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.
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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.
All other officers listed have been executive officers for the past five years.
ITEM 2.
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.
ITEM 3.
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II.
ITEM 5.
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.
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.
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.
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.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III.
ITEM 10.
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.
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.
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.
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.
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
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