 8,533
Accounts receivable, net 146,167
Inventory, net
Other current assets 9,305
- --------------------------------------------------------------------------------
Total current assets 301,009
Property, plant, & equipment, net 105,679
Goodwill, net 61,549
Sundry 12,632
- --------------------------------------------------------------------------------
Total assets $480,869
- --------------------------------------------------------------------------------
Total current liabilities $134,068
Other liabilities 21,421
Note payable to Thomas Industries 22,287
Long-term debt 38,565
Shareholders' equity 264,528
- --------------------------------------------------------------------------------
Total liabilities & shareholders' equity $480,869
- --------------------------------------------------------------------------------
GTG INCOME STATEMENT(1)
Net sales $324,111
Cost of sales 210,190
- --------------------------------------------------------------------------------
Gross profit 113,921
SG&A expense 85,144
- --------------------------------------------------------------------------------
Operating profit 28,777
Interest expense, net 1,252
- --------------------------------------------------------------------------------
Income before taxes 27,525
Income taxes (Foreign) 1,009(2)
- --------------------------------------------------------------------------------
Net income $ 26,516
- --------------------------------------------------------------------------------
Amounts recorded by Thomas
Investment $147,386(3)
Note receivable 22,287(4)
Equity income 20,323(5)
Distributions received 19,053(6)
(1) Amounts represent results of operations for GTG for the four months ended
December 31, 1998 (since inception).
(2) GTG is organized as a limited liability corporation (LLC) that has elected
to be taxed as a partnership for U.S. income tax purposes. GTG is subject
to certain foreign income taxes.
(3) At December 31, 1998, Thomas' investment in GTG exceeded its underlying
equity in net assets by $62,737,000. For the four months ended December 31,
1998, equity income was reduced by $733,000 which represents straight-line
amortization of the excess investment.
(4) The note receivable from GTG represents a debt equalization note issued to
Thomas at the formation of GTG. Interest on the principal amount
outstanding under the note accrues at a variable rate and is payable on a
quarterly basis. The principal amount of the note is due on August 29,
2003, and may be prepaid in whole or in part at any time without premium or
penalty.
(5) Consists of $12,571,000 of income from Thomas' former lighting operations
for the eight months ended August 30, 1998 (which were restated to the
equity method), $8,485,000 of equity income from GTG for the four months
ended December 31, 1998 less $733,000 of amortization of Thomas' excess
investment.
(6) Consists of $16,324,000 of cash flows from Thomas' former lighting
operations and distributions of $2,729,000 received from GTG.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. INCOME TAXES
A summary of the provision for income taxes follows:
(In thousands) 1998 1997 1996
- --------------------------------------------------------------------------------
Current:
Federal $ 9,937 $ 7,977 $ 6,946
State 1,508 780 630
Foreign 3,377 3,007 2,498
14,822 11,764 10,074
- --------------------------------------------------------------------------------
Deferred:
Federal and state 61 1,594 128
Foreign 13 (184) 70
- --------------------------------------------------------------------------------
74 1,410 198
- --------------------------------------------------------------------------------
Total provision for income taxes $ 14,896 $ 13,174 $ 10,272
- --------------------------------------------------------------------------------
The U.S. and foreign components of income before income taxes follow:
(In thousands) 1998 1997 1996
- --------------------------------------------------------------------------------
United States $29,687 $27,360 $20,731
Foreign 9,719 8,284 6,957
- --------------------------------------------------------------------------------
Income before income taxes $39,406 $35,644 $27,688
- --------------------------------------------------------------------------------
A reconciliation of the normal statutory federal income tax rate to the
Company's effective income tax rate follows:
1998 1997 1996
- --------------------------------------------------------------------------------
U.S. statutory rate 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefits 2.5 1.4 1.5
Nondeductible amortization of intangible assets 1.0 1.6 2.0
Loss carryforwards (.4) (.9) (1.4)
Foreign taxes .3 1.0 1.8
Other (.6) (1.1) (1.8)
- --------------------------------------------------------------------------------
Effective income tax rate 37.8% 37.0% 37.1%
- --------------------------------------------------------------------------------
NOTE 5. INCOME TAXES (CONTINUED)
Deferred income taxes are provided for significant income and expense items
recognized in different years for tax and financial reporting purposes.
Temporary differences which gave rise to significant deferred tax assets and
liabilities follow:
(In thousands) 1998 1997
- --------------------------------------------------------------------------------
Deferred tax assets:
Net operating loss carryforwards $ 939 $ 1,856
Allowance for doubtful accounts receivable 119 644
Inventory reserves 535 1,658
Accrued compensation expenses 1,201 2,853
Other 1,869 3,093
- --------------------------------------------------------------------------------
4,663 10,104
Less valuation allowance (939) 1,856
- --------------------------------------------------------------------------------
Net deferred tax asset 3,724 8,248
Deferred tax liabilities:
Accelerated depreciation 3,701 7,030
Inventory valuation 453 1,844
Pension expense 315 1,318
Investment in unconsolidated affiliates 1,504 --
Other 343 597
- --------------------------------------------------------------------------------
6,316 10,789
- --------------------------------------------------------------------------------
Net deferred tax liability $ 2,592 $ 2,541
- --------------------------------------------------------------------------------
Classification:
Current asset $ 2,997 $ 6,694
Long-term asset 727 1,554
Current liability 453 1,987
Long-term liability 5,863 8,802
- --------------------------------------------------------------------------------
Net deferred tax liability $ 2,592 $ 2,541
- --------------------------------------------------------------------------------
Deferred tax assets and liabilities are classified according to the related
asset and liability classification on the consolidated balance sheet.
The realization of deferred tax assets is dependent upon the Company's
generating future taxable income when temporary differences become deductible.
Based upon historical and projected levels of taxable income, management
believes it is more likely than not the Company will realize the benefits of the
deductible differences, net of the valuation allowance of $939,000. The
valuation allowance is provided for income tax loss carryforward benefits for
federal and state income tax purposes which expire over a five-year period
beginning in 2006, the realization of which is not assured within the
carryforward periods.
The Company's foreign subsidiaries have accumulated undistributed earnings
($23,668,000 at December 31, 1998) on which U.S. taxes have not been provided.
Under current tax regulations and with the availability of certain tax credits,
it is management's belief that the likelihood of the Company's incurring
significant taxes on any distribution of such accumulated earnings is remote.
Dividends, if any, would be paid principally from current earnings.
The Company made federal, state, and foreign income tax payments of $14,476,000
in 1998, $13,911,000 in 1997 and $13,179,000 in 1996.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. LONG-TERM DEBT AND CREDIT ARRANGEMENTS
Long-term debt consists principally of 9.36% senior notes with annual maturities
through 2005 ($46,350,000 and $54,080,000 at December 31, 1998 and 1997,
respectively).
The fair value of the Company's long-term debt at December 31, 1998 and 1997,
was $53,800,000 and $60,000,000, respectively.
Maturities of long-term debt for the next five years are as follow:
1999-$7,782,000; 2000-$7,784,000; 2001-$7,786,000; 2002-$7,788,000; and
2003-$7,791,000.
Certain loan agreements of the Company include restrictions on working capital,
operating leases, tangible net worth and the payment of cash dividends and stock
distributions. Under the mostrestrictive of these arrangements, retained
earnings of $52,800,000 were not restricted at December 31, 1998.
As of December 31, 1998, the Company had available credit of $13,600,000 with
banks under short-term borrowing arrangements which was unused and a $30,000,000
revolving line of credit that expires in 2002, which was unused.
Cash paid for interest was $6,426,000 in 1998, $6,805,000 in 1997 and $7,591,000
in 1996. The weighted average interest rates on short-term borrowings at
December 31, 1998 and 1997, were 6.18% and 4.30%, respectively.
NOTE 7. SHAREHOLDERS' EQUITY
STOCK INCENTIVE PLANS
At the April 20, 1995, Annual Meeting, the Company's shareholders approved the
Company's 1995 Incentive Stock Plan. An aggregate of 900,000 shares of common
stock, plus all shares remaining under the Company's 1987 Incentive Stock Plan,
were reserved for issuance under this Plan. Under this Plan, options may be
granted to employees at not less than market value at date of grant. All options
granted have 10-year terms and vest and become fully exercisable at the end of
five years of continued employment. The Company's 1987 Incentive Stock Plan was
terminated, except with respect to outstanding options which may be exercised
through 2005.
At the April 21, 1994, Annual Meeting, the Company's shareholders approved the
Non-Employee Director Stock Option Plan. Under this Plan, each continuing
non-employee director in office on the date of each annual meeting is awarded
options to purchase 3,000 shares of common stock at not less than market value
at date of grant. All options granted have 10-year terms and vest and become
fully exercisable on the date granted. This Plan provides for options to be
awarded at each annual meeting through 2004 or until 375,000 options have been
granted. At December 31, 1998, there were eight non-employee directors in
office, and 126,000 options had been awarded under this Plan.
NOTE 7. SHAREHOLDERS' EQUITY (CONTINUED)
The Company has adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123). In accordance with SFAS
123, the Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations, in accounting for its stock-based compensation because, as
discussed below, the alternative fair value accounting provided for under SFAS
123 requires use of option valuation models that were not developed for use in
valuing stock options. Under APB 25, because the exercise price of the Company's
stock options equals the market price of the underlying stock on the date of
grant, no compensation expense is recognized.
Pro forma information regarding net income and earnings per share is required by
SFAS 123, which also requires that the information be determined as if the
Company had accounted for its employee stock options granted subsequent to
December 31, 1994, under the fair value method of SFAS 123. The fair value for
these options was estimated at the date of grant using a Black-Scholes option
pricing model with the following weighted-average assumptions:
1998 1997 1996
- --------------------------------------------------------------------------------
Risk-free interest rate 4.8% 5.5% 6.5%
Expected life, in years 6.5 6.5 8.0
Expected volatility 0.280 0.264 0.273
Expected dividend yield 1.7% 1.8% 2.0%
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restriction and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. Because
the Company's stock options have characteristics significantly different from
those of traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the fair
value of its stock options.
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information follows:
(In thousands, except share data) 1998 1997 1996
- --------------------------------------------------------------------------------
Net income As reported $24,510 $22,470 $17,416
Pro forma 23,668 21,882 17,024
Net income per share As reported 1.54 1.42 1.11
Basic Pro forma 1.49 1.38 1.08
Net income per share As reported 1.50 1.38 1.09
Diluted Pro forma 1.44 1.34 1.06
Because SFAS 123 is applicable only to options granted subsequent to December
31, 1994, its pro forma effect will not be fully reflected until 1999.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. SHAREHOLDERS' EQUITY (CONTINUED)
A summary of stock option activity for all plans follows:
1998 1997 1996
- --------------------------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
Options Price Options Price Options Price
- --------------------------------------------------------------------------------
Beginning of year 1,345,400 $13.22 1,174,110 $11.02 1,026,288 $10.01
Granted 263,500 19.04 269,000 21.31 268,500 13.98
Exercised (108,867) 9.70 (95,211) 8.92 (97,924) 8.59
Forfeited or expired (2,450) 18.19 (2,499) 12.49 (22,754) 11.20
- --------------------------------------------------------------------------------
End of year 1,497,583 $14.49 1,345,400 $13.22 1,174,110 $11.02
- --------------------------------------------------------------------------------
Exercisable at
end of year 654,576 $10.95 559,481 $ 9.69 506,390 $ 8.74
The weighted average fair value of options granted was $5.98 in 1998, $6.67 in
1997 and $5.05 in 1996 using a Black-Scholes option pricing model. Options
outstanding at December 31, 1998, had option prices ranging from $6.58 to $23.63
and expire at various dates between April 20, 1999, and December 14, 2008, (with
a weighted-average remaining contractual life of 7.3 years). There are 285,553
shares reserved for future grant, of which 242,600 shares are reserved for the
Non-Employee Director Stock Option Plan.
In addition to the options listed above, 11,800 performance share awards were
granted in December 1998, and 13,215 performance share awards were granted in
December 1997 and December 1996. Awards may be earned based on the total
shareholder return of the Company during the three-year periods commencing
January 1 following the grant date.
SHAREHOLDER RIGHTS PLAN
On December 10, 1997, the Board of Directors of the Company adopted a
shareholder rights plan (the Rights Plan) pursuant to which preferred stock
purchase rights (the Rights) were declared and distributed to the holders of the
Company's common stock. The Rights Plan provides that the Rights separate from
the common stock and become exercisable if a person or group of persons working
together acquires at least 20% of the common stock (a 20% Acquisition) or
announces a tender offer which would result in ownership by that person or group
of at least 20% of the common stock (a 20% Tender Offer). Upon a 20%
Acquisition, the holders of Rights may purchase the common stock at half price.
If, following the separation of the Rights from the common stock, the Company is
acquired in a merger or sale of assets, holders of Rights may purchase the
acquiring company's stock at half price.
Notwithstanding the foregoing discussion, under the Rights Plan, the Board of
Directors has flexibility in certain events. In order to provide maximum
flexibility, the Board of Directors may delay the date upon which the Rights
become exercisable in the event of a 20% Tender Offer. In addition, the Board of
Directors has the option to exchange one share of common stock for each
outstanding Right at any time after a 20% Acquisition but before the acquirer
has purchased 50% of the outstanding common stock. The Rights may also be
redeemed at two cents per Right at any time prior to a 20% Acquisition or a 20%
Tender Offer.
NOTE 8. EMPLOYEE BENEFIT PLANS
The Company has noncontributory defined benefit pension plans and contributory
defined contribution plans covering its hourly union employees. The defined
benefit plans primarily provide flat benefits of stated amounts for each year of
service. The Company's policy is to fund pension costs deductible for income tax
purposes.
NOTE 8. EMPLOYEE BENEFIT PLANS (CONTINUED)
The Company also sponsors defined contribution pension plans covering
substantially all U.S. employees whose compensation is not determined by
collective bargaining. Annual contributions are determined by the Board of
Directors.
<TABLE>
<CAPTION>
Pension benefits Other postretirement benefits
---------------------------------------------------
(In thousands) 1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATIONS
Benefit obligations at beginning of year $ 29,260 $ 25,511 $ 4,898 $ 4,725
Service cost 193 482 22 38
Interest cost 669 1,994 359
Plan amendments -- 349 -- --
Benefits paid (610) (2,069) (417) (432)
Obligations assumed by GTG (19,563) -- (4,211) --
Actuarial loss 363 2,993 394 208
Benefit obligations at end of year $ 10,312 $ 29,260 $ 733 $ 4,898
CHANGE IN PLAN ASSETS
Value of plan assets at beginning of year $ 30,500 $ 26,074 $ -- $ --
Actual return on plan assets 1,934 5,598 -- --
Employer contributions 115 897 417 432
Benefits paid (610) (2,069) (417) (432)
Assets transferred to GTG (20,736) -- -- --
Value of plan assets at end of year $ 11,203 $ 30,500 $ -- $ --
The defined benefit plans' assets at December 31, 1998, consisted primarily of
listed stocks and bonds, including 14,430 shares of Company common stock having
a market value of $283,000 at that date.
FUNDED STATUS OF THE PLANS
Assets less accumulated obligations $ 891 $ 1,240 $ (733) $(4,898)
Unrecognized actuarial (gain) loss (302) 258 66 (548)
Unrecognized transition gain 4 161 -- --
Unrecognized prior service cost 496 2,071 262 3,504
Net asset (liability) recognized at end of year $ 1,089 $ 3,730 $ (405) $(1,942)
The accumulated benefit obligation and plan assets for pension plans with
accumulated benefit obligations in excess of plan assets were $3,251,000 and
$2,993,000 as of December 31, 1998, and $12,378,000 and $11,440,000 as of
December 31, 1997.
BALANCE SHEET ASSETS (LIABILITIES)
Prepaid benefit costs $ 788 $ 2,256 $ -- $ --
Accrued benefit liabilities (258) (974) (405) (1,942)
Intangible assets 427 1,685 -- --
Accumulated other comprehensive income 132 763 -- --
Net asset (liability) recognized at end of year $ 1,089 $ 3,730 $ (405) $(1,942)
ASSUMPTIONS AS OF DECEMBER 31 Discount rate 6.75% 7.15% 6.75% 7.15%
Expected return on plan assets 9.00% 9.00% -- --
Initial health care cost trend rate -- -- 8.00% 8.00%
Ultimate health care cost trend rate -- -- 4.50% 4.50%
Year ultimate rate is achieved -- -- 2006 2006
A one-percentage-point change in the assumed health care cost trend rate would
not have a significant effect on the other postretirement benefits amounts
reported above.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. EMPLOYEE BENEFIT PLANS (CONTINUED)
The following table details the components of pension and other postretirement
benefit costs.
<TABLE>
<CAPTION>
Pension benefits Other postretirement benefits
-----------------------------------------------------------
(In thousands) 1998 1997 1996 1998 1997 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 193 $ 482 $ 502 $ 22 $ 38 $ 50
Interest cost 669 1,994 1,806 47 359 356
Expected return on plan assets (853) (2,275) (2,098) -- -- --
Other amortization and deferral 46 228 251 (14) 216 233
- -----------------------------------------------------------------------------------------------
$ 55 $ 429 $ 461 $ 55 $ 613 $ 639
- -----------------------------------------------------------------------------------------------
</TABLE>
Thomas sponsors various defined contribution plans to assist eligible employees
in providing for retirement or other future needs. Company contributions to
these plans amounted to $1,169,000 in 1998, $3,307,000 in 1997 and $3,206,000 in
1996. Current-year Company contributions included in these financial statements
decreased as a result of the formation of GTG.
NOTE 9. LEASES, COMMITMENTS, AND CONTINGENCIES
Rental expense was $2,722,000 in 1998; $4,888,000 in 1997 and $4,664,000 in
1996. Future minimum rentals under non-cancellable operating leases are as
follow: 1999-$2,000,000; 2000-$1,945,000; 2001-$1,656,000; 2002-$1,603,000;
2003-$1,163,000; and thereafter-$4,786,000. The reduction in current-year rental
expense is primarily due to the formation of GTG.
The Company had letters of credit outstanding in the amount of $4,963,000 at
December 31, 1998.
The Company, like other similar manufacturers, is subject to environmental rules
and regulations regarding the use, disposal and cleanup of substances regulated
under environmental protection laws. It is the Company's policy to comply with
these rules and regulations, and the Company believes that its practices and
procedures are designed to meet this compliance. The Company is involved in
remedial efforts at certain of its present and former locations; and when costs
can be reasonably estimated, the Company records appropriate liabilities for
such matters. Estimated liabilities are not discounted to present value. The
Company does not believe that the ultimate resolution of environmental matters
will have a material adverse effect on its financial position, results of
operations or liquidity.
In the normal course of business, the Company is a party to legal proceedings
and claims. When costs can be reasonably estimated, appropriate liabilities for
such matters are recorded. While management currently believes the amount of
ultimate liability, if any, with respect to these actions will not materially
affect the financial position, results of operations, or liquidity of the
Company, the ultimate outcome of any litigation is uncertain. Were an
unfavorable outcome to occur, the impact could be material to the Company.
NOTE 10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
A summary of accrued expenses and other current liabilities follows:
(In thousands) 1998 1997
- --------------------------------------------------------------------------------
Accrued wages, taxes and withholdings $ 4,401 $12,702
Accrued insurance 1,732 5,056
Accrued sales expense 910 5,913
Income taxes payable 3,865 1,463
Other current liabilities 8,489 16,512
- --------------------------------------------------------------------------------
Total accrued expenses and other current liabilities $19,397 $41,646
- --------------------------------------------------------------------------------
The reduction in current-year accrued expenses and other current liabilities is
primarily due to the formation of GTG.
NOTE 11. SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
Unaudited quarterly results of operations follow:
(In thousands, Net Sales Gross Profit Net Income
except share data)--------------------------------------------------------------
1998 1997 1998 1997 1998 1997
- --------------------------------------------------------------------------------
1st Qtr $ 48,209 $126,356 $ 17,628 $ 38,257 $ 5,250 $ 4,002
2nd Qtr 46,336 139,989 17,278 43,540 6,875 6,430
3rd Qtr 43,146 141,204 15,845 44,181 7,050 7,025
4th Qtr 39,529 140,153 14,151 42,978 5,335 5,013
- --------------------------------------------------------------------------------
$177,220 $547,702 $ 64,902 $168,956 $ 24,510 $ 22,470
- --------------------------------------------------------------------------------
Basic Net Income Diluted Net Income
Per Share Per Share
----------------------------------------------
1998 1997 1998 1997
- --------------------------------------------------------------------------------
1st Qtr $0.33 $0.25 $0.32 $0.25
2nd Qtr 0.43 0.41 0.42 0.39
3rd Qtr 0.44 0.44 0.43 0.43
4th Qtr 0.34 0.32 0.33 0.31
- --------------------------------------------------------------------------------
$1.54 $1.42 $1.50 $1.38
- --------------------------------------------------------------------------------
NOTE 12. ACQUISITION
On March 15, 1996, the Company acquired Welch Vacuum Technology, Inc., of
Skokie, Illinois, a manufacturer of high vacuum systems for laboratory and
chemical markets. Welch was acquired in exchange for 514,574 shares of common
stock of the Company in a transaction accounted for as a pooling of interests.
Due to immateriality, prior-year financial statements were not restated.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13. INDUSTRY SEGMENT INFORMATION
Industry segment information follows:
(In thousands) 1998 1997 1996
- -------------------------------------------------------------------------------
REVENUES
Sales and operating revenues
Compressors & Vacuum Pumps $ 177,220 $ 173,637 $ 170,064
Lighting -- 374,065 340,047
- -------------------------------------------------------------------------------
$ 177,220 $ 547,702 $ 510,111
- -------------------------------------------------------------------------------
OPERATING INCOME (LOSS)
Compressors & Vacuum Pumps $ 30,743 $ 30,879 $ 28,857
Lighting 20,323 22,423 16,832
Corporate (6,646) (12,315) (11,047)
- -------------------------------------------------------------------------------
$ 44,420 $ 40,987 $ 34,642
- -------------------------------------------------------------------------------
ASSETS
Compressors & Vacuum Pumps $ 89,736 $ 85,878 $ 86,259
Lighting 147,386 222,449 211,173
Corporate 45,237 19,312 22,218
- -------------------------------------------------------------------------------
$ 282,359 $ 327,639 $ 319,650
- -------------------------------------------------------------------------------
INVESTMENT IN EQUITY AFFILIATES
Lighting $ 147,386 $ -- $ --
EXPENSES NOT AFFECTING CASH
Depreciation and amortization
Compressors & Vacuum Pumps $ 7,008 $ 6,530 $ 6,537
Lighting -- 9,345 8,934
Corporate 168 174 211
- -------------------------------------------------------------------------------
$ 7,176 $ 16,049 $ 15,682
- -------------------------------------------------------------------------------
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
Compressors & Vacuum Pumps $ 6,703 $ 8,441 $ 7,122
Lighting -- 9,006 7,675
Corporate 275 249 274
- -------------------------------------------------------------------------------
$ 6,978 $ 17,696 $ 15,071
- -------------------------------------------------------------------------------
Intersegment and interlocation sales are not significant and have been
eliminated from the above tabulation. Operating income by segment is gross
profit less operating expenses, excluding interest, general corporate expenses,
other income and income taxes.
<PAGE>
NOTE 13. INDUSTRY SEGMENT INFORMATION (CONTINUED)
Information by geographic area follows:
(In thousands) 1998 1997 1996
- --------------------------------------------------------------------------------
REVENUES
Total net sales including intercompany sales
United States $ 131,253 $ 469,984 $ 434,145
Canada -- 43,460 39,378
Europe 58,877 58,143 56,658
- --------------------------------------------------------------------------------
$ 190,130 $ 571,587 $ 530,181
- --------------------------------------------------------------------------------
Intercompany sales
United States $ (5,698) $ (14,257) $ (12,387)
Canada -- (489) (674)
Europe (7,212) (9,139) (7,009)
- --------------------------------------------------------------------------------
$ (12,910) $ (23,885) $ (20,070)
- --------------------------------------------------------------------------------
Net sales to unaffiliated customers
United States $ 125,555 $ 455,727 $ 421,758
Canada -- 42,971 38,704
Europe 51,665 49,004 49,649
- --------------------------------------------------------------------------------
$ 177,220 $ 547,702 $ 510,111
- --------------------------------------------------------------------------------
OPERATING INCOME
United States $ 35,901 $ 31,981 $ 27,498
Canada -- 1,427 1,121
Europe 8,519 7,579 6,023
- --------------------------------------------------------------------------------
$ 44,420 $ 40,987 $ 34,642
- --------------------------------------------------------------------------------
LONG-LIVED ASSETS
United States $ 27,472 $ 69,879 $ 64,445
Canada -- 6,666 6,879
Europe 7,784 7,057 7,531
- --------------------------------------------------------------------------------
$ 35,256 $ 83,602 $ 78,855
- --------------------------------------------------------------------------------
<PAGE>
REPORTS OF MANAGEMENT AND INDEPENDENT AUDITORS
RESPONSIBILITY FOR FINANCIAL REPORTING
Board of Directors and Shareholders
Thomas Industries Inc.
The financial statements herein have been prepared under management direction
from accounting records which management believes presents fairly the
transactions and financial position of the Company. They were developed in
accordance with generally accepted accounting principles appropriate in the
circumstances.
Management has established internal control systems and procedures to provide
reasonable assurance that assets are maintained and accounted for in accordance
with its authorizations and that transactions are recorded in a manner to ensure
reliable financial information. The Company has a formally stated and
communicated policy demanding of employees high ethical standards in their
conduct of its business.
The Audit Committee of the Board of Directors is composed of outside directors
who meet regularly with management, internal auditors and independent auditors
to review audit plans and fees, independence of auditors, internal controls,
financial reports and related matters. The Committee has unrestricted access to
the independent and internal auditors with or without management attendance.
Timothy C. Brown
Chairman of the Board
President
Chief Executive Officer
Phillip J. Stuecker
Vice President of Finance
Chief Financial Officer
Secretary
Louisville, Kentucky
February 11, 1999
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Thomas Industries Inc.
We have audited the consolidated balance sheets of Thomas Industries Inc. and
subsidiaries as of December 31, 1998 and 1997, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the three
years in the period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. The financial
statements of Genlyte Thomas Group LLC (GTG), a partnership formed on August 30,
1998, in which the Company has a 32% interest, have been audited by other
auditors whose report has been furnished to us; insofar as our opinion on the
consolidated financial statements relates to data included for GTG, it is based
solely on their report.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Thomas Industries Inc.
and subsidiaries at December 31, 1998 and 1997, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Louisville, Kentucky
February 11, 1999
<TABLE>
<CAPTION>
FIVE YEAR SUMMARY OF OPERATIONS AND STATISTICS
Years ended December 31
--------------------------------------------------------------------------------
(Dollars in thousands except per share) 1998(A) 1997 1996 1995 1994
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<S> <C> <C> <C> <C> <C>
EARNINGS STATISTICS
Net sales $ 177,220 $ 547,702 $ 510,111 $ 490,573 $ 456,565
Cost of products sold 112,318 378,746 358,778 352,551 329,338
Selling, general, and administrative expenses 40,805 127,969 117,659 108,284 104,091
Equity income from lighting 20,323 -- -- -- --
Interest expense 6,199 6,480 7,333 8,242 9,225
Income before income taxes 39,406 35,644 27,688 21,053 18,198
As a percentage of net sales 22.2% 6.5% 5.4% 4.3% 4.0%
Income taxes 14,896 13,174 10,272 8,278 7,656
Effective tax rate 37.8% 37.0% 37.1% 39.3% 42.1%
Net income 24,510 22,470 17,416 12,775 10,542(B)
FINANCIAL POSITION
Working capital $ 29,840 $ 92,258 $ 85,838 $ 80,837 $ 77,558
Current ratio 1.9 to 1 2.1 to 1 2.0 to 1 2.0 to 1 2.0 to 1
Property, plant and equipment - net 34,001 80,197 77,795 75,710 75,962
Total assets 282,359 327,639 319,650 313,533 305,071
Return on ending assets 8.7% 6.9% 5.4% 4.1% 3.5%
Long-term debt, less current portion 48,298 55,006 62,632 70,791 79,693
Long-term debt to capital 20.2% 24.1% 28.4% 33.1% 37.3%
Shareholders' equity 190,687 173,405 157,702 143,177 133,766
Return on beginning shareholders' equity 14.1% 14.2% 12.2% 9.6% 8.4%
DATA PER COMMON SHARE (C)
Net income $ 1.50 $ 1.38 $ 1.09 $ 0.83 $ 0.70
Cash dividends declared 0.30 0.28 0.27 0.27 0.27
Shareholders' equity 11.73 10.59 9.99 9.43 8.85
Price range 26.63 22.33 15.92 16.08 10.92
to to to to to
17.06 13.67 11.00 9.08 8.50
Closing price 19.625 19.75 13.92 15.67 9.58
Price/earnings ratio 13.1 14.3 12.8 18.8 13.7
OTHER DATA
Cash dividends declared $ 4,766 $ 4,357 $ 4,169 $ 4,036 $ 4,024
Expenditures for property, plant and equipment 6,978 17,696 15,071 12,288 16,301
Depreciation and amortization 7,176 16,049 15,682 14,803 15,524
Average number of employees 1,050 3,300 3,150 3,100 3,190
Average sales per employee 168.8 166.0 161.9 158.2 143.1
Number of shareholders of record 1,950 2,057 2,232 2,407 2,677
Average number common shares outstanding (C) 16,382,928 16,271,678 16,021,026 15,348,828 15,090,654
SEGMENT INFORMATION
Net Sales
Compressors & Vacuum Pumps $ 177,220 $ 173,637 $ 170,064 $ 157,731 $ 146,323
Lighting -- 374,065 340,047 332,842 304,047
Other -- -- -- -- 6,195
Total Net Sales $ 177,220 $ 547,702 $ 510,111 $ 490,573 $ 456,565
Operating Income
Compressors & Vacuum Pumps $ 30,743 $ 30,879 $ 28,857 $ 28,446 $ 29,252
Lighting 20,323 22,423 16,832 11,193 4,618
Other -- -- -- -- (263)
Corporate expenses (6,646) (12,315) (11,047) (10,133) (10,709)
Total Operating Income $ 44,420 $ 40,987 $ 34,642 $ 29,506 $ 22,898
Note: See accompanying Notes to Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
(A) Thomas Industries changed its method of accounting for its lighting business
(contributed to GTG) to the equity method, effective January 1, 1998, the
beginning of Thomas' current fiscal year. This change had no effect on Thomas'
net income or common shareholders' equity but did reduce its revenues, costs,
assets, liabilities, and number of employees. Financial statements for years
prior to 1998 were not restated; therefore, some information in Thomas'
financial statements and highlights for 1998 is not comparable to prior years.
(B) Divestitures -- major divestitures and the effect on net income in the year
of divestiture include Builders Brass Works and Portland Willamette in 1994 for
a gain of $3,000,000.
(C) Adjusted for 1997 stock split.
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Exhibit 21.
SUBSIDIARIES OF THE REGISTRANT
Place of Percentage of
Name of Company Incorporation Voting Securities
--------------- ------------- -----------------
ASF Thomas Limited United Kingdom 100%
ASF Thomas Industries Holding Deutschland GmbH Germany 100%
ASF Thomas Industries GmbH, Puchheim Germany 100%
ASF Thomas Industries GmbH, Memmingen Germany 100%
ASF Thomas Industries GmbH & Co. KG, Wuppertal Germany 100%
ASF Thomas, Inc. Georgia 100%
Blue Grass Holdings Inc. Nevada 100%
T.I. Industries Corporation Delaware 100%
TI Pneumotive, Inc. Delaware 100%
Thomas Group U.K., Inc. Delaware 100%
Thomas Imports, Inc. Nevada 100%
Thomas Industries Asia Pacific, Inc. Delaware 100%
Thomas Industries Asia Pacific, Ltd. Hong Kong 100%
Thomas Industries Export, Inc. U.S. Virgin Islands 100%
Thomas Industries Holdings Inc. Delaware 100%
Tupelo Holdings Inc. Delaware 100%
Thomas Technologies, Inc. Delaware 100%
Welch Vacuum Technology, Inc. Delaware 100%
NON WHOLLY OWNED SUBSIDIARIES
Place of Percentage of
Name of Company Incorporation Voting Securities
--------------- ------------- -----------------
Thomas Americas Industria e Commercio, LTDA Brazil 95%
Exhibit 23(a)
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-3 No. 333-05629) and related Prospectus and in the Registration Statements
(Forms S-8 No. 33-16257, No. 33-51653, No. 33-54689, No. 33-59099, and No.
333-34175) of Thomas Industries Inc. of our report dated February 11, 1998, with
respect to the consolidated financial statements and schedule of Thomas
Industries Inc. and subsidiaries included in the Annual Report (Form 10-K) for
the years ended December 31, 1997 and 1996.
/s/ Ernst & Young LLP
Louisville, Kentucky
March 16, 1998
Exhibit 23(b)
Consent of Independent Auditors
As independent auditors, we hereby consent to the incorporation by reference in
the Registration Statement (Form S-3 No. 333-05629) and related Prospectus and
in the Registration Statements (Forms S-8 No. 33-16257 No. 33-54689, No.
33-59099, and No. 333-34175) of Thomas Industries Inc. of our report dated
February 10, 1999, with respect to the consolidated financial statements of The
Genlyte Thomas Group LLC included in the Annual Report (Form 10-K) for the year
ended December 31, 1998.
/s/ Arthur Andersen LLP
Louisville, Kentucky
March 24, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR<F1>
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> DEC-31-1998 DEC-31-1997
<CASH> 18,205 17,352
<SECURITIES> 0 0
<RECEIVABLES> 19,861 73,431
<ALLOWANCES> 656 2,046
<INVENTORY> 20,186 74,128
<CURRENT-ASSETS> 64,243 176,611
<PP&E> 73,115 154,977
<DEPRECIATION> 39,114 74,780
<TOTAL-ASSETS> 282,359 327,639
<CURRENT-LIABILITIES> 34,403 84,353
<BONDS> 48,298 55,006
0 0
0 0
<COMMON> 17,486 17,394
<OTHER-SE> 173,201 156,011
<TOTAL-LIABILITY-AND-EQUITY> 282,359 327,639
<SALES> 177,220 547,702
<TOTAL-REVENUES> 177,220 547,702
<CGS> 112,318 378,746
<TOTAL-COSTS> 112,318 378,746
<OTHER-EXPENSES> 19,068 126,391
<LOSS-PROVISION> 229 441
<INTEREST-EXPENSE> 6,199 6,480
<INCOME-PRETAX> 39,406 35,644
<INCOME-TAX> 14,896 13,174
<INCOME-CONTINUING> 24,510 22,470
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 24,510 22,470
<EPS-PRIMARY> 1.54 1.42
<EPS-DILUTED> 1.50 1.38
<FN>
<F1>RESTATED.
</FN>
</TABLE>
