-----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, CdWlVbDJSTHWpRItLuvBpa5FroaXzQprj/s9uu+NzdiIbbanAvo0oM5PqHlbHgnL J80wNWCgZ8aG9RPSWQHM0w== 0000914760-99-000212.txt : 19991115 0000914760-99-000212.hdr.sgml : 19991115 ACCESSION NUMBER: 0000914760-99-000212 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 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-Q SEC ACT: SEC FILE NUMBER: 001-05426 FILM NUMBER: 99750466 BUSINESS ADDRESS: STREET 1: 4360 BROWNBORO ROAD STREET 2: SUITE 300 CITY: LOUISVILLE STATE: KY ZIP: 40207 BUSINESS PHONE: 5028934600 MAIL ADDRESS: STREET 1: 4360 BROWNBORO ROAD STREET 2: SUITE 300 CITY: LOUISVILLE STATE: KY ZIP: 40207 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [ X ] For the quarterly period ended: September 30, 1999 ------------------------------------------------- OR TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [ ] For the transition period from to ---------------- ------------------------------- Commission File Number 1-5426. ------------------------------ THOMAS INDUSTRIES INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 61-0505332 -------- ---------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 4360 Brownsboro Road, Louisville, Kentucky 40207 - ------------------------------------------ ----- (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: 502/893-4600 ----------------------------- 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 twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] The number of shares outstanding of issuer's Common Stock, $1 par value, as of October 30, 1999, was 15,822,942 shares. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) THOMAS INDUSTRIES INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in Thousands Except Amounts Per Share) Three Months Ended Nine Months Ended September 30 September 30 ------------------- -------------- 1999 1998 1999 1998 ---- ---- ---- ---- Net sales $ 39,856 $ 43,147 $133,624 $137,691 Cost of products sold 25,503 27,302 85,387 86,940 -------- -------- -------- -------- Gross profit 14,353 15,845 48,237 50,751 Selling, general, and administrative expenses 9,284 9,948 30,636 31,131 Equity income from Lighting 6,351 6,908 16,988 15,230 -------- -------- -------- -------- Operating income 11,420 12,805 34,589 34,850 Interest expense 1,130 1,593 3,452 4,650 Interest income and other 558 78 1,602 336 -------- -------- -------- -------- Income before income taxes 10,848 11,290 32,739 30,536 Income taxes 4,100 4,240 12,836 11,361 -------- -------- -------- -------- Net income $ 6,748 $ 7,050 $ 19,903 $ 19,175 ======== ======== ======== ======== Net income per share Basic $ .43 $ .44 $ 1.26 $ 1.21 Diluted $ .42 $ .43 $ 1.23 $ 1.16 Dividends declared per share $ .075 $ .075 $ .225 $ .225 Weighted average number of shares outstanding Basic 15,812 15,881 15,787 15,873 Diluted 16,240 16,461 16,194 16,468 Effective August 30, 1998, Thomas Industries Inc. ("Thomas") and The Genlyte Group ("Genlyte") formed Genlyte Thomas Group LLC ("GTG"), combining Thomas' lighting business with Genlyte (the "Joint Venture"). Genlyte has a 68% interest in GTG, and Thomas holds a 32% interest, which is accounted for using the equity method of accounting. Thomas changed its method of accounting for the lighting business contributed to GTG to the equity method effective January 1, 1998, the beginning of Thomas' prior fiscal year, restating results for the quarters ended March 31 and June 30, 1998. The restatement of results using the equity method for the 1998 quarterly periods prior to consummation of the Joint Venture had no effect on net income or common shareholders' equity but did reduce its revenues, costs, assets, and liabilities, and changed certain components of cash flow. See notes to condensed consolidated financial statements. THOMAS INDUSTRIES INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (Unaudited) September 30 December 31 1999 1998* ---- ----- ASSETS Current assets Cash and cash equivalents $ 14,268 $ 18,205 Accounts receivable, less allowance (1999--$662; 1998--$656) 20,578 19,205 Inventories: Finished products 5,534 5,352 Raw materials 8,808 9,196 Work in process 4,963 5,638 --------- --------- 19,305 20,186 Deferred income taxes 3,341 2,997 Other current assets 4,601 3,650 --------- --------- Total current assets 62,093 64,243 Investment in GTG 157,219 147,386 Property, plant, and equipment 76,376 73,115 Less accumulated depreciation and amortization 43,292 39,114 --------- --------- 33,084 34,001 Note receivable from GTG 22,287 22,287 Intangible assets--less accumulated amortization 7,850 8,248 Other assets 4,875 6,194 --------- --------- Total assets $ 287,408 $ 282,359 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes payable $ 95 $ 235 Accounts payable 5,791 5,794 Other current liabilities 17,286 20,592 Current portion of long-term debt 7,782 7,782 --------- --------- Total current liabilities 30,954 34,403 Deferred income taxes 5,789 5,863 Long-term debt (less current portion) 40,529 48,298 Other long-term liabilities 4,176 3,108 --------- --------- Total liabilities 81,448 91,672 Shareholders' equity Preferred Stock, $1 par value, 3,000,000 shares authorized--none issued -- -- Common Stock, $1 par value, shares authorized: 60,000,000; 1999--17,551,429 1998--17,485,909 17,551 17,486 Capital surplus 110,821 110,412 Retained earnings 104,629 88,277 Accumulated other comprehensive income (5,919) (4,351) Less cost of treasury shares: (1999--1,743,150; 1998--1,744,400) (21,122) (21,137) --------- --------- Total shareholders' equity 205,960 190,687 --------- --------- Total liabilities and shareholders' equity $ 287,408 $ 282,359 ========= ========= *Derived from the audited December 31, 1998, consolidated balance sheet. See notes to condensed consolidated financial statements. THOMAS INDUSTRIES INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in Thousands) Nine Months Ended September 30 ------------ 1999 1998 Operating activities: Net income $ 19,903 $ 19,175 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 5,711 5,642 Deferred income taxes (248) 658 Equity income from Lighting (16,988) (15,230) Distributions from/cash used by Lighting 6,575 (18,128) Other items 86 317 Changes in operating assets and liabilities: Accounts receivable (1,871) (3,160) Inventories 54 572 Accounts payable 134 (2,952) Accrued expenses and other liabilities (1,818) (1,921) Other 204 (4,142) -------- -------- Net cash provided by (used in) operating activities 11,742 (19,169) Investing activities: Purchases of property, plant, and equipment (5,108) (4,648) Sale of property, plant, and equipment 15 60 -------- -------- Net cash used in investing activities (5,093) (4,588) Financing activities: (Payments on) proceeds from notes payable to banks, net (133) 22,265 Payments on long-term debt, net (7,769) (6,517) Dividends paid (3,560) (3,571) Other 1,069 179 -------- -------- Net cash provided by (used in) financing activities (10,393) 12,356 Effect of exchange rate change (193) 206 -------- -------- Net decrease in cash and cash equivalents (3,937) (11,195) Cash and cash equivalents at beginning of period 18,205 17,352 -------- -------- Cash and cash equivalents at end of period $ 14,268 $ 6,157 ======== ======== See notes to condensed consolidated financial statements. THOMAS INDUSTRIES INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note A - Basis of Presentation - ------------------------------ The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and with the instructions to Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The results of operations for the nine-month period ended September 30, 1999, are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. For further information, refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. Effective August 30, 1998, Thomas and Genlyte formed GTG, combining Thomas' lighting business with Genlyte. Genlyte has a 68% interest in GTG, and Thomas holds a 32% interest, which is accounted for using the equity method of accounting. Thomas changed its method of accounting for the lighting business contributed to GTG to the equity method effective January 1, 1998, the beginning of Thomas' prior fiscal year, restating results for the quarters ended March 31 and June 30, 1998. The restatement of results using the equity method for the 1998 quarterly periods prior to consummation of the Joint Venture had no effect on net income or common shareholders' equity but did reduce its revenues, costs, assets, and liabilities, and changed certain components of cash flow. (See Note D.) Note B - Contingencies - ---------------------- In the normal course of business, the Company is a party to legal proceedings and claims. When costs can be reasonably estimated, appropriate liabilities for such matters are recorded. While management currently believes the amount of ultimate liability, if any, with respect to these actions will not materially affect the financial position, results of operations, or liquidity of the Company, the ultimate outcome of any litigation is uncertain. Were an unfavorable outcome to occur, the impact could be material to the Company. Note C - Comprehensive Income - ----------------------------- Reconciliation of net income to total comprehensive income for the periods indicated follows. For the three months ended September 30: 1999 1998 ---- ---- Net income $6,748 $7,050 Minimum pension liability -- (287) Foreign currency translation 852 1,294 ----- ----- Comprehensive income $7,600 $8,057 ===== ===== For the nine months ended September 30: Net income $19,903 $19,175 Minimum pension liability 1 (287) Foreign currency translation (1,569) 492 ------ ------ Comprehensive income $18,335 $19,380 ====== ====== Note D - Genlyte Thomas Group LLC - --------------------------------- The following table contains certain unaudited financial information for the Joint Venture. Genlyte Thomas Group LLC Condensed Financial Information (Dollars in Thousands) Balance sheet as of September 30, 1999: Current assets $329,712 Long-term assets 234,362 Current liabilities 163,837 Long-term liabilities 97,865 Three Months Nine Months Ended Ended Sept 30, 1999 Sept 30, 1999 ------------- ------------- Income statement: Net sales $257,811 $738,932 Gross profit 87,808 244,656 Earnings before interest and taxes 25,171 65,561 Net income* 21,503 58,049 *Amounts recorded by Thomas Industries Inc.: Equity income from GTG $6,881 $18,576 Amortization of excess investment (530) (1,588) ----- ------ Equity income reported by Thomas $6,351 $16,988 ===== ====== Note E - Receivables from Affiliate - ----------------------------------- Included in Other Long-Term Assets at September 30, 1999, and December 31, 1998, is $22,287,000 which represents a debt equalization note payable to Thomas by GTG related to the formation of the Joint Venture. Interest on the principal amount outstanding under the note accrues at a variable rate based on LIBOR plus the Offshore Rate Margin and is payable on a quarterly basis. The principal amount of the note is due on August 29, 2003, and may be prepaid in whole or in part at any time without premium or penalty. Note F - Segment Disclosures - ---------------------------- Three Months Ended Nine Months Ended September 30 September 30 ------------ ------------ 1999 1998 1999 1998 ---- ---- ---- ---- Total net sales including intercompany sales Compressors & Vacuum Pumps $ 43,940 $ 47,270 $ 145,241 $ 151,462 Intercompany sales Compressors & Vacuum Pumps $ (4,084) $ (4,123) $ (11,617) $ (13,771) --------- --------- --------- --------- Net sales to unaffiliated customers Compressors & Vacuum Pumps $ 39,856 $ 43,147 $ 133,624 $ 137,691 ========= ========= ========= ========= Operating income Compressors & Vacuum Pumps $ 6,451 $ 7,273 $ 22,579 $ 24,651 Lighting* 6,351 6,908 16,988 15,230 Corporate (1,382) (1,376) (4,978) (5,031) --------- --------- --------- --------- $ 11,420 $ 12,805 $ 34,589 $ 34,850 ========= ========= ========= ========= *Represents 32% of GTG net income less amortization of excess investment.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- Net sales during the third quarter ended September 30, 1999, were $39.9 million compared to $43.1 million for the third quarter 1998. Since the Company's Lighting business was contributed to GTG effective August 30, 1998, the 1998 net sales reflect the application of the equity method, retroactive to January 1, 1998, and therefore include only net sales for the Compressor & Vacuum Pump operations. The North American operations and the European operations declined from the third quarter 1998 sales levels. Several of our major OEM customers cancelled or pushed out orders due to slack demand in their end markets, which contributed to this decline. Net sales for the nine-month period ended September 30, 1999, were $133.6 million compared to $137.7 million for the prior year. For the nine-month period, the North American operations showed a slight improvement over the prior-year period, while the European operations declined compared to the prior year. Operating income for the third quarter ended September 30, 1999, was $11.4 million compared to $12.8 million for the third quarter 1998. For the quarter, both the North American and European Compressor & Vacuum Pump operations showed decreases compared to the 1998 third quarter. This resulted primarily from the reduced sales levels. Our Lighting results reflect the application of the equity method retroactive to January 1, 1998. Therefore, the prior-year results for January through August included pretax operating income from the Thomas Lighting operations. After the GTG joint venture was formed on August 30, 1998, all subsequent Lighting results also include our 32 percent share of foreign taxes and interest expense. This makes meaningful comparisons to the prior year's quarter and year-to-date Lighting results very difficult. Our third quarter 1999 net equity earnings from GTG were $6.4 million, compared to $6.9 million for the prior-year quarter. As mentioned above, Thomas' share of GTG's quarterly earnings was lower than the prior year's Lighting results due to the manner in which foreign taxes and interest expense are accounted for under the equity method of accounting. After adjusting for these items, the earnings, which included two months of Thomas' former operations and one month of GTG results, would be up over prior years' levels. Operating income for the nine-month period ended September 30, 1999, was $34.6 million compared to $34.9 for the nine-month period in 1998. The North American operations reflected an improvement over the prior-year period, while the European operations showed a decrease for the 1998 nine-month period. An increase in the GTG earnings for the nine-month period helped to offset some of the reduction in the Compressor & Vacuum Pump results. Net income for the 1999 third quarter of $6.7 million was 4.3% lower than the $7.1 million for the comparable 1998 period. This reduction was primarily related to the lower sales levels. Net income for the nine-month period ended September 30, 1999, was $19.9 million compared to $19.2 million for the nine-month period in 1998. The first nine months of 1999 were the highest for any previous first nine-month period in the Company's history. Interest expense for the 1999 third quarter was $1.1 million, or 29.1% lower than the prior-year amount of $1.6 million. The decrease was attributed Item 2. Management's Discussion and Analysis --Continued primarily to a significant reduction in short-term debt, which was higher in the third quarter of 1998 due to the funding of working capital needs of the Lighting business. Also, long-term debt of $7.7 million was paid down on January 31, 1999, which reduced interest expense over the prior-year amount. Interest income was $.3 million higher in the 1999 third quarter versus the 1998 third quarter. The nine-month period for 1999 reflected a $.9 million increase in interest income over the prior year. These increases are the result of improved cash flows and interest received from GTG on a $22,287,000 note payable to Thomas. Included in Other Long-Term Assets at September 30, 1999,is $22,287,000 which represents the debt equalization note payable to Thomas by GTG related to the formation of the Joint Venture. Interest on the principal amount outstanding under the note accrues at a variable rate based on LIBOR plus the Offshore Rate Margin and is payable on a quarterly basis. The principal amount of the note is due on August 29, 2003, and may be prepaid in whole or in part at any time without premium or penalty. Working capital of $31.1 million at September 30, 1999, is $1.3 million higher than the amount at December 31, 1998. Accounts receivable at September 30, 1999, have increased by 7.1% since December 31, 1998, due to seasonality in our sales volume. The number of days sales in receivables at September 30, 1999, compared to December 31, 1998, has decreased to 48.3 days from 49.1. Inventory turnover at September 30, 1999, of 5.1 times per year improved significantly from the December 31, 1998, level of 4.5. 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 $64.1 million are not restricted at September 30, 1999. As of September 30, 1999, the Company had available credit of $7.9 million with banks under short-term borrowing arrangements which was unused. Due to improved cash flows, the Company dissolved the $30 million revolving line of credit. 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 investment grade, short-term securities. Year 2000 Issue - --------------- In the third quarter of 1996, the Company recognized the need to ensure that its operations would not be adversely affected by Year 2000 computer hardware and software failures. Certain systems would fail, unless modified, to properly handle date-sensitive calculations for dates that crossed the century. Such systems could fail because the systems use only two digits rather than four to define a specific year. These failures would pose known risks to the future integrity of the Company's financial reports and to virtually all aspects of the Company's operations, including the Company's ability to process sales transactions, fulfill customer orders, and receive and manage inventories and other assets. Item 2. Management's Discussion and Analysis --Continued Plans for achieving internal Year 2000 compliance were finalized during 1996 and included a goal to be complete by the end of the third quarter 1998. Accordingly, the Company completed a high level analysis of the scope of the issues to be addressed, created a team of IT resources, and contracted with a major software consulting firm to assist in the Year 2000 remediation efforts. The discovery phase of the problems and the plan for remediation were completed in 1997. Remediation and testing were completed on most systems during 1998. The objective of these efforts is to achieve Year 2000 compliance with a minimal effect on customer service or other disruption to, or loss of integrity in, business or financial operations. At this date, sources of potential failure have been identified, and we believe that they have all been remediated. We believe that all critical software is now compliant. The Company has performed an assessment of its material non-Information Technology systems such as CAD systems, PBX systems, Environmental Control systems, Elevator Control systems, and numeric control devices and, based upon this assessment, believes that these systems are Year 2000 compliant. The Company has communicated with its major suppliers and customers to determine their Year 2000 compliant status and to identify any issues or problems with respect to their Year 2000 preparedness that might adversely affect their companies. The Company is continuing its efforts to obtain such assurances from all critical suppliers. Failure of these third parties could have a material impact on operations and/or the Company's ability to deliver products. Contingency planning is being established and will be implemented in an effort to minimize any impact from Year 2000 related failures. Through September 30, 1999, approximately $2.4 million in costs, which includes Compressors & Vacuum Pumps and Lighting costs, has been incurred in the Company's efforts to achieve Year 2000 compliant systems. These costs have been incurred over the 1996-1999 time frame and have not been, nor are expected to be, a material incremental cost having an impact on the Company's operations, financial condition, or liquidity and include the costs for both its Vacuum Pump & Compressor business and the Company's former Lighting business. These costs consist primarily of outsourced consulting and remediation efforts. Any remaining costs for the Company are expected to be less than $25,000. There have been no major system projects cancelled or delayed as a result of the Company's Year 2000 costs. The above expectations are subject to uncertainties. For example, if the Company is unsuccessful in identifying or fixing all Year 2000 problems in our critical operations, or if we are affected by the inability of our suppliers or major customers to continue operations due to such problems, our results of operations or financial condition could be materially affected. The Company has a minority interest in GTG, which has advised the Company that it is currently in the process of identifying and remediating its Year 2000 issues as well as conducting a review to gain reasonable assurances that its business partners are addressing Year 2000 issues. If GTG is unsuccessful in identifying or remediating all Year 2000 problems in its critical operations, or if it is affected by the inability of its suppliers or major customers to continue operations due to such problems, this could have an impact on the Company's financial results and condition. Item 2. Management's Discussion and Analysis --Continued New European Currency - --------------------- Eleven European countries (The European Monetary Union) have implemented a single currency zone as of January 1, 1999. The new currency (Euro) will eventually replace the existing currencies of the participating countries. It is expected that this transition from the various currencies to the Euro will occur over a three-year period. Since the Company's European Operations may have to accommodate dual currencies during this period, modifications to our third-party software at our European locations may be necessary. A team has been formed to monitor EMU developments, evaluate the requirements, develop and execute action plans and work with our third party software providers to address this issue. While management currently believes the Company will be able to accommodate any required changes in its operations without significant costs, there can be no assurance that the Company, its customers, suppliers and service providers or government agencies will all meet the Euro currency requirements in a timely manner. Such failure to complete the necessary work on a timely basis could result in material financial risk. Item 3. Quantitative and Qualitative Disclosures about Market Risk The Company's long-term debt bears interest at fixed rates; therefore, the Company's results of operations would only be affected by interest rate changes to the extent that variable rate, short-term notes payable are outstanding. At September 30, 1999, short-term notes payable are not significant. The Company has significant operations consisting of sales and manufacturing activities in foreign countries. As a result, the Company's financial results could be significantly affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which the Company manufactures or distributes its products. Currency exposures are concentrated in Germany but exist to a lesser extent in other parts of Western Europe and Asia. PART II. OTHER INFORMATION - ------- ----------------- Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10(h) (Corrected) 1995 Incentive Stock Plan as Amended and Restated as of April 15, 1999. 27 Financial Data Schedule. (b) No reports on Form 8-K were filed during the quarter. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THOMAS INDUSTRIES INC. ---------------------- Registrant /s/ Phillip J. Stuecker --------------------------------------- Phillip J. Stuecker, Vice President of Finance, Chief Financial Officer, and Secretary Date November 12, 1999 -------------------- EX-10.(H) 2 THOMAS INDUSTRIES INC. 1995 INCENTIVE STOCK PLAN (as amended and restated April 15, 1999) 1. Purpose. The Thomas Industries Inc. 1995 Incentive Stock Plan (the "Plan") is intended to provide incentives which will attract and retain highly competent persons as officers and key employees of Thomas Industries Inc. (the "Company") and its subsidiaries, by providing them opportunities to acquire shares of Common Stock of the Company ("Common Stock") or to receive monetary payments based on the value of such shares pursuant to the Benefits described herein. 2. Administration. The Plan will be administered by the Compensation Committee of the Board of Directors of the Company or another committee (the "Committee"), appointed by the Board from among its members consisting of two or more non-employee Directors as set forth in Securities and Exchange Commission Regulation ss. 240.16b-3 ("Rule 16b-3") or any successor regulation. 3. Participants. Participants will consist of such key employees (including officers) of the Company or its subsidiaries as the Committee in its sole discretion determines to be significantly responsible for the success and future growth and profitability of the Company and whom the Committee may designate from time to time to receive Benefits under the Plan. Designation of a participant in any year shall not require the Committee to designate such person to receive a Benefit in any other year or, once designated, to receive the same type or amount of Benefit as granted to the participant in any year. The Committee shall consider such factors as it deems pertinent in selecting participants and in determining the type and amount of their respective Benefits. 4. Types of Benefits. Benefits under the Plan may be granted in any one or a combination of (a) Incentive Stock Options; (b) Non-qualified Stock Options; (c) Stock Appreciation Rights; (d) Stock Awards and Performance Share Awards; and (e) Tax-Offset Bonus Rights; all as described below. 5. Shares Reserved under the Plan. There is hereby reserved for issuance under the Plan an aggregate of 827,302 shares of Common Stock, which may be authorized but unissued or treasury shares. In addition, any shares of Common Stock remaining available for Benefits under the Company's 1987 Incentive Stock Plan, as amended, (the "1987 Plan") on the date of the 1995 annual meeting of shareholders of the Company and any shares of Common Stock subject to Benefits under the Company's 1987 Plan on such date which thereafter lapse, expire or are terminated shall thereafter be available for Benefits hereunder. All of such shares may, but need not, be issued pursuant to the exercise of Incentive Stock Options. The maximum number of option shares which may be awarded to any participant in any fiscal year during the term of the Plan is 50,000 shares. No more than 100,000 shares may be issued as Stock Awards not based on performance goals during the term of the Plan. Any shares subject to stock options or Stock Appreciation Rights or issued under such options or rights or as Stock Awards may thereafter be subject to new options, rights or awards under this Plan if there is a lapse, expiration or termination of any such options or rights prior to issuance of the shares or if shares are issued under such options or rights or as such awards, and thereafter are reacquired by the Company without consideration pursuant to rights reserved by the Company upon issuance thereof. 6. Stock Options. Incentive Stock Options and Non-qualified Stock Options will consist of stock options to purchase Common Stock at purchase prices not less than 100% of the fair market value of the Common Stock on the date the option is granted. Said purchase price may be paid by check or, in the discretion of the Committee, by the delivery (or certification of ownership) of shares of Common Stock of the Company owned by the participant for a period of at least six months. In the discretion of the Committee, payment may also be made by delivering a properly executed exercise notice to the Company, together with a copy of the irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the exercise price. Non-qualified Stock Options shall be exercisable not later than fifteen years after the date they are granted and Incentive Stock Options shall be exercisable not later than ten years after the date they are granted. In the event of termination of employment, all stock options shall terminate at such times and upon such conditions or circumstances as the Committee shall in its discretion set forth in such option at the date of grant. The aggregate fair market value (determined as of the time the option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a participant during any calendar year (under all option plans of the Company and its subsidiary corporations) shall not exceed $100,000. The Committee may provide, either at the time of grant or subsequently, that a stock option include the right to acquire a replacement stock option upon exercise of the original stock option (in whole or in part) prior to termination of employment of the participant and through payment of the exercise price in shares of Common Stock. The terms and conditions of a replacement option shall be determined by the Committee in its sole discretion. In no event shall the Committee cancel any outstanding Stock Option for the purpose of reissuing the option to the participant at a lower exercise price or reduce the option price of an outstanding option. 7. Stock Appreciation Rights. The Committee may, in its discretion, grant Stock Appreciation Rights to the holders of any stock options granted hereunder. In addition, Stock Appreciation Rights may be granted independently of and without relation to options. Each Stock Appreciation Right shall be subject to such terms and conditions consistent with the Plan as the Committee shall impose from time to time, including the following: (a) A Stock Appreciation Right relating to an option may be made part of such option at the time of its grant or at any time thereafter. (b) Each Stock Appreciation Right will entitle the holder to elect to receive the appreciation in the fair market value of the shares subject thereto up to the date the right is exercised. In the case of a right issued in relation to a stock option, such appreciation shall be measured from not less than the option price and in the case of a right issued independently of any stock option, such appreciation shall be measured from not less than the fair market value of the Common Stock on the date the right is granted. Payment of such appreciation shall be made in cash or in Common Stock, or a combination thereof, as set forth in the award, but no Stock Appreciation Right shall entitle the holder to receive, upon exercise thereof, more than the number of shares of Common Stock (or cash of equal value) with respect to which the right is granted. (c) Each Stock Appreciation Right will be exercisable at the times and to the extent set forth therein, but no Stock Appreciation Right may be exercisable more than fifteen years after it was granted. Exercise of a Stock Appreciation Right shall reduce the number of shares issuable under the Plan (and the related option, if any) by the number of shares with respect to which the right is exercised. 8. Stock Awards and Performance Share Awards. Stock Awards will consist of Common Stock transferred to participants without other payment therefor as additional compensation for services to the Company and its subsidiaries. Stock Awards shall be subject to such terms and conditions as the Committee determines appropriate, including, without limitation, restrictions on the sale or other disposition of such shares, rights of the Company to reacquire such shares upon termination of the participant's employment within specified periods and conditions requiring that the shares be earned in whole or in part upon the achievement of performance goals established by the Committee over a designated period of time. The Committee may award performance shares (which may include dividend equivalents) to participants subject to such terms and conditions as the Committee determines appropriate. Performance shares may be earned in whole or in part if certain goals established by the Committee are achieved over a period of time designated by the Committee, which may include overlapping performance periods. The goals established by the Committee may be based on business criteria selected by the Committee including total shareholder return, economic value added, net income, return on equity or assets, earnings per share, cash flow and cost control. The maximum number of performance shares payable for a performance period to any participant that is intended to satisfy the requirements for "performance-based compensation" under Section 162(m) of the Internal Revenue Code of 1954 shall not exceed 20,000. 9. Tax-Offset Bonus Rights. The Committee, in its sole discretion, may grant Tax-Offset Bonus Rights with respect to Non-qualified Stock Options. Such Tax-Offset Bonus Rights may be granted to a participant at the time of the grant of the related Non-qualified Stock Option or subsequent thereto, but only with respect to the related Non-qualified Stock Option. A Tax-Offset Bonus Right shall entitle the participant to receive from the Company or a subsidiary upon exercise of the related Non-qualified Stock Option an amount in cash equal to (1) the excess, if any, of the aggregate fair market value of shares acquired by the exercise of a Non-qualified Stock Option on the date of exercise over the aggregate purchase price of the shares acquired by such exercise, multiplied by (2) a fraction, the numerator of which is not more than the maximum marginal individual income tax rate, and the denominator of which is one minus such rate. The Committee shall determine all of the terms and provisions of any Tax-Offset Bonus Right including but not limited to the date of grant, the term, the effect of employment termination and death. No Tax-Offset Bonus Right shall be assignable or transferable except to the extent the Committee permits such Tax-Offset Bonus Right to be assigned by will or through the laws of descent and distribution. 10. Adjustment Provisions. (a) If the Company shall at any time change the number of issued shares of Common Stock without new consideration to the Company (such as by stock dividends or stock splits), the total number of shares reserved for issuance under this Plan and the number of shares covered by each outstanding Benefit shall be adjusted so that the aggregate consideration payable to the Company and the value of each such Benefit shall not be changed. The Committee may also provide for the continuation of Benefits or for other equitable adjustments after changes in the Common Stock resulting from reorganization, sale, merger, consolidation or similar occurrence. (b) Notwithstanding any other provision of this Plan, and without affecting the number of shares otherwise reserved or available hereunder, the Committee may authorize the issuance or assumption of Benefits in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate. (c) In the case of any merger, consolidation or combination of the Company with or into another corporation, other than a merger, consolidation or combination in which the Company is the continuing corporation and which does not result in the outstanding Common Stock being converted into or exchanged for different securities, cash or other property, or any combination thereof (an "Acquisition"): (i) any participant to whom a stock option has been granted under the Plan shall have the right (subject to the provisions of the Plan and any limitation applicable to such option) thereafter and during the term of such option, to receive upon exercise thereof the Acquisition Consideration (as defined below) receivable upon such Acquisition by a holder of the number of shares of Common Stock which might have been obtained upon exercise of such option or portion thereof, as the case may be, immediately prior to such Acquisition; (ii) any participant to whom a Stock Appreciation Right has been granted under the Plan shall have the right (subject to the provisions of the Plan and any limitation applicable to such right) thereafter and during the term of such right to receive upon exercise thereof the difference between the aggregate fair market value on the applicable date (as set forth in such right) of the Acquisition Consideration receivable upon such Acquisition by a holder of the number of shares of Common Stock which might have been obtained upon exercise of the option related thereto or any portion thereof, as the case may be, immediately prior to such Acquisition and the aggregate option price of the related option, or the aggregate fair market value on the date of grant of the right, whichever is applicable. The term "Acquisition Consideration" shall mean the kind and amount of shares of the surviving or new corporation, cash, securities, evidence of indebtedness, other property or any combination thereof receivable in respect of one share of Common Stock of the Company upon consummation of an Acquisition. 11. Nontransferability. Each Benefit granted under the Plan to an employee shall not be transferable by him otherwise than by will or the laws of descent and distribution, and shall be exercisable, during his lifetime, only by him. In the event of the death of a participant, each Benefit theretofore granted to him shall be exercisable within the period after his death established by the Committee at the time of grant (but not beyond the stated duration of the Benefit) and then only: (a) By the executor or administrator of the estate of the deceased participant or the person or persons to whom the deceased participant's rights under the Benefit shall pass by will or the laws of descent and distribution; and (b) To the extent that the deceased participant was entitled to do so at the date of his death. Notwithstanding the foregoing, at the discretion of the Committee, an award of a Benefit may permit the transferability of the Benefit by the participant solely to members of the participant's immediate family or trusts or family partnerships for the benefit of such persons subject to such terms and conditions as may be established by the Committee. 12. Other Provisions. The award of any Benefit under the Plan may also be subject to such other provisions (whether or not applicable to the Benefit awarded to any other participant) as the Committee determines appropriate, including without limitation, provisions for the installment purchase of Common Stock under Stock Options, provisions for the installment exercise of Stock Appreciation Rights, provisions to assist the participant in financing the acquisition of Common Stock, restrictions on resale or other disposition, provisions for the acceleration of exercisability of Benefits in the event of a change of control of the Company, provisions for the payment of the value of the Benefits to participants in the event of a change of control of the Company, provisions to comply with Federal and state securities laws, or understandings or conditions as to the participant's employment in addition to those specifically provided for under the Plan. 13. Rules. The Committee may establish such rules and regulations as it considers desirable for the administration of the Plan. 14. Manner of Action by Committee. A majority of the members of the Committee qualified to act on a question may act by meeting or by writing signed without meeting and may execute, or delegate to one of its members authority to execute any instrument or document required. The Committee may delegate the performance of ministerial functions in connection with the Plan to such person or persons as the Committee may select. The costs of administration of the Plan will be paid by the Company. 15. Fair Market Value. For purposes hereof, fair market value of Common Stock shall be the closing sale price for the Company's Common Stock as reflected in the New York Stock Exchange Composite Transaction Quotations for the date of calculation (or on the next preceding trading date if Common Stock was not traded on the date of calculation). 16. Taxes. The Company shall be entitled if necessary or desirable to pay or withhold the amount of any tax attributable to any amounts payable under the Plan after giving the person entitled to receive such amount notice as far in advance as practicable, and the Company may defer making payment as to any Benefit if any such tax may be pending until indemnified to its satisfaction. When a person is required to pay to the Company an amount required to be withheld under applicable tax laws in connection with exercises of Non-qualified Stock Options or other Benefits under the Plan, the Committee may, in its discretion and subject to such rules as it may adopt, permit such person to satisfy the obligation, in whole or in part, by electing to have the Company withhold shares of Common Stock having a fair market value equal to the amount required to be withheld. 17. Tenure. A participant's right, if any, to continue to serve the Company and its subsidiaries as an officer, employee, or otherwise, shall not be enlarged or otherwise affected by his designation as a participant under the Plan. 18. Amendment and Termination. The terms and conditions applicable to any Benefit granted under the Plan may be amended or modified by mutual agreement between the Company and the participant or such other persons as may then have an interest therein. Also, by mutual agreement between the Company and a participant hereunder, or under any other present or future plan of the Company, stock options or other Benefits may be granted to such participant in substitution and exchange for, and in cancellation of, any Benefits previously granted such participant under this Plan, or any Benefit previously or hereafter granted to him under any other present or future plan of the Company. The Board of Directors may amend the Plan from time to time or terminate the Plan at any time. However, no action authorized by this paragraph shall reduce the amount of any existing Benefit or change the terms and conditions thereof without the participant's consent. No amendment of the Plan shall, without approval of the shareholders of the Company, (i) increase the total number of shares which may be issued under the Plan or increase the amount or type of Benefits that may be granted under the Plan; (ii) change the minimum purchase price, if any, of Common Stock which may be made subject to the Benefits under the Plan; or (iii) modify the requirements as to eligibility for Benefits under the Plan. However, the Board of Directors may amend the Plan in any respect without shareholder approval if shareholder approval is not then required to comply with Rule 16b-3 or other similar requirements. 19. Shareholder Approval. The Plan was approved by the shareholders of the Company on April 20, 1995 and amended and restated by the Board of Directors on April 15, 1999. An amendment to Section 5 of this Plan was approved by the shareholders on April 15, 1999. This Plan shall continue in effect until terminated by the Board pursuant to Section 18; provided, however, that no Incentive Stock Option shall be granted more than ten years after April 15, 1999. EX-27 3
5 1,000 9-MOS DEC-31-1999 SEP-30-1999 14,268 0 21,240 662 19,305 62,093 76,376 43,292 287,408 30,954 40,529 0 0 17,551 188,409 205,960 133,624 133,624 85,387 85,387 11,960 86 3,452 32,739 12,836 19,903 0 0 0 19,903 1.26 1.23
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