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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1993
_ OR
/_/ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission File Number 1-5426.
THOMAS INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
Delaware 61-0505332
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4360 Brownsboro Road, Louisville, Kentucky 40207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: 502/893-4600
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $1 Par Value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark 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. Yes x No _____
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 _____
As of March 4, 1994, 10,050,595 shares of the registrant's Common Stock were
outstanding.
While it is difficult to determine the number of shares owned by non-
affiliates (within the meaning of such term under the applicable regulations
of the Securities and Exchange Commission), the registrant estimates that the
aggregate market value of the registrant's Common Stock held by non-affiliates
on March 4, 1994 (based upon an estimate that 90.9 percent of the shares is so
owned by non-affiliates and upon the closing price for the Common Stock on the
New York Stock Exchange), was $141,600,000.
Portions of the following documents are incorporated into this Form 10-K by
reference: Proxy Statement for Annual Meeting
of Shareholders to be held on April 21, 1994 Part III
Annual Report to Shareholders for fiscal
year ended December 31, 1993 Parts I and II
Exhibit Index is located on page 24.
PART I.
ITEM 1. BUSINESS
a. General Development of Business.
The Company began operations in 1928 and has grown through both internal
expansion and new business acquisitions. Efforts since 1984 have
focused on expansion of the Lighting Segment and the Compressors and
Vacuum Pumps Segment as the two core businesses. The significant recent
additions to these two core segments have been ASF, Pneumotive, Brey,
and WISA, all compressor and vacuum pump companies, acquired from 1987
through 1990; and the Lumec and Day-Brite Lighting additions in 1987 and
1989, respectively. These acquisitions have been strategically
important to the Company, as they allow us to offer a more complete
product line and make us a more prominent participant in both the
lighting and compressor and vacuum pump markets.
The Lighting Segment operates in a multi-faceted industry, serving the
residential, commercial, industrial, and outdoor markets. The industry
is dominated by five companies in the U.S. and Canada, one of which is
Thomas Industries. Although the industry is subject to the cyclicality
of residential and commercial construction activity, replacement and
renovation activity moderates these cycles somewhat.
Operations of the Compressors and Vacuum Pump Segment help the Company
moderate the impact of the Lighting Segment's vulnerability to
construction and economic cycles. Thomas believes it is the major
supplier to the original equipment manufacturer (OEM) medical market and
a significant participant in its other OEM compressor and vacuum pump
markets.
The Company's other disassociated businesses consist of three smaller
operating units that provide commercial construction hardware and
consumer fireplaces and fireplace accessory products.
b. Financial Information about Industry Segments.
The information required by this item is set forth in the registrant's
Annual Report to Shareholders for the fiscal year ended December 31,
1993, in Note 11 of Notes to Consolidated Financial Statements found on
page 29 (under the caption "Industry Segment Information"), which
information is incorporated herein by reference.
c. Narrative Description of Business.
The Company's principal businesses are lighting, including
residential, commercial, industrial, and outdoor lighting fixtures;
compressors and vacuum pumps; and other products (including door control
devices and hardware, fire screens, gas log sets, fireplace accessories,
insulated metal chimneys, and zero-clearance fireplaces). The Company
designs, manufactures, markets, and sells these products; and maintains
corporate offices in Louisville, Kentucky. The Company operates
ITEM 1. (Continued)
numerous divisions and subsidiaries, with facilities throughout the
U.S. and operations in Canada and Germany. The Company also maintains
sales offices in Brazil, England, Italy, and Japan and has joint
ventures in Japan and in the U.S. and Canada with a Belgian company.
Lighting Segment
The Company's residential lighting products--its original base--are
designed for a broad range of consumers. The Company stresses
product development to meet changing needs and demands. The Company
typically targets the more upscale, single-family homeowner but also
has a line for the do-it-yourself homeowner. The Company also is
strongly involved in the replacement lighting market, which is a
growing component of the overall lighting industry. Under the Thomas
and Premier brand names, the Company's residential lighting line
includes high-style chandeliers and bathroom fixtures, plus quality
lighting products for foyers, dining rooms, living rooms,
entertainment areas, kitchens, bedrooms, and outdoors.
The Thomas and Premier lines are distributed throughout the United
States through a network of electrical distributors, retail lighting
showrooms, and home centers, which, in turn, sell to electrical
contractors, builders, and consumers.
Residential lighting fixtures are manufactured and sold in the U.S.
and Canada under the Thomas and Premier trade names; and those trade
names are recognized as important to this Segment's business.
The Company believes it has established a reputation as an innovator
and pioneer in track and recessed lighting technology and is one of
the nation's leading manufacturers of fluorescent and high-intensity
discharge ("HID") commercial and industrial products, as well as
signal and security equipment. The Company's commercial and
industrial product line can be applied to virtually any application,
using a variety of lamp sources, and is designed for efficiency as
well as energy savings. The Company's outdoor lighting products are
known for their high performance in efficiency, glare control, and
uniformity of illumination. Products are manufactured and sold in
the U.S. and Canada under the Day-Brite/Benjamin, Gardco, Capri,
Electro/Connect, McPhilben, Omega, Emco, Lumec, and Thomas Lighting
trade names.
The Lighting Segment accounted for 66 percent of the Company's sales
in 1993, compared to 68 percent in 1992 and 69 percent in 1991.
Compressors and Vacuum Pumps Segment
This Segment includes air compressors and vacuum pumps manufactured
under the Thomas name for use in the finished products of other
domestic or foreign manufacturers. Its products also are
manufactured for private-label sale in the construction compressor
ITEM 1. (Continued)
industry. Thomas specializes in compressor applications below 1.5
horsepower. Such compressors and vacuum pumps are found in medical
equipment, vending machines, photocopiers, computer tape drives,
automotive and transportation equipment, liquid dispensing
applications, gasoline vapor recovery, and waste disposal equipment.
Thomas is the major compressor and vacuum pump participant in
the medical OEM industry worldwide. The Company offers a wide
selection of branded standard air compressors and vacuum pumps and
will modify or design its products to meet exacting OEM applications.
In addition, the Company manufactures and sells compressors and
related accessories for commercial and consumer use. Sales, both
domestic and international, traditionally are made through hardware
stores, home centers, building supply dealers, and mass merchandisers.
The Pneumotive Division manufactures rotary vane and piston
compressors and vacuum pumps, as well as air motors and vacuum
ejectors, for a variety of applications to the OEM market as well as
through fluid power and large compressor distributors.
The Brey Division produces a complementary line of rotary vane
compressors and vacuum pumps, with expertise in applications of less
than 1/8 horsepower. These products are currently distributed for
sale primarily in Europe, with increasing worldwide marketing.
Under the ASF name, the Company produces diaphragm and peristaltic
compressors and vacuum pumps with applications in photography,
medical, air and gas sampling, and dish washing equipment, as well as
laboratory instruments and leak detection devices. These products
are marketed worldwide to original equipment manufacturers.
WISA produces a line of linear-type vibrating and diaphragm
compressors and vacuum pumps for various applications, the foremost
of which is gas analyzers. Sales and distribution are made primarily
in Europe and the U.S., with expanding availability worldwide.
The Thomas, ASF, Pneumotive, Brey, WISA, and Sprayit trade names are
recognized in the market and are important to the Segment.
The Compressors and Vacuum Pumps Segment accounted for 29 percent of
the Company's sales in 1993, compared to 26 percent in 1992 and 25
percent in 1991.
Other Products
Other, smaller divisions of the Company manufacture and market
architectural door trim, hardware, and door controls through contract
hardware distributors. Door closers, exit devices, and pivots are
marketed through original equipment manufacturers. Other products
include high-quality glass fire screens, gas log sets, factory-built
ITEM 1. (Continued)
fireplaces, chimneys, and fireplace accessories marketed through
specialty shops, distributors, and special equipment dealers.
Jackson Exit Device, Builders Brass Works, Oliver-MacLeod, Portland
Willamette, Glassfyre, Premier, Ultrafyre, and Pro-Jet are important
trade names to these businesses.
These products, on a combined basis, accounted for 5 percent of the
Company's sales in 1993, compared to 6 percent in 1992 and 6 percent
in 1991.
--------------------
No single customer of the Company accounted for more than 10 percent
of consolidated net sales or more than 10 percent of any segment's net
sales in 1993, and no material part of the business is dependent upon
a single customer the loss of which could have a materially adverse
effect on the business of the Company.
The backlog of unshipped orders was $86 million at December 31, 1993--
56 percent Lighting, 43 percent Compressors and Vacuum Pumps, and 1
percent Other--and $91 million at December 31, 1992--59 percent
Lighting, 40 percent Compressors and Vacuum Pumps, and 1 percent
Other. The Company believes substantially all of such orders are
firm, although some orders are subject to cancellation. Substantially
all of these orders are filled in the succeeding year.
Competition in the lighting industry is strong in all markets served
by the Company. The industry has been consolidating significantly
over the last few years. It is estimated that five companies control
the majority of the market in the U.S. and Canada. Thomas Industries
is one of these top five. The Company stresses high quality and
energy efficient lighting products, while providing value and strong
customer support to compete in its markets.
The Compressors and Vacuum Pumps Segment competes worldwide in the
fractional horsepower compressor and vacuum pump markets. Management
believes it is the major supplier to the OEM medical market and a
significant participant in its other OEM markets. The Company
believes that it has adequate sources of materials and supplies for
each of its businesses.
There is no significant seasonal impact on the business of any
industry segment of the Company. Many of the lighting businesses
continue to be dependent on the construction markets, which are
subject to the overall health of the economy.
Working capital is provided principally from operating profits. The
Company maintains adequate lines of credit and financial resources to
meet the anticipated cash requirements in the year ahead.
ITEM 1. (Continued)
The Company has various patents and trademarks but does not consider its
business to be materially dependent upon any individual patent or
trademark.
During 1993, the Company spent $12.4 million on research activities
relating to the development of new products and the improvement of
existing products. Substantially all of this amount was Company-
sponsored activity. During 1992, the Company spent $12.5 million on
these activities and during 1991, $12.1 million.
Continued compliance with present and reasonably expected federal,
state, and local environmental regulations is not expected to have any
material effect upon capital expenditures, earnings, or the competitive
position of the Company and its subsidiaries.
The Company employs approximately 3,400 people.
d. Financial Information about Foreign and Domestic Operations and Export
Sales.
See Note 11 of Notes to Consolidated Financial Statements found on page
30 of the Annual Report to Shareholders for financial information about
foreign and domestic operations. Export sales for the years 1993, 1992,
and 1991, were $34,500,000, $32,800,000, and $29,500,000, respectively.
e. Executive Officers of the Registrant.
Year
Office or Position First Elected
Name with Company Age as an Officer
Timothy C. Brown President, Chief Executive 43 1984
Officer, Chairman of the
Executive Committee, and
Director
Clifford C. Moulton Group Vice President-- 46 1993
(A) Compressors and Vacuum
Pumps
Gerald E. Seebeck Group Vice President-- 48 1992
(B) Lighting
Phillip J. Stuecker Vice President, Chief 42 1984
Financial Officer, and
Secretary
Ronald D. Schneider Vice President, 43 1992
(C) Manufacturing Services
C. Barr Schuler Vice President, Corporate 53 1977
Development and Acquisitions
Gilbert R. Grady Vice President, Corporate 57 1981
Employee Relations
ITEM 1. (Continued)
(A) Clifford C. Moulton was elected an officer effective March 1, 1993.
Mr. Moulton had spent the past 23 years with Honeywell Corporation
in various management positions, most recently as Vice President and
General Manager of the Skinner Valve Division, since 1987.
(B) Gerald E. Seebeck was elected an officer on December 10, 1992. Mr.
Seebeck has held the positions of General Manager, Assistant General
Manager, and Senior Vice President, Operations, for the Commercial &
Industrial Lighting Division of the Company from 1989 through 1992.
Prior to 1989, Mr. Seebeck had held various management positions
with Emerson Electric Co., including Senior Vice President,
Operations, of Day-Brite Lighting, Inc. (a subsidiary of Emerson
Electric Co.), from 1988 until the May 15, 1989, acquisition of Day-
Brite Lighting, Inc., by the Company.
(C) Ronald D. Schneider was elected an officer effective April 16, 1992.
Mr. Schneider had held the position of Director, Manufacturing
Services, since 1989 and prior to that was Manufacturing Services
Manager at the Company's Power Air Division. He has been with the
Company since 1984.
All other officers listed have been executive officers for the past five
years.
ITEM 2. PROPERTIES
The Corporate offices of the Company are located in Louisville, Kentucky.
Due to the large number of individual locations and the diverse nature of
the operating facilities, it is neither practical nor significant to
describe all of the properties owned and leased by the Company. All of the
buildings are of steel, masonry, and concrete construction, are in generally
good condition, provide adequate and suitable space for the operations at
each location, and are of sufficient capacity for present and foreseeable
future needs.
With the reduction in volumes within the Lighting Segment due to the decline
in commercial and residential construction from 1991 through 1993, capacity
at these facilities is somewhat in excess of that required to meet current
demand. The following listing summarizes the Company's properties.
ITEM 2. (Continued)
Number
of Facilities Combined
Segment Owned Leased Square Feet Nature of Facilities
Lighting 9 4 1,948,672 Manufacturing plants
2 5 540,999 Distribution center
0 2 63,400 Administrative offices
0 1 14,000 Showroom
Compressors
and Vacuum 3 3 445,100 Manufacturing plants
Pumps 0 1 6,000 Distribution center
Other Products 3 1 324,698 Manufacturing plants
Corporate 0 2 16,186 Corporate headquarters
1 1 45,615 Leased to third parties
4 0 382,800 Property for sale
ITEM 3. LEGAL PROCEEDINGS
In the normal course of business, the Company and its subsidiaries are
parties to litigation. Management believes that these suits will be
resolved with no materially adverse impact on the financial condition of the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
The information required by this item is set forth in registrant's Annual
Report to Shareholders for the fiscal year ended December 31, 1993, on page
17 (under the caption "Common Stock Market Prices and Dividends") and on
pages 25 and 26 (under the caption "Note 5, Shareholders' Equity"), which
information is hereby incorporated by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is set forth in registrant's Annual
Report to Shareholders for the fiscal year ended December 31, 1993, on pages
32 and 33 (under the captions "Earnings Statistics, Financial Position, and
Data per Common Share"), which information is hereby incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is set forth in registrant's Annual
Report to Shareholders for the fiscal year ended December 31, 1993, on pages
ITEM 7. (Continued)
16 and 17 (under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations"), which information is hereby
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is set forth in registrant's Annual
Report to Shareholders for the fiscal year ended December 31, 1993, on pages
18 through 31 in the Consolidated Financial Statements, which information is
hereby incorporated herein by reference.
The supplementary data regarding quarterly results of operations is set
forth in registrant's Annual Report to Shareholders for the fiscal year
ended December 31, 1993, on page 28 (under the caption "Note 10, Summary of
Quarterly Results of Operations, Unaudited"), which information is
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
a. Directors of the Company
The information required by this item is set forth in registrant's Proxy
Statement for the Annual Meeting of Shareholders to be held on April 21,
1994, on pages 3 through 5 (under the caption "Election of Directors"),
and on page 15 (under the caption "Compliance with Section 16(a)"), which
information is hereby incorporated herein by reference.
b. Executive Officers of the Company
Reference is made to "Executive Officers of the Registrant" in Part I,
Item 1e.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is set forth in registrant's Proxy
Statement for the Annual Meeting of Shareholders to be held on April 21,
1994, on pages 6 through 12 (under the captions "Executive Compensation,"
"Compensation Committee Report on Executive Compensation," and "Performance
Graph") and on page 13 (under the caption "Compensation Committee Interlocks
and Insider Participation"), which information is hereby incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is set forth in registrant's Proxy
Statement for the Annual Meeting of Shareholders to be held on April 21,
1994, on pages 2 through 3 (under the caption "Securities Beneficially Owned
by Principal Shareholders and Management"), which information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is set forth in registrant's Proxy
Statement for the Annual Meeting of Shareholders to be held on April 21,
1994, on pages 3 through 5 (under the caption "Election of Directors").
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
a. (1) Financial Statements
The response to this portion of Item 14 is submitted as a separate
section of this report beginning on page 15.
(2) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a separate
section of this report beginning on page 15.
(3) Listing of Exhibits
Exhibit No. Exhibit
3(a) Restated Certificate of Incorporation, as amended,
filed as Exhibit 3(a) to registrant's report on
Form 10-Q dated August 11, 1988, hereby
incorporated by reference.
3(b) Bylaws, as amended March 17, 1993, filed as
Exhibit 3(b) to registrant's report on Form 10-K
dated March 25, 1993, hereby incorporated by
reference.
4 Note Agreement dated January 19, 1990, by and
among the Company and its Day-Brite Lighting,
Inc., subsidiary, Allstate Life Insurance Company,
and other investors filed on Form 10-K dated March
22, 1990, hereby incorporated by reference.
Copies of debt instruments for which the related
debt is less than 10% of consolidated total assets
will be furnished to the Commission upon request.
ITEM 14. (Continued)
Exhibit No. Exhibit
4(a) Rights Agreement filed by the registrant on Form
8A on December 23, 1987, hereby incorporated by
reference.
4(b) Amendment to Rights Agreement filed by the
registrant on Form 8-K on October 18, 1990, hereby
incorporated by reference.
10(a) Employment Agreements, filed as Exhibits 3(a)
through 3(k) to registrant's report on Form 10-Q
dated November 11, 1988, hereby incorporated by
reference.
10(b) Employment Agreements, filed as Exhibits 10(b) and
10(c) to registrant's report on Form 10-K dated
March 25, 1993, hereby incorporated by reference.
10(c) Trust Agreement, filed as Exhibit 10(l) to
registrant's report on Form 10-Q dated November
11, 1988, hereby incorporated by reference.
10(d) Indemnity Agreement, Amendment thereto, and
listing of Officers and Directors who signed,
filed as Exhibits 10(g) through 10(i) to
registrant's report on Form 10-K dated March 23,
1988, hereby incorporated by reference.
10(e) Severance pay policy of the Company, effective
October 1, 1988, covering all officers, filed as
Exhibit 10(d) to registrant's report on Form 10-K
dated March 23, 1989, hereby incorporated by
reference.
10(f) Severance pay policy of the Company, effective
October 1, 1988, covering all non-officer general
managers, filed as Exhibit 10(e) to registrant's
report on Form 10-K dated March 23, 1989, hereby
incorporated by reference.
10(g) Severance pay policy of the Company, effective
October 1, 1988, covering all other exempt salary
employees, filed as Exhibit 10(f) to registrant's
report on Form 10-K dated March 23, 1989, hereby
incorporated by reference.
10(h) 1987 Incentive Stock Plan as Amended, filed as
Annex A to the registrant's Proxy Statement on
March 17, 1989, hereby incorporated by reference.
13 Annual Report to Shareholders for 1993.
ITEM 14. (Continued)
Exhibit No. Exhibit
18 Letter re change in accounting principle
22 Subsidiaries of the Registrant.
23 Consent of KPMG Peat Marwick
23.a Consent of Ernst & Young
b. Reports on Form 8-K
There were no reports on Form 8-K for the three months ending December
31, 1993. A Form 8-K report was filed on February 11, 1994,
incorporating the Company's press release dated February 10, 1994. This
release announced that the Company's earnings for the fourth quarter and
year ended December 31, 1993, includes pretax charges of $3,500,000
($2,040,000 after tax) for restructuring charges to further consolidate
its Commercial & Industrial Lighting operations, including the closing of
the Long Island, New York, facility.
c. Exhibits
The response to this portion of Item 14 is submitted as a separate
section of this report beginning on page 24.
S I G N A T U R E S
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THOMAS INDUSTRIES INC.
Date March 18, 1994 By /S/ Timothy C. Brown
Timothy C. Brown, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
/S/ Walter S. Davis Chairman of the Board; 3/18/94
Walter S. Davis Director
/S/ Timothy C. Brown President; Chairman of 3/18/94
Timothy C. Brown the Executive Committee;
Director
(Chief Executive Officer)
/S/ Phillip J. Stuecker Vice President; Secretary 3/18/94
Phillip J. Stuecker (Chief Financial Officer)
/S/ David J. Stumler Controller; Assistant 3/18/94
David J. Stumler Secretary
(Chief Accounting Officer)
/S/ Peter P. Donis Director 3/18/94
Peter P. Donis
/S/ Wallace H. Dunbar Director 3/18/94
Wallace H. Dunbar
/S/ Roger P. Eklund Director 3/18/94
Roger P. Eklund
Signatures (Continued)
Signature Title Date
/S/ H. Joseph Ferguson Director 3/18/94
H. Joseph Ferguson
/S/ Gene P. Gardner Director 3/18/94
Gene P. Gardner
/S/ Lawrence E. Gloyd Director 3/18/94
Lawrence E. Gloyd
/S/ Ralph D. Ketchum Director 3/18/94
Ralph D. Ketchum
/S/ Franklin J. Lunding, Jr. Director 3/18/94
Franklin J. Lunding, Jr.
/S/ Bernard W. Rogers Director 3/18/94
Bernard W. Rogers
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) AND (2)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1993
THOMAS INDUSTRIES INC.
LOUISVILLE, KENTUCKY
FORM 10-K
ITEM 14(a)(1) AND (2)
THOMAS INDUSTRIES INC. AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of Thomas Industries Inc. and
subsidiaries, included in the annual report of the registrant to its
shareholders for the year ended December 31, 1993, are included in Item 8:
Consolidated Balance Sheets--December 31, 1993 and 1992
Consolidated Statements of Income--Years ended December 31, 1993, 1992, and
1991
Consolidated Statements of Shareholders' Equity--Years ended December 31,
1993, 1992, and 1991
Consolidated Statements of Cash Flows--Years ended December 31, 1993, 1992,
and 1991
Notes to Consolidated Financial Statements--December 31, 1993
The following consolidated financial statement schedules of Thomas Industries
Inc. and subsidiaries are included in Item 14(a)(2):
Schedule V -- Property, Plant, and Equipment
Schedule VI -- Accumulated Depreciation, Depletion, and Amortization
of Property, Plant, and Equipment
Schedule VIII -- Valuation and Qualifying Accounts
Schedule IX -- Short-Term Borrowings
Schedule X -- Supplementary Income Statement Information
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable and, therefore, have been
omitted.
KPMG PEAT MARWICK
Independent Auditors' Report
The Board of Directors and Shareholders
Thomas Industries Inc.
We have audited the consolidated balance sheet of Thomas Industries Inc. and
subsidiaries as of December 31, 1993, and the related consolidated statements
of income, shareholders' equity, and cash flows for the year then ended as
listed in the accompanying index. In connection with our audit of the 1993
consolidated financial statements, we also have audited the 1993 financial
statement schedules as listed in the accompanying index. These consolidated
financial statements and financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these 1993 consolidated financial statements and financial statement schedules
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the 1993 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Thomas
Industries Inc. and subsidiaries as of December 31, 1993, and the results of
their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles. Also in our opinion, the
related 1993 financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present fairly, in
all material respects, the information set forth therein.
As discussed in Note 7 to the consolidated financial statements, the Company
changed its method of accounting for postretirement benefits in 1993 to adopt
the provisions of the Financial Accounting Standards Board's Statement of
Financial Accounting Standards (SFAS) No. 106, Employers' Accounting for
Postretirement Benefits Other than Pensions. As discussed in Note 3, the
Company changed its method of accounting for income taxes in 1993 to adopt the
provisions of SFAS No. 109, Accounting for Income Taxes. As discussed in Note
1, the Company changed its method of accounting for certain inventories in
1993.
/S/KPMG PEAT MARWICK
Louisville, Kentucky
February 10, 1994
ERNST & YOUNG
Report of Independent Auditors
Board of Directors and Shareholders
Thomas Industries Inc.
We have audited the accompanying consolidated balance sheet of Thomas
Industries Inc. and subsidiaries as of December 31, 1992 and the related
consolidated statements of income, shareholders' equity, and cash flows for
each of the two years in the period ended December 31, 1992. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Thomas
Industries Inc. and subsidiaries at December 31, 1992, and the consolidated
results of their operations and their cash flows for each of the two years in
the period ended December 31, 1992 in conformity with generally accepted
accounting principles.
/S/ERNST & YOUNG
Louisville, Kentucky
February 11, 1993
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
Thomas Industries Inc. and Subsidiaries
December 31, 1993
Balance at Other Changes Balance at
Beginning Additions Add (Deduct) - End of
CLASSIFICATION of Period at Cost Retirements Describe Period
Year ended December 31, 1993
Land $6,428,841 $3,589 $0 ($53,748) $6,378,682
Buildings 32,073,771 1,546,886 (133,047) (363,671) 33,390,033
Leasehold Improvements 11,039,897 271,236 1,735,049 (121,109) 9,454,975
Machinery and Equipment 95,654,548 12,086,657 9,087,166 (954,881) 97,699,158
Totals $145,197,057 $13,908,368 (1) $10,689,168 ($1,493,409) (2) $146,922,848
Year ended December 31, 1992
Land $5,904,512 $610,828 $15,919 ($70,580) $6,428,841
Buildings 30,675,677 3,563,725 1,580,152 (585,479) 32,073,771
Leasehold Improvements 10,992,992 704,962 529,738 (128,319) 11,039,897
Machinery and Equipment 97,945,805 8,818,726 9,329,884 (1,780,099) 95,654,548
Totals $145,518,986 $13,698,241 (1) $11,455,693 ($2,564,477) (2) $145,197,057
Year ended December 31, 1991
Land $5,870,351 $41,000 ($6,839) $5,904,512
Building 29,747,303 959,984 $5,150 (26,460) 30,675,677
Leasehold Improvements 10,690,410 444,031 143,589 2,140 10,992,992
Machinery and Equipment 93,422,315 10,191,349 5,125,286 (542,573) 97,945,805
Totals $139,730,379 $11,636,364 (1) $5,274,025 ($573,732) (2) $145,518,986
(1) Includes normal replacement and expansion of existing facilities and assets of companies at dates acquired
(2) Effect of translation in accordance with SFAS No. 52
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY PLANT AND EQUIPMENT
Thomas Industries Inc. and Subsidiaries
December 31, 1993
Balance at Other Changes Balance at
Beginning Additions Add (Deduct) - End of
CLASSIFICATION of Period at Cost Retirements Describe Period
Year ended December 31, 1993
Buildings $11,667,303 $991,224 ($148,611) ($73,926) $12,733,212
Leasehold Improvements 3,269,890 927,352 632,665 (46,122) 3,518,455
Machinery and Equipment 50,460,370 12,575,504 8,344,199 (607,044) 54,084,631
Totals $65,397,563 $14,494,080 $8,828,253 ($727,092) (1) $70,336,298
Year ended December 31, 1992
Buildings $11,918,137 $941,827 $1,051,344 ($141,317) $11,667,303
Leasehold Improvements 3,098,748 746,861 529,738 (45,981) 3,269,890
Machinery and Equipment 46,056,084 12,676,375 6,999,850 (1,272,239) 50,460,370
Totals $61,072,969 $14,365,063 $8,580,932 ($1,459,537) (1) $65,397,563
Year ended December 31, 1991
Buildings $10,978,906 $933,847 $360 $5,744 $11,918,137
Leasehold Improvements 2,479,361 751,492 141,485 9,380 3,098,748
Machinery and Equipment 39,064,109 12,430,112 5,046,586 (391,551) 46,056,084
Totals $52,522,376 $14,115,451 $5,188,431 ($376,427) (1) $61,072,969
(1) Effect of translation in accordance with SFAS No. 52
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Thomas Industries Inc. and Subsidiaries
December 31, 1993
ADDITIONS
Balance at Charged to Charged to Balance at
DESCRIPTION Beginning Costs Other Accounts - Deductions - End of
of Period and Expenses Describe Describe Period
Year ended December 31, 1993
Allowance for doubtful accounts $2,220,000 $1,040,000 $1,497,000 (1) $1,763,000
Allowance for obsolete and slow moving inventory 4,742,000 4,470,000 2,793,000 (2) 6,419,000
$6,962,000 $5,510,000 $4,290,000 $8,182,000
Year ended December 31, 1992
Allowance for doubtful accounts $2,012,000 $1,921,000 $23,000 (3) $1,736,000 (1) $2,220,000
Allowance for obsolete and slow moving inventory 5,315,000 1,066,000 1,639,000 (2) 4,742,000
$7,327,000 $2,987,000 $23,000 $3,375,000 $6,962,000
Year ended December 31, 1991
Allowance for doubtful accounts $1,748,000 $949,000 $685,000 (1) $2,012,000
Allowance for obsolete and slow moving inventory 5,200,000 2,444,000 2,329,000 (2) 5,315,000
$6,948,000 $3,393,000 $3,014,000 $7,327,000
(1) Uncollectible accounts written off, less recoveries on accounts previously written off and effect of translation in accordance
with SFAS No. 52
(2) Disposal of obsolete inventory and effect of translation in accordance with SFAS No. 52
(3) Balance at date of acquisition of subsidiary companies
SCHEDULE IX - SHORT-TERM BORROWINGS
Thomas Industries Inc. and Subsidiaries
December 31, 1993
(2) (3)
Maximum Average Weighted
Amount Amount Average
CATEGORY OF AGGREGATE Balance at Outstanding Outstanding Interest Rate
SHORT-TERM BORROWINGS End of During the During the During the
Period Period Period Period
Year ended December 31, 1993
Notes payable to banks (1) $15,870,604 $29,696,748 $23,115,565 7.08%
Year ended December 31, 1992
Notes payable to banks (1) $13,220,220 $13,788,022 $13,482,358 11.25%
Year ended December 31, 1991
Notes payable to banks (1) $14,341,032 $15,046,351 $12,938,409 10.57%
(1) Notes payable to banks represent borrowings under lines of credit borrowing arrangements which generally have
no termination but are reviewed annually for renewal.
(2) The average amount outstanding during the period was computed by totaling the monthly outstanding principal
balance and dividing by 12.
(3) The weighted average interest rate during the period was computed by dividing the actual interest expense by
average short-term debt outstanding.
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
Thomas Industries Inc. and Subsidiaries
December 31, 1993
ITEM Charged to Costs and Expenses
Year Ended December 31
1993 1992 1991
Maintenance and repairs $4,249,000 $4,507,000 $4,673,000
Amounts for royalties, taxes other than payroll and income taxes, advertising
costs, amortization of intangible assets, pre-operating costs, and similar
deferrals are not presented, as such amounts are less than 1% of total sales
and revenues.
EXHIBIT INDEX
Exhibit No. Exhibit Page
13. Annual Report to Shareholders for 1993 25
18. Letter re Change in Accounting Principles 52
22. Subsidiaries of the Registrant 53
23. Consent of KPMG Peat Marwick 55
23.a Consent of Ernst & Young 56
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations:
Consolidated net sales during 1993 increased 7% from 1992 to $450.1 million,
following an increase of 3% from 1991. Net income of $3.8 million for 1993 was
up from the $2.0 million loss in 1992 and equal to net income of $3.8 million
in 1991.
In February 1994, the Company made the decision to further consolidate its
Commercial and Industrial Lighting operations by taking a $2.0 million
after-tax charge in the fourth quarter of 1993, primarily related to the
closing of our Long Island facility. The 1992 net loss includes an after-tax
charge of $4.0 million to establish a reserve for the costs associated with
restructuring and consolidating certain of the operations within the Lighting
Segment and other operations. The 1993 net income includes an after-tax gain
of $1.1 million due to a change in the method of applying LIFO for certain
inventories within the Lighting Segment, while 1991 net income includes an
after-tax gain of $1.2 million due to LIFO inventory reductions at certain
operating units.
The Lighting Segment net sales of $298.4 million in 1993 were 4% higher than
1992, after a 1% increase over 1991. The 1993 increase resulted from higher
unit volumes due to improving residential and commercial and industrial
construction markets, while pricing remained very competitive. Sales were
relatively flat in 1992 as U.S. construction activity stabilized at lower
levels. The Thomas Lighting Division in Canada experienced a substantial
reduction in volume in 1992 with the decline in the Canadian economy and
overall construction activity.
The Lighting Segment reported an operating income drop to $.1 million for 1993
due to the restructuring charge and the significant competitive pricing
pressures experienced by the Residential and the Commercial & Industrial
Lighting operations during the year. Significant efforts were also made during
the year to prune excess product offerings, resulting in increased costs to
dispose of these items. Operating income for 1992 of $2.7 million was down
from the $7.9 million of 1991, primarily due to the restructuring charge taken
in the first quarter of 1992. Cost of products sold at these divisions during
1993 and 1991 was reduced by LIFO inventory adjustments, the effect of which
decreased cost of products sold, and therefore increased operating income by
$1.9 million in both 1993 and in 1991.
The Compressors and Vacuum Pumps Segment continued to extend its record sales
pace with an increase of 16% in 1993 over 1992, after an 11% improvement from
1991. The increases for both years are attributable to the sustained growth of
the Original Equipment Manufacturers (OEM) medical products market and the
success of new products and new applications for existing products. The most
significant increases have come from growing markets in the U.S. International
sales have grown at an even faster pace, although activity in Europe has been
slow due to their stalled economies. Operating income improved 37% for the
Segment over 1992, which was 13% higher than 1991, due to the volume increases
during both years along with increased productivity gains resulting from
continued investment in more efficient manufacturing processes.
Net sales of the three divisions grouped as "Other" were flat compared to
1992, following a decline of 6% from 1991, as the residential and commercial
construction markets they serve have stabilized. Operating income recovered
somewhat from the low 1992 levels, which were down 64% from 1991, as these
operations benefited in 1993 from cost reduction programs and staffing
cutbacks to adjust to the lower level of business.
Interest expense for 1993 was virtually unchanged from 1992 as the benefit
from lower short-term rates offset the increase in short-term bank borrowings
during 1993. In 1992, interest expense was 5% below 1991, with principal
payments made on the foreign long-term debt related to the acquisition of the
German compressor divisions reducing foreign interest expense.
The Company, like other similar manufacturers, is subject to environmental
rules and regulations regarding the use, disposal, and clean up of substances
regulated under environmental protection laws. It is the Company's policy to
comply with these rules and regulations, and the Company believes that its
practices and procedures are designed properly to meet this compliance. The
Company is involved in remedial efforts at certain of its present and former
locations; and when costs can be reasonably estimated, the Company records
appropriate liabilities for such matters. While it is difficult to reasonably
estimate the potential costs due to changes in the laws, regulations,
technology, and circumstances, Management continues to believe that compliance
with present laws governing environmental protection will not materially
affect the financial condition of the Company.
During 1993, the Company employed an average of 3,390 people, down from 3,480
in 1992 and 3,530 in 1991, due primarily to the staff reductions resulting
from restructuring and effected consolidation plans.
Liquidity and Sources of Capital:
Cash and cash equivalents decreased to $2.4 million at December 31, 1993,
compared to $3.5 million at year-end 1992 and $14.2 million at year-end 1991.
Cash flows from operations during 1993 amounted to $15.7 million compared to
$10.7 million in 1992 and $28.1 million in 1991. These funds, along with the
net change in cash on hand, have been utilized in funding of capital
expenditures, business acquisitions, and dividends over the three-year period,
along with the net pay down of debt during 1991 and 1992 totaling $20.1
million, of which $11.7 million was prepaid in 1991, without penalty.
Working capital increased $8.0 million during 1993 from the December 31, 1992
level which declined $6.9 million from year-end 1991. The 1993 working capital
includes the recognition of a $7.0 million deferred tax asset resulting from
the required change in accounting for income taxes. Accounts receivable levels
have increased in support of the higher sales levels compared to 1992. Notes
payable to banks also have increased over 1992, principally to fund working
capital related to the sales increase.
(In thousands)
1993 1992 1991
Working capital $78,466 $70,448 $77,332
Current ratio 2.06 2.01 2.20
Long term debt $87,509 $89,900 $93,309
Long term debt as a % of capital 41.2% 41.0% 40.2%
Certain loan agreements of the Company include restrictions on working
capital, operating leases, tangible net worth, and the payment of cash
dividends and stock distributions. Under the most restrictive of these
arrangements, retained earnings of $10.3 million are not restricted at
December 31, 1993.
As of December 31, 1993, the Company had available credit of $67 million with
banks under short-term borrowing arrangements and a revolving line of credit,
$52 million of which was available at year-end. Anticipated funds from
operations, along with available short-term credit and other resources, are
expected to be sufficient to meet cash requirements in the year ahead. Cash in
excess of operating requirements will continue to be invested in high grade,
short-term securities.
Common Stock Market Prices and Dividends:
The Company's Common Stock is traded on the New York Stock Exchange (ticker
symbol TII). On February 10, 1994, there were a total of 2,863 security
holders of record. High and low stock prices and dividends (see Note 4) for
the last two years were:
1993 1992
Cash Cash
Sales Price Dividends Sales Price Dividends
Quarter Ended High Low Declared High Low Declared
March 31 11-1/4 9-1/8 $.10 14-1/8 11-1/8 $.10
June 30 12-3/8 10-3/8 .10 12 9-3/4 .10
September 30 14 10-1/4 .10 10-5/8 9 .10
December 31 13-1/4 10-5/8 .10 10-7/8 8-3/8 .10
Consolidated Statements of Income
Year ended December 31 1993 1992 1991
(Dollars in thousands, except share data)
Net sales $450,149 $420,754 $408,365
Cost of products sold 326,396 303,428 294,900
Gross profit 123,753 117,326 113,465
Selling, general and administrative
expenses 102,440 101,473 96,206
Restructuring costs (Note 2) 3,500 5,925 --
Interest expense 10,279 10,428 11,004
Interest income and other (286) (748) (993)
115,933 117,078 106,217
Income before income taxes 7,820 248 7,248
Income taxes (Note 3) 4,015 2,280 3,460
Net income (loss) $ 3,805 $ (2,032) $ 3,788
Net income (loss) per share (Note 1) $.38 $(.20) $.38
See accompanying notes.
Consolidated Balance Sheets
December 31 1993 1992
(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents $ 2,364 $ 3,539
Accounts receivable, less allowance
($1,763 - 1993; $2,220 - 1992) 61,214 56,542
Inventories (Note 1) 72,164 71,496
Deferred income taxes (Note 3) 7,031 --
Other current assets 10,057 8,945
Total current assets 152,830 140,522
Property, plant and equipment, net (Note 1) 76,587 79,799
Intangible assets, net (Note 1) 63,818 66,550
Other assets (Note 3) 9,525 7,582
Total assets $302,760 $294,453
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 15,870 $ 13,220
Accounts payable 24,562 23,283
Accrued expenses and other current
liabilities (Note 9) 30,721 29,558
Dividends payable 1,005 1,001
Current portion of long-term debt 2,206 3,012
Total current liabilities 74,364 70,074
Deferred income taxes (Note 3) 8,342 1,794
Long-term debt, less current portion (Note 4) 87,509 89,900
Minimum pension liability (Note 6) 4,322 --
Other long-term liabilities 3,174 3,140
103,347 94,834
Shareholders' equity (Notes 4, 5 and 6):
Preferred stock, $1 par value, 3,000,000
shares authorized - none issued
Common stock, $1 par value, authorized shares:
60,000,000; shares issued: 1993--11,415,790;
1992--11,377,548 11,416 11,378
Capital surplus 117,264 116,910
Retained earnings 24,746 24,955
Equity adjustment from translation of
foreign currency (2,156) (718)
Minimum pension liability adjustment (3,241) --
Less cost of treasury shares
(1993 and 1992--1,366,695 shares) (22,980) (22,980)
Total shareholders' equity 125,049 129,545
Commitments and contingencies (Note 8)
Total liabilities and shareholders'
equity $302,760 $294,453
See accompanying notes.
Consolidated Statements of Shareholders' Equity
Year ended December 31 1993 1992 1991
(In thousands)
Common stock:
Balance at beginning of year $ 11,378 $ 11,377 $11,377
Stock options exercised 38 1 --
Balance at end of year 11,416 11,378 11,377
Capital surplus:
Balance at beginning of year 116,910 116,903 116,903
Stock options exercised 354 7 --
Balance at end of year 117,264 116,910 116,903
Retained earnings:
Balance at beginning of year 24,955 30,991 34,811
Net income (loss) for the year 3,805 (2,032) 3,788
Cash dividends of $.40 per share in 1993
and 1992 and $.76 per share in 1991 (4,014) (4,004) (7,608)
Balance at end of year 24,746 24,955 30,991
Equity adjustment from translation of
foreign currency:
Balance at beginning of year (718) 2,284 1,545
Deferred adjustment for the year (1,438) (3,002) 739
Balance at end of year (2,156) (718) 2,284
Minimum pension liability adjustment:
Balance at beginning of year -- -- --
Adjustment for the year (Note 6) (3,241) -- --
Balance at end of year (3,241) -- --
Treasury shares:
Balance at beginning of year (22,980) (22,980) (22,942)
Purchase of shares - 4,000 in 1991 -- -- (38)
Balance at end of year (22,980) (22,980) (22,980)
Total shareholders' equity $125,049 $129,545 $138,575
See accompanying notes.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31 1993 1992 1991
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 3,805 $(2,032) $ 3,788
Reconciliation of net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 16,517 16,339 16,096
Noncash portion of restructuring costs 3,500 4,911 --
Deferred income taxes (1,850) (2,492) 193
Provision for losses on accounts receivable 1,040 1,921 949
Changes in operating assets and liabilities
net of effect of acquisitions:
Accounts receivable (6,087) (2,143) 4,156
Inventories (1,907) (9,654) 4,012
Other current assets (1,143) (77) (1,009)
Accounts payable 1,446 5,153 1,388
Accrued expenses and other liabilities 432 (805) (2,337)
Other (50) (404) 910
Net cash provided by operating activities 15,703 10,717 28,146
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (13,908) (13,152) (11,636)
Proceeds from sale of property, plant and
equipment and other assets 311 1,715 156
Purchase of companies (net of cash acquired) -- (442) --
Net cash used in investing activities (13,597) (11,879) (11,480)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt, net 3,330 -- --
Payments of long-term debt (2,927) (4,281) (15,811)
Purchase of treasury shares -- -- (38)
Dividends paid (4,011) (4,905) (7,608)
Other 327 (301) (55)
Net cash used in financing activities (3,281) (9,487) (23,512)
Decrease in cash and cash equivalents (1,175) (10,649) (6,846)
Cash and cash equivalents at beginning of year 3,539 14,188 21,034
Cash and cash equivalents at end of year $ 2,364 $ 3,539 $14,188
See accompanying notes.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Accounting Policies
Principles of Consolidation: The consolidated financial statements include the
accounts of Thomas Industries Inc. and subsidiaries (the Company). Equity in
minority-owned affiliates is accounted for using the equity method, under
which the Company s share of earnings of these affiliates is included in
income as earned. Intercompany accounts and transactions are eliminated.
Inventories: Inventories are valued at the lower of cost or market.
Inventories valued using the last-in, first-out (LIFO) method represented
approximately 79% and 26% of consolidated inventories at December 31, 1993
and 1992, respectively, as all U.S. manufacturing operations previously using
the first-in, first-out (FIFO) method adopted LIFO in 1993. The effect of this
change on net income for the year ended December 31, 1993 was not significant.
In addition, the Company changed its method of applying LIFO for certain
inventories within the Lighting segment as required by changes in the nature
of the Company's business. The effect of this change on the results of
operations for the year ended December 31, 1993 was to increase net income in
the fourth quarter by approximately $1,148,000 ($.11 per share). The Company
believes these changes are preferable because they provide a better matching
of costs with related revenues. The cumulative effect of these changes and the
pro forma effects on prior years' earnings have not been included because such
effects cannot be reasonably determined. The impact on the Company's first,
second, and third quarters of 1993 was not material.
Inventories which are not on LIFO are valued using FIFO. On a current cost
basis, inventories would have been $16,992,000 and $19,087,000 higher than
that reported at December 31, 1993 and 1992, respectively. Inventories consist
of the following:
(In thousands)
1993 1992
Finished goods $33,374 $30,218
Raw materials 26,969 28,131
Work in process 11,821 13,147
Total inventory $72,164 $71,496
Inventory quantities at certain operating units decreased in 1991. As a
result, cost of products sold includes cost of inventories based on prior
years' LIFO values which were less than current replacement costs, the effect
of which increased net income by $1,215,000 ($.12 per share) in 1991.
Property, Plant and Equipment: The cost of property, plant and equipment is
depreciated principally by the straight-line method. Estimated useful lives
are 30 to 45 years for buildings and 3 to 10 years for machinery and
equipment. Property, plant and equipment consist of the following:
(In thousands)
1993 1992
Land $ 6,379 $ 6,429
Buildings 33,390 32,074
Leasehold improvements 9,455 11,040
Machinery and equipment 97,699 95,654
146,923 145,197
Accumulated depreciation and amortization 70,336 65,398
Total property, plant and equipment, net $ 76,587 $79,799
Intangible Assets: Intangible assets represent the excess of cost over the
fair value of net assets of companies acquired and are stated net of
accumulated amortization of $12,176,000 and $10,346,000 at December 31, 1993
and 1992, respectively. The excess is being amortized over 40 years by the
straight-line method.
Net Income (Loss) Per Share: Net income (loss) per share is based on the
weighted daily average number of common shares outstanding during the year.
Outstanding stock options have an insignificant dilutive effect.
Research and Development Costs: Research and development costs, which include
costs of product improvements and design, are expensed as incurred
($12,431,000 in 1993, $12,464,000 in 1992 and $12,061,000 in 1991).
Financial Instruments: Various methods and assumptions were used by the
Company in estimating its fair value disclosures for significant financial
instruments. Fair values of cash equivalents approximate their carrying amount
because of the short maturity of those investments. The fair value of short-
term debt approximates its carrying amount. The fair value of long-term debt
is based on the present value of the underlying cash flows discounted at the
current estimated borrowing rates available to the Company.
Other: Cash equivalents are highly liquid investments with a maturity of less
than three months when purchased.
Note 2. Restructuring Costs
In February 1994, the Company made the decision to further consolidate its
commercial and industrial lighting operations and recorded a $3,500,000
($2,040,000 after tax) restructuring charge in the fourth quarter of 1993.
During the first quarter of 1992, the Company recorded a $5,925,000
($3,986,000 after tax) charge to establish a reserve for the costs associated
with restructuring and consolidating certain of its operations. The
restructuring included the nonrecurring costs of severance payments,
relocation, environmental remediation and disposal of assets related to the
consolidation of certain operations in the Lighting Segment. This included the
closing of one of three residential lighting plants, disposition of the
Company's electronic ballast technology and related assets, and the
consolidation of certain manufacturing and administrative functions. Other
charges relate to the discontinuance of a joint venture and other nonproducing
assets.
Note 3. Income Taxes
Effective January 1, 1993, the Company adopted the asset and liability method
of SFAS No. 109, "Accounting for Income Taxes." The Company previously used
the asset and liability method under SFAS No. 96, "Accounting for Income
Taxes." The effect of this change on net income for 1993 was not significant.
A summary of the provision for income taxes follows:
(In thousands)
1993 1992 1991
Currently payable:
Federal $ 3,545 $ 3,352 $ 2,659
State 1,100 810 925
Foreign 1,220 610 (317)
5,865 4,772 3,267
Deferred:
Federal and state (2,200) (2,662) 43
Foreign 350 170 150
(1,850) (2,492) 193
Total provision for income taxes $4,015 $ 2,280 $ 3,460
The components of the provision (benefit) for deferred income taxes are as
follows:
(In thousands)
1993 1992 1991
Organization restructuring $ (983) $(1,638) --
Depreciation (414) (850) $ 361
Inventory valuation (598) -- --
Other 145 (4) (168)
Total provision for deferred
income taxes $(1,850) $(2,492) $ 193
The components of the deferred tax assets and deferred tax liabilities at
December 31, 1993 are as follows:
(In thousands)
Deferred tax assets:
Net operating loss carryforwards $ 3,078
Reserve for uncollectible accounts receivable 538
Inventory valuation 1,566
Accrued compensation expenses 2,652
Organization restructuring 3,058
Other 504
11,396
Less valuation allowance (3,078)
Net deferred tax assets 8,318
Deferred tax liabilities:
Depreciation of fixed assets 6,669
Pension expense 904
Other 769
Deferred tax liabilities 8,342
Net deferred tax liability $ (24)
Classification:
Current asset $ 7,031
Long-term asset 1,287
Total assets 8,318
Long-term liability (8,342)
Net deferred tax liability $ (24)
SFAS No. 109 requires that deferred tax asset and liabilities are classified
according to the related asset and liability classification on the balance
sheet.
The realization of deferred tax assets is dependent upon the Company
generating future taxable income when temporary differences become deductible.
Based upon historical and projected levels of taxable income, management
believes it is more likely than not the Company will realize the benefits of
the deductible differences, net of the valuation allowance, of $3,078,000. The
valuation allowance is provided for loss carryforwards in states and foreign
jurisdictions, the realization of which is not assured within the carryforward
periods.
The U.S. and foreign components of income before income taxes follow:
(In thousands)
1993 1992 1991
Income before taxes:
United States $ 5,669 $2,538 $7,996
Foreign 2,151 (2,290) (748)
Income before income taxes $ 7,820 $ 248 $7,248
A reconciliation of the normal statutory federal income tax with the Company's
provision for income taxes follows:
(In thousands)
1993 1992 1991
Income taxes computed at U.S. statutory rates $2,659 $ 84 $2,464
State income taxes, net of federal taxes 570 350 611
Nondeductible amortization of intangible assets 538 538 517
Currently unutilizable (utilizable) benefit of
foreign losses 429 1,229 (155)
Effect of foreign tax rates 395 303 180
Refunds and overaccruals of prior years'
income taxes (532) -- --
Other (44) (224) (157)
Total income taxes $4,015 $2,280 $3,460
The Company's foreign subsidiaries have accumulated undistributed earnings
($12,857,000) on which U.S. taxes have not been provided. Under current tax
regulations and with the availability of certain tax credits, it is
management's belief that the likelihood of the Company incurring significant
taxes on any distribution of such accumulated earnings is remote. Dividends,
if any, would be paid principally from current earnings.
At December 31, 1993, the Company had foreign net operating loss carryforwards
for financial reporting purposes of approximately $7,800,000. For income tax
purposes, these carryforwards are approximately $7,300,000 and expire
$1,100,000, $5,200,000 and $1,000,000 on January 1, 1999, 2000 and 2001,
respectively.
The Company made federal, state and foreign income tax payments of $4,655,000
in 1993, $4,147,000 in 1992 and $4,326,000 in 1991.
Note 4. Long-Term Debt and Credit Arrangements
A summary of long-term debt follows:
(In thousands)
1993 1992
Domestic:
9.36%, due through 2005 $85,000 $85,000
Other 1,221 1,651
Foreign (Germany):
9.87% (variable), due through 1996 1,267 2,038
8.125%, due through 1994 -- 1,087
Other 21 124
Total long-term debt $87,509 $89,900
As current interest rates are generally lower than the above rates, the fair
value of the Company's long-term debt at December 31, 1993 was $98,800,000.
Maturities of long-term debt for the next five years are as follows: 1994 -
$2,206,195; 1995 - $8,744,517; 1996 - $8,723,581; 1997 - $8,140,091; and 1998
- - - - - - - - - - $7,740,091.
Certain loan agreements include restrictions on working capital and tangible
net worth and the payment of cash dividends and stock distributions. Under the
most restrictive of these arrangements, retained earnings of $10,300,000 are
not restricted at December 31, 1993.
The Company has a $50,000,000 variable rate revolving line of credit expiring
June 30, 1994. In addition, the Company has short-term lines of credit under
which it may borrow up to $17,000,000, expiring on various dates during 1994.
The Company plans to renew these lines annually.
Actual cash paid for interest was $10,185,000 in 1993, $10,454,000 in 1992 and
$11,144,000 in 1991.
Note 5. Shareholders' Equity
Under the Company's 1987 Incentive Stock Plan, options may be granted through
1997 at not less than market value at date of grant and expire ten years after
date of grant.
The Company's 1977 Incentive Stock Plan, amended in 1982 for the issuance of
incentive stock options, terminated in 1987 except with respect to outstanding
options which will remain exercisable until 1997.
Following is a summary of outstanding stock options:
1993 1992 1991
Outstanding at beginning of year 456,068 387,710 326,120
Granted at $10.00 to $12.62 per share in 1993,
$10.00 per share in 1992 and $10.75 per
share in 1991 105,000 76,750 68,000
Canceled or expired (110,025) (7,457) (6,410)
Exercised at $9.87 to $10.80 in 1993
and $8.65 in 1992 (38,242) (935) --
Outstanding at end of year 412,801 456,068 387,710
Options outstanding at December 31, 1993, of which 245,135 options were
exercisable, had option prices ranging from $9.87 to $18.75 (with an average
option price of $12.25) and expire at various dates between December 12, 1995
and December 12, 2003. There were 197,509 shares reserved for future grant.
On December 23, 1987, the Company's Board of Directors authorized the
repurchase, at management's discretion, of up to 1,000,000 shares of its common
stock in the open market or through privately negotiated transactions. At
December 31, 1993, 377,023 shares had been purchased at a cost of $5,759,000
(none purchased during 1993 and 1992).
The Board of Directors of the Company adopted a shareholder rights plan (the
Rights Plan) in 1987 pursuant to which preferred stock purchase rights (the
Rights) were declared and distributed to the holders of the Company's common
stock. On October 18, 1991, the Board of Directors of the Company adopted
certain amendments to the Rights Plan. The Rights Plan, as amended, provides
that the Rights separate from the common stock and become exercisable if a
person or group of persons working together acquires at least 20% of the common
stock (a 20% Acquisition) or announces a tender offer which would result in
ownership by that person or group of at least 20% of the common stock (a 20%
Tender Offer). Upon a 20% Acquisition, the holders of Rights may purchase the
common stock at half-price. If following the separation of the Rights from the
common stock the Company is acquired in a merger or sale of assets, holders of
Rights may purchase the acquiring company s stock at half-price.
Notwithstanding the foregoing discussion, under the Rights Plan, the Board of
Directors has flexibility in certain events. In order to provide maximum
flexibility, the Board of Directors may delay the date upon which the Rights
become exercisable in the event of a 20% Tender Offer. In addition, the Board
of Directors has the option to exchange one share of common stock for each
outstanding Right at any time after a 20% Acquisition but before the acquirer
has purchased 50% of the outstanding common stock. The Rights may also be
redeemed at two cents per Right at any time prior to a 20% Acquisition or a 20%
Tender Offer.
Note 6. Retirement Plans
The Company has noncontributory defined benefit pension plans principally
covering its hourly union employees. Such plans primarily provide flat benefits
of stated amounts for each year of service. The Company's policy is to fund
pension costs deductible for income tax purposes.
The Company also sponsors defined contribution pension plans covering
substantially all employees whose compensation is not determined by collective
bargaining. Annual contributions are determined by the Board of Directors.
A summary of pension expense follows:
(In thousands)
1993 1992 1991
Defined benefit plans:
Service cost-benefits earned during the period $ 448 $ 415 $ 409
Interest cost on projected benefit obligation 1,518 1,472 1,356
Actual return on plan assets (1,735) (1,494) (4,106)
Net amortization and deferral 114 (98) 2,878
Net pension cost of defined benefit plans 345 295 537
Defined contribution plans 1,214 364 2,513
Multi-employer plans for certain union employees
and other 450 572 581
Total pension expense $2,009 $1,231 $3,631
The assumptions used in the accounting for the funded status of defined benefit
plans follows:
1993 1992 1991
Weighted average discount rates 7.50% 8.75% 8.75%
Rates of increase in compensation levels 5.00% 5.00% 5.00%
Expected long-term rate of return on assets 9.00% 9.00% 9.00%
The following table sets forth the funded status and amounts recognized in the
consolidated balance sheets for the Company's defined benefit pension plans:
(In Thousands)
1993 1992
Plans Plans Plans Plans
Whose Whose Whose Whose
Assets Accumu- Assets Accumu-
Exceed lated Exceed lated
Accumu- Benefits Accumu- Benefits
lated Exceed lated Exceed
Benefits Assets Benefits Assets
Actuarial present value of
benefit obligations:
Vested benefit obligation $4,135 $16,985 $11,413 $5,568
Accumulated benefit obligation $4,166 $17,616 $11,850 $5,739
Projected benefit obligation $4,600 $17,616 $12,197 $5,739
Plan assets at fair value 5,064 15,443 14,028 5,527
Projected benefit obligation less than
(in excess of) plan assets 464 (2,173) 1,831 (212)
Unrecognized net (gain) loss 72 3,241 (919) 403
Unrecognized net obligation, net
of amortization 2 1,081 851 342
Adjustment required to recognize
minimum liability -- (4,322) -- --
Prepaid pension asset (liability) $ 538 $(2,173) $ 1,763 $ 533
At December 31, 1993, approximately 92% of plan assets are invested in
listed stocks and bonds.
Note 7. Other Postretirement Benefit Plans
The Company provides postretirement medical and life insurance benefits for
certain retirees and employees.
Effective January 1, 1993, the Company adopted SFAS No. 106, "Employer's
Accounting for Postretirement Benefits Other than Pensions." This statement
requires the cost of postretirement benefits to be accrued during the service
lives of employees. The Company elected the prospective method of recognizing
the accumulated postretirement benefit obligation. The effect of adopting SFAS
No. 106 on 1993 on-going operations is an increase in expense of $294,000
($176,000 net of income tax benefit), with the net periodic cost during 1993
of $779,000. Prior to 1993, the Company recognized the cost of these benefits
on the cash basis.
The following table presents the Plan's funded status reconciled with
amounts recognized in the Company's consolidated balance sheet at December 31,
1993:
(In thousands)
Accumulated postretirement benefit obligation:
Retirees $5,325
Fully eligible active Plan participants 410
Other active Plan participants 1,300
7,035
Unrecognized net loss (798)
Unrecognized transition obligation 4,393)
Previously recognized liability (705)
Accrued postretirement benefit cost
included in other liabilities $1,139
Net periodic postretirement benefit cost for 1993 includes the following
components:
Service cost $ 80
Interest cost 468
Net amortization and deferral 231
Net periodic postretirement benefit cost $779
For measurement purposes, a 11% annual rate of increase in the per capita
cost of future health benefits was assumed for 1994; the rate was assumed to
decrease gradually to 5.5% by the year 2004, converging toward the assumed
long-term rate of 5% thereafter. The health care cost trend rate assumption
has a significant effect on the amounts reported. For example, increasing the
assumed health care cost trend rates by one percentage point in each year
would increase the accumulated postretirement benefit obligation as of
December 31, 1993 by $650,000 and the aggregate of the service and interest
cost components of net periodic postretirement benefit cost for the year ended
December 31, 1993 by $50,000. The weighted average discount rate used in
determining the accumulated postretirement benefit obligation was 7.25% as of
December 31, 1993.
Note 8. Leases, Commitments and Contingencies
Total rental expense amounted to $5,321,000 in 1993, $5,444,000 in 1992 and
$5,346,000 in 1991. Future minimum rentals (on leases in effect at December
31, 1993) for the five years ending December 31, 1998, and in the aggregate
thereafter, are as follows: 1994 - $3,668,000; 1995 - $2,847,000; 1996 -
$2,480,000; 1997 - $2,015,000; 1998 - $1,048,000; and thereafter - $7,107,000.
Capital leases are not significant.
The Company has various letters of credit outstanding in the amount of
$9,000,000 at December 31, 1993.
The Company is involved in environmental remedial efforts at certain of
its present and former locations; and when costs can be reasonably estimated,
the Company records appropriate liabilities for such matters. While it is
difficult to reasonably estimate the potential costs due to changes in the
laws, regulations, technology, and circumstances, Management believes that
compliance with present laws governing environmental protection will not
materially affect the financial condition of the Company.
In the normal course of business, the Company and its subsidiaries are
parties to litigation. Management believes that these suits will be resolved
with no material adverse impact on the financial condition of the Company.
Note 9. Accrued Expenses and Other Current Liabilities
A summary of accrued expenses and other current liabilities follows:
(In thousands)
1993 1992
Accrued wages, taxes and withholdings $ 6,791 $ 6,952
Accrued insurance 5,698 5,705
Accrued retirement expense 2,024 1,041
Accrued sales expense 3,254 4,108
Accrued interest expense 3,350 3,256
Income taxes payable 3,571 2,780
Accrued restructuring costs 2,549 2,450
Other current liabilities 3,484 3,266
Total accrued expenses and other current liabilities $30,721 $29,558
Note 10. Summary of Quarterly Results of Operations (Unaudited)
The following is a tabulation of the unaudited quarterly results of operations
for the years ended December 31, 1993 and 1992:
(In thousands, except per share data)
Net Sales Gross Profit Net Income (Loss) Net Income (Loss)
Per Share
1993 1992 1993 1992 1993 1992 1993 1992
1st Qtr. $112,074 $100,177 $ 29,653 $ 28,199 $ 655 $(3,696) (2) $.07 $(.37) (2)
2nd Qtr. 111,001 103,367 30,128 28,676 1,175 470 .12 .05
3rd Qtr. 117,322 109,016 31,217 29,478 1,552 504 .15 .05
4th Qtr. 109,752 108,194 32,755 30,973 423 (1) 690 .04 (1) .07
$450,149 $420,754 $123,753 $117,326 $3,805 $(2,032) $.38 $(.20)
(1) Net income in the fourth quarter of 1993 includes a charge of $2,040,000
($.20 per share) for restructuring costs, and a credit of $1,148,000 ($.11
per share) from a change in the method of applying LIFO as required by
changes in the nature of the Company's business.
(2) Net income in the first quarter of 1992 includes a charge of $3,986,000
($.40 per share) for restructuring costs.
Note 11. Industry Segment Information
The Company's segments consist of Lighting, including residential, commercial,
industrial and outdoor lighting products; Compressors and Vacuum Pumps; and
other products.
Industry segment information follows:
(In thousands)
Compressors
& Vacuum Consoli-
Lighting Pumps Other Corporate dated
1993
Net sales $298,432 $127,896 $23,821 -- $450,149
Operating income 120 26,183 710 -- 27,013
General corporate expenses -- -- -- $ 9,200 9,200
Identifiable assets 212,600 64,161 12,496 13,503 302,760
Depreciation and
amortization expense 10,955 4,578 725 259 16,517
Capital expenditures 6,966 6,237 579 126 13,908
1992
Net sales $286,417 $110,022 $24,315 -- $420,754
Operating income 2,659 19,147 412 -- 22,218
General corporate expenses -- -- -- $ 9,969 9,969
Identifiable assets 212,856 62,476 13,555 5,566 294,453
Depreciation and
amortization expense 10,974 4,331 768 266 16,339
Capital expenditures 7,806 4,384 521 441 13,152
1991
Net sales $282,964 $ 99,444 $25,957 -- $408,365
Operating income 7,910 16,883 1,133 -- 25,926
General corporate expenses -- -- -- $ 8,667 8,667
Identifiable assets 208,328 64,721 14,135 15,848 303,032
Depreciation and
amortization expense 10,807 3,940 916 433 16,096
Capital expenditures 6,584 4,385 504 163 11,636
Intersegment and interlocation sales are not significant and have been
eliminated from the above tabulation. Operating income by segment is gross
profit less operating expenses (including certain restructuring costs),
excluding interest, general corporate expenses, other income, and income
taxes. Corporate assets consist principally of highly liquid investments.
Capital expenditures exclude property, plant and equipment of acquired
companies at date of acquisition.
Information by geographic area follows:
(In thousands)
United Elimina- Consoli-
States Canada Europe tions dated
1993
Net sales to unaffiliated
customers $379,968 $ 31,268 $ 38,913 -- $450,149
Inter-area sales 13,036 83 5,609 $(18,728) --
Total net sales 393,004 31,351 44,522 (18,728) 450,149
Operating income (loss) 22,716 (60) 4,357 -- 27,013
Identifiable assets 250,126 24,376 28,258 -- 302,760
1992
Net sales to unaffiliated
customers $348,160 $ 34,303 $ 38,291 -- $420,754
Inter-area sales 13,029 153 5,448 $(18,630) --
Total net sales 361,189 34,456 43,739 (18,630) 420,754
Operating income (loss) 21,758 (3,276) 3,736 -- 22,218
Identifiable assets 237,983 25,235 31,235 -- 294,453
1991
Net sales to unaffiliated
customers $330,383 $ 42,308 $ 35,674 -- $408,365
Inter-area sales 14,892 158 4,532 $(19,582) --
Total net sales 345,275 42,466 40,206 (19,582) 408,365
Operating income (loss) 24,121 (1,573) 3,378 -- 25,926
Identifiable assets 238,083 29,644 35,305 -- 303,032
Financial Review
Responsibility for Financial Reporting
The Board of Directors and Shareholders
Thomas Industries Inc.
The financial statements herein have been prepared under management direction
from accounting records which management believes present fairly the
transactions and financial position of the Company. They were developed in
accordance with generally accepted accounting principles appropriate in the
circumstances.
Management has established internal control systems and procedures, including
an internal audit function, to provide reasonable assurance that assets are
maintained and accounted for in accordance with its authorizations and that
transactions are recorded in a manner to ensure reliable financial
information. The Company has a formally stated and communicated policy
demanding of employees high ethical standards in their conduct of its business.
The Audit Committee of the Board of Directors is composed of outside directors
who meet regularly with management, internal auditors, and independent
auditors to review audit plans and fees, independence of auditors, internal
controls, financial reports, and related matters. The Committee has
unrestricted access to the independent and internal auditors with or without
management attendance.
/S/Timothy C. Brown /S/Phillip J. Stuecker
Timothy C. Brown Phillip J. Stuecker
President and Vice President of Finance
Chief Executive Officer Chief Financial Officer
Secretary
Louisville, Kentucky
February 10, 1994
Independent Auditors' Report
The Board of Directors and Shareholders
Thomas Industries Inc.
We have audited the accompanying consolidated balance sheet of Thomas
Industries Inc. and subsidiaries as of December 31, 1993, and the related
consolidated statements of income, shareholders' equity, and cash flows for
the year then ended.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. The consolidated
financial statements of Thomas Industries Inc. and subsidiaries as of December
31, 1992 and for the years ended December 31, 1992 and 1991, were audited by
other auditors whose report thereon dated February 11, 1993, expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the 1993 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Thomas
Industries Inc. and subsidiaries as of December 31, 1993, and the results of
their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles.
As discussed in Note 7 to the consolidated financial statements, the Company
changed its method of accounting for postretirement benefits in 1993 to adopt
the provisions of the Financial Accounting Standards Board's Statement of
Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions." As discussed in Note 3, the
Company changed its method of accounting for income taxes in 1993 to adopt the
provisions of SFAS No. 109, "Accounting for Income Taxes." As discussed in
Note 1, the Company changed its method of accounting for certain inventories
in 1993.
S/KPMG Peat Marwick
Louisville, Kentucky
February 10, 1994
11-Year Summary of Operations and Statistics
(In thousands except per share data) 1993 1992 1991 1990
Earnings Statistics (A)
Net sales $450,149 $420,754 $408,365 $461,725
Cost of products sold 326,396 303,428 294,900 327,993
Selling, general and administrative expenses 102,440 101,473 96,206 103,380
Interest expense 10,279 10,428 11,004 12,198
Income taxes 4,015 2,280 3,460 8,484
Net income (loss) 3,805 (G) (2,032)(D) 3,788 11,702
Financial Position (A)
Working capital $ 78,466 $ 70,448 $ 77,332 $ 91,483
Current ratio 2.1 to 1 2.0 to 1 2.2 to 1 2.4 to 1
Property, plant and equipment - net 76,587 79,799 84,446 87,208
Total assets 302,760 294,453 303,032 323,350
Return on ending assets 1.3% (.7)% 1.3% 3.6%
Long-term debt 87,509 89,900 93,309 108,853
Long-term debt to total capital 41.2% 41.0% 40.2% 43.4%
Shareholders' equity 125,049 129,545 138,575 141,694
Return on average shareholders' equity 3.0% (1.5)% 2.7% 8.3%
Data Per Common Share (B)
Net income (loss) $.38 $(.20) $.38 $1.15
Dividends declared: cash .40 .40 .76 .76
stock
Shareholders' equity 12.44 12.94 13.84 14.15
Price range per share 14 to 14-1/8 to 14-3/4 to 20-7/8 to
9-1/8 8-3/8 9-1/4 9-1/4
Other Data
Cash dividends declared $ 4,014 $ 4,004 $ 7,608 $ 7,726
Expenditures for property, plant and equipment (C) 13,908 13,152 11,636 17,161
Depreciation and amortization 16,517 16,339 16,096 15,658
Average number of employees 3,390 3,480 3,530 3,930
Sales per average number of employees 132.8 120.9 115.7 117.5
Number of shareholders of record 2,903 3,154 3,308 3,249
Average number common shares outstanding (B) 10,035,172 10,010,746 10,010,000 10,178,547
Segment Information (A)
Net Sales
Lighting $298,432 $286,417 $282,964 $332,802
Compressors & Vacuum Pumps 127,896 110,022 99,444 98,355
Other 23,821 24,315 25,957 30,568
Total net sales $450,149 $420,754 $408,365 $461,725
Operating income
Lighting $ 120 $ 2,659 $ 7,910 $ 23,746
Compressors & Vacuum Pumps 26,183 19,147 16,883 15,050
Other 710 412 1,133 1,195
Total operating income $ 27,013 $ 22,218 $ 25,926 $ 39,991
1989 1988 1987 1986 1985 1984 1983
$436,577 $347,578 $321,911 $296,195 $294,711 $275,679 $208,072
305,092 237,586 212,271 197,125 199,029 186,774 142,953
100,705 83,212 80,160 72,322 66,910 60,229 45,604
10,464 3,983 3,500 2,615 4,018 3,613 1,611
14,175 11,860 12,380 11,460 11,247 12,594 6,281
20,616 18,507 17,136 12,756 16,233 15,855 9,214
$105,028 $ 78,180 $ 84,752 $ 73,939 $ 70,224 $ 83,167 $ 69,725
2.4 to 1 2.7 to 1 3.3 to 1 3.8 to 1 3.3 to 1 3.6 to 1 3.9 to 1
80,675 44,133 37,957 32,541 31,488 33,212 28,243
333,327 207,624 208,182 168,812 166,179 178,214 132,607
6.2% 8.9% 8.2% 7.6% 9.8% 8.9% 6.9
117,254 32,790 35,294 20,133 22,329 43,074 16,190
45.8% 20.8% 21.4% 14.6% 16.9% 30.1% 15.2%
138,999 124,701 129,773 117,411 109,962 99,851 90,017
15.6% 14.5% 13.9% 11.2% 15.5% 16.7% 10.5%
$2.02 $1.70 $1.56 $1.17 $1.50 $1.47 $.86
.73 .66 .62 .56 .53 .49 .42
5% 5% 10% 5% 10% 10%
13.59 12.25 11.78 10.72 10.11 9.25 8.35
20-5/8 to 23-3/8 to 20-1/2 to 22-1/8 to 17-1/8 to 14-7/8 to 15-3/8 to
17-5/8 15 13-1/4 14 11-7/8 9-3/4 8-5/8
$ 7,437 $ 7,211 $ 6,793 $ 6,130 $ 5,794 $ 5,243 $ 4,549
20,974 14,583 9,723 7,017 7,395 7,090 4,730
11,512 8,494 7,313 6,096 6,017 5,446 5,064
3,700 3,170 3,140 3,080 3,160 3,180 2,740
118.0 109.6 102.5 96.2 93.3 86.7 75.9
3,386 3,530 3,702 3,830 3,940 4,000 4,000
10,183,513 10,916,302 10,999,754 10,920,883 10,833,894 10,788,728 10,768,317
$306,146 $217,811 $201,785 $201,694 $186,617 $156,941 $103,772
87,466 67,259 51,650 34,787 35,511 39,647 32,574
42,965 62,508 68,476 59,714 72,583 79,091 71,726
$436,577 $347,578 $321,911 $296,195 $294,711 $275,679 $208,072
$ 22,135 $ 16,957 $ 21,467 $ 22,737 $ 20,976 $ 17,110 $ 3,365 (E)
15,113 12,029 8,742 3,206 (F) 6,484 8,268 7,002
4,558 6,660 8,305 6,174 7,314 9,222 7,520
$ 41,806 $ 35,646 $ 38,514 $ 32,117 $ 34,774 $ 34,600 $ 17,887
Note: See accompanying Notes to Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
(A) Acquisitions and divestitures--major acquisitions during the period
include Capri and Gardco in 1984, Lumec and ASF GmbH in 1987, and Day-
Brite in 1989. Major divestitures and the effect on net income in the
year of divestiture include North American Decorative Products and Lennon
Wallpaper (minority interests), Pouliot Designs, and Paint Applicator in
1988 for a gain of $2,598,000; and the Tool and Fastener Division in 1989
for a gain of $5,223,000.
(B) Adjusted for stock dividends
(C) Does not include property, plant and equipment of companies at dates
acquired
(D) Includes after-tax charge of $3,986,000 restructuring costs
(E) Includes Electronics Division shutdown costs
(F) Includes charge of $2,600,000 litigation settlement
(G) Includes after-tax charge of $2,040,000 restructuring costs and credit of
$1,148,000 for LIFO accounting change
Exhibit 18.
Letter Regarding Change in Accounting Principles
March 17, 1994
The Board of Directors
Thomas Industries Inc.
Gentlemen:
We have audited the consolidated balance sheet of Thomas Industries Inc.
and subsidiaries as of December 31, 1993, and the related consolidated
statements of income, shareholders' equity, and cash flows for the year then
ended, and have reported thereon under date of February 10, 1994. The
aforementioned consolidated financial statements and our audit report
thereon are incorporated by reference in the Company's annual report on Form
10-K for the year ended December 31, 1993. As stated in Note 1 to those
financial statements, the Company changed its method of accounting for
certain domestic inventories from the FIFO method to the LIFO method and,
for certain other inventories within the Lighting segment, in the method of
applying LIFO as required by changes in the nature of the Company's business
and states that the newly adopted accounting principles are preferable in
the circumstances because these changes provide a better matching of costs
with related revenues. In accordance with your request, we have reviewed
and discussed with Company officials the circumstances and business judgment
and planning upon which the decision to make these changes in the method of
accounting was based.
With regard to the aforementioned accounting changes, authoritative criteria
have not been established for evaluating the preferability of one
acceptable method of accounting over another acceptable method. However,
for purposes of Thomas Industries Inc.'s compliance with the requirements
of the Securities and Exchange Commission, we are furnishing this letter.
Based on our review and discussion, with reliance on management's business
judgment and planning, we concur that the newly adopted methods of
accounting are preferable in the Company's circumstances.
Very truly yours,
S/KPMG PEAT MARWICK
Exhibit 22.
SUBSIDIARIES OF THE REGISTRANT
Place of Percentage of
Name of Company Incorporation Voting Securities
ASF Gesellschaft fur Electrotechnische
Gerate mbH Germany 100%
ASF, Inc. Georgia 100%
Belvedere Lighting Center, Inc. Tennessee 100%
Helmut Brey Verwaltung GmbH Germany 100%
Builders Brass Works of Nevada, Inc. Nevada 100%
Builders Brass Works de Mexico,
S.A. de C.V. Mexico 100%
Capri Lighting, Inc. California 100%
Day-Brite Lighting, Inc. Delaware 100%
Fastway Holding Company Delaware 100%
Gardco Manufacturing, Inc. California 100%
Lumec, Inc. Province of Quebec, 100%
Canada
Pouliot Designs Corporation Minnesota 100%
T.I. Industries Corporation Delaware 100%
TI Pneumotive, Inc. Delaware 100%
Thomas Group U.K., Inc. Delaware 100%
Thomas Imports, Inc. Nevada 100%
Thomas Industries Corp. Province of Ontario, 100%
Canada
Thomas Industries Export, Inc. U.S. Virgin Islands 100%
Thomas Industries of Nevada, Inc. Nevada 100%
Tupelo Holdings Inc. Delaware 100%
Thomas Lighting de Mexico, S.A. de C.V. Mexico 100%
Wilhelm Sauer GmbH and Company KG (WISA) Germany 100%
NON WHOLLY OWNED SUBSIDIARIES
Jackson Hardware Company, Ltd. Thailand 60%
Yamada Day-Brite, Ltd. Japan 50%
Exhibit 23.
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Thomas Industries Inc.
We consent to incorporation by reference in the registration statements (No.
33-16257) on Form S-8 and (No. 33-51653) on Form S-8 of Thomas Industries Inc.
of our report dated February 10, 1994, relating to the consolidated balance
sheet of Thomas Industries Inc. and subsidiaries as of December 31, 1993, and
the related consolidated statements of income, shareholders' equity, and cash
flows and related schedules for the year then ended, which report appears in
the December 31, 1993 annual report on Form 10-K of Thomas Industries Inc.
Our report refers to a change in the method of accounting for postretirement
benefits, income taxes, and certain inventories.
/S/KPMG PEAT MARWICK
Louisville, Kentucky
March 17, 1994
Exhibit 23.a
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-16257) pertaining to the stock option plan and (Form S-8
No. 33-51653) pertaining to the retirement savings and investment plan
of Thomas Industries Inc. of our report dated February 11, 1993, with
respect to the 1992 and 1991 consolidated financial statements and related
schedules of Thomas Industries Inc. included and/or incorporated by reference
in this Annual Report (Form 10-K) for the year ended December 31, 1993.
/S/ERNST & YOUNG
March 17, 1994