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.
During 1994, the Company divested the three remaining disassociated operating units that manufactured commercial construction hardware and consumer fireplaces and fireplace accessory products. These operations were insignificant, both individually and in the aggregate, to the Company.
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.
ITEM 1. (Continued)
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, Premier, 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, Premier, 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, Premier, 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 67 percent of the Company's sales in 1994, compared to 66 percent in 1993 and 68 percent in 1992.
Compressors and Vacuum Pumps Segment
This Segment includes air compressors and vacuum pumps manufactured under the Thomas name 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, and waste disposal equipment. Thomas is the major compressor and vacuum pump participant in the medical OEM industry
ITEM 1. (Continued)
worldwide. The Company offers a wide selection of branded 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, building supply dealers, and mass merchandisers.
The Pneumotive Division manufactures rotary vane and piston compressors and vacuum pumps, as well as air motors and vacuum ejectors, for a variety of applications to the OEM market as well as through fluid power and large compressor distributors.
The Brey Division produces a complementary line of rotary vane compressors and vacuum pumps, with expertise in applications of less than 1/8 horsepower. These products are currently distributed for sale primarily in Europe, with increasing worldwide marketing.
Under the ASF name, the Company produces diaphragm and peristaltic compressors and vacuum pumps with applications in photography, medical, air and gas sampling, and dish washing equipment, as well as laboratory instruments and leak detection devices. These products are marketed worldwide to original equipment manufacturers.
WISA produces a line of linear-type vibrating and diaphragm compressors and vacuum pumps for various applications, the foremost of which is gas analyzers. Sales and distribution are made primarily in Europe and the U.S., with expanding availability worldwide.
The Thomas, ASF, Pneumotive, Brey, WISA, 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 1994, compared to 29 percent in 1993 and 26 percent in 1992.
Other Products
These products, on a combined basis, accounted for 1 percent of the Company's sales in 1994, compared to 5 percent in 1993 and 6 percent in 1992. ---------------------
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 1994, 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, 1994--48 percent Lighting and 52 percent Compressors and Vacuum Pumps--and
ITEM 1. (Continued)
$86 million at December 31, 1993--56 percent Lighting, 43 percent Compressors and Vacuum Pumps, and 1 percent Other. 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 1994, the Company spent $12.7 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 1993, the Company spent $12.4 million on these activities and during 1992, $12.5 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 3,200 people.
ITEM 1. (Continued)
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 1994 Annual Report to Shareholders, for financial information about foreign and domestic operations. Export sales for the years 1994, 1993, and 1992, were $36,600,000, $34,500,000, and $32,800,000, 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 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 1994 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 "11-Year Summary of Operations and Statistics," which information is contained in the Company's 1994 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 1994 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 1994 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 1994 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
None
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 20, 1995, under the headings "Election of Directors" and "Compliance with
ITEM 10. (Continued)
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 20, 1995, 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 20, 1995, 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 20, 1995, 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 1994 Annual Report to Shareholders are included in Part II, Item 8:
Consolidated Balance Sheets--December 31, 1994 and 1993 Consolidated Statements of Income--Years ended December 31, 1994, 1993, and 1992 Consolidated Statements of Shareholders' Equity--Years ended December 31, 1994, 1993, and 1992 Consolidated Statements of Cash Flows--Years ended December 31, 1994, 1993, and 1992 Notes to Consolidated Financial Statements--December 31, 1994 11-Year Summary of Operations and Statistics Independent auditors report from KPMG Peat Marwick LLP Independent auditors report from Ernst & Young LLP
ITEM 14. (Continued)
(2) Financial Statement Schedules
Schedule VIII -- Valuation and Qualifying Accounts
(3) Listing of Exhibits
b. Reports on Form 8-K
There were no reports on Form 8-K for the three months ended December 31, 1994.
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.
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.
Independent Auditors' Report
The Board of Directors and Shareholders Thomas Industries Inc.
We have audited the consolidated balance sheets of Thomas Industries Inc. and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, shareholders' equity, and cash flows for the years then ended as listed in the accompanying index. In connection with our audits of the 1994 and 1993 consolidated financial statements, we also have audited the 1994 and 1993 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 1994 and 1993 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 provides a reasonable basis for our opinion.
In our opinion, the 1994 and 1993 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, 1994 and 1993, and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. Also, in our opinion, the related 1994 and 1993 financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
As discussed in Note 8 to the consolidated financial statements, the Company changed its method of accounting for postretirement benefits in 1993 to adopt the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions." As discussed in Note 4, the Company changed its method of accounting for income taxes in 1993 to adopt the provisions of SFAS No. 109, "Accounting for Income Taxes." As discussed in Note 1, the Company changed its method of accounting for certain inventories in 1993.
KPMG PEAT MARWICK LLP ---------------------- Louisville, Kentucky February 9, 1995
The Board of Directors and Shareholders Thomas Industries Inc.
We have audited the accompanying consolidated statements of income, shareholders' equity, and cash flows of Thomas Industries Inc. and subsidiaries for the year ended December 31, 1992. Our audit also included the financial statement schedule for the year ended December 31, 1992, listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of Thomas Industries Inc. and subsidiaries for the year ended December 31, 1992, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP -----------------
Louisville, Kentucky February 11, 1993
EXHIBIT INDEX