-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Tfd2dz+5qF4JLNXjhxvCvruz247Rnp9rgBMsq607y6byrPRWNpwqK8FBU6XSs7iB zwZ3GVmqmqmK4DTEpUio+w== 0000914760-96-000049.txt : 19960325 0000914760-96-000049.hdr.sgml : 19960325 ACCESSION NUMBER: 0000914760-96-000049 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960322 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: THOMAS INDUSTRIES INC CENTRAL INDEX KEY: 0000097886 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 610505332 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-05426 FILM NUMBER: 96537599 BUSINESS ADDRESS: STREET 1: P O BOX 35120 CITY: LOUISVILLE STATE: KY ZIP: 40232 BUSINESS PHONE: 5028934600 MAIL ADDRESS: STREET 1: P O BOX 35120 CITY: LOUISVILLE STATE: KY ZIP: 40232 10-K405 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION (Mark One) Washington, D.C. 20549 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-5426 THOMAS INDUSTRIES INC. (Exact name of Registrant as specified in its Charter) DELAWARE 61-0505332 (State of incorporation) (I.R.S. Employer Identification Number) 4360 BROWNSBORO ROAD, LOUISVILLE, KENTUCKY 40207 (Address of principal executive offices) (Zip Code) 502/893-4600 (Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE SECURITIES EXCHANGE ACT OF 1934: Title of Each Class Name of Each Exchange on which Registered Common Stock, $1 Par Value New York Stock Exchange Preferred Stock Purchase Rights New York Stock Exchange Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] As of March 1, 1996, 10,130,143 shares of the registrant's Common Stock were outstanding. The aggregate market value of the voting stock held by non-affiliates of the Registrant at March 1, 1996, was approximately $220,330,610. Portions of Proxy Statement for the Annual Meeting of Shareholders on April 18, 1996, are incorporated by reference in Part III of this report. Portions of the Annual Report to Shareholders for fiscal year ended December 31, 1995 are incorporated by reference in Parts I and II of this report. 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 as they allow the Company to offer a more complete product line and make the Company 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 consumer, 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 Pumps 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. b. Financial Information about Industry Segments. The information required by this item is set forth in Exhibit 13 under the heading "Notes to Consolidated Financial Statements," which information is hereby incorporated herein by reference. c. Narrative Description of Business. The Company's principal businesses are lighting, including consumer, commercial, industrial, and outdoor lighting fixtures; and compressors and vacuum pumps. The Company designs, manufactures, markets, and sells these products; and maintains corporate offices in Louisville, Kentucky. The Company operates 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 consumer 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 Do-It-Yourself brand names, the Company's consumer 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 Do-It-Yourself lines are distributed throughout the United States through a network of electrical distributors, lighting showrooms, and home centers, which, in turn, sell to electrical contractors, builders, and consumers. Consumer lighting fixtures are manufactured and sold in the U.S. and Canada under the Thomas and Do-It-Yourself 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. 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, Gardco, Capri, Electro/Connect, McPhilben, Omega, Emco, Lumec, and Thomas Lighting trade names. The Lighting Segment accounted for 68 percent of the Company's sales in 1995, compared to 67 percent in 1994 and 66 percent in 1993. Compressors and Vacuum Pumps Segment This Segment includes air compressors and vacuum pumps manufactured under the Thomas name in the U.S. and ASF/Thomas in Europe 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 industry. Thomas specializes in compressor applications below the 1.5 horsepower range. 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, refrigerant 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 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, and building supply dealers. The U.S. operations manufacture rotary vane, piston, and diaphragm compressors and vacuum pumps, as well as air motors and vacuum ejectors. These products are distributed worldwide to original equipment manufacturers as well as through fluid power and large compressor distributors. Primary markets served include medical, environmental, instrumentation, mobile, construction, and consumer. The European operations manufacture a complementary line of miniature rotary vane, piston, linear, and diaphragm compressors and vacuum pumps, with expertise in applications of less than 1/8 horsepower. These products are currently distributed worldwide to original equipment manufacturers. Primary applications for products manufactured in Europe include medical, air and gas sampling, photography, and dish washing equipment, as well as laboratory instruments and leak detection devices. The Thomas, ASF/Thomas, and Sprayit trade names are recognized in the market and are important to the Segment. The Compressors and Vacuum Pumps Segment accounted for 32 percent of the Company's sales in 1995, compared to 32 percent in 1994 and 29 percent in 1993. --------------------- 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 1995, 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 $90 million at December 31, 1995--47 percent Lighting and 53 percent Compressors and Vacuum Pumps--and $90 million at December 31, 1994--48 percent Lighting and 52 percent Compressors and Vacuum Pumps. 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. The Company has various patents and trademarks but does not consider its business to be materially dependent upon any individual patent or trademark. During 1995, the Company spent $13.4 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 1994, the Company spent $12.7 million on these activities and during 1993, $12.4 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 3,100 people. d. Financial Information about Foreign and Domestic Operations and Export Sales. See Notes to Consolidated Financial Statements, as set forth in Exhibit 13, which information is incorporated herein by reference to the Company's 1995 Annual Report to Shareholders, for financial information about foreign and domestic operations. Export sales for the years 1995, 1994, and 1993, were $40,900,000, $36,600,000, and $34,500,000, respectively. e. Executive Officers of the Registrant.
Year Office or Position First Elected with Company Age as an Officer Timothy C. Brown Chairman of the Board, 45 1984 President, Chief Executive Officer, Chairman of the Executive Committee, and Director Richard J. Crossland Vice President; Lighting 52 1994 (A) Group Manager Clifford C. Moulton Vice President; 48 1993 (B) Compressor and Vacuum Pump Group Manager Phillip J. Stuecker Vice President of Finance, 44 1984 Chief Financial Officer, and Secretary Ronald D. Schneider Vice President, 45 1992 (C) Lighting Operations C. Barr Schuler Vice President, Corporate 55 1977 Development; Treasurer Gilbert R. Grady, Jr. Vice President, Corporate 59 1981 Employee Relations (A) Richard J. Crossland was elected an officer effective August 18, 1994. Mr. Crossland spent the previous 10 years with Philips Lighting Company, Somerset, New Jersey, where he was Group Vice President/General Manager of four divisions since 1990 and Vice President, Operations, of seven manufacturing facilities from 1989 to 1990. (B) Clifford C. Moulton was elected an officer effective March 1, 1993. Mr. Moulton spent the previous 23 years with Honeywell Corporation in various management positions, most recently as Vice President and General Manager of the Skinner Valve Division, since 1987. (C) 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. The following listing summarizes the Company's properties.
Number of Facilities Combined Segment Owned Leased Square Feet Nature of Facilities Lighting 8 4 1,699,887 Manufacturing plants 3 3 633,116 Distribution centers 0 4 65,550 Administrative offices Compressors and Vacuum 3 3 558,100 Manufacturing plants Pumps 0 1 6,000 Distribution center Corporate 0 2 16,186 Corporate headquarters 3 1 299,300 Leased to third parties 3 0 279,200 Property for sale
ITEM 3. LEGAL PROCEEDINGS In the normal course of business, the Company and its subsidiaries are parties to legal proceedings. Management believes that these proceedings will be resolved with no materially adverse impact on the financial condition and results of operations 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 Exhibit 13 under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" and under the heading "Notes to Consolidated Financial Statements," which information is contained in the Company's 1995 Annual Report to Shareholders and hereby incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA The information required by this item is set forth in Exhibit 13 under the heading "Five-Year Summary of Operations and Statistics," which information is contained in the Company's 1995 Annual Report to Shareholders and 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 Exhibit 13 under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations," which information is contained in the Company's 1995 Annual Report to Shareholders and hereby incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is set forth in Exhibit 13 under the headings "Consolidated Financial Statements," "Notes to Consolidated Financial Statements," and "Report of Management and Independent Auditors," which information is contained in the Company's 1995 Annual Report to Shareholders and hereby incorporated herein by reference. The supplementary data regarding quarterly results of operations is set forth in Exhibit 13 under the heading "Notes to Consolidated Financial Statements," which information is contained in the Company's 1995 Annual Report to Shareholders and hereby incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 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 18, 1996, under the headings "Election of Directors" and "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 18, 1996, under the headings "Executive Compensation," "Compensation Committee Interlocks and Insider Participation," and "Board of Directors," 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 18, 1996, under the heading "Securities Beneficially Owned by Principal Shareholders and Management," which information is hereby 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 18, 1996, under the caption "Board of Directors," which information is hereby incorporated herein by reference. PART IV. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K a. (1) Financial Statements The following consolidated financial statements of Thomas Industries Inc. and subsidiaries, included in the Company's 1995 Annual Report to Shareholders are included in Part II, Item 8: Consolidated Balance Sheets--December 31, 1995 and 1994 Consolidated Statements of Income--Years ended December 31, 1995, 1994, and 1993 Consolidated Statements of Shareholders' Equity--Years ended December 31, 1995, 1994, and 1993 Consolidated Statements of Cash Flows--Years ended December 31, 1995, 1994, and 1993 Notes to Consolidated Financial Statements--December 31, 1995 Five-Year Summary of Operations and Statistics Independent auditors report from KPMG Peat Marwick LLP (2) Financial Statement Schedule Schedule II -- Valuation and Qualifying Accounts (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 December 14, 1995. 4(a) 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 as Exhibit No. 4 to registrant's report 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. 4(b) Rights Agreement filed as Exhibit 1 to registrant's report on Form 8-A on December 23, 1987, hereby incorporated by reference. 4(c) Amendment to Rights Agreement filed as Exhibit 1 to the registrant's report on Form 8-K on October 18, 1990, hereby incorporated by reference. 10(a) Employment Agreements with Timothy C. Brown, Gilbert R. Grady, Jr., C. Barr Schuler, and Phillip J. Stuecker filed as Exhibits 3(a), 3(f), 3(i), and 3(j), respectively, to registrant's report on Form 10-Q dated November 11, 1988, hereby incorporated by reference. 10(b) Employment Agreement with Clifford C. Moulton filed as Exhibit 10(b) to registrant's report on Form 10-K dated March 25, 1993, hereby incorporated by reference. 10(c) Employment Agreement with Richard J. Crossland filed as Exhibit 10(c) to registrant's report on Form 10-K dated March 22, 1994, hereby incorporated by reference. 10(d) Trust Agreement, filed as Exhibit 10(1) to registrant's report on Form 10-Q dated November 11, 1988, hereby incorporated by reference. 10(e) Form of Indemnity Agreement and Amendment thereto entered into by the Company and each of its Executive Officers filed as Exhibits 10 (g) and (h) to registrant's report on Form 10-K dated March 23, 1988, hereby incorporated by reference. 10(f) Severance pay policy of the Company, effective October 1, 1988, covering all Executive Officers, filed as Exhibit 10(d) to registrant's report on Form 10-K dated March 23, 1989, hereby incorporated by reference. 10(g) 1987 Incentive Stock Plan as Amended, filed as Annex A to the registrant's Proxy Statement on March 17, 1989, hereby incorporated by reference. 10(h) Non-Employee Director Stock Option Plan, filed as Exhibit A to the registrant's Proxy Statement on March 10, 1994, hereby incorporated by reference. 10(i) 1995 Incentive Stock Plan, filed as Exhibit A to the registrant's Proxy Statement on March 14, 1995, hereby incorporated by reference. 13 Certain portions of the Company's 1995 Annual Report to Shareholders as specified in Part II hereof to be incorporated by reference in this Annual Report on Form 10-K. 21 Subsidiaries of the Registrant. 23 Consent of KPMG Peat Marwick LLP. 27 Financial Data Schedule. b. Reports on Form 8-K There were no reports on Form 8-K for the three months ended December 31, 1995. c. Exhibits The exhibits filed as part of this Annual Report on Form 10-K are as specified in Item 14(a)(3) herein. S I G N A T U R E S Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized. THOMAS INDUSTRIES INC. Date: March 21, 1996 By /s/ Timothy C. Brown Timothy C. Brown, Chairman of the Board Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Timothy C. Brown Chairman of the Board; 3/21/96 Timothy C. Brown President; Chief Executive Officer; Chairman of the Executive Committee; Director (Principal Executive Officer) /s/ Phillip J. Stuecker Vice President of Finance; 3/21/96 Phillip J. Stuecker Chief Financial Officer; Secretary (Principal Financial Officer) /s/ Ronald D. Wiseman Controller; Assistant 3/21/96 Ronald D. Wiseman Secretary (Principal Accounting Officer) /s/ Peter P. Donis Director 3/21/96 Peter P. Donis /s/ Wallace H. Dunbar Director 3/21/96 Wallace H. Dunbar /s/ Roger P. Eklund Director 3/21/96 Roger P. Eklund /s/ H. Joseph Ferguson Director 3/21/96 H. Joseph Ferguson /s/ Gene P. Gardner Director 3/21/96 Gene P. Gardner /s/ Lawrence E. Gloyd Director 3/21/96 Lawrence E. Gloyd /s/ William M. Jordan Director 3/21/96 William M. Jordan /s/ Ralph D. Ketchum Director 3/21/96 Ralph D. Ketchum /s/ Franklin J. Lunding, Jr. Director 3/21/96 Franklin J. Lunding, Jr. Independent Auditors' Report The Board of Directors and Shareholders Thomas Industries Inc. We have audited the consolidated financial statements of Thomas Industries Inc. and subsidiaries as listed in the accompanying index. In connection with our audits of the financial statements, we also have audited the financial statement schedule as listed in the accompanying index. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule 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 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, 1995 and 1994, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1995, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG PEAT MARWICK LLP Louisville, Kentucky February 7, 1996 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Thomas Industries Inc. and Subsidiaries December 31, 1995
ADDITIONS Charged to Balance at Charged to Other Balance at Beginning Costs and Accounts- Deductions- End of DESCRIPTION of Period Expenses Describe Describe Period Year ended December 31, 1995 Allowance for doubtful accounts $ 1,773,000 $ 519,000 $ 278,000 (1) $ 2,014,000 Allowance for obsolete and slow moving 5,724,000 4,004,000 1,977,000 (2) 7,751,000 inventory $ 7,497,000 $ 4,523,000 $ 2,255,000 $ 9,765,000 Year ended December 31, 1994 Allowance for doubtful accounts $ 1,763,000 $ 705,000 $ 695,000 (1) $ 1,773,000 Allowance for obsolete and low moving 6,419,000 4,079,000 4,774,000 (2) 5,724,000 inventory $ 8,182,000 $ 4,784,000 $ 5,469,000 $ 7,497,000 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 4,742,000 4,470,000 2,793,000 (2) 6,419,000 inventory $ 6,962,000 $ 5,510,000 $ 4,290,000 $ 8,182,000 (1) Uncollectible accounts written off, less recoveries on accounts previously written off and effect of translation in accordance with SFAS No. 52 (2) Dispossal of obsolete inventory and effect of translation in accordance with SFAS No. 52
EXHIBIT INDEX Exhibit No. Exhibit Page 3(b). Bylaws, as amended December 14, 1995 13. Certain portions of the Company's 1995 Annual Report to Shareholders as specified in Part II hereof to be incorporated by reference in this Annual Report on Form 10-K 21. Subsidiaries of the Registrant 23. Consent of KPMG Peat Marwick 27. Financial Data Schedule EX-3.(B) 2 EXHIBIT 3(b) BYLAWS OF THOMAS INDUSTRIES INC. Amended as of December 14, 1995 BYLAWS OF THOMAS INDUSTRIES INC. ARTICLE I Offices The principal office of the Corporation in the State of Delaware is located at No. 306 South State Street, City of Dover 19901, County of Kent, State of Delaware; and the name of the resident agent in charge thereof is the United States Corporation Company. The Company may also have offices at such other places, within or without the State of Delaware, as the Board of Directors may from time to time determine. ARTICLE II Shareholders Section 1. Annual Meeting. An annual meeting of the shareholders of the Corporation for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held each year on such day during the month of April or May, and at such time and place, as may be fixed from time to time by the Board of Directors of the Corporation. Section 2. Special Meetings. Special meetings of the shareholders of the Corporation for any purpose or purposes may be called at any time by the Board of Directors or by a committee of the Board of Directors which has been duly designated by the Board of Directors and whose powers and authority, as provided in a resolution of the Board of Directors or in these Bylaws, include the power to call such meetings, but such special meetings may not be called by any other person or persons; provided, however, that if and to the extent that any special meeting of shareholders may be called by any other person or persons by the terms of any series of Preferred Stock then outstanding, then such special meeting may also be called by the person or persons, in the manner, at the times, and for the purposes so specified. Special meetings shall be held at such place within or without the State of Delaware as may be specified in the call thereof. Business transacted at all special meetings shall be confined to the objects stated in the call. Section 3. Notice of Meetings. Written notice of the annual meeting of the shareholders shall be served by the Secretary, either personally or by mail, upon each shareholder of record entitled to vote at such meeting, at least ten days before the meeting. Written notice of any special meeting of the shareholders shall be so served at least five days before the meeting. If mailed, the notice of a meeting shall be directed to a shareholder at his last known post office address. The notice of every meeting of the shareholders shall state the purpose or purposes for which the meeting is called and the time when and the place where it is to be held. Failure to serve personally or by mail such notice, or any irregularity therein, shall not affect the validity of such meeting or any of the proceedings thereat. Such notice may be waived in writing. Section 4. Quorum. At all meetings of the shareholders, the presence, in person or by proxy, of the holders of record of a majority of the shares of stock issued and outstanding, and entitled to vote thereat, shall be necessary and sufficient to constitute a quorum for the transaction of business, except as otherwise provided by law, by the Certificate of Incorporation, or by these Bylaws. In the absence of a quorum, the holders of record of a majority of the shares of stock present in person or by proxy, and entitled to vote thereat, or if no such shareholder is present in person or by proxy, any officer entitled to preside at, or act as secretary of, such meeting, without notice other than by announcement at the meeting, may adjourn the meeting from time to time, for a period of not more than thirty days at any one time until a quorum shall attend. At any such adjourned meeting at which a quorum shall be present in person or by proxy, any business may be transacted that might have been transacted at the meeting as originally called. Section 5. Voting. At each meeting of the shareholders, except as may be provided by the Certificate of Incorporation, as amended, or in a certificate filed by the Corporation pursuant to Section 151(g) of the Delaware General Corporation Law, each shareholder entitled to vote at such meeting shall be entitled to one vote for each share of stock standing in his name in the stock ledger of the Corporation and may vote either in person or by proxy, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. Every proxy must be executed in writing by the shareholder or by his duly authorized attorney and dated, but need not be sealed, witnessed, or acknowledged. At each meeting of the shareholders, if there shall be a quorum, the vote of the holders of a majority of the shares of stock present in person or by proxy, and entitled to vote thereat, shall decide all matters brought before such meeting, except as otherwise provided by law, by the Certificate of Incorporation, or by these Bylaws. Upon demand of any shareholder entitled to vote at a meeting of the shareholders or upon the direction of the presiding officer at such meeting, the vote upon any matter brought before such meeting shall be by ballot; but otherwise no such vote need be by ballot except as is provided in Article II, Section 10, of these Bylaws. Section 6. Presiding Officer and Secretary. At all meetings of the shareholders, the Chairman of the Board of Directors, or in his absence the President of the Corporation, or in his absence a Vice President, or if none be present, the appointee of the meeting, shall preside. The Secretary of the Corporation, or in his absence an Assistant Secretary, or if none be present, the appointee of the presiding officer of the meeting, shall act as secretary of the meeting. Section 7. Inspectors of Election. At each meeting of the shareholders at which any matter brought before the meeting is to be voted upon by ballot, the presiding officer of such meeting may, and if so required by Article II, Section 10, of the Bylaws shall, appoint two persons, who need not be shareholders, to act as Inspectors of Election at such meeting. The Inspectors so appointed, before entering on the discharge of their duties, shall take and subscribe an oath or affirmation faithfully to execute the duties of Inspectors at such meeting with strict impartiality and according to the best of their ability; and thereupon the Inspectors shall take charge of the polls and after the balloting shall canvass the votes and determine in accordance with law, and make a certificate to the Corporation of, the results of the vote taken. No director or candidate for the office of director shall be appointed an Inspector. Section 8. Nomination of Director Candidates and Other Shareholder Proposals. Nominations of candidates for election to the Board of Directors of the Corporation or any other matters to be considered at any meeting of the shareholders called for election of directors or for the consideration of any other matters (an "Election Meeting") may be made only by or at the direction of the Board of Directors or by a shareholder entitled to vote at such Election Meeting. All such nominations, or any other proposals, except those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, any such notice must be received at the principal executive offices of the Corporation not less than sixty days prior to the date of the Election Meeting and must set forth (i) the name, age, business address and residence address, and the principal occupation or employment of any nominee proposed in such notice, (ii) the name and address of the shareholder giving the notice as the same appears in the Corporation's stock ledger, (iii) the number of shares of capital stock of the Corporation which are beneficially owned by any such nominee and by such shareholder, (iv) such other information concerning any such nominee as would be required, under the rules of the Securities and Exchange Commission, in a proxy statement soliciting proxies for the election of such nominee, and (v) a description of any other matter proposed to be voted upon at the Election Meeting. Such notice must also include a signed consent of each such nominee to serve as a director of the Corporation, if elected. If the presiding officer of an Election Meeting determines that a director nomination, or any other proposal, was not made in accordance with the foregoing procedures, such nomination or other proposal shall be void and shall be disregarded for all purposes. Section 9. List of Shareholders. At least ten days prior to every election of directors, a complete list of the shareholders entitled to vote at such election, arranged in alphabetical order and indicating the number of voting shares held by each, shall be prepared and certified by the Secretary or an Assistant Secretary. Such list shall be filed at the place where the election is to be held and shall at all times during the usual hours for business, and during the whole time of said election, be open to the examination of any shareholder. Section 10. Determination of Contested Elections. In the event that there are more candidates for election to the Board of Directors at a meeting of the shareholders than there are directors to be elected at such meeting (a "Contested Election"), the vote for election of directors shall be by ballot, and two Inspectors of Election for such meeting shall be appointed by the presiding officer of such meeting. The nominees for election to the Board of Directors in a Contested Election who are certified by the Inspectors as having been elected shall be deemed to be duly elected and qualified upon the expiration of three business days following the date of such certification, provided that in the event any court proceedings are commenced which challenge the results of such Contested Election, such nominees shall not be deemed to be duly elected and qualified until all such court proceedings, including appeals, shall have been finally concluded. ARTICLE III Directors Section 1. Number/Terms of Office. Except as provided by law or by the Certificate of Incorporation, or by these Bylaws, the powers, business, property, and affairs of the Corporation shall be exercised and managed by a Board of ten directors. The number of directors may be altered from time to time by an amendment of these Bylaws as hereinafter provided, but no reduction in the number of directors shall affect any director whose term of office shall not have expired. No director need be a shareholder. The directors shall be divided into three classes as follows: Class I -- four members Class II -- three members Class III -- three members The term of office of directors of Class I shall expire at the 1996 annual meeting of shareholders; the term of office of directors of Class II shall expire at the 1997 annual meeting of shareholders; and the term of office of directors of Class III shall expire at the 1998 annual meeting of shareholders. At each annual meeting of shareholders, directors of the class whose term then expires shall be elected for a full term of three years to succeed the directors of such class so that the term of office of the directors of one class shall expire in each year, provided that nothing herein shall be construed to prevent (a) the election of a director to succeed himself, (b) the election of a director for the remainder of an unexpired term in the class of directors to which he is elected, and (c) amendment of the Bylaws to increase or decrease the number of directors. Notwithstanding any other provision of these Bylaws, each director shall continue in office until his successor shall have been duly elected and shall qualify, or until his earlier resignation or removal in the manner provided in these Bylaws, or death. Section 2. Election of Directors/Vacancies. The members of each class of directors shall be elected at the annual meeting of the shareholders at which the term of office of such class expires, as provided herein. If for any reason any annual election of directors shall not be held on the day designated by these Bylaws, the directors shall cause such election to be held as soon thereafter as conveniently may be. Newly created directorships resulting from any increase in the authorized number of directors and vacancies in the Board of Directors from death, resignation, retirement, disqualification, removal from office, or other cause, shall be filled by a majority vote of the directors then in office; and directors so chosen shall hold office for a term expiring at the annual meeting at which the term of the class to which they shall have been elected expires. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Subject to the rights of the holder of any series of Preferred Stock then outstanding, (a) any director, or the entire Board of Directors, may be removed at any time, but only for cause; and (b) the affirmative vote of the holders of 75 percent of the voting power of all of the stock of the Corporation entitled to vote in the election of directors shall be required to remove a director from office. The shareholders of the Corporation are expressly prohibited from cumulating their votes in any election of directors of the Corporation. Section 3. Resignations. Any director may resign from his office at any time by delivering his resignation in writing to the Corporation; and the acceptance of such resignation, unless required by the terms thereof, shall not be necessary to make such resignation effective. Section 4. Meetings. The Board of Directors may hold its meetings in such place or places within or without the State of Delaware as the Board from time to time by resolution may determine or as shall be specified in the respective notices or waivers of notice thereof; and the directors may adopt such rules and regulations for the conduct of their meetings and the management of the Corporation, not inconsistent with these Bylaws, as they may deem proper. An annual meeting of the Board for the election of officers shall be held within three days following the day on which the annual meeting of the shareholders for the election of directors shall have been held. The Board of Directors, from time to time by resolution, may fix a time and place (or varying times and places) for the annual and other regular meetings of the Board provided that, unless a time and place is so fixed for any annual meeting of the Board, the same shall be held immediately following the annual meeting of the shareholders at the same place at which such meeting shall have been held. No notice of the annual or other regular meetings of the Board need be given. Other meetings of the Board of Directors shall be held whenever called by the Chairman of the Board or by any two of the directors for the time being in office; and the Secretary shall give notice of each such meeting to each director by mailing the same not later than the third day before the meeting, or personally, or by telegraphing, cabling, or telephoning, the same not later than two hours before the meeting. No notice of a meeting need be given if all the directors are present in person. Any business may be transacted at any meeting of the Board of Directors, whether or not specified in a notice of the meeting. Section 5. Quorum. A majority of the total number of directors constituting the whole Board shall constitute a quorum for the transaction of business. If there be less than a quorum at any meeting of the Board, a majority of those present (or if only one be present, then that one) may adjourn the meeting from time to time; and no further notice thereof need be given other than announcement at the meeting which shall be so adjourned. The act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by law or by the Certificate of Incorporation or by these Bylaws. Section 6. Compensation of Directors. The Board of Directors shall have the authority to fix the compensation of the directors. A director may serve the Corporation in other capacities and receive compensation therefor. Section 7. Indemnification of Directors and Officers. (a) Each person who was or is a party or is threatened to be made a party to or is involved in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative (hereinafter a "proceeding"), by reason of the fact that he, or a person of whom he is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to employee benefit plans, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the laws of Delaware as the same now or may hereafter exist (but, in the case of any change, only to the extent that such change permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such change) against all costs, charges, expenses, liabilities, and losses (including attorneys' fees, judgments, fines, ERISA excise taxes, or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of his heirs, executors, and administrators. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition upon receipt by the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that the director or officer is not entitled to be indemnified under this section or otherwise. The Corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers. (b) If a claim under subsection (a) of this Section is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall also be entitled to be paid the expense of prosecuting such claim. It shall be a defense to any action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking has been tendered to the Corporation) that the claimant has failed to meet a standard of conduct which makes it permissible under Delaware law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is permissible in the circumstances because he has met such standard of conduct, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its shareholders) that the claimant has not met such standard of conduct, nor the termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall be a defense to the action or create a presumption that the claimant has failed to meet the required standard of conduct. (c) The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaw, agreement, vote of shareholders or disinterested directors, or otherwise. (d) The Corporation may maintain insurance at its expense to protect itself and any director, officer, employee, or agent of the Corporation or another corporation, partnership, joint venture, trust, or other enterprise against any expense, liability, or loss whether or not the Corporation would have the power to indemnify such person against such expense, liability, or loss under Delaware law. (e) To the extent that any director, officer, employee, or agent of the Corporation is by reason of such position, or a position with another entity at the request of the Corporation, a witness in any proceeding, he shall be indemnified against all costs and expenses actually and reasonably incurred by him or on his behalf in connection therewith. (f) The Corporation may enter into indemnity agreements with the persons who are members of its Board of Directors from time to time, and with such officers, employees, and agents as the Board may designate, indemnity agreements providing in substance that the Corporation shall indemnify such persons to the fullest extent permitted by the laws of Delaware. (g) Any amendment, repeal, or modification of any provision of this Section by the shareholders or the Directors of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such amendment, repeal, or modification. Section 8. Committees. The Board of Directors may, by resolution or resolutions, passed by a majority of the whole Board, from time to time designate an Executive Committee and such other committee or committees as it may determine, each committee to be headed by a chairman who shall be a member of the Board of Directors and elected by the Board of Directors. The committee or committees shall exercise only such powers of the Board of Directors as are specifically provided in said resolution or resolutions. The chairman of the Executive Committee, if any, shall report to the Board at its meetings upon the affairs of the Corporation. ARTICLE IV Officers and Agents Section 1. General Provisions. The officers of the Corporation shall be a President, a Treasurer, and a Secretary, and may include a Chairman of the Executive Committee, one or more Vice Presidents, any of which may be an Executive Vice President, one or more Assistant Treasurers, and one or more Assistant Secretaries. The Chairman of the Board of Directors and the President shall be chosen from among the directors. Any two offices, except those of President and Vice President, may be held by the same person; but no officer shall execute, acknowledge, or verify any instrument in more than one capacity if such instrument is required by law or by these Bylaws to be executed, acknowledged, or verified by any two or more officers. Each of such officers shall serve until the annual meeting of the Board of Directors next succeeding his appointment and until his successor shall have been chosen and shall have qualified. The Board of Directors may appoint such other officers, agents, and employees as it may deem necessary or proper, who shall respectively have such authority and perform such duties as may from time to time be prescribed by the Board of Directors. All officers, agents, and employees appointed by the Board of Directors shall be subject to removal at any time by the affirmative vote of a majority of the whole Board. Other agents and employees may be removed at any time by the Board of Directors, by the officer appointing them, or by any other superior officer upon whom such power of removal may be conferred by the Board of Directors. The salaries of the officers of the Corporation shall be fixed by the Board of Directors, but this power may be delegated to any officer. Section 2. The Chairman of the Board of Directors. The Chairman of the Board of Directors shall preside at all meetings of the shareholders and of the Board of Directors of the Corporation. At each annual meeting of the shareholders, he shall present a statement of the business of the Corporation for the preceding year and a report of its financial condition. Section 3. The President. The President shall be the Chief Executive Officer of the Corporation. He shall have general and active supervision of its business and affairs, and general charge of its property and employees, subject, however, to the control of the Board of Directors. He shall see that all resolutions and orders of the Board of Directors or of any committee thereof are carried into effect. He shall have power in the name of the Corporation and on its behalf to execute any and all deeds, mortgages, contracts, agreements, and other instruments in writing, and shall have such other powers as may be assigned to him by the Board of Directors. He shall have full power and authority on behalf of the Corporation to execute any shareholder's consent and to attend and vote in person or by proxy at any meeting of shareholders of any corporation in which the Corporation may own stock, and at any such meeting shall possess and may exercise any and all rights and powers incident to the ownership of such stock and which, as the owner thereof, the Corporation might have possessed and exercised if present. Section 4. Vice Presidents. Each Vice President shall have such powers and perform such duties as the Board of Directors, Chairman of the Board, or the President may from time to time prescribe, and shall perform such other duties as may be prescribed in these Bylaws. In the absence or inability to act of the Chairman of the Board or the President, the Vice President next in order as designated by the Board of Directors or, in the absence of such designation, senior in length of service in such capacity, shall perform all the duties and may exercise any of the powers of the President, subject to the control of the Board of Directors. The performance of any duty by a Vice President shall be conclusive evidence of his power to act. Section 5. The Treasurer. The Treasurer shall have the care and custody of all funds and securities of the Corporation which may come into his hands and shall deposit the same to the credit of the Corporation in such bank or banks or other depositary or depositaries as the Board of Directors may designate. He may endorse all commercial documents requiring endorsements for or on behalf of the Corporation and may sign all receipts and vouchers for payments made to the Corporation. He shall render an account of his transactions to the Board of Directors as often as they shall require the same and shall at all reasonable times exhibit his books and accounts to any director; shall cause to be entered regularly in books kept for that purpose full and accurate account of all monies received and paid by him on account of the Corporation; and shall have such further powers and duties as are incident to the position of Treasurer, subject to the control of the Board of Directors. He may be required by the Board of Directors to give a bond for the faithful discharge of his duties in such sum and with such surety as the Board may require. Section 6. The Secretary. The Secretary shall keep the minutes of all meetings of the Board of Directors and of the shareholders and shall attend to the giving and serving of all notices of the Corporation. He shall have custody of the seal of the Corporation and shall affix the seal to all certificates of shares of stock of the Corporation and to such other papers or documents as may be proper and, when the seal is so affixed, he shall attest the same by his signature whenever required. He shall have charge of the stock certificate book, transfer book, and stock ledger, and such other books and papers as the Board of Directors may direct. He shall, in general, perform all the duties of Secretary, subject to the control of the Board of Directors. Section 7. Assistant Treasurers. In the absence or inability of the Treasurer to act, any Assistant Treasurer may perform all the duties and exercise all of the powers of the Treasurer, subject to the control of the Board of Directors. The performance of any such duty shall be conclusive evidence of his power to act. Any Assistant Secretary shall also perform such other duties as the Secretary or the Board of Directors may from time to time assign to him. Section 8. Assistant Secretaries. In the absence or inability of the Secretary to act, any Assistant Secretary may perform all the duties and exercise all the powers of the Secretary, subject to the control of the Board of Directors. The performance of any such duty shall be conclusive evidence of his power to act. Any Assistant Secretary shall also perform such other duties as the Secretary or the Board of Directors may from time to time assign to him. Section 9. Other Officers. Other officers shall perform such duties and have such powers as may from time to time be assigned to them by the Board of Directors. Section 10. Delegation of Duties. In case of the absence of any officer of the Corporation, or for any other reason that the Board may deem sufficient, the Board may confer, for the time being, the powers or duties, or any of them, of such officer upon any other officer, or upon any director. ARTICLE V Capital Stock Section 1. Certificates for Shares. Certificates for shares of stock of the Corporation certifying the number and class of shares owned shall be issued to each shareholder in such form, not inconsistent with the Certificate of Incorporation and these Bylaws, as shall be approved by the Board of Directors. The certificates for the shares of each class shall be numbered and registered in the order in which they are issued and shall be signed by the Chairman of the Board of Directors or the President or a Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer; and the seal of the Corporation shall be affixed thereto. However, where any such certificate is signed by a transfer agent and by a registrar of the Corporation, other than the Corporation itself or its employee, the signature of either the transfer agent or the registrar and of any such corporate officer or officers and the seal of the Corporation upon such certificate may be facsimilies, engraved, or printed. All certificates exchanged or returned to the Corporation shall be cancelled. Section 2. Transfer of Shares of Stock. Transfers of shares shall be made only upon the books of the Corporation by the holder, in person or by attorney lawfully constituted in writing, and on the surrender of the certificate or certificates for such shares properly assigned. The Board of Directors shall have the power to make all such rules and regulations, not inconsistent with the Certificate of Incorporation and these Bylaws, as they may deem expedient concerning the issue, transfer, and registration of certificates for shares of stock of the Corporation. Section 3. Lost, Stolen, or Destroyed Certificates. The Board of Directors, in their discretion, may require the owner of any certificate of stock alleged to have been lost, stolen, or destroyed, or his legal representatives, to give the Corporation a bond in such sum as they may direct, to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate, as a condition of the issue of a new certificate of stock in the place of any certificate theretofore issued alleged to have been lost, stolen, or destroyed. Proper and legal evidence of such loss, theft, or destruction shall be procured for the Board, if required. The Board of Directors in their discretion may refuse to issue such new certificate, save upon the order of some court having jurisdiction in such matters. Section 4. Record Date. The Board of Directors may fix in advance a date, not more than sixty days nor less than ten days preceding the date of any meeting of the shareholders and not more than sixty days preceding the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the shareholders entitled to notice of, and to vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock; and in such case such shareholders and only such shareholders as shall be shareholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. Section 5. Maintenance and Inspection of Stock Ledger. The original or a duplicate stock ledger containing a list of the shareholders shall be maintained at the principal office or place of business of the Corporation and shall upon written demand under oath stating the purpose thereof, be available for inspection by any shareholder of record for any proper purpose in person or by attorney or other agent during the usual hours of business. A proper purpose shall mean a purpose reasonably related to such person's interest as a shareholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the shareholder. The demand under oath shall be directed to the Corporation at its registered office in Delaware or at its principal place of business. Section 6. Record Ownership. The Corporation shall be entitled to recognize the exclusive right of a person registered as such in the stock ledger of the Corporation as the owner of shares of the Corporation's stock to receive dividends and to vote as such owner and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have express or other notice thereof, except as otherwise provided by law. ARTICLE VI Seal The seal of the Corporation shall consist of a flat-faced, circular die with the name of the Corporation, the year of its incorporation, and the words "Corporate Seal" and "Delaware" inscribed thereon. ARTICLE VII Waiver Whenever any notice whatever is required to be given by statute, or under the provisions of the Certificate of Incorporation or Bylaws of this Corporation, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE VIII Checks, Notes, Drafts, Etc. Checks, notes, drafts, acceptances, bills of exchange, and other orders or obligations for the payment of money shall be signed by such officer or officers or person or persons as the Board of Directors shall from time to time determine. ARTICLE IX Amendments These Bylaws may be amended or repealed and new Bylaws adopted by the affirmative vote of a majority of the total number of directors (fixed by the Bylaws as in effect immediately prior to such vote) or by the affirmative vote of the holders of 75 percent of the voting power of the Corporation's stock outstanding and entitled to vote thereon. Such Bylaws may contain any provision for the regulation and management of the affairs of the Corporation and the rights or powers of its shareholders, directors, officers, or employees not inconsistent with the laws of the State of Delaware. EX-13 3 EXHIBIT 13 TO FORM 10-K (12/31/95) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net income for 1995 was $12.8 million, an increase of $2.3 million, or 21.9% over 1994; while net sales increased 7.4% to $490.6 million in 1995 from $456.6 million in 1994. The 1994 net income includes an after-tax gain of $3.0 million from the sale of two non-core divisions. Results for 1994 improved over 1993, with net income in 1994 increasing to $10.5 million versus $3.8 million in 1993. Net sales increased by 1.4% to $456.6 million in 1994 from $450.1 million in 1993. The 1993 net income includes an after-tax charge of $2.0 million for certain restructuring expenses. The Compressor and Vacuum Pump Segment achieved record net sales of $157.7 million, an increase of 7.8% over 1994, following an increase of 14.4% in 1994 over 1993. The increases for both years are attributable to the continued successful introduction of new products for new applications. The majority of the increase in net sales for 1995 was from the European operations. Operating income for the Segment decreased by 2.8% in 1995 from 1994, principally due to competitive pricing pressure in the North American medical market. Operating income for the Segment increased 11.7% in 1994 over 1993 primarily due to volume increases. The Lighting Segment net sales for 1995 of $332.8 million were also a record and represent an increase of 9.5% over 1994 net sales, after a 1.9% increase in 1994 over 1993. The increase in both years resulted principally from improvements in the Commercial & Industrial Division. Operating income for the Lighting Segment improved to $11.4 million in 1995, up from $4.9 million in 1994 and $.1 million in 1993. The 1995 operating income improvement of 135.3% over 1994 was due to volume increases and implementation of cost containment programs. The 1994 level was a 34.1% improvement over 1993 after excluding the $3.5 million pre-tax restructuring charge in 1993 referenced above. This improvement was in part due to the reduced costs resulting from the restructuring actions as well as additional cost savings and improved operating efficiencies introduced over the previous three years in response to the soft lighting market conditions. The 1994 Lighting Segment results include a gain of $2.0 million due to LIFO inventory quantity reductions at certain operating divisions, while the 1993 results include a gain of $1.9 million due to a change in the method of applying LIFO for certain inventories. In 1994, the Company recorded an after-tax gain of $3.0 million from the sales of the Portland Willamette and Builders Brass Works Divisions. The operations, whose products were fireplace screens and accessories and architectural hardware and door controls, were divested as part of the Company's strategy to focus on its two core businesses. The 1993 net income includes an after-tax charge of $2.0 million primarily related to exiting the Company's Long Island facility and the sale of a product line within the Commercial & Industrial Lighting Division. Interest expense for 1995 declined $1.0 million or 10.7% from 1994, due to reduced levels of long-term and short-term debt during 1995. In 1994, interest expense was 10.3% lower than 1993 due to reduced levels of short-term bank borrowings. The Company, like other similar manufacturers, is subject to environmental rules and regulations regarding the use, disposal, and cleanup of substances regulated under environmental protection laws. It is the Company's policy to comply with these rules and regulations, and the Company believes that its practices and procedures are designed to meet this compliance. The Company is involved in remedial efforts at certain of its present and former locations; and when costs can be reasonably estimated, the Company records appropriate liabilities for such matters. During 1995, the Company employed an average of 3,100 people, down from 3,190 in 1994 and 3,390 in 1993, primarily due to the staff reductions resulting from the divestitures, restructuring and effected consolidation plans. LIQUIDITY AND SOURCES OF CAPITAL Cash and cash equivalents increased to $18.3 million at December 31, 1995, compared to $5.1 million and $2.4 million at December 31, 1994 and 1993, respectively. Cash flows from operations were $38.0 million in 1995 compared to $20.2 million in 1994 and $15.7 million in 1993. These funds, along with the proceeds from divestitures, have been utilized in funding of capital expenditures and dividends over the three-year period, along with the net pay down of long-term and short-term debt during 1995, 1994, and 1993 totaling $19.9 million. Working capital increased $3.3 million during 1995 from the December 31, 1994, level which had decreased $.9 million from December 31, 1993. From 1994 to 1995, accounts receivable increased $.9 million on higher sales volume, while inventory levels decreased $4.8 million due to improved utilization. Notes payable to banks have decreased from December 31, 1994, principally due to the application of positive cash flows generated from operations.
1995 1994 1993 Working capital $80,837 $77,558 $78,466 Current ratio 1.96 2.00 2.06 Long-term debt, less current portion $70,791 $79,693 $87,509 Long-term debt to total capital 33.1% 37.3% 41.2%
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 $20 million are not restricted at December 31, 1995. As of December 31, 1995, the Company had available credit of $69.9 million with banks under short-term borrowing arrangements and a revolving line of credit, $68.4 million of which was unused at year-end. Anticipated funds from operations, along with available short-term credit, are expected to be sufficient to meet cash requirements in the year ahead. Cash in excess of operating requirements will continue to be invested in high grade, short-term securities. NEW ACCOUNTING STANDARDS In March 1995, the Financial Accounting Standards Board (FASB) issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." For a discussion of this statement and its impact on the Company, please refer to Note Two of the Notes to the Consolidated Financial Statements on page 23. In October 1995, the FASB adopted Statement No. 123, "Accounting for Stock-Based Compensation." For a discussion of this statement and its impact on the Company, please refer to Note Seven of the Notes to the Consolidated Financial Statements on page 27. COMMON STOCK MARKET PRICES AND DIVIDENDS The Company's common stock is traded on the New York Stock Exchange (ticker symbol TII). On February 7, 1996, there were 2,465 security holders of record. High and low stock prices and dividends for the last two years were: [CAPTION] 1995 1994 Cash Cash Market Price Dividends Market Price Dividends Quarter Ended High Low Declared High Low Declared March 31 $ 17 $13-5/8 $ .10 $16-3/8 $13-1/4 $ .10 June 30 16-7/8 15-1/2 .10 15-3/4 13-1/8 .10 September 30 20-1/4 16-1/8 .10 15-3/8 14 .10 December 31 24-1/8 18-7/8 .10 15 12-3/4 .10
CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31 (In thousands, except share data) 1995 1994 1993 Net sales $490,573 $456,565 $450,149 Cost of products sold 352,551 329,338 326,396 Gross profit 138,022 127,227 123,753 Selling, general and administrative expenses 108,284 104,091 102,440 Restructuring costs - - 3,500 Interest expense 8,242 9,225 10,279 Interest income and other 443 (4,287) (286) 116,969 109,029 115,933 Income before income taxes 21,053 18,198 7,820 Income taxes 8,278 7,656 4,015 Net income $ 12,775 $ 10,542 $ 3,805 Net income per share $ 1.25 $ 1.05 $ .38
See accompanying notes. CONSOLIDATED BALANCE SHEETS
December 31 (In thousands, except share data) 1995 1994 Assets Current assets: Cash and cash equivalents $ 18,305 $ 5,050 Accounts receivable, less allowance ($2,014 - 1995; $1,773 - 1994) 61,975 61,075 Inventories 68,065 72,902 Deferred income taxes 5,775 5,874 Other current assets 10,619 10,454 Total current assets 164,739 155,355 Property, plant and equipment, net 75,710 75,962 Intangible assets, net 61,379 62,532 Other assets 11,705 11,222 Total assets $ 313,533 $ 305,071 Liabilities and Shareholders' Equity Current liabilities: Notes payable to banks $ 7,679 $ 8,252 Accounts payable 27,778 25,892 Accrued expenses and other current liabilities 38,427 33,814 Dividends payable 1,010 1,007 Current portion of long-term debt 9,008 8,832 Total current liabilities 83,902 77,797 Deferred income taxes 7,875 7,684 Long-term debt, less current portion 70,791 79,693 Other long-term liabilities 7,788 6,131 Total liabilities 170,356 171,305 Shareholders' equity: Preferred stock, $1 par value, 3,000,000 shares authorized - none issued - - Common stock, $1 par value, authorized shares: 60,000,000; shares issued: 1995 - 11,485,865; 1994 - 11,447,873 11,486 11,448 Capital surplus 117,974 117,557 Retained earnings 40,003 31,264 Foreign currency translation (616) (2,478) Minimum pension liability (2,690) (1,045) Less cost of treasury shares (1,366,695 shares) (22,980) (22,980) Total shareholders' equity 143,177 133,766 Commitments and contingencies Total liabilities and shareholders' equity $ 313,533 $ 305,071
See accompanying notes. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years ended December 31 (In thousands, except per share data) 1995 1994 1993 Common stock: Beginning of year $ 11,448 $ 11,416 $ 11,378 Stock options exercised 38 32 38 End of year 11,486 11,448 11,416 Capital surplus: Beginning of year 117,557 117,264 116,910 Stock options exercised 417 293 354 End of year 117,974 117,557 117,264 Retained earnings: Beginning of year 31,264 24,746 24,955 Net income 12,775 10,542 3,805 Cash dividends of $.40 per share (4,036) (4,024) (4,014) End of year 40,003 31,264 24,746 Foreign currency translation: Beginning of year (2,478) (2,156) (718) Adjustment 1,862 (322) (1,438) End of year (616) (2,478) (2,156) Minimum pension liability: Beginning of year (1,045) (3,241) - Adjustment (1,645) 2,196 (3,241) End of year (2,690) (1,045) (3,241) Treasury shares (22,980) (22,980) (22,980) Total shareholders' equity $143,177 $133,766 $125,049
See accompanying notes. CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31 (In thousands) 1995 1994 1993 Cash flows from operating activities: Net income $ 12,775 $ 10,542 $ 3,805 Reconciliation of net income to net cash provided by operating activities: Depreciation and amortization 14,803 15,524 16,517 Non-cash portion of restructuring costs - - 3,500 Deferred income taxes 75 1,391 (1,850) Provision for losses on accounts receivable 519 705 1,040 (Gain) loss on asset disposals, net 123 (4,223) - Changes in operating assets and liabilities net of effect of divestitures: Accounts receivable (1,037) (3,412) (6,087) Inventories 4,312 (4,739) (1,907) Other current assets 1,282 1,004 (1,143) Accounts payable 1,779 1,565 1,446 Accrued expenses and other liabilities 4,366 1,037 432 Other (1,021) 822 (50) Net cash provided by operating activities 37,976 20,216 15,703 Cash flows from investing activities: Purchases of property, plant and equipment (12,288) (16,301) (13,908) Proceeds from sales of property, plant and equipment and other assets 1,458 12,747 311 Net cash used in investing activities (10,830) (3,554) (13,597) Cash flows from financing activities: (Payments on) proceeds from short-term debt, net (1,231) (8,615) 3,330 Payments on long-term debt (8,914) (1,508) (2,927) Dividends paid (4,033) (4,022) (4,011) Other 287 169 327 Net cash used in financing activities (13,891) (13,976) (3,281) Increase (decrease) in cash and cash equivalents 13,255 2,686 (1,175) Cash and cash equivalents at beginning of year 5,050 2,364 3,539 Cash and cash equivalents at end of year $ 18,305 $ 5,050 $ 2,364
See accompanying notes. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE ONE - DESCRIPTION OF BUSINESS Thomas Industries Inc. and subsidiaries (the Company) operate two core businesses; lighting and compressors & vacuum pumps. The Company designs, manufactures, markets and sells these products. Manufacturing facilities are located in North America and Europe with additional sales operations located in South America and Asia. Lighting products are sold principally in North America for commercial, industrial and consumer applications. Compressor and vacuum pump products are sold worldwide with principal markets in North America and Europe, primarily for applications of original equipment manufacturers. NOTE TWO - ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company. Affiliates not required to be consolidated are accounted for using the equity method, under which the Company's share of earnings of these affiliates is included in income as earned. Intercompany accounts and transactions are eliminated. INVENTORIES Inventories are valued at the lower of cost or market. Inventories valued using the last-in, first-out (LIFO) method represented approximately 74% and 79% of consolidated inventories at December 31, 1995 and 1994, respectively. Inventories not on LIFO are valued using the first-in, first-out (FIFO) method. Inventories consist of the following:
(In thousands) 1995 1994 Finished goods $29,951 $31,417 Raw materials 25,107 29,970 Work in process 13,007 11,515 Total inventories $68,065 $72,902
On a current cost basis, inventories would have been $12,727,000 and $13,494,000 higher than that reported at December 31, 1995 and 1994, respectively. Inventory quantities at certain operating units decreased in 1994. As a result, cost of products sold included cost of inventories based on prior years' LIFO values which were less than current replacement costs, the effect of which increased net income by $1,192,000 ($.12 per share) in 1994. LONG-LIVED ASSETS PROPERTY, PLANT AND EQUIPMENT The cost of property, plant and equipment is depreciated principally by the straight-line method over their estimated useful lives. Property, plant and equipment consist of the following:
(In thousands) 1995 1994 Land $ 6,258 $ 6,210 Buildings 30,950 30,295 Leasehold improvements 11,005 10,210 Machinery and equipment 98,690 95,345 146,903 142,060 Accumulated depreciation and amortization 71,193 66,098 Total property, plant and equipment, net $ 75,710 $75,962
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 $16,548,000 and $14,294,000 at December 31, 1995 and 1994, respectively. The excess is being amortized over 40 years by the straight-line method. In March 1995, the Financial Accounting Standards Board (FASB) issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amounts. Statement No. 121 also addresses the accounting for long-lived assets that are expected to be disposed of. The Company will adopt Statement No. 121 in the first quarter of fiscal year 1996 and, based on current circumstances, does not believe the effect of adoption will be material. NET INCOME PER SHARE Net income per share is based on the weighted daily average number of common shares outstanding during the year, adjusted for the dilutive effect of common stock equivalents, consisting of stock options, calculated using the treasury stock method. RESEARCH AND DEVELOPMENT COSTS Research and development costs, which include costs of product improvements and design, are expensed as incurred ($13,405,000 in 1995, $12,705,000 in 1994 and $12,431,000 in 1993). 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 they are highly liquid investments with a maturity of less than three months when purchased. 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. USE OF ESTIMATES Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. OTHER Certain prior year amounts have been reclassified to conform to the current year presentation. NOTE THREE - DIVESTITURES In the first quarter of 1994, the Company sold its Oliver-MacLeod Division. Oliver-MacLeod manufactured factory-built chimneys and zero-clearance fireplaces. No gain or loss resulted from the transaction. In the second quarter of 1994, the Company sold its Portland Willamette and Builders Brass Works Divisions. Portland Willamette manufactured fireplace screens and related accessories. Builders Brass Works manufactured architectural hardware and door controls. These transactions resulted in a pre-tax gain of $4,175,000 and a net gain of $3,000,000 ($.30 per share). Proceeds from these transactions included cash of $10,900,000 and interest-bearing notes receivable of $4,500,000. NOTE FOUR - RESTRUCTURING COSTS During 1993, the Company recorded a $3,500,000 ($2,040,000 after-tax) restructuring charge to further consolidate its commercial and industrial lighting operations. The restructuring charge included the costs associated with exiting the Company's Long Island facility and the discontinuance and sale of a product line. NOTE FIVE - INCOME TAXES The Company accounts for income taxes using the asset and liability method. A summary of the provision for income taxes follows:
(In thousands) 1995 1994 1993 Currently payable: Federal $5,138 $3,614 $ 3,545 State 300 850 1,100 Foreign 2,765 1,801 1,220 8,203 6,265 5,865 Deferred: Federal and state 211 1,366 (2,200) Foreign (136) 25 350 75 1,391 (1,850) Total provision for income taxes $8,278 $7,656 $ 4,015
The components of the deferred tax assets and deferred tax liabilities follow:
(In thousands) 1995 1994 Deferred tax assets: Net operating loss carryforwards $ 2,045 $ 2,713 Allowance for uncollectible accounts receivable 610 524 Inventory valuation 2,060 1,516 Accrued compensation expenses 2,661 2,798 Organization restructuring 1,803 2,244 Other 313 217 9,492 10,012 Less valuation allowance 2,045 2,713 Net deferred tax assets 7,447 7,299 Deferred tax liabilities: Depreciation of property, plant and equipment 6,406 6,167 Inventory valuation 1,397 1,394 Pension expense 1,026 938 Other 443 590 Deferred tax liabilities 9,272 9,089 Net deferred tax liability $1,825 $ 1,790 Classification: Current asset $5,775 $ 5,874 Long-term asset 1,672 1,425 Current liability 1,397 1,405 Long-term liability 7,875 7,684 Net deferred tax liability $1,825 $ 1,790
Deferred tax assets and liabilities are classified according to the related asset and liability classification on the consolidated balance sheet. The realization of deferred tax assets is dependent upon the Company 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 $2,045,000. 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) 1995 1994 1993 Income before income taxes: United States $14,973 $13,628 $5,669 Foreign 6,080 4,570 2,151 Income before income taxes $21,053 $18,198 $7,820
A reconciliation of the normal statutory federal income tax with the Company's provision for income taxes follows:
(In thousands) 1995 1994 1993 Income taxes computed at U.S. statutory rates $7,369 $6,369 $2,659 State income taxes, net of federal tax benefits 195 553 570 Nondeductible amortization of intangible assets 555 561 538 Effect of increase in (use of) foreign losses (235) (262) 429 Effect of foreign tax rates 483 343 395 Refunds and overaccruals of prior years' income taxes - - (532) Other (89) 92 (44) Total income taxes $8,278 $7,656 $4,015
The Company's foreign subsidiaries have accumulated undistributed earnings ($21,500,000) 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, 1995, the Company had foreign net operating loss carryforwards for income tax purposes of approximately $3,800,000 which expire $3,600,000 and $200,000 on January 1, 2000 and 2001, respectively. The Company made federal, state and foreign income tax payments of $7,200,000 in 1995, $7,025,000 in 1994 and $4,655,000 in 1993. NOTE SIX - LONG-TERM DEBT AND CREDIT ARRANGEMENTS A summary of long-term debt follows:
(In thousands) 1995 1994 Domestic: 9.36%, due through 2005 $69,540 $77,270 Other 1,251 860 Foreign (Germany): 7.28% (variable), due through 1996 - 1,420 Other - 143 Total long-term debt, less current portion $70,791 $79,693
As current interest rates are generally lower than the above rates, the fair value of the Company's long-term debt at December 31, 1995, is $78,400,000. Maturities of long-term debt for the next five years are as follows: 1996 - $9,008,000; 1997 - $8,157,000; 1998 - $7,790,000; 1999 - $7,782,000 and 2000 - $7,785,000. 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 $20,000,000 are not restricted at December 31, 1995. The Company has a $50,000,000 variable rate revolving line of credit expiring July 12, 1996. In addition, the Company has short-term lines of credit under which it may borrow up to $19,900,000, expiring on various dates in 1996. The Company plans to renew these lines annually. Cash paid for interest was $8,533,000 in 1995, $9,253,000 in 1994 and $10,185,000 in 1993. NOTE SEVEN - SHAREHOLDERS' EQUITY At the April 20, 1995, Annual Meeting, the Company's shareholders approved the Company's 1995 Incentive Stock Plan. An aggregate of 600,000 shares of common stock, plus all shares remaining under the Company's 1987 Incentive Stock Plan, were reserved for issuance under this Plan. Under this Plan, options may be granted to employees at not less than market value at date of grant and expire no later than ten years from date of grant. The Company's 1987 Incentive Stock Plan was terminated, except with respect to outstanding options which may be granted until 2005. At the April 21, 1994, Annual Meeting, the Company's shareholders approved the Non-Employee Director Stock Option Plan. Under this Plan, each continuing non-employee director in office on the date of each annual meeting is awarded a stock option for the purchase of 2,000 shares of common stock at not less than market value at date of grant. This Plan provides for options to be awarded at each annual meeting beginning in 1994 and continuing through 2004 or until 250,000 options have been granted. A summary of outstanding stock options for all plans follows:
1995 1994 1993 Outstanding at beginning of year 558,051 412,801 456,068 Granted at $16.00 to $21.87 per share in 1995, $13.37 to $14.87 in 1994 and $10.00 to $12.62 in 1993 179,000 205,500 105,000 Cancelled or expired (8,751) (28,167) (110,025) Exercised at $9.87 to $15.05 per share in 1995, $9.87 to $10.75 in 1994 and $9.87 to $10.80 in 1993 (44,108) (32,083) (38,242) Outstanding at end of year 684,192 558,051 412,801
Options outstanding at December 31, 1995, of which 315,190 options were exercisable, had option prices ranging from $9.87 to $21.87 (with an average option price of $15.02) and expire at various dates between December 17, 1997 and December 13, 2005. There are 706,043 shares reserved for future grant, of which 214,000 shares are reserved for the Non-Employee Director Stock Option Plan. 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, 1995, 377,023 shares had been purchased at a cost of $5,759,000 (none purchased since 1991). 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, 1990, 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. In October 1995, the FASB issued Statement No. 123, "Accounting for Stock-Based Compensation." Statement No. 123 establishes financial accounting and reporting standards for stock-based employee compensation plans such as stock purchase plans and stock option plans. Statement No. 123 is effective for fiscal years beginning after December 15, 1995. In accordance with Statement No. 123, the Company believes it will elect to remain with the accounting in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," but will disclose in its consolidated financial statements the effect that Statement No. 123 would have if it were required to be adopted. NOTE EIGHT - 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 U.S. 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) 1995 1994 1993 Defined benefit plans: Service cost-benefits earned during the period $ 362 $ 503 $ 448 Interest cost on projected benefit obligation 1,598 1,492 1,518 Actual return on plan assets (4,368) (3) (1,735) Net amortization and deferral 3,264 (1,394) 114 Net pension cost of defined benefit plans 856 598 345 Defined contribution plans 2,685 2,540 1,214 Multi-employer plans for certain union employees and other 217 264 450 Total pension expense $ 3,758 $ 3,402 $ 2,009
The assumptions used in the accounting for the funded status of defined benefit plans follow:
1995 1994 1993 Weighted average discount rates 7.15% 9.00% 7.50% Rates of increase in compensation levels 5.00% 5.00% 5.00% Expected long-term rates 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:
1995 1994 Assets Accumulated Assets Accumulated Exceed Benefits Exceed Benefits Accumulated Exceed Accumulated Exceed (In thousands) Benefits Assets Benefits Assets Actuarial present value of benefit obligations: Vested benefit obligation $5,925 $16,630 $8,674 $ 8,477 Accumulated benefit obligation $6,212 $16,984 $8,968 $ 8,658 Projected benefit obligation $6,212 $16,984 $9,331 $ 8,658 Plan assets at fair value 6,396 15,157 9,376 8,023 Projected benefit obligation less than (in excess of) plan assets 184 (1,827) 45 (635) Unrecognized net loss 575 2,718 590 1,045 Unrecognized net obligation, net of amortization 248 802 647 714 Additional minimum liability - (3,520) - (1,759) Prepaid pension asset (liability) $1,007 $(1,827) $1,282 $ (635)
At December 31, 1995, approximately 94% of plan assets are invested in listed stocks and bonds. NOTE NINE - OTHER POSTRETIREMENT BENEFIT PLANS The Company provides postretirement medical and life insurance benefits for certain retirees and employees, and accrues the cost of such benefits during the service lives of such employees. Net periodic postretirement benefit cost includes the following components:
(In thousands) 1995 1994 1993 Service cost $ 42 $ 93 $ 80 Interest cost 439 491 468 Net amortization and deferral 344 294 231 Net periodic postretirement benefit cost $825 $878 $779
The following table sets forth the status and amounts recognized in the consolidated balance sheets for the Company's postretirement benefit plans:
(In thousands) 1995 1994 Retiree participants $ 4,910 $ 4,637 Fully eligible active participants 229 398 Other active participants 794 1,225 Accumulated postretirement benefit obligation 5,933 6,260 Unrecognized prior service cost (40) (42) Unrecognized net loss (371) (631) Unrecognized transition obligation (3,931) (4,162) Accrued postretirement benefit liability $ 1,591 $ 1,425
For measurement purposes, a 9.0% annual rate of increase in the per capita cost of future health benefits was assumed for 1996; the rate was assumed to decrease gradually to 5.5% by the year 2004. 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, 1995 by $589,000 and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the year ended December 31, 1995 by $45,000. The weighted average discount rates used in determining the accumulated postretirement benefit obligation were 7.15% and 9.00% as of December 31, 1995 and 1994, respectively. NOTE TEN - LEASES, COMMITMENTS AND CONTINGENCIES Total rental expense amounted to $4,554,000 in 1995, $4,840,000 in 1994 and $5,321,000 in 1993. Future minimum rentals (on leases in effect at December 31, 1995) for the five years ending December 31, 2000, and in the aggregate thereafter, are as follows: 1996 - $3,237,000; 1997 - $2,796,000; 1998 - $2,146,000; 1999 - $1,593,000; 2000 - $1,165,000 and thereafter - $7,146,000. Capital leases are not significant. The Company has letters of credit outstanding in the amount of $7,964,000 at December 31, 1995. The Company, like other similar manufacturers, is subject to environmental rules and regulations regarding the use, disposal and cleanup of substances regulated under environmental protection laws. It is the Company's policy to comply with these rules and regulations, and the Company believes that its practices and procedures are designed to meet this compliance. The Company is involved in remedial efforts at certain of its present and former locations; and when costs can be reasonably estimated, the Company records appropriate liabilities for such matters. In the normal course of business, the Company and its subsidiaries are parties to legal proceedings. When costs can be reasonably estimated, the Company records appropriate liabilities for such matters. NOTE ELEVEN - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES A summary of accrued expenses and other current liabilities follows:
(In thousands) 1995 1994 Accrued wages, taxes and withholdings $ 9,420 $ 7,757 Accrued insurance 5,338 5,926 Accrued sales expense 4,937 3,786 Income taxes payable 5,126 2,091 Other current liabilities 13,606 14,254 Total accrued expenses and other current liabilities $38,427 $33,814
NOTE TWELVE - SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) Unaudited quarterly results of operations follow:
(In thousands, except per share data) Net Income Net Sales Gross Profit Net Income Per Share 1995 1994 1995 1994 1995 1994 1995 1994 1st Qtr. $117,609 $109,391 $ 31,228 $ 29,650 $ 1,588 $ 1,011 $0.16 $0.10 2nd Qtr. 127,367 117,288 36,499 32,815 3,876 5,046(1)(2) 0.38 0.50(1)(2) 3rd Qtr. 128,750 119,035 36,908 33,937 4,702 2,820(2) 0.46 0.28(2) 4th Qtr. 116,847 110,851 33,387 30,825 2,609 1,665(2) 0.25 0.17(2) $490,573 $456,565 $138,022 $127,227 $12,775 $10,542 $1.25 $1.05 (1) Net income in the second quarter of 1994 included a gain of $3,000,000 ($.30 per share) from the sales of the Builders Brass Works and the Portland Willamette Divisions. (2) Net income in the second, third and fourth quarters of 1994 included gains of $440,000 ($.04 per share), $280,000 ($.03 per share) and $472,000 ($.05 per share), respectively, from the reduction of LIFO inventory quantities.
NOTE THIRTEEN - INDUSTRY SEGMENT INFORMATION Industry segment information follows:
Compressors & (In thousands) Lighting Vacuum Pumps Other Corporate Consolidated 1995 Net sales $332,842 $157,731 $ - $ - $490,573 Operating income 11,425 28,446 - - 39,871 General corporate expenses - - - 10,133 10,133 Identifiable assets 204,707 82,299 - 26,527 313,533 Depreciation and amortization expense 8,784 5,803 - 216 14,803 Capital expenditures 5,849 6,241 - 198 12,288 1994 Net sales $304,047 $146,323 $ 6,195 $ - $456,565 Operating income (loss) 4,856 29,252 (263) - 33,845 General corporate expenses - - - 10,709 10,709 Identifiable assets 213,904 76,753 - 14,414 305,071 Depreciation and amortization expense 9,829 5,224 241 230 15,524 Capital expenditures 6,364 9,758 83 96 16,301 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 221,343 62,323 14,099 4,995 302,760 Depreciation and amortization expense 10,955 4,578 725 259 16,517 Capital expenditures 6,966 6,237 579 126 13,908
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. Information by geographic area follows:
United (In thousands) States Canada Europe Eliminations Consolidated 1995 Net sales to unaffiliated customers $403,955 $35,051 $51,567 $ - $490,573 Inter-area sales 10,484 541 6,630 (17,655) - Total net sales 414,439 35,592 58,197 (17,655) 490,573 Operating income 32,765 729 6,377 - 39,871 Identifiable assets 253,438 26,336 33,759 - 313,533 1994 Net sales to unaffiliated customers $381,195 $31,605 $43,765 $ - $456,565 Inter-area sales 9,879 266 5,248 (15,393) - Total net sales 391,074 31,871 49,013 (15,393) 456,565 Operating income 28,719 412 4,714 - 33,845 Identifiable assets 253,372 22,653 29,046 - 305,071 1993 Net sales to unaffiliated customers $379,968 $31,268 $38,913 $ - $450,149 Inter-area sales 5,716 83 4,586 (10,385) - Total net sales 385,684 31,351 43,499 (10,385) 450,149 Operating income (loss) 22,716 (60) 4,357 - 27,013 Identifiable assets 250,433 27,113 25,214 - 302,760
REPORTS OF MANAGEMENT AND INDEPENDENT AUDITORS 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 controls 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 Chairman of the Board Vice President of Finance President Chief Financial Officer Chief Executive Officer Secretary Louisville, Kentucky February 7, 1996 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders Thomas Industries We have audited the accompanying consolidated balance sheets of Thomas Industries Inc. and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1995. 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 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 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, 1995 and 1994, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1995, in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP Louisville, Kentucky February 7, 1996 FIVE YEAR SUMMARY OF OPERATIONS AND STATISTICS
Year ended December 31 (Dollars in thousands, except per share data) 1995 1994 1993 1992 1991 Earnings Statistics (A) Net sales $490,573 $456,565 $450,149 $420,754 $408,365 Cost of products sold 352,551 329,338 326,396 303,428 294,900 Selling, general and administrative expenses 108,284 104,091 102,440 101,473 96,206 Interest expense 8,242 9,225 10,279 10,428 11,004 Income before income taxes 21,053 18,198 7,820 248 7,248 As a percentage of net sales 4.3% 4.0% 1.7% 0.1% 1.8% Income taxes 8,278 7,656 4,015 2,280 3,460 Effective tax rate 39.3% 42.1% 51.3% n/a 47.7% Net income (loss) 12,775 10,542 3,805(B) (2,032)(C) 3,788 Financial Position (A) Working capital $ 80,837 $ 77,558 $ 78,466 $ 70,448 $ 77,332 Current ratio 2.0 to 1 2.0 to 1 2.1 to 1 2.0 to 1 2.2 to 1 Property, plant and equipment, net 75,710 75,962 76,587 79,799 84,446 Total assets 313,533 305,071 302,760 294,453 303,032 Return on ending assets 4.1% 3.5% 1.3% (0.7)% 1.3% Long-term debt, less current portion 70,791 79,693 87,509 89,900 93,309 Long-term debt to capital 33.1% 37.3% 41.2% 41.0% 40.2% Shareholders' equity 143,177 133,766 125,049 129,545 138,575 Return on average shareholders' equity 9.2% 8.1% 3.0% (1.5)% 2.7% Data Per Common Share Net income (loss) $1.25 $1.05 $.38 $(.20) $.38 Cash dividends declared .40 .40 .40 .40 .76 Shareholders' equity 14.15 13.27 12.44 12.94 13.84 Price range 24 1/8-13 5/8 16 3/8-12 3/4 14-9 1/8 14 1/8-8 3/8 14 3/4-9 1/4 Closing price 23 1/2 14 3/8 13 1/8 9 1/8 12 Price/earnings ratio 18.8 13.7 34.5 n/a 31.6 Other Data Cash dividends declared $ 4,036 $ 4,024 $ 4,014 $ 4,004 $ 7,608 Depreciation and amortization 14,803 15,524 16,517 16,339 16,096 Average number of employees 3,100 3,190 3,390 3,480 3,530 Average sales per employee 158.2 143.1 132.8 120.9 115.7 Number of shareholders of record 2,407 2,677 2,903 3,154 3,308 Average shares outstanding 10,232,552 10,060,436 10,035,172 10,010,746 10,010,000 Segment Information (A) Net sales Lighting $332,842 $304,047 $298,432 $ 286,417 $282,964 Compressors & Vacuum Pumps 157,731 146,323 127,896 110,022 99,444 Other 6,195 23,821 24,315 25,957 Total net sales $490,573 $456,565 $450,149 $ 420,754 $408,365 Operating income Lighting $ 11,425 $ 4,856 $ 120(B) $2,659(C) $ 7,910 Compressors & Vacuum Pumps 28,446 29,252 26,183 19,147 16,883 Other (263) 710 412 1,133 Total operating income $ 39,871 $ 33,845 $ 27,013 $ 22,218 $ 25,926
Note: See accompanying Notes to the Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations (A) Divestitures - major divestitures and the effect on net income in the year of divestiture include Builders Brass Works and Portland Willamette in 1994 for a gain of $3,000,000 (B) Includes after-tax charge of $2,040,000 (pre-tax of $3,500,000) restructuring costs and credit of $1,148,000 (pre-tax of $1,900,000) for LIFO accounting change (C) Includes after-tax charge of $3,986,000 (pre-tax of $3,604,000 allocated to lighting) restructuring costs EX-21 4 EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT Place of Percentage of Name of Company Incorporation Voting Securities ASF Thomas Limited United Kingdom 100% ASF Thomas Industries GmbH, Puchheim Germany 100% ASF Thomas Industries GmbH, Memmingen Germany 100% ASF Thomas Industries GmbH, Wuppertal Germany 100% ASF Thomas, Inc. Georgia 100% Lighting Center Holdings, Inc. Tennessee 100% Blue Grass Holdings Inc. Nevada 100% Capri Lighting, Inc. California 100% Thomas Industries Holdings Inc. 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% Tupelo Holdings Inc. Delaware 100% Thomas Lighting de Mexico, S.A. de C.V. Mexico 100% NON WHOLLY OWNED SUBSIDIARIES Place of Percentage of Name of Company Incorporation Voting Securities Lumec-Schreder Inc. Province of Quebec, 50% Canada Thomas Americas Industria e Commercio, LTDA Brazil 95% Yamada Day-Brite, Ltd. Japan 50% EX-23 5 EXHIBIT 23 Consent of Independent Auditors We consent to incorporation by reference in the Registration Statements (No. 33-16257), (No. 33-51653), (No. 33-54689) and (No. 33-59099) on Form S-8 of Thomas Industries Inc. of our report dated February 7, 1996, relating to the consolidated balance sheets of Thomas Industries Inc. and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, shareholders' equity, and cash flows and related schedules for each of the years then ended, which report appears in the December 31, 1995, annual report on Form 10-K of Thomas Industries Inc. /S/ KPMG PEAT MARWICK LLP KPMG PEAT MARWICK LLP March 19, 1996 EX-27 6
5 This schedule contains summary financial information extracted from Thomas Industries' Form 10-K405 and is qualified in its entirety by reference to such Form 10-K405 filing. 1,000 12-MOS DEC-31-1995 DEC-31-1995 18,305 0 63,989 2,014 68,065 164,739 146,903 71,193 313,533 83,902 70,791 11,486 0 0 131,691 313,533 490,573 490,573 352,551 352,551 108,208 519 8,242 21,053 8,278 12,775 0 0 0 12,775 1.25 1.25
-----END PRIVACY-ENHANCED MESSAGE-----