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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K(A)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
COMMISSION FILE NUMBER: 0-16960
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THE GENLYTE GROUP INCORPORATED
100 LIGHTING WAY
SECAUCUS, N.J. 07096
(201) 864-3000
INCORPORATED IN DELAWARE I.R.S. EMPLOYER
IDENTIFICATION NO. 22-2584333
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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COMMON STOCK, PAR VALUE NASDAQ NATIONAL MARKET SYSTEM
$.01 PER SHARE
Number of shares of Common Stock (par value $.01 per share) outstanding as of
February 4, 1994: 12,833,674
Aggregate market value of Common Stock (par value $.01 per share) held by non-
affiliates on February 4, 1994: $56,147,324
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Documents Incorporated by Reference:
DOCUMENT PART OF FORM 10-K
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Annual Report to Stockholders for the fiscal year Parts I, II and IV
ended December 31, 1993
Proxy Statement for the Annual Meeting of Part III
Stockholders to be held April 29, 1994
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MANAGEMENT'S DISCUSSION AND ANALYSIS
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RESULTS OF OPERATIONS
Net Sales during 1993 increased $3.8 million, or 1%, from 1992 following a $3.1
million, or 1% decrease from 1992 to 1991. Economic pressures in both the U.S.
and Canadian markets adversely impacted the 1992 sales due to the recessed
construction industry. The 1992 acquisition of the Forecast Lighting Division,
in conjunction with new product introductions and investments in selling and
marketing programs, partially offset the negative economic factors in 1992 and
gave the Company expanded selling opportunities in 1993. Sales in 1993
increased as a result of a positive response to new products introduced,
including Forecast Decorative Lighting, and returns from investments made in
selling and marketing programs.
Gross Profit was $127.5 million in 1993, $123.7 million in 1992, and $130.3
million in 1991. The $6.6 million decrease in 1992 reflected an under
absorption of overhead costs and increased pressure on selling prices due to the
heightened competitive environment. The 1993 increase in gross profit of $3.8
million reflects the improved sales volume, in conjunction with ongoing cost
containment efforts, positive results from facility rationalization, and a de-
emphasis of lower margin products.
Selling and Administrative expenses, as a percentage of sales, were 25.2% in
1993, 25.4% in 1992, and 25.6% in 1991. Aggressive cost containment efforts in
1992 yielded positive results but were offset by additional bad debt
requirements of $1.6 million due to two major distributor bankruptcies during
the year. Additional 1993 expenditures in the sales and marketing areas,
including additional sales territories and field personnel, were offset by other
cost reductions, such as a lower bad debt requirement, as compared with 1992.
In the fourth quarter of 1992, the Company recorded a pre-tax charge of $6.2
million to establish a reserve for the costs associated with the Company's
decision to consolidate and improve the manufacturing processes in its plants.
The Company's plan included: relocation of its DFT manufacturing and
distribution operations (leased) in Cleveland, Ohio to an existing facility in
Elgin, Illinois; closure of its Prodel operations in Quebec City, Canada, and
sale of the existing building; downsizing of manufacturing and distribution
facilities in Edison, New Jersey and Compton, California; and the transfer of
certain Headquarters staff to the Company's expanded Fall River, Massachusetts
facility. The charge was comprised of the following amounts:
Plant and Equipment Writedowns $ 465,000
Inventory Writedowns 407,000
Severance
(approx. 250 employees) Costs 1,403,000
Personnel (approx. 100
employees) Relocation Costs 3,720,000
Other costs 155,000
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$6,150,000
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The charge was allocated as follows by facility:
DFT -- Cleveland $2,600,000
Prodel -- Canada 1,312,000
Headquarters 2,238,000
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$6,150,000
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The plant, equipment, and inventory writedowns are the only items which do not
require the use of cash. The Company intended to complete all aspects of the
plan during 1993, but union negotiations and construction at the Fall River
facility created significant delays in implementation. As a result, charges
against the reserve in 1993 totalled only $677,000 of which $390,000 required
cash. During
1994 the Company expects to charge an additional $5,100,000 to the reserve,
using cash of approximately $4,800,000. As described under the heading
"Liquidity and Capital Resources," the Company expects cash from operations to
be adequate to provide for these expenditures. Proceeds from the sale of the
Prodel facility are not expected to be realized until at least late 1994. The
Company expects the plan to generate operating profit improvements, primarily
representing labor cost swings, in excess of $4.4 million per year beginning in
1995; specific results are difficult to measure as operating efficiencies may
occur for reasons not directly associated with the consolidation process. The
margin improvements are expected to be offset to a large degree in 1994 by
indirect costs and inefficiencies resulting from the relocation.
Corporate expenses were $5.3 million, $4.3 million, and $4.5 million in 1993,
1992, and 1991, respectively. Headcount reductions, lower legal expenses, and
other cost controls implemented during 1992 resulted in a 4% decrease in
expenses for that year. Additional expenses in 1993 were significantly due to
accruals for legal costs to defend the Company against actions commenced in the
third quarter of 1993.
Net interest expense has decreased $.9 million in 1993 and $3.8 million in 1992
due to lower interest rates and a reduction in average borrowings as debt is
paid down.
The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 109
- -- "Accounting for Incomes Taxes" in 1992, retroactive to January 1, 1992. One
of the requirements of SFAS No. 109 is that the effect on income taxes of a
change in tax rates be recognized in the period of the change. Under the prior
method, deferred taxes were recognized using the tax rate applicable to the year
of the calculation and were not adjusted for subsequent changes in tax rates.
The cumulative effect of this change in accounting principle resulted in a $3.7
million increase in net income recognized in 1992.
The effective tax rates for 1993, 1992, and 1991 were 44%, 40%, and 40%,
respectively. Changes in federal tax law and increases in state tax rates
raised the 1993 effective rate by 4%.
Net income before the cumulative effect of the change in accounting principle
and the facility rationalization charge was $3.3 million in 1993, $1.5 million
in 1992, and $2 million in 1991. Earnings per share increased to $.26 per share
in 1993 as compared to $.12 in 1992, and $.16 in 1991. Improved earnings in
1993 reflect positive results from investments in marketing programs, as
evidenced by increased sales, facility rationalizations which streamlined costs,
and a de-emphasis of lower margin products. The net effect after taxes in 1992
of the change in accounting principle was entirely offset by the facility
rationalization charges, net of taxes.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased to $3.3 million in 1993 as compared to $2.8
million in 1992 and $2.3 million in 1991. Sources of cash are predominantly
from operating activities which generated $28.4 million, $24.8 million, and
$24.2 million in 1993, 1992, and 1991, respectively. These funds were used
principally to pay down debt, fund the plant consolidation plan, and fund
capital expenditures, including the acquisition of Forecast Lighting in 1992.
The significant weakening in the Canadian Dollar caused unfavorable exchange
rate changes of $.5 million and $1.3 million, in 1993 and 1992, respectively.
The 1991 exchange rate change was negligible.
Capital expenditures funded by operations included the acquisition of Forecast
Lighting, a leading designer and manufacturer of decorative lighting products,
in 1992. The Forecast line began contributing to net earnings in 1993.
Investments in more advanced machinery and equipment, and the tooling of new
product introductions were the significant expenditures in 1993, 1992, and 1991.
The Company borrows funds under a Revolving Credit and Term Loan Agreement (the
Agreement) which calls for a $140 million reducing revolving credit facility,
with a conversion to term loan on July 1, 1994. The term loan will amortize
through July 1, 1997. Reductions in debt for 1993 and 1992 were $17.4 million
and $12.2 million, respectively, ending 1993 at a record low debt balance of
$100.4 million. Covenants under the Agreement restrict the Company's ability to
pay future dividends. The Company expects that funds provided by operations,
combined with amounts available under the Agreement, will be sufficient to meet
cash requirements in 1994. Such 1994 cash requirements will include funding the
plant consolidation plan, including related capital expansions of $3.5 million
at the Fall River and Elgin facilities.