UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from
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Commission File Number 1-5426
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THOMAS INDUSTRIES INC.
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(Exact name of Registrant as specified in its Charter)
DELAWARE 61-0505332
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(State of incorporation) (I.R.S. Employer Identification Number)
4360 BROWNSBORO ROAD, LOUISVILLE, KENTUCKY 40207
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(Address of principal executive offices) (Zip Code)
502/893-4600
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(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
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2) Yes X No
--- ---
As of February 28, 2003, 17,144,420 shares of the registrant's Common Stock were
outstanding (net of treasury shares and including directors' and executive
officers' shares).
The aggregate market value of the voting stock held by non-affiliates of the
Registrant at June 30, 2002, was approximately $425,100,000. The aggregate
market value was computed by using the closing price of the common stock as of
that date on the New York Stock Exchange. (For purposes of calculating this
amount only, all directors and executive officers of the registrant have been
treated as affiliates.)
Portions of the Proxy Statement for the Annual Meeting of Shareholders on April
17, 2003, are incorporated by reference in Part III of this report.
Portions of the Annual Report to Shareholders for fiscal year ended December 31,
2002, are incorporated by reference in Parts I and II of this report.
PART I.
ITEM 1. BUSINESS
a. General Development of Business.
-------------------------------
The company that was eventually to become known as Thomas Industries
Inc. ("Thomas"or the "Company") was founded in 1928 as the Electric
Sprayit Company. Electric Sprayit manufactured paint 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 Pumps and Compressors.
Significant additions to the Lighting business included the Lumec and
Day-Brite Lighting acquisitions in 1987 and 1989. 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 (GTG),
estimated to be the third largest manufacturer of lighting fixtures and
controls in North America. Thomas owns a 32% interest in the joint
venture, and Genlyte owns a 68% interest. Since the formation of the
joint venture, GTG has made several acquisitions to fill product voids,
including Fibre Light, Ledalight, Translite, Chloride and Vari-Lite.
Significant additions to the Pump and Compressor business include ASF,
Pneumotive, Brey, WISA, Welch and Oberdorfer, which were made from 1987
through 1999. On August 29, 2002, the Company purchased substantially
all the assets and liabilities of Werner Rietschle Holding GmbH
("Rietschle"), a privately held company based in Schopfheim, Germany.
Rietschle is a world leader in vacuum and pressure technology, which
includes dry-running and oil-lubricated pumps, blowers, compressors,
and pressure/vacuum pumps utilizing rotary vane, screw, roots and claw
technologies. With the newly-launched Rietschle Thomas brand, Thomas
intends to pursue further opportunities in markets such as printing,
packaging, woodworking and many other applications that fit Rietschle
technologies, including fuel cells.
Website Access to Company Reports
We make available free of charge through our website,
www.thomasind.com, our annual report on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and all amendments to those
reports as soon as reasonably practicable after such material is
electronically filed with the Securities and Exchange Commission. Our
internet website and the
ITEM 1. (Continued)
information contained therein or incorporated therein are not intended
to be incorporated into this Annual Report on Form 10-K.
b. Financial Information about 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.
---------------------------------
Pump and Compressor Segment
---------------------------
Since the formation of the lighting joint venture, Thomas is now
focused on its Pump and Compressor business. Thomas is a leading
supplier of pumps and compressors to the original equipment
manufacturer (OEM) market in such applications as medical equipment,
gasoline vapor and refrigerant recovery, automotive and transportation
applications, printing, packaging, tape drives, laboratory equipment,
and many other applications for consumer, commercial, and industrial
uses. The Company designs, manufactures, markets, sells and services
these products through worldwide operations. Pump and Compressor Group
headquarters are as follows: North American Group--Sheboygan,
Wisconsin; European Group--Puchheim, Germany; and Asia Pacific
Group--Hong Kong, China.
The Company has four manufacturing operations in the United States
which manufacture rotary vane, linear, piston, and diaphragm pumps and
compressors, and various liquid pump technologies. These products are
directly sold worldwide to OEM's, as well as through fluid power and
industrial distributors.
Four German operations manufacture a complementary line of rotary vane,
piston, linear, diaphragm, gear, side channel, radial, claw, screw, and
rotary lobe pump and compressors, as well as various liquid pump
technologies, air-centers and centralized systems. These products are
distributed worldwide.
The Company also maintains sales and service offices in Germany,
U.S.A., Switzerland, Ireland, England, Italy, Switzerland, Sweden,
France, Denmark, Netherlands, China, Japan, Taiwan, Mexico, Korea, New
Zealand, Australia and Brazil. In many of these countries systems sales
and production for end users for industrial, chemical and hospitals
also takes place. 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 pump and compressor
products are now marketed under the Rietschle Thomas name worldwide.
Other products are marketed under the brand names Welch (high vacuum
systems for laboratory and chemical markets), Air-Pac (pnueumatic
ITEM 1. (Continued)
construction equipment), Vakuumatic (leakage detection systems),
Medi-Pump (respiratory products), and Oberdorfer (liquid pumps).
The medical equipment market, which includes oxygen concentrators,
nebulizers, aspirators, and other devices, is important to the Company.
Excluding Rietschle, company sales to medical equipment OEM's were
approximately $67 million in 2002, $69 million in 2001, and $65 million
in 2000. Oxygen concentrator OEM's represent a significant portion of
the Company's sales in the medical equipment market. The Company
believes it has the leading market share in the oxygen concentrator OEM
market worldwide.
No single customer of the Company accounted for 10 percent or more of
the Company's net sales in 2002.
Excluding the Rietschle acquisition, the backlog of unshipped orders
was $47 million at December 31, 2002, and $38 million at December 31,
2001. The increase in backlog included $3.6 million of orders from Asia
Pacific locations, which previously had not been tracking this
activity, as well as an additional $5 million, which primarily related
to increased activity in the automotive market. Not included above is
another $15 million of backlog at December 31, 2002 related to our
newly acquired Rietschle business. 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 2003.
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 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, Day-Brite, Crescent,
Capri/Omega, Choride Systems, Controls, Hadco, Gardco, Wide-Lite,
Stonco and Thomas Residential in the United States and Mexico; and
Canlyte, Thomas Lighting Canada, Lumec, and Ledalite 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
ITEM 1. (Continued)
existing structures. Because GTG does not principally sell directly to
the end user of its products, it's management cannot determine
precisely the percentage of its revenues derived from the sale of
products installed in each type of building, nor 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, entertainment, and residential
markets, and task lighting for all markets.
Outdoor fixtures - HID, fluorescent, 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. GTG's products are principally sold throughout the
United States, Canada, and Mexico.
Thomas' investment in GTG is accounted for using the equity method of
accounting. Under the terms of the LLC Agreement, any time on or after
January 31, 2002, Thomas has the right (a "put right"), but not the
obligation, to require the Joint Venture (GTG) to purchase all, but not
less than all, of Thomas' ownership interest in GTG at the applicable
purchase price. The purchase price shall be equal to the "Fair Market
Value" of GTG multiplied by Thomas' ownership percentage in GTG. The
"Fair Market Value" means the value of the total interests in GTG
computed as a going concern, including the control premium.
Also under the terms of the LLC Agreement, on or after the the final
settlement or disposition of Genlyte's case related to the Keene
Creditors Trust lawsuit against Genlyte and others, either Thomas or
Genlyte has the right, but not the obligation to buy the other parties'
interest in GTG (the "Offer Right"). If Thomas and Genlyte cannot agree
on the terms, then GTG or the business of GTG shall be sold to the
highest bidder. Either party may participate in bidding for the
purchase of GTG or the business of GTG. On March 14, 2003, the Southern
District of New York Federal District Court dismissed the Genlyte case
noted above. The Creditors Trust has not indicated its intentions with
respect to appeal; however, the Federal Rules of Civil Procedure
provide for appeal as a matter of right with respect to any final
judgment. The time for filing a Notice of Appeal by the Creditors Trust
shall expire on the 30th day following entry of the Court's judgment,
absent some other procedural action being taken by any party, which
could suspend or delay the running of the time for a filing by the
Creditors Trust of a Notice of Appeal. Therefore, as of March 28, 2003,
no final settlement or disposition has occurred and neither party has
the ability to exercise this right.
ITEM 1. (Continued)
In the event of a Change of Control (i) of Thomas, GTG has the right,
but not the obligation, to purchase Thomas' interest for a purchase
price equal to the Fair Market Value of GTG multiplied by Thomas'
ownership interest in GTG or (ii) of Genlyte, Thomas has the right, but
not the obligation, to sell its interest to the Joint Venture for a
purchase price equal to Fair Market Value of GTG multiplied by Thomas'
ownership interest in GTG. The definition of "Change of Control"
includes the acquisition by any person of 25% or more of Thomas'
outstanding common stock.
In the event of a Deadlock (as defined below), Thomas may exercise its
Put Right in accordance with the LLC Agreement or Genlyte may, in its
sole discretion, cause the entire Joint Venture or business of GTG to
be sold. A "Deadlock" shall be deemed to exist if (i) the Management
Board of GTG fails to agree on a matter for which Special Approval is
required in accordance with the LLC Agreement and (ii) such
disagreement continues for 90 days. The definition of "Special
Approval"includes the approval of at least a majority of the management
board representatives, including, in all instances, approval by at
least one representative appointed by Thomas.
d. Other
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The Company has a $120 million committed revolving line of credit with
its banks through August 28, 2005, of which $78 million was being used
at December 31, 2002. The Company also had uncommitted short-term
borrowing arrangements being used by some of its foreign offices which
totaled $1.5 million at December 31, 2002. The Company expects to fund
working capital requirements from a combination of available cash
balances, internally generated funds, and from the borrowing
arrangements mentioned above.
The Company has various patents and trademarks but does not consider
its business to be materially dependent upon any individual patent or
trademark. The majority of patents and trademarks resulted from the
Rietschle acquisition.
The Company competes across all of its product lines with many large
and varied manufacturers, both domestic and foreign. Some of our
competitors are publicly-held companies and some are private companies.
The Company competes on the basis of quality, performance, service, and
price. Thomas believes that it is able to maintain its competitive
position because of the quality and breadth of its products and
services and its global presence.
During 2002, the Company spent $11,789,000 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 2001, the Company spent $10,369,000
on these activities and during 2000, $9,721,000.
ITEM 1. (Continued)
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 2,260 people at December 31, 2002,
of which 1,170 relate to Rietschle's operations.
e. Financial Information about Geographic Areas.
--------------------------------------------
See Notes to Consolidated Financial Statements, as set forth in Exhibit
13, which information is contained in the Company's 2002 Annual Report
to Shareholders, and incorporated herein by reference, for financial
information about foreign and domestic operations.
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, 52 1984
(A) President, Chief Executive
Officer, and Director
Phillip J. Stuecker Vice President of Finance, 51 1984
(B) Chief Financial Officer,
and Secretary
Bernard R. Berntson Vice President; General 63 1992
(C) Manager, North American
Pump and Compressor Group
Peter H. Bissinger Vice President; General 57 1992
(D) Manager, European
Pump and Compressor Group
Dieter W. Rietschle General Manager, TIWR 56 2002
(E) Holding GmbH & Co. KG
(A) Timothy C. 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) Phillip J. 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.
ITEM 1. (Continued)
(C) Bernard R. Berntson was elected an officer effective December 14,
1992. Mr. Berntson had held the position of General Manager of the
North American Pump and Compressor Group since 1987. Mr. Berntson
has retired effective March 1, 2003.
(D) 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 Thomas GmbH since 1979.
(E) Dieter W. Rietschle was appointed a General Manager of TIWR
Holding GmbH and Co. KG, a wholly owned subsidiary of the Company,
effective August 30, 2002. This was the date Mr. Rietschle joined
the Company as a result of the acquisition of substantially all of
the assets of Werner Rietschle Holding GmbH. Prior to this date,
Mr. Rietschle was General Manager of Werner Rietschle Holding
GmbH. On December 10, 2002, Mr. Rietschle was appointed director
of the Company in accordance with the terms of the Rietschle
acquisition agreement.
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
------- ----- ------ ----------- --------------------
Pump and Compressor 7 6 924,000 Manufacturing plants
7 46 308,000 Distribution and
service centers
Corporate -- 1 6,900 Corporate headquarters
2 -- 160,000 Leased to third parties
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 2002 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 2002 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 2002
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, with the
exception of the $1.25 million Industrial Revenue Bond and the $78.0 million
revolving line of credit facility that accrue interest at variable rates,
which can be fixed for six month intervals. Short-term borrowings of $1.5
million at December 31, 2002, are priced at variable interest rates. The
Company's results of operations and cash flows, therefore, would only be
affected by interest rate changes to its variable rate debt. At December 31,
2002, $80.7 million was outstanding. A 100 basis point movement in the
interest rate on the variable rate debt of $80.7 million would result in an
$807,000 annualized effect on interest expense and cash flows ($516,000 net
of tax).
ITEM 7a. (Continued)
The Company also has short-term investments, including cash equivalents, of
$13.5 million as of December 31, 2002 that bear interest at variable rates.
A 100 basis point movement in the interest rate would result in an
approximate $135,000 annualized effect on interest income and cash flows
($86,000 net of tax).
The fair value of the Company's long-term debt is estimated based on current
interest rates offered to the Company for similar instruments. A 100 basis
point movement in the interest rate would result in an approximate $260,000
annualized effect on the fair value of long-term debt ($166,000 net of tax).
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
currency exchange rates or changing economic conditions in the foreign
markets in which the Company manufactures or distributes its products.
Currency exposures for our Pump and Compressor Segment are concentrated in
Germany but exist to a lesser extent in other parts of Europe, Asia and
South America. Our Lighting Segment currency exposure is primarily in
Canada.
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 2002 Annual Report to Shareholders and incorporated herein by
reference. The Report of Independent Auditors is also set forth in Exhibit
13 and is hereby incorporated herein by reference. In addition, financial
statements of GTG are included in this Form 10-K on pages F-1 to F-23.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On May 21, 2002, on the recommendation of the Audit Committee, the Board of
Directors appointed Ernst & Young LLP ("Ernst & Young ") as the
Corporation's independent auditors for the 2002 fiscal year, replacing
Arthur Andersen LLP ("Arthur Andersen").
Arthur Andersen's report on the financial statements for the fiscal year
preceding dismissal contained no adverse opinion or disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or
accounting principles. During the fiscal year and interim period preceding
the dismissal, there were no disagreements with Arthur Andersen on any
matter of accounting principles or practices, financial statement
disclosure, or audit scope or procedure.
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 17, 2003, 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.f.
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 17,
2003, 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 17,
2003, under the heading "Securities Beneficially Owned by Principal
Shareholders and Management," which information is incorporated herein by
reference.
Additionally, the following table is included regarding equity compensation
plan information:
EQUITY COMPENSATION PLAN INFORMATION
- ---------------------------------------------------------------------------------------------------------------------
(a) (b) (c)
- ---------------------------------------------------------------------------------------------------------------------
Plan Category Number of securities to be Weighted-average exercise Number of securities
issued upon exercise of price of outstanding remaining available for
outstanding options, options, warrants and future issuance under
warrants and rights rights equity compensation plans
(excluding securities
reflected in column (a))
- ---------------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by security holders
1,616,359 $19.34 453,900
- ---------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders
0 0 0
- ---------------------------------------------------------------------------------------------------------------------
Total 1,616,359 $19.34 453,900
- ---------------------------------------------------------------------------------------------------------------------
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The primary information required by this item is set forth in registrant's
Proxy Statement for the Annual Meeting of Shareholders to be held on April
17, 2003, under the headings "Securities Beneficially Owned by Principal
Shareholders and Management", "Election of Directors", "Executive
Compensation", "Board of Directors" and "Compensation Committee Interlocks
and Insider Participation," which information is incorporated herein by
reference.
ITEM 14. CONTROLS AND PROCEDURES
Our Chief Executive Officer and Chief Financial Officer have concluded, based
on their evaluation within 90 days of the filing date of this report, that
our disclosure controls and procedures are effective in all material respects
in ensuring that information required to be disclosed in the reports that we
file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commission's rules and forms. There have been no
significant changes in our internal controls or in other factors that could
significantly affect these controls subsequent to the date of the previous
mentioned evaluation.
PART IV.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
a. (1) Financial Statements
--------------------
The following consolidated financial statements of Thomas
Industries Inc., included in the Company's 2002 Annual Report to
Shareholders, are included in Part II, Item 8:
Consolidated Balance Sheets -- December 31, 2002 and 2001
Consolidated Statements of Income -- Years ended December 31,
2002, 2001, and 2000
Consolidated Statements of Shareholders' Equity -- Years ended
December 31, 2002, 2001, and 2000
Consolidated Statements of Cash Flows -- Years ended December
31, 2002, 2001, and 2000
Notes to Consolidated Financial Statements -- December 31,
2002
(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
----------- -------
2(a) Agreement for Purchase of Equity
Interests and Shares (English
translation) dated August 29, 2002, by
and among Thomas Industries Inc., Werner
Rietschle Holding GmbH, TIWR Holding
GmbH & Co. KG, TIWR Netherlands Holdings
C.V., TIWR U.K. Limited, TI France SAS,
Thomas Industries Australia Pty. Ltd.
and TI Luxembourg S.A.R.L., filed as
Exhibit 2.1 to Form 8-K filed September
12, 2002, herein incorporated by
reference.
3(a) Restated Certificate of Incorporation,
as amended, filed as Exhibit 3(a) to
Form 10-Q filed November 13, 2002,
herein incorporated by reference.
3(b) Bylaws, as amended December 10, 2002,
filed herewith.
4(a)(1) Thomas Industries Holdings, Inc., Thomas
Industries Inc. Note Agreement Amended
and Restated as of November 6, 1998,
filed herewith.
ITEM 15. (Continued)
Exhibit No. Exhibit
----------- -------
4(a)(2) Thomas Industries Holdings, Inc., Thomas
Industries Inc. First Amendment dated as
of July 30, 2002 to Note Agreement
Amended and Restated as of November 6,
1998.
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) Amended and Restated Rights Agreement
filed as Exhibit 4(b) to registrant's
report on Form 10-Q dated August 14,
2000, hereby incorporated by reference.
4(c) First Amendment to Rights Agreement
filed as Exhibit 4(c) to registrant's
report on Form 10-K dated March 26,
2001, hereby incorporated by reference.
10(a) Employment Agreements with Timothy C.
Brown and 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) Trust Agreement, filed as Exhibit 10(1)
to registrant's report on Form 10-Q
dated November 11, 1988, hereby
incorporated by reference.
10(c) 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(d) 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. registrant's
ITEM 15. (Continued)
Exhibit No. Exhibit
----------- -------
10(e) Nonemployee Director Stock Option Plan
as Amended and Restated as of February
5, 1997, filed as Exhibit 10(h) to
registrant's report on Form 10-K dated
March 20, 1997, hereby incorporated by
reference.
10(f) 1995 Incentive Stock Plan as Amended and
Restated as of April 15, 1999, filed as
Exhibit 10(h) to registrant's report on
Form 10-Q dated November 12, 1999,
hereby incorporated by reference.
10(g) 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(g)(1) Service Agreement with Dieter Rietschle
(English translation) dated September
20, 2002, filed herewith.
10(g)(2) Employment Agreement with Peter
Bissinger (English translation) dated
January 1, 2003, filed herewith.
10(h) 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(i) 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(j) Capitalization Agreement among GT
Lighting, LLC, and Thomas Industries
Inc., Tupelo Holdings Inc., Thomas
Industries Holdings Inc., Gardco
Manufacturing, Inc., Capri Lighting,
inc., Thomas Imports, 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(k) Capitalization Agreement between GT
Lighting, LLC, and The Genlyte Group
Incorporated dated April 28, 1998, filed
as Exhibit 2.4 to registrant's Form 8-K
dated July 24, 1998, hereby incorporated
by reference.
ITEM 15. (Continued)
Exhibit No. Exhibit
----------- -------
10(l) Credit Agreement dated August 28, 2002
among Thomas Industries Inc., Bank One,
Kentucky, N.A., National City Bank of
Kentucky, Sun Trust Bank, HVB Banque
Luxembourg Societe Anonyme, and Wells
Fargo Bank, N.A., as Lenders (the
"Lenders"); Bank One, Kentucky, N.A., as
Administrative Agent for itself and the
other Lenders; National City Bank of
Kentucky as Syndication Agent; Sun Trust
Bank and HVB Banque Luxembourg Societe
Anonyme as Co-Documentation Agents; and
Banc One Capital Markets, Inc. as Lead
Arranger and Sole Book Runner, filed as
Exhibit 10.1 to Form 10-Q filed November
13, 2002, herein incorporated by
reference.
13 Certain portions of the Company's 2002
Annual Report to Shareholders as
specified in Parts I and II, hereby
incorporated by reference in this Annual
Report on Form 10-K, filed herewith.
16 Letter regarding change in certifying
accountant of the registrant from Arthur
Andersen LLP dated May 21, 2002, filed
as Exhibit 16.1 to the registrant's Form
8-K dated May 21, 2002, hereby
incorporated by reference.
21 Subsidiaries of the Registrant, filed
herewith.
23(a) Consent of Ernst & Young LLP, filed
herewith.
23(b) Information regarding consent of Arthur
Andersen LLP, filed herewith.
23(c) Consent of Ernst & Young LLP, filed
herewith.
23(d) Information regarding consent of Arthur
Andersen LLP, filed herewith.
99.1 Certifications Pursuant to 18 U.S.C
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002, filed herewith.
b. Reports on Form 8-K
-------------------
A form 8-K/A was filed November 12, 2002 related to the Rietschle
acquisition, which amended the Form 8-K filed September 12, 2002
to include financial statements of Rietschle and certain pro
forma financial information.
c. Exhibits
--------
The exhibits filed as part of this Annual Report on Form 10-K are
as specified in Item 14(a)(3) herein.
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, thereunto duly authorized.
THOMAS INDUSTRIES INC.
Date: March 28, 2003 By /s/ Timonthy 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; 3/28/03
Timothy C. Brown President; Chief Executive
Officer; Director
(Principal Executive Officer)
/s/ Phillip J. Stuecker
- ---------------------------------- Vice President of Finance; 3/28/03
Phillip J. Stuecker Chief Financial Officer;
Secretary
(Principal Financial Officer)
/s/ Roger P. Whitton
- ---------------------------------- Controller 3/28/03
Roger P. Whitton (Principal Accounting Officer)
/s/ Wallace H. Dunbar
- ---------------------------------- Director 3/28/03
Wallace H. Dunbar
/s/ H. Joseph Ferguson
- ---------------------------------- Director 3/28/03
H. Joseph Ferguson
/s/ Lawrence E. Gloyd
- ---------------------------------- Director 3/28/03
Lawrence E. Gloyd
Signatures (Continued)
Signature Title Date
--------- ----- ----
/s/ William M. Jordan
- ---------------------------------- Director 3/28/03
William M. Jordan
/s/ Franklin J. Lunding, Jr.
- ---------------------------------- Director 3/28/03
Franklin J. Lunding, Jr.
/s/ Anthony A. Massaro
- ---------------------------------- Director 3/28/03
Anthony A. Massaro
/s/ Dieter W. Rietschle
- ---------------------------------- Director 3/28/03
Dieter W. Rietschle
CERTIFICATIONS
--------------
I, Timothy C. Brown, certify that:
1. I have reviewed this annual report on Form 10-K of Thomas Industries
Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in
this annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: March 28, 2003
/s/ Timothy C. Brown
---------------------------------
Timothy C. Brown
Chairman, President and CEO
CERTIFICATIONS
--------------
I, Phillip J. Stuecker, certify that:
1. I have reviewed this annual report on Form 10-K of Thomas Industries
Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in
this annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: March 28, 2003
/s/ Phillip J. Stuecker
------------------------------------------
Phillip J. Stuecker
Vice President and Chief Financial Officer
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 years ended December
31, 2002, 2001, and 2000.
F - 1
REPORT OF INDEPENDENT AUDITORS
To the Members of Genlyte Thomas Group LLC:
We have audited the accompanying consolidated balance sheet of Genlyte Thomas
Group LLC and Subsidiaries (the Company) as of December 31, 2002 and the related
consolidated statements of income, members' equity and cash flows for the year
then ended. 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. The financial statements of the Company as of
December 31, 2001 and for each of the two years in the period ended December 31,
2001 were audited by other auditors who have ceased operations and whose report
dated January 18, 2002 expressed an unqualified opinion on those statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the 2002 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Genlyte Thomas
Group LLC and Subsidiaries at December 31, 2002, and the consolidated results of
their operations and their cash flows for the year then ended, in conformity
with accounting principles generally accepted in the United States.
As discussed in Note 2, in 2002 the Company changed its method of accounting for
goodwill and other intangible assets.
As discussed above, the financial statements of the Company as of December 31,
2001 and for each of the two years in the period ended December 31, 2001 were
audited by other auditors who have ceased operations. As discussed in Note 2,
these financial statements have been revised to include the transitional
disclosures required by Statement of Financial Accounting Standards (Statement)
No. 142, "Goodwill and Other Intangible Assets", which was adopted by the
Company as of January 1, 2002. Our audit procedures with respect to the
disclosures in Note 2 with respect to 2001 and 2000 included (a) agreeing the
previously reported net income to the previously issued financial statements and
the adjustments to reported net income representing amortization expense
(including any related tax effects) recognized in those periods related to
goodwill to the Company's underlying records obtained from management, and (b)
testing the mathematical accuracy of the reconciliation of adjusted net income
to reported net income. In our opinion, the disclosures for 2001 and 2000 in
Note 2 are appropriate. However, we were not engaged to audit, review, or apply
any procedures to the 2001 and 2000 financial statements of the Company other
than with respect to such adjustments related to Note 2, and accordingly, we do
not express an opinion or any other form of assurance on the 2001 and 2000
financial statements taken as a whole.
/s/ Ernst & Young, LLP
Louisville, Kentucky
January 22, 2003
F - 2
THIS REPORT HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP AS ARTHUR ANDERSEN LLP
CEASED OPERATIONS IN AUGUST 2002.
THE FOLLOWING REPORT IS A COPY OF THE PREVIOUSLY ISSUED ARTHUR ANDERSEN LLP
REPORT.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Members of Genlyte Thomas Group LLC:
We have audited the accompanying consolidated balance sheets of Genlyte Thomas
Group LLC (a Delaware limited liability company) and Subsidiaries (the Company)
as of December 31, 2001 and 2000, and the related consolidated statements of
income, members' equity, and cash flows for each of the three years in the
period ended December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Genlyte Thomas Group LLC and
Subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.
/s/ Arthur Andersen LLP
Louisville, Kentucky
January 18, 2002
F - 3
GENLYTE THOMAS GROUP LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands)
For the years ended December 31,
---------------------------------------------
2002 2001 2000
---------------------------------------------
Net sales $970,304 $ 985,176 $ 1,007,706
Cost of sales 630,433 636,582 651,304
---------------------------------------------
Gross profit 339,871 348,594 356,402
Selling and administrative expenses 239,730 248,005 257,583
Amortization of goodwill - 5,211 4,388
Amortization of other intangible assets 851 796 228
---------------------------------------------
Operating profit 99,290 94,582 94,203
Interest expense, net of interest income 606 3,699 4,184
Minority interest 240 (54) (140)
---------------------------------------------
Income before income taxes 98,444 90,937 90,159
Income tax provision 7,804 6,064 6,622
---------------------------------------------
Net income $ 90,640 $ 84,873 $ 83,537
=============================================
The accompanying notes are an integral part of these consolidated financial statements.
F-4
GENLYTE THOMAS GROUP LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
As of December 31,
--------------------------
2002 2001
--------------------------
Assets:
Current Assets:
Cash and cash equivalents $ 111,539 $ 59,691
Accounts receivable, less allowances for doubtful
accounts of $10,616 and $10,111, respectively 148,279 141,658
Inventories 136,470 132,932
Other current assets 8,850 8,763
--------------------------
Total current assets 405,138 343,044
Property, plant and equipment, at cost:
Land and land improvements 7,447 6,490
Buildings and leasehold improvements 81,764 83,318
Machinery and equipment 276,353 273,154
--------------------------
Total property, plant and equipment 365,564 362,962
Less: Accumulated depreciation and amortization 257,988 252,515
--------------------------
Net property, plant and equipment 107,576 110,447
Goodwill, net of accumulated amortization 134,231 135,417
Other intangible assets, net of accumulated amortization 22,195 22,280
Other assets 3,841 7,933
--------------------------
Total Assets $ 672,981 $ 619,121
===========================
Liabilities & Members' Equity:
Current Liabilities:
Current maturities of long-term debt $ 4,100 $ 3,284
Accounts payable 87,201 82,150
Related-party payables 30,483 19,705
Accrued expenses 65,427 65,406
--------------------------
Total current liabilities 187,211 170,545
Long-term debt 33,028 36,989
Deferred income taxes 4,459 3,991
Accrued pension 25,406 15,925
Minority interest 677 (194)
Other long-term liabilities 6,225 5,862
--------------------------
Total liabilities 257,006 233,118
Commitments and contingencies (See notes (12) and (13))
Members' Equity:
Accumulated other comprehensive income (loss) (26,965) (9,076)
Other members' equity 442,940 395,079
--------------------------
Total members' equity 415,975 386,003
--------------------------
Total Liabilities & Members' Equity $ 672,981 $ 619,121
==========================
The accompanying notes are an integral part of these consolidated financial statements.
F-5
GENLYTE THOMAS GROUP LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
(Amounts in thousands)
Accumulated
Other Other Total
Comprehensive Members' Members'
Income (Loss) Equity Equity
--------------------------------------------
Members' equity, December 31, 1999 $ 3,158 $ 306,010 $ 309,168
Net income - 83,537 83,537
Increase in minimum pension liability (277) - (277)
Foreign currency translation adjustments (2,006) - (2,006)
--------------------------------------------
Total comprehensive income (2,283) 83,537 81,254
Distributions to members - (43,116) (43,116)
--------------------------------------------
Members' equity, December 31, 2000 875 346,431 347,306
Net income - 84,873 84,873
Increase in minimum pension liability (6,424) - (6,424)
Foreign currency translation adjustments (3,527) - (3,527)
--------------------------------------------
Total comprehensive income (9,951) 84,873 74,922
Distributions to members - (36,225) (36,225)
--------------------------------------------
Members' equity, December 31, 2001 (9,076) 395,079 386,003
Net income - 90,640 90,640
Increase in minimum pension liability, before tax (18,450) - (18,450)
Related tax effect 541 - 541
--------------------------------------------
Increase in minimum pension liability, after tax (17,909) 90,640 72,731
Foreign currency translation adjustments 20 - 20
--------------------------------------------
Total comprehensive income (17,889) 90,640 72,751
Contribution from Thomas - 299 299
Distributions to members - (43,078) (43,078)
--------------------------------------------
Members' equity, December 31, 2002 $ (26,965) $ 442,940 $ 415,975
============================================
The accompanying notes are an integral part of these consolidated financial statements.
F-6
GENLYTE THOMAS GROUP LLC & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
For the years ended December 31,
-----------------------------------------
2002 2001 2000
-----------------------------------------
Cash Flows From Operating Activities:
Net income $ 90,640 $ 84,873 $ 83,537
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 23,169 28,172 25,664
Net loss (gain) from disposals of property, plant and equipment 1,010 (807) (77)
Provision for doubtful accounts receivable 2,170 424 (718)
Provision (benefit) for deferred income taxes (134) (150) 1,575
Changes in assets and liabilities, net of effect of acquisitions:
(Increase) decrease in:
Accounts receivable (7,640) 1,520 18,899
Related-party receivables - 1,204 (1,204)
Inventories 2,069 19,419 (10,726)
Other current assets 24 (1,199) 204
Intangible and other assets 8,195 5,017 481
Increase (decrease) in:
Accounts payable 4,261 (15,517) 7,894
Related-party payables 10,598 12,683 (1,740)
Accrued expenses (560) (5,671) (5,721)
Deferred income taxes, long-term 581 (130) 1,439
Minority interest 874 (54) (140)
Other long-term liabilities (8,059) (3,486) (49)
All other, net (977) (79) 566
-----------------------------------------
Net cash provided by operating activities 126,221 126,219 119,884
-----------------------------------------
Cash Flows From Investing Activities:
Acquisitions of businesses, net of cash received (10,641) (2,900) (59,145)
Purchases of property, plant and equipment (18,912) (20,250) (28,423)
Proceeds from sales of property, plant and equipment 1,807 1,597 1,347
-----------------------------------------
Net cash used in investing activities (27,746) (21,553) (86,221)
-----------------------------------------
Cash Flows From Financing Activities:
Proceeds from long-term debt - 14,000 47,600
Reductions of long-term debt (3,318) (43,040) (35,029)
Distributions to members (43,078) (36,225) (43,116)
-----------------------------------------
Net cash used in financing activities (46,396) (65,265) (30,545)
-----------------------------------------
Effect of exchange rate changes on cash and cash equivalents (231) (3,527) (2,006)
-----------------------------------------
Net increase in cash and cash equivalents 51,848 35,874 1,112
Cash and cash equivalents at beginning of year 59,691 23,817 22,705
-----------------------------------------
Cash and cash equivalents at end of year $ 111,539 $ 59,691 $ 23,817
=========================================
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Genlyte Thomas Group LLC and Subsidiaries
Notes to Consolidated Financial Statements
(Dollars in thousands)
(1) DESCRIPTION OF BUSINESS
Genlyte Thomas Group LLC ("GTG" or the "Company"), a Delaware limited liability
company, is a United States based multinational company. The Company designs,
manufactures, and sells lighting fixtures and controls for a wide variety of
applications in the commercial, residential, and industrial markets in North
America. The Company's products are marketed primarily to distributors who
resell the products for use in commercial, residential, and industrial
construction and remodeling. The Company is the result of the business
combination discussed in note (3) "Formation of Genlyte Thomas Group LLC."
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial statements
include the accounts of GTG and all majority-owned subsidiaries, and also
include other entities that are jointly owned by The Genlyte Group Incorporated
("Genlyte") and Thomas Industries Inc. ("Thomas"), all of which entities in
total operationally comprise GTG. Intercompany accounts and transactions have
been eliminated. Investments in affiliates owned less than 50%, and over which
the Company exercises significant influence, 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
accounting principles generally accepted in the United States 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 the
estimates.
REVENUE RECOGNITION: The Company records sales revenue when products are
shipped, which is when legal title passes to the customer and the risks and
rewards of ownership have transferred. A provision for estimated returns and
allowances is recorded as a sales deduction.
CUSTOMER REBATES: In 2001, the Company began classifying all customer rebates as
sales deductions. Prior to 2001, the Company had been classifying most rebates
paid to customers as sales deductions, but certain rebates were classified as
selling and administrative expenses. The effect in 2001 was to reclassify $3,007
to net sales (decrease) from selling and administrative expenses (decrease). The
2000 statement of income has not been reclassified to conform to the 2001 and
2002 classification, because the amount, $3,125, is not considered material.
SHIPPING AND HANDLING COSTS: In compliance with Emerging Issues Task Force issue
00-10, "Accounting for Shipping and Handling Fees and Costs," the Company
includes in net sales all amounts billed to customers that relate to shipping
and handling. Shipping and handling costs billed to customers and included in
net sales were $7,372 in 2002, $7,502 in 2001, and $7,664 in 2000. Shipping and
handling costs included in selling and administrative expenses were $45,724 in
2002, $50,552 in 2001, and $52,805 in 2000.
STOCK-BASED COMPENSATION COSTS: At December 31, 2002, Genlyte had two
stock-based compensation (stock option) plans, which are described more fully in
note (14) "Stock Options." Genlyte accounts for those plans using the intrinsic
value method of APB Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25") and related interpretations. As a consolidated subsidiary of Genlyte,
GTG is also required to apply APB 25 to stock-based compensation for stock
options granted by Genlyte to employees of GTG. Therefore, GTG also accounts for
those plans using the intrinsic value method. Because all options granted under
those plans had an exercise price equal to the market value of the underlying
common stock on the date of grant, no stock-based compensation cost has been
recognized in the consolidated statements of income.
F - 8
Had stock-based compensation cost for the plans been determined using the fair
value recognition provisions of Statement of Financial Accounting Standards
("SFAS") No. 123, "Accounting for Stock-Based Compensation," the effect on the
Company's net income for the years ended December 31 would have been as follows:
2002 2001 2000
------------------------------------------------------------------------------------
Net income, as reported $ 90,640 $ 84,873 $ 83,537
Stock-based compensation cost using
fair value method 3,123 2,042 751
---------------------------------------
Net income, pro forma $ 87,517 $ 82,831 $ 82,786
=======================================
ACCOUNTING FOR STOCK-BASED COMPENSATION INCURRED BY INVESTORS: Thomas has also
granted stock options to certain employees of GTG. According to Emerging Issues
Task Force issue 00-12, "Accounting by an Investor for Stock-Based Compensation
Granted to Employees of an Equity Method Investee," an investee should recognize
the costs of the stock-based compensation incurred by an investor on its behalf,
and a corresponding capital contribution. Therefore, in 2002, the Company (the
investee) recorded $299 of stock-based compensation expense in selling and
administrative expenses and the same amount as a contribution from Thomas (the
investor) in the consolidated statement of members' equity.
ADVERTISING COSTS: The Company expenses advertising costs principally as
incurred. Certain catalog, literature, and display costs are amortized over
their useful lives, from 6 to 24 months. Total advertising expenses, classified
as selling and administrative expenses, were $8,538 in 2002, $10,373 in 2001,
and $12,221 in 2000.
RESEARCH AND DEVELOPMENT COSTS: Research and development costs are expensed as
incurred. These expenses, classified as selling and administrative expenses,
were $8,521 in 2002, $9,359 in 2001, and $8,510 in 2000.
CASH EQUIVALENTS: The Company considers all highly liquid investments with a
maturity of three months or less from the date of purchase to be cash
equivalents.
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE: The Company maintains allowances for
doubtful accounts receivable for estimated uncollectible invoices resulting from
the customer's inability to pay (bankruptcy, out of business, etc.) as well as
the customer's refusal to pay (returned products, billing errors, disputed
amounts, etc.). Management's estimated allowances are based on the aging of the
invoices, historical collections, amounts disputed by customers, and the
customer's financial status.
CONCENTRATION OF CREDIT RISK: Assets that potentially subject the Company to
concentration of credit risk are cash and cash equivalents and accounts
receivable. The Company invests its cash primarily in high-quality institutional
money market funds with maturities of less than three months and limits the
amount of credit exposure to any one financial institution. The Company provides
credit to most of its customers in the ordinary course of business, and
collateral or other security may be required in certain situations. The Company
conducts ongoing credit evaluations of its customers and maintains allowances
for potential credit losses. Concentration of credit risk with respect to
accounts receivable is limited due to the wide variety of customers and markets
to which the Company sells. As of December 31, 2002, management does not
consider the Company to have any significant concentration of credit risk.
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:
2002 2001
-----------------------------------------------------------------
Raw materials $ 53,428 $ 51,595
Work in process 15,104 13,582
Finished goods 67,938 67,755
-----------------------------
Total inventories $ 136,470 $ 132,932
=============================
F - 9
Inventories valued using the last-in, first-out ("LIFO") method represented
approximately 83% of total inventories at December 31, 2002 and 2001.
Inventories not valued at LIFO (primarily inventories of Canadian operations)
are valued using the first-in, first-out ("FIFO") method. On a FIFO basis, which
approximates current cost, inventories would have been $2,337 and $2,616 lower
than reported at December 31, 2002 and 2001, respectively.
During each of the last three years, certain inventory quantity reductions
caused partial liquidations of LIFO inventory layers (in some cases including
the base), the effects of which increased 2002 pre-tax income by $114, increased
2001 pre-tax income by $1,047, and decreased 2000 pre-tax income by $591.
PROPERTY, PLANT AND EQUIPMENT: The Company provides for depreciation of
property, plant and equipment, which also includes amortization of assets
recorded under capital leases, 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:
Land improvements 10 - 25 years
Buildings and leasehold improvements 10 - 40 years
Machinery and equipment 3 - 10 years
Leasehold improvements are amortized over the terms of the respective leases, or
over their estimated useful lives, whichever is shorter. Depreciation and
amortization of property, plant and equipment, including assets recorded under
capital leases, was $22,318 in 2002, $22,165 in 2001, and $21,048 in 2000.
Accelerated methods of depreciation are used for income tax purposes, and
appropriate provisions are made for the related deferred income taxes for the
foreign subsidiaries.
When the Company sells or otherwise disposes of property, plant and equipment,
the asset cost and accumulated depreciation are removed from the accounts, and
any resulting gain or loss is recorded in selling and administrative expenses in
the consolidated statements of income.
Maintenance and repairs are expensed as incurred. Renewals and improvements that
extend the useful life of an asset are capitalized and depreciated or amortized
over the remaining useful lives of the respective assets.
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 are
charged to the foreign currency translation adjustment component of accumulated
other comprehensive income (loss) in members' equity. Income and expenses are
translated at the average exchange rates prevailing during the year. Net gains
or (losses) resulting from foreign currency transactions of $151 in 2002, $88 in
2001, and ($80) in 2000 are included in selling and administrative expenses.
COLLECTIVE BARGAINING AGREEMENTS: As of December 31, 2002, the Company had 2,569
employees, or 50.6% of the total employees, who were members of various
collective bargaining agreements. Several of these collective bargaining
agreements, covering 799 employees, which is 31.1% of the collective bargaining
employees and 15.8% of the total employees, will expire in 2003. Management does
not expect the expiration and renegotiation of these agreements to have a
significant impact on 2003 production.
FAIR VALUE OF FINANCIAL INSTRUMENTS: The carrying amounts of cash equivalents
and long-term debt approximate fair value because of their short-term maturity
and/or variable market-driven interest rates.
ADOPTION OF NEW ACCOUNTING STANDARD REGARDING GOODWILL AND OTHER INTANGIBLE
ASSETS: On January 1, 2002, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets."
Under SFAS No. 142, goodwill and intangible assets with indefinite useful lives
are no longer amortized, but instead are subject to an assessment for impairment
on a reporting unit basis by applying a fair-value-based test annually, and more
frequently if circumstances indicate a possible impairment.
F - 10
If a reporting unit's net book value is more than its fair value, and the
reporting unit's net book value of its goodwill and intangible assets with
indefinite lives exceeds the fair value of those assets, an impairment loss is
recognized in an amount equal to the excess net book value of the goodwill and
intangible assets. Separate intangible assets that are not deemed to have an
indefinite life continue to be amortized over their useful lives.
The Company tested the goodwill of all of its reporting units, which are a level
below the reportable segments disclosed in note (17) "Segment Reporting," for
impairment during the fourth quarter of 2002 using a present value of future
cash flows valuation method. This process did not result in any impairment to be
recorded.
Prior to the adoption of SFAS No. 142, the Company had $4,922 of goodwill
acquired prior to 1971 that was not amortized and $165,928 of goodwill acquired
after 1970 that was amortized on a straight-line basis over periods ranging from
10 to 40 years. Had the Company accounted for goodwill in accordance with SFAS
No. 142 in 2001 and 2000, net income for the years ended December 31 would have
been as follows:
2002 2001 2000
------------------------------------------------------------------------------------
Reported net income $ 90,640 $84,873 $ 83,537
Add back: Goodwill amortization * - 4,991 4,059
---------------------------------------
Adjusted net income $ 90,640 $89,864 $ 87,596
=======================================
* Goodwill amortization is after tax effects.
The changes in the net carrying amounts of goodwill by segment for the year
ended December 31, 2002 were as follows:
Industrial
Commercial Residential and Other Total
--------------------------------------------------------------------------------------------------------------
Balance as of January 1, 2002 $ 108,511 $ 22,576 $ 4,330 $ 135,417
Acquisition of business 2,891 - - 2,891
Adjustments to goodwill acquired
previously (3,504) (858) - (4,362)
Effect of exchange rate change on
Canadian goodwill 285 - - 285
--------------------------------------------------------------------
Balance as of December 31, 2002 $ 108,183 $ 21,718 $ 4,330 $ 134,231
====================================================================
Summarized information about the Company's other intangible assets follows:
As of December 31, 2002 As of December 31, 2001
-------------------------------------------------------------------------------------------------------------
Gross Gross
Carrying Accumulated Carrying Accumulated
Amount Amortization Amount Amortization
-------------------------------------------------------------------
Amortized intangible assets:
License agreement $12,500 $ 938 $ 12,500 $ 521
Non-competition agreements 10,950 798 10,500 438
Patents and other 532 126 313 74
-------------------------------------------------------------------
Total $23,982 $1,862 $ 23,313 $1,0330
===================================================================
Unamortized intangible assets:
Trademarks $ 75 $ -
===================================================================
The Company amortizes the license agreement over its contractual life of 30
years, the non-competition agreements over their contractual lives of two and 30
years, and patents and other over two to 15 years. Amortization expense for
intangible assets (other than goodwill) was $851 in 2002, $796 in 2001, and $228
in 2000. Estimated amortization expense for intangible assets for the next five
full years is $902 for 2003, $893 for 2004, $872 for 2005, $872 for 2006, and
$867 for 2007.
F - 11
ADOPTION OF NEW FASB INTERPRETATION REGARDING ACCOUNTING AND DISCLOSURE BY
GUARANTORS: Financial Accounting Standards Board ("FASB") Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others" (the "Interpretation") was issued
in November 2002. The Interpretation contains recognition and measurement
provisions that require certain guarantees to be recorded as a liability, at the
inception of the guarantee, at fair value. Current accounting practice is to
record a liability only when a loss is probable and reasonably estimable. The
Interpretation also requires a guarantor to make new disclosures. The
recognition and measurement provisions are effective for guarantees issued after
December 31, 2002. Management is currently analyzing the provisions of the
Interpretation, but does not expect its adoption to have a significant impact on
the Company's financial condition or results of operations.
The disclosure requirements of the Interpretation became effective on December
31, 2002. For the Company, the required disclosures relate only to product
warranties. The Company offers a limited warranty that its products are free of
defects in workmanship and materials. The specific terms and conditions may vary
somewhat by product line, but generally cover defects returned within one, two,
three, or five years from date of shipment. The Company records warranty
liabilities to cover repair or replacement of defective returned products. The
Company periodically assesses the adequacy of its recorded warranty liabilities
and adjusts the amounts as necessary.
Changes in the Company's warranty liabilities, which are included in accrued
expenses in the accompanying consolidated balance sheets, during the years ended
December 31 were as follows:
2002 2001
---------------------------------------------------------------------
Balance, beginning of year $1,247 $1,283
Additions applicable to business acquired 250 -
Additions charged to expense 3,743 4,065
Deductions for repairs and replacements 3,357 4,101
-----------------------
Balance, end of year $1,883 $1,247
=======================
OTHER NEW ACCOUNTING STANDARDS: On January 1, 2002, the Company adopted SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No.
144 requires that long-lived assets to be disposed of by sale be measured at the
lower of net book value or fair value less cost to sell, whether reported in
continuing operations or in discontinued operations. SFAS No. 144 also expands
the reporting of discontinued operations to include components of an entity that
have been or will be disposed of rather than limiting such reporting to
discontinued segments of a business. The adoption of SFAS No. 144 did not have a
material impact on the Company's financial condition or results of operations
during 2002. However, future plans to dispose of long-lived assets could result
in charges against operations to write down long-lived asset values.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
With Exit or Disposal Activities," which is effective for exit or disposal
activities that are initiated after December 31, 2002. SFAS No. 146 nullifies
EITF Issue 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring)." SFAS No. 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized at fair value when
the liability is incurred. A commitment to an exit or disposal plan no longer
will be sufficient basis for recording a liability for those activities. The
adoption of SFAS No. 146 in 2003 is not expected to have an immediate material
impact on the Company's financial condition or results of operations, however,
the Company may have future exit or disposal activities to which SFAS No. 146
would apply.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an Amendment of FASB Statement No.
123," which was effective on December 31, 2002.
F - 12
SFAS No. 148 provides alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based compensation. In
addition, it amends the disclosure requirements of SFAS No. 123 to require
prominent disclosures about the method of accounting for stock-based
compensation and the effect of the method on reported results. The provisions
regarding alternative methods of transition do not apply to the Company, which
accounts for stock-based compensation using the intrinsic value method. The
disclosure provisions have been adopted. See note (2), "Stock-Based Compensation
Costs."
RECLASSIFICATIONS: Certain prior year amounts have been reclassified to conform
to the current year presentation. These changes had no impact on previously
reported net income or members' equity.
(3) FORMATION OF GENLYTE THOMAS GROUP LLC
On August 30, 1998, The Genlyte Group Incorporated and Thomas Industries Inc.
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 ("GTG"). GTG manufactures, sells, markets, and
distributes commercial, residential, and industrial lighting fixtures and
controls. Genlyte contributed substantially all of its assets and liabilities to
GTG and received a 68% interest in GTG. Thomas contributed substantially all of
the assets and certain related liabilities of Thomas Lighting and received a 32%
interest in GTG. The percentage interests in GTG issued to Genlyte and Thomas
were based on arms-length negotiations between the parties with the assistance
of their financial advisers.
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 "Members"), respectively, will be made at such time and in such
amounts as determined by the GTG Management Board and shall be made in cash or
other property in proportion to the Members' 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 GTG make the following distributions to the
Members:
(i) a distribution to each Member, based on its percentage interest, for tax
liabilities attributable to its participation as a Member of GTG based upon the
effective tax rate of the Member having the highest tax rate;
(ii) subject to the provisions of Delaware law and the terms of the primary GTG
credit facility, distributions (exclusive of the tax distributions set forth
above) to each of the Members so that Thomas receives at least an aggregate of
$3,000 and Genlyte receives at least an aggregate of $6,375 per year. During
2002, GTG made distributions of $5,000 to Thomas and $10,625 to Genlyte. During
2001 and 2000, GTG made distributions of $3,000 to Thomas and $6,375 to Genlyte
each year.
Also under the terms of the LLC Agreement, at any time on or after January 31,
2002, Thomas has the right (a "Put Right"), but not the obligation, to require
GTG to purchase all, but not less than all, of Thomas's 32% interest at the
appraised value of such interest. The appraised value shall be the fair market
value of GTG as a going concern, taking into account a control premium, and
determined by an appraisal process to be undertaken by recognized investment
banking firms chosen initially by the Members. If GTG cannot secure the
necessary financing with respect to Thomas's exercise of its Put Right, then
Thomas has the right to cause GTG to be sold.
At any time after Thomas exercises its Put Right, Genlyte has the right, in its
sole discretion and without the need of approval of Thomas, to cause GTG to be
sold by giving notice to the GTG Management Board, and the Management Board must
then proceed to sell GTG subject to a fairness opinion from a recognized
investment banking firm. Genlyte also has the right to cause GTG to assign the
rights to purchase Thomas's interest to Genlyte. Genlyte also has the right to
cause GTG to incur indebtedness or to undertake an initial public offering to
finance or effect financing of the payment of the purchase price.
F - 13
Also under the terms of the LLC Agreement, on or after the later to occur of (1)
the final settlement or disposition of Genlyte's litigation with the Keene
Corporation's Creditors Trust or (2) January 31, 2002, either Member has the
right, but not the obligation, to offer to buy the other Member's interest (the
"Offer Right"). If the Members cannot agree on the terms, then GTG shall be sold
to the highest bidder. Either Member may participate in the bidding for the
purchase of GTG. As of December 31, 2002, neither Member had the ability to
exercise the Offer Right as the final settlement or disposition of Genlyte's
litigation with the Keene Corporation's Creditors Trust had not yet occurred.
Complete details of the Put Right, Offer Right, and appraisal process can be
found in the proxy statement pertaining to the formation of GTG, filed with the
Securities and Exchange Commission by Genlyte on July 23, 1998.
(4) ACQUISITION OF VARI-LITE IN 2002
On November 18, 2002, the Company acquired the manufacturing assets,
intellectual property, and sales division of Vari-Lite Inc. ("Vari-Lite"), a
subsidiary of Dallas, Texas based Vari-Lite International Inc., a designer and
manufacturer of highly advanced automated lighting equipment for the
entertainment industry. The purchase price of $10,641, plus the assumption of
$1,021 of liabilities, was funded from cash on hand.
The Vari-Lite acquisition was accounted for using the purchase method of
accounting. The preliminary determination of the excess of the purchase price
over the fair market value of net assets acquired (goodwill) of $2,891 is not
being amortized, in accordance with SFAS No. 142. The determination of the fair
market value as reflected in the balance sheet is subject to change, with a
final determination no later than one year after the acquisition date. The
operating results of Vari-Lite have been included in the Company's consolidated
financial statements since the date of acquisition. The pro forma results and
other disclosures required by SFAS No. 141, "Business Combinations," have not
been presented because the acquisition of Vari-Lite is not considered a material
acquisition.
(5) ACQUISITION OF ENTERTAINMENT TECHNOLOGY IN 2001
On August 31, 2001, the Company acquired the assets of Entertainment Technology,
Incorporated ("ET"), a subsidiary of privately held Rosco Laboratories, Inc. of
Stamford, Connecticut. ET was a manufacturer of entertainment lighting equipment
and controls. Products include the Intelligent Power System line of theatrical
dimming equipment and the family of Horizon lighting controls. The purchase
price of $2,900, plus the assumption of $734 of liabilities, was funded from
cash on hand.
The ET acquisition was accounted for using the purchase method of accounting.
The excess of the purchase price over the fair market value of net assets
acquired (goodwill) of $1,827 is not being amortized, in accordance with SFAS
No. 142. The operating results of ET have been included in the Company's
consolidated financial statements since the date of acquisition. The pro forma
results and other disclosures required by SFAS No. 141 have not been presented
because the acquisition of ET is not considered a material acquisition.
(6) ACQUISITIONS OF TRANSLITE SONOMA AND CHLORIDE SYSTEMS IN 2000
On September 14, 2000, the Company acquired Translite Limited ("Translite
Sonoma"), a San Carlos, California based manufacturer of low-voltage cable and
track lighting systems and decorative architectural glass lighting. Earlier in
2000, Translite Limited had expanded its operations by merging with Sonoma
Lighting Limited, which had been a manufacturer of decorative architectural
glass lighting. The Company purchased all of the outstanding capital stock of
Translite Limited for $6,427, borrowing $5,000 from the revolving credit
facility and funding the remainder from cash on hand.
F - 14
On October 1, 2000, the Company acquired the assets of the emergency lighting
business of Chloride Power Electronics Incorporated ("Chloride Systems") from
the Chloride Group, PLC, in London, England. The purchase included the U.S.
Chloride Systems and LightGuard emergency lighting brands. The purchase price
was $52,324 in cash plus the assumption of approximately $2,800 in liabilities.
The revolving credit facility was used to borrow $35,000 and cash on hand was
used to pay the remaining $17,324.
T