Juno Lighting, Inc. History

Company Perspectives:

Juno Lighting, Inc. is committed to producing quality products and providing our customers with unsurpassed service. We are dedicated to lead the industry with innovative new products. We embrace the concept of teamwork and shared goals and aspire to achieve and maintain high standards of excellence in all that we do.

Company History:

Juno Lighting, Inc. is an industry leader in the design, manufacture, and marketing of lighting fixtures for commercial, institutional, and residential use, primarily in the United States. Marketing its products primarily through distributors, Juno is the largest independent manufacturer of track, recessed, exit, and emergency lighting in the nation. Architects, interior designers, and custom home builders use the company as a source of style alternatives and value in the marketplace. Juno's top competitors include U.S. Industries, Inc., The Genlyte Group, Inc., and Catalina Lighting, Inc.

Robert Fremont founded the Des Plaines, Illinois-based Juno in 1976. In the early 1950s Fremont had begun traveling the country selling home lighting fixtures for various manufacturers. After working his way up to a position as a vice-president of sales, he decided to quit and start his own company. In 1956 his new business, Halo Lighting, was established in Chicago with help from some of the sales staff that moved with him from their previous employer. Eleven years later Fremont sold the company but remained on as president until the new owners made him a corporate vice-president. He eventually resigned from that position, frustrated by the corporate view that emphasized financing and restructuring over marketing and operations. Finally, 20 years after starting his first lighting company, he again decided to organize and operate his own style of business. Fremont then launched Juno Lighting, specializing in high-end business and residential lighting products. He envisioned luminaires that combined beauty, economy, contemporary styling, and flexibility, qualities manifest in what became Juno's flagship, the Trac-Master, a high-quality, stylish track-lighting fixture.

Going Public in 1983

Boosted by a public offering in 1983, Juno acquired Alumitron, a fluorescent lighting company. Fremont developed and introduced the very successful Sloped Ceiling Down-Lights, recessed lights that shine down from a sloped ceiling. In 1988, with $80 million in cash reserves, Juno acquired Indy Lighting, a producer of department store lighting fixtures. Profits from Alumitron were disappointing, leading to its sale in 1990. Further Juno expansion during the 1980s included the purchase of D.W. Barton and Associates, the parent company of Danalite.

Juno's market share grew from 14 percent in 1987 to 20 percent by 1993. Market gains were attributed in large part to low-cost production and direct sales to more than 1,000 of its distributors and showrooms through five U.S. warehouses and one in Canada. Fremont's former company, Halo Lighting, became a division of Cooper Industries, which conflicted with Juno when it introduced a product similar to Juno's patented fixture for sloped ceilings. Juno sued and the companies settled in 1993, with the recognition of Juno's patent. In the following year, Ronel W. Giedt--former president and CEO of Juno's Indianapolis-based subsidiary, Indy Lighting--was named president and CEO of Juno Lighting, Inc. Robert Fremont indicated that the change came about because "the future growth objectives of the company require a separate corporate president and that Giedt's track record with Indy made him the ideal executive for the job," according to HFD--The Weekly Home Furnishings Newspaper.

With 40 percent of its assets in cash and equivalents (three times Juno's short term and long term debt combined), the company began plans for constructing a new $17 million plant. Production space was increased by almost 90 percent when Juno's new 524,000-square-foot Des Plaines plant and headquarters opened in 1996--opening on the heels of dismal earnings performance for 1995. Company executives attributed the shortfall to sluggish home and commercial construction, increased material costs, and delayed product introductions. Fremont told Anne Therese Palmer of Crain's Chicago Business, "Juno's underlying strength lies in its ability to develop new, exciting products, utilize effective merchandising and provide immediate service to customers," adding, "They will permit Juno to achieve future sales and profit increases as construction markets improve."

Juno's product introductions during this period included emergency lighting systems and incandescent down-lighting, which targeted commercial markets. Its commercial clients included Disney, Florsheim, and The Gap. Attentive to energy conservation, a new series of compact fluorescent track fixtures was produced, designed specifically for lighting walls and large display areas for the retail and commercial markets. The fixtures offered a low-profile, low-wattage adjustable incandescent lighting that saved up to 75 percent more energy than comparable incandescents. The cooler operating temperatures benefited the consumer by lowering air conditioning expenses in addition to longer lamp life (12,000 to 20,000 hours), translating into lower lamp replacement costs. Concerned with optimal lighting performance, Juno recommended that consumers use electronic ballasts rather than the magnetic ones that tend to flicker annoyingly and are less energy efficient, heavier, not as long-lasting, and noisier.

Juno had acquired Advanced Fiberoptic Technologies (AFT) in 1997. The purchase was described as a first example of a lighting company acquiring a fiber optics company. The purchase was made with the intention of integrating fiber optic technology into Juno's existing product line, or the development of new products lines for AFT's existing marketplace. AFT's clients included Tiffany's, Walt Disney, and several of the nation's Smithsonian museums. Under AFT's patented process its fiber optic fixtures offered the advantage of generating less heat and ultraviolet rays. The heat reduction was made possible because of the centralized location of a light source that actually blew cooling air.

Strong Reviews: 1997

Juno was spotlighted when it captured the attention of LJR Great Lakes Review, a quarterly research report published by a division of the Lynch Jones & Ryan institutional brokerage. The publication was followed by 300 banks, brokerages, and other institutional clients. Focusing on Midwestern firms, the Review typically alerted Wall Street to stocks of mid-sized firms previously undervalued. It was not unusual for a recommended stock to soar following endorsement by the publication. The Review's analysts favored Juno despite the previous year's flattened earnings because of the effects of a number of new product introductions by the company. As one of the largest independent producers of specialty lighting, with an estimated 20 percent of the $500 million market, Juno was in a solid position for future growth. analysts expected that the robust U.S. economy, the strong building and remodeling market, and the trend of building larger houses with an emphasis on energy efficient products would combine to ensure an impressive revitalization of revenues for the company. Juno's history was favorable, the new production plant was expected to boost production and cut operating costs, and the company had little debt and $69 million in cash. The stock's 12.9 P/E was well below the estimated annual earnings growth of 15 percent over the next five years and stocks were "expected to gain 55 percent to $26 for the next 12 months."

1998: Dissension from Shareholders Following Dim Performance

Despite a strong stock market, Juno's stock continued to trade in the $20 range, inciting action by major shareholders. In 1998, dissident shareholders--led by a shareholder activist group, Lens, Inc. of Washington, D.C., which owned seven percent of Juno Lighting--submitted a shareholder resolution to limit the board to no more than one inside director. Lens, Inc. proposed that Juno's bylaws be amended to require that a majority of the company's directors be independent, also proposing that Lens principal Robert A.G. Monks--known for a 1992 proxy battle with Sears, Roebuck and Company--be positioned as a director. The group also campaigned to redeploy the company's $90 million cash hoard and to develop a succession plan. It was suggested that the company buy back its own stock when shares hit a low of $14.50, but Juno chose not to. The Lens group viewed the cash surplus of 45 percent of company assets at that time as a critical problem, insisting that "cash doesn't win a competitive rate of return." According to Crain's Chicago Business, Lens Inc. threatened to "weigh a proxy contest if it [did not] see 'significant improvement."' Juno's director of corporate planning indicated that the company had hired a search firm after agreeing to add two outside directors. In previous unrelated actions, Lens, Inc. pushed for change and was responsible for the departures of CEOs from Waste Management, Inc., Westinghouse, Inc., and Stone & Webster, Inc. Lens principal Nell Minow explained in Crain's Chicago Business that small to mid-sized firms deserved greater scrutiny because they were "more susceptible to a private-company mentality." He added that at least five of the company's directors were either executive officers or providers of legal and investment banking services to Juno.

Anxious to get back on track, Juno agreed to comply with terms set forth by Lens, Inc., but they failed to fulfill an April 1998 promise to appoint another two independent directors within 60 days. The company also was searching for a replacement for president and CEO, following the resignation of Ronel Giedt. Joanne Lublin of the Wall Street Journal reported that Juno later responded by trying to bar the boardroom door by unveiling a merger and recapitalization plan. Answering to the concern that Juno invest the cash hoard Fremont said, "I wasn't critical of [Lens's] criticism; we have been unable to use the funds as we should have used them. It has been a board subject for eight years." He explained that the problem was a scarcity of attractive acquisition targets. Juno accepted a $25 per share (or $410 million) merger and recapitalization offer from a partnership controlled by Fremont Partners LP, a San Francisco equity fund unrelated to Mr. Fremont. He told Lublin: "My motives are not to frustrate Lens. My motives are to make sure that Juno does the right thing" for its shareholders. Unhappy with the price, Lens wrote a letter to shareholders in a campaign effort to defeat the merger plan, blaming the deal on the management-controlled board and proposing a public auction of the company. The Lens principals claimed the takeout value of Juno should have fallen between $30.67 and $34.25 per share. On June 30 Juno announced the merger with Fremont Investors, following majority stockholder approval.

For the six months ending in May 1999, Juno's net sales rose ten percent to $82.8 million, in large part attributable to new products in the commercial area. In July 1999, the company announced that its board of directors had appointed Glenn Bordfeld--who had been with Juno since 1982 and who was serving as president and chief operating officer&mdash a company director.

Principal Subsidiaries: Advanced Fiberoptic Technologies, Inc.; Indy Lighting, Inc.; Juno Lighting, Ltd. (Canada); Juno Manufacturing, Inc.

Further Reading:

• Crown, Judith, "Big or Small, No Place to Hide," Crain's Chicago Business, March 9, 1998, p. 1.
• "Finding Riches in Business Niches," Money, August 1994, p. 38.
• Freid, Carla, "Up Nearly 25 Percent a Year, A Pro Names Four Mid-Size Stocks to Gain As Much As 55 Percent," Money, December 1997, p. 183.
• "Juno Compact Fluorescent Track Line for Lighting Walls, Big Display Areas," HFD--The Weekly Home Furnishings Newspaper, September 19, 1994, p. 24.
• "Juno Lighting Announces Proration Results," PR Newswire Association, Inc., July 8, 1999, p. 6845.
• "Juno Lighting's $125 Million Senior Subordinated Notes Rated 'B' by S & P," PR Newswire Association, Inc., May 18, 1999, p. 2896.
• "Junoesque Prospects," Forbes, September 27, 1993, p. 180.
• Labate, John, "Juno Lighting," Fortune, February 21, 1994, p. 99.
• "Lens Renews Focus on Juno Lighting," Crain's Chicago Business, November 16, 1998, p. 1.
• "Lighting Specialist Buys Fiber Company," Fiber Optic News, July 14, 1997.
• Lublin, Joanne S., "Dissident Investors Fight for Board Seats Without Seeking Full Control of Firms, Wall Street Journal, June 1, 1999, p. B3.
• Palmer, Ann Therese, "Dimmer Juno Seeks New Markets," Crain's Chicago Business, July 1, 1996, p. 64.

Source: International Directory of Company Histories, Vol. 30. St. James Press, 2000.