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UNITED STATES
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, 2003

Commission file number: 0-16960

THE GENLYTE GROUP INCORPORATED
10350 ORMSBY PARK PLACE, SUITE 601
LOUISVILLE, KY 40223
(502) 420-9500

        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.  ý Yes        o 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.  o

        Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  ý Yes        o No

        Aggregate market value of common stock held by non-affiliates on June 27, 2003: $473,848,036.

        Number of shares of common stock outstanding as of March 8, 2004: 13,595,131.

DOCUMENTS INCORPORATED BY REFERENCE:

THE GENLYTE GROUP INCORPORATED
2003 FORM 10-K

TABLE OF CONTENTS

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PART I

ITEM 1.    BUSINESS

        The Genlyte Group Incorporated ("Genlyte") was incorporated in the State of Delaware in 1985 as a wholly-owned subsidiary of Bairnco Corporation. In 1988 Genlyte was spun off from Bairnco Corporation and became an independent public company.

        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 ("GTG"). Genlyte contributed substantially all of its assets and liabilities to GTG and received a 68% interest in GTG. Thomas contributed substantially all of the assets and certain related liabilities of Thomas Lighting and received a 32% interest in GTG. For more information regarding the formation of GTG, see note (3) in the "Notes to Consolidated Financial Statements" section of Item 8 "Financial Statements and Supplementary Data."

        Throughout this report on Form 10-K, the term "Company" as used herein refers to The Genlyte Group Incorporated, including the consolidation of Genlyte, GTG, and all majority-owned subsidiaries.

        The Company designs, manufactures, markets, and sells lighting fixtures, controls, and related products for a wide variety of applications in the commercial, residential, and industrial markets in North America. The Company operates in these three industry segments through the following divisions: Capri/Omega, Chloride Systems, Controls, Crescent, Day-Brite, Gardco, Hadco, Lightolier, Shakespeare Composite Structures, Stonco, Thomas Residential, and Wide-Lite in the United States, and Canlyte, Ledalite, Lumec, and Thomas Lighting Canada in Canada. The Company markets its products under the following brand names:

        The Company's products primarily utilize incandescent, fluorescent, light emitting diodes (LED), 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.

        Because the Company does not principally sell directly to the end-user of its products, management 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, depend significantly on the level of activity in new construction and remodeling.

        Part of the Company's strategy has been to strengthen its product lines and profitably grow sales through the acquisition of other lighting companies. A description of recent acquisitions is contained in notes (5), (6), and (7) in the "Notes to Consolidated Financial Statements" section of Item 8 "Financial Statements and Supplementary Data."

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Financial Information About Industry Segments

        Financial information about the Company's industry segments for the last three fiscal years is set forth in note (20) in the "Notes to Consolidated Financial Statements" section of Item 8 "Financial Statements and Supplementary Data."

Products and Distribution

        The Company designs, manufactures, markets, and sells the following types of products:

        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 products are sold principally throughout the United States, Canada, and Mexico.

Raw Materials Sources and Availability

        The Company purchases large quantities of raw materials and components—mainly steel, aluminum, ballasts, sockets, wire, plastic, lenses, glass, and corrugated cartons—from multiple sources. No significant supply problems have been encountered in recent years. Relationships with vendors have been satisfactory.

Patents and Trademarks

        The Company has hundreds 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 or expiration of any presently held patent or trademark is likely to have a material adverse impact on its business.

Seasonal Effects on Business

        There are no predictable significant seasonal effects on the Company's results of operations.

Working Capital

        The Company has no significant business practices counter to lighting industry practices that affect working capital. The Company's terms of collection vary but are generally consistent with lighting industry practices, including programs to extend terms beyond 30 days. The Company attempts to keep inventory levels at the minimum required to satisfy customer requirements. The residential segment, as well as the commodity-type products in the commercial and industrial segments, generally requires substantial amounts of finished goods to satisfy quick shipment of customer orders. Other products that are made to order require less finished goods but more raw material and component inventories.

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Backlog

        Backlog was $87,304,000 as of December 31, 2003; $88,451,000 as of December 31, 2002; and $94,989,000 as of December 31, 2001. Substantially all the backlog at December 31, 2003 is expected to be shipped in 2004.

Competition

        The lighting market addressed by the Company represents an estimated $7.4 billion of revenues per year. The industry is very mature, and although it contains a few large companies, no single company is truly dominant. The Company believes its sales make it the third highest-selling lighting fixture manufacturer in North America, behind the lighting equipment segment of Acuity Brands, Inc. (better known as Lithonia) and Cooper Industries, whose lighting fixture sales are included in its electrical products segment. However, the lighting industry is highly fragmented, with markets served by many international, national, and regional companies.

        The Company's products span major market segments in the lighting industry and therefore compete in a number of different markets with numerous competitors for each type of fixture. The principal measures of competition in indoor and outdoor fixtures for the commercial, residential, and industrial segments are price, service (delivery), design, innovation, and product quality and performance. Certain commodity-type products compete more on price, delivery, and quality. More differentiated products compete more on design, innovation, and product performance, including energy efficiency. The Company believes that it competes adequately in all of these measures of competition and attempts to differentiate itself through innovation and energy efficiency.

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 accounting principles generally accepted in the United States, were $10,343,000; $8,521,000; and $9,359,000 during 2003, 2002, and 2001, respectively.

Environmental Regulations

        The Company's operations are subject to Federal, state, local, and foreign laws and regulations that have been enacted to regulate the discharge of materials into the environment or otherwise relating to the protection of the environment. Management does not anticipate that compliance with current environmental laws and regulations will materially affect the Company's capital expenditures, results of operations, or competitive position in 2004.

Employees

        At December 31, 2003, the Company employed 3,255 union and nonunion production workers and 1,946 engineering, administrative, and sales personnel, for a total of 5,201 employees. Several of the collective bargaining agreements, covering 723 employees, which is 29% of the union employees and 14% of the total employees, will expire in 2004. Relationships with unions have been satisfactory. Expiration and re-negotiation of collective bargaining agreements is not expected to have a significant impact on 2004 production.

International Operations

        The Company has international operations in Canada and Mexico. Financial information about the Company's operations by geographical area for the last three fiscal years is set forth in note (21) in the "Notes to Consolidated Financial Statements" section of Item 8 "Financial Statements and

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Supplementary Data." Management generally believes that there are no substantial differences in business risks with these international operations compared with domestic operations, except that the Company is subject to different economic uncertainties in its foreign operations and is subject to foreign currency exchange rate fluctuations.

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, 5, 7 and 8 of this report on Form 10-K includes 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 overall economic and specific market conditions, new building construction cycles, the impact of seasonal weather conditions on construction activity, customer acceptance of price increases, acceptance of new product offerings, availability of attractive acquisition candidates, cost and availability of steel and other raw materials, casualty and medical insurance cost increases, the costs and outcomes of legal proceedings, currency exchange rates, the level and volatility of interest rates, 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 report on Form 10-K.

Available Information

        The Company makes available free of charge through its Internet web site its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, any amendments to those reports, and proxy statements for its annual meeting of stockholders as soon as reasonably practicable after this material has been electronically filed with, or furnished to, the Securities and Exchange Commission. This material may be accessed by visiting the Investor Relations section of the Company's web site at http://www.Genlyte.com.

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ITEM 2.    PROPERTIES

        In August 2002, the Company moved its Corporate office to a new leased office building 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 neither practical nor meaningful to an understanding of the Company's business. All of the buildings are of steel, masonry, or concrete construction, are maintained and generally in good working condition, and generally provide adequate and suitable space for the operations of each location. A summary of the Company's property follows:

        While management believes that the Company's facilities are generally adequate, the Company is currently, and will continue, reorganizing manufacturing and distribution facilities in order to more efficiently utilize capacity. The Company has additional capacity available at some of its manufacturing facilities, and consolidating activities have and will continue to occur. At the same time, management currently has plans to expand manufacturing capacity at one location. The overall strategy is to focus each facility on what it does best.

ITEM 3.    LEGAL PROCEEDINGS

        On August 29, 2003, GTG settled a patent infringement lawsuit filed in March 2000 against Acuity Brands, Inc. and its Lithonia Lighting Division. The United States District Court for the Western District of Kentucky in Louisville had ruled in January 2003 that Lithonia's plastic Insta-Lite product infringes GTG's Quicklight plastic recessed lighting fixture patent. Lithonia paid GTG $8 million and also agreed to cease selling the infringing version of its plastic recessed lighting product as of December 31, 2003.

        Genlyte was 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"). 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 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").

        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. On January 5 and 6, 1999, the Court rendered rulings 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

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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.

        On March 17, 2003, the Court entered a summary judgment in favor of all defendants in the case. As a result, the case against all defendants, including Genlyte, was dismissed in its entirety. On April 14, 2003, the Trust filed a Notice of Appeal to the United States Court of Appeals for the Second Circuit from the final judgment entered on March 17, 2003. The Notice claims to bring up for review all orders, opinions, and decisions previously entered in the action; however, the Trust has since indicated that it would pursue its appeal only as to certain issues including the dismissal of the fraudulent conveyance claims, but would not pursue its appeal as to certain other issues, including the dismissal of the RICO claims. Argument on appeal is scheduled for March 24, 2004.

        In the normal course of business, the Company is a plaintiff in various lawsuits and is also subject to various legal claims which arise in the normal course of business, including being a defendant and/or being a potentially responsible party in, generally, patent, trademark, product liability, environmental and contract claims and litigation. Based on information currently available, it is the opinion of management that the ultimate resolution of pending and threatened claims against the Company will not have a material adverse effect on the financial condition or results of operations of the Company.

        The Company records liabilities and establishes reserves for legal claims against it when the costs or exposures associated with the claims become probable and can be reasonably estimated. Because the ultimate outcome of legal claims and litigation is uncertain, the actual costs of resolving legal claims and litigation may be substantially higher than the amounts reserved for such claims. In the event of unexpected future developments, it is possible that the ultimate resolution of such matters, if unfavorable, could have a material adverse effect on results of operations of the Company in future periods.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        No matters were submitted to a vote of the stockholders during the fourth quarter of 2003.

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a)

Genlyte's common stock is traded on the NASDAQ National Market System under the symbol "GLYT." Data regarding market prices of Genlyte's common stock are included in note (22) in the "Notes to Consolidated Financial Statements" section Item 8 "Financial Statements and Supplementary Data."



(b)

The number of common equity security holders is as follows:

(c)

The Company has never paid a cash dividend on its common stock and does not expect to pay any cash dividends on its common stock in the foreseeable future. This is not because of dividend restrictions, but because management believes the stockholders are better served if all of the Company's earnings are retained for expansion of the business or used to repurchase treasury shares. Information concerning Preferred Stock Purchase Rights is included in note (17) in the "Notes to Consolidated Financial Statements" section of Item 8 "Financial Statements and Supplementary Data."



(d)

The following table gives information as of December 31, 2003 about equity awards under the Company's stock option plans.

        The Company's only equity compensation plans are its 1998 and 2003 stock option plans, both of which were approved by the security holders.

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ITEM 6.    SELECTED FINANCIAL DATA

        The information set forth below should be read in conjunction with Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Item 8 "Financial Statements and Supplementary Data."

(*)

in thousands, including incremental common shares issuable under stock option plans

        In 2002, the Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets." See note (2) in the "Notes to Consolidated Financial Statements" section of Item 8 "Financial Statements and Supplementary Data," for information related to the impact of this accounting change on the Company's net income and earnings per share.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion should be read in conjunction with Item 8 "Financial Statements and Supplementary Data."

Overview

        The Genlyte Group Incorporated holds a 68% interest in Genlyte Thomas Group LLC. Thomas Industries Inc. holds the remaining 32% interest. The Company is one of the top three largest manufacturers of lighting fixtures in North America, and the largest company in North America devoted exclusively to selling lighting fixtures, controls, and related products. The Company has a 13.9% share of the North American lighting market, which it estimated to be $7.4 billion in 2003. The total market is divided as follows: 33% commercial, 32% residential, 27% outdoor, and 8% industrial. The Company participates primarily in the commercial and outdoor markets, but also has a considerable position in the residential and industrial markets.

        The Company sells products under 23 widely recognized and respected brand names. Part of its strategy is to take advantage of brand name recognition and focus its brands on specific markets, market channels or product competencies. The Company sells primarily through wholesale electrical distributors—mostly independent distributors and selective relationships with national accounts—using multiple sales forces of direct sales employees and independent sales representatives to maximize market coverage.

        The Company is committed to product innovation. Its goal is to generate 30% of its annual sales from new products released within the past three years. In 2003, it released over 2,000 new products. It has 515 patents/patents pending. The Company is also committed to growth through market share penetration and strategic acquisitions. Since the formation of GTG in 1998, the Company has acquired six companies that contributed over $125 million to 2003 sales.

        In spite of soft commercial and industrial construction markets during 2003, the Company's net income, earnings per share, and cash flow from operations all grew by more than 10% compared to 2002. Weakness experienced in its core commercial markets was offset by refocusing efforts on the faster growing institutional markets of education and healthcare and in the residential market, which remained strong. The acquisition of Vari-Lite in November 2002 and Shakespeare Composite Structures ("Shakespeare") in May 2003 added approximately $50 million to 2003 net sales. Tight control of selling, administrative and product costs helped earnings.

        Although the overall economy in North America is improving, commercial and industrial new construction is not expected to improve until at least the second half of 2004, and demand for lighting fixtures may not pick up until at least late 2004 or early 2005. In response to the persistent weak market conditions, management is continuing with the following plans: ongoing industry leadership in product development and new product introductions; refocusing the sales force on the more robust markets of schools, museums, and healthcare; searching for strategic acquisitions; and continuing cost control.    If the energy bill, which stalled in Congress in late 2003, ultimately passes with incentives for energy-efficient lighting products, it may provide significant business opportunities for the lighting industry and the Company.

Results of Operations

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

        Net sales for 2003 were $1,033.9 million, increasing by $63.6 million, or 6.6% from 2002 net sales of $970.3 million. The 2003 net sales included incremental sales of $48.6 million relating to Vari-Lite, acquired in November 2002, and Shakespeare, acquired in May 2003. Net sales for comparable

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operations, excluding these acquisitions, increased 1.5%. The commercial and industrial construction markets in which the Company operates remained soft throughout the entire year. Overall commercial new construction in the U.S. decreased 6.0% from 2002, which was also a weak year. One of the Company's largest markets, retail construction, was down significantly; hospitality construction decreased in 2003, but not as much as in 2002; and new office construction was very weak because of the glut of office space in many major cities. The industrial construction markets were flat compared to 2002. The residential market, however, was relatively strong. The Company has received a small benefit from its price increase announced in the first quarter of 2003. Because of the continued soft conditions in the construction markets, and the excess capacity in the lighting industry, pricing remains very competitive.

        Net sales for the U.S. operations increased 5.5% compared to 2002, while net sales for the Canadian operations increased 12.1%. Without Vari-Lite and Shakespeare, net sales for the U.S. operations would have decreased 0.5%. The increase in net sales for Canadian operations is entirely attributable to the change in exchange rates. The strengthening of the Canadian dollar versus the U.S. dollar in 2003 compared to 2002 increased U.S. dollar sales of Canadian operations by $19.1 million. If the exchange rate had remained constant, net sales of Canadian operations would have decreased 0.2%.

        The Company operates primarily in the commercial lighting markets, with 74.8% of its 2003 net sales coming from the Commercial segment. This percentage is up from 73.2% in 2002. Net sales of $772.9 million for the Commercial segment in 2003 increased 8.8% from 2002 net sales of $710.2 million. Vari-Lite and Shakespeare are both in the Commercial segment. 2003 net sales for comparable operations, excluding these acquisitions, increased 2.0%. If the Canadian exchange rate had remained constant, and Commercial segment net sales had received no benefit from currency translation, net sales would have increased 6.6%. Excluding both acquisitions and currency translation, net sales would have decreased 0.3%.

        Residential segment net sales of $129.5 million in 2003 represented 12.5% of total Company net sales compared to $132.4 million in 2002, or 13.6% of total Company net sales. Although the residential construction market has remained one of the stronger areas of the U.S. economy, net sales in the Residential segment declined 2.2% from 2002. If the Canadian exchange rate had remained constant, and Residential segment net sales had received no benefit from currency translation, net sales would have decreased 2.8%. The segment's strategy has been to reduce emphasis in the do-it-yourself business and concentrate on higher margin business. The strategy has improved the segment's overall profitability, as operating profit as a percentage of net sales was 13.9% in 2003, compared to 12.0% in 2002.

        The Industrial and Other segment accounts for all remaining net sales and declined as a percentage of total Company net sales: 12.7% in 2003 versus 13.2% in 2002. Net sales of $131.5 million for the Industrial and Other segment in 2003 increased 2.9% from 2002 net sales of $127.7 million. If the Canadian exchange rate had remained constant, and Industrial and Other segment net sales had received no benefit from currency translation, net sales would have increased 1.1%

        Net income for 2003 was $46.3 million ($3.41 per diluted share), a 12.7% increase over 2002 net income of $41.1 million ($3.01 per diluted share). The 2003 net income includes $773 thousand of incremental net income related to Vari-Lite and Shakespeare. Net income during 2003 was impacted by the following significant items:

        The Company collected $8.0 million from a patent litigation settlement with the Lithonia division of Acuity Brands, Inc. in the third quarter. The settlement increased operating profit by $6.4 million, net of $1.6 million of legal expenses, and increased net income by $2.6 million ($0.19 per diluted share) after minority interest and income taxes. However, even without the litigation settlement, the Company increased its net income and earnings per share by 6.3% and 7.0%, respectively, over 2002.

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        The Company's total legal expenses increased $1.0 million compared to 2002, for a negative impact on net income of $400 thousand after minority interest and taxes. In addition, the Company wrote down the carrying value of its Controls division building which was vacated, and wrote off design costs related to the manufacturing plant that had been planned for San Marcos, Texas and due diligence costs related to a potential acquisition that management decided not to pursue. These three write-offs totaled $1.6 million, or $650 thousand after minority interest and income taxes.

        The Company recorded a $3.4 million net charge to selling and administrative expenses, for a negative net income impact of $1.4 million after minority interest and income taxes, related to Canadian division sales and purchases recorded in Canadian dollars but settled in U.S. dollars and accumulated Canadian cash balances denominated in U.S. dollars. In a period of a strengthening Canadian dollar, sales from the Canadian divisions that are recorded in Canadian dollars and subsequently settled in U.S. dollars result in a loss; conversely, purchases result in a gain. Accumulated Canadian cash balances denominated in U.S. dollars result in a loss. The opposite would occur in a period of a weakening Canadian dollar. In 2003, because such sales exceeded purchases, significant U.S. dollar cash balances existed in Canada, and the Canadian dollar strengthened, the Company incurred a net charge. In recent previous years, any such gains or losses have been insignificant. The Company does not hedge this activity with derivative financial instruments and therefore is exposed to future gains or losses based on levels of sales and purchases and the strengthening or weakening of the Canadian dollar versus the U.S. dollar.

        Although the Company suffered a $3.4 million net charge because of the strengthening Canadian dollar versus the U.S. dollar, this situation also resulted in a $2.5 million pre-tax benefit, or a positive net income impact of $1.0 million after minority interest and income taxes, from translating operating income of Canadian operations at a higher rate. More significantly, the strengthening Canadian dollar also resulted in a $13.7 million foreign currency translation adjustment gain, which increased accumulated other comprehensive income during 2003. Other comprehensive income is only reflected as an increase in stockholders' equity in the balance sheet and statement of stockholders' equity and is not reflected in results of operations in the statement of income.

        Cost of sales for 2003 was 64.9% of net sales, compared to 65.0% for 2002. Increased warranty expenses and additional costs of shutting down production at the Barrington, New Jersey plant and transferring it to Sparta, Tennessee and other plants were offset by cost savings in certain raw materials. Selling and administrative expenses for 2003 were 25.3% of net sales, compared to 25.0% in 2002. This reflects the $3.4 million net charge related to foreign currency transaction and monetary asset losses of Canadian operations and the increased legal and acquisition due diligence costs mentioned above. In addition, advertising and research and development expenses increased slightly as a percentage of sales, but information technology expenses decreased.

        In 2003, interest expense was $0.9 million and interest income was $1.2 million (net interest income of $0.3 million). In 2002, interest expense was $1.5 million and interest income was $1.3 million (net interest expense of $0.2 million). Interest expense was lower because of significantly lower debt. The monthly average debt balance in 2003 was $23.7 million compared to a monthly average debt balance in 2002 of $40.1 million. Although cash, cash equivalents, and short-term investments increased during 2003, interest income was lower because of lower interest rates. The monthly average cash, cash equivalents and short-term investments balance in 2003 was $109.6 million compared to $82.2 million in 2002.

        Because the Company was in a net cash position, a hypothetical 1% increase in interest rates would result in an increase of $1.6 million in net interest income, or a positive net income impact of $0.8 million. The estimated increase is based upon the volume and composition of cash, cash equivalents, short-term investments, and debt at December 31, 2003.

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        Minority interest primarily represents the 32% ownership share of GTG income by Thomas. It also includes the 49.5% ownership share of Lumec-Schreder income by a Belgian holding corporation of the Schreder Group.

        The effective income tax rate was 39.0% for 2003, up from 38.6% for 2002. The increase is due to higher state and local tax rates as well as expanding to an additional state jurisdiction with the acquisition of Shakespeare.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

        Net sales for 2002 were $970.3 million, decreasing by $14.9 million, or 1.5%, from 2001 net sales of $985.2 million. The commercial and industrial construction markets in which the Company operates remained soft throughout the entire year. The residential market, however, was relatively strong. Management believes that the Company gained market share during 2002, because the primary markets served by the Company decreased by approximately 10%, which is more than the Company's 1.5% sales decline.

        The Company operates primarily in the commercial lighting markets, with 73.2% of its 2002 net sales coming from the Commercial segment. This percentage is up slightly from 72.3% in 2001. Net sales of $710.2 million for the Commercial segment in 2002 decreased just 0.3% from 2001 net sales of $712.7 million. The segment's three primary commercial markets were very soft in 2002. The retail construction market, particularly high-end retail, was in a decline. The office construction market was soft due to the excess office space in many large cities. The hospitality construction market, which includes major hotels and restaurants, was soft compared to recent years, but began to improve in the second half of the year. The segment's fluorescent and downlighting business struggled because of the soft market conditions, which caused downward pricing pressures from competitors. Overall, considering the softness of the commercial construction markets, the Commercial segment's sales were relatively strong.

        Although the residential construction market has remained one of the stronger areas of the U.S. economy, net sales in the Residential segment declined in proportion to the Company's overall sales decrease. Residential segment net sales of $132.4 million in 2002 and $134.3 million in 2001 were 13.6% of Company net sales both years. The segment's strategy has been to reduce emphasis in the do-it-yourself business and concentrate on higher margin business. The strategy has improved the segment's overall profitability, as operating profit as a percentage of net sales was 12.0% in 2002, compared to 9.6% in 2001. The Residential segment has significantly improved its profitability the last two years.

        The Industrial and Other segment accounts for all remaining net sales and declined as a percentage of total Company net sales: 13.2% in 2002 and 14.1% in 2001. Net sales of $127.7 million for the Industrial and Other segment in 2002 decreased 7.6% from 2001 net sales of $138.2 million. The decrease in 2002 net sales is attributable to the soft industrial construction market as well as significantly decreased sales to one large customer. However, the Company does not have any customers that constitute as much as 10% of total net sales. Except for the impact of possible future acquisitions, management does not expect a significant change in the ratio of each segment's net sales to total Company net sales in the foreseeable future.

        U.S. operations accounted for all of the Company's net sales decrease in 2002. Net sales for the Canadian operations increased 5.2% compared to last year, while net sales for the U.S. operations decreased 2.7%. Also, the weakening of the Canadian dollar during 2002 compared to 2001 reduced U.S. dollar sales of Canadian operations approximately $2.4 million. If the exchange rate had remained constant, net sales of Canadian operations would have increased 6.8%.

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        During the first quarter of 2002, the Company acquired an additional equity interest in the Lumec-Schreder joint venture, which provided the Company controlling interest in the joint venture, and therefore its balance sheet and income statement are now fully consolidated. This resulted in consolidating sales of $7.1 million for Canadian operations in 2002. If not for these Lumec-Schreder sales, net sales of Canadian operations would have increased only 0.4% during 2002. Lumec-Schreder's total assets were $3.3 million as of December 31, 2002. As of December 31, 2001, the Company's equity method investment in the joint venture was $0.7 million.

        Net income for 2002 was $41.1 million ($3.01 per diluted share), a 10.1% increase over 2001 net income of $37.3 million ($2.77 per diluted share). Substantially all of this increase was the result of the change in accounting rules regarding the amortization of goodwill. On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142") and ceased amortizing goodwill. Had the Company accounted for goodwill the same way in 2001, net income would have been $40.5 million ($3.01 per diluted share). Net income was also favorably impacted in 2002 by lower net interest expense, which had a positive after-tax effect of $1.3 million ($0.10 per diluted share), and a lower effective tax rate, which had a positive effect of $0.9 million ($0.07 per diluted share).

        In addition, 2002 net income was adversely impacted by several unusual items that did not impact 2001. These include the first quarter expenses associated with closing the plants in Tijuana, Mexico and Milan, Illinois, patent and Keene litigation expenses, a litigation settlement, and the costs of shutting down production at the Barrington, New Jersey plant and transferring it to Sparta, Tennessee and other plants. These items totaled $6.3 million in expense, or $2.9 million after minority interest and taxes ($0.21 per diluted share).

        The 2002 gross profit percentage (to net sales) of 35.0% was slightly lower than the 2001 gross profit percentage of 35.4%. The decrease was primarily the result of the expenses associated with the plant closings and production transfers mentioned above, workers' compensation, and casualty insurance costs, offset by a more favorable mix of products sold (i.e. products with higher gross profit).

        Selling and administrative expenses as a percentage of sales decreased to 25.0% in 2002, from 25.4% in 2001, despite increases in insurance and legal expenses. Management has been very diligent in controlling selling and administrative expenses to keep them in line with lower sales volume. Offsetting the increases in casualty insurance, group health insurance, and legal expenses were decreases in freight expense, research and development, advertising, and information technology expenses.

        In 2002, interest expense was $1.5 million and interest income was $1.3 million (net interest expense of $0.2 million). In 2001, interest expense was $3.8 million and interest income was $0.5 million (net interest expense of $3.3 million). Interest expense was lower because of significantly lower debt, and interest income was higher because of significantly higher cash. The monthly average debt balance in 2002 was $40.1 million compared to an average debt balance in 2001 of $67.4 million. The average cash balance in 2002 was $82.2 million compared to an average cash balance in 2001 of $33.3 million.

        A hypothetical 1% increase in interest rates would result in an increase of $510 thousand in pre-tax income. The estimated increase is based upon no change in the volume or composition of cash, cash equivalents, short-term investments, or debt at December 31, 2002.

        Minority interest primarily represents the 32% ownership share of GTG income by Thomas. It also includes the 49.5% ownership share of Lumec-Schreder income by a Belgian holding corporation of the Schreder Group.

        The effective income tax rate was approximately 38.6% in 2002, down from 40.0% in 2001. The decrease in the effective tax rate is a result of the adoption of SFAS No. 142 discussed above. Because most of the Company's goodwill was never amortizable for income tax purposes, the financial reporting income subject to tax did not significantly change. This resulted in a lower effective tax rate and little impact on the current tax liability.

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Outlook for the Future

        Management does not expect the primary construction markets that the Company serves to improve significantly until at least the second half of 2004. Although the Company did see some strengthening in the commercial and industrial construction markets in the fourth quarter of 2003, they are projected to remain relatively weak through the first half of 2004. When construction does pick up, it will not begin to impact the Company until 2005, since lighting is installed toward the end of a construction project. The residential construction market has been maintaining a strong pace, so it is not projected to improve either. Conversely, the Company's sales have been relatively healthy, and management does not expect a downturn as long as interest rates remain low. A significant increase in interest rates would be concerning to management. Overall, management anticipates the current trend of soft sales for its stock products to continue, while project business is improving for some divisions.

        Although the Company has realized some benefit from the price increase announced in January of 2003, it has been minimal, and management believes it will remain minimal as long as construction market conditions remain weak. In response to the weak market conditions, management is continuing with the following plans: ongoing industry leadership in product development and new product introductions; refocusing the sales force on the more robust markets of schools, museums, and healthcare; and continuing cost control.

        Although foreign currency rates are unpredictable, management does not expect the Canadian dollar to continue to strengthen versus the U.S. dollar as much as it did during 2003. If the Canadian dollar exchange rate stabilizes, the Company will not continue to realize the foreign currency transaction losses of Canadian operations, although it will continue to realize the benefit of translating sales and income at higher exchange rates compared to the preceding year. If the Canadian dollar weakens, the Company should realize some foreign currency transaction gains. High insurance expenses and legal costs experienced during 2003 are expected to continue. In addition, freight costs are expected to increase.

        Management expects Vari-Lite's operating results to improve from the break-even performance of 2003. Vari-Lite's operating results have improved each quarter, and management believes Vari-Lite will be more profitable in 2004. The Shakespeare composite pole business acquired in May 2003 has been profitable and is expected to perform even better in 2004.

        The U.S. Senate and the House of Representatives both passed energy bills in 2003. These bills include goals for federal energy efficiency including federal building requirements and requirements for the federal government to purchase new energy efficient products, including lighting fixtures. In addition, they include tax incentives for businesses to install new energy efficient products, including lighting. Management believes passage of this energy legislation may have a positive impact on retrofit lighting business in the U.S., and may provide significant additional business opportunities for the Company in 2004 and for the next three to five years.

Financial Condition

Liquidity and Capital Resources

        The Company focuses on its net cash (cash, cash equivalents, and short-term investments minus total debt) and working capital as its most important measures of short-term liquidity. For long-term liquidity, the Company considers its ratio of total debt to total capital employed (total debt plus total stockholders' equity) and trends in net cash and cash provided by operating activities to be the most important measures. From both a short-term and a long-term perspective, the Company's liquidity is exceptionally strong.

        The Company is in a net cash position (cash, cash equivalents, and short-term investments exceed total debt by $141.1 million) at December 31, 2003, compared to net cash of $74.8 million at December 31, 2002. Total debt decreased to $11.5 million at December 31, 2003, compared to

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$37.1 million at December 31, 2002, while cash, cash equivalents, and short-term investments increased to $152.6 million at December 31, 2003, compared to $111.9 million at December 31, 2002. The decrease in debt was mainly due to repayment of approximately $13.3 million in Canadian dollar notes obtained to finance the Ledalite acquisition in 1999, repayment of a $7.6 million industrial revenue bond obtained to finance a plant expansion and paint line at the plant in Littlestown, Pennsylvania, and repayment of a $4.5 million industrial revenue bond related to the plant in Barrington, New Jersey. The New Jersey bond was repaid because the Barrington plant has been shut down and is for sale. The Pennsylvania bond was repaid because the project was canceled without using the proceeds.

        Working capital at December 31, 2003 was $311.4 million, compared to $259.8 million at December 31, 2002. The primary reasons for the increase in working capital were a $40.7 million increase in cash, cash equivalents, and short-term investments, the acquisition of Shakespeare, which added working capital of $5.9 million, and the translation of the account balances of Canadian operations at higher exchange rates, which increased working capital $1.6 million. Accounts receivable increased $11.8 million because of $3.9 million added from the Shakespeare acquisition, $3.0 million attributed to translation of Canadian accounts receivable at a higher exchange rate, and higher sales during the month of December 2003 compared to December 2002. Inventory increased $7.4 million mainly because of $3.8 million added from the Shakespeare acquisition, and $2.3 million attributed to translation of Canadian inventory at a higher exchange rate. Current maturities of long-term debt decreased $3.8 million because of the repayment of the Canadian dollar notes mentioned above. Accounts payable and accrued expenses increased $12.8 million because of $2.1 million added from the Shakespeare acquisition, $3.7 million attributed to translation of Canadian accounts payable and accrued expenses at a higher exchange rate, and normal fluctuations due to the timing of cash disbursements. The current ratio was 2.8 at December 31, 2003, compared to 2.6 at December 31, 2002. This represents the Company's highest current ratio in the last twelve years.

        The ratio of total debt to total capital employed at December 31, 2003 was reduced to the lowest level in the Company's history at 3.1%, compared to 11.2% at December 31, 2002. The Company is in a very good position to add debt if needed. Cash provided by operating activities has been strong enough for the Company to repay most of its debt and add substantially to its cash balance. Cash provided by operating activities was $101.2 million in 2003, a record for the Company, compared to $86.4 million in 2002, and $86.9 million in 2001. The 2003 amount included $8.0 million from the patent litigation settlement with the Lithonia division of Acuity Brands, Inc.

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Cash Flows

        A condensed consolidated statement of cash flows follows:

*

Earnings before interest, taxes, depreciation, and amortization. This is a "non-GAAP financial measure" under the Securities and Exchange Commission regulations. Management believes this is a useful measure because it is included as a key measure in the Company's credit facilities and it is widely recognized and used by financial analysts and the financial community.

        Cash provided by operating activities in 2003 was $14.8 million higher than 2002, which was virtually the same as 2001. Cash used in investing activities is comprised of acquisitions of businesses, purchases of property, plant and equipment, less proceeds from sales of property, plant and equipment, and changes in short-term investments. In 2003, the Company paid $20.4 million to purchase Shakespeare. In 2002, the Company paid $10.6 million to purchase Vari-Lite, and in 2001, the Company paid $2.9 million to purchase Entertainment Technology. Purchases of plant and equipment in 2003 were $1.4 million lower than in 2002, which were $1.3 million lower than in 2001. In response to the soft business conditions during the last two years, management committed fewer funds to capital expenditures. Proceeds from sales of property, plant and equipment were insignificant in 2003, $1.8 million in 2002, primarily from the sale of building and equipment at the plant in Milan, Illinois; and $1.6 million in 2001, primarily from the sale of the Hopkinsville, Kentucky distribution center. As the Company's available cash balance was growing, it invested $10.8 million, $34.1 million, and $23.2 million in short-term investments in 2001, 2002, and 2003, respectively.

        Cash used in financing activities during 2003 was $24.7 million, with $27.4 million in repayments of long-term debt (primarily the Canadian dollar notes and two industrial revenue bonds mentioned above) offset by $2.7 million of stock options exercised. The $27.4 million figure for the repayments of long-term debt does not agree with the decrease in long-term debt of $25.6 million mentioned above, because the Canadian dollar notes were translated at a higher exchange rate on the date they were paid off than the exchange rate in effect on December 31, 2002, when the balance sheet comparison was made. The Company repurchased no treasury stock during 2003. However, the board of directors has authorized the Company to repurchase up to 5%, or approximately 670,000 shares, of its outstanding common stock under a plan that expires in April 2004. Cash used in financing activities during 2002 was $6.0 million, with $4.1 million in stock options exercised offsetting payments on debt of $3.3 million and treasury stock purchases of $6.8 million. The Company purchased 202,800 shares of

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treasury stock at an average price of $33.48 in 2002. Cash used in financing activities in 2001 was $26.9 million with a net reduction in debt of $29.0 million offset by $2.5 million in stock options exercised. Very little treasury stock was purchased in 2001—just 17,600 shares for $0.4 million.

        Management is confident that currently available cash, combined with internally generated funds, will be sufficient to fund capital expenditures as well as any increase in working capital required to accommodate business needs in the next year. The Company continues to seek opportunities to acquire businesses that fit its strategic growth plans. Management believes adequate financing for any such investments will be available through cash on hand, future borrowings, or equity offerings.

Debt and Other Contractual Obligations

        The Company's debt at December 31, 2003 consisted of $11.0 million in industrial revenue bonds and $0.5 million in capital leases and other. GTG has a $130 million U.S. revolving credit facility and a $20 million Canadian revolving credit facility with a syndicate of nine banks. These unsecured facilities mature in July 2006. At December 31, 2003, the Company had no borrowings and approximately $19.1 million in outstanding letters of credit under these facilities. The letters of credit serve to guarantee the industrial revenue bonds as well as insurance reserves. The Company is in compliance with all of its debt covenants.

        The following table summarizes the Company's contractual obligations at December 31, 2003, excluding current liabilities except for the current maturities of long-term debt, and the effect such obligations are expected to have on cash flows and liquidity in future periods (in thousands):

(a)

Long-term debt is included in the consolidated balance sheet in Item 8. Also see note (11) in Item 8.

(b)

Capital lease debt is included in the consolidated balance sheet in Item 8. Also see note (14) in Item 8.

(c)

Operating lease commitments are described in note (14) in Item 8.

(d)

Purchase obligations represent non-cancelable commitments to purchase inventory ordered before year-end.

(e)

Other long-term liabilities included in the consolidated balance sheet in Item 8 consist of reserves for pension benefits (see note (12)), other postretirement benefits (see note (13)), income taxes, and casualty insurance. None of these amounts are included in the table above because they do not have determinable payment streams.

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Other

        Under the terms of the Genlyte Thomas Group LLC Agreement (the "LLC Agreement"), Thomas currently has the right (a "Put Right"), but not the obligation, to require GTG to purchase all, but not less than all, of Thomas's 32% interest at the appraised value of such interest. The appraised value shall be the fair market value of GTG as a going concern multiplied by Thomas's ownership interest percentage, taking into account a control premium, and determined by an appraisal process to be undertaken by recognized investment banking firms chosen initially by Genlyte and Thomas. If GTG cannot secure the necessary financing with respect to Thomas's exercise of its Put Right, then Thomas has the right to cause GTG to be sold.

        At any time after Thomas exercises its Put Right, Genlyte has the right, in its sole discretion and without the need of approval of Thomas, to cause GTG to be sold by giving notice to the GTG Management Board, and the Management Board must then proceed to sell GTG subject to a fairness opinion from a recognized investment banking firm. Genlyte also has the right to cause GTG to assign the rights to purchase Thomas's interest to Genlyte. Genlyte also has the right to cause GTG to incur indebtedness or to undertake an initial public offering to finance or effect financing of the payment of the purchase price.

        Also under the terms of the LLC Agreement, on or after the later to occur of (1) the final settlement or disposition of the Keene litigation described in note (15) "Contingencies" in the "Notes to Consolidated Financial Statements" section of Item 8 "Financial Statements and Supplementary Data," or (2) January 31, 2002, either Genlyte or Thomas has the right, but not the obligation, to offer to buy the other's interest (the "Offer Right"). If Genlyte and Thomas cannot agree on the terms, then GTG shall be sold to the highest bidder. Either Genlyte or Thomas may participate in the bidding for the purchase of GTG. As of December 31, 2003, neither Genlyte nor Thomas has the ability to exercise the Offer Right.

        If either Genlyte or Thomas were to exercise its rights, causing GTG or Genlyte to purchase Thomas's interest, Genlyte's liquidity and capital resources would be affected.

        In 2003, 2002, and 2001, 16.9%, 16.1%, and 15.1%, respectively, of the Company's net sales were generated from operations in Canada. In addition, the Company has a production facility in Mexico. International operations are subject to fluctuations in currency exchange rates. The Company monitors its currency exposure in each country, but does not actively hedge or use derivative financial instruments to manage exchange rate risk. Management cannot predict future foreign currency fluctuations, which have and will continue to affect the Company's balance sheet and statement of income. The cumulative effect of foreign currency translation adjustments, included in accumulated other comprehensive income, a component of stockholders' equity, was a $7.5 million gain as of December 31, 2003. Such adjustments were a gain of $13.7 million in 2003, a gain of $14 thousand in 2002, and a loss of $2.4 million in 2001. Pre-tax gains and (losses) from translation of foreign currency transactions, which are recorded in selling and administrative expenses, were $(3.4) million for 2003, $151 thousand for 2002, and $88 thousand for 2001.

Critical Accounting Policies

        "Management's Discussion and Analysis of Financial Condition and Results of Operations" is based on the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements 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 dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

        On an on-going basis, the Company evaluates its estimates and assumptions, including those related to sales returns and allowances, doubtful accounts receivable, slow moving and obsolete

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inventory, income taxes, impairment of long-lived assets including goodwill and other intangible assets, medical and casualty insurance reserves, warranty reserves, pensions and other post-retirement benefits, contingencies, environmental matters, and litigation. Management bases its estimates and assumptions on its substantial historical experience and other relevant factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Reported results would differ under different assumptions or conditions. Actual results will inevitably differ from management's estimates, and such differences could be material to the consolidated financial statements.

        Management believes the following critical accounting policies affect its more significant estimates and assumptions used in the preparation of the Company's consolidated financial statements:

Allowance for Doubtful Accounts Receivable

        The Company maintains allowances for doubtful accounts receivable for estimated uncollectible invoices resulting from the customer's inability to pay (bankruptcy, out of business, etc., which result in "bad debt" write-offs) as well the customer's refusal to pay (returned products, billing errors, disputed amounts, etc., which result in credit memos). Management's estimated allowances are based on the aging of the invoices, historical collections, customers' financial status, the overall ratio of "bad debt" allowances to account receivable balances in comparison to relevant industry data, amounts returned and disputed by customers, and estimated lag times for processing credit memos. In the opinion of management, these allowances are adequately established and sufficient to cover future collection problems. However, should business conditions deteriorate and more customers have financial problems, these allowances may need to be increased, which would have a negative impact on the Company's results of operations.

Reserve for Slow Moving and Obsolete Inventory

        The Company records inventory at the lower of cost (generally LIFO) or market. Because of the stability of product costs in recent years, and the level of gross profit margins on most products, the Company has not made any material adjustments to write down inventory to market. However, the Company does reserve for excess quantities of slow moving or obsolete inventory. These reserves are primarily based upon management's assessment of the salability of the inventory, historical usage of raw materials and historical demand for finished goods, and estimated future usage and demand. An improper assessment of salability or improper estimate of future usage or demand, or significant changes in usage or demand could result in significant changes in the reserves and a positive or a negative impact on the Company's results of operations in the period the change occurs.

Impairment of Goodwill

        Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"), was issued in July 2001 and became effective for the Company on January 1, 2002. Goodwill is now subject to an assessment for impairment on a reporting unit basis by applying a fair-value-based test annually, and more frequently if circumstances indicate a possible impairment. If a reporting unit's carrying value exceeds its fair value, and the reporting unit's carrying value of its goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

        The evaluation of goodwill for impairment requires management to use significant estimates and assumptions including, but not limited to, projecting future revenue, operating results, and cash flow of each of the Company's reporting units. Although management believes the estimates and assumptions used in the evaluation of goodwill are reasonable, differences between actual and projected revenue, operating results, and cash flow could cause some of the Company's goodwill to be deemed impaired. If this were to occur, the Company would be required to write down the goodwill, which could have a material negative impact on the Company's results of operations and financial condition.

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Retirement Plans and Post-Retirement Benefit Plans

        Assets and liabilities of the Company's defined benefit plans are determined on an actuarial basis and are affected by the estimated market value of plan assets, estimates of the expected return on plan assets, and discount rates. Actual changes in the fair market value of plan assets and differences between the actual return on plan assets and the expected return on plan assets, as well as changes in the discount rate, will affect the amount of pension expense recognized, impacting the Company's results of operations. The liability for post-retirement medical and life insurance benefits is also determined on an actuarial basis and is affected by assumptions including the discount rate and expected trends in health care costs. Changes in the discount rate and differences between actual and expected health care costs will affect the recorded amount of post-retirement benefits expense, impacting the Company's results of operations.

Self-Insurance for Workers' Compensation and Medical Claims

        The Company is insured for workers' compensation, but the deductible, $250,000 prior to August 2002 and $500,000 afterwards, exceeds the vast majority of claims. The insurance provider and administrator, Travelers, provides the Company with estimated losses and reserve requirements for each open claim based on its expertise and experience. The Company records provisions for workers' compensation claims based on the information received from Travelers. The Company also provides reserves for estimated losses for claims incurred but not reported and the future development of reported claims, based on actuarial and claims trend analysis performed by the Company's casualty insurance broker and consultant, Marsh & McLennan Company. Travelers and Marsh & McLennan use significant judgment and assumptions to estimate the losses and reserve requirements, and although management believes the current estimates are reasonable, significant differences related to the factors used in making those estimates could materially affect the Company's workers' compensation liabilities and expense, impacting financial condition and results of operations.

        The Company is self-insured for the medical benefit plans covering most of its employees. The Company estimates its liability for claims incurred by applying a lag factor to the Company's historical claims and administrative cost experience. The validity of the lag factor is evaluated periodically and revised if necessary. Although management believes the current estimated liabilities for medical claims are reasonable, changes in the lag in reporting claims, changes in claims experience, unusually large claims, and other factors could materially affect the recorded liabilities and expense, impacting financial condition and results of operations.

Stock-Based Compensation Costs

        Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," ("SFAS No. 123") gives companies the choice to account for stock-based compensation using either the fair value method or the intrinsic value method of APB Opinion No. 25, "Accounting for Stock Issued to Employees." The Company has elected to account for its stock option plans using the intrinsic value method. Because all options granted under those plans have had an exercise price equal to the market value of the underlying common stock on the date of grant, no stock-based compensation cost has been recognized in the consolidated statements of income. Had the Company elected to account for its stock option plans using the fair value method of SFAS No. 123, or if accounting rules change to require accounting different than the intrinsic value method, the Company's results of operations could be materially affected.

        Note (2) "Summary of Significant Accounting Policies—Stock-Based Compensation Costs" in the "Notes to Consolidated Financial Statements" section of item 8 "Financial Statements and Supplementary Data" includes supplemental information, including pro forma net income and earnings per share, as if stock-based compensation cost for the stock option plans had been determined using the fair value method of SFAS No. 123. The fair value of these options was estimated at the date of grant using a Black-Scholes option pricing model with assumptions about the risk-free interest rate,

21

expected option life, and expected stock price volatility. These assumptions can be highly subjective. 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. Using different assumptions, the supplemental information provided in note (2) could be materially different.

Income Taxes

        Significant management judgment is required in developing the Company's income tax provision, including the determination of deferred tax assets and liabilities and any valuation allowances that might be required against deferred tax assets. Management has determined that no valuation allowances are required.

        The Company operates in multiple taxing jurisdictions and is subject to audit in those jurisdictions. Because of the complex issues involved, any assessments can take an extended period of time to be resolved. In management's opinion, adequate income tax provisions have been made and adequate tax reserves exist to cover probable risks. However, results of Internal Revenue Service or other jurisdictional audits, closing of past years' tax returns no longer subject to audit, and future tax law changes could have a material impact on the Company's future tax liabilities and provisions, impacting financial condition and results of operations.

Contingencies and Litigation

        Genlyte is currently named as a party to legal proceedings discussed in note (15) "Contingencies" in the "Notes to Consolidated Financial Statements" section of item 8 "Financial Statements and Supplementary Data." While management currently believes the ultimate liability, if any, of these proceedings will not have a material effect on the Company's results of operations, financial condition, or liquidity, the ultimate outcome of any litigation is uncertain. Were an unfavorable outcome to occur, the impact could be material to the Company. The Company would accrue the cost of an adverse outcome, if in management's judgment, the adverse outcome was probable and the cost could be reasonably estimated. The Company has made no such accruals as of December 31, 2003.

Forward-Looking Statements

        Certain statements in this Management's Discussion and Analysis of Financial Condition and Results of Operations, including without limitation expectations as to future sales and operating results, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Words such as "expects," "believes," "plans," "intends," "estimates," "forecasts," and similar expressions are intended to identify such forward-looking statements. The statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the following: the highly competitive nature of the lighting business; the overall strength or weakness of the economy, construction activity, and the commercial, residential, industrial, and outdoor lighting markets; the ability to maintain or increase prices; acceptance of new product offerings; passage of an energy bill providing incentives for energy efficient lighting products; the performance of Vari-Lite and Shakespeare; future acquisitions; availability and cost of steel and other raw materials; casualty and medical insurance cost increases; freight cost increases; cost savings realized from plant consolidations; the costs and outcomes of legal proceedings; and foreign exchange rates. The Company could also be affected by changes in tax rates or laws and changes in interest rates. The Company will not undertake and specifically declines any obligation to update or correct any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The Company is exposed to market risk for interest rates, prices of raw materials and component parts, and foreign currency exchange rates in the operation of its business. Each of these risks is discussed below.

        The Company earns interest income on its cash, cash equivalents, and short-term investments and pays interest expense on its long-term debt. Because of variable interest rates, the Company is exposed to risk of interest rate fluctuations. However, because of its net cash position (cash, cash equivalents, and short-term investments exceed total debt) and the current low level of interest rates, management currently believes this risk is not material to the Company's operating results in the near term. Interest rates on cash, cash equivalents, and short-term investments cannot decrease much further, and an increase in interest rates would result in an increase in interest income exceeding the increase in interest expense. Based upon December 31, 2003 debt levels, a hypothetical 1% increase in interest rates would result in an annualized increase of approximately $115,000 in interest expense, reducing net income by $16,000 after minority interest and income taxes. However, based on December 31, 2003 cash, cash equivalents, and short-term investments levels, a 1% increase in interest rates would increase interest income approximately $1,688,000, resulting in an increase of $1,573,000 in net interest income, or $759,000 after minority interest and income taxes. The estimated increases are based upon no change in the volume or composition of cash, cash equivalents, and short-term investments or debt at December 31, 2003. The increases also assume short-term interest rates on cash, cash equivalents, and short-term investments fluctuate "perfectly" with long-term interest rates on debt, which is not likely to occur. The Company does not use derivative financial products such as interest rate hedges or swaps.

        The Company purchases large quantities of raw materials and components—mainly steel, aluminum, ballasts, sockets, wire, plastic, lenses, glass, and corrugated cartons. The Company's operating results could be affected by the availability and price fluctuations of these materials. The Company uses multiple suppliers, has alternate suppliers for most materials, and has no significant dependence on any single supplier. No consequential supply problems have been encountered in recent years. Price risk for these materials is related to increases in commodity items that effect all users of the materials, including the Company's competitors. In recent years, few of these materials have had volatile prices, and the primary price trend has been slightly downward. Although steel tariffs have been abated, global commodity costs for steel, packaging, and some other commodities have recently increased significantly due to the weakening U.S. dollar. Historically, the Company has attempted to pass along significant price increases in its materials in industry-wide price adjustments to customers, to mitigate the Company's exposure to supplier price fluctuations. However, such price adjustments are subject to competitive pressure. The Company does not actively hedge or use derivative instruments to manage its risk in this area.

        In 2003, approximately 17% of the Company's net sales were generated from operations in Canada. Although the majority of these products were manufactured and sold within Canada, a significant amount were manufactured in Canada and sold to U.S. customers. As of December 31, 2003, approximately 19% of the Company's total assets were in Canada. The Company's financial condition and operating results are affected by changes in Canadian dollar exchange rates, but management regards this risk as manageable and, therefore, does not actively hedge or use derivative instruments in this area. Foreign currency translation adjustments, which are recorded in the accumulated other comprehensive income component of stockholders' equity and do not affect net income, were a credit of $13,719,000 in 2003, a credit of $14,000 in 2002, and a charge of $2,397,000 in 2001. Gains and losses resulting from translation of foreign currency transactions, which do affect net income, were a pre-tax loss of $3,405,000 in 2003, a pre-tax gain of $151,000 in 2002, and a pre-tax gain of $88,000 in 2001.

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

        All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

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Report of Independent Auditors

To the Stockholders of The Genlyte Group Incorporated:

        We have audited the accompanying consolidated balance sheets of The Genlyte Group Incorporated and Subsidiaries (the Company) as of December 31, 2003 and 2002 and the related consolidated statements of income, stockholders' equity and cash flows for the years then ended. Our audits also included the financial statement schedule listed in Item 15 (a) 2 for the years ended December 31, 2003 and 2002. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. The financial statements of the Company for the year ended December 31, 2001 were audited by other auditors who have ceased operations and whose report dated January 18, 2002 expressed an unqualified opinion on those statements.

        We conducted our 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 2003 and 2002 financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Genlyte Group Incorporated and Subsidiaries at December 31, 2003 and 2002, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

        As discussed in Note 2, in 2002 the Company changed its method of accounting for goodwill and other intangible assets.

        As discussed above, the financial statements of the Company for the year ended December 31, 2001 were audited by other auditors who have ceased operations. As discussed in Note 2, these financial statements have been revised to include the transitional disclosures required by Statement of Financial Accounting Standards (Statement) No. 142, "Goodwill and Other Intangible Assets," which was adopted by the Company as of January 1, 2002. Our audit procedures with respect to the disclosures in Note 2 with respect to 2001 included (a) agreeing the previously reported net income to the previously issued financial statements and the adjustments to reported net income representing amortization expense (including any related tax effects) recognized in those periods related to goodwill to the Company's underlying records obtained from management, and (b) testing the mathematical accuracy of the reconciliation of adjusted net income to reported net income. In our opinion, the disclosures for 2001in Note 2 are appropriate. However, we were not engaged to audit, review, or apply any procedures to the 2001 financial statements of the Company other than with respect to such adjustments related to Note 2, and accordingly, we do not express an opinion or any other form of assurance on the 2001 financial statements taken as a whole.

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        NOTE: This is a copy of a report previously issued by Arthur Andersen LLP, the Company's former independent accountants. The Arthur Andersen LLP report refers to certain financial information for the years ended December 31, 2000 and 1999, and certain balance sheet information as of December 31, 2001 and 2000, which are no longer included in the accompanying financial statements. Arthur Andersen LLP has not reissued this report as Arthur Andersen LLP ceased operations in August 2002.

Report of Independent Public Accountants

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 (the Company) as of December 31, 2001 and 2000, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Genlyte Group Incorporated and Subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

/s/ ARTHUR ANDERSEN LLP

Louisville, Kentucky
January 18, 2002

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THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except earnings per share data)

The accompanying notes are an integral part of these consolidated financial statements.

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THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

The accompanying notes are an integral part of these consolidated financial statements.

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THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Amounts in thousands)

The accompanying notes are an integral part of these consolidated financial statements.

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THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

The accompanying notes are an integral part of these consolidated financial statements.

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THE GENLYTE GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars 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 all majority-owned subsidiaries.

(1) Description of Business

        The Genlyte Group Incorporated ("Genlyte"), a Delaware corporation, is a United States based multinational corporation. The Company designs, manufactures, markets, and sells lighting fixtures, controls and related products for a wide variety of applications in the commercial, residential, and industrial markets in North America. The Company's products are marketed primarily to distributors who resell the products for use in commercial, residential, and industrial construction and remodeling.

(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 ("GTG"). See note (3) "Formation of Genlyte Thomas Group LLC."

        Use of Estimates:    The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from the estimates.

        Revenue Recognition:    The Company records sales revenue when products are shipped, which is when legal title passes to the customer and the risks and rewards of ownership have transferred. Provisions for estimated returns, allowances, discounts, and rebates are recorded as sales deductions.

        Shipping and Handling Fees and Costs:    Shipping and handling costs associated with storage and handling of finished goods and handling of shipments to customers are included in cost of sales. Outbound freight for shipments to customers is included in selling and administrative expenses and amounted to $49,017 in 2003, $45,724 in 2002, and $50,552 in 2001. Sometimes outbound freight is billed to the customer. Such fees are included in net sales and amounted to $8,228 in 2003, $7,372 in 2002, and $7,502 in 2001.

        Stock-Based Compensation Costs:    At December 31, 2003, the Company had two stock-based compensation (stock option) plans, which are described more fully in note (16) "Stock Options." The Company accounts for these plans using the intrinsic value method of APB Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), as permitted under Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation" and SFAS No. 148, "Accounting for Stock-Based Compensation—Transition and Disclosure—an Amendment of FASB Statement No. 123." Because all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant, no stock-based compensation cost has been recognized in the consolidated statements of income.

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Had stock-based compensation cost for the plans been determined using the fair value recognition provisions of SFAS No. 123, the effect on the Company's net income and earnings per share for the years ended December 31 would have been as follows: