ITEM 1. BUSINESS
General
Juno Lighting, Inc. began operations in 1976 and was incorporated in Illinois. It changed its state of incorporation to Delaware in 1983. Its executive offices and principal plant are located at 1300 S. Wolf Road, Des Plaines, Illinois 60018, a suburb of Chicago; the telephone number is (847) 827-9880. Juno also has facilities in the Los Angeles, Indianapolis, Toronto, Philadelphia, Dallas and Atlanta areas. The terms "Juno" and "Company" as used herein mean Juno Lighting, Inc. and its subsidiaries, collectively.
The Company is a leading designer, assembler and marketer of recessed and track lighting fixtures. Its broad product line is used in commercial and residential remodeling and in new construction. Its principal products use a variety of light sources and are designed for reliable and flexible function, efficient operation, attractive appearance and simple installation and servicing. The Company is also engaged in the marketing, design and manufacture of other incandescent and fluorescent lighting products with application in the commercial lighting market, primarily in department and chain stores.
Approximately 91% of the Company's sales in fiscal 2003 were made in the United States, with most of the balance made in Canada. The Company's sales are made primarily to electrical distributors as well as certain wholesale lighting outlets. Such distributors resell the Company's products for use in remodeling of existing structures and in new residential, commercial and institutional construction.
The Company produces a wide variety of fixtures and related equipment for the recessed and track lighting markets. Its recessed lighting fixtures are designed to be installed directly into ceilings, while its track lighting fixtures are mounted on electrical tracks affixed to ceilings or walls. End-users of the Company's products generally prefer them due to their superior design, reliability and ease of installation. Juno designs and assembles substantially all of its products in-house. However, it outsources virtually all component manufacturing to a number of independent vendors principally located near its production facilities. Inventories are maintained at three production and distribution facilities located near Chicago, Indianapolis and Toronto and at distribution facilities near Atlanta, Dallas, Los Angeles and Philadelphia.
The Company's primary means of distribution is through over 1,400 distributors of lighting products located throughout the United States and Canada. The Company has established itself as a preferred lighting supplier by providing high quality and well-designed products, superior customer service, timely delivery, technical advice and product training. Its distributors maintain their own inventory of the Company's products, and, in turn, sell to electrical contractors and builders and, in some cases, at the retail level. Sales to distributors are made through the Company's knowledgeable sales staff and through manufacturers' agents who also sell other, non-competing electrical products. The Company also has a national accounts sales force that focuses on department store, specialty retail, supermarket and commercial accounts. The Company works closely with these national accounts to provide custom solutions to their lighting needs and, in turn, to have the Company's products specified for their major renovations or store expansions.
Products
The Company produces a wide variety of lighting fixtures and related equipment of both contemporary and traditional design, most of which are available in a variety of styles, sizes and finishes. Some styles differ from others only in size, light source capacity or other minor modifications. Some fixtures which Juno produces are designed to be installed in recesses in ceilings, while others are designed to be mounted on electrified tracks affixed to ceilings or walls, while still others are used in merchandise display cases.
Each recessed fixture is composed of a housing and a separate trim. Housings may be fitted with a variety of trims offering a wide choice of diffusers, lenses and louvers to satisfy different optical and aesthetic requirements. Recessed fixtures are generally used for down-lighting, but by special configuration they also may be used for wall-washing and spot lighting. The Company has designed recessed lighting fixtures, sold under the Sloped Ceiling Downlights name, that provide lighting perpendicular to a floor from a sloped ceiling. The Company also produces a series of recessed lighting fixtures sold under the name Air-Loc, which are designed to restrict the passage of air into and out of a residence through the fixture to minimize energy loss. The Company's line of commercial lighting fixture products for use primarily in department and chain stores utilize incandescent, fluorescent, high intensity discharge and compact fluorescent light sources to provide specialty and general purpose lighting. The Company also produces a line of high performance recessed lighting targeted for custom homes. Marketed under the ACULUX name, these highly efficient luminaires create more precise/dramatic lighting effects from fixtures that quietly blend in with the architecture.
The Company's principal track lighting system, sold under the Trac-Master name, is made up of an electrified extruded aluminum channel (called the track) and a wide variety of individual fixtures that may be connected at any point on the track. The individual fixtures are available in different geometric styles, light source sizes and finishes.
The Company also has a line of track lighting produced under the name of Trac-Lites to complement its line of products under the Trac-Master name. This line is a lower priced but high quality line of products that do not contain some of the features of Trac-Master.
Track lighting products were originally developed for use in store displays. While this use continues to be important, track lighting is also popular in the residential market, particularly in the remodeling and do-it-yourself markets. One line of the Company's track fixtures allows each track light to be controlled by either of two switches and includes a series of miniature low voltage halogen track lights that provide higher lumens per watt than standard incandescent light sources.
The Company also produces and markets a series of track lighting products under the names Trac 12 and Flex 12. Trac 12 is a low voltage track lighting system featuring small individual fixtures and a miniature lamp holder used in linear lighting applications. Flex 12 is also a low voltage track lighting system that features a track that can be curved in a variety of shapes. A series of miniature fixtures were introduced to accompany this flexible system for commercial and residential lighting applications. In October 2002, Juno completed the acquisition of Alfa Lighting, Inc. Alfa provides Juno with an expanded product offering in the low voltage category to include monorail, cable and pendant systems as a complement to its existing Trac Master, Trac 12 and Flex 12 product lines.
Through an acquisition Juno became a supplier of High Intensity Discharge (HID) lighting products for commercial and industrial applications principally in Canada. Indoor lighting products include high and low bay luminaires designed to illuminate large spaces such as factories, warehouses, indoor sports arenas and retail stores. Outdoor lighting products include area, flood, building and canopy mount luminaires to provide security lighting, to illuminate building facades, parking garages and parking lots. Marketed under the Acculite brand, these products are characterized by high quality construction and superior photometric performance to facilitate lower installation and operating costs.
The Company believes its innovations in simplifying installation and improving the function of its lighting products have served to increase demand for its products.
Juno, Indy, Trac-Master, Real Nail , Air-Loc, Wireforms, Accents, Conix, Delta 200 Series, IdeaLab, It's All in the Lighting, Design Only and MH2 are registered trademarks of Juno.
Production
The Company designs and assembles substantially all of its products in-house. However, the Company outsources virtually all component manufacturing to a number of independent vendors located principally near its production facilities. Tools, dies and molds are manufactured by outside sources to the Company's designs and specifications. Tooling is consigned to independent job shops, largely near the Company's manufacturing facilities, which fabricate and finish the components of the Company's products. The Company inspects the components and assembles, tests, packages, stores and ships the finished products. Most assembly operations are performed at the Des Plaines, Illinois plant and Indianapolis, Indiana assembly facilities.
The Company outsources manufacturing of virtually all components to minimize fixed costs and capital requirements and to produce flexibility in responding to market needs. It believes its utilization of subcontractors with specialized skills is the most efficient method of manufacturing its products. The Company further believes that alternate tool making specialists and fabricators are generally available. It uses multiple subcontractors for most of its components to facilitate availability. In addition, the Company purchases many of the raw materials used in the manufacturing of its components to control the quality of the raw materials used by the subcontractors and to receive more competitive prices for the raw materials.
The Company spent approximately $4,840,000, $4,973,000, and $4,696,000 on research, development and testing of new products and development of related tooling in fiscal 2002, 2001, and 2000, respectively.
Sales and Distribution
The Company has relationships with a broad base of over 1,400 distributors across the United States and in Canada. Each of the Company's distributors maintains its own inventory of Company products and in turn, sells to electrical contractors and builders and, in some cases, also sells at the retail level. Sales to distributors are made through the Company's own staff of sales managers and sales personnel and also through manufacturers' agents who sell other electrical products of a non-competitive character. The Company also seeks to have its products specified by architects, engineers and contractors for large commercial and institutional projects with actual sales made through the Company's distributors. The Company also sells to certain wholesale lighting outlets and national accounts.
Inventories of substantially all items Juno produces are maintained at the Des Plaines, Illinois and Indianapolis, Indiana plants and substantially all items are maintained in Juno's warehouses in the Atlanta, Dallas, Los Angeles, Philadelphia and Toronto areas. Most orders are shipped from stock inventory within 48 hours of receipt.
Backlog and Material Customers
We have no material long-term contracts. The Company is not dependent on any single customer or group of customers and no single customer accounted for as much as 10% of sales in fiscal 2002.
Competition
We are not aware of any published figures that identify the overall market for the Company's products. Nevertheless, the Company believes that its sales place the Company among the five highest-selling manufacturers of track and recessed lighting products in the United States. The Company estimates that there are more than 50 manufacturers of competing track and recessed lighting products. The Company competes not only with manufacturers in its own fields, but also with manufacturers of a variety of fluorescent and decorative lighting products. A number of competitors, including the Company's two largest competitors, are divisions or subsidiaries of larger companies, which have substantially greater resources than the Company.
There is wide price variance in competitive products and the Company believes that its line can be described as moderately priced in order to be attractive to the high-volume commercial and residential markets. However, lighting fixtures are often purchased in small quantities and, as a result, product features may be more important to a purchaser in small quantities than cost. The Company believes that its growth has been attributable principally to the design and construction of its products, the quality of its sales force and its reputation for prompt delivery and service.
As of November 30, 2002, the Company owned a substantial number of United States patents and had several patent applications on file with the United States Patent Office. The Company also has corresponding foreign patents and registered trademarks in the United States. There is no assurance that any patents will be issued with respect to pending or future applications. As the Company develops products for new markets and uses, it normally seeks available patent protection. The Company believes that its patents are important, but does not consider itself materially dependent upon any single patent or group of related patents.
Employees
The Company employs approximately 1,000 persons. Most of the Company's factory employees are represented by one of two unions. The expiration dates for the collective bargaining agreements pertaining to the Company's Des Plaines, Illinois, and Indianapolis, Indiana locations are September 2005 and September 2004, respectively.
Available Information
The Company's Internet address is www.junolighting.com. Currently, the Company does not make the reports it files with the Securities and Exchange Commission pursuant to Section 13(a) or 15(d) of the Exchange Act available on its Internet website because the website does not yet have such capability. The Company will voluntarily provide copies of its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports free of charge upon request. The information on the Company's website is not part of this report.
ITEM 2.
ITEM 2. PROPERTIES
Juno owns a building located in Des Plaines, Illinois of approximately 510,000 square feet, which serves at its principal assembly, warehouse and executive office facility. Juno also owns distribution warehouses in New Jersey, Georgia, and Brampton, Ontario, Canada which have, in the aggregate, approximately 140,700 square feet of floor space and a 130,000 square foot assembly and general office facility in Indianapolis, Indiana for its Indy Lighting, Inc. subsidiary. The Company leases four additional distribution warehouses for relatively short terms, which have, in the aggregate, approximately 149,000 square feet of floor space. These warehouse leases call for an aggregate annual rental of approximately $924,000. The Company's facilities are modern, considered adequate for its business as presently conducted and experience varying levels of utilization.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
On or about May 17, 2002, Juno filed a Complaint against U.S. Industries, Inc. in the Superior Court of the State of Delaware in and for New Castle County and issued written discovery to U.S. Industries. In the Complaint, Juno alleges that U.S. Industries breached an exclusivity agreement with Juno related to a proposed acquisition, by engaging in negotiations with another company, Hubbell Incorporated, during an exclusivity period with Juno. The Complaint seeks damages of $8,500,000 based on a liquidated damages provision contained in the exclusivity agreement to cover expenses incurred and additional losses by Juno, as well as attorneys' fees and costs. U.S. Industries has answered the Complaint and denied liability. The parties are proceeding with discovery.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Executive Officers Of The Registrant
The following table gives certain information with respect to the Executive Officers of the Company as of January 31, 2003:
T. Tracy Bilbrough
has served as Chief Executive Officer and director since May 2000. From September 1997 to May 2000 he was President - Commercial Division of Thomas & Betts Corporation, a manufacturer of electrical and electronic components. From October 1995 to September 1997 he was President - Eastern Hemisphere of Black & Decker Corporation, a manufacturer of power tools, plumbing fixtures and various other hardware products and accessories.
Glenn R. Bordfeld has been Executive Vice President, Chief Operating Officer and President, Juno Lighting Division since May 2000 and served as a director from July 1999 until May 2000. From January 1999 to May 2000 he was President, Chief Operating Officer of the Company. He was the Company's Vice President, Sales from July 1991 to January 1999. Previously, he was employed by the Company as its National Sales Manager from November 1988 to July 1991; its Assistant Sales Manager from November 1985 to November 1988 and its Advertising Manager from November 1982 to November 1985.
George J. Bilek has been Vice President, Finance and Treasurer since April 1990 and was appointed Secretary as of March 2001. He was employed by the Company as its Comptroller from September 1985 to April 1990.
W. Allen Fromm joined the Company as Vice President, Purchasing in April 2001. From 1996 through 2001, he was Global Commodity Director for Black & Decker Corporation. Prior to 1996 he held various roles of increasing responsibility in marketing and global product development for Black & Decker and DeWalt Professional Power Tools, a division of Black & Decker.
Charles F. Huber has been Vice President, Engineering and Special Projects since July 1999. He was the Company's Vice President, Corporate Development from December 1992 to July 1999. From January 1989 to December 1992 he was employed by the Company as the Director of Corporate Development. From October 1984 to January 1989 he was employed by Reliance Electric, Inc., a manufacturer and distributor of electrical products, as its Vice President and General Manager.
Jacques P. LeFevre has served as a Vice President since August 1999. He has been President of Indy Lighting, Inc. (acquired by Juno in 1988) since 1994. He was Vice President and General Manager of Indy Lighting from October 1983 to October 1994. Previously, he was a Certified Public Accountant with Arthur Young & Company for six years.
Daniel S. Macsherry joined the company as Vice President, Business Development in October 2000. From December 1998 to September 2000 he was Director of Finance for Stanley Fastening Systems, a division of the Stanley Works and a manufacturer of pneumatic tools and accessories. He was the Director of Business Planning and Analysis at DeWalt Professional Power Tools, a division of Black & Decker Corporation, from 1996 to 1998. From 1983 through 1995 he held various financial roles of increasing responsibility supporting operations at Black & Decker.
Scott L. Roos rejoined Juno in October 1998 as Vice President, Product Management and Development. From August 1994 through October 1998 he was Vice President, Product Development and Marketing for Alkco, a division of the JJI Lighting Group (a manufacturer of lighting products). From 1990 through August 1994 he was the Company's Director of New Product Development.
Richard B. Stam has been Vice President, Sales since August 1999. From 1997 to 1999, he was employed by the Company as its National Sales Manager for North America. From 1994 to 1997, he was the National Sales Manager for Juno Lighting, Ltd., Juno's Canadian subsidiary.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Common Stock and Dividend Information
The Company's Common Stock is being traded on The Nasdaq SmallCap Market. Prior to August 3, 2000, the Company's Common Stock was traded on the Nasdaq National Market.
As of January 31, 2003 there were approximately 1,400 holders of record of Common Stock.
The following table sets forth, for the fiscal years indicated, the range of high and low sales prices as reported by the Nasdaq Stock Market
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
FINANCIAL HIGHLIGHTS
(in thousands except per share amounts)
(1) Defined as total Current Assets minus total Current Liabilities.
(2) Defined as total Current Assets divided by total Current Liabilities.
Both Working Capital and Current Ratio as defined above are important and relevant measurements given the Company's current capital structure and level of outstanding debt. In order to maximize debt reduction the Company must focus on sales growth, earnings and minimizing working capital.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
This document contains various forward-looking statements. Statements in this document that are not historical are forward-looking statements. Such statements are subject to various risks and uncertainties that could cause actual results to vary materially from those stated. Such risks and uncertainties include: economic conditions generally, levels of construction and remodeling activities, the ability to improve manufacturing and operating efficiencies, disruptions in manufacturing or distribution, product and price competition, raw material prices, the ability to develop and successfully introduce new products, technology changes, patent issues, exchange rate fluctuations, and other risks and uncertainties. The Company undertakes no obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
Fiscal 2002 Compared to Fiscal 2001. For the fiscal year ended November 30, 2002, net sales increased approximately $1,823,000 or 1.0% to $181,770,000 from $179,947,000 for the like period in 2001 due primarily to new products introduced over the past year and the full year impact of the Acculite product line acquired in August 2001, offset by lower volumes in some of the Company's commercial product lines and selling price pressure. Sales through Juno's Canadian subsidiary (which includes the Acculite division acquired in August 2001) increased 29.9% to $16,144,000 for the fiscal year ended November 30, 2002 compared to $12,426,000 for the like period in 2001.
Gross profit expressed as a percentage of sales decreased to 49.9% in fiscal 2002 compared to 50.7% in fiscal 2001. This decrease was due primarily to unfavorable sales mix and a more competitive selling price environment, which were offset, to some degree, by favorable purchase price variances on the Company's principal raw materials.
Selling, general and administrative expenses expressed as a percentage of sales increased to 31.3% in fiscal 2002 compared to 31.2% in fiscal 2001 due primarily to one-time expenses incurred of approximately $3,050,000 in connection with a proposed major acquisition that was not consummated.
Interest expense was $16,907,000 for fiscal 2002 compared to $19,930,000 for 2001. This decrease is due to the reduction in debt from $176,803,000 at November 30, 2001 to $166,356,000 at November 30, 2002, reductions in interest rates on the Company's floating rate debt and the net effect of interest rate swaps.
Fiscal 2001 Compared to Fiscal 2000. For the fiscal year ended November 30, 2001, net sales increased approximately $5,959,000 or 3.4% to $179,947,000 from $173,988,000 for the like period in 2000. Approximately $1,600,000 of the increase in sales is due to Acculite, a manufacturer of HID lighting fixtures located in Kitchener, Ontario, Canada, that was acquired by Juno on August 28, 2001. In management's opinion, the remainder of the increase is due primarily to new products that were introduced in the last half of fiscal 2000 and in the first half of fiscal 2001. Sales through Juno's Canadian subsidiary (which includes the Acculite division) increased 11.2% to $12,426,000 for the fiscal year ended November 30, 2001 compared to $11,179,000 for the like period in 2000.
Gross profit expressed as a percentage of sales increased to 50.7% in fiscal 2001 compared to 49.2% in fiscal 2000. This increase was due primarily to productivity improvements from the process re-engineering project.
Selling, general and administrative expenses expressed as a percentage of sales increased to 31.2% in fiscal 2001 compared to 29.7% in fiscal 2000 due primarily to costs incurred of approximately $1,350,000 for the process re-engineering project, $175,000 for the settlement of a legal case, approximately $2,000,000 for additional promotion expenses in connection with several programs designed to increase revenue for the year, and $850,000 for administrative salaries (including $210,000 for severance payments; $350,000 for salaries of executives hired in the second half of fiscal 2000; and $200,000 for the fiscal 2001 management incentive program).
Interest expense was $19,930,000 for fiscal 2001 compared to $22,597,000 for 2000. This decrease is due to the reduction in debt from $186,557,000 at November 30, 2000 to $176,803,000 at November 30, 2001 and reductions in interest rates on the Company's floating rate debt.
Inflation While management believes it has generally been successful in controlling the prices it pays for materials and passing on increased costs by increasing its prices, no assurances can be given as to the Company's future success in limiting material price increases or that it will be able to fully reflect any material price increases in the prices it charges its customers or fully offset such price increases through improved efficiencies.
Financial Condition
Fiscal 2002 The Company generated positive net cash flow provided by operating activities of $19,467,000 comprised principally of net income, depreciation and amortization, deferred charges, decreases in inventories and other assets, and an increase in accounts payable, (collectively aggregating $21,927,000), net of a decrease to the allowance for doubtful accounts and accrued liabilities, unrealized gain on interest rate swap and increases in accounts receivable and prepaid expenses, (collectively aggregating $2,460,000).
Net cash used in investing activities amounted to $9,372,000 and was used to finance capital expenditures of $2,494,000. In addition, on October 15, 2002 the Company purchased the stock of Alfa Lighting, Inc., manufacturers and marketers of low voltage lighting systems for $7,200,000 in cash. The acquisition was financed using the Company's revolving credit facility (the "Revolving Credit Facility") under the Company's existing senior credit facility with Bank of America, N.A., Credit Suisse First Boston and certain other lenders (the "Senior Credit Facility"). The purchase agreement calls for an additional purchase price due at the end of the first twenty-four months after acquisition contingent upon this division attaining certain operating objectives. As a result of this acquisition, the Company recorded additional working capital of $2,428,000 and goodwill of $4,450,000.
The net cash used in financing activities of $10,154,000 consisted primarily of principal payments on the term debt under the Senior Credit Facility of $67,815,000 less proceeds from its Revolving Credit Facility of $57,300,000.
Prior to the June 30, 1999 merger of Jupiter Acquisition Corp., a Delaware company and wholly-owned subsidiary of Fremont Investors I, LLC, with and into the Company (the "Merger"), the Company historically had funded its operations principally from cash generated from operations and available cash. The Company incurred substantial indebtedness in connection with the Merger. The Company's liquidity needs are expected to arise primarily from operating activities and servicing indebtedness incurred in connection with the Merger.
Principal and interest payments under the Senior Credit Facility and the $125 million principal amount of 11-7/8% senior subordinated notes due July 1, 2009 issued by the Company (the "Subordinated Debt" or "Notes"), both entered into in connection with the Merger, represent significant liquidity requirements for the Company. As of November 30, 2002, the Company had cash of approximately $1.2 million, a $6.0 million balance on the Company's Revolving Credit Facility and total term debt of approximately $160.3 million. Detailed information concerning the terms of the Senior Credit Facility and the Subordinated Debt can be found in the Company's audited financial statements and notes thereto appearing elsewhere in this document.
The Company's $35 million Revolving Credit Facility is available to finance its working capital requirements and had an outstanding balance on November 30, 2002 of $6.0 million. The Company's principal source of cash to fund its liquidity needs will be net cash from operating activities and borrowings under the Revolving Credit Facility. The Company believes these sources will be adequate to meet its anticipated future requirements for working capital, capital expenditures, and scheduled payments of principal and interest on its existing indebtedness for at least the next 12 months. However, the Company may not generate sufficient cash flow from operations or have future working capital borrowings available in an amount sufficient to enable it to service its indebtedness, including the Notes, or to make necessary capital expenditures.
Fiscal 2001
The Company generated positive net cash flow provided by operating activities of $17,993,000 comprised principally of net income, depreciation and amortization, deferred charges, decreases in inventory, and an increase in accrued liabilities, (collectively aggregating $22,883,000), net of a decrease to the allowance for doubtful accounts and accounts payable and increases in accounts receivable, prepaid expenses and other assets, (collectively aggregating $4,890,000).
Net cash used in investing activities amounted to $11,870,000 and was used to finance capital expenditures of $2,796,000, and make payments of $3,220,000 associated with licensing certain intellectual property rights. In addition, on August 28, 2001 the Company purchased the net assets of Acculite Mfg., Inc. and two of its affiliates, manufacturers and marketers of HID (High Intensity Discharge) lighting fixtures for commercial and industrial use for $5,900,000 in cash. The acquisition was financed using the Company's existing Revolving Credit Facility. The purchase agreement calls for an additional payment of up to approximately $1,305,000, due at the end of the first twenty-four months after acquisition contingent upon this division attaining certain operating objectives. As a result of this acquisition, the Company recorded additional working capital of $1,889,000 and goodwill of $3,965,000.
The net cash used in financing activities of $9,660,000 consisted primarily of principal payments on the term debt under the Senior Credit Facility of $52,515,000 less proceeds from the $35 million Revolving Credit Facility of $42,700,000.
As of November 30, 2001, the Company had cash of approximately $1.3 million, a $5.3 million balance on the Company's Revolving Credit Facility and total term debt of approximately $171.5 million. Detailed information concerning the terms of the Senior Credit Facility and the Subordinated Debt can be found in the Company's audited financial statements and notes thereto appearing elsewhere in this document.
The Company's $35 million Revolving Credit Facility was available to finance its working capital and had an outstanding balance on November 30, 2001 of $5.3 million.
Fiscal 2000
The Company generated positive net cash flow provided by operating activities of $22,275,000 comprised principally of net income, depreciation and amortization, deferred charges, decreases in inventory, accounts receivable, prepaid expenses and other assets and an increase in accounts payable, (collectively aggregating $22,506,000), net of a decrease to the allowance for doubtful accounts of $231,000.
Net cash flow used in investing activities amounted to $2,468,000 comprised of capital expenditures for fiscal 2000.
Net cash flow used in financing activities amounted to $23,622,000 due primarily to principal payments on long-term debt of $23,620,000.
As of November 30, 2000, the Company had cash of approximately $4.8 million and total indebtedness of approximately $186.6 million.
The Company's $35 million Revolving Credit Facility was available to finance its working capital and had no outstanding balance on November 30, 2000.
As of May 31, 2000, the Company was not in compliance with a requirement of the Secured Credit Agreement for maintaining a minimum ratio of EBITDA to Interest Expense, as defined. On June 30, 2000, the lenders agreed to waive compliance with this requirement for the quarter ended May 31, 2000 and modified this and other financial ratios for the remainder of the term.
Other Matters
Recently Issued Accounting Standards
In June 2001, the FASB issued SFAS 141, "Business Combinations". This standard applies to acquisitions after June 30, 2001 and requires, among other things, that purchase accounting be followed. Accordingly, the Company applied this standard to the acquisitions of Acculite Manufacturing and Alfa Lighting, Inc. Consistent with this standard, the resulting goodwill from the acquisition of Acculite Manufacturing of $3,965,000 and Alfa Lighting, Inc. of $4,450,000 were not subject to amortization.
In June 2001, the FASB issued SFAS 142, "Goodwill and Other Intangible Assets". This standard addresses the accounting for goodwill and other intangible assets that have been historically subject to annual amortization over their estimated useful lives. The Company adopted SFAS 142 during 2002. Management conducted a review of the estimated fair market value of its business segment, using discounted cash flow techniques. Based on management's review, no goodwill impairment was recorded for the year ended November 30, 2002.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment of Disposal of Long-Lived Assets," effective for years beginning after December 15, 2001. Under the new rules, the accounting and reporting for the impairment and disposal of long-lived assets have been superseded from SFAS No. 121 and APB No. 30. Also, ARB No. 51 has been amended to eliminate the exception for consolidation of a temporary subsidiary. Effective November 30, 2002, the Company adopted SFAS No. 144, which did not have an effect on the financial statements of the Company.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activites, " effective for exit or disposal activities initiated after December 31, 2002. Under the new rules, EITF, 94-3 has been nullified and now costs associated with an exit or disposal activity will be recognized when the liability is incurred rather than when the entity committed to an exit plan. Effective November 30, 2002, the Company adopted SFAS No. 146, which did not have an effect on the financial statements of the Company.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK The Company is exposed to market risks arising from changes in interest rates. As of November 30, 2002, the Company had both floating-rate and fixed rate long-term debt that is exposed to changes in interest rates. In order to manage the Company's risk, at November 30, 2002 the Company had two interest rate swap agreements. The net unrealized gain from these swaps for the fiscal year ended November 2002 was $418,000 based on the swaps' estimated market values as of November 30, 2002. The Company also realized a gain of $1,549,000 for the fiscal year ended November 30, 2002 as a result of exiting an interest rate swap transaction. Detailed information concerning the terms of these swaps can be found in the Company's audited Financial Statement and notes thereto appearing elsewhere in this document.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Accountants
To the Board of Directors and
Stockholders of Juno Lighting, Inc.
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of stockholders' equity (deficit) and of cash flows present fairly, in all material respects, the financial position of Juno Lighting, Inc. and its subsidiaries at November 30, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended November 30, 2002, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
As disclosed in Note 1 to the financial statements, the Company changed the manner in which it accounts for goodwill and other intangible assets upon the adoption of Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets" on December 1, 2001.
PricewaterhouseCoopers LLP
Chicago, Illinois
January 10, 2003
CONSOLIDATED STATEMENTS OF INCOME
See notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
Return to Index
CONSOLIDATED BALANCE SHEETS
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
See notes to consolidated financial statements.
Return to Index
CONSOLIDATED STATEMENTS OF CASH FLOW
See notes to consolidated financial statements.
Return to Index
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Juno Lighting, Inc.
Note 1: Summary of Significant Accounting Policies
Nature of the Business Juno Lighting, Inc. (the "Company") is a leader in the design, manufacture and marketing of lighting fixtures for commercial and residential use primarily in the United States.
Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All material intercompany accounts and transactions have been eliminated.
Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition Revenues from sales are recognized at the time goods are shipped when title and risk of loss passes to the customer.
Inventories Inventories are valued at the lower of cost (first-in, first-out) or market.
Property and Equipment Property and equipment are stated at cost. Depreciation is computed over estimated useful lives using the straight-line method for financial reporting purposes and accelerated methods for income tax reporting. Depreciation expense in 2002, 2001, and 2000 amounted to approximately $4,483,000, $4,462,000, and $4,774,000 respectively.
Useful lives for property and equipment are as follows:
Goodwill The Company adopted SFAS 142 "Goodwill and Other Intangibles" during 2002. Management conducted a review of the estimated fair market value of its business segment, using discounted cash flow techniques. Based on management's review, no goodwill impairment was recorded for the year ended November 30, 2002. Furthermore, the Company has not amortized any of its goodwill for the year ended November 30, 2002. Had SFAS 142 been in effect for fiscal 2001 and 2000, the net income (loss) attributable to common shareholders and earnings per share attributable to common shareholders for the three years ending November 30, 2002 would have been as follows:
Income Taxes The Company uses the asset and liability approach under which deferred taxes are provided for temporary differences between the financial reporting and income tax bases of assets and liabilities based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.
Research and Development The Company spent approximately $4,840,000, $4,973,000 and $4,696,000 on research, development and testing of new products and development of related tooling in fiscal 2002, 2001 and 2000, respectively.
Foreign Currency Translation The financial statements of the Company's Canadian subsidiary have been translated using local currency as the functional currency.
Net Income Per Share Basic net income per share is computed based upon weighted average number of shares of common stock. Diluted earnings per share is computed based on the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. The effects of convertible Preferred Stock have been excluded from dilutive earnings per share in the periods presented because the impact would be antidilutive. Share and per share information have been adjusted for all stock splits.
Stock-based Compensation As permitted by Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), the Company has elected to continue to account for its stock-based awards in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and has provided the pro forma disclosures as required by SFAS 123 for the years ended November 30, 2002, 2001 and 2000.
Derivative Instruments Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. The Company entered into two interest rate swap agreements in fiscal 2001 (notional amounts of $30,000,000 pay-fixed rate swap and $60,000,000 pay-floating rate swap), which resulted in a net unrealized gain of $418,000 for the year ended November 30, 2002 and a net expense of $472,000 for the year ended November 30, 2001, based on the swaps' estimated market values as of November 30, 2002, and 2001, respectively. These derivatives do not qualify for hedge accounting. Accordingly, the net impact was recorded as other income/expense on the consolidated statements of income for fiscal 2002 and 2001. The Company also realized a gain of $1,549,000 for the fiscal year ended November 30, 2002 as a result of exiting an interest rate swap transaction. The Company entered into these agreements to reduce the risk of adverse changes in variable interest rates on certain of the long-term debt. These derivative instruments will be adjusted to estimated market values quarterly with any adjustment impacting current earnings until their respective maturities.
Recently Issued Accounting Standards In June 2001, the FASB issued SFAS 142, "Goodwill and Other Intangible Assets". This standard addresses the accounting for goodwill and other intangible assets that have historically been subject to annual amortization over their estimated useful lives. The Company has adopted this standard (see Note 1).
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment of Disposal of Long-Lived Assets," effective for years beginning after December 15, 2001. Under the new rules, the accounting and reporting for the impairment and disposal of long-lived assets have been superseded from SFAS No. 121 and APB No. 30. Also, ARB No. 51 has been amended to eliminate the exception for consolidation of a temporary subsidiary. Effective November 30, 2002, the Company adopted SFAS No. 144, which did not have an effect on the financial statements of the Company.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activites, " effective for exit or disposal activities initiated after December 31, 2002. Under the new rules, EITF, 94-3 has been nullified and now costs associated with an exit or disposal activity will be recognized when the liability is incurred rather than when the entity committed to an exit plan. Effective November 30, 2002, the Company adopted SFAS No. 146, which did not have an effect on the financial statements of the Company.
Note 2: Merger and Recapitalization
On June 30, 1999, Jupiter Acquisition Corp. ("Merger Sub"), a Delaware corporation and a wholly-owned subsidiary of Fremont Investors I, LLC ("Fremont Investors"), was merged (the "Merger") with and into the Company pursuant to an Agreement and Plan of Recapitalization and Merger dated March 26, 1999 (the "Merger Agreement") by and among Merger Sub, the Company and Fremont Investors. Pursuant to the Merger, the holders of all the issued and outstanding shares of Juno common stock, $.01 par value per share, were entitled to receive either $25 cash or one share of Juno common stock, $.001 par value per share, for each share of common stock issued and outstanding; provided that this consideration was subject to proration, as such holders were entitled to receive an aggregate of 2,400,000 shares of Juno common stock. The Company funded this effective retirement of 16,242,527 shares of the Company's common stock with a payment to stockholders in the aggregate of approximately $406 million. The sources of this funding included the Company's available cash and marketable securities, a $106 million preferred stock investment by Fremont and key employees of Juno ("Preferred Stock"), approximately $94.9 million of bank debt ("Bank Debt") and the issuance of $125 million of subordinated debt ("Subordinated Debt"). In connection with the Merger, the Company incurred approximately $9.9 million in transaction costs and $10.2 million of deferred financing costs. Included in these costs were payments of approximately $4.9 million to Fremont Investors.
Note 3: Acquisition
In October 2002, the Company purchased all of the outstanding stock of Alfa Lighting, Inc., a manufacturer and marketer of low voltage lighting systems for $7,200,000. The Company performed an analysis of the purchase price and determined that there were no identifiable intangibles. As a result the purchase price was allocated to working capital of $2,750,000 and goodwill of $4,450,000. The purchase agreement calls for an additional purchase price that is contingent upon Alfa Lighting, Inc. attaining certain operating objectives. The additional purchase price is payable at the end of the first twenty-four months after the acquisition date if the objectives are met.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.
The purchase price and its allocation is subject to change pending final determination of certain acquired balances, however, management does not believe such changes will be significant.
Note 4: Inventories
Inventories consist of the following:
Work in process inventories are not significant in amount and are included in finished goods.
Note 5: Accrued Liabilities
Accrued liabilities consist of the following:
Note 6: Long-Term Debt
Long-term debt consists of the following:
The Company has a senior credit facility (the "Senior Credit Facility") with Bank of America, N.A., Credit Suisse First Boston and certain other lenders providing (i) a $90 million term facility consisting of a (a) $40 million tranche A term loan ("Term Loan A"), and (b) $50 million tranche B term loan ("Term Loan B"), and (ii) a $35 million revolving credit facility (the "Revolving Credit Facility"). Borrowings under the Senior Credit Facility bear interest, at the Company's option, at a rate per annum equal to either the Eurodollar rate (the London interbank offered rate for eurodollar deposits as adjusted for statutory reserve requirements) or a base rate plus variable applicable percentages. At November 30, 2002, the nominal interest rates for Term Loan A and Term Loan B were 3.88% and 4.38%, respectively. Term Loan A and Term Loan B are each payable in separate quarterly installments. The final maturity of Term Loan A is November 30, 2005 and the final maturity of Term Loan B is November 30, 2006.
Amounts outstanding under the Revolving Credit Facility at November 30, 2002 and November 30, 2001 were $6,050,000 and $5,350,000 respectively. At November 30, 2002, the nominal interest rate for borrowing on the Revolving Credit Facility was 4.3%. Borrowings under the Revolving Credit Facility are due on November 30, 2005. In addition, the Company issued $125 million principal amount of 11-7/8% senior subordinated notes due July 1, 2009 (the "Notes") to qualified institutional buyers under a private placement offering pursuant to Rule 144A and Regulation S of the Securities Act of 1933, which notes were then exchanged for new notes registered under the Securities Act of 1933 with substantially identical economic terms, resulting in approximately $120.4 million in proceeds to the Company. Interest is payable on the Notes semi- annually on January 1 and July 1 of each year. The Notes are unsecured senior subordinated obligations of the Company, subordinated in right of payment to all existing and future senior indebtedness of the Company, including the Senior Credit Facility. Each of the aforementioned debt facilities contain restrictive covenants. The credit agreement related to the Senior Credit Facility including the Revolving Credit Facility (the "Secured Credit Agreement") requires the Company to maintain certain financial ratios, as defined therein.
Relating to the Senior Credit Facility and the Notes, the Company incurred approximately $3.9 million and $6.3 million of financing fees, respectively, which are being amortized over the life of the related debt.
The Senior Credit Facility is collateralized by substantially all of the assets of the Company and its domestic subsidiaries as more particularly described in the Secured Credit Agreement dated June 29, 1999,including all applicable amendments. The aggregate amounts of existing long-term debt maturing in each of the next five years are as follows: 2003 - $4,681,000; 2004 - $3,929,000; 2005 - $4,851,000; 2006 - $22,540,000.
Note 7: Taxes On Income
Provisions for federal and state income taxes in the consolidated statements of income are comprised of the following:
Deferred tax assets (liabilities) are comprised of the following:
The following summary reconciles taxes at the federal statutory tax rate to the Company's effective tax rate:
Note 8: Stock Based Compensation Plans
The Company maintains two stock-based compensation programs: a stock option plan and a stock purchase plan. Prior to June 30, 1999, stock options were issued under the 1993 Stock Option Plan. The 1993 Stock Option Plan ("the 1993 Plan") provided for the granting of stock options or stock appreciation rights ("SAR") to certain key employees, including officers. Under the 1993 Plan, up to 600,000 shares of the Company's common stock may be issued upon exercise of stock options, and SARs may be granted with respect to up to 600,000 shares of the Company's common stock. At November 30, 2002, remaining options outstanding under the 1993 Plan totaled 167,500. The Company's 1999 Stock Award and Incentive Plan (the "1999 Plan") provides for the granting of stock options or stock appreciation rights ("SAR") to certain key employees, including officers, directors (including non-employee directors), and independent contractors. The stock option plan provides for the grant of "incentive stock options" or "non-qualified stock options" as defined in Section 422 of the Internal Revenue Code as amended. Under the 1999 Plan, up to 940,000 shares of the Company's common stock may be issued upon the exercise of stock options, and SARs may be granted with respect to up to 940,000 shares of the Company's common stock. At November 30, 2002, a total of 62,095 shares were available for grant under the 1999 Plan. The per-share option price for options granted under the stock option plan may not be less than 100% of the fair market value of the Company's common stock on the date of grant.
The Company's stock purchase plan allows employees to purchase shares of the Company's common stock through payroll deductions over a twelve-month period. The purchase price is equal to 85 percent of the fair market value of the common stock on either the first or last day of the accumulation period, whichever is lower. Purchases under the stock purchase plan are limited to the lesser of $5,000 or 10% of an employees base salary. In connection with the Company's stock purchase plan, 400,000 shares of common stock are authorized for issuance of which 268,517 remain available for issuance as of November 30, 2002. Under this stock purchase plan, 29,145 shares of common stock were issued at $8.08 per share in fiscal 2002.
A summary of activity under the Company's stock option plan is as follows:
A summary of outstanding and exercisable stock options as of November 30, 2002, is as follows:
As permitted under SFAS 123, the Company has elected to continue
to follow APB Opinion No. 25 in accounting for stock-based awards.
Pro forma information regarding net income and earnings per share is required by SFAS 123 for stock-based awards granted after November 30, 1995, as if the Company had accounted for its stock-based awards under the fair value method of SFAS 123. The fair value of the Company's stock-based awards was estimated as of the date of grant using the Black-Scholes option pricing model.
The weighted average estimated grant date fair value, as defined by SFAS 123, for options granted to employees during fiscal 2002, 2001 and 2000 was $1.86, $1.03 and $.86 per share, respectively, under the Company's Stock Option Plan and $3.26, $2.84 and $3.92, respectively, under the Company's Stock Purchase Plan. The fair value of the Company's stock-based awards was estimated assuming the following weighted average assumptions:
Had the Company recorded compensation based on the estimated grant date fair value, as defined by SFAS 123, for awards granted under its stock-based compensation plans, the Company's net (loss) income available to common shareholders and net (loss) income per share would have been reduced, or increased, to the pro forma amounts below for the years ended November 30, 2002, 2001 and 2000:
Note 9: Profit Sharing Plan
The Company has a profit sharing plan pursuant to Section 401(k) of the Internal Revenue Code, whereby participants may contribute a percentage of compensation, but not in excess of the maximum allowed under the Code. As of January 1, 2002, the Company amended the plan to satisfy the 401(k) safe-harbor requirements by increasing the Company matching contribution to 4%. The matching contribution provided by the Company amounted to approximately $669,000, $257,000 and $244,000 in 2002, 2001, and 2000 respectively. In addition, the Company may make additional contributions at the discretion of the Board of Directors. The Board authorized an additional contribution of $531,000 for fiscal 2002, $860,000 for fiscal 2001 and $888,000 for fiscal 2000.
Note 10: Series A and Series B Preferred Stock On June 30, 1999, the Company issued 1,060,000 shares of Series A convertible preferred stock ("Series A") to Fremont Investors and certain employees of the Company. On November 30, 2000, the Company issued 3,500 shares of Series B convertible preferred stock ("Series B", and together with the Series A, the "Preferred Stock") to the Company's Chief Executive Officer. Holders of the Preferred Stock are entitled to receive cumulative quarterly dividends, whether or not declared by the Board of Directors, in an amount equal to the greater of:
-
dividends which would have been payable to the holders of Series A or Series B, as the
case may be, in such quarter had they converted their Preferred stock into Juno common
stock prior to the record date of dividends declared on the common stock in such quarter, or
-
the stated amount then in effect multiplied by 2%.
Through June 30, 2004, the dividends for the Series A will be payable by an increase in the stated amount of such stock, and through November 30, 2005, the dividends for the Series B will be payable by an increase in the stated amount of such stock. After June 30, 2004, the dividends on the Series A will be paid in cash until redemption or conversion, and after November 30, 2005, the dividends on the Series B will be paid in cash until redemption or conversion. The Preferred Stock is convertible into shares of the Company's common stock at a rate of $26.25 per share. Holders of Preferred Stock are entitled to one vote for each whole share of common stock that would be issuable to such holder upon the conversion of all the shares of the Preferred Stock held by such holder on the record date for the determination of stockholders entitled to vote. Additionally, holders of Preferred Stock have preference to common stockholders in the event of liquidation, dissolution, winding up or sale of the Company.
Note 11: Business Segments and Geographical Information The Company operates in one product segment - the design, manufacture and marketing of lighting fixtures. The aggregation criteria for sales are based on point of shipment while the aggregation criteria for assets are based on their physical location.
Financial information by geographic area is as follows:
Note 12: Commitments and Contingencies
Total minimum rentals under noncancelable operating leases for distribution warehouse space and equipment at November 30, 2002 are as follows:
Total rent expense charged to operations amounted to approximately $1,190,000, $911,000, and $994,000 for the years ended November 30, 2002, 2001 and 2000, respectively.
In the ordinary course of business, there are various claims and lawsuits brought by or against the Company. In the opinion of management, the ultimate outcome of these matters will not materially affect the Company's operations or financial position.
Note 13: Certain Relationships and Related Transactions Mr. Michael M. Froy, a Director of the Company since September 2000, is a partner of the law firm of Sonnenschein Nath & Rosenthal, which billed the Company an aggregate of $720,880 for legal services provided to the Company for the fiscal year ended November 30, 2002.
The Company and Fremont Partners L.L.C., a shareholder of the Company, entered into a management services agreement at the effective time of the Merger, pursuant to which agreement Fremont Partners L.L.C. renders certain management services in connection with the Company's business operations, including strategic planning, finance, tax and accounting services. Juno pays Fremont Partners L.L.C. an annual management fee of $325,000 to render such services. In addition, the Company engaged Fremont Partners III, LLC, an affiliate of Fremont Partners L.L.C, in fiscal 2002 to provide financial advisory services to the Company in connection with a proposed major acquisition, for which the Company paid approximately $337,000.
Note 14: Guarantors' Financial Information The Company has issued and registered $125 million of Series B Senior Subordinated Notes at 11-7/8% (the "Senior Subordinated Notes") under the Securities Act of 1933, as amended (the "Act"). Pursuant to the registration and issuance of the Senior Subordinated Notes under the Act, the Company's domestic subsidiaries, Juno Manufacturing, Inc., Alfa Lighting, Inc. and Indy Lighting, Inc. will provide full and unconditional senior subordinated guarantees for the Senior Subordinated Notes on a joint and several basis.
Following is consolidating condensed financial information pertaining to the Company ("Parent") and its subsidiary guarantors and subsidiary non-guarantors.
Note 15: Selected Quarterly Financial Data (Unaudited)
A summary of selected quarterly information for 2002 and 2001 is as follows:
*Due to rounding differences, the totals for the fiscal years ended November 30, 2002 and 2001 may not equal the sum of the respective items for the four quarters then ended.
Return to Index
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to the directors of the Company will be set forth in the Proxy Statement and is incorporated herein by this reference.
Information regarding the Executive Officers of the Company is set forth in Part I of this Form 10-K on pages 6 and 7.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item will be set forth in the Proxy Statement and is incorporated herein by this reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this Item will be set forth in the Proxy Statement and is incorporated herein by this reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS; CERTAIN BUSINESS RELATIONSHIPS
Mr. Jaunich is Chairman of the Board and a director of Juno Lighting. He is also President and Chief Executive Officer of Fremont Investors, a Managing Director of Fremont Partners, a member of FP Advisors, L.L.C. ("FP Advisors") and a Managing Director and a member of the Fremont Group. Mr. Williamson is a director of Juno Lighting, and is also Vice President and Treasurer of Fremont Investors, a Managing Director of Fremont Partners and a member of FP Advisors. As a result of the Merger, Fremont Investors obtained control of the Company in June 1999.
Mr. Froy is a partner of the law firm of Sonnenschein Nath & Rosenthal, which provided legal services to the Company in fiscal 2002.
The Company and Fremont Partners L.L.C., a shareholder of the Company and an affiliate of Fremont Investors, Fremont Partners and FP Advisors (collectively, the "Fremont Entities"), entered into a management services agreement at the effective time of the Merger, pursuant to which agreement Fremont Partners L.L.C. renders certain management services in connection with the Company's business operations, including strategic planning, finance, tax and accounting services. Juno pays Fremont Partners L.L.C. an annual management fee of $325,000 to render such services. In addition, the Company engaged Fremont Partners III, LLC, an affiliate of the Fremont Entities, in fiscal 2002 to provide financial advisory services to the Company in connection with a proposed major acquisition, for which the Company paid approximately $337,000.
INDEBTEDNESS OF MANAGEMENT
In connection with the purchase by Mr. Bilbrough, Juno's President and Chief Executive Officer, of shares of the Company's common stock, the Company made a loan to him in the principal amount of $199,968.33. All of the proceeds of this loan were used to pay a portion of the purchase price of the shares. Subject to certain terms and conditions, Mr. Bilbrough will not owe any interest on this debt on or before May 22, 2010 and will owe 18% per annum thereafter on any remaining balance. As of November 30, 2002, the outstanding balance of Mr. Bilbrough's debt was $199,968.33.
ITEM 14.
ITEM 14. CONTROLS AND PROCEDURES
(a) Under the supervision and with the participation of the Company's management, including the Company's principal executive officer and principal financial officer, the Company conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-14(c) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), within 90 days of the filing date of this report. Based on their evaluation, the Company's principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures are effective.
(b) There have been no significant changes (including corrective actions with regard to significant deficiencies or material weaknesses) in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referenced in paragraph (a) above.
PART IV
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
Report of Independent Accountants on
Financial Statement Schedule
To the Board of Directors
of Juno Lighting, Inc.
Our audits of the consolidated financial statements of Juno Lighting, Inc. referred to in our report dated January 10, 2003, appearing on page 14 of this 2002 Annual Report on Form 10-K, also included an audit of the Financial Statement Schedule listed in Item 15(a)(2). In our opinion, the Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Chicago, Illinois
January 10, 2003
CERTIFICATIONS
I, T. Tracy Bilbrough, certify that:
1. I have reviewed this annual report on Form 10-K of Juno lighting, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: February 27, 2003
/s/ T. Tracy Bilbrough
T. Tracy Bilbrough
Chief Executive Officer
CERTIFICATIONS
I, George J. Bilek, certify that:
1. I have reviewed this annual report on Form 10-K of Juno lighting, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: February 27, 2003
/s/ George J. Bilek
George J. Bilek
Vice President, Finance
(Principal Financial Officer)
JUNO LIGHTING, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Return to Index
Exhibit 11.1
JUNO LIGHTING, INC. AND SUBSIDIARIES
COMPUTATIONS OF NET INCOME (LOSS) PER COMMON SHARE
Exhibit 21.1
SUBSIDIARIES OF JUNO LIGHTING, INC.
Exhibit 23.1
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-93659) of Juno Lighting, Inc. of our report dated January 10, 2003, relating to the financial statements, which appears in the Annual Report, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated January 10, 2003 relating to the Financial Statement Schedule, which appears in this Form 10-K.
PricewaterhouseCoopers LLP
Chicago, Illinois
February 27, 2003
Exhibit 99.1
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
I, T. Tracy Bilbrough, Chief Executive Officer of Juno Lighting, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The annual report on Form 10-K for the year ended November 30, 2002, as filed with the Securities and Exchange Commission on February 27, 2003 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Juno Lighting, Inc.
Dated: February 27, 2003
/s/ T. TRACY BILBROUGH
T. Tracy Bilbrough
Chief Executive Officer
Exhibit 99.2
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
I, George J. Bilek, Vice President, Finance of Juno Lighting, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The annual report on Form 10-K for the year ended November 30, 2002, as filed with the Securities and Exchange Commission on February 27, 2003 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Juno Lighting, Inc.
Dated: February 27, 2003
/s/ GEORGE J. BILEK
George J. Bilek
Vice President, Finance
(Principal Financial Officer)
PART I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7a. Quantitative and Qualitative Disclosures about Market Risk
Report of Independent Accountants
Consolidated Statements of Income for the three years ended November 30, 2001
Consolidated Balance Sheets at November 30, 2001 and 2000
Consolidated Statements of Stockholders' Equity (Deficit) for the three years ended November 30, 2001
Consolidated Statements of Cash Flows for the three years ended November 30, 2001
Notes to Consolidated Financial Statements
Selected Quarterly Financial Data (Unaudited)
Item 9. Changes in and Disagreements on Accounting and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13 Certain Relationships and Related Transactions
Item 14 Controls and Procedures
Part IV
Item 15 Exhibits, Financial Statement Schedules and Reports on Form 8-K
Valuation and Qualifying Accounts for the three years ended November 30, 2001
Signatures
Certifications
Exhibit 99.1
Exhibit 99.2
Back to top