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SECURITIES AND EXCHANGE C0MMISSION
Washington, D.C. 20549
_______________________
F0RM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended November 30, 1998
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________ to __________.
Commission file number 0-11631
________________________
JUNO LIGHTING, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2852993
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
1300 S. Wolf Road
P.0. Box 5065
Des Plaines, Illinois 60017-5065
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (847) 827-9880
________________________
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
___________________ _____________________
None None
Securities registered pursuant to Section 12(g) of the Act:
2
Common Stock, par value $.01 per share
Common Share Purchase Rights
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No .
___ ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes X No .
___ ___
Aggregate market value of voting stock held by non-affiliates of the
registrant, based upon the price of the stock as reported by the National
Association of Securities Dealers Automated Quotations System, on
January 31, 1999: $398,104,142
At January 31, 1999, 18,595,327 shares of common stock were outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
1. Registrant's Proxy Statement for its 1999 Annual Meeting of
Stockholders (the "Proxy Statement"), which will be filed with the
Securities and Exchange Commission no later than 120 days after the
end of the registrant's fiscal year, is incorporated into Part III of
this Annual Report on Form l0-K, as indicated herein.
3
PART I
______
ITEM 1. BUSINESS
_________________
General Development of Business
_______________________________
Juno Lighting, Inc. began operations in 1976 and was
incorporated in Illinois. It changed its state of incorporation
to Delaware in 1983. Executive offices and principal plant are
located at 1300 S. Wolf Road, Des Plaines, Illinois 60017-5065, 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 term "Juno" as used
herein means Juno Lighting, Inc.; the term "Company" as used
herein means Juno Lighting, Inc. and its subsidiaries,
collectively.
Juno is a specialist in the design, manufacture and
marketing of a full line of recessed and track lighting fixtures
for use in new construction and remodeling of commercial,
institutional and residential buildings. Juno's principal
products use incandescent, high intensity discharge and
fluorescent light sources and are designed for attractive
appearance, reliable and flexible function, efficient operation
and simple installation and servicing. Through Indy Lighting,
Inc. ("Indy"), a wholly-owned subsidiary of Juno, 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. New product development is of prime importance to
the Company and the Company has been innovative and responsive to
its customers' needs both in the styling and technical
development of its products.
Approximately 93% of the Company's sales in fiscal 1998 were
in the United States and most of the balance in Canada. The
Company's sales are made primarily to electrical distributors, as
well as to certain wholesale lighting outlets.
The Company's products are marketed primarily to
distributors who resell the products for use in new residential,
commercial and institutional construction and in remodeling
existing structures. The Company therefore cannot determine with
any precision the percentage of its revenues derived from sales
of products installed in each type of building nor can it
determine the percentage of its products sold for new
construction as compared to remodeling. The Company's sales,
like those of the lighting fixture industry in general, are
partly dependent on levels of activity in new construction and
4
remodeling. No assurances can be given that historic levels of
activity will increase or be maintained.
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 type 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. Juno has designed recessed lighting fixtures, sold
under the Sloped Ceiling Down-Lights name, that provide lighting
perpendicular to a floor from a sloped ceiling. Juno 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.
Juno's principal track lighting system, sold under the
Trac-Master name, is made up of an electrified extruded aluminum
channel (called the trac) 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. Juno also has a line of track
lighting produced under the name of Vector by Juno 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 Juno
trac 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 provides higher lumens per watt than
standard incandescent light sources. Juno also manufactures and distributes
Trac-Sign (patent pending) which is a line of flexible, internally
illuminated sign products that work in conjunction with its existing
track system. The product consists
5
of an aluminum enclosure which utilizes a fluorescent light
source and permits the end-user to easily and economically
display and light advertising material in the form of standard-size
transparencies.
Juno also produces and markets a line of miniature trac
lighting products under the name Trac 12. This is a low voltage
trac lighting system featuring small individual fixtures and a
miniature lamp holder used in linear lighting applications.
Pursuant to an acquisition, several years ago Juno began
manufacturing and selling a line of fixtures used in show case
lighting applications under the name Danalite. This linear
configuration which uses low voltage and fluorescent light
sources is used in show cases as well as other merchandise
display cases and certain other commercial and residential accent
lighting applications. The products are made utilizing aluminum
extruded channels in various lengths and finishes. These
products primarily utilize miniature 12 volt halogen light
sources with hinged sockets so that the process of changing the
light source can be done easily.
Advanced Fiberoptic Technologies, Inc., a wholly-owned
subsidiary of Juno, is a designer and manufacturer of a system of
fiberoptic lighting products. This system consists of an
illuminator, which uses either halogen or high intensity
discharge light sources, fiberoptic cable and in some cases
fixtures. The electrically powered illuminator generates the
light and transfers it into the ends of the optical fiber. The
principal advantage of fiberoptic lighting is that it provides
light at the application level free of heat and ultraviolet
light.
Juno produces a line of energy efficient Exit and Emergency
lighting products that are electronically powered and protected.
This product line uses LED (light emitting diode) technology for
its light source.
Indy produces a wide variety of commercial lighting fixture
products for use primarily in department and chain stores. These
products use incandescent, fluorescent, high intensity discharge
and compact fluorescent light sources to provide specialty and
general purpose lighting.
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 and Air-Loc are
registered trademarks of Juno.
6
Production
__________
Substantially all of the Company's products are designed and
engineered by its staff. 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. Nevertheless, the
Company inspects the components and assembles, tests, packages,
stores and ships the finished products. Most assembly operations
are performed at the Des Plaines plant and at Indy's Indianapolis
assembly facilities.
The Company believes that utilization of sub-contractors
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.
The Company spent approximately $4,095,000, $4,719,000, and
$4,309,000 on research, development and testing of new products
and development of related tooling in fiscal 1998, 1997, and 1996,
respectively.
Sales and Distribution
______________________
The Company sells directly to distributors of lighting
products, located throughout the United States and in Canada.
Each of Juno's distributors maintains its own inventory of Juno
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 all items Juno produces are maintained at the
Des Plaines plant and substantially all items are maintained in the
Company's warehouses in the Atlanta, Dallas, Los Angeles, Philadelphia
and Toronto areas. Inventories of Indy's products are maintained at
Indy's Indianapolis facilities. Most orders are shipped from
stock inventory within 48 hours of receipt.
Indy sells its products primarily to the commercial
construction industry. Indy's products are generally shipped
from the factory directly to the job site.
7
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 1998.
Competition
___________
There are no published figures that identify the overall
market for the Company's products. Nevertheless, the Company
believes that Juno's sales place Juno among the five
highest-selling manufacturers of track and recessed lighting
products in the United States, but that two competitors have
substantially larger sales. Since the Company introduced its
line of Exit and Emergency lighting products in fiscal 1996,
management believes that its share of this market has been
insignificant. The Company estimates that there are more than
fifty manufacturers of competing track, recessed and exit and
emergency lighting products. The Company competes not only with
manufacturers in its own fields, but also with manufacturers of a
variety of fluorescent, high intensity discharge, exit and
emergency 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 Juno's 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.
Although the Company believes that it holds certain valuable
patents, the Company does not believe that any one patent is
material to its business, taken as a whole.
Employees
_________
The Company employs approximately 1,065 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 1999 and September
2001, respectively.
8
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 which have, in the aggregate, approximately
140,700 square feet of floor space and owns a 130,000 square foot
assembly and general office facility in Indianapolis, Indiana for
its Indy Lighting, Inc. subsidiary. The Company leases two
additional distribution warehouses for relatively short terms
which have, in the aggregate, approximately 108,000 square feet
of floor space. These warehouse leases call for an aggregate
annual rental of approximately $440,000. The Company's
facilities are modern, considered adequate for its business as
presently conducted and experience varying levels of utilization.
ITEM 3. LEGAL PROCEEDINGS
__________________________
On September 8, 1997, Juno Lighting, Inc. ("Juno") was
served with a complaint for patent infringement alleged by Mr.
Ole K. Nilssen (Case No. 97 C 4624 in the United States District
Court for the Northern District of Illinois). In this complaint,
Mr. Nilssen alleges that Juno has infringed seven of Mr.
Nilssen's patents and seeks a permanent injunction against Juno's
sale of products utilizing the inventions claimed by such patents
and unspecified monetary damages including a request for treble
damages. These patents relate variously to low-voltage, high
frequency power supplies for lighting systems and to so-called
track lighting systems incorporating such low-voltage high
frequency power supplies. Juno has filed an answer and
counterclaim denying the allegations of the complaint and
asserting a number of affirmative defenses and prayers for
declaratory relief.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
____________________________________________________________
None.
9
Executive Officers Of The Registrant
____________________________________
The following table gives certain information with respect
to the Executive Officers of the Company as of January 31, 1999:
Name Age Positions Held
____ ___ ______________
Robert S. Fremont 74 Chairman of the Board,
Chief Executive Officer and Director
Glenn R. Bordfeld 52 President, Chief Operating Officer
Joel W. Chemers 61 Vice President, Corporate Planning
Thomas W. Tomsovic 57 Vice President, Operations and
Director
George J. Bilek 44 Vice President, Finance and Treasurer
Charles F. Huber 57 Vice President, Corporate Development
Scott L. Roos 41 Vice President, Product Management
& Development
There are no family relationships among the above
officers, nor an arrangement or understanding between any
officer and any other person pursuant to which the officer was
elected. None of the officers has been involved in any legal
proceedings of the nature described in Item 401(f) of
Regulation S-K. All officers were last elected to their
present positions with Juno on April 28, 1998. The term of
each officer of Juno expires at the meeting of the Board of
Directors on the date of the 1999 Annual Meeting of the
Stockholders.
Robert S. Fremont founded the Company in 1976, has been a
Director since 1976 and was its President through November 30,
1994. Mr. Fremont has been Chairman of the Board and Chief
Executive Officer since December 1, 1994. Mr. Fremont was
Treasurer of the Company from 1976 to April, 1990.
Glenn R. Bordfeld has been President, Chief Operating
Officer since January 19, 1999. 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.
Joel W. Chemers has been Vice President, Corporate
Planning since January 19, 1999. He was Director, Corporate
Planning from October, 1997 to January, 1999. From March,
1996 to October, 1997 he was Executive Vice President and
Chief Operating Officer of Tisma Machinery, a designer and
builder of automatic cartoning machinery. From 1993 through
March, 1996 he was Managing Director, Midwest Region for
Starshak & Associates, a consulting firm to underperforming
companies.
10
Thomas W. Tomsovic has been employed by the Company since
its founding in 1976. He was elected Vice President,
Manufacturing in July, 1983 and Vice President, Operations in
June, 1986. Mr. Tomsovic has been a Director since June,
1986.
George J. Bilek has been Vice President, Finance and
Treasurer since April, 1990. He was employed by the Company
as its Comptroller from September, 1985 to April, 1990.
Charles F. Huber has been Vice President, Corporate
Development since December, 1992. 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.
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.
PART II
_______
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
_________________________________________________________
STOCKHOLDER MATTERS
___________________
Common Stock and Dividend Information
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.
As of January 31, 1999 there were 397 holders of record of
Common Stock, at least 300 of which own 100 or more shares.
Fiscal 1998 Fiscal 1997
------------------------ ------------------------
Dividends Dividends
High Low Per Share High Low Per Share
---- --- --------- ---- --- ---------
First Quarter 21-3/8 15-3/4 $.09 16-7/8 14-1/2 $.08
Second Quarter 22-3/4 19-1/2 .09 17-1/8 14-1/2 .08
Third Quarter 24-1/4 18-1/2 .09 17-1/2 14-7/8 .08
Fourth Quarter 25 18-1/4 .09 19-5/8 14-3/4 .08
11
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
FINANCIAL HIGHLIGHTS
(in thousands except per share amounts)
Year ended November 30, 1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Net Sales $160,941 $139,855 $131,479 $126,364 $126,777
Gross Profit $ 81,059 $ 67,974 $ 63,160 $ 61,279 $ 65,549
Net income $ 26,625 $ 20,303 $ 19,897 $ 19,974 $ 22,907
Percent of net income to
net sales 16.5% 14.5% 15.1% 15.8% 18.1%
Net income per common share
Basic $1.43 $1.10 $1.08 $1.08 $1.24
Diluted $1.43 $1.10 $1.08 $1.08 $1.23
Cash dividends per common
share $ .36 $ .32 $ .32 $ .30 $.26
Total Assets $208,839 $187,389 $178,181 $160,089 $145,756
Long - Term Debt $ 3,265 $ 3,385 $ 4,433 $ 5,976 $ 6,404
Stockholders' Equity $191,448 $170,630 $155,661 $141,368 $126,748
Stockholders' Equity per
common share $10.30 $9.19 $8.41 $7.66 $6.87
Working Capital $133,409 $110,876 $104,465 $102,294 $ 89,451
Current Ratio 11.5 to 1 10.5 to 1 7.5 to 1 10.6 to 1 9.5 to 1
12
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 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 1998 Compared to Fiscal 1997.
For the fiscal year ended November 30, 1998, net sales increased approximately
$21,086,000 or 15.1% to $160,941,000 from $139,855,000 for the like period in
1997. This increase is due primarily to an overall increase in demand from
improving economic conditions and is represented by growth across
substantially all product lines and markets. Sales through Juno's Canadian
subsidiary increased 8.4% to $9,290,000 for the year ended November 30, 1998
compared to $8,571,000 for the like period in 1997.
Gross profit expressed as a percentage of sales increased to 50.4% in fiscal
1998 compared to 48.6% in fiscal 1997 due to increased productivity, stable raw
material costs and benefits from the redesign and retooling of high volume
parts.
Selling, general and administrative expenses as a percentage of sales
decreased to 27.4% in fiscal 1998 compared to 29.0% in fiscal 1997 due primarily
to economies of scale associated with the sales increase. In addition, Juno
incurred one-time charges in fiscal 1997 of approximately $700,000 to repair
defective components in certain exit and emergency lighting fixtures and
approximately $300,000 for the Company's move to its new factory and corporate
office facilities in 1997.
The effective income tax rate for fiscal 1998 increased slightly to 35.5%
compared to 35.3% for fiscal 1997. Since the Company's investment portfolio
consists largely of municipal bonds, the interest earned is substantially tax
exempt. Therefore, in periods when operating earnings increase compared to
prior years, the relationship of tax-exempt income to total income decreases
thus producing a higher effective income tax rate.
Fiscal 1997 Compared to Fiscal 1996. For the fiscal year ended November 30,
1997, net sales increased approximately $8,376,000 or 6.4% to $139,855,000 from
$131,479,000 for the like period in 1996. This increase is due primarily to
sales of new products introduced in 1996. Sales through Juno's Canadian
subsidiary increased 11.2% to $8,571,000 for the year ended November 30, 1997
compared to $7,711,000 for the like period in 1996.
13
Gross profit expressed as a percentage of sales increased slightly to 48.6% in
fiscal 1997 compared to 48.0% in fiscal 1996 due primarily to reductions in raw
material costs and improvements in manufacturing productivity.
Selling, general and administrative expenses as a percentage of sales
increased to 29.0% in fiscal 1997 compared to 28.0% in fiscal 1996 due, in part,
to costs associated with the Company's move to its new factory and corporate
office facilities in the fourth quarter of 1997. In addition, Juno incurred
one-time charges in 1997 to effect field repairs of a defective component in
certain exit and emergency lighting fixtures. The fixtures from this product
line required the replacement of an electric component that was supplied by a
vendor.
The effective income tax rate for fiscal 1997 increased to 35.3% compared to
33.9% for fiscal 1996. Since the Company's investment portfolio consists
largely of municipal bonds, the interest earned is substantially tax exempt.
Therefore, in periods when operating earnings increase compared to prior years,
the relationship of tax-exempt income to total income decreases thus producing a
higher effective income tax rate.
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 1998 The Company generated positive cash flow from operating activities
of $22,567,000 comprised principally of net income, depreciation and
amortization, and an increase in accounts payable (collectively aggregating
$31,165,000), net of an increase in accounts receivable ($2,601,000) and an
increase in inventory ($5,408,000). Accounts receivable increased 9.1% in
support of the higher sales level compared to 1997. In order to maintain the
Company's commitment to prompt delivery of product to its customers, inventory
increased by 23.8% compared to 1997 levels. Miscellaneous other assets
decreased to $607,000 from $4,456,000 due to the sale of the building that
formerly served as the Company's principal corporate facility.
The Company used the net cash provided from operating activities to increase
its investment portfolio by $11,949,000 finance capital expenditures of
$5,293,000, and pay dividends of $6,686,000, which reflected a quarterly
dividend rate of $.09 per share.
On October 27, 1998 the Company announced the declaration of a cash dividend
of $.10 per share payable January 15, 1999 to stockholders of record December
15, 1998. This represents an 11% increase from the previous quarterly rate of
$.09 per share.
14
The Company generated additional positive cash flow of $4,605,000 from the
sale of the building that formerly served as the Company's principal corporate
office and assembly facility. This building was previously classified in
miscellaneous assets.
Fiscal 1997 The Company generated positive cash flow from operating activities
of $17,200,000 comprised principally of net income, depreciation and
amortization, and a decrease in inventory (collectively aggregating
$24,355,000), net of a decrease in accrued liabilities ($3,773,000) and an
increase in accounts receivable ($1,359,000). Miscellaneous other assets
increased to $4,456,000 from $67,000 due to the reclassification of the
Company's remaining unsold building to other assets in recognition of its status
as a non-productive asset.
The Company used the net cash provided from operating activities to finance
capital expenditures of $13,226,000, primarily for its new factory and office
facility, make principal payments on long-term debt of $1,048,000 and pay
dividends of $5,925,000, which reflected a quarterly dividend rate of $.08 per
share.
On October 22, 1997 the Company announced the declaration of a cash dividend
of $.09 per share payable January 15, 1998 to stockholders of record December
15, 1997. This represents a 13% increase from the previous quarterly rate of
$.08 per share.
The Company has completed its new factory and corporate office facility in Des
Plaines, Illinois. Final occupancy took place on October 12, 1997. The cost of
the project, including furniture and equipment, amounted to $22,470,000 and was
financed out of existing corporate funds.
The Company generated additional positive cash flow of $4,322,000 from the
sale of two of its three buildings, all of which were vacant due to the move to
the new corporate facility. The Company used these proceeds to retire an
existing Industrial Development Revenue Bond of approximately $950,000.
Fiscal 1996 The Company generated positive cash flow from operating activities
of $22,162,000 comprised principally of net income, depreciation and
amortization, and an increase in accrued liabilities (collectively aggregating
$27,365,000), net of increases in inventory ($3,692,000) and accounts receivable
($1,965,000). In order to maintain the Company's commitment to prompt delivery
of product to its customers and to support the Company's planned move to its new
facility in 1997, inventory increased by 18.9% compared to 1995 levels.
Accounts receivable increased 11.7% which approximates the increase in the sales
volume for the fourth quarter of 1996 compared to 1995. Net property and
equipment increased 32.2% and accrued liabilities increased 70.9% due primarily
to construction in process for the new facility.
The Company used the net cash provided from operating activities to finance
capital expenditures of $13,316,000, increase its investment portfolio by
$5,695,000, and pay dividends of $5,903,000, which reflected a quarterly
dividend rate of $.08 per share.
15
Other Matters The Company has been assessing its "Year 2000" readiness and
exposure to Year 2000 issues. Partly in connection with such assessment, the
Company initiated a program to upgrade its systems hardware and software. The
Company's assessment has been focused on information technology systems but has
included a review of non-information technology systems, principally imbedded
building and facility systems. The Company entered into an agreement to acquire
new enterprise system software and certain related consulting services. The
vendor has advised the Company that the system is Year 2000 compliant. The
Company implemented and tested a portion of the new system in the fourth
calendar quarter of 1998 and the balance is expected in the second calendar
quarter of 1999. The Company has also solicited confirmation from its principal
vendors that such vendors are Year 2000 compliant.
The Company believes that the principal cost of addressing the Company's Year
2000 issues are costs associated with implementing its new enterprise system.
Through November 30, 1998, the Company incurred costs of approximately
$2,950,000 with respect to such system and estimates that it will incur
approximately an additional $750,000 with respect to such system. However, no
assurance can be given as to the ultimate costs that may be incurred with
respect to such system or Year 2000 matters.
The failure of one or more of the Company's systems to be Year 2000 compliant
or of the Company's vendors or customers to be Year 2000 compliant could (i)
prevent the Company from engaging in its normal business operations for a time
period, (ii) cause the Company to resort to alternate or manual processes and
incur material additional expenses to correct or replace deficient systems and
(iii) have a material effect on the Company's results of operation, liquidity
and financial condition; although the ultimate impact of such events is
uncertain. Based on its assessment of its principal information technology
systems, including the advice of its enterprise systems vendor, the Company
believes that its material systems will be Year 2000 compliant. However, the
impact of the failure of such systems to be compliant is uncertain and the
Company is unable to determine its most reasonably likely worst case scenario.
The Company has not undertaken and does not anticipate undertaking further
analysis of the uncertainty or development of a plan to address this
uncertainty or the potential that the Company or its vendors or customers
fail to be Year 2000 compliant.
16
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------
The Company, in the normal course of doing business, is theoretically exposed
to interest rate change market risk with respect to its Securities Available for
Sale. All of the Registrant's Securities Available for Sale are state
government or municipal bonds. As of November 30, 1998, the cost and market
value of such bonds was $88,626,000 and $89,885,000, respectively. A
significant increase in interest rates would result in a decrease in the bond
prices. However, to minimize risk, the Company has a policy of investing only
in highly rated instruments (substantially all have AA or better Moody's bond
ratings).
The table below presents notional amounts and related weighted-average interest
rates by year of maturity for the Company's investment portfolio (in thousands,
except percentages).
1999 2000 2001 2002 2003 Thereafter
---- ---- ---- ---- ---- ----------
Investments $12,190 $5,857 $7,785 $7,675 $7,814 $ 48,564
Average Interest 5.6% 5.5% 5.5% 5.5% 5.4% 5.5%
Rate
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA PAGE
Index to Financial Statements
Financial Statements:
Report of Independent Accountants 17
Consolidated Statements of Income for the
three years ended November 30, 1998 18
Consolidated Balance Sheets at November 30,
1998 and 1997 19-20
Consolidated Statements of Stockholders' Equity
for the three years ended November 30, 1998 21
Consolidated Statements of Cash Flows for the
three years ended November 30, 1998 22
Notes to Consolidated Financial Statements 23-29
Selected Quarterly Financial Data (Unaudited) 29
Financial Statement Schedule:
For the three years ended November 30, 1998
Valuation and Qualifying Accounts 38
17
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 and of cash flows present fairly, in all material
respects, the financial position of Juno Lighting, Inc. and its
subsidiaries at November 30, 1998 and 1997, and the results of
their operations and their cash flows for each of the three years
in the period ended November 30, 1998, in conformity with
generally accepted accounting principles. 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 generally accepted auditing
standards 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.
PricewaterhouseCoopers LLP
Chicago, Illinois
January 14, 1999
18
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except share amounts)
Year ended November 30, 1998 1997 1996
---- ---- ----
Net sales $160,941 $139,855 $131,479
Cost of sales 79,882 71,881 68,319
-------- -------- --------
Gross profit 81,059 67,974 63,160
Selling, General and Administrative 44,083 40,601 36,766
-------- -------- --------
Operating income 36,976 27,373 26,394
-------- -------- --------
Other income (expense):
Interest expense (166) (244) (317)
Interest and dividend income 4,371 3,946 3,957
Miscellaneous 76 318 78
-------- -------- --------
Total other income 4,281 4,020 3,718
-------- -------- --------
Income before taxes on income 41,257 31,393 30,112
Taxes on income 14,632 11,090 10,215
-------- -------- --------
Net income $ 26,625 $ 20,303 $ 19,897
======== ======== ========
Net income per common share $ 1.43 $ 1.10 $ 1.08
(Basic and Diluted) ======== ======== ========
Weighted average number of shares
outstanding - Basic 18,576,015 18,522,270 18,451,366
Weighted average number of shares
outstanding - Diluted 18,614,863 18,540,835 18,494,548
========== ========== ==========
See notes to consolidated financial statements.
19
CONSOLIDATED BALANCE SHEETS
(in thousands)
November 30, 1998 1997
---- ----
Assets
Current:
Cash $ 10,498 $ 6,806
Marketable securities 77,836 65,766
Accounts receivable, less allowance for doubtful
accounts of $1,205,000 and $907,000 24,577 22,533
Inventories 28,115 22,707
Prepaid expenses and miscellaneous 5,041 4,696
-------- --------
Total current assets 146,067 122,508
-------- --------
Property and equipment:
Land 7,279 7,322
Building and improvements 31,580 31,372
Tools and dies 7,884 7,117
Machinery and equipment 7,135 6,299
Computer equipment 5,043 2,060
Office furniture and equipment 2,606 2,166
-------- --------
61,527 56,336
Less accumulated depreciation (15,351) ( 11,887)
-------- --------
Net property and equipment 46,176 44,449
-------- --------
Other assets:
Marketable securities 12,049 11,373
Goodwill and other intangibles,
net of accumulated amortization of
$1,536,000 and $367,000 3,940 4,603
Miscellaneous 607 4,456
-------- --------
Total other assets 16,596 20,432
-------- --------
Total assets $208,839 $187,389
======== ========
20
CONSOLIDATED BALANCE SHEETS
(in thousands)
November 30, 1998 1997
---- ----
Liabilities
Current:
Accounts payable $ 4,441 $ 3,579
Accrued liabilities 8,097 7,938
Current maturities of long-term debt 120 115
-------- -------
Total current liabilities 12,658 11,632
-------- -------
Long-term debt, less current maturities 3,265 3,385
-------- -------
Deferred income taxes payable 1,468 1,742
-------- -------
Commitments and Contingencies
Stockholders' Equity
Common stock, $.01 par value; 50,000,000 shares
authorized, 18,595,327 and 18,563,412
shares issued. 186 186
Paid-in capital 5,484 4,934
Cumulative marketable securities valuation
adjustment 1,259 723
Cumulative (loss) on foreign currency translation (655) (395)
Retained earnings 185,174 165,238
-------- --------
191,448 170,686
-------- --------
Less: Treasury stock, at cost; 0 and 3,642 shares - (56)
-------- --------
Total stockholders' equity 191,448 170,630
-------- --------
Total liabilities and stockholders' equity $208,839 $187,389
======== ========
See notes to consolidated financial statements.
21
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
Years ended November 30,
1996, 1997 and 1998 Cumulative Cumulative
Marketable Gain (Loss)
Common Stock Securities on Foreign
Amount Paid-In Valuation Currency Retained Treasury
$.01 PAR Capital Adjustment Translation Earnings Stock Total
-------- ------- ---------- ----------- -------- -------- -----
Balance, December 1, 1995 $185 $4,415 $ 661 $(201) $137,342 $(1,034) $141,368
Treasury stock purchased - - - - - (637) (637)
Treasury stock reissued - - - - (453) 875 422
Exercise of stock options 1 379 - - - - 380
Tax benefit of stock options
exercised - 121 - - - - 121
Net income for 1996 - - - - 19,897 - 19,897
Gain on foreign currency
translation - - - 4 - - 4
Cash dividend ($0.32 per share) - - - - (5,903) - (5,903)
Change in unrealized holding
gains - - 9 - - - 9
------- ------ ------ ----- -------- ----- --------
Balance, November 30, 1996 186 4,915 670 (197) 150,883 (796) 155,661
Treasury stock reissued - - - - (23) 740 717
Tax benefit of stock options
exercised - 19 - - - - 19
Net income for 1997 - - - - 20,303 - 20,303
(Loss) on foreign currency
translation - - - (198) - - (198)
Cash dividend ($0.32 per share) - - - - (5,925) - (5,925)
Change in unrealized holding
gains - - 53 - - - 53
------- ------ ------ ----- -------- ----- --------
Balance, November 30, 1997 186 4,934 723 (395) 165,238 (56) 170,630
Treasury stock reissued - - - - (3) 56 53
Exercise of stock options - 510 - - - - 510
Tax benefit of stock options
exercised - 40 - - - - 40
Net income for 1998 - - - - 26,625 - 26,625
(Loss) on foreign currency
translation - - - (260) - - (260)
Cash dividend ($0.36 per share) - - - - (6,686) - (6,686)
Change in unrealized holding
gains - - 536 - - - 536
------- ------ ------ ------ -------- ------- --------
Balance, November 30, 1998 $186 $5,484 $1,259 $(655) $185,174 $ - $191,448
See notes to consolidated financial statements.
22
CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
Year ended November 30, 1998 1997 1996
---- ---- ----
Net income $26,625 $20,303 $19,897
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 3,678 3,484 3,074
Gain on sale of assets (178) (397) -
Increase (decrease) in allowance for doubtful 298 353 (300)
accounts
Deferred income taxes (274) (369) (18)
Changes in assets and liabilities:
(Increase) in accounts receivable (2,601) (1,359) (1,965)
(Increase) decrease in inventory (5,408) 568 (3,692)
(Increase) decrease in prepaid expenses (607) (386) 714
(Increase) decrease in other assets (27) (671) 55
Increase (decrease) in accounts payable 862 (553) 3
Increase (decrease) in accrued liabilities 199 (3,773) 4,394
------- ------- -------
Net cash provided by operating activities 22,567 17,200 22,162
------- ------- -------
Cash flows provided by (used in) investing activities:
Purchases of marketable securities (47,089) (22,514) (43,226)
Proceeds from sales of marketable securities 35,140 23,807 37,531
Proceeds from sale of assets 4,605 4,322 -
Capital expenditures (5,293) (13,226) (13,316)
------- ------- -------
Net cash (used in) investing activities (12,637) (7,611) (19,011)
------- ------- -------
Cash flows provided by (used in) financing activities:
Principal payments on long-term debt (115) (1,048) (458)
Dividends paid (6,686) (5,925) (5,903)
Purchase of treasury stock - - (637)
Proceeds from sale of common stock through
Employee Stock Purchase Plan 191 202 -
Proceeds from exercise of stock options 372 515 801
------- ------- -------
Net cash (used in) financing activities (6,238) (6,256) (6,197)
------- ------- -------
Net increase (decrease) in cash 3,692 3,333 (3,046)
Cash at beginning of year 6,806 3,473 6,519
------- ------- -------
Cash at end of year $10,498 $ 6,806 $ 3,473
======= ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 163 $ 256 $ 320
Income Taxes $16,234 $11,781 $10,577
======= ======= =======
See notes to consolidated financial statements.
23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Juno Lighting, Inc.
Summary of Significant Accounting Policies
Nature of the Business Juno Lighting, Inc. (the "Company") is a specialist 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.
Marketable Securities Consistent with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt
and Equity Securities", the Company has classified its current and non-current
securities as available-for-sale and reports them at their estimated market
values, which have been determined based upon published market quotes.
Unrealized gains and losses relating to available-for-sale securities are
considered to be temporary and therefore are excluded from earnings and recorded
as a separate component of stockholders' equity until realized. Realized gains
and losses on sales of marketable securities are computed using the specific
identification method.
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 1998 and 1997 amounted to approximately $3,508,000 and
$3,287,000, respectively.
Useful lives for property and equipment are as follows:
- ------------------------------------------------------------------------------
Buildings and improvements 20 - 40 years
Tools and dies 3 years
Machinery and equipment 7 years
Computer equipment 5 years
Office furniture and equipment 5 years
- ------------------------------------------------------------------------------
Goodwill Goodwill is amortized using the straight-line method over a forty year
period.
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.
24
Research and Development The Company spent approximately $4,095,000, $4,719,000
and $4,309,000 on research, development and testing of new products and
development of related tooling in fiscal 1998, 1997 and 1996, respectively.
Fair Value of Financial Instruments The Company's marketable securities are
recorded at market value. The carrying amount of the Company's other financial
instruments approximates their estimated fair value based upon market prices for
the same or similar type of financial instruments.
Foreign Currency Translation The financial statements of the Company's Canadian
subsidiary have been translated using local currency as the functional currency.
Earnings Per Share Basic earnings per share are computed based upon weighted
average number of shares of common stock. Diluted earnings per share are
computed based on the weighted average number of shares of common stock and
common stock equivalents (stock options) outstanding. 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, 1998, 1997 and 1996.
Marketable Securities Marketable securities consist principally of tax exempt
municipal bonds. The amortized cost of available-for-sale securities
approximated the estimated market value of such securities at November 30, 1998;
gross unrealized holding gains and losses were not significant. The estimated
market value of available-for-sale securities at November 30, 1998, by
contractual maturity, are shown below. Actual maturities may differ from
contractual maturities as issuers have the right to call or prepay certain of
these securities.
(in thousands)
Maturity Market Value
-------- ------------
Within one year $12,190
After one through ten years 52,546
Over ten years 25,149
-------
$89,885
=======
Gross realized gains and losses on sales were not material.
Inventories
Inventories consist of the following:
(in thousands)
November 30, 1998 1997
---- ----
Finished goods $13,164 $ 7,762
Raw materials 14,951 14,945
------- -------
Total $28,115 $22,707
======= =======
Work in process inventories are not significant in amount and are included in
finished goods.
25
Accrued Liabilities
Accrued liabilities consist of the following:
(in thousands)
November 30, 1998 1997
---- ----
Compensation and benefits $ 4,684 $ 3,697
Current income taxes - 323
Promotional programs 1,634 1,282
Real estate taxes 884 826
Commissions 443 378
Construction costs - 923
Other 452 509
------- -------
Total $ 8,097 $ 7,938
======= =======
Long-Term Debt
Long-term debt consists of the following:
(in thousands)
November 30, 1998 1997
---- ----
Industrial Development Revenue
Bond, payable in escalating installments through December
2016, plus interest at a variable rate, generally
approximating 67% of prime. 3,385 3,500
------- -------
Less current maturities 120 115
------- -------
Total long-term debt $ 3,265 $ 3,385
======= =======
The aforementioned bonds are collateralized by certain land, buildings, and
machinery and equipment. The aggregate amounts of existing long-term debt
maturing in each of the next five years are as follows:
1999 - $120,000; 2000 - $125,000; 2001 - $135,000;
2002 - $140,000; 2003 - $145,000
Taxes On Income
Provisions for federal and state income taxes in the consolidated statements of
income are comprised of the following:
(in thousands)
November 30, 1998 1997 1996
---- ---- ----
Current:
Federal $12,621 $ 9,494 $ 8,789
State 2,632 2,120 1,563
------- ------- -------
15,253 11,614 10,352
------- ------- -------
Deferred:
Federal (528) (443) (117)
State (93) (81) (20)
------- ------- -------
(621) (524) (137)
------- ------- -------
Total taxes on income $14,632 $11,090 $10,215
======= ======= =======
26
Deferred tax assets (liabilities) are comprised of the following:
(in thousands)
November 30, 1998 1997
---- ----
Reserves for doubtful accounts $ 451 $ 327
Inventory costs capitalized for tax purposes 547 452
Compensation and benefits 993 857
Accrued warranty reserve 33 27
Accrued advertising 99 112
------ ------
Deferred tax assets 2,123 1,775
------ ------
Depreciation (1,020) (1,264)
Prepaid health and welfare costs (328) (329)
Basis difference of acquired assets (87) (95)
Capitalized interest (15) (34)
Real estate taxes (347) (348)
Unrealized holding gains (640) (378)
------ ------
Deferred tax liabilities (2,437) (2,448)
------ ------
Net deferred tax liability $ (314) $ (673)
====== ======
The following summary reconciles taxes at the federal statutory tax rate to the
Company's effective tax rate:
November 30, 1998 1997 1996
---- ---- ----
Income taxes at statutory rate 35.0% 35.0% 35.0%
Dividend exclusion and municipal interest (3.5) (4.2) (4.3)
State and local taxes, net of federal income
tax benefit 4.1 4.4 3.6
Other (.1) .1 (.4)
---- ---- ----
Effective tax rate 35.5% 35.3% 33.9%
==== ==== ====
Stock Based Compensation Plans
The Company maintains two stock-based compensation plans: a stock option plan
and a stock purchase plan. The Company's stock option plan provides for the
granting of stock options or stock appreciation rights ("SAR") to certain key
employees, including officers. The stock option plan is designed so that
options granted thereunder at 100% of the fair value of the common stock at date
of grant may, under certain circumstances, be treated as "incentive stock
options" as defined in Section 422 of the Internal Revenue Code as amended.
Under the stock option plan, up to 600,000 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 600,000 shares of the Company's common stock. 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 have been reserved for
future issuances. Under this stock purchase plan, 14,257 shares of common stock
were issued at $13.39 per share in 1998.
27
A summary of activity under the Company's stock option plan is as follows:
Weighted
Shares Average
Available Options Exercise
for Grant utstanding Price
Balance at
November 30, 1995 271,000 445,000 $14.53
Options Granted - 1,000 $18.25
Options Exercised - (109,000) $ 7.32
Options Canceled - (12,000) $16.75
------- ------- ------
Balance at
November 30, 1996 282,000 325,000 $16.87
Options Granted - 21,000 $16.16
Options Exercised - (32,000) $16.00
Options Canceled - (62,000) $16.76
------- ------- ------
Balance at
November 30, 1997 323,000 252,000 $16.95
Options Granted - 11,000 $22.06
Options Exercised - (21,000) $17.47
Options Canceled - (6,000) $15.58
------- ------- ------
Balance at
November 30, 1998 318,000 236,000 $17.17
======= ======= ======
A summary of outstanding and exercisable stock options as of November 30, 1998,
is as follows:
Options Outstanding Options Exercisable
------------------- -------------------
Weighted
Averaged Weighted Weighted
Range of Remaining Average Average
Exercise Number of Contractual Exercise Number of Exercise
Prices Shares Life(in years) Price Shares Price
- -------- -------- ------------- -------- --------- --------
$14.44 95,800 7.0 $14.44 54,800 $14.44
$15.38 13,000 8.1 $15.38 2,600 $15.38
$16.69-$18.50 46,000 6.3 $18.46 33,400 $18.48
$19.63-$22.19 81,200 5.7 $19.95 54,400 $19.63
------- --- ------ ------- ------
236,000 6.5 $17.17 145,200 $17.33
======= === ====== ======= ======
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 1998, 1997 and 1996 was $8.52,
$7.54 and $6.74 per share, respectively, under the Company's Stock Option Plan
and $4.88, $4.77 and $5.08, 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:
28
1998 1997 1996
---- ---- ----
Expected life (in years) 8 8 8
Expected volatility 35.9% 35.9% 38.2%
Dividend yield 2.0% 2.0% 2.0%
Risk free interest rate 4.7% 6.0% 6.3%
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 income and net income per share would have
been reduced to the pro forma amounts below for the years ended November 30,
1998, 1997 and 1996:
(in thousands except per share amounts)
1998 1997 1996
---- ---- ----
Net income as reported $26,625 $20,303 $19,897
Pro forma net income 26,551 20,223 19,866
Earnings per share as reported (Basic & Diluted) $ 1.43 $ 1.10 $ 1.08
Pro forma earnings per share (Basic & Diluted) 1.43 1.09 1.07
The pro forma effect on net income and earnings per common share for 1998, 1997
and 1996 is not representative of the pro forma effect on net income in future
years because it does not take into consideration pro forma compensation expense
related to grants made prior to fiscal 1996.
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. The plan provides for
a matching contribution by the Company which amounted to approximately $195,000,
$181,000 and $163,000 in 1998, 1997, and 1996, respectively. In addition, the
Company may make additional contributions at the discretion of the Board of
Directors. The Board authorized additional contributions of $807,000, $598,000,
and $569,000 in 1998, 1997 and 1996, respectively.
Common Shares
Pursuant to a dividend distribution declared by the Board of Directors in 1989,
each common share outstanding has one non-voting common share purchase right.
The rights, which are exercisable only under certain conditions, entitle the
holder to purchase common shares at prices specified in the Rights Agreement.
These rights expire on August 3, 1999.
Commitments and Contingencies
Total minimum rentals under noncancelable operating leases for distribution
warehouse space and equipment at November 30, 1998 are as follows:
November 30, (in thousands)
1999 $1,104
2000 843
2001 428
2002 310
2003 129
------
Total $2,814
======
Total rent expense charged to operations amounted to approximately $874,000,
$823,000, and $897,000 for the years ended November 30, 1998, 1997 and 1996,
respectively. In the ordinary course of business, there are various claims
29
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.
Selected Quarterly Financial Data (Unaudited)
A summary of selected quarterly information for 1998 and 1997 is as follows:
(in thousands except per share amounts)
1998 Quarter Ended Feb. 28 May 31 Aug. 31 Nov. 30 Total*
------- ------- ------- ------- -----
Net Sales $34,386 $40,846 $44,419 $41,290 $160,941
Gross Profit 16,770 20,501 22,850 20,938 81,059
Net Income 4,766 6,822 8,050 6,988 26,625
Net Income Per Common Share $ .26 $ .37 $ .43 $ .37 $ 1.43
(Basic and Diluted)
*Due to rounding differences, the totals for the fiscal year ended November 30,
1998 may not equal the sum of the respective items for the four quarters then
ended.
(in thousands except per share amounts)
1997 Quarter Ended Feb. 28 May 31 Aug. 31 Nov. 30 Total
------- ------- ------- ------- -----
Net Sales $30,804 $35,832 $37,238 $35,981 $139,855
Gross Profit 14,351 17,024 18,767 17,832 67,974
Net Income 3,890 5,298 5,812 5,303 20,303
Net Income Per Common Share $ .21 $ .29 $ .31 $ .29 $ 1.10
(Basic and Diluted)
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND
- -------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
PART III
--------
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 9 and 10.
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. 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.
30
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
Mr. Fremont is a member of the Board and an executive officer of the
Company. Mr. Lewis is a Board member and an officer of the Company but
not an executive officer. Mr. Ball is a Board Member. Other than the
Compensation Committee members and Mr. Fremont, who attends meetings of the
Compensation Committee at the request of the Compensation Committee and
makes recommendations regarding the compensation level of executive officers
other than himself, no current or former officer or employee of the Company
or its subsidiaries participated in the deliberations of the Board
concerning executive compensation during the fiscal year ended November
30, 1998. Mr. Lewis is a partner of the law firm of Sonnenschein Nath
& Rosenthal, which provided legal services to the Company in the fiscal
year ended November 30, 1998, and Mr. Ball is the Chairman of Philpott,
Ball & Co., an investment banking firm which provided investment
banking services to the Company in such fiscal year.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
- --------------------------------------------------------------
ON FORM 8-K
-----------
14(a)(1). Financial Statements - Appear as part of Item 8 of this
--------------------
Form 10-K.
Supplementary Data
------------------
The supplementary data required by Item 302 of Regulation S-K
is contained on page 29 of this Annual Report on Form 10-K.
Report of Independent Accountants
---------------------------------
The Report of the Company's Independent Accountants,
PricewaterhouseCoopers LLP, dated January 14, 1999, on the
consolidated financial statements as of and for the fiscal
years ended November 30, 1998, November 30, 1997, and
November 30, 1996, is filed as a part of this Annual Report on
Form 10-K on page 17.
31
14(a)(2). Financial Statement Schedule:
-----------------------------
The following financial statement schedule is submitted in
response to this Item 14(a)2 on page 38 of this Annual Report on
Form 10-K.
Schedule II - Valuation and Qualifying Accounts and Reserves.
Report of Independent Accountants Relating to Schedule.
------------------------------------------------------
The Report of the Company's Independent Accountants,
PricewaterhouseCoopers LLP, on the financial statement
schedule, insofar as the information therein relates to
November 30, 1998 and November 30, 1997 and the fiscal years
then ended, is filed as a part of this Annual Report on Form
10-K on page 32.
Schedules other than those noted above have been omitted
because they are either inapplicable or the information is
contained elsewhere in the Annual Report.
32
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 14, 1999,
appearing on page 17 of this 1998 Annual Report on Form 10-K,
also included an audit of the Financial Statement Schedule listed
in Item 14(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 14, 1999
33
14(a)(3).Exhibits
--------
(i) The following exhibits are filed herewith:
11.1 Computations of Net Income Per Common
Share.
21.1 Subsidiaries of the Registrant.
23.1 Consent of PricewaterhouseCoopers LLP.
(ii) The following exhibits are incorporated herein by
reference or have been previously reported:
3.1 Certificate of Incorporation, as amended,
of Juno Lighting, Inc. filed as
Exhibit 3.1 to the Company's Report on
Form 10-Q (SEC File No. 0-11631) for the
quarter ended May 31, 1987.
3.1(a) Amendment to Certificate of Incorporation
of Juno Lighting, Inc. filed as
Exhibit 3.1 to the Company's Annual Report
on Form 10-K (SEC File No. 0-11631) for
the fiscal year ended November 30, 1990.
3.2 By-Laws of Juno Lighting, Inc., as
amended, filed as Exhibit 3.2 to the
Company's Annual Report on Form 10-K (SEC
File No. 0-11631) for the fiscal year
ended November 30, 1987.
3.2(a) Amendment to By-Laws of Juno Lighting,
Inc. filed as Exhibit 3.1 to the Company's
quarterly report on Form 10-Q (SEC File
No. 0-11631) for the quarter ended May 31,
1991.
10.1 Juno Lighting, Inc. 1993 Stock Option
Plan, as amended, filed as Exhibit 10.1 to
the Company's quarterly report on Form
10-Q (SEC File No. 0-11631) for the
quarter ended May 31, 1994.
10.2 Loan Agreement dated as of December 1,
1991 by and between Juno Lighting, Inc.
and the Indiana Development Finance
Authority. Filed as Exhibit 10.1 to the
Company's Annual Report on Form 10-K (SEC
File No. 0-11631) for the fiscal year
ended November 30, 1992.
10.2(a) Trust Indenture dated as of December 1,
1991 by and between the Indiana
Development Finance Authority and First
Wisconsin Trust Company, as Trustee, with
34
respect to Industrial Development Revenue
Bonds, Series 1991 (Juno Lighting, Inc.
Project). Filed as Exhibit 10.1(a) to the
Company's Annual Report on Form 10-K (SEC
File No. 0-11631) for the fiscal year
ended November 30, 1992.
10.3 Agreement among Juno Lighting, Inc., the
City of Des Plaines and American National
Bank and Trust Company of Chicago. Filed
as Exhibit 10.1 to the Company's
Registration Statement on Form S-1, made
effective September 1, 1983 (Registration
No. 2-85267).
10.4 Juno Lighting, Inc. 1983 Stock Option
Plan, as amended, filed as Exhibit 10.1 to
the Company's Annual Report on Form l0-K
(SEC File No. 0-11631) for the fiscal year
ended November 30, 1983.
10.4(a) First Amendment to the Juno Lighting, Inc.
1983 Stock Option Plan dated April 9,
1986, filed as Exhibit 10.2(a) to the
Company's Annual Report on Form 10-K (SEC
File No. 0-11631) for the fiscal year
ended November 30, 1986.
10.4(b) Third Amendment to the Juno Lighting,
Inc. 1983 Stock Option Plan dated May 6,
1987, filed as Exhibit 10.2(b) to the
Company's Annual Report on Form 10-K
(SEC File No. 0-11631) for the fiscal
year ended November 30, 1987.
10.4(c) Fourth Amendment to the Juno Lighting,
Inc. 1983 Stock Option Plan dated
September 24, 1987, filed as Exhibit
10.2(c) to the Company's Annual Report on
Form 10-K (SEC File No. 0-11631) for the
fiscal year ended November 30, 1987.
10.4(d) Fifth Amendment to the Juno Lighting,
Inc. 1983 Stock Option Plan dated December
13, 1988, filed as Exhibit 10.2(d) to the
Company's Annual Report on Form 10-K (SEC
File No. 0-11631) for the fiscal year
ended November 30, 1988.
35
10.5 Agreement dated as of July 1, 1984 among
Juno Lighting, Inc., the City of Des
Plaines, Illinois and American National
Bank and Trust Company of Chicago. Filed
as Exhibit 10.1(b) to the Company's
Registration Statement on Form S-1, made
effective December 13, 1984 (Registration
No. 2-94147).
10.6 Juno Lighting, Inc. 401(K) Plan, Amended
and Restated effective December 1, 1987,
executed June 1, 1994.
10.6(a) Juno Lighting, Inc. 401(K) Trust,
effective December 1, 1985, executed
June 1, 1994.
10.6(b) Amendment to Juno Lighting, Inc. 401(K)
Plan, effective September 1, 1994,
executed September 12, 1994.
10.7 Juno Lighting, Inc. Rights Agreement dated
as of August 3, 1989 between Juno
Lighting, Inc. and the First National Bank
of Chicago, as Rights Agent, filed as
Exhibit 1 to the Company's Current Report
on Form 8-K (SEC File No. 0-11631) filed
with the Securities and Exchange
Commission on August 9, 1989.
10.7(a) First Amendment to Juno Lighting, Inc.
Rights Agreement dated as of June 17, 1991
between Juno Lighting, Inc. and The First
National Bank of Chicago, as Rights Agent,
filed as Exhibit 10.5(a) to the Company's
Annual Report on Form 10-K (SEC File
No. 0-11631) for the fiscal year ended
November 30, 1991.
10.7(b) Second Amendment to Juno Lighting, Inc.
Rights Agreement dated as of June 17, 1991
between Juno Lighting, Inc. and The First
Chicago Trust Company of New York, as
successor Rights Agent to The First
National Bank of Chicago, filed as
Exhibit 1 to the Company's Current Report
on Form 8-K (SEC File No. 0-11631) filed
with the Securities and Exchange
Commission on July 17, 1991.
16.1 The information has been previously
reported in a Form 8 dated May 21, 1992
filed by the Company with the Securities
and Exchange Commission on May 22, 1992
(SEC File No. 0-11631).
36
14(b) Reports on Form 8-K
-------------------
No reports on Form 8-K for the three months ended
November 30, 1998 were filed by the Company with the
Securities and Exchange Commission.
37
SIGNATURES
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, thereunto duly
authorized on February 25, 1999.
JUNO LIGHTING, INC.
By: /s/Robert S. Fremont
--------------------
Robert S. Fremont
Chief Executive Officer
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.
Signatures Title Date
---------- ----- ----
/s/Robert S. Fremont Director and Chief February 25, 1999
- ---------------------
Robert S. Fremont Executive Officer
/s/George J. Bilek Vice President, Finance February 25, 1999
- ---------------------
George J. Bilek and Treasurer (Principal
Financial and Accounting
Officer)
/s/Thomas W. Tomsovic Director February 25, 1999
- ---------------------
Thomas W. Tomsovic
/s/Julius Lewis Director February 25, 1999
- ---------------------
Julius Lewis
/s/Allan Coleman Director February 25, 1999
- ---------------------
Allan Coleman
/s/George M. Ball Director February 25, 1999
- ---------------------
George M. Ball
38
JUNO LIGHTING, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
===============================================
Column A Column B Column C Column D Column E Column F
- -------- -------- -------- -------- -------- --------
Other
Balance Charged charges
at to costs Deductions add (deduct) Balance
beginning and describe describe at end
Description of period expenses (a) (b) of period
- ----------- --------- -------- ---------- ----------- ---------
Deducted from assets to which they
apply:
Allowance for doubtful accounts:
Year ended November 30, 1998 $907 $812 $510 $(4) $1,205
Year ended November 30, 1997 554 929 574 (2) 907
Year ended November 30, 1996 854 549 850 1 554
____________________________________
NOTE:
(a) Write off of bad debts, less recoveries.
(b) Foreign currency translation.
39
EXHIBIT INDEX
Exhibit
Number Page
- ------ ----
The following exhibits are filed herewith:
11.1 Computations of Net Income Per Common Share. 42
21.1 Subsidiaries of the Registrant. 43
23.1 Consent of PricewaterhouseCoopers LLP. 44
The following exhibits are incorporated herein by reference:
3.1 Certificate of Incorporation, as amended, of Juno ____
Lighting, Inc. filed as Exhibit 3.1 to the Company's
Report on Form 10-Q (SEC File No. 0-11631) for the
quarter ended May 31, 1987.
3.1(a) Amendment to Certificate of Incorporation of Juno ____
Lighting, Inc. filed as Exhibit 3.1 to the Company's
Annual Report on Form 10-K (SEC File No. 0-11631) for
the fiscal year ended November 30, 1990.
3.2 By-Laws of Juno Lighting, Inc., as amended, filed as ____
Exhibit 3.2 to the Company's Annual Report on Form
10-K (SEC File No. 0-11631) for the fiscal year ended
November 30, 1987.
3.2(a) Amendment to By-Laws of Juno Lighting, Inc. filed as ____
Exhibit 3.1 to the Company's quarterly report on
Form 10-Q (SEC File No. 0-11631) for the quarter ended
May 31, 1991.
10.1 Juno Lighting, Inc. 1993 Stock Option Plan, as amended, ____
filed as Exhibit 10.1 to the Company's quarterly report
on Form 10-Q (SEC File No. 0-11631) for the quarter
ended May 31, 1994.
10.2 Loan Agreement dated as of December 1, 1991 by and ____
between Juno Lighting, Inc. and the Indiana
Development Finance Authority. Filed as Exhibit 10.1
to the Company's Annual Report on Form 10-K (SEC File
No. 0-11631) for the fiscal year ended
November 30, 1992.
40
Exhibit
Number Page
- ------ ----
10.2(a) Trust Indenture dated as of December 1, 1991 by and ____
between the Indiana Development Finance Authority and
First Wisconsin Trust Company, as Trustee, with
respect to Industrial Development Revenue Bonds, Series
1991 (Juno Lighting, Inc. Project). Filed as
Exhibit 10.1(a) to the Company's Annual Report on
Form 10-K (SEC File No. 0-11631) for the fiscal year
ended November 30, 1992.
10.3 Agreement among Juno Lighting, Inc., the City of ____
Des Plaines and American National Bank and Trust
Company of Chicago. Filed as Exhibit 10.1 to the
Company's Registration Statement on Form S-1, made
effective September 1, 1983 (Registration No. 2-85267).
10.4 Juno Lighting, Inc. 1983 Stock Option Plan, as amended,____
filed as Exhibit 10.1 to the Company's Annual Report on
Form l0-K (SEC File No. 0-11631) for the fiscal year ended
November 30, 1983.
10.4(a) First Amendment to the Juno Lighting, Inc. 1983 Stock ____
Option Plan dated April 9, 1986, filed as Exhibit 10.2(a)
to the Company's Annual Report on Form 10-K (SEC File No.
0-11631) for the fiscal year ended November 30, 1986.
10.4(b) Third Amendment to the Juno Lighting, Inc. 1983 Stock ____
Option Plan dated May 6, 1987, filed as Exhibit 10.2(b)
to the Company's Annual Report on Form 10-K (SEC File
No. 0-11631) for the fiscal year ended November 30, 1987.
10.4(c) Fourth Amendment to the Juno Lighting, Inc. 1983 Stock____
Option Plan dated September 24, 1987, filed as Exhibit
10.2(c) to the Company's Annual Report on Form 10-K (SEC
File No. 0-11631) for the fiscal year ended November 30,
1987.
10.4(d) Fifth Amendment to the Juno Lighting, Inc. 1983 Stock ____
Option Plan dated December 13, 1988, filed as Exhibit
10.2(d) to the Company's Annual Report on Form 10-K (SEC
File No. 0-11631) for the fiscal year ended November 30,
1988.
10.5 Agreement dated as of July 1, 1984 among Juno ____
Lighting, Inc., the City of Des Plaines, Illinois and
American National Bank and Trust Company of Chicago.
Filed as Exhibit 10.1(b) to the Company's Registration
Statement on Form S-1, made effective December 13, 1984
(Registration No. 2-94147).
41
Exhibit
Number Page
- ------ ----
10.6 Juno Lighting, Inc. 401(K) Plan, Amended and Restated ____
effective December 1, 1987, executed June 1, 1994.
10.6(a) Juno Lighting, Inc. 401(K) Trust, effective December 1,____
1985, executed June 1, 1994.
10.6(b) Amendment to Juno Lighting, Inc. 401(K) Plan, effective____
September 1, 1994, executed September 12, 1994.
10.7 Juno Lighting, Inc. Rights Agreement dated as of ____
August 3, 1989 between Juno Lighting, Inc. and the
First National Bank of Chicago, as Rights Agent,
filed as Exhibit 1 to the Company's Current Report on
Form 8-K (SEC File No. 0-11631) filed with the Securities
and Exchange Commission on August 9, 1989.
10.7(a) First Amendment to Juno Lighting, Inc. Rights ____
Agreement dated as of June 17, 1991 between Juno
Lighting, Inc. and The First National Bank of Chicago,
as Rights Agent, filed as Exhibit 10.5(a) to the Company's
Annual Report on Form 10-K (SEC File No. 0-11631) for the
fiscal year ended November 30, 1991.
10.7(b) Second Amendment to Juno Lighting, Inc. Rights ____
Agreement dated as of June 17, 1991 between Juno
Lighting, Inc. and The First Chicago Trust Company of
New York, as successor Rights Agent to The First
National Bank of Chicago, filed as Exhibit 1 to the
Company's Current Report on Form 8-K (SEC File No. 0-11631)
filed with the Securities and Exchange Commission on
July 17, 1991.
16.1 The information has been previously reported in a ____
Form 8 dated May 21, 1992 filed by the Company with the
Securities and Exchange Commission on May 22, 1992
(SEC File No. 0-11631).
42
Exhibit 11.1
JUNO LIGHTING, INC. AND SUBSIDIARIES
COMPUTATIONS OF NET INCOME PER COMMON SHARE
===========================================
1998 1997 1996
Average number of common shares ---- ---- ----
outstanding during the year 18,576,015 18,522,270 18,451,366
---------- ---------- ----------
Common equivalents:
Shares issuable under
outstanding options 178,962 148,153 147,854
Shares which could have
been purchased based
on the average market
value for the period 140,114 129,588 104,672
---------- ---------- ----------
Shares for the portion of the
period that the options
were outstanding 38,848 18,565 43,182
---------- ---------- ----------
Average number of common and
common equivalent shares
outstanding during the
year 18,614,863 18,540,835 18,494,548
========== ========== ==========
NET INCOME $26,625,368 $20,303,252 $19,897,162
=========== =========== ===========
NET INCOME PER COMMON SHARE
(Basic and Diluted) $1.43 $1.10 $1.08
===== ===== =====
43
Exhibit 21.1
SUBSIDIARIES OF JUNO LIGHTING, INC.
State or Jurisdiction
Name of Subsidiary of Incorporation
------------------ ---------------------
Juno Manufacturing, Inc. Illinois
Indy Lighting, Inc. Indiana
Juno Lighting, Ltd. Canada
Advanced Fiberoptic
Technologies, Inc. Florida
44
Exhibit 23.1
Consent of Independent Accountants
----------------------------------
We hereby consent to the incorporation by reference in
the Registration Statement on Form S-8 (No. 33-87290) of
Juno Lighting, Inc. of our report dated January 14, 1999
appearing on page 17 of this Annual Report on Form 10-K
of Juno Lighting, Inc. for the fiscal year ended November
30, 1998. We also consent to the incorporation by
reference of our report on the Financial Statement
Schedule, which appears on page 32 of this Form 10-K.
PricewaterhouseCoopers LLP
Chicago, Illinois
February 25, 1999