-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C/EyiBgzQj2AsatWzPUT7s/4yE/Y1aEQ+Sf/5A0Zp6kTn1rJxgx++QcVlsewycXR SavTt3NfzLIdFi2cZtbjKg== 0001019056-00-000173.txt : 20000327 0001019056-00-000173.hdr.sgml : 20000327 ACCESSION NUMBER: 0001019056-00-000173 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000324 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENLYTE GROUP INC CENTRAL INDEX KEY: 0000833076 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 222584333 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-16960 FILM NUMBER: 578518 BUSINESS ADDRESS: STREET 1: 4360 BROWNSBORO ROAD CITY: LOUISVILLE STATE: KY ZIP: 40207 BUSINESS PHONE: 9089647000 MAIL ADDRESS: STREET 1: 4360 BROWNSBORO ROAD CITY: LOUISVILLE STATE: KY ZIP: 40207 10-K 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended December 31, 1999 Commission file number: 0-16960 ---------------- THE GENLYTE GROUP INCORPORATED 4360 Brownsboro Road Louisville, Kentucky 40207 (502) 893-4600 INCORPORATED IN DELAWARE I.R.S. EMPLOYER IDENTIFICATION NO. 22-2584333 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED - -------------------------------------------------------------------------------- Common Stock, par value NASDAQ National Market System $.0l per share Number of shares of Common Stock (par value $.0l per share) outstanding as of March 6, 2000: 13,686,190. Aggregate market value of Common Stock (par value $.01 per share) held by non-affiliates on March 6, 2000: $278,856,121. Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Documents Incorporated by Reference: DOCUMENT PART OF FORM 10-K Portions of Annual Report to Stockholders for the year ended December 31, 1999 Parts I, II, and IV Proxy Statement for the Annual Meeting of Stockholders to be held April 27, 2000 Part III PART I ITEM 1. BUSINESS On August 30, 1998, The Genlyte Group Incorporated ("Genlyte") and Thomas Industries Inc. ("Thomas") completed the combination of the business of Genlyte with the lighting business of Thomas ("Thomas Lighting"), in the form of a limited liability company named Genlyte Thomas Group LLC ("Genlyte Thomas"). Genlyte contributed substantially all of its assets and liabilities to Genlyte Thomas and received a 68% interest in Genlyte Thomas. Thomas contributed substantially all of its assets and certain related liabilities comprising Thomas Lighting and received a 32% interest in Genlyte Thomas. Throughout this Form 10-K, the term "Company" as used herein refers to The Genlyte Group Incorporated, including the consolidation of The Genlyte Group Incorporated and all majority-owned subsidiaries. The Company designs, manufactures, markets, and sells lighting fixtures and controls for a wide variety of applications in the commercial, residential, and industrial markets. The Company operates in these three industry segments through the following divisions: Lightolier, Day-Brite, Crescent, Capri, Controls, Hadco, Gardco, Wide-Lite, Stonco, and Consumer in the United States and Mexico, and Canlyte, Thomas Lighting Canada, Lumec, and Ledalite in Canada. The Company markets its products under the following brand names: In the U.S. -- Bronzelite, Capri, Crescent, Day-Brite, Diamond F, Electro/Connect, Emco, ExceLine, Fibre Light, Forecast, Gardco, Hadco, Ledalite, Lightolier, Lightolier Controls, Lumec, Lumec-Schreder, Matrix, mcPhilben, Omega, Starlight, Stonco, Thomas, Wide-Lite, and ZED. In Canada -- C&M, CFI (Canadian Fluorescent Industries), Capri, Day-Brite, Hadco, Horizon, Keene-Widelite, Ledalite, Lightolier, Lite-Energy, Lumec, Prodel, Stonco, Uniglo, Wide-Lite, and ZED. In Mexico -- Bronzelite, Capri, Day-Brite, Emco, Forecast, Gardco, Hadco, Lightolier, Lumec, Thomas, and Wide-Lite. The Company's products primarily utilize incandescent, fluorescent, and high-intensity discharge (HID) light sources and are marketed primarily to distributors who resell the products for use in new commercial, residential, and industrial construction as well as in remodeling existing structures. 2 Because the Company does not principally sell directly to the end-user of its products, the Company cannot determine precisely the percentage of its revenues derived from the sale of products installed in each type of building or the percentage of its products sold for new construction versus remodeling. The Company's sales, like those of the lighting fixture industry in general, are partly dependent on the level of activity in new construction and remodeling. PRODUCTS AND DISTRIBUTION The Company designs, manufactures, markets, and sells the following types of products: Indoor Fixtures: Incandescent, fluorescent, and HID lighting fixtures and lighting controls for commercial, residential, industrial, institutional, medical, and sports markets, and task lighting for all markets. Outdoor Fixtures: HID and incandescent lighting fixtures and accessories for commercial, residential, industrial, institutional, and sports markets. The Company's products are marketed by independent sales representatives and Company direct sales personnel who sell to distributors, electrical wholesalers, mass merchandisers, and national accounts. In addition, the Company's products are promoted through architects, engineers, contractors, and building owners. The fixtures are principally sold throughout the United States, Canada, and Mexico. RAW MATERIALS SOURCES & AVAILABILITY The Company purchases large quantities of raw materials and components -- mainly steel, aluminum, ballasts, sockets, wire, plastic, lenses, and glass -- from multiple sources. No significant supply problems have been encountered in recent years. Relationships with vendors have been satisfactory. SEASONAL EFFECT ON BUSINESS There are no predictable significant seasonal effects on the Company's results of operations. PATENTS AND TRADEMARKS The Company has a number of United States and foreign mechanical patents, design patents, and registered trademarks. The Company maintains such protections by periodic renewal of trademarks and payments of maintenance fees for issued patents. The Company vigorously enforces its intellectual property rights. The Company does not believe that a loss of any presently held patent or trademark is likely to have a material adverse impact on its business. 3 WORKING CAPITAL There are no unusual significant business practices at the Company that affect working capital. The Company's terms of sale vary by division but are generally consistent with general practices within the lighting industry. The Company attempts to keep inventory levels at the minimum required to satisfy customer requirements. BACKLOG Backlog was $102,080,000 as of December 31, 1999; $90,474,000 as of December 31, 1998, and $54,206,000 as of December 31, 1997. The $36,268,000 increase from December 31, 1997 to December 31, 1998 was primarily because of the inclusion of Thomas Lighting following the formation of Genlyte Thomas. Substantially all the backlog at December 31, 1999 is expected to be shipped in 2000. COMPETITION The Company's products are sold in competitive markets, in which are numerous producers of each type of fixture. The principal measures of competition in indoor and outdoor fixtures for the commercial, residential, and industrial markets are price, service, design, and product performance. RESEARCH AND DEVELOPMENT The Company continues to develop new products to provide innovative lighting solutions to meet the needs of its customers. Costs incurred for research and development activities, as determined in accordance with generally accepted accounting principles, were $8,086,000; $7,237,000; and $5,195,000 during 1999, 1998, and 1997, respectively. EMPLOYEES At December 31, 1999, the Company employed approximately 3,370 union and nonunion production workers and approximately 2,000 engineering, administrative, and sales personnel. Approximately 42% of the production workers are covered by collective bargaining agreements that expire in 2000. Relationships with unions have been satisfactory. Negotiation of collective bargaining agreements is not expected to have a significant impact on 2000 production. 4 INTERNATIONAL OPERATIONS The Company has international operations in Canada and Mexico. Information on the Company's operations by geographical area for the last three fiscal years is set forth in the "Notes to Consolidated Financial Statements" section of Genlyte's 1999 Annual Report to Stockholders (Exhibit 13 hereto), which is incorporated herein by reference. DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward looking statements. Certain information in Items 1, 2, 3, 7 and 8 of this Form 10-K include information that is forward looking. The matters referred to in such information could be affected by the risks and uncertainties involved in the Company's business. These risks and uncertainties include, but are not limited to, the effect of economic and market conditions, new building construction cycles, the impact of seasonal weather conditions on construction activity, currency exchange rates, the level and volatility of interest rates, economic and political conditions in international markets, including civil unrest, government changes and restrictions on the ability to transfer capital across borders, the impact of legislative enactments, regulatory action and changes in accounting standards and taxation requirements, environmental laws in domestic and foreign jurisdictions, as well as certain other risks described in this Form 10-K. 5 ITEM 2. PROPERTIES The leased Corporate offices of the Company are located in Louisville, Kentucky. Because of the large number of individual locations and the diverse nature of the operating facilities, specific description of each property owned and leased by the Company is not necessary to an understanding of the Company's business. All of the buildings are of steel, masonry, or concrete construction, are generally in good condition, provide adequate and suitable space for the operations of each location, and provide sufficient capacity for present and foreseeable future needs. A summary of the Company's property follows:
27 Owned Facilities 46 Leased Facilities Combined Facilities Nature of Facilities Total Square Feet Total Square Feet Total Square Feet - -------------------- ----------------- ----------------- ----------------- Manufacturing Plants 2,079,000 342,000 2,421,000 Distribution Centers 1,523,000 351,000 1,874,000 Administrative Offices 329,000 164,000 493,000 Sales Offices -- 61,000 61,000 Other 105,000 4,000 109,000 ----------- ---------- ---------- Total 4,036,000 922,000 4,958,000 =========== ========== ==========
ITEM 3. LEGAL PROCEEDINGS Genlyte has been named as one of a number of corporate and individual defendants in an adversary proceeding filed on June 8, 1995, arising out of the Chapter 11 bankruptcy filing of Keene Corporation ("Keene"). Except for the last count, as discussed below, the claims and causes of action set forth in the June 8, 1995 complaint (the "complaint") are substantially the same as were brought against Genlyte in the U.S. District Court in New York in August 1993 (which original proceeding was permanently enjoined as a result of Keene's reorganization plan). The complaint is being prosecuted by the Creditors Trust created for the benefit of Keene's creditors (the "Trust"), seeking from the defendants, collectively, damages in excess of $700 million, rescission of certain asset sale and stock transactions, and other relief. With respect to Genlyte, the complaint (some of the claims of which have since been restricted, as noted below) principally maintains that certain lighting assets of Keene were sold to a predecessor of Genlyte in 1984 at less than fair value, while both Keene and Genlyte were wholly-owned subsidiaries of Bairnco Corporation ("Bairnco"). The complaint also challenges Bairnco's spin-off of Genlyte in August 1988. Other allegations are that Genlyte, as well as other corporate defendants, are liable as corporate successors to Keene. The complaint fails to specify the amount of damages sought against Genlyte. The complaint also alleges a violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). 6 Following confirmation of the Keene reorganization plan, the parties moved to withdraw the case from bankruptcy court to the Southern District of New York Federal District Court. The case is now pending before the Federal District Court. On October 13, 1998, the Court issued an opinion dismissing certain counts as to Genlyte and certain other corporate defendants. In particular, the Court dismissed the count of the complaint against Genlyte that alleged the 1988 spin-off was a fraudulent transaction, and the count alleging a violation of RICO. The Court also denied a motion to dismiss the challenge to the 1984 transaction on statute of limitations grounds and ruled that the complaint should not be dismissed for failure to specifically plead fraud. On January 5 and 6, 1999, the Court rendered additional rulings further restricting the claims by the Trust against Genlyte and other corporate defendants, and dismissing the claims against all remaining individual defendants except one. The primary effect of the rulings with respect to claims against Genlyte was to require the Trust to prove that the 1984 sale of certain lighting assets of Keene was made with actual intent to defraud present and future creditors of Genlyte's predecessor. Discovery, which was stayed since commencement of the action, is now ongoing. Genlyte has filed its answer to the complaint, denying liability, and is in the process of responding to and requesting discovery. Genlyte believes that it has meritorious defenses to the adversary proceeding and will defend said action vigorously. Additionally, the Company is a defendant and/or potentially responsible party, with other companies, in actions and proceedings under state and Federal environmental laws including the Federal Comprehensive Environmental Response Compensation and Liability Act, as amended. Management does not believe that the disposition of the lawsuits and/or proceedings will have a material effect on the Company's financial condition, results of operations, or liquidity. In the normal course of business, the Company is a party to legal proceedings and claims. When costs can be reasonably estimated, appropriate liabilities or reserves for such matters are recorded. While management currently believes the amount of ultimate liability, if any, with respect to these actions will not materially affect the financial condition, results of operations, or liquidity of the Company, the ultimate outcome of any litigation is uncertain. Were an unfavorable outcome to occur, the impact could be material to the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None 7 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY & RELATED STOCKHOLDER MATTERS a. and c. Data regarding market price of Genlyte's common stock is included in the "Notes to Consolidated Financial Statements" section of Genlyte's 1999 Annual Report to Stockholders (Exhibit 13 hereto), which is incorporated herein by reference. Genlyte's common stock is traded on the NASDAQ National Market System under the symbol "GLYT". Information concerning dividends and restrictions thereon and Preferred Stock Purchase Rights are included in the "Notes to Consolidated Financial Statements" section of Genlyte's 1999 Annual Report to Stockholders, which is incorporated herein by reference. b. The approximate number of common equity security holders is as follows: Approximate Number of Holders of Record as of Title of Class Year-end 1999 ------------------------------------------------------------------ Common Stock, par value $.0l per share 1,329 ITEM 6. SELECTED FINANCIAL DATA The information required for this item is included in Genlyte's 1999 Annual Report to Stockholders (Exhibit 13 hereto), which is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Reference is made to the "Management's Discussion and Analysis" section of Genlyte's 1999 Annual Report to Stockholders (Exhibit 13 hereto), which is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK At December 31, 1999, a hypothetical 1% increase in interest rates would result in a reduction of approximately $560,000 in pre-tax income. The estimated reduction is based upon no change in the volume or composition of debt at December 31, 1999. 8 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Reference is made to the "Consolidated Financial Statements" and "Notes to Consolidated Financial Statements" sections of Genlyte's 1999 Annual Report to Stockholders (Exhibit 13 hereto), which is incorporated herein by reference. Financial statement schedules are included in Part IV of this filing. ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None 9 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required with respect to the Directors of Genlyte is included in the "Election of Directors" section of the Proxy Statement for the 2000 Annual Meeting of Stockholders of Genlyte, which has been filed with the Securities and Exchange Commission and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information required with respect to executive compensation is included in the "Compensation of Directors" and "Compensation Committee Report on Executive Compensation" sections of the Proxy Statement for the 2000 Annual Meeting of Stockholders of Genlyte, which has been filed with the Securities and Exchange Commission and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required with respect to security ownership is included in the "Voting Securities and Principal Holders Thereof" section of the Proxy Statement for the 2000 Annual Meeting of Stockholders of Genlyte, which has been filed with the Securities and Exchange Commission and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required with respect to relationships is included in the "Compensation Committee Interlocks and Insider Participation" and "Voting Securities and Principal Holders Thereof" sections of the Proxy Statement for the 2000 Annual Meeting of Stockholders of Genlyte, which has been filed with the Securities and Exchange Commission and is incorporated herein by reference. 10 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K a) 1) FINANCIAL STATEMENTS The following information is incorporated herein by reference to Genlyte's 1999 Annual Report to Stockholders (Exhibit 13 hereto): Report of Independent Public Accountants Consolidated Statements of Income for the years ended December 31, 1999, 1998, and 1997 Consolidated Balance Sheets as of December 31, 1999 and 1998 Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998, and 1997 Consolidated Statements of Stockholders' Investment for the years ended December 31, 1999, 1998, and 1997 Notes to Consolidated Financial Statements 2) FINANCIAL STATEMENT SCHEDULE Report of Independent Public Accountants on Financial Statement Schedule Schedule II -- Valuation and Qualifying Accounts for the years ended December 31, 1999, 1998, and 1997. Other schedules are omitted because of the absence of conditions under which they are required or because the required information is included in the consolidated financial statements or notes thereto. b) REPORTS ON FORM 8-K There were no reports on Form 8-K for the three months ended December 31, 1999. 11 c) EXHIBITS Incorporated By Description Reference To - ----------- ------------ - - Amended and Restated Certificate of Exhibit 3(b) to Genlyte's Incorporation of Genlyte, dated Registration Statement on Form August 2, 1988 8 as filed with the Securities and Exchange Commission on August 3, 1988 - - Amended and Restated Certificate of Exhibit 3(a) to Genlyte's Form Incorporation of Genlyte, dated May 10-K filed with the Securities 9, 1990 and Exchange Commission in March 1993 - - Amended and Restated By-laws of Exhibit 3(c) to Genlyte's Genlyte, as adopted on May 16, 1988 Registration Statement on Form 8 as filed with the Securities and Exchange Commission on August 3, 1988 - - Form of Stock Certificate for Exhibit 4(a) to Genlyte's Genlyte Common Stock Registration Statement on Form 8 as filed with the Securities and Exchange Commission on August 3, 1988 - - Loan Agreement between Genlyte and Exhibit 4(c) to Genlyte's Form Jobs for Fall River, Inc., dated as 10-K filed with the Securities of July 13, 1994 and Exchange Commission in March 1995 - - Rights Agreement between Genlyte Exhibit 4.1 to Genlyte's Form and The Bank of New York, as 8-A filed with the Securities Rights Agent, dated as of September and Exchange Commission on 13, 1999 September 15, 1999 - - Stock Purchase Agreement between Exhibit 10(a) to Genlyte's Genlyte and purchasers of Genlyte Registration Statement on Form Class B Stock, dated as of June 17, 8 as filed with the Securities 1988 and Exchange Commission on August 3, 1988 - - Loan Agreement between Genlyte and Exhibit 10(b) to Genlyte's Form the New Jersey Economic Development 10-K filed with the Securities Authority dated April 1, 1990, and Exchange Commission in replacing the First Mortgage and March 1991 Security Agreement between the New Jersey Economic Development Authority and KCS Lighting, Inc., dated December 20, 1984 (assigned to and assumed by Genlyte effective December 31, 1986) 12 Incorporated By Description Reference To - ----------- ------------ - - Loan Agreement between Genlyte and Exhibit 10(c) to Genlyte's Form New Jersey Economic Development 10-K filed with the Securities Authority dated June 1, 1990, and Exchange Commission in replacing the Loan Agreement March 1991 between KCS Lighting, Inc. and the New Jersey Economic Development Authority, dated December 20, 1984 (assigned to and assumed by Genlyte effective December 31, 1986) - - Merger and Assumption Agreement, Exhibit 10(d) to Genlyte's Form dated as of December 28, 1990, by 10-K filed with the Securities and between Genlyte and Lightolier and Exchange Commission in March 1991 - - Management Incentive Compensation Plan Exhibit 10(i) to Genlyte's Registration Statement on Form 8 as filed with the Securities and Exchange Commission on August 3, 1988 - - Genlyte 1988 Stock Option Plan Exhibit 10(j) to Genlyte's Registration Statement on Form 8 as filed with the Securities and Exchange Commission on August 3, 1988 - - Genlyte 1998 Stock Option Plan Annex A to Genlyte's Proxy Statement (Form DEF 14A) for the 1998 Annual Meeting of Stockholders of Genlyte as filed with the Securities and Exchange Commission on March 23, 1998 - - Tax Sharing Agreement between Exhibit 10(k) to Genlyte's Genlyte and Bairnco Corporation, Registration Statement on Form dated July 15, 1988 8 as filed with the Securities and Exchange Commission on August 3, 1988 - - Master Transaction Agreement dated Exhibit 2.1 to Genlyte's Form April 28, 1998 by and between 8-K filed with the Securities Thomas and Genlyte and Exchange Commission on July 24, 1998 13 Incorporated By Description Reference To - ----------- ------------ - - Limited Liability Company Agreement Exhibit 2.2 to Genlyte's Form of GT Lighting, LLC (now named 8-K filed with the Securities Genlyte Thomas) dated April 28, and Exchange Commission on July 1998 by and among Thomas, Genlyte 24, 1998 and Genlyte Thomas - - Capitalization Agreement dated Exhibit 2.3 to Genlyte's Form April 28, 1998 by and among Genlyte 8-K filed with the Securities Thomas and Thomas and certain of and Exchange Commission on July its affiliates 24, 1998 - - Capitalization Agreement dated Exhibit 2.4 to Genlyte's Form April 28, 1998 by and between 8-K filed with the Securities Genlyte Thomas and Genlyte and Exchange Commission on July 24, 1998 - - Credit Agreement between Genlyte Exhibit 10 to Genlyte's Form Thomas and the applicable banks 10-Q filed with the Securities named therein, dated as of August and Exchange Commission in 30, 1998 November 1998 - - Financial Statements of Business Exhibits 99.1 through 99.16 to Acquired and Pro Forma Financial Genlyte's Form 8-K/A filed with Information related to the the Securities and Exchange formation of Genlyte Thomas Commission on November 5, 1998 - - Form of Employment Protection Exhibit 99 to Genlyte's Form Agreement between Genlyte and 10-K filed with the Securities certain key executives and Exchange Commission on March 26, 1999 Other Exhibits included herein: 10(a) Financing agreement between Genlyte Thomas Group Nova Scotia ULC and Bank of Montreal dated December 22, 1999. 10(b) Financing agreement between Genlyte Thomas Group Nova Scotia ULC and The Toronto-Dominion Bank dated December 22, 1999. 10(c) Financing agreement between Genlyte Thomas Group Nova Scotia ULC and Royal Bank of Canada dated December 22, 1999. 11 Calculation of Basic and Diluted Earnings per Share 13 Portions of the Annual Report to Stockholders for the year ended December 31, 1999, incorporated herein by reference 18 Letter re Change in Accounting Principle 21 Subsidiaries of The Genlyte Group Incorporated 23 Consent of Independent Public Accountants 27 Financial Data Schedule 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Genlyte has duly caused this Annual Report to be signed on its behalf by the undersigned thereunto duly authorized. THE GENLYTE GROUP INCORPORATED Registrant Date: March 24, 2000 By /s/ WILLIAM G. FERKO ----------------------- ----------------------------------------- March 24, 2000 William G. Ferko V.P. Finance - CFO & Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report is signed below by the following persons on behalf of Genlyte and in the capacities and on the date indicated. /s/ AVRUM I. DRAZIN March 24, 2000 - --------------------------------------------------- ------------------ Avrum I. Drazin - Chairman of the Board /s/ LARRY POWERS March 24, 2000 - --------------------------------------------------- ------------------ Larry Powers, President and Chief Executive Officer (Principal Executive Officer) /s/ DAVID M. ENGELMAN March 17, 2000 - --------------------------------------------------- ------------------ David M. Engelman - Director /s/ FRED HELLER March 24, 2000 - --------------------------------------------------- ------------------ Fred Heller - Director /s/ FRANK METZGER March 24, 2000 - --------------------------------------------------- ------------------ Frank Metzger - Director 15 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE TO THE GENLYTE GROUP INCORPORATED: We have audited in accordance with auditing standards generally accepted in the United States the consolidated financial statements included in The Genlyte Group Incorporated Annual Report to Stockholders for the year ended December 31, 1999, incorporated by reference in this Form 10-K, and have issued our report thereon dated February 2, 2000. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in Item 14a(2) is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic consolidated financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic consolidated financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole. /s/ ARTHUR ANDERSEN LLP Louisville, Kentucky February 2, 2000 16 THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997 ($ in thousands)
Additions Additions Additions Balance at From Charged to Charged Balance Beginning Companies Costs and to Other at End of Year Acquired Expenses Accounts Deductions of Year ------- -------- -------- -------- ---------- ------- (1) (2) YEAR ENDED 12/31/99 Allowance for Doubtful Accounts $10,907 $ 2,986 $ 4,113 $ 824 $(3,920) $14,910 YEAR ENDED 12/31/98 Allowance for Doubtful Accounts $ 6,864 $ 1,407 $ 3,172 $ - $ (536) $10,907 YEAR ENDED 12/31/97 Allowance for Doubtful Accounts $ 8,222 $ - $ 2,100 $ - $(3,458) $ 6,864
(1) The amount in 1998 represents the balance acquired from Thomas Lighting. The amount in 1999 represents $360 acquired from Ledalite and $2,626 of adjustments to the Thomas Lighting balance. (2) Represents uncollectible accounts written off, less recoveries of accounts previously written off. 17 EX-10.A 2 EXHIBIT 10(A) BANK OF MONTREAL CORPORATE FINANCE PERSONAL AND COMMERCIAL FINANCIAL SERVICES 105 St. Jacques Street, 3rd floor Montreal, Quebec H2Y 1L6 Telephone No (514) 877-7262 Telecopier No (514) 877-7704 December 15th, 1999 Mr. Terry Lange Genlyte Thomas Group Nova Scotia ULC 4360 Brownsboro Road, Suite 300 P.O. Box 35120 Louisville, Kentucky USA, 40232 SUBJECT: FINANCING AGREEMENT Dear Mr. Lange, We are pleased to offer Genlyte Thomas Group Nova Scotia ULC the following credit facility, subject to the terms and conditions outlined below. This Financing Agreement replaces and supercedes our initial Offer dated November 23rd, 1999: BORROWER: Genlyte Thomas Group Nova Scotia ULC (referred to herein as the "Borrower"). LENDER: Bank of Montreal, at its Branch located 115 South LaSalle Street, Chicago, Illinois, USA, 60603 (the "Bank"). TYPE OF CREDIT AND AMOUNT: 364 day, Committed non-revolving facility for up to CDN$10,000,000 and/or its US $ equivalent, by way of: Canadian Prime Rate Based Loan in CDN $ ("Prime Based Loan"); and/or US Prime Rate Based Loan in US$ ("US Prime Based Loan"); and/or London InterBank Offered Rate Notes in CDN $ and/or US $ ("LIBOR"); (called the "Facility") Page 1 of 14 Genlyte Thomas Group Nova Scotia ULC Financing Agreement - December 15th, 1999 PURPOSE: To provide funds to repay 33.3% of a Bridge Loan outstanding with The Toronto-Dominion Bank used for the acquisition of the assets (including goodwill) of Ledalite Architectural Products Inc. AVAILABILITY: By way of one single advance (referred to herein as the "Loan"). REPAYMENT: The loan shall be repayable on the Maturity Date. MATURITY DATE: 1 Business day prior to the first anniversary date of the acceptance by the Borrower of this Financing Agreement unless extended as provided herein (the "Maturity Date"). Any extension (Maximum 4) of the Maturity Date shall be conditional upon the Borrower repaying on the last day of the then current Maturity Date an amount equal to: First extension: CDN$ 500,000 Second extension CDN$1,000,000 Third extension CDN$1,500,000 Fourth extension CDN$2,000,000 Final Maturity Date CDN$5,000,000 EXTENSION OF MATURITY DATE: The Borrower is deemed to have requested the Bank at least 60 days prior to the then current Maturity Date to extend the Maturity Date for a period of no more than 364 days starting on the day of the then current Maturity Date. The Bank shall be deemed to have granted such extension if the Bank has not otherwise advised the Borrower in writing 30 days prior to the current Maturity Date. The Bank shall have entire discretion to grant or not to grant any such extension and upon such terms and conditions as it deems appropriate. Page 2 of 14 Genlyte Thomas Group Nova Scotia ULC Financing Agreement - December 15th, 1999 INTEREST RATES AND SPREADS: CDN Prime / US Prime Spread: 0 Basis points LIBOR Spread: 50 Basis points US Prime Rate means the rate of interest per annum (based on a 365/366 day year) established by the Bank from time to time as the reference rate of interest for the determination of interest rates that the Bank charges to customers of varying degrees of creditworthiness for US dollar loans made by it in the United States. CDN Prime Rate means the rate of interest per annum (based on a 365/366 day year) established by the Bank from time to time as the reference rate of interest for determination of interest rates that the Bank charges to customers of varying degrees of creditworthiness for Canadian dollar loans made by it in the United States. LIBOR in respect of a LIBOR advance means the rate of interest per annum (based on a 360 day year) as determined by the Bank (rounded upwards, if necessary to the nearest whole multiple of 1/16th of 1%) at which the Bank may make available United States dollars or Canadian Dollars, as the case may be, which are obtained by the Bank in the InterBank Euro Currency Market, London, England at approximately 11:00 a.m. (Toronto time) on the second business day before the first day of, and in an amount similar to, and for the period similar to the interest period of, such LIBOR advance. Any interest rate based on a period less than a year expressed as an annual rate for the purposes of the Interest Act (Canada) is equivalent to such determined rate multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by the number of days in the period upon which it was based. INTEREST CALCULATION AND PAYMENT: Interest on CDN Prime Based Loans and US Prime Based Loans is calculated daily and payable monthly in arrears based on the number of days which the loan is outstanding. Interest on LIBOR Loans is calculated and payable on the earlier of contract maturity or quarterly in arrears and on contract maturity, for the number of days in the LIBOR interest period. Interest is payable both before and after demand, default and judgment. All interest shall be payable at the above referred to rates plus applicable spreads mentioned above. Page 3 of 14 Genlyte Thomas Group Nova Scotia ULC Financing Agreement - December 15th, 1999 DRAWDOWN: As required upon satisfaction of conditions precedent, but no later than December 31st, 1999 (to coincide with expiry of the 90 day Bridge loan with the Toronto-Dominion Bank). CDN PRIME RATE BASED LOANS AND/OR US PRIME RATE BASED LOANS The minimum amount of drawdown by way of CDN Prime Based Loans and/or US Prime Based Loans is $500,000. LIBOR The Borrower shall advise the Bank of the requested LIBOR contract maturity or interest period. The Bank shall have the discretion to restrict the LIBOR contract maturity, for periods between 30 to 180 days, subject to availability. The minimum amount of a drawdown by way of a LIBOR loan is $1,000,000, and shall be in multiples of $500,000 thereafter. The Borrower will provide the Bank with 2 business days notice of a requested LIBOR loan. TAXATION ON PAYMENTS: All payments made be the Borrower to the Bank will be made free and clear of all present and future taxes (excluding the taxes on the net income of the Bank), withholdings or deductions of whatever nature. If these taxes, withholdings or deductions are required by applicable law and are made, the Borrower, shall as a separate and independent obligation pay to the Bank all such additional amounts as shall fully indemnify the Bank from any such taxes, withholding or deduction. SECURITY: The following security shall be provided prior to first drawdown, and shall be acceptable to the Bank and its legal counsel: 1) Irrevocable and Unconditional Standby Letter of Credit (L/C) in favour of the Bank for an amount of CDN$10,000,000 or its US$ equivalent issued by Bank of America, N.A. The letter shall bear an initial term of no less than 364 days, with a provision for automatic renewal without amendment unless notified via tested telex/authenticated swift at least 60 days prior to the Maturity Date, subject to the satisfaction of the Bank. Page 4 of 14 Genlyte Thomas Group Nova Scotia ULC Financing Agreement - December 15th, 1999 If the Letter of Credit is issued in US$, to the extent if any, that at any time the Letter of Credit value is less than the equivalent amount of the facility due to fluctuations in the exchange rate by which such equivalence is determined (a "deficiency"), then upon demand by the Bank the Borrower shall: a) Immediately prepay the amount of the deficiency, or b) Deposit the amount of the deficiency with the Bank and grant it a security interest in the cash collateral, or c) Immediately increase the amount of the outstanding Letter of Credit sufficient enough to satisfy the Bank. 2) To ensure that there is appropriate coverage in favor of the Bank in the event of an adverse currency fluctuation between the US$ and CDN$, Genlyte Thomas Group LLC shall upon issuance of the Letter of Credit, provide the Bank with a written undertaking to pay to the Bank on the date the Bank demands payment from Bank of America, N.A. under the Letter of Credit, a sum equal to the difference, if any, between the proceeds received from the financial institution which issued the letter of credit and the then outstanding indebtedness owing by the Borrower to the Bank as expressed in CDN$. This undertaking shall remain in full force and effect as long as there exists any outstanding indebtedness owing to the Bank by the Borrower. (All of the above security shall be referred to collectively in this agreement as "Bank Security"). CONDITIONS PRECEDENT: The obligation of the Bank to make and keep on its books any loan hereunder is subject to the following conditions precedent : a) The Bank shall have received the following documents which shall be in form and substance satisfactory to the Bank and its legal counsel : i) Duly executed copy of this Financing Agreement signed by all parties, with the appropriate resolutions and legal opinions. ii) A copy of The Genlyte Thomas Group Incorporated September 30th, 1999 quarterly financial statements, and related Genlyte Thomas Group LLC attachments, accompanied by a compliance certificate from the Chief Financial Officer confirming that they are in compliance with the credit agreement dated August 30th, 1999. Page 5 of 14 Genlyte Thomas Group Nova Scotia ULC Financing Agreement - December 15th, 1999 iii) A copy of the last form 10-Q and 10-K for The Genlyte Group Incorporated and Thomas Industries Inc, respectively; iv) All of the Bank Security and supporting resolutions required hereunder and solicitors letter of opinion; v) Any other documents deemed necessary by the Bank and its legal counsel. b) The Borrower has paid the Arrangement Fee and all legal expenses incurred by the Bank in connection with this Financing Agreement and/or the Bank Security. c) No Event of Default shall have occurred. REPRESENTATIONS AND WARRANTIES: The Borrower hereby represents and warrants, which representations and warranties shall be deemed to be continually repeated so long as any amounts remain outstanding and unpaid under this agreement or so long as the commitment under this Agreement remains in effect, that : a) The Borrower is a corporation duly incorporated and organized, validly existing and in good standing under the laws of Nova Scotia and has adequate corporate power and authority to carry on its business, own property, borrow monies and enter into agreements therefor, execute and deliver the documents required hereunder, and observe and perform the terms and provisions of this Agreement. b) There are no laws, statutes or regulations applicable to or binding upon the Borrower and no provisions in its Articles or in any by-laws, resolutions, contracts, agreements, or arrangements which would contravene, breach, default or violate the execution, delivery, performance, observance, of any terms of this Agreement. c) No Event of Default has occurred nor has any event occurred which, in time, would constitute an Event of Default under this Agreement or which would constitute a default under any other agreement. Page 6 of 14 Genlyte Thomas Group Nova Scotia ULC Financing Agreement - December 15th, 1999 d) There are no actions, suits or proceedings, including appeals or applications for review, or any knowledge of pending actions, etc..., against the Borrower and its subsidiaries, before any court or administrative agency which would result in any material adverse change in the property, assets, financial conditions, and business or operations of the Borrower. e) All material authorizations, approvals, consents, licenses, exemptions, filings, registrations, notarizations and other requirements of governmental, judicial and public bodies and authorities required reasonably necessary to carry on its business have been or will be obtained or effected and are or will be in full force and effect. f) The financial statements delivered to the Bank fairly present the present financial position of the Borrower and Genlyte Thomas Group LLC, and have been prepared by their auditors in accordance with Generally Accepted Accounting Principles. g) All the remittances required to be made by the Borrower to the federal, provincial and municipal governments have been made, are currently up to date and there are no outstanding arrears. Without limiting the foregoing, all employee deductions (including Income Taxes, Unemployment, insurance and Canada Pension Plan), sales taxes (both provincial and federal), corporate income taxes, payroll taxes and workmen's compensation dues are currently paid and up to date. POSITIVE COVENANTS: As long as any loans or commitment of the Bank remain outstanding, the Borrower and Genlyte Thomas Group LLC will : a) Cause to be paid all amounts, interest and fees on the dates, times and place specified herein or under any other agreement between the Bank and the Borrower. b) Provide The Genlyte Group Incorporated quarterly audited consolidated financial statements and annual audited consolidated financial statements within 60 and 120 days of each respective period and related Genlyte Thomas Group LLC attachments, accompanied by a compliance certificate from the Chief Financial Officer confirming that all terms and conditions are in compliance with this Page 7 of 14 Genlyte Thomas Group Nova Scotia ULC Financing Agreement - December 15th, 1999 Agreement and that no event has occurred that is, or with the passing of time may become, an Event of Default under this Agreement or a default under any other agreement. c) Provide the Bank with information and financial data as it may reasonably request from time to time. d) The Borrower agrees that in the event it provides any security interest, assignment or other interest in any of its assets or more favorable covenants and/or pricing to any other secured party or secured lender, that it shall provide equal ranking and equal value security over such assets and covenants and/or pricing to the Bank. EVENTS OF DEFAULT: The Bank has the right to accelerate the payment of principal and accrued interest under the credit facility at any time after the occurrence of any one of the following Events of Default: a) The failure of the Borrower to provide to the Bank the renewal of the irrevocable and unconditional standby letter of credit without amendment as referred to under the heading "Security", 60 days prior to the then current expiry date of the said letter of credit. b) Non-payment of principal when due or non-payment of interest or fees within 3 business days of when due or when demanded. c) The failure of the Borrower and/or Genlyte Thomas Group LLC to fulfill any of the terms and conditions contained in this Agreement or any security document(s) or any other agreement with the Bank and such default continues unremedied for five (5) business days after the occurrence. d) The Borrower or Genlyte Thomas Group LLC become insolvent or Bankrupt. e) Any representation or warranty is inaccurate in any material respect. f) The Borrower (i) has an order for relief entered with respect to it under Canadian or United States bankruptcy laws or any other law, domestic or foreign, relating to bankruptcy, insolvency or reorganization or relief of debts as now or hereafter in effect, (ii) makes an assignment for the benefit of creditors, (iii) applies for, seeks, consents to, or acquiesces in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it Page 8 of 14 Genlyte Thomas Group Nova Scotia ULC Financing Agreement - December 15th, 1999 or any material part of its property, (iv) institutes any proceeding seeking an order for relief under Canadian or United States bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a bankruptcy or insolvent, or seeking dissolution, winding up, disestablishment, liquidation, reorganization, arrangement, adjustment or composition of it or suspension of its general operations under the law, domestic or foreign, relating to bankruptcy, insolvency or reorganization or relief of debtors or fails to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (v) takes any company action to authorize or effect any of the foregoing actions set forth in this paragraph (e); (vi) fails to contest in good faith any appointment or proceeding described in the following paragraph (f); or (vii) does not pay, or admits in writing its inability to pay, its debts generally as they become due; g) Without application, approval or consent of the Borrower, a receiver, trustee, examiner, liquidator or similar official is appointed for the Borrower or any material part of its property, or any of the proceeding described above is to be instituted against the Borrower and such appointment constitutes undischarged or such proceeding continues undismissed or unstayed for a period of 60 consecutive days; or h) Any court, government or governmental agency condems, seizes or otherwise appropriates, or takes custody or control of, all or any substantial portion of the property of the Borrower; Then, at any time during the existence of such event, the Bank may, by notice to the Borrower or, in the case of events under paragraph (f), (g) or (h), automatically without notice, terminate the credit facility and/or declare the advance and all other amount owing under this Financing Agreement to be immediately due and payable without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived. NON-WAIVER: Should there be a breach of or non-compliance with any term or condition hereof, or should an Event of Default occur, the Bank may at its option exercise any rights or remedies it may have hereunder or which may be available to it and the failure of the Bank to exercise any such rights or remedies shall not be deemed to be a waiver of such term or condition and will not prevent the Bank from exercising such rights and remedies pursuant to that default or subsequent defaults at any later time. Page 9 of 14 Genlyte Thomas Group Nova Scotia ULC Financing Agreement - December 15th, 1999 REPRESENTATIONS: No representation or warranty or other statement made by the Bank concerning the credit shall be binding on the Bank unless made by it in writing as a specific amendment to this letter. ADDED COST: If the introduction of or any change in any present or future law, regulation, treaty, official or unofficial directive, or regulatory requirement, (whether or not having the force of law) or in the interpretation or application thereof, relates to : i) the imposition or exemption of payments due to the Bank or on reserves or deemed reserves in respect of the undrawn portion of any loan made available hereunder; or ii) any reserve, special deposit, regulatory or similar requirement against assets, deposits, or loans or other acquisition of funds for loans by the Bank; or iii) the amount of capital required or expected to be maintained by the Bank as a result of the existence of the advances or the commitment made hereunder; and the result or such occurrence is, in the sole determination of the Bank, to increase the cost of the Bank or to reduce the income received by the Bank hereunder, the Borrower shall, on demand by the Bank, pay to the Bank that amount which the Bank estimates will compensate it for such additional cost or reduction in income and the Bank's estimate shall be conclusive, absent manifest error. PREPAYMENT: Any portion of the loan which bears interest based on floating rate may be prepaid at any time without penalty. No prepayments shall be authorized on LIBOR loan except on the last day of the applicable interest period of such LIBOR loan. The Borrower shall compensate the Bank for all losses, expenses and liabilities which the Bank may sustain as the result of any prepayment. YEAR 2000 REPRESENTATION: 1) The Borrower and Genlyte Thomas Group LLC shall use commercially reasonable efforts to ensure that the Borrower's products, business systems and revenue generating systems (the "Systems") are Year 2000 compliant (as defined below) as soon as reasonably practicable. Upon reasonable Page 10 of 14 Genlyte Thomas Group Nova Scotia ULC Financing Agreement - December 15th, 1999 request by the Bank, Borrower shall provide documentation relating to or evidencing such Year 2000 Compliance. 2) The Borrower and Genlyte Thomas Group LLC shall test the Systems for Year 2000 Compliance and shall provide the Bank with the opportunity to review test results at such date or dates to be mutually agreed by the Bank and Borrower. 3) The Borrower and Genlyte Thomas Group LLC have taken the reasonable steps to ensure to their satisfaction that third party suppliers, subcontractors, agents of Borrower are Year 2000 Compliant. "Year 200 Compliant" or "Year 2000 Compliance" means the Systems will : a) process, calculate, accept, maintain, store and output date and time data accurately and without delay, interruption or error at all times from, into and between the Twentieth and twenty-first centuries and in particular during the years 1999 and 2000, including the leap year calculations; and b) function accurately and without interruption at all times before, on and after January 1, 2000 (including through February 29, 2000) without any change in operations associated with the advent of 1999 or the twenty-first century. EXPENSES: The Borrower shall pay all reasonable fees (including but not limited to all legal and documentation fees) and expenses incurred by the Bank or the Borrower in connection with the preparation and registration of this Agreement, Bank Security, and any other document contemplated thereby, and with the enforcement of the Bank's rights under this Agreement, the Bank Security and any other document, whether or not any amounts are advanced under the Agreement. These fees and expenses shall include, but not be limited, to all outside counsel expenses and all in-house legal expenses, if in-house counsel are used. The Borrower shall pay interest on unpaid amounts due pursuant to this paragraph at the CDN Prime Rate plus 2% per annum. Page 11 of 14 Genlyte Thomas Group Nova Scotia ULC Financing Agreement - December 15th, 1999 ARRANGEMENT FEE: The Borrower will pay prior to initial drawdown a non-refundable Arrangement Fee of $25,000 (25 Basis points). ANNUAL REVIEW FEE: For the next year and thereafter, the Borrower will pay a non refundable Annual Review Fee of $10,000 for the Bank to consider the Borrower's deemed request for extension of the Maturity Date. Should the review involve any material change in the general terms and conditions of the Loan, then this fee could be renegotiated. INDEMNITY: The Borrower shall indemnify and hold the Bank harmless for all costs, expenses and liabilities in connection with this credit including the prepayment of any LIBOR loan prior to the last day of the interest period applicable to such LIBOR loan. EVIDENCE OF INDEBTEDNESS: The Bank shall record on its records the amount of all loans made hereunder, payments made in respect thereto, and all other amounts becoming due to the Bank under this Agreement. The Bank's records constitute, in the absence of manifest error, conclusive evidence of the indebtedness of the Borrower to the Bank pursuant to this Agreement. PROMISSORY NOTE: The Bank may request that loan made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to the Bank a promissory note payable to the order of the Bank (or, if requested by the Bank, to its assigns) and in a form approved by the Bank and its legal counsel. OTHER AGREEMENTS: The Borrower acknowledges that it will sign other Bank documents relating to the credit facility made available hereunder, including without limitation the evidence of debt, and that the terms and conditions contained in such other documents shall be deemed to be incorporated herein by reference and shall also apply to the credit facility. Page 12 of 14 Genlyte Thomas Group Nova Scotia ULC Financing Agreement - December 15th, 1999 ASSIGNMENT: The Bank may assign or grant participation in all or part of this Agreement or in any loan made hereunder to any Canadian financial institution with the Borrower's prior consent, which shall not be withheld unreasonably. The Borrower may not assign or transfer all or any part of its rights or obligations under this Agreement. LANGUAGE PREFERENCE: This Agreement has been drawn up in the English language at the request of all parties. (Cet acte a ete redige en langue anglaise a la demande de toutes les parties). GOVERNING LAWS: The laws of the Province of Quebec and of Canada. In accepting this commitment you acknowledge that, if in the opinion of the Bank, a material adverse change in risk occurs, including without limiting the generality of the foregoing, any material adverse change in the financial condition of the Borrower and/or Genlyte Thomas Group LLC, any obligation to advance some or all of the above facility may be withdrawn or cancelled. On this understanding, we request your acceptance of the following by signing and returning the enclosed copy of this Financing Agreement by December 24th, 1999. At that point, security documentation will be prepared. We wish to thank you for approaching Bank of Montreal for you company's requirements and we look forward to an ongoing mutually beneficial relationship. Yours truly, /s/ PIERRE GERMAIN ------------------------------------- Pierre Germain Senior Manager Page 13 of 14 Genlyte Thomas Group Nova Scotia ULC Financing Agreement - December 15th, 1999 ACKNOWLEDGED AND ACCEPTED BY: Genlyte Thomas Group Nova Scotia ULC Per : /s/ TERRY L. LANGE - TREASURER Date: 12/22/99 --------------------------------------- -------- Terry L. Lange Per : /s/ WILLIAM G. FERKO Date: 12/22/99 --------------------------------------- -------- William G. Ferko Genlyte Thomas Group LLC hereby intervenes in the present Agreement and acknowledges that it has taken cognizance of the terms and conditions therein contained and in particular the provisions contained under the headings "Security" and "Positive Covenants" by these presents, discloses itself to be content and satisfied therewith and further agrees and consents to the punctual fulfillment of all of our obligations in favor of the Bank. Genlyte Thomas Group LLC Per : /s/ TERRY L. LANGE - TREASURER Date: 12/22/99 --------------------------------------- -------- Terry L. Lange Per : /s/ WILLIAM G. FERKO - VP & CFO Date: 12/22/99 ------------------------------- -------- William G. Ferko Page 14 of 14 EX-10.B 3 EXHIBIT 10(B) 1 December 13, 1999 GENLYTE THOMAS GROUP NOVA SCOTIA ULC 4360 Brownsboro road, suite 300 P.O. Box 35120 Louisville, Kentucky, 40232 ATTENTION: MR. TERRY LANGE FINANCING AGREEMENT Dear Terry, We are pleased to offer the Borrower Genlyte Thomas Group Nova Scotia ULC, the following credit facility, subject to the terms and conditions outlined below: BORROWER: GENLYTE THOMAS GROUP NOVA SCOTIA, UNLIMITED LIABILITY COMPANY. (referred to herein as the "Borrower") LENDER: The Toronto-Dominion Bank, through its Houston Agency, 909 Fannin, suite 1700, Houston, Texas, U.S.A., 77010 (the "Bank") TYPE OF CREDIT AND AMOUNT: 1) 364 days, Committed non-revolving facility for up to C$10,000,000. Available at the Borrower's option by way of: Prime Rate Based Loans in C$ ("Prime Based Loans"); New York Prime Rate Based Loans in US$ ("NY Prime Based Loans"); London Interbank Offered Rate Loans in C$ and/or US$ ("LIBOR"). Libor: Terms between 30 and 180 days; (the "Facility") PURPOSE: 1) To provide funds to repay 33.3% of the Bridge Loan used for the acquisition of the assets (including goodwill) of Ledalite Architectural Products Inc. AVAILABILITY: 1) The facility shall be drawn on a Business day, no later than December 31st, 1999 (the "Maturity date"), unless otherwise extended at the sole discretion of the Bank, as herein provided. 2 REPAYMENT: Principal shall be repayable on the Maturity Date. MATURITY DATE AND EXTENSION: a) Upon written notice from the Borrower to Bank, received no earlier than 60 days and no later than 30 days prior to the Maturity Date, the Borrower may request an extension of the facility for another period of 364 days and, provided no Event of Default or default which, with notice or the lapse of time would become an Event of Default, shall then have occurred and be continuing, if the Bank in its sole discretion agrees to such an extension, the extended Maturity Date shall be the date which is 364 days from the Maturity Date in effect prior to such extension, subject to the payment of such administrative fees and expenses as the Bank may require. b) Any extended Maturity Date may be extended for a further period of 364 days upon the Borrower's request, subject to the conditions set forth in paragraph (a) preceding, if the Bank, in its sole discretion, shall agree, provided, however, that no such extended Maturity Date shall be later than December 17th, 2004. c) Not in derogation but in furtherance of the Bank's sole discretion to agree to any such extension, no such extension shall be made unless there shall be a Letter of Credit in an amount and for a term at least coextensive with such extension. d) At the initial Maturity Date provided herein and on every Maturity Date as extended hereunder, the entire advance shall be due and payable in full together with accrued interest, fees and any other expenses hereunder unless extended; provided, if the Bank shall agree to any such extension, there shall be a mandatory prepayment on the last day of the Maturity Date prior to extension, in the amount which is the lesser of the amount set forth below for such Maturity Date and the entire amount then outstanding and due, as a condition to any such extension: Maturity Date 2000: C$ 500,000 Maturity Date 2001: C$1,000,000 Maturity date 2002: C$1,500,000 Maturity Date 2003: C$2,000,000 Maturity Date 2004: C$5,000,000 PREPAYMENT Any portion of the loan which bears interest based on floating rate may be prepaid upon five days' prior written notice to Bank; provided however, that the LIBOR advance may be prepaid only on an interest payment date and the Borrower shall compensate Bank for all losses, expenses and liabilities which Bank may sustain as the 3 result of any prepayment. Any portion of the advance prepaid may not to be reborrowed within the term hereof, including for this purpose, any extension in accordance with the terms hereof, unless the Bank shall otherwise agree in writing. INTEREST RATES AND FEES 1) PRIME / NY PRIME SPREAD: 0 bp LIBOR SPREAD: 50 bp per annum NY Prime Rate means the rate of interest per annum (based on a 365/366 day year) established by the Bank from time to time as the reference rate of interest for the determination of interest rates that the Bank charges to customers of varying degrees of creditworthiness for US dollar loans made by it in Canada. Prime Rate means the rate of interest per annum (based on a 365/366 day year) established and reported by the Bank to the Bank of Canada from time to time as the reference rate of interest for determination of interest rates that the Bank charges to customers of varying degrees of creditworthiness in Canada for Canadian dollar loans made by it in Canada. LIBOR means the rate of interest per annum (based on a 360 day year) as determined by the Bank (rounded upwards, if necessary to the nearest whole multiple of 1/16th of 1%) at which the Bank may make available United States dollars which are obtained by the Bank in the Interbank Euro Currency Market, London, England at approximately 11:00 a.m. (Toronto time) on the second business day before the first day of, and in an amount similar to, and for the period similar to the interest period of, such advance. Any interest rate based on a period less than a year expressed as an annual rate for the purposes of the Interest Act (Canada) is equivalent to such determined rate multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by the number of days in the period upon which it was based. INTEREST CALCULATION AND PAYMENT Interest on Prime Based Loans and NY Prime Based Loans is calculated daily and payable monthly in arrears based on the number of days which the loan is outstanding. 4 Interest on LIBOR Loans is calculated and payable on the earlier of contract maturity or quarterly in arrears, for the number of days in the LIBOR interest period. Interest is payable both before and after demand, default and judgment. DRAWDOWN: 1) As required upon satisfaction of conditions precedent, but no later than December 31st, 1999. PRIME RATE BASED LOANS AND/OR NEW YORK PRIME RATE BASED LOANS The minimum amount of drawdown by way of Prime Based Loans and/or NY Prime Based loans is $500,000. LIBOR The Borrower shall advise the Bank of the requested LIBOR contract maturity or interest period. The Bank shall have the discretion to restrict the LIBOR contract maturity. The minimum amount of a drawdown by way of a LIBOR loan is $1,000,000, and shall be in multiples of $500,000 thereafter. The Borrower will provide the Bank with 3 business days notice of a requested LIBOR Loan. The Borrower shall give the Bank in the case of LIBOR advances at least 3 business days irrevocable prior written notice in the form of a Request for advance; or telephonic notice immediately followed by a Request for advance; provided, however, that the Borrower's failure to confirm any telephonic notice with a Request for advance shall not invalidate any notice so given. TAXATION ON PAYMENTS All payments made by the Borrower to the Bank will be made free and clear of all present and future taxes (excluding the Bank's income taxes), withholdings or deductions of whatever nature. If these taxes, withholdings or deductions are required by applicable law and are made, the Borrower, shall as a separate and independent obligation pay to the Bank all such additional amounts as shall fully indemnify the Bank from any such taxes, withholding or deduction. SECURITY The following security shall be provided prior to first drawdown, and shall be acceptable to the Bank and its legal counsel: 5 Irrevocable and Unconditional Standby Letter of Credit in favor of the Bank as the beneficiary thereof for an amount of C$10,000,000 or its US$ equivalent, issued by a recognized financial institution satisfactory to the Bank in its sole discretion. The letter of Credit shall bear an initial term of no less than 364 days. If the Letter of Credit is issued in US dollars, to the extent, if any that at any time the Letter of Credit value is less than the equivalent amount of the facility due to fluctuations in the exchange rate by which such equivalence is determined (a "deficiency"), then upon demand by Bank: (1) Borrower shall immediately prepay the amount of the deficiency, or (2) deposit the amount of the deficiency with the Bank and grant it a security interest in the cash collateral, or (3) immediately increase the amount of the outstanding Letter of Credit, sufficient enough to satisfy the Bank. To ensure that there is appropriate coverage in favor of the Bank in the event of an adverse currency fluctuation between the US$ and CDN$, Genlyte Thomas Group LLC shall upon issuance of the LC, provide to the Bank a written undertaking to pay to the Bank on the date the Bank demands payment from the financial institution which issued the letter of credit, a sum equal to the difference, if any, between the proceeds received from the financial institution which issued the letter of credit and the then outstanding indebtedness owing by the Borrower to the Bank as expressed in CDN$. This undertaking shall remain in full force and effect so long as there exists any outstanding indebtedness owing to the Bank by the Borrower. (All of the above security shall be referred to collectively in this agreement as "Bank Security"). CONDITIONS PRECEDENT The obligation of the Bank to make and keep on its books any loan hereunder is subject to the following conditions precedent: a) The Bank shall have received the following documents which shall be in form and substance satisfactory to the Bank and its legal counsel: i) Copy of this Financing Agreement and the note, if any, each duly executed and delivered by the Borrower, with the Letter of Credit attached in form and substance satisfactory to the Bank and duly executed by an authorized officer of the issuer thereof; 6 ii) Certified copies of the Board resolutions authorizing the Borrower's borrowing hereunder and the execution, delivery and performance of this Financing Agreement and the note, if any; iii) Incumbency certificates showing the names, titles and signatures of the Borrower's officers authorized to execute and deliver this Financing Agreement and the note, if any, and otherwise to act with respect to this Financing Agreement and the note, if any; iv) A copy of The Genlyte Group Incorporated September 30th, 1999 quarterly financial statements, and related Genlyte Thomas Group LLC attachments, accompanied by a compliance certificate from the Chief Financial Officer of Genlyte Thomas Group LLC confirming that they are in compliance with the Credit Agreement dated August 30th, 1998 among Genlyte Thomas Group LLC and its Banking syndicate; v) A copy of the last Form 10-Q and 10-K for The Genlyte Group Incorporated and Thomas Industries Inc, respectively; vi) All of the Bank Security (including the guarantee of Genlyte Thomas Group LLC) and supporting resolutions and solicitors letter of opinion required hereunder; vii) Any other documents deemed necessary by the bank and its legal counsel; b) The Borrower has paid the Arrangement fees, Administration fees and all legal expenses incurred by the Bank in connection with this Financing and/or the Bank Security. c) No Event of Default have occurred. REPRESENTATIONS AND WARRANTIES The Borrower hereby represents and warrants, which representations and warranties shall be deemed to be continually repeated so long as any amounts remain outstanding and unpaid under this agreement or so long as the commitment under this Agreement remains in effect, that: a) The Borrower is a corporation duly incorporated and organized, validly existing and in good standing under the laws of Nova Scotia and has adequate corporate power and authority to carry on its business, own property, borrow monies and enter into agreements therefor, execute and deliver the documents required hereunder, and observe and perform the terms and provisions of this agreement. 7 b) There are no laws, statutes or regulations applicable to or binding upon the Borrower and no provisions in its Articles or in any by-laws, resolutions, contracts, agreements, or arrangements which would contravene, breach, default or violate the execution, delivery, performance, observance, of any terms of this Agreement. c) No Event of Default has occurred nor has any event occurred which, in time, would constitute an Event of Default under this Agreement or which would constitute a default under any other agreement. d) There are no actions, suits or proceedings, including appeals or applications for review, or any knowledge of pending actions etc., against the Borrower and its subsidiaries, before any court or administrative agency which would result in any material adverse change in the property, assets, financial conditions, and business or operations of the Borrower. e) All material authorizations, approvals, consents, licenses, exemptions, filings, registrations, notarizations and other requirements of governmental, judicial and public bodies and authorities required reasonably necessary to carry on its business have been or will be obtained or effected and are or will be in full force and effect. f) The financial statements delivered to the Bank fairly present the present financial position of the Borrower and Genlyte Thomas Group LLC, and have been prepared by their auditors in accordance with Generally Accepted Accounting Principles. g) All the remittances required to be made by the Borrower to the federal, provincial and municipal governments have been made, are currently up to date and there are no outstanding arrears. Without limiting the foregoing, all employee deductions (including Income Taxes, Unemployment, insurance and Canada Pension Plan), sales taxes (both provincial and federal), corporate income taxes, payroll taxes and workmen's compensation dues are currently paid and up to date. POSITIVE COVENANTS As long as any loans or commitment of the Bank remain outstanding, the Borrower will: a) Cause to be paid all amounts, interest and fees on the dates, times and place specified herein or under any other agreement between the Bank and the Borrower. 8 b) Cause The Genlyte Group Incorporated to provide quarterly audited consolidated financial statements and annual audited consolidated financial statements within 60 and 120 days of each respective period and related Genlyte Thomas Group LLC attachments, accompanied by a compliance certificate from the Chief Financial Officer confirming that all terms and conditions are in compliance with this Agreement and that no event has occurred that is, or with the passing of time may become, an Event of Default under this Agreement or a default under any other agreement. c) Provide the Bank with information and financial data as it may reasonably request from time to time. d) The Borrower agrees that in the event it provides any security interest, assignment or other interest in any of its assets or more favorable covenants and/or pricing to any other secured party or secured lender, that it shall provide equal ranking and equal value security over such assets and covenants and/or pricing to the Bank. EVENTS OF DEFAULT The Bank has the right to accelerate the payment of principal and accrued interest under the facility, and to cancel any undrawn portion of the facility hereunder, at any time after the occurrence of any one of the following Events of Default: a) The failure of the Borrower to provide to the Bank the irrevocable and unconditional standby letter of credit as referred to under the heading "Security". b) Nonpayment of principal when due or nonpayment of interest or fees within 3 business days of when due or when demanded. c) The failure of the Borrower and/or Genlyte Thomas Group LLC to fulfill any of the terms and conditions contained in this agreement or any security document(s) or any other agreement with the Bank and such default continues unremedied for five (5) business days after the occurrence. d) The Borrower or Genlyte Thomas Group LLC become insolvent or bankrupt. e) Any representation or warranty is inaccurate in any material respect. f) The Borrower (i) has an order for relief entered with respect to it under Canadian or United States bankruptcy laws or any other law, domestic 9 or foreign, relating to bankruptcy, insolvency or reorganization or relief of debtors as now or hereafter in effect, (ii) makes an assignment for the benefit of creditors, (iii) applies for, seeks, consents to, or acquiesces in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any material part of its property, (iv) institutes any proceeding seeking an order for relief under Canadian or United States bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, disestablishment, liquidation, reorganization, arrangement, adjustment or composition of it or suspension of its general operations under the law, domestic or foreign, relating to bankruptcy, insolvency or reorganization or relief of debtors or fails to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (v) takes any company action to authorize or effect any of the foregoing actions set forth in this paragraph (e); (vi) fails to contest in good faith any appointment or proceeding described in the following paragraph (f); or (vii) does not pay, or admits in writing its inability to pay, its debts generally as they become due; g) Without application, approval or consent of the Borrower, a receiver, trustee, examiner, liquidator or similar official is appointed for the Borrower or any material part of its property, or any of the proceeding described above is to be instituted against the Borrower and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 60 consecutive days; or h) Any court, government or governmental agency condemns, seizes or otherwise appropriates, or takes custody or control of, all or any substantial portion of the property of the Borrower; then, at any time during the existence of such event, the Bank may, by notice to the Borrower or, in the case of events under paragraph (f), (g) or (h), automatically without notice, terminate the Facility and/or declare the advance and all other amount owing under this agreement to be immediately due and payable without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived. NON-WAIVER Should there be a breach of or non-compliance with any term or condition hereof, or should an Event of Default occur, the Bank may at its option exercise any rights or remedies it may have hereunder or which may be available to it and the failure of the Bank to exercise any such rights or remedies shall not be deemed to be a waiver of such term or condition and will not prevent the Bank from exercising such rights and remedies pursuant to that default or subsequent defaults at any later time. 10 REPRESENTATIONS No representation or warranty or other statement made by the Bank concerning the credit shall be binding on the Bank unless made by it in writing as a specific amendment to this letter. ADDED COST If the introduction of or any change in any present or future law, regulation, treaty, official or unofficial directive, or regulatory requirement, (whether or not having the force of law) or in the interpretation or application thereof, relates to: i) the imposition or exemption of payments due to the Bank or on reserves or deemed reserves in respect of the undrawn portion of any loan made available hereunder; or, ii) any reserve, special deposit, regulatory or similar requirement against assets, deposits, or loans or other acquisition of funds for loans by the Bank; or, iii) the amount of capital required or expected to be maintained by the Bank as a result of the existence of the advances or the commitment made hereunder; and the result of such occurrence is, in the sole determination of the Bank, to increase the cost of the Bank or to reduce the income received by the Bank hereunder, the Borrower shall, on demand by the Bank, pay to the Bank that amount which the Bank estimates will compensate it for such additional cost or reduction in income and the Bank's estimate shall be conclusive, absent manifest error. YEAR 2000 REPRESENTATION 1) The Borrower and Genlyte Thomas Group LLC shall use commercially reasonable efforts to ensure that the borrower's products, business systems and revenue generating systems (the "Systems") are Year 2000 compliant (as defined below) as soon as reasonably practicable. Upon reasonable request by the Bank, Borrower shall provide documentation relating to or evidencing such Year 2000 Compliance. 2) The Borrower and Genlyte Thomas Group LLC shall test the Systems for Year 2000 Compliance and shall provide the Bank with the opportunity to review test results at such date or dates to be mutually agreed by the Bank and Borrower. 3) The Borrower and Genlyte Thomas Group LLC has taken the reasonable steps to ensure to its satisfaction that third party suppliers, subcontractors, agents of Borrower are Year 2000 Compliant. 11 "Year 2000 Compliant" or "Year 2000 Compliance" means the Systems will: a) process, calculate, accept, maintain, store and output date and time data accurately and without delay, interruption or error at all times from, into and between the Twentieth and twenty-first centuries and in particular during the years 1999 and 2000, including the leap year calculations; and b) function accurately and without interruption at all times before, on and after January 1, 2000 (including through February 29, 2000) without any change in operations associated with the advent of 1999 or the twenty-first century. EXPENSES The Borrower shall pay all reasonable fees (including but not limited to all legal and documentation fees) and expenses incurred by the Bank or the Borrower in connection with the preparation and registration of this Agreement and Bank Security and with the enforcement of the Bank's rights under this Agreement or the Bank Security, whether or not any amounts are advanced under the Agreement. These fees and expenses shall include, but not be limited, to all outside counsel expenses and all in-house legal expenses, if in-house counsel are used. The Borrower shall pay interest on unpaid amounts due pursuant to this paragraph at the Prime Rate plus 2% per annum. ARRANGEMENT FEE Upon initial drawdown, the Borrower will pay prior to any drawdown a non-refundable arrangement fee of $35,000 (35 basis points). ADMINISTRATION FEE Upon initial drawdown, the Borrower will pay an administration fee of $25,000. ANNUAL REVIEW FEE For the next year and thereafter, the Borrower will pay an annual review fee of $10,000 for the Bank to consider the Borrower's request for an extension of the Maturity Date. Should the review involve any material change in the general terms and conditions of the loan, then this fee could be renegotiated. INDEMNITY The Borrower shall indemnify and hold harmless the Bank for all costs, expenses and liabilities in connection with this credit including the prepayment of any LIBOR loan prior to the last day of the interest period applicable to such LIBOR loan. EVIDENCE OF INDEBTEDNESS The Bank shall record on its records the amount of all loans made hereunder, payments made in respect thereto, and all other amounts becoming due to the Bank under this Agreement. The Bank's records 12 constitute, in the absence of manifest error, conclusive evidence of the indebtedness of the Borrower to the Bank pursuant to this Agreement. PROMISSORY NOTE The Bank may request that loan made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to the Bank a promissory note payable to the order of the Bank (or, if requested by the Bank, to its assigns) and in a form approved by the Bank. OTHER AGREEMENTS The Borrower acknowledges that it will sign other Bank documents relating to the credit facility made available hereunder, including without limitation, the commercial term loan note, and that the terms and conditions contained in such other documents shall be deemed to be incorporated herein by reference and shall also apply to the credit facility. ASSIGNMENT The Bank may assign or grant participation in all or part of this Agreement or in any loan made hereunder to any Canadian financial institution with the Borrower's prior consent, which shall not be withheld unreasonably. The Borrower may not assign or transfer all or any part of its rights or obligations under this Agreement. LANGUAGE PREFERENCE This Agreement has been drawn up in the English language at the request of all parties. (Cet acte a ete redige en langue anglaise a la demande de toutes les parties). SUBMISSION TO JURISDICTION For purposes of any suit, action or proceeding involving this Financing Agreement, any note or any other document or instrument contemplated hereby or required hereunder or any judgment entered by any court in respect of such suit, action or proceeding, the Borrower expressly submits to the non-exclusive jurisdiction of any state or U.S. Federal court sitting in the borough of Manhattan in the city of New York and agrees that any order, process or other paper may be served upon the Borrower within or without such court's jurisdiction by mailing a copy to the Borrower at the Borrower's address for notices provided in this Financing Agreement, provided that a reasonable time for appearance is allowed. The Borrower irrevocably waives any objection it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Financing Agreement or any other credit document brought in any such court and further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. 13 Nothing contained in this Financing Agreement or any other document shall affect the Bank's right to serve legal process in any other manner permitted by law to bring any action or proceeding against the Borrower or the Borrower's property in the courts of other jurisdictions. WAIVER OF JURY TRIAL The Borrower and the Bank hereby knowingly, voluntarily and intentionally waive any right to trial by jury in any judicial proceeding involving, directly or indirectly, any matter (whether sounding in tort, contract or otherwise) in any way arising out of, related to or connected with any credit document or the relationship established thereunder and agree that any such proceeding shall be tried before a judge sitting without a jury. SEVERABILITY If any provision of this Financing Agreement is or becomes prohibited or unenforceable in any jurisdiction, such prohibition or unenforceability shall not invalidate or render unenforceable the provision concerned in any other jurisdiction nor invalidate, affect or impair any of the remaining provisions hereof. We trust you will find this facility helpful in meeting your ongoing financing requirements. We ask that if you wish to accept this offer of financing please do so by signing and returning the attached duplicate copy of this letter to the undersigned. This offer will expire if not accepted in writing and received by the Bank on or before December 20th, 1999. Yours truly, Sylvie Demers Normand Belcourt Relationship Manager Manager, Commercial Credit TD New York Branch 14 TO THE TORONTO-DOMINION BANK: Genlyte Thomas Group Nova Scotia ULC hereby accepts the foregoing offer this 22nd day of December , 1999. - ---- -------- Genlyte Thomas Group Nova Scotia ULC Per: Terry L. Lange - Treasurer -------------------------- Per: William G. Ferko - VP & CFO --------------------------- EX-10.C 4 EXHIBIT 10(C) ROYAL BANK OF CANADA U.S.A. Headquarters 1 Liberty Plaza New York, N.Y. 10006-1404 Tel.: (212) 428-6200 as of December 22, 1999 Genlyte Thomas Group Nova Scotia ULC 4360 Brownsboro Road, Suite 300 P.O. Box 35120 Louisville, KY 40232 Attention: Mr. Terry Lange Ladies and Gentlemen: Royal Bank of Canada (the "BANK") is pleased to offer to Genlyte Thomas Group Nova Scotia ULC (the "BORROWER") on the terms and conditions set forth herein an Advance (as defined below) in Canadian or U.S. Dollars (as the Borrower shall request) in a principal amount not to exceed C$10,000,000 or the Equivalent Amount (as defined below) in U.S. Dollars. Defined terms not otherwise defined in this letter agreement (the "AGREEMENT") shall have the meanings provided in Annex A attached hereto and made a part hereof. 1. THE ADVANCE (a) Upon satisfaction of the conditions below, Borrower may, upon notice as set forth below, request, on or after December 22, 1999, a single advance hereunder in such currency as Borrower shall request (which may be either Canadian Dollars or U.S. Dollars) for an amount not to exceed C$10,000,000 or the Equivalent Amount in U.S. Dollars (the "ADVANCE"). As between Canadian and U.S. Dollars, the currency in which the Advance is funded is the "CURRENCY" and the currency in which the Advance is not funded is the "OTHER CURRENCY." There shall be no conversion of the Advance from the Currency to the Other Currency during the term of this Agreement. (b) The interest rate basis for the Advance may be converted or continued from time to time based on Libor or the Prime Rate applicable to the Currency. At such time as interest is based on the applicable Libor rate, the Advance shall be referred to as the Libor Advance and, at such time as interest is based on the applicable Prime Rate, the Advance shall be referred to as the Prime Rate Advance; PROVIDED, HOWEVER, any such characterization shall always constitute but one and the same Advance hereunder in the Currency. If Libor is selected and no Interest Period is specified, Borrower will be deemed to have Genlyte Thomas Group Nova Scotia ULC Page 2 December 22, 1999 requested an Interest Period of one month. If no interest rate basis is specified, Borrower will be deemed to have requested a Prime Rate Advance. The principal amount of the Advance at any time that it shall be a Libor Advance shall be no less than C$500,000 or larger whole multiples of C$100,000 for the Advance in Canadian Dollars and US$500,000 or larger whole multiples of US$100,000 for the Advance in U.S. Dollars. 2. PURPOSE Borrower will use the Advance to repay a portion of one or more loans made by the Toronto Dominion Bank to Borrower, originally for the purpose of the acquisition by Borrower of Ledalite Architectural Products Inc. 3. AVAILABILITY The Advance shall be drawn on a Business Day (as defined below) no later than December 31, 1999 and shall mature on the date which is 364 days thereafter (the "MATURITY DATE"), unless otherwise extended at the sole discretion of Bank, as herein provided. 4. NOTICE OF BORROWING OR CONVERSION Notice of the date on which the Advance shall be made, the Currency requested, the amount to be borrowed, the interest rate basis and, for Libor Advance, the Interest Period, shall be given by Borrower to Bank in accordance with the applicable provisions of Schedule A attached hereto and made a part hereof. Conversions to a different interest rate basis may be made upon notice as provided in such Schedule; PROVIDED, HOWEVER, in no case shall any Interest Period extend beyond the Maturity Date. 5. REPAYMENT The Advance shall be payable in full, together with all accrued interest thereon not previously paid and any other fees or expenses due hereunder on the Maturity Date. All amounts payable and due from the Borrower pursuant to this Agreement shall be paid in immediately available funds in the Currency. If a day on which an amount is due is not a Business Day, such amount shall be deemed for all purposes of this Agreement to be due on next following Business Day unless such next following Business Day is in the next calendar month in which event such amount shall be due on the Business Day next preceding, and all interest and other fees shall continue to accrue until payment. Interest and fees payable under this Agreement are payable both before and after any or all of default, demand and judgment. Genlyte Thomas Group Nova Scotia ULC Page 3 December 22, 1999 6. INTEREST RATES AND FEES (a) The following rates of interest and fees shall apply: (1) For the Advance in Canadian Dollars: Prime Advance - RBP Libor Advance - Canadian Libor + 0.50% per annum (2) For the Advance in U.S. Dollars: Prime Advance - RBUSBR Libor Advance - U.S. Libor + 0.50% per annum (b) Upon Borrower's acceptance of this Agreement, Borrower shall pay Bank an arrangement fee of Cdn$25,000. (c) If Borrower shall request an extension of the Advance in accordance with Section 13 hereof and if Bank, in its sole discretion, shall agree to such an extension, then, on and at the effective date of such extension, Borrower shall pay to Bank an extension fee of Cdn$10,000. 7. INTEREST PAYMENT AND CALCULATION (a) PRIME ADVANCE Interest on the Prime Advance will accrue daily on the basis of a year of 365 days and will be calculated, payable and compounded monthly on such day of the month as the Bank shall specify. Any change in RBP or RBUSBR shall be effective as of the opening of business on the day such change takes place. (b) LIBOR ADVANCE For the Libor Advance, interest or fees, as applicable, will be calculated and payable in the manner set forth in Schedule A attached hereto and made a part hereof. Genlyte Thomas Group Nova Scotia ULC Page 4 December 22, 1999 (c) INTEREST ACT (CANADA) The annual rates of interest or fees to which the rates calculated in accordance with this Agreement are equivalent are the rates so calculated multiplied by the actual number of days in the calendar year in which such calculation is made and divided by 365 or, in the case of the Libor Advance, 360. In no event will interest exceed the rate permitted by law. Interest will be calculated on the basis of a 365-day year and actual days elapsed, and payable quarterly in arrears on the last Business Day of each March, June, September and December following the Advance, and on the Maturity Date. The annual rates of interest to which the rates calculated in accordance with this Agreement are equivalent, are the rates so calculated multiplied by the actual number of days in the calendar year in which such calculation is made and divided by 365. The Borrower shall not be obligated to pay any interest under or in connection with this letter agreement to the extent such interest exceeds the effective annual rate of interest on the credit advanced hereunder that would be lawfully permitted under the CRIMINAL CODE. For purposes of this section, "interest" and "credit advanced" have the meanings ascribed to such terms in the CRIMINAL CODE (Canada) and the "effective annual rate of interest" shall be calculated in accordance with generally accepted actuarial practices and principles. 8. PREPAYMENT The Advance may be prepaid in whole or in part upon five days' prior written notice to Bank; PROVIDED, HOWEVER, that the Libor Advance may be prepaid only on an Interest Payment Date and the Borrower shall compensate Bank for all losses, expenses and liabilities which Bank may sustain as the result of any prepayment. Each prepayment shall be accompanied by payment of interest accrued on the amount prepaid to the date of prepayment and shall be made in immediately available funds in the Currency. Any portion of the Advance prepaid may not be reborrowed within the term hereof, including for this purpose, any extension in accordance with the terms hereof, unless the Bank shall otherwise agree in writing. 9. EVIDENCE OF INDEBTEDNESS (a) The Bank shall maintain on its records, accounts evidencing the Borrower's liability to the Bank in respect of principal of and interest on the Advance and all other amounts payable under this letter agreement. The Bank's accounts shall constitute, in the absence of manifest error, PRIMA FACIE evidence of the indebtedness of the Borrower to the Bank pursuant to this Agreement. (b) If the Advance is made in U.S. Dollars, it shall be evidenced by a promissory note of the Borrower in form and substance satisfactory to the Bank, in its sole discretion (the "Note"). Genlyte Thomas Group Nova Scotia ULC Page 5 December 22, 1999 10. INDEMNIFICATION AND INCREASED COSTS (a) If any payment of the Libor Advance occurs on a date that is not the last day of the applicable Interest Period, whether because of acceleration, mandatory prepayment or otherwise, or the Libor Advance is not made or converted or continued on the date specified by the Borrower for any reason other than default by the Bank, the Borrower will indemnify the Bank for any loss or cost incurred by it resulting therefrom, including (but not limited to) any loss or cost in liquidating or employing deposits acquired to fund or maintain such Libor Advance. The Bank's written statement as to the amount of any such loss (such statement to set forth in reasonable detail the manner in which such amount was calculated) will be conclusive, absent manifest error. (b) If the Bank's cost of making or maintaining the Advance is increased, any amount received or receivable by the Bank hereunder is reduced or the rate of return on the Bank's capital in respect of the Advance is reduced by an amount deemed by the Bank to be material, by reason of any tax not in effect on the date hereof (other than any increase in the rate of tax on the net income, gains or profits of the Bank), any reserve or capital adequacy requirement, liquidity ratio, special deposit requirement or otherwise, then the Borrower shall either (i) promptly pay the Bank, on demand, any additional amounts necessary to compensate the Bank for such additional cost or reduced amount received or receivable or reduction in rate of return with respect to the Advance or (ii) promptly prepay the outstanding amount of the Advance as provided in this Agreement, together with such additional amounts for the period up to such prepayment. The Bank's written statement as to the amount of any such cost, loss or requirement (such statement to set forth in reasonable detail the manner in which such amount was calculated) will be conclusive, absent manifest error. (c) If the Bank determines that the making or maintenance of the Libor Advance would violate any applicable law, rule, regulation or directive, whether or not having the force of law, or if the Bank determines that funds of a type and maturity appropriate to match fund a requested conversion to or continuation of the Libor Advance are not available, then the availability of the Libor Advance shall be suspended and the Advance shall be converted to or continued as the Prime Advance at the end of the then current Interest Period therefor or at such earlier time as may be required by applicable law, rule, regulation or directive. The Bank's written statement as to the such circumstances or requirements (such statement to set forth in reasonable detail the manner in which such amount was calculated) will be conclusive, absent manifest error. Genlyte Thomas Group Nova Scotia ULC Page 6 December 22, 1999 11. TAXES Payments of all amounts to the Bank hereunder shall be made free and clear of, and without deduction for, any present or future taxes, levies, imposts, duties or withholding charges imposed by any governmental authority in any jurisdiction or political subdivision or taxing authority therein( any such taxes, levies, imposts, duties, withholding charges, collectively, "TAXES"). If any such Taxes, withholdings or deductions are required by Applicable Law to be made and are made, the Borrower shall, as a separate and independent obligation, pay to the Bank all such additional amounts as shall fully indemnify the Bank from, and hold the Bank harmless against, any such Taxes, withholding or deduction. 12. LETTER OF CREDIT AND GUARANTY (a) Borrower shall provide an Irrevocable Standby Letter of Credit in favor of Bank as the beneficiary thereof for a face amount (the "LETTER OF CREDIT AMOUNT") at least equal to the Advance, issued by a recognized financial institution satisfactory to the Bank in its sole discretion, having a term of at least 364-days from the date of the Advance with such provisions for renewal, if any, as Bank may agree to (the "LETTER OF CREDIT"). (b) The Letter of Credit may be issued in the Currency or the Other Currency. (c) The Letter of Credit shall be in substantially a form submitted to the Bank for approval and approved by the Bank, in its sole discretion , executed and delivered by the issuing bank on or prior to the date of the Advance and shall be attached hereto and made a part hereof. (d) If the Letter of Credit is issued in the Other Currency, to the extent, if any that at any time the Letter of Credit Amount is less than the Equivalent Amount of the Advance due to fluctuations in the exchange rate by which such equivalence is determined (a "DEFICIENCY"), upon demand by Bank: (1) Borrower shall immediately prepay the Advance in the amount of such Deficiency; (2) deposit with the Bank and grant to the Bank a security interest in cash collateral in the Currency in the amount of the Deficiency; or Genlyte Thomas Group Nova Scotia ULC Page 7 December 22, 1999 (3) cause the Letter of Credit immediately to be increased in an amount at least equal to the Deficiency plus any such additional amount which Bank shall reasonably request to cover reasonably foreseeable adverse fluctuations in the exchange rate at the time of such increase and to avoid the need for subsequent repeated increases. (The Letter of Credit so increased shall be the Letter of Credit hereunder as and from the date of such increase and any subsequent Deficiency in respect of such Letter of Credit shall, accordingly, be subject to this Section 12.) (e) Further to protect Bank against any such adverse currency fluctuation, Borrower shall cause Genlyte Thomas Group LLC (the "GUARANTOR") to deliver to Bank, and it shall be a condition to the effectiveness hereof that the Guarantor shall so deliver, concurrent with the execution and delivery hereof by Borrower, a written guaranty (the "GUARANTY") in form and substance satisfactory to Bank which guarantees payment of the Deficiency to the Bank by the Guarantor on the date of any drawing under the Letter of Credit, notwithstanding whether Bank shall have made any demand upon Borrower pursuant to paragraph (d) preceding. 13. EXTENSION (a) Upon written notice from Borrower to Bank, received no earlier than 60 days and no later than 30 days prior to the Maturity Date, Borrower may request an extension of the Advance (in the Currency only) for another period of 364-days and, PROVIDED no Event of Default or default which, with notice or the lapse of time would become an Event of Default, shall then have occurred and be continuing, if the Bank in its sole discretion agrees to such an extension, the extended Maturity Date shall be the date which is 364 days from the Maturity Date in effect prior to such extension, subject to the payment of such administrative fees and expenses as Bank may require. For the avoidance of all doubt, it is hereby confirmed, acknowledged and agreed by Borrower that the Bank shall have entire and sole discretion at the time of any extension request as provided herein to agree or not to agree to such extension and upon such additional or different terms and conditions as Bank may deem appropriate at such time and under such circumstances, notwithstanding anything to the contrary herein or otherwise. (b) Any extended Maturity Date may be extended for a further period of 364 days upon the Borrower's request, subject to the conditions set forth in paragraph (a) preceding, if the Bank, in its sole discretion, shall agree; PROVIDED, HOWEVER, that no such extended Maturity Date shall be later than 6 days prior to the anniversary of the initial Maturity Date in the year 2004. (c) Not in derogation but in furtherance of the Bank's sole discretion to agree to any such extension, no such extension shall be made unless there shall be a Letter of Credit in an amount and for a term at least coextensive with such extension. Genlyte Thomas Group Nova Scotia ULC Page 8 December 22, 1999 (d) At the initial Maturity Date provided herein and on every Maturity Date as extended hereunder, the entire Advance shall be due and payable in full together with accrued interest, fees and any other expenses hereunder unless extended; PROVIDED, if the Bank shall agree to any such extension, there shall be a mandatory prepayment on the Maturity Date prior to extension, in the amount which is the lesser of the amount set forth below for such Maturity Date and the entire amount then outstanding and due, as a condition to any such extension: Maturity Date 2000: C$ 500,000 Maturity Date 2001: C$1,000,000 Maturity Date 2002: C$1,500,000 Maturity Date 2003: C$2,000,000 Maturity Date 2004: C$5,000,000 14. CONDITIONS PRECEDENT The Bank's obligation to fund the Advance is subject at the time of such funding to the following conditions: (a) The Bank shall have received: (1) This Agreement and, if the Advance is requested to be made in U.S. Dollars, the Note, each duly executed and delivered by Borrower, and the Letter of Credit in form and substance satisfactory to the Bank, duly executed by an authorized officer of the issuer thereof; (2) The Guaranty, duly executed and delivered by the Guarantor; (3) Certified copies of Board resolutions authorizing the Borrower's borrowing hereunder and the execution, delivery and performance of this Agreement and the Note, if any, and certified copies of Board resolutions of the Guarantor authorizing the Guarantor's Guaranty as provided herein and therein; (4) Incumbency certificates showing the names, titles and signatures of the Borrower's officers authorized to execute and deliver this Agreement and the Note, if any, and otherwise to act with respect to this Agreement and the Note, if any, and incumbency certificates showing the names, titles and signatures of Guarantor's officers authorized to execute and deliver the Guaranty; (5) An opinion of counsel to the Borrower, in form and substance satisfactory to the Bank; Genlyte Thomas Group Nova Scotia ULC Page 9 December 22, 1999 (6) A copy of the Genlyte Group Incorporated financial statements for the latest fiscal quarter and related Genlyte Thomas Group LLC attachments, accompanied by a compliance certificate from the Chief Financial Officer of Genlyte Thomas Group LLC confirming that all terms and conditions are in compliance with the Credit Agreement dated August 30, 1998 by and among Genlyte Thomas Group LLC and the Banks named therein and Bank of America National Trust and Savings Association, as Agent and Issuing Bank (as amended, modified or supplemented); (7) A copy of the latest Forms 10-Q and 10-K for The Genlyte Group Incorporated and Thomas Industries Inc., respectively; (8) Such other documents, instruments, opinions or assurances as the Bank may require; and (9) Payment of the administrative fee provided herein and all legal expenses incurred by the Bank in connection with this Agreement, the Note, if any, the Letter of Credit, the Guaranty or any related matters contemplated hereby. (b) At the time the Borrower requests the Advance, upon acceptance of the proceeds and after giving effect thereto, there shall exist no Event of Default (as specified below) and no condition or event that, with or without the giving of notice or lapse of time or both, would become an Event of Default, and all representations and warranties made herein shall be true and correct with the same effect as though made on and as of such date. 15. REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants to the Bank as of the date hereof, the date on which the Advance is made, any date on which an extension is requested hereunder and any date on which such extension is made, that: (a) Borrower is a corporation, duly incorporated and organized, validly existing and in good standing under the laws of Nova Scotia, has adequate corporate power and authority to carry on its business, own property, borrow monies and enter into agreements therefor, executed and deliver this Agreement and any other document or instrument required hereunder or contemplated hereby, observe and perform the terms and conditions of this Agreement and that it is duly registered or qualified to carry on business in all jurisdictions where the nature of its properties, assets or business makes such registration or qualification necessary or desirable. Genlyte Thomas Group Nova Scotia ULC Page 10 December 22, 1999 (b) The execution, delivery and performance of this Agreement have been duly authorized by all necessary actions, this Agreement has been duly executed by Borrower and such execution, delivery and performance do not and will not (i) violate any law, regulation or rule by which it is bound, (ii) violate any provision of its charter documents, by-laws or any shareholders' agreement to which it is subject, (iii) contravene or result in a breach of, or a default under, any agreement or instrument to which it is a party or by which it or any of its properties or assets may be bound or affected or (iv) result in the creation of any encumbrance on any of its properties or assets. (c) Subject to applicable bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors' rights generally, and to the equitable and statutory powers of courts to stay proceedings before them and to stay the execution of judgments, this Agreement constitutes a legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms. (d) The most recent audited, consolidated financial statements of Borrower and Genlyte Thomas Group LLC delivered to the Bank fairly present in conformity with GAAP the consolidated financial position of the Borrower and Genlyte Thomas Group LLC as of the date thereof and the consolidated results of operations and cash flows for the fiscal year covered thereby, and since the date of such financial statements there has occurred no material adverse change in the business or financial condition of the Borrower or Genlyte Thomas Group LLC. (e) Borrower is in compliance in every material respect with all Applicable Laws, including, without limitation, all Environmental Laws and there are no actions, suits or proceedings, initiated or threatened, against the Borrower and its subsidiaries, before any court or administrative agency or otherwise which would result in any material adverse effect on the property, assets, financial condition and business or operations of the Borrower. (f) No event has occurred which constitutes, or which with giving of notice, lapse of time or other condition would constitute, a default having a material adverse effect on the financial condition of the Borrower under or in respect of any agreement, undertaking or instrument to which the Borrower is a party or to which the Borrower or any of its properties or assets may be subject. (g) All material authorizations, approvals, consents, licenses, exemptions, filings, registrations, notarizations and other requirements of governmental, judicial and public bodies and authorities required to carry on Borrower's business have been obtained or effected and will, as such requirements arise in the future, be obtained and effected and are or will be, respectively, in full force and effect. Genlyte Thomas Group Nova Scotia ULC Page 11 December 22, 1999 (h) All payments required to be made by Borrower to any taxing or regulating governmental authority in respect of taxes, fees, licenses or other payments have been paid and there are no outstanding arrears. Without limiting the foregoing, all employee deductions (including income taxes, unemployment insurance and Canada Pension Plan), sales taxes (provincial, state or federal), corporate income taxes in any jurisdiction, payroll taxes and worker's compensation are fully and currently paid. (i) All remittances required to be made by the Borrower to any federal, provincial or state and municipal governments have been made, are currently up to date and there are no outstanding arrears. Without limiting the foregoing, all employee deductions (including income taxes, unemployment, insurance and Canada Pension Plan, sales taxes (provincial, state or federal), corporate income taxes, payroll taxes and worker's compensation amounts due are currently paid and up to date. (j) The Borrower and Genlyte Thomas Group LLC have used and shall continue to use commercially reasonable practices and judgment to ensure that the Borrower's products, business systems and revenue generating systems (the "SYSTEMS") are "Year 2000 Compliant" as defined below. Upon request by Bank, Borrower shall provide documentation relating to or evidencing such Year 2000 Compliance. The Borrower and Genlyte Thomas Group LLC have each taken, and will continue to take as necessary, reasonable steps to ensure to the satisfaction of each that third party suppliers, subcontractors, or Agents of either of them are Year 2000 Compliant. "YEAR 2000 COMPLIANT" or "YEAR 2000 COMPLIANCE" means the Systems will process, calculate, accept, maintain, store and produce date and time data and data dependent thereon accurately and without delay, interruption or error at all times from, the date of this Agreement forward for so long as this Agreement shall be in effect, including without limitation, for dates before, on and after January 1, 2000, including leap year calculations, and will function accurately and with out interruption at all times before, on and after January 1, 2000 (including through February 29, 2000) without any adverse change in operations associated with the advent of the year 2000. 16. COVENANTS The Borrower agrees that, until all obligations to the Bank hereunder are paid in full, the Borrower will: (a) Pay when due all amounts owing under this Agreement. Genlyte Thomas Group Nova Scotia ULC Page 12 December 22, 1999 (b) Furnish to the Bank not later than 120 days after the close of each of its fiscal years, and within 60 days of the close of each fiscal quarter, copies of annual audited and quarterly audited, consolidated financial statements for such period and related Genlyte Thomas Group LLC attachments, prepared in accordance with generally accepted accounting principles, reported on by the Borrower's independent certified public accountants, together with a compliance certificate from the Chief Financial Officer confirming that all terms and conditions are in compliance with this Agreement and that no even has occurred that is, or with the passing of time may become, an Event of Default hereunder or a default under any other agreement. (c) Provide the Bank with any information and financial data as it may reasonably request from time to time. (d) Promptly give notice to the Borrower of the existence of any condition or the occurrence of any event or act that, with or without the giving of notice or lapse of time, or both, would constitute an Event of Default. (e) In the event, after the date hereof, Borrower grants any security interest, or otherwise pledges, assigns or transfers property or rights in any of its assets as security to, or agrees to covenants or pricing more favorable than provided herein with, any other lender or secured creditor, grant, pledge, assign or transfer an interest in such property or rights or in property and rights equivalent in value at such time to such property and rights (up to the U.S. Dollar Equivalent Amount of the obligations of Borrower hereunder), or otherwise amend this Agreement to provide for covenants or pricing, in any case ranking at least equal and PARI PASSU to such interests in favor of such other lenders or secured creditors. 17. EVENTS OF DEFAULT If any of the following events occurs: (a) any principal (including any prepayment) of the Advance, any interest on the Advance, or any other amount due hereunder is not paid when due and such failure continues for three Business Days; (b) the Borrower defaults in the due performance or observance of any other term, covenant or agreement to be performed or observed by it contained herein and such default, if capable of cure, is not cured within 30 Business Days after the Borrower's receipt of notice thereof; Genlyte Thomas Group Nova Scotia ULC Page 13 December 22, 1999 (c) any representation made herein or in any document or financial or other statement delivered in connection herewith proves to have been incorrect or misleading in any material respect as of the date at which it was made or deemed to be made and such representation shall be material at the time it shall have been determined to have been false or incorrect; or (d) any default or similar event occurs or condition exists that would permit and in fact causes the Bank to declare immediately due and payable, or the Borrower or the Guarantor fails to pay at its stated maturity, any amount owed to the Bank by the Borrower or the Guarantor under any other loan or credit agreement; (e) the Letter of Credit is terminated or the rating of the issuer thereof changes unfavorably, in the Bank's opinion, or the Guaranty ceases to be in full force and effect, enforceable in accordance with its terms against the Guarantor; (f) Borrower (i) has an order for relief entered with respect to it under Canadian or United States bankruptcy laws or any other law, domestic or foreign, relating to bankruptcy, insolvency or reorganization or relief of debtors as now or hereafter in effect, (ii) makes an assignment for the benefit of creditors, (iii) applies for, seeks, consents to, or acquiesces in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any material part of its property, (iv) institutes any proceeding seeking an order for relief under Canadian or United States bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, disestablishment, liquidation, reorganization, arrangement, adjustment or composition of it or its debts or suspension of its general operations under any law, domestic or foreign, relating to bankruptcy, insolvency or reorganization or relief of debtors or fails to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (v) takes any company action to authorize or effect any of the foregoing actions set forth in this paragraph (e); (vi) fails to contest in good faith any appointment or proceeding described in the following paragraph (f); or (vii) does not pay, or admits in writing its inability to pay, its debts generally as they become due; (g) without application, approval or consent of the Borrower, a receiver, trustee, examiner, liquidator or similar official is appointed for the Borrower or any material part of its property, or a proceeding described in the preceding paragraph (f) is be instituted against the Borrower and such appointment continues undischarged or such proceeding continues without being dismissed or is unstayed for a period of 60 consecutive days; or (h) any court, government or governmental agency condemns, seizes or otherwise appropriates, or takes custody or control of, all or any substantial portion of the property of the Borrower; Genlyte Thomas Group Nova Scotia ULC Page 14 December 22, 1999 then, at any time during the existence of such event, the Bank may, by notice to the Borrower or, in the case of events under paragraphs (f), (g) or (h), automatically without notice, terminate the Agreement and the obligations of the Bank hereunder and/or declare the Advance and all other amounts owing under this Agreement to be immediately due and payable without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived. 18. NOTICES Except as otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be in writing and shall be deemed to have been duly given or made five Business Days after being mailed (by registered or certified mail, return receipt requested) or when delivered by hand or overnight courier or by telefax, such telefax to be telephonically confirmed by the sender, to the party to which such notice, request, demand or other communication is required or permitted to be given or made under this letter agreement, addressed to such party at its address or telefax number set forth on Annex B attached hereto and made a part hereof or at such other address or telefax number as such party may hereafter specify by a notice to the other party. 19. NO WAIVER; NO ORAL MODIFICATIONS (a) No failure or delay on the part of Bank in exercising any right hereunder or under the Guaranty, and no course of dealing between the Borrower and the Bank, shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder or under the Guaranty preclude any other or further exercise thereof or the exercise of any other right hereunder or thereunder. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies that the Bank would otherwise have. (b) This Agreement may not be amended, supplemented, waived or otherwise modified orally. 20. BINDING EFFECT (a) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; PROVIDED, HOWEVER, that the Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of the Bank. Genlyte Thomas Group Nova Scotia ULC Page 15 December 22, 1999 (b) Bank may sell, assign, transfer, negotiate or otherwise dispose of its rights hereunder (a) with the prior written consent of the Borrower, which consent shall not be unreasonably withheld or delayed, to a Canadian financial institution, or (b) without any such consent, to a Canadian affiliate of the Bank; PROVIDED, the consent of the Borrower under clause (i) shall not be required if an Event of Default shall have occurred and be continuing. 21. EXPENSES The Borrower shall pay on demand all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by Bank in connection with the preparation of this Agreement, the Letter of Credit, the Guaranty, any promissory note made hereunder or any other document, instrument or action arising hereunder or contemplated hereby, and the preservation and enforcement of Bank's rights hereunder. 22. CURRENCY The Currency in which the Advance is funded, whether Cdn. Dollars or U.S. Dollars is of the essence. The obligations of Borrower hereunder shall, notwithstanding any payment in any currency other than the Currency (whether pursuant to judgment or award or otherwise), be discharged only to the extent of the amount of the Currency that the Bank may, in accordance with normal banking procedures, purchase and receive with the sum paid in such different currency, including without limitation, the Other Currency (including any premium and costs of exchange) on the Business Day immediately following the day on which the Bank receives such payment in such different currency. If the conversion rate actually applied differs from the rate of exchange prevailing on such Business Day and, as a result, the amount of the Currency so purchased falls short of the amount originally due in the Currency, the Borrower agrees to pay such additional amount in the Currency as may be necessary to indemnify the Bank against such shortfall (and if the amount of the Currency so purchased exceeds the amount originally due, the excess shall be refunded to the Borrower). Any obligation not discharged by such payment shall be due as a separate and independent obligation and, until discharged as provided in this Section, shall continue in full force and effect. No such obligation shall be affected by any judgment being obtained for any amount due under or in respect of this Agreement or by any time or indulgence granted to the Borrower from time to time. 23. GOVERNING LAW This Agreement shall be governed by and construed in accordance with the law of the State of New York. Genlyte Thomas Group Nova Scotia ULC Page 16 December 22, 1999 24. SUBMISSION TO JURISDICTION. FOR PURPOSES OF ANY SUIT, ACTION OR PROCEEDING INVOLVING THIS AGREEMENT, ANY NOTE OR ANY OTHER DOCUMENT OR INSTRUMENT CONTEMPLATED HEREBY OR REQUIRED HEREUNDER OR ANY JUDGMENT ENTERED BY ANY COURT IN RESPECT OF SUCH SUIT, ACTION OR PROCEEDING, THE BORROWER EXPRESSLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR U.S. FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK AND AGREES THAT ANY ORDER, PROCESS OR OTHER PAPER MAY BE SERVED UPON THE BORROWER WITHIN OR WITHOUT SUCH COURT'S JURISDICTION BY MAILING A COPY TO THE BORROWER AT THE BORROWER'S ADDRESS FOR NOTICES PROVIDED IN THIS AGREEMENT, PROVIDED THAT A REASONABLE TIME FOR APPEARANCE IS ALLOWED. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OF PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY SUCH COURT AND FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING CONTAINED IN THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT SHALL AFFECT THE BANK'S RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR THE BORROWER'S PROPERTY IN THE COURTS OF OTHER JURISDICTIONS. 25. WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH ANY CREDIT DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER AND AGREE THAT ANY SUCH PROCEEDING SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY. Genlyte Thomas Group Nova Scotia ULC Page 17 December 22, 1999 26. SEVERABILITY If any provision of this Agreement is or becomes prohibited or unenforceable in any jurisdiction, such prohibition or unenforceability shall not invalidate or render unenforceable the provision concerned in any other jurisdiction nor invalidate, affect or impair any of the remaining provisions hereof. 27. WHOLE AGREEMENT This Agreement and any agreements delivered pursuant to or referred to in this Agreement constitute the whole and entire agreement between the parties in respect hereof. If you agree to all of the terms and conditions set forth herein, please accept and agree by signing in the place provided below and return one original to the attention of the undersigned. This offer is open for acceptance until the conclusion of two weeks from the date hereof and if not accepted by the execution and delivery hereof by such date, shall expire as of close of business on such date. Yours truly, ROYAL BANK OF CANADA By Name: N.G. Millar Title: Senior Manager Accepted and agreed, this 22nd day of December , 1999: ---- ----------- GENLYTE THOMAS GROUP NOVA SCOTIA ULC By W.G. FERKO --------------------------- Name: William G. Ferko Title: Vice President By T.L. LANGE --------------------------- Name: Terry Lange Title: Treasurer Annex A DEFINITIONS "APPLICABLE LAW" means, in respect of any Person, property, transaction or event, all present or future applicable laws, statutes, regulations, treaties, judgments and decrees and (whether or not having the force of law) all applicable official directives, rules, guidelines, orders, by-laws, approvals, permits, consents and policies of any governmental or regulatory body, stock exchange or securities commission having jurisdiction. "BUSINESS DAY" means a day, excluding Saturday, Sunday and any other day which shall be in The City of New York or in The City of Toronto a legal holiday or a day on which banking institutions are closed and means, with respect to the Libor Advance, a Business Day which is also a day on which dealings in the applicable currency, U.S. or Canadian, as the case may be by and between leading banks in the London interbank market may be conducted. "CANADIAN DOLLARS" and the symbols "CDN$" and "$" each means lawful money of Canada. "CANADIAN LIBOR" means, with respect to each Libor Interest Period applicable to the Advance in Canadian Dollars, the annual rate of interest (rounded upwards, if necessary, to the nearest whole multiple of one sixteenth of one percent (1/16th%)), at which the Bank, in accordance with its normal practice, would be prepared to offer to leading banks in the London interbank market (or such other interbank market as Bank shall deem appropriate under the circumstances) for delivery on the first day of such Libor Interest Period and for a period equal to such Libor Interest Period, deposits in Canadian Dollars of amounts comparable to such Libor Advance to be outstanding during such Libor Interest Period, at or about 10:00 a.m. (Toronto time) on the Interest Determination Date. "CONTAMINANT" includes, without limitation, any pollutant, dangerous substance, liquid waste, industrial waste, hazardous material, hazardous substance or contaminant including any of the foregoing as defined in any Environmental Law. "ENVIRONMENTAL ACTIVITY" means any past, present or future activity, event or circumstance in respect of a Contaminant, including, without limitation, its storage, use, holding, collection, purchase, accumulation, assessment, generation, manufacture, construction, processing, treatment, stabilization, disposition, handling or transportation, or its Release, escape, leaching, dispersal or migration into the natural environment, including the movement through or in the air, soil, surface water or groundwater. "ENVIRONMENTAL LAW" means any and all applicable international, federal, provincial, state, municipal or local laws, statutes, regulations, treaties, orders, judgments, decrees, ordinances and official directives and all authorizations relating to the environment, occupational health and safety or any Environmental Activity. A-2 "EQUIVALENT AMOUNT" means, with respect to any amount of the Currency or the Other Currency, the amount of, respectively, the Other Currency or the Currency required to purchase that amount of the first currency through the Bank at the Bank's noon spot rate in either New York City or Toronto as applicable, in accordance with normal banking procedures. "GAAP" means generally accepted accounting principles in effect from time to time in Canada applied in a consistent manner from period to period. "INTEREST DETERMINATION DATE" means, with respect to a Libor Advance, the date which is 2 Business Days prior to the first day of the Libor Interest Period applicable to such Libor Advance. "INDEBTEDNESS" means, (a) indebtedness for borrowed money or for the deferred purchase price of goods or services (including trade obligations), (b) obligations under leases which are or should be reported, in accordance with generally accepted accounting principles, as capital leases, (c) obligations under letters of credit or guarantee, whether issued for the benefit of the Borrower or another or others, (d) obligations arising pursuant to bankers' acceptance facilities, and (e) obligations under guarantees, endorsements (other than for collection or deposit in the ordinary course of business) and other obligations to purchase, provide funds for payment, provide funds for investment in or otherwise provide financial assistance to any other party but "INDEBTEDNESS" does not include deferred taxes. "LIBOR" means, as applicable, Canadian Libor or U.S. Libor. "LIBOR INTEREST DATE" means, with respect to the Libor Advance, the last day of each Libor Interest Period and, if the Borrower selects a Libor Interest Period longer than 3 months, the Libor Interest Date shall be the date falling every 3 months after the beginning of such Libor Interest Period as well as the last day of such Libor Interest Period. "LIBOR INTEREST PERIOD" means, with respect to any Libor Advance, a period of one, two, three or six months as selected by Borrower, subject to availability, commencing with the date on which such Libor Advance is made or converted from the Prime Advance, or the last day of the immediately prior Libor Interest Period. "PERSON" means any individual, firm, partnership, company, corporation, government, governmental body or agency, instrumentality and unincorporated body of persons or association. "RELEASE" includes discharge, spray, inject, inoculate, abandon, deposit, spill, leak, seep, pour, emit, empty, throw, dump, place and exhaust, and when used as a noun has a similar meaning. A-3 "RBP" and "ROYAL BANK PRIME" each means, with respect to the Prime Advance in Canadian Dollars, the annual rate of interest announced by the Bank from time to time as being a reference rate then in effect for determining interest rates on Canadian Dollar commercial loans made in Canada. "RBUSBR" and "ROYAL BANK US BASE RATE" each means, with respect to the Prime Advance in U.S. Dollars, the annual rate of interest determined by the Bank in New York City from time to time as its prime rate then in effect for determining interest rates on US Dollar commercial loans. "US DOLLARS," "U.S. DOLLARS" and "US$" each means lawful money of the United States of America in immediately available funds. "U.S. LIBOR" means, with respect to each Libor Interest Period applicable to the Advance in U.S. Dollars, the annual rate of interest (rounded upwards, if necessary, to the nearest whole multiple of one sixteenth of one percent (1/16th%)), at which the Bank, in accordance with its normal practice, would be prepared to offer to leading banks in the London interbank market for delivery on the first day of such Libor Interest Period and for a period equal to such Libor Interest Period, deposits in US Dollars of amounts comparable to such Libor Advance to be outstanding during such Libor Interest Period, at or about 10:00 a.m. (New York City time) on the Interest Determination Date. ANNEX B ADMINISTRATIVE DETAILS PAYMENTS TO BANK: For U.S. Dollar payments: Royal Bank of Canada Grand Cayman (North America No. 1) Branch c/o New York Branch Attention: Loans Administration The Chase Manhattan Bank, New York ABA # 021000021 Account of Royal Bank of Canada, New York Account No.: 920-1-033363 for further credit to account no. 218-599-9 (loans), Ref: Genlyte Thomas Group For Canadian Dollar payments: as Bank shall advise Borrower in writing prior to any such payment. BORROWER'S ADDRESS FOR NOTICES: Genlyte Thomas Group Nova Scotia ULC 4360 Brownsboro Road, Suite 300 P.O. Box 35120 Louisville, KY 40232 Attention: Mr. Terry Lange Telephone No.: Facsimile No.: BANK'S ADDRESS FOR NOTICES: Royal Bank of Canada Grand Cayman (North America No.1) Branch c/o New York Branch One Liberty Plaza, 4th Floor New York, New York 10006-1404 Attention: Linda Joannou Telephone No.: (212) 428-6212 Facsimile No.: (212) 428-2372 with a copy to: Royal Bank of Canada One Liberty Plaza, 4th Floor New York, New York 10006-1404 Attention: Mr. N. G. Millar, Senior Manager Telefax No.: (212) 428-6363 Telephone No.: (212) 809-7148 Schedule A NOTICE REQUIREMENTS FOR DRAWDOWN, CONVERSIONS OR CONTINUATIONS THE PRIME ADVANCE Borrower shall request the Prime Advance or conversion to Prime Advance by 10:00 AM (Toronto or New York City time, as applicable to the Currency) on the day of the Advance, conversion or continuation. THE LIBOR ADVANCE Borrower shall request the Libor Advance by 10:00 a.m. (Toronto or New York City time, as applicable to the Currency) on the Interest Determination Date. LIBOR ADVANCE CONDITIONS The Borrower may borrow by way of the Libor Advance subject to the following further conditions: (a) The Borrower may select the Libor Interest Period applicable to the Libor Advance and shall notify the Bank of such Libor Interest Period when giving notice pursuant to Schedule "A". (b) The Borrower shall pay interest on the Libor Advance in the Currency on each Libor Interest Date, calculated in arrears. Such interest will accrue daily on the basis of the actual number of days elapsed and a year of 360 days. EX-11 5 EXHIBIT 11 EXHIBIT 11 THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES CALCULATION OF BASIC AND DILUTED EARNINGS PER SHARE FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997 ($ in thousands, except per share data) 1999 1998 1997 ------- ------- ------- BASIC EARNINGS PER SHARE Net income $32,781 $26,760 $19,113 Average common shares outstanding 13,831 13,671 13,127 ------- ------- ------- Basic Earnings Per Share $ 2.37 $ 1.96 $ 1.46 ======= ======= ======= DILUTED EARNINGS PER SHARE (1) Net income $32,781 $26,760 $19,113 Average common shares outstanding 13,831 13,671 13,127 Incremental common shares issuable: stock options 18 19 309 ------- ------- ------- Average common shares outstanding assuming dilution 13,849 13,690 13,436 ------- ------- ------- ------- ------- ------- Diluted Earnings Per Share $ 2.37 $ 1.95 $ 1.42 ======= ======= ======= (1) Diluted earnings per share include all average common shares outstanding adjusted for the incremental dilution of outstanding stock options. EX-13 6 EXHIBIT 13 SELECTED FINANCIAL DATA GENLYTE GROUP INCORPORATED AND SUBSIDIARIES Amounts in thousands, except per share data
1999 1998 1997 1996 1995 - -------------------------------------------------------------------------------------------------- SUMMARY OF OPERATIONS Net sales $978,302 664,095 487,961 456,860 445,660 Gross profit $329,676 230,653 169,405 154,722 138,120 Operating profit $ 86,861 59,290 37,621 28,448 21,955 Interest expense, net $ 4,584 3,857 4,085 5,649 7,986 Minority interest $ 25,268 8,485 -- -- -- Income before income taxes $ 57,009 46,948 33,536 22,799 13,969 Income tax provision $ 24,228 20,188 14,423 9,802 6,060 Net income $ 32,781 26,760 19,113 12,997 7,909 Return on: Net sales 3.4% 4.0% 3.9% 2.8% 1.8% Average stockholders' investment 17.8% 19.8% 20.4% 16.9% 12.1% Average capital employed 13.5% 14.6% 14.6% 9.9% 5.5% -------- ------- -------- ------- ------- YEAR-END POSITION Working capital $175,702 180,032 81,961 71,366 75,719 Plant and equipment, net $104,989 105,679 59,618 60,380 64,149 Total assets $575,710 493,501 254,028 238,115 231,034 Capital employed: Total debt $ 55,611 62,986 32,785 41,847 67,132 Stockholders' investment $202,542 166,232 103,729 83,783 69,900 -------- ------- -------- ------- ------- Total capital employed $258,153 229,218 136,514 125,630 137,032 -------- ------- -------- ------- ------- PER SHARE DATA Net income: Basic $ 2.37 1.96 1.46 1.01 0.62 Diluted $ 2.37 1.95 1.42 1.00 0.62 Stockholders' investment per average share outstanding $ 14.63 12.14 7.72 6.42 5.46 Market range: High $ 26 28 3/8 21 3/8 14 8 Low $ 16 15 3/4 9 7/8 6 4 -------- ------- -------- ------- ------- OTHER DATA Orders on hand $102,080 90,474 54,206 42,247 51,093 Depreciation and amortization $ 23,835 15,066 12,156 14,550 15,657 Capital expenditures, net $ 20,514 17,436 11,597 10,405 10,232 Average shares outstanding(*) 13,849 13,690 13,436 13,055 12,804 Current ratio 2.0 2.3 1.9 1.8 2.0 Interest coverage ratio 13.4 13.2 9.2 5.0 2.7 Debt to total capital employed 21.5% 27.5% 24.0% 33.3% 49.0% Number of stockholders 1,329 1,459 1,567 1,705 1,865 Average number of employees 5,343 3,671 2,767 2,581 2,657 Average sales per employee $ 183 181 176 177 168 -------- ------- -------- ------- -------
(*) including incremental common shares issuable under stock option plans MANAGEMENT'S DISCUSSION AND ANALYSIS Genlyte Group Incorporated And Subsidiaries Note: Throughout this discussion the term "Company" as used herein refers to The Genlyte Group Incorporated, including the consolidated results of The Genlyte Group Incorporated and Genlyte Thomas Group LLC. RESULTS OF OPERATIONS Net sales for 1999 were $978.3 million, increasing by $314.2 million, or 47.3% from 1998. Net sales for 1998 were 36.1% higher than 1997. The 1999 results include the operations of Fibre Light U.S. LLC ("Fibre Light"), subsequent to its formation on May 10, 1999, and Ledalite Architectural Products, Inc. ("Ledalite"), subsequent to its acquisition on June 30, 1999. The 1998 results include the operations of Genlyte Thomas Group LLC ("Genlyte Thomas") subsequent to its formation on August 30, 1998. Genlyte holds a 68% interest in Genlyte Thomas and accounts for it on a fully consolidated basis. The remaining 32% interest in Genlyte Thomas is held by Thomas Industries Inc. ("Thomas"). Total net sales on a comparative, unaudited basis for all current Genlyte businesses (including for the periods prior to the actual formation of Genlyte Thomas) were approximately 4.1% higher in 1999 over 1998, which were approximately 6.2% higher than the comparable 1997. The Company primarily serves the commercial, residential and industrial lighting markets, the strength of which over the past two years contributed substantially to the sales growth in both years. New products introduced during both years have also contributed to sales growth. Gross profit of the Company increased to $329.7 million in 1999 from $230.7 million in 1998, a 42.9% increase following a $61.2 million or 36.2% growth in gross profit from 1997 to 1998. Cost of sales increased to 66.3% of sales in 1999 from 65.3% in both 1998 and 1997. This is due to the higher mix of commodity fluorescent lighting fixtures in 1999 from Genlyte Thomas sales compared to the former Genlyte divisions for the first eight months of 1998. This impact is being offset partially by the elimination of excess capacity with the closing of a manufacturing facility in mid 1999. Selling and administrative expenses as a percent of sales decreased to 24.8% in 1999 from 25.8% in 1998 and 27.0% in 1997. The continued reduction in selling and administrative expense as a percent of sales is a result of maintaining existing levels of fixed costs to support increased sales, and facility closings which reduced certain variable costs as well as fixed selling and administrative expenses. These reductions were partially offset by increased research and development spending to support new product introductions. Net interest expense amounted to $4.6 million in 1999, an increase over 1998 of $0.7 million, after a decrease of $0.2 million from 1997. Net interest expense was higher in 1999 due to the additional debt and related interest expense from the Fibre Light and Ledalite acquisitions. The decrease in 1998 was due to a reduction in interest rates from 1997 as well as a reduction in average net borrowings for the year. At December 31, 1999, a hypothetical 1% increase in interest rates would result in a reduction of approximately $560 in pre-tax income. The estimated reduction is based upon no change in the volume or composition of debt at December 31, 1999. Minority interest represents the 32% share of Thomas in Genlyte Thomas. The effective rate of income tax expense was approximately 42.5% in 1999, down from the 43% rate for 1998 and 1997. 2 FINANCIAL CONDITION LIQUIDITY AND CAPITAL RESOURCES The Company's cash flows from operations continue to provide adequate capital to meet operating and capital expenditures. A condensed consolidated statement of cash flows follows:
For the years ended December 31, --------------------------------- (Amounts in thousands) 1999 1998 1997 --------------------------------- EBITDA* $ 85,428 $ 65,871 $ 49,777 Interest expense, net (4,584) (3,857) (4,085) Taxes on income (24,228) (20,188) (14,423) Working capital, other 14,906 4,873 (12,684) -------- -------- -------- Cash provided by operating activities 71,522 46,699 18,585 Cash used in investing activities, net (51,448) (15,555) (11,597) Cash used in financing activities, net (5,969) (24,243) (8,229) -------- -------- -------- Increase (decrease) in cash $ 14,105 $ 6,901 $ (1,241) ======== ======== ========
*Earnings before interest, taxes, depreciation, and amortization Cash provided by operating activities increased $24.8 million and $28.1 million in fiscal 1999 and 1998, respectively, reflecting higher net income and increases in accounts payable and accrued expenses. The Company had working capital of $175.7 million at December 31, 1999, a reduction of $4.3 million from the $180.0 million at December 31, 1998. The Company's ratio of total debt to total capitalization was 21.5, 27.5 and 24.0 percent at December 31, 1999, 1998 and 1997 respectively, with total capitalization defined as total debt plus total stockholders' investment. The decrease during 1999 was due to the significant increase in cash provided by operating activities, used in part to reduce outstanding debt, following an increase in debt during 1998 incurred with the Genlyte Thomas formation. Genlyte Thomas has a $150 million revolving credit agreement with various banks, increasing it $25 million during 1999. At December 31, 1999, Genlyte Thomas had zero outstanding borrowings and $39.4 million in outstanding letters of credit under this agreement. YEAR 2000 ISSUE The Company developed and executed plans to prepare its information technology systems and non-information technology systems with embedded technology for the year 2000 conversion. The company experienced no significant disruptions as a result of the date change to January 1, 2000, and is not currently aware of any significant adverse impact affecting its major vendors or customers. The cost for the year 2000 project was approximately $3.0 million, which was incurred from 1996 through 1999. While there is no assurance that additional issues related to the 2000 calendar will not develop, management believes the Company's business will not be significantly affected in the future due to the year 2000 issue. FORWARD-LOOKING STATEMENTS The forward-looking statements made by the Company are based on estimates which the Company believes are reasonable. This means that the Company's actual results could differ materially from such estimates as a result of being negatively affected as described above or otherwise positively affected. 3 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS Genlyte Group Incorporated And Subsidiaries To the Stockholders of The Genlyte Group Incorporated: We have audited the accompanying consolidated balance sheets of The Genlyte Group Incorporated (a Delaware corporation) and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of income, stockholders' investment and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Genlyte Group Incorporated and subsidiaries as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Arthur Andersen LLP Louisville, Kentucky February 2, 2000 4 CONSOLIDATED STATEMENTS OF INCOME THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES (Amounts in thousands, except per share data)
For the years ended December 31, -------------------------------- 1999 1998 1997 -------- -------- -------- Net sales $978,302 $664,095 $487,961 Cost of sales 648,626 433,442 318,556 -------- -------- -------- Gross profit 329,676 230,653 169,405 Selling and administrative expenses 242,815 171,363 131,784 -------- -------- -------- Operating profit 86,861 59,290 37,621 Interest expense, net 4,584 3,857 4,085 Minority interest 25,268 8,485 -- -------- -------- -------- Income before income taxes 57,009 46,948 33,536 Income tax provision 24,228 20,188 14,423 -------- -------- -------- Net income $ 32,781 $ 26,760 $ 19,113 ======== ======== ======== Earnings per share: Basic $ 2.37 $ 1.96 $ 1.46 Diluted $ 2.37 $ 1.95 $ 1.42
The accompanying notes are an integral part of these consolidated financial statements. 5 CONSOLIDATED BALANCE SHEETS THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES (Amounts in thousands, except share data)
As of December 31, ------------------------- 1999 1998 ----------- ----------- ASSETS: CURRENT ASSETS: Cash and cash equivalents $ 22,660 $ 8,555 Accounts receivable, less allowance for doubtful accounts of $14,910 and $10,907, respectively 155,428 146,167 Inventories 136,041 137,004 Other current assets 29,938 25,520 ----------- ----------- Total current assets 344,067 317,246 Plant and equipment, at cost Land 6,537 7,290 Buildings and leasehold interests and improvements 87,951 82,856 Machinery and equipment 228,379 218,886 ----------- ----------- Total plant and equipment 322,867 309,032 Less: accumulated depreciation and amortization 217,878 203,353 ----------- ----------- Net plant and equipment 104,989 105,679 Cost in excess of net assets of acquired businesses 111,426 57,944 Other assets 15,228 12,632 ----------- ----------- TOTAL ASSETS $ 575,710 $ 493,501 =========== =========== LIABILITIES & STOCKHOLDERS' INVESTMENT: CURRENT LIABILITIES: Short-term borrowings and current portion of long-term debt $ 1,647 $ 2,134 Accounts payable 86,717 73,852 Accrued expenses 80,001 61,228 ----------- ----------- Total current liabilities 168,365 137,214 Long-term debt 53,964 60,852 Deferred income taxes 31,797 22,192 Minority interest 98,940 84,649 Other liabilities 20,102 22,362 ----------- ----------- Total liabilities 373,168 327,269 STOCKHOLDERS' INVESTMENT: Common stock ($.01 par value, 30,000,000 shares authorized; 13,802,071 and 13,648,290 shares issued, respectively; 13,675,726 and 13,535,548 shares outstanding, respectively) 137 136 Additional paid-in capital 17,761 16,207 Retained earnings 153,307 120,526 Accumulated other comprehensive income 31,337 29,363 ----------- ----------- Total stockholders' investment 202,542 166,232 ----------- ----------- TOTAL LIABILITIES & STOCKHOLDERS' INVESTMENT $ 575,710 $ 493,501 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 6 CONSOLIDATED STATEMENTS OF CASH FLOWS THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES (Amounts in thousands)
For the years ended December 31, -------------------------------- 1999 1998 1997 --------- -------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 32,781 $ 26,760 $ 19,113 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 23,835 15,066 12,156 Loss (gain) from disposal of plant and equipment (20) 259 (237) Changes in assets and liabilities, net of effect of acquisitions: (Increase) decrease in: Accounts receivable (5,354) (5,432) (8,184) Inventories 3,039 65 152 Other current assets (3,823) (3,575) (3,476) Other assets (32,341) 2,611 (6,408) Increase (decrease) in: Accounts payable and accrued expenses 27,611 9,664 (328) Deferred income taxes 9,481 (6,412) 3,460 Minority interest 14,291 5,412 -- Other liabilities (2,260) 2,521 1,897 Minimum pension liability 732 (732) -- All other, net 3,550 492 440 -------- -------- ------- Net cash provided by operating activities 71,522 46,699 18,585 -------- -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions, net of cash acquired (30,934) 1,881 -- Purchases of plant and equipment (20,514) (17,436) (11,597) -------- -------- ------- Net cash used in investing activities (51,448) (15,555) (11,597) CASH FLOWS FROM FINANCING ACTIVITIES: Increase (decrease) in short-term borrowings (1,932) (32,281) -- Proceeds from long-term debt 20,956 6,000 -- Payments on long-term debt (28,202) (220) (9,062) Purchases of treasury stock (271) -- -- Stock options exercised 1,826 3,317 1,770 -------- -------- ------- Net cash used in financing activities (7,623) (23,184) (7,292) -------- -------- ------- Effect of exchange rate changes on cash and cash equivalents 1,654 (1,059) (937) -------- -------- ------- Net increase (decrease) in cash and cash equivalents 14,105 6,901 (1,241) Cash and cash equivalents at beginning of year 8,555 1,654 2,895 -------- -------- ------- Cash and cash equivalents at end of year 22,660 8,555 1,654 ======== ======== ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for: Interest $ 4,517 $ 4,057 $ 3,256 Income taxes $ 20,275 $ 18,445 $ 20,350 The accompanying notes are an integral part of these consolidated financial statements.
7 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES
Accumulated Additional Other Total Common Paid-in Retained Comprehensive Stockholders' (Amounts in thousands) Stock Capital Earnings Income Investment ------------ ------------ ------------ ------------- ------------- Balance, December 31, 1996 $ 131 $ 11,125 $ 74,653 $ (2,126) $ 83,783 Net income -- -- 19,113 -- 19,113 Foreign currency translation adjustments -- -- -- (937) (937) ------------ ------------ ------------ --------- ----------- Total comprehensive income -- -- 19,113 (937) 18,176 Stock options exercised 4 1,766 -- -- 1,770 ------------ ------------ ------------ --------- ----------- Balance, December 31, 1997 $ 135 $ 12,891 $ 93,766 $ (3,063) $ 103,729 Net income -- -- 26,760 -- 26,760 Gain on formation of Genlyte Thomas, before tax -- -- -- 56,984 56,984 Related tax effect -- -- -- (22,767) (22,767) ------------ ------------ ------------ --------- ----------- Gain on formation of Genlyte Thomas, after tax -- -- -- 34,217 34,217 Increase in minimum pension liability, before tax -- -- -- (1,220) (1,220) Related tax effect -- -- -- 488 488 ------------ ------------ ------------ --------- ----------- Increase in minimum pension liability, after tax -- -- -- (732) (732) Foreign currency translation adjustments -- -- -- (1,059) (1,059) ------------ ------------ ------------ --------- ----------- Total comprehensive income -- -- 26,760 32,426 59,186 Stock options exercised 1 3,316 -- -- 3,317 ------------ ------------ ------------ --------- ----------- Balance, December 31, 1998 $ 136 $ 16,207 $ 120,526 $ 29,363 $ 166,232 Net income -- -- 32,781 -- 32,781 Gain on formation of Genlyte Thomas, before tax -- -- -- (688) (688) Related tax effect -- -- -- 276 276 ------------ ------------ ------------ --------- ----------- Gain on formation of Genlyte Thomas, after tax -- -- -- (412) (412) Decrease in minimum pension liability, before tax -- -- -- 1,220 1,220 Related tax effect -- -- -- (488) (488) ------------ ------------ ------------ --------- ----------- Decrease in minimum pension liability, after tax -- -- -- 732 732 Foreign currency translation adjustments -- -- -- 1,654 1,654 ------------ ------------ ------------ --------- ----------- Total comprehensive income -- -- 32,781 1,974 34,755 Stock options exercised 1 1,825 -- -- 1,826 Treasury stock purchased -- (271) -- -- (271) ------------ ------------ ------------ --------- ----------- Balance, December 31, 1999 $ 137 $ 17,761 $ 153,307 $ 31,337 $ 202,542 ============ ============ ============ ========= ===========
The accompanying notes are an integral part of these consolidated financial statements. 8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Genlyte Group Incorporated And Subsidiaries Amounts in thousands except per share data NOTE: THROUGHOUT THESE NOTES, THE TERM "COMPANY" AS USED HEREIN REFERS TO THE GENLYTE GROUP INCORPORATED, INCLUDING THE CONSOLIDATED RESULTS OF THE GENLYTE GROUP INCORPORATED AND GENLYTE THOMAS GROUP LLC OPERATIONS. (1) DESCRIPTION OF BUSINESS The Genlyte Group Incorporated, a Delaware corporation ("Genlyte") is a United States based multinational corporation. The Company designs, manufactures, and sells lighting fixtures and controls for a wide variety of applications in the commercial, residential, and industrial markets. The Company's products are marketed primarily to distributors who resell the products for use in commercial, residential, and industrial construction and remodeling. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial statements include the accounts of Genlyte and all majority-owned subsidiaries, after elimination of intercompany accounts and transactions. These statements include the accounts of Genlyte Thomas Group LLC (Genlyte Thomas) from inception, August 30, 1998, through December 31, 1999. See Note 3 regarding the formation of Genlyte Thomas. Investments in affiliates owned less than 50% are accounted for using the equity method, under which Genlyte's share of these affiliates' earnings is included in income as earned. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates. The Company operates in a highly competitive business environment, and its sales could be negatively affected by its inability to maintain or increase prices, changes in geographic or product mix or the decision of its customers to purchase competitive products instead of the Company's products. Sales could also be affected by pricing, purchasing, financing, operational, advertising or promotional decisions made by purchasers of the Company's products. As the Company's business continues to expand outside the United States, the Company could experience changes in its ability to obtain or hedge against foreign currency rates and fluctuations in those rates. The Company could also be affected by nationalizations; unstable governments, economies, or legal systems; or intergovernmental disputes. These currency, economic and political uncertainties may affect the Company's results. CASH EQUIVALENTS: The Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents. INVENTORIES: Inventories are stated at the lower of cost or market and include materials, labor and overhead. Inventories at December 31 consisted of the following: 1999 1998 ------------ ------------ Raw materials and supplies $ 46,717 $ 43,167 Work in process 14,027 14,529 Finished goods 75,297 79,308 ------------ ------------ Total inventories $ 136,041 $ 137,004 ============ ============ 9 Inventories valued using the last-in, first-out ("LIFO") method represented approximately 83% and 89% of total inventories at December 31, 1999 and 1998, respectively. Inventories not valued at LIFO (primarily inventories of Canadian operations) are valued using the first-in, first-out ("FIFO") method. During 1998, the Company changed its method of accounting for certain inventories from the FIFO method to the LIFO method. This change, applied prospectively from the date of the change, was made to have a consistent method throughout the U.S. operations because the Thomas Lighting U.S. inventories, now consolidated with Genlyte through the Genlyte Thomas Group LLC, are valued using the LIFO method. This change increased net income by $507, or $.04 per diluted share, in 1998. On a FIFO basis, which approximates current cost, inventories would have been $3,083 and $2,350 lower than reported at December 31, 1999 and 1998, respectively. ADVERTISING COSTS: The Company expenses advertising costs principally as incurred. Certain catalog and literature costs are amortized over their useful lives, generally 2 - 3 years. Advertising expenses were $13,416 in 1999, $9,480 in 1998, and 8,382 in 1997. PLANT AND EQUIPMENT: The Company provides for depreciation of plant and equipment, which also includes amortization of assets recorded under capital leases, principally on a straight-line basis over the estimated useful lives of the assets. Useful lives vary among the items in each classification, but fall within the following ranges: Buildings and leasehold interests and improvements 10 - 40 years Machinery and equipment 3 - 10 years When the Company sells or otherwise disposes of plant and equipment, the asset cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is included in the consolidated statements of income. Leasehold interests and improvements are amortized over the terms of the respective leases, or over their estimated useful lives, whichever is shorter. Maintenance and repairs are expensed as incurred. Renewals and betterments are capitalized and depreciated or amortized over the remaining useful lives of the respective assets. Accelerated methods of depreciation are used for income tax purposes, and appropriate provisions are made for the related deferred income taxes. COST IN EXCESS OF NET ASSETS OF ACQUIRED BUSINESSES: Cost in excess of net assets of businesses acquired prior to 1971 is not amortized since, in the opinion of management, there has been no diminution in value. For businesses acquired subsequent to 1970, the cost in excess of net assets, aggregating $132,587 as of December 31, 1999 and $75,466 as of December 31, 1998, is being amortized on a straight-line basis over periods ranging from 10 to 40 years. Accumulated amortization was $26,083 and $22,445 as of December 31, 1999 and 1998, respectively. The Company periodically evaluates these intangible assets using discounted cash flows to assess recoverability from future operations. Impairment would be recognized as expense if a permanent diminution in value occurred. In the opinion of management, no material diminution in value has occurred during the periods presented in these consolidated financial statements. RESEARCH AND DEVELOPMENT COSTS: Research and development costs are expensed as incurred. These expenses were $8,086 in 1999, $7,237 in 1998, and $5,195 in 1997. 10 TRANSLATION OF FOREIGN CURRENCIES: Balance sheet accounts of foreign subsidiaries are translated into U.S. dollars at the rates of exchange in effect as of the balance sheet dates. The cumulative effects of such adjustments were $2,468 and $4,122 at December 31, 1999 and 1998, respectively, and have been charged to the cumulative foreign currency translation adjustment component of stockholders' investment. Income and expenses are translated at the average exchange rates prevailing during the year. Gains or losses resulting from foreign currency transactions are included in net income. FAIR VALUE OF FINANCIAL INSTRUMENTS: The carrying amounts of cash equivalents, short-term borrowings and long-term debt approximate fair value. RECLASSIFICATIONS: Certain prior year amounts have been reclassified to conform to the current year presentation. These changes had no impact on previously reported net income or stockholders' investment. (3) FORMATION OF GENLYTE THOMAS GROUP LLC On August 30, 1998, Genlyte and Thomas Industries Inc. ("Thomas") completed the combination of the business of Genlyte with the lighting business of Thomas ("Thomas Lighting"), in the form of a limited liability company named Genlyte Thomas Group LLC ("Genlyte Thomas"). Genlyte Thomas manufactures, sells, markets, and distributes commercial, residential, and industrial lighting fixtures and controls. Genlyte contributed substantially all of its assets and liabilities to Genlyte Thomas and received a 68% interest in Genlyte Thomas. Thomas contributed substantially all of its assets and certain related liabilities comprising Thomas Lighting and received a 32% interest in Genlyte Thomas. The percentage interests in Genlyte Thomas issued to Genlyte and Thomas were based on arms-length negotiations between the parties with the assistance of their financial advisers. Under the purchase method of accounting, Genlyte's majority ownership of Genlyte Thomas requires the assets and liabilities contributed by Thomas to Genlyte Thomas to be valued at their fair values, as of the acquisition date, in the Company's consolidated financial statements. The fair values attributed to the Thomas assets and liabilities result from management's determination of purchase accounting adjustments and are based upon available information and certain assumptions that management considers reasonable under the circumstances. The resulting cost in excess of the fair market value of net assets contributed by Thomas of $32,412 is being amortized on a straight-line basis over 30 years. The assets contributed by Genlyte to Genlyte Thomas are reflected at their historical cost. To the extent the actual net working capital contributed by Thomas Lighting exceeded the target net working capital, Genlyte Thomas paid Thomas the difference of $35,189. Of this amount, $34,175 was paid in 1998 and $1,014 was paid in 1999, based on an adjustment to the Thomas net working capital. The target net working capital was determined by a formula that considered Genlyte's adjusted net working capital, Thomas Lighting's net working capital, and Genlyte's net working capital as a percentage of net sales as of August 30, 1998. Subject to the provisions in the Genlyte Thomas Group LLC Agreement (the "LLC Agreement") regarding mandatory distributions described below, and the requirement of special approval in certain instances, distributions to Genlyte and Thomas (the "Partners"), respectively, will be made at such time and in such amounts as determined by the Genlyte Thomas Management Board and shall be made in cash or other property in proportion to the Partners' respective percentage interests. Notwithstanding anything to the contrary provided in the LLC Agreement, no distribution under the LLC Agreement shall be permitted to the extent prohibited by Delaware law. The LLC Agreement requires that Genlyte Thomas make the following distributions to the Partners: (i) a distribution to each Partner, based on its percentage interest, for tax liabilities attributable to its participation as a Partner of Genlyte Thomas based upon the effective tax rate of the Partner having the highest tax rate; and 11 (ii) subject to the provisions of Delaware law and the terms of the primary Genlyte Thomas credit facility, distributions (exclusive of the tax distributions set forth above) to each of the Partners so that Thomas receives at least an aggregate of $3,000 and Genlyte receives at least an aggregate of $6,375 per fiscal year beginning in fiscal year 1999. The formation of Genlyte Thomas and the contribution of the net assets of Genlyte and Thomas Lighting to Genlyte Thomas in exchange for Genlyte's and Thomas' respective interests in Genlyte Thomas described above is referred to herein as the "Transaction." Concurrent with the formation of Genlyte Thomas, Genlyte has recognized an after-tax gain on the Transaction, which represents the excess of the fair market value of Thomas Lighting's contributed net assets over the historical book value of Genlyte's contributed net assets, net of deferred income taxes (as set forth in the table below). Because of the 1999 adjustment of $1,014 to the Thomas contribution referred to above, the after-tax gain initially recorded in 1998 was adjusted by $412 in 1999. 68 percent of the fair value of Thomas Lighting $ 93,859 32 percent of the historical book value of Genlyte's net assets contributed to Genlyte Thomas 37,563 Deferred income taxes 22,491 -------- After-tax gain recognized by Genlyte on the formation of Genlyte Thomas $ 33,805 ======== The operating results of Genlyte Thomas have been included in Genlyte's consolidated financial statements since August 30, 1998. On an unaudited pro forma basis, assuming the Transaction described above had occurred at the beginning of 1998, the results would have been: Actual Pro-forma 1999 1998 ------------ ------------ Net sales $ 978,302 $ 929,123 Net income 32,781 26,334 Earnings per share $ 2.37 $ 1.92 ============ ============ The pro forma results do not purport to state exactly what Genlyte's results of operations would have been had the Transaction in fact been consummated as of the assumed date and for the period presented. (4) INVESTMENT IN FIBRE LIGHT AND ACQUISITION OF LEDALITE On May 10, 1999, Genlyte Thomas acquired a 2% interest (with rights to acquire an additional 6%) in Fibre Light International, based in Burleigh Heads, Queensland, Australia. Fibre Light International is in the business of commercializing fiber optic lighting technology. The two companies then formed a jointly owned limited liability company named Fibre Light U.S. LLC ("Fibre Light"), of which Genlyte Thomas owns 80%. Fibre Light will manufacture, market and sell fiber optic lighting systems in the U.S. On June 30, 1999, Genlyte Thomas acquired the assets and liabilities of privately held Ledalite Architectural Products Inc. ("Ledalite"), located in Vancouver, Canada. Ledalite designs, manufactures, and sells architectural linear lighting systems for offices, schools, transportation facilities, and other commercial buildings. The purchase prices of these acquisitions totaled $31,469 (including costs of acquisition), consisting of approximately $8.5 million in cash payments and approximately $23 million in borrowings. The Ledalite acquisition has been accounted for using the purchase method of accounting. The preliminary determination of the excess of the purchase price over the fair market value of net assets acquired of $22,392 is being amortized 12 on a straight-line basis over 30 years. The determination of these fair market values as reflected in the balance sheet is subject to change. The operating results of Fibre Light and Ledalite have been included in the Company's consolidated financial statements since the dates of acquisition. On an unaudited pro forma basis, assuming these acquisitions had occurred at the beginning of 1999 and 1998, Genlyte's results would have been: 1999 1998 ------------ ------------ Net sales $ 990,326 $ 686,069 Net income 32,492 25,913 Earnings per share $ 2.35 $ 1.89 ============ ============ The pro forma results do not purport to state exactly what Genlyte's results of operations would have been had the acquisitions in fact been consummated as of the assumed dates and for the periods presented, nor are they necessarily indicative of future consolidated results. (5) EARNINGS PER SHARE In 1997, Genlyte adopted Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128"). SFAS No. 128 requires the presentation of basic earnings per share and diluted earnings per share. "Basic earnings per share" represents net income divided by the weighted-average number of common shares outstanding during the period. "Diluted earnings per share" represents net income divided by the weighted-average number of common shares outstanding during the period, adjusted for the incremental dilution of outstanding stock options, and is consistent with Genlyte's historical presentation. 1999 1998 1997 ------ ------ ------ Average common shares outstanding 13,831 13,671 13,127 Incremental common shares issuable: Stock option plans 18 19 309 ------ ------ ------ Average common shares outstanding assuming dilution 13,849 13,690 13,436 ====== ====== ====== (6) INCOME TAXES The components of income before income taxes and the provisions for income taxes for the years ended December 31 were as follows: 1999 1998 1997 -------- -------- -------- Income before income taxes: Domestic $ 46,974 $ 41,867 $ 29,771 Foreign 10,035 5,081 3,765 -------- -------- -------- Income before income taxes $ 57,009 $ 46,948 $ 33,536 ======== ======== ======== Income tax provision (benefit): Domestic: Currently payable $ 19,658 $ 18,457 $ 16,427 Deferred 89 (329) (3,411) Foreign: Currently payable 3,839 1,871 1,538 Deferred 642 189 (131) -------- -------- -------- Income tax provision $ 24,228 $ 20,188 $ 14,423 ======== ======== ======== 13 A reconciliation of the statutory federal income tax rate to the Company's effective income tax rate follows: 1999 1998 1997 ---- ---- ---- Statutory federal rate 35.0% 35.0% 35.0% State income taxes, net of federal tax benefits 3.1% 4.6% 5.2% Minority interest share of foreign taxes 1.4% 0.8% -- Nondeductible portion of amortization and expenses 1.1% 1.0% 1.0% Other 1.9% 1.6% 1.8% ---- ---- ---- Effective income tax rate 42.5% 43.0% 43.0% ==== ==== ==== Deferred income taxes are provided for significant income and expense items recognized in different years for tax and financial reporting purposes. Significant temporary differences creating deferred tax assets and liabilities at December 31 follow: 1999 1998 ------- ------- Deferred tax assets: Allowance for doubtful accounts receivable $ 3,297 $ 2,830 Inventory reserves 5,281 6,145 Accrued compensation expenses 7,719 8,522 Other 4,270 8,705 ------ ------ Total deferred tax assets 20,567 26,202 Deferred tax liabilities: Accelerated depreciation 6,330 7,016 Gain on formation of Genlyte Thomas 22,491 22,767 Other 1,254 510 ------- ------- Total deferred tax liabilities 30,075 30,293 ------- ------- Net deferred tax liability $ 9,508 $ 4,091 ======= ======= Classification: Current asset $22,289 $18,101 Net long-term liability 31,797 22,192 ------- ------- Net deferred tax liability $ 9,508 $ 4,091 ======= ======= Deferred tax assets and liabilities are classified according to the related asset and liability classification on the consolidated balance sheets. Undistributed earnings of non-U.S. subsidiaries included in consolidated retained earnings amounted to $32,133 at December 31, 1999. These earnings, which reflected full provision for non-U.S. income taxes, are indefinitely reinvested in non-U.S. operations or will be remitted substantially free of additional tax. Accordingly, no provision has been made for taxes that may be payable upon remittance of such earnings. (7) LONG-TERM DEBT Long-term debt at December 31 consisted of the following: 1999 1998 ---------- ---------- Revolving credit notes $ -- $ 28,000 Canadian dollar notes 20,772 -- Industrial revenue bonds 10,500 10,500 Loan payable to Thomas 22,287 22,287 Capital leases and other 2,052 267 ---------- ---------- 55,611 61,054 Less: current maturities 1,647 202 ---------- ---------- Total long-term debt $ 53,964 $ 60,852 ========== ========== 14 Genlyte Thomas has a $150,000 revolving credit agreement (the "Facility") with various banks that matures in 2003. Under the most restrictive borrowing covenant, which is the fixed charge coverage ratio, Genlyte Thomas could incur approximately $25,000 in additional fixed charges. Total borrowings under the Facility as of December 31, 1999 and 1998, were $0 and $28,000, respectively. Outstanding borrowings bear interest at the option of Genlyte Thomas based on the bank's base rate or the LIBOR rate plus a spread as determined by total indebtedness. The borrowings as of December 31, 1998 were classified as long-term because of Genlyte Thomas' intention to refinance these obligations on a long-term basis through its revolving credit agreement. In addition, Genlyte Thomas has outstanding approximately $39,400 of letters of credit, which reduce the amount available to borrow under the Facility. The amount outstanding under the Facility is secured, if requested by the banking group, by liens on domestic accounts receivable, inventories, and machinery and equipment, as well as the investments in certain subsidiaries of Genlyte Thomas. The net book value of assets subject to lien at December 31, 1999 was $294,770. Genlyte Thomas has CDN$30,000 of borrowings through its Canadian subsidiary Genlyte Thomas Group Nova Scotia ULC. These borrowings will be repaid in installments in each of the next five years. Interest rates on these borrowings can be either the Canadian prime rate or the Canadian LIBOR rate plus a spread of 50 basis points. These borrowings are backed by the letters of credit mentioned above. Genlyte Thomas has $10,500 of variable rate demand Industrial Revenue Bonds that mature during 2009 to 2010. The average borrowing rate on these bonds was 3.3% in 1999 and 3.5% in 1998. These bonds are backed by the letters of credit mentioned above. The loan payable to Thomas accrues interest quarterly based on the 90 day LIBOR rate plus a spread as determined by the Facility. This loan can be prepaid in whole or in part without penalty, ultimately maturing in 2003. The annual maturities of long-term debt are summarized as follows: Year ending December 31 - -------------------------------------------------------------- 2000 $ 1,647 2001 2,624 2002 3,402 2003 26,584 2004 10,541 Thereafter 10,813 --------- Total long-term debt $ 55,611 ========= (8) STOCK OPTIONS The Genlyte 1998 Stock Option Plan (the "Plan") was established for the benefit of key employees of Genlyte Thomas and directors of Genlyte. The Plan replaced the 1988 stock option plan, options under which are currently outstanding. The Plan provides that an aggregate of 2,000,000 shares of Genlyte common stock may be granted as nonqualified stock options, provided that no options may be granted if the number of shares of Genlyte common stock that may be issued upon the exercise of outstanding options would exceed the lesser of 1,700,000 shares of Genlyte common stock or 10% of the issued and outstanding shares of Genlyte common stock. The option exercise prices are established by the Board of Directors of Genlyte and cannot be less than the higher of the book value or the fair market value of a share of common stock on the date of the grant. Options become exercisable at 15 the rate of 50% per year commencing two years after the date of the grant. Transactions under the 1998 and 1988 Stock Option Plans are summarized below: Weighted Average Exercise Price Shares Per Share ------ ---------------- Outstanding December 31, 1996 1,021,973 $ 6.33 Granted 179,000 16.71 Exercised (396,031) 5.07 Canceled (93,992) 6.54 Outstanding December 31, 1997 710,950 9.63 Granted 235,960 20.03 Exercised (146,950) 6.27 Canceled (44,625) 13.54 Outstanding December 31, 1998 755,335 13.30 Granted 202,550 19.55 Exercised (152,800) 7.58 Canceled (45,175) 17.67 Outstanding December 31, 1999 759,910 15.86 Exercisable at End of Year December 31, 1997 203,450 6.31 December 31, 1998 279,750 7.72 December 31, 1999 289,450 10.27 The weighted average fair values of options granted in 1999, 1998 and 1997 were $9.51, $10.05, and $7.42, respectively. The options outstanding at December 31, 1999 have a weighted average remaining contractual life of 4.06 years. The fair value of these options was estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions: 1999 1998 1997 ---- ---- ---- Risk free interest rate 5.78% 4.74% 5.89% Expected life, in years 6.0 5.9 5.0 Expected volatility 40.5 45.6 45.8 Expected dividends -- -- -- The Black-Scholes pricing model was developed for use in estimating the fair value of non-traded options that have a seven- year vesting restriction. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because Genlyte's stock options have characteristics different from those of traded options, and changes in the subjective assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measurement of the fair value of Genlyte's stock options. The Company accounts for this plan under APB Opinion No. 25, under which no compensation cost has been recognized. Had compensation cost for the plan been determined consistent with Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), the Company's net income and earnings per share would have been reduced to the pro forma amounts below. Because the method of accounting in SFAS No. 123 has not been applied to options granted prior to January 1, 1995, the resulting pro forma compensation cost may not be representative of that to be expected in future years. 16 1999 1998 1997 -------- -------- -------- Net income As reported $ 32,781 $ 26,760 $ 19,113 Pro forma 31,673 25,431 18,610 Earnings per share - basic As reported 2.37 1.96 1.46 Pro forma 2.29 1.86 1.42 Earnings per share - diluted As reported 2.37 1.95 1.42 Pro forma 2.29 1.86 1.38 (9) PREFERRED STOCK PURCHASE RIGHTS On September 13, 1999, Genlyte declared a dividend, as of the expiration (September 18, 1999) of the rights issued under the Stockholder Rights Plan dated as of August 29, 1989, of one preferred stock purchase right for each outstanding share of Genlyte's common stock. Under certain conditions, each right may be exercised to purchase one one-hundredth of a share of junior participating cumulative preferred stock at a price of $105.00 per share. The preferred stock purchased upon exercise of the rights will have a minimum preferential quarterly dividend of $25.00 per share and a minimum liquidation payment of $100.00 per share. Each share of preferred stock will have one hundred votes. Rights become exercisable when a person, entity, or group of persons or entities ("Acquiring Person") acquires, or 10 business days following a tender offer to acquire, ownership of 20% or more of Genlyte's outstanding common stock. In the event that any person becomes an Acquiring Person, each right holder will have the right to receive the number of shares of common stock having a then current market value equal to two times the aggregate exercise price of such rights. If Genlyte were to enter into certain business combination or disposition transactions with an Acquiring Person, each right holder will have the right to receive shares of common stock of the acquiring company having a value equal to two times the aggregate exercise price of the rights. Genlyte may redeem these rights in whole at a price of $.01 per right. The rights expire on September 12, 2009. (10) RETIREMENT PLANS The Company has defined benefit plans which cover the majority of its full-time employees. The Company's policy for funded plans is to make contributions equal to or greater than the requirements prescribed by the Employee Retirement Income Security Act. The plans' assets consist primarily of stocks and bonds. Pension costs for all Company defined benefit plans are actuarially computed. The Company also has other defined contribution plans, including those covering certain former Genlyte and Thomas employees. The amounts included in the accompanying consolidated balance sheets based on the funded status of the defined benefit plans at September 30, 1999 and 1998 17 (September 30, 1999 and December 31, 1998 for the Canadian plans) follow:
U.S. Plans Canadian Plans -------------------- -------------------- 1999 1998 1999 1998 -------- -------- -------- -------- CHANGE IN BENEFIT OBLIGATIONS Benefit obligations, beginning $ 81,097 $ 52,519 $ 4,562 $ 3,750 Service cost 2,310 1,789 252 211 Interest cost 5,358 4,281 339 295 Benefits paid (4,101) (3,436) (221) (258) Amendments -- 260 38 -- Obligations assumed by Genlyte Thomas -- 21,223 -- -- Other-primarily actuarial (gain) loss (10,737) 4,461 (440) 564 -------- -------- -------- -------- Benefit obligation, ending $ 73,927 $ 81,097 $ 4,530 $ 4,562 ======== ======== ======== ======== CHANGE IN PLAN ASSETS Plan assets at fair value, beginning $ 68,902 $ 49,457 $ 5,030 $ 4,737 Actual return on plan assets 6,965 219 80 338 Employer contributions 1,611 2,459 123 178 Member contributions -- -- 148 135 Assets assumed by Genlyte Thomas -- 20,203 -- -- Benefits paid (4,101) (3,436) (221) (258) Other -- -- 336 (100) -------- -------- -------- -------- Plan assets at fair value, ending $ 73,377 $ 68,902 $ 5,496 $ 5,030 ======== ======== ======== ======== FUNDED STATUS OF THE PLANS Plan assets (less than) benefit obligations $ (550) $(12,195) $ 966 $ 468 Unrecognized transition obligation at adoption 200 487 (33) (36) Unrecognized actuarial (gain) (11,563) (1,143) (718) (52) Unrecognized prior service cost 2,024 4,017 110 78 Contributions subsequent to measurement date 946 -- 259 -- -------- -------- -------- -------- Net pension asset (liability) $ (8,943) $ (8,834) $ 584 $ 458 ======== ======== ======== ======== BALANCE SHEET ASSET (LIABILITY) Accrued pension liability $(13,763) $(14,908) $ -- $ (12) Prepaid pension cost 4,468 1,603 584 470 Intangible asset 339 2,961 -- -- Accumulated other comprehensive income 13 1,510 -- -- -------- -------- -------- -------- Net asset (liability) recognized $ (8,943) $ (8,834) $ 584 $ 458 ======== ======== ======== ======== WEIGHTED AVERAGE ASSUMPTIONS Discount rate 7.75% 6.75% 7.75% 6.50% Rate of compensation increase 4.00% 5.00% 4.00% 4.00% Expected return on plan assets 8.50% 8.50% 7.75% 6.50% 18 U.S. Plans ----------------------------------- 1999 1998 1997 ---------- ---------- ---------- COMPONENTS OF NET PERIODIC BENEFIT COSTS Service cost $ 2,310 $ 1,789 $ 1,483 Interest cost 5,358 4,281 3,633 Expected return on plan assets (5,536) (3,800) (2,895) Amortization of transition amounts 181 18 -- Amortization of prior service cost 293 345 269 Recognized actuarial loss 60 202 178 ---------- --------- --------- Net pension expense of defined benefit plans 2,666 2,835 2,668 Defined contribution plans 671 720 -- Multi-employer plans 294 207 211 ---------- --------- --------- Total benefit costs $ 3,631 $ 3,762 $ 2,879 ========== ========= =========
Canadian Plans ----------------------------------- 1999 1998 1997 ---------- ---------- ---------- COMPONENTS OF NET PERIODIC BENEFIT COSTS Service cost $ 252 $ 211 $ 142 Interest cost 339 295 300 Expected return on plan assets (368) (315) (368) Amortization of transition amounts (6) (5) (6) Amortization of prior service cost 5 5 5 Recognized actuarial (gain) loss (1) 2 (1) ---------- --------- --------- Net pension expense of defined benefit plans 221 193 72 Multi-employer plans -- -- -- ---------- --------- --------- Total benefit costs $ 221 $ 193 $ 72 ========== ========= =========
A summary of the plans in which benefit obligations and accumulated benefit obligations exceed fair value of assets follows: 1999 1998 ---------- ---------- Benefit obligation $ 6,830 $ 59,669 Accumulated benefit obligation 6,569 52,010 Plan assets at fair value 3,470 45,091 Effective January 1, 2000, the Company has frozen the salaried pension plan of certain employees. These employees will be eligible for Company matching on their 401(k) contributions as well as being a participant in the Genlyte Thomas Retirement Savings and Investment Plan. This will result in a curtailment credit of $603, which will be a reduction of net pension expense in 2000. (11) POST-RETIREMENT PLANS The Company provides post-retirement medical and life insurance benefits for certain retirees and employees, and accrues the cost of such benefits during the service lives of such employees. The amounts included in the accompanying consolidated balance sheets for the post-retirement benefit plans based on the funded status at September 30, 1999 and December 31, 1998, follow:
1999 1998 ----------- ----------- CHANGE IN BENEFIT OBLIGATIONS Benefit obligations, beginning $ 3,657 $ -- Service cost 39 8 Interest cost 294 83 Benefits paid (413) (166) Obligations assumed by Genlyte Thomas -- 3,638 Other-primarily actuarial loss 574 94 ----------- ----------- Benefit obligations, ending $ 4,151 $ 3,657 =========== =========== FUNDED STATUS OF THE PLANS Plan assets (less than) benefit obligation $ (4,151) $ (3,657) Unrecognized net obligation at adoption -- 3,008 Unrecognized actuarial (gain) loss 574 (973) ----------- ----------- Accrued liability $ (3,577) $ (1,622) =========== =========== Employer contributions $ 413 $ 166 Benefits paid $ (413) $ (166) COMPONENTS OF NET PERIODIC BENEFIT COSTS Service cost $ 39 $ 8 Interest cost 294 83 Recognized actuarial loss -- 69 ----------- ----------- Net expense of post-retirement plans $ 333 $ 160 =========== ===========
19 The assumed discount rates used in measuring the obligations as of September 30, 1999, and December 31, 1998 were 7.75% and 6.75%, respectively. The assumed health care cost trend rate for 2000 was 7%, declining to 4.5% in 2006. A one-percentage-point increase or decrease in the assumed health care cost trend rate for each year would increase or decrease the obligation at September 30, 1999 by approximately $300, and the 1999 post-retirement benefit expense by approximately $27. (12) ACCRUED EXPENSES Accrued expenses at December 31 consisted of the following: 1999 1998 ---------- ---------- Employee related costs and benefits $ 30,267 $ 30,201 Advertising and sales promotion 8,331 8,168 Income and other taxes payable 9,043 6,075 Other accrued expenses 32,360 16,986 ---------- ---------- Total accrued expenses $ 80,001 $ 61,430 ========== ========== (13) LEASE COMMITMENTS The Company rents office space, equipment and computers under non-cancelable operating leases. Rental expense for operating leases during 1999, 1998 and 1997 amounted to $6,184, $4,229, and $2,903, respectively. One division of the Company also rents manufacturing and computer equipment and software under agreements that are classified as capital leases. Future required minimum lease payments as of December 31, 1999 were as follows:
Operating Capital Leases Leases ------------ ------------ 2000 $ 5,872 $ 746 2001 4,652 582 2002 2,896 448 2003 1,811 232 2004 1,697 300 Thereafter 1,499 -- ------------ ------------ Total minimum lease payments $ 18,427 2,308 ============ Less amount representing interest 344 ------------ Present value of net minimum lease payments $ 1,964 ============
(14) CONTINGENCIES Genlyte has been named as one of a number of corporate and individual defendants in an adversary proceeding filed on June 8, 1995, arising out of the Chapter 11 bankruptcy filing of Keene Corporation ("Keene"). Except for the last count, as discussed below, the claims and causes of action set forth in the June 8, 1995 complaint (the "complaint") are substantially the same as were brought against Genlyte in the U.S. District Court in New York in August 1993, (which original proceeding was permanently enjoined as a result of Keene's reorganization plan). The complaint is being prosecuted by the Creditors Trust created for the benefit of Keene's creditors (the "Trust"), seeking from the defendants, collectively, damages in excess of $700 million, rescission of certain asset sale and stock transactions, and other relief. With respect to Genlyte, the complaint (some of the claims of which have since been restricted, as noted below) principally 20 maintains that certain lighting assets of Keene were sold to a predecessor of Genlyte in 1984 at less than fair value, while both Keene and Genlyte were wholly-owned subsidiaries of Bairnco Corporation ("Bairnco"). The complaint also challenges Bairnco's spin-off of Genlyte in August 1988. Other allegations are that Genlyte, as well as other corporate defendants, are liable as corporate successors to Keene. The complaint fails to specify the amount of damages sought against Genlyte. The complaint also alleges a violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). Following confirmation of the Keene reorganization plan, the parties moved to withdraw the case from bankruptcy court to the Southern District of New York Federal District Court. The case is now pending before the Federal District Court. On October 13, 1998, the Court issued an opinion dismissing certain counts as to Genlyte and certain other corporate defendants. In particular, the Court dismissed the count of the complaint against Genlyte that alleged the 1988 spin-off was a fraudulent transaction, and the count alleging a violation of RICO. The Court also denied a motion to dismiss the challenge to the 1984 transaction on statute of limitations grounds and ruled that the complaint should not be dismissed for failure to specifically plead fraud. On January 5 and 6, 1999, the Court rendered additional rulings further restricting the claims by the Trust against Genlyte and other corporate defendants, and dismissing the claims against all remaining individual defendants except one. The primary effect of the rulings with respect to claims against Genlyte was to require the Trust to prove that the 1984 sale of certain lighting assets of Keene was made with actual intent to defraud present and future creditors of Genlyte's predecessor. Discovery, which was stayed since commencement of the action, is now ongoing. Genlyte has filed its answer to the complaint, denying liability, and is in the process of responding to and requesting discovery. Genlyte believes that it has meritorious defenses to the adversary proceeding and will defend said action vigorously. Additionally, the Company is a defendant and/or potentially responsible party, with other companies, in actions and proceedings under state and Federal environmental laws including the Federal Comprehensive Environmental Response Compensation and Liability Act, as amended ("Superfund"). Management does not believe that the disposition of the lawsuits and/or proceedings will have a material effect on the Company's financial condition, results of operations, or liquidity. In the normal course of business, the Company is a party to legal proceedings and claims. When costs can be reasonably estimated, appropriate liabilities or reserves for such matters are recorded. While management currently believes the amount of ultimate liability, if any, with respect to these actions will not materially affect the financial condition, results of operations, or liquidity of the Company, the ultimate outcome of any litigation is uncertain. Were an unfavorable outcome to occur, the impact could be material to the Company. (15) SEGMENT REPORTING In 1998, the Company adopted Statement of Financial Accounting Standards No. 131, "Disclosures About Segments of an Enterprise and Related Information" ("SFAS No. 131"). Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company's reportable operating segments include the Commercial Segment, the Residential Segment, and the Industrial and Other Segment. Intersegment sales are eliminated in consolidation and therefore not presented in the table below. Operating Segments: Industrial 1999 Commercial Residential and Other Total - ---- ---------- ----------- ---------- -------- Net sales $689,167 $145,040 $144,095 $978,302 Operating profit 65,938 7,898 13,025 86,861 Assets 391,493 96,007 88,210 575,710 Depreciation and amortization 16,595 3,532 3,708 23,835 Expenditures for plant and equipment 14,399 3,023 3,092 20,514 21 Industrial 1998 Commercial Residential and Other Total - ---- ---------- ----------- ---------- -------- Net sales $463,761 $102,327 $ 98,007 $664,095 Operating profit 44,565 5,439 9,286 59,290 Assets 344,629 76,041 72,831 493,501 Depreciation and amortization 10,522 2,321 2,223 15,066 Expenditures for plant and equipment 12,176 2,687 2,573 17,436 Industrial 1997 Commercial Residential and Other Total - ---- ---------- ----------- ---------- -------- Net sales $342,675 $ 73,270 $ 72,016 $487,961 Operating profit 28,189 3,249 6,183 37,621 Assets 178,393 38,144 37,491 254,028 Depreciation and amortization 8,537 1,825 1,794 12,156 Expenditures for plant and equipment 8,144 1,741 1,712 11,597 (16) GEOGRAPHICAL INFORMATION The Company has operations throughout North America. Information about the Company's operations by geographical area for the years ended December 31, 1999, 1998 and 1997 follows. Foreign balances represent primarily Canada and some Mexico. 1999 U.S. FOREIGN TOTAL - ---- -------- -------- -------- Net sales $855,199 $123,103 $978,302 Operating profit 73,719 13,142 86,861 Assets 441,008 134,702 575,710 Depreciation and amortization 19,178 4,657 23,835 Expenditures for plant and equipment 16,506 4,008 20,514 1998 U.S. FOREIGN TOTAL - ---- -------- -------- -------- Net sales $578,308 $ 85,787 $664,095 Operating profit 52,807 6,483 59,290 Assets 433,204 60,297 493,501 Depreciation and amortization 12,613 2,453 15,066 Expenditures for plant and equipment 11,088 6,348 17,436 1997 U.S. FOREIGN TOTAL - ---- -------- -------- -------- Net sales $423,185 $ 64,776 $487,961 Operating profit 33,837 3,784 37,621 Assets 224,969 29,059 254,028 Depreciation and amortization 10,254 1,902 12,156 Expenditures for plant and equipment 9,717 1,880 11,597 22 (17) QUARTERLY RESULTS OF OPERATIONS Quarter ----------------------------------------- 1999 1st 2nd 3rd 4th Full Year - ---- -------- -------- -------- -------- --------- Net sales $237,476 $243,645 $257,811 $239,370 $978,302 Operating profit 18,912 21,044 24,276 22,629 86,861 Net income 6,955 7,860 9,258 8,708 32,781 Earnings per share: Basic .50 .57 .67 .63 2.37 Diluted .50 .57 .66 .63 2.37 Market price High 19 3/8 23 9/16 26 25 7/8 26 Low 16 16 1/2 21 7/16 20 1/8 16 Quarter ----------------------------------------- 1998 1st 2nd 3rd 4th Full Year - ---- -------- -------- -------- -------- --------- Net sales $130,124 $130,327 $174,178 $229,466 $664,095 Operating profit 11,625 12,339 16,330 18,996 59,290 Net income 6,146 6,475 6,900 7,239 26,760 Earnings per share: Basic .46 .47 .50 .53 1.96 Diluted .45 .47 .50 .53 1.95 Market price High 20 28 3/8 27 7/8 20 3/4 28 3/8 Low 15 3/4 19 3/4 17 16 15 3/4 (18) SUBSEQUENT EVENTS On February 8, 2000, the Company announced that it has reached a tentative agreement to acquire Translite Systems, Inc., a San Carlos, California based manufacturer and marketer of low-voltage cable and track lighting systems. Translite Systems, Inc. is one of the leading designers and manufacturers of accent track systems for commercial, retail and residential applications. On February 22, 2000, Genlyte announced that it plans to repurchase up to 5%, or approximately 700,000 shares, of its outstanding shares of common stock in the open market or through privately negotiated transactions at the prevailing market price. Shares purchased will be held in the corporate treasury and will be used for general corporate purposes. 23 EX-18 7 EXHIBIT 18 EXHIBIT 18 LETTER RE CHANGE IN ACCOUNTING PRINCIPLE TO THE GENLYTE GROUP INCORPORATED This letter is written to meet the requirements of Regulation S-K calling for a letter from a registrant's independent accountants whenever there has been a change in accounting principle or practice. As of August 30, 1998, Genlyte changed from the first-in, first-out method of accounting for inventory to the last-in, first-out method. According to management of Genlyte, this change was made to have a consistent method throughout the U.S. operations because the Thomas Lighting U.S. inventories, now consolidated with Genlyte through Genlyte Thomas, are valued using the last-in, first-out method. A complete coordinated set of financial and reporting standards for determining the preferability of accounting principles among acceptable alternative principles has not been established by the accounting profession. Thus, we cannot make an objective determination of whether the change in accounting described in the preceding paragraph is to a preferable method. However, we have reviewed the pertinent factors, including those related to financial reporting, in this particular case on a subjective basis, and our opinion stated below is based on our determination made in this manner. We are of the opinion that Genlyte's change in method of accounting is to an acceptable alternative method of accounting, which, based upon the reasons stated for the change and our discussion with you, is also preferable under the circumstances in this particular case. In arriving at this opinion, we have relied on the business judgment and business planning of your management. /s/ ARTHUR ANDERSEN LLP EX-21 8 EXHIBIT 21 EXHIBIT 21 SUBSIDIARIES OF THE GENLYTE GROUP INCORPORATED DECEMBER 31, 1999 The Genlyte Group Incorporated has the following subsidiaries, 100% owned, except as noted: Genlyte Thomas Group LLC, a Delaware limited liability company (68% owned) Diaman-Mexo, S.A. De C.V., a Mexican corporation Fibre Light U.S. LLC, a Delaware limited liability company (80% owned) Genlyte Thomas Exports Inc., a Barbados corporation Genlyte Thomas Group Nova Scotia ULC, a Nova Scotian unlimited liability company GTG International Acquisitions LP, a Canadian limited partnership Lumec Holding Corp., a Canadian corporation Lumec, Inc., a Canadian corporation Lumec-Schreder, Inc., a Canadian corporation (50% owned) Lightolier De Mexico, S.A. De C.V., a Mexican corporation Thomas De Mexico, S.A. De C.V., a Mexican corporation Thomas Schreder Co., a U.S. partnership (50% owned) Yamada Day-Brite, Ltd., a Japanese corporation (50% owned) Genlyte Canadian Holdings, Inc., a Kentucky corporation GTG Intangible Holdings, LLP, a Kentucky limited liability partnership (68% owned) Canlyte Inc., a Canadian corporation Ledalite Architectural Products LP, a Canadian limited partnership EX-23 9 EXHIBIT 23 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the inclusion of or incorporation by reference in (a) The Genlyte Group Incorporated's (the "Company's") previously filed Registration Statements on Form S-8 (Registration No. 333-30066, No. 333-93369, No. 33-30722 and No. 33-27190) and (b) the Company's Form 10-K for the year ended December 31, 1999 of our reports dated February 2, 2000 included in the Company's Annual Report to Stockholders for the year ended December 31, 1999. /s/ ARTHUR ANDERSEN LLP Louisville, Kentucky March 24, 2000 EX-27 10 FDS
5 0000833076 THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES 1,000 USD 12-MOS DEC-31-1999 JAN-01-1999 DEC-31-1999 1 22,660 0 155,428 14,910 136,041 344,067 322,867 217,878 575,710 168,365 53,964 0 0 137 202,405 575,710 978,302 978,302 648,626 891,441 0 0 4,584 57,009 24,228 32,781 0 0 0 32,781 2.37 2.37
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