-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CG27nBF1PDxHui9jbgbkuwYUY7dxZH+L+dG80EnA72qgRaol5uSgnl7onNZFrALU Dq7UXk8uDnah2gogBuHuww== 0000950152-97-001032.txt : 19970222 0000950152-97-001032.hdr.sgml : 19970222 ACCESSION NUMBER: 0000950152-97-001032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KEITHLEY INSTRUMENTS INC CENTRAL INDEX KEY: 0000054991 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 340794417 STATE OF INCORPORATION: OH FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09965 FILM NUMBER: 97534435 BUSINESS ADDRESS: STREET 1: 28775 AURORA RD CITY: SOLON STATE: OH ZIP: 44139 BUSINESS PHONE: 2162480400 10-Q 1 KEITHLEY INSTRUMENTS 10-Q 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-9965 KEITHLEY INSTRUMENTS, INC. (Exact name of registrant as specified in its charter) OHIO 34-0794417 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 28775 AURORA ROAD, SOLON, OHIO 44139 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (216) 248-0400 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 --- --- As of January 31, 1997 there were outstanding 4,837,119 Common Shares, without par value, and 2,794,278 Class B Common Shares, without par value. ================================================================================ 2 PART I. FINANCIAL INFORMATION ------- --------------------- ITEM 1. Financial Statements. - ------- --------------------- KEITHLEY INSTRUMENTS, INC. CONSOLIDATED BALANCE SHEET (In Thousands of Dollars) (Unaudited)
DECEMBER 31, SEPTEMBER 30, ------------ ------------- 1996 1995 1996 ---- ---- ---- Assets - ------ Current assets: Cash and cash equivalents $ 4,938 $ 4,727 $ 3,995 Accounts receivable and other, net 16,592 19,362 18,538 Inventories: Raw materials 7,756 5,698 8,255 Work in process 4,460 3,835 4,880 Finished products 4,868 3,845 4,291 ------- ------- ------- Total inventories 17,084 13,378 17,426 Other current assets 3,900 3,116 3,781 ------- ------- ------- Total current assets 42,514 40,583 43,740 ------- ------- ------- Property, plant and equipment, at cost 40,482 33,684 37,873 Less-Accumulated depreciation 23,500 22,840 22,531 ------- ------- ------- Total property, plant and equipment, net 16,982 10,844 15,342 ------- ------- ------- Intangible assets, net 1,989 7,605 2,064 Other assets 11,935 8,564 12,688 ------- ------- ------- Total assets $73,420 $67,596 $73,834 ======= ======= ======= Liabilities and Shareholders' Equity - ------------------------------------ Current liabilities: Short-term debt and current installments on long-term debt $ 62 $ 71 $ 61 Accounts payable 7,474 8,363 8,162 Accrued payroll and related expenses 4,343 4,489 4,525 Other accrued expenses 8,275 5,092 9,358 Income taxes payable 1,369 2,968 2,955 ------- ------- ------- Total current liabilities 21,523 20,983 25,061 ------- ------- ------- Long-term debt 17,344 5,464 13,308 Other long-term liabilities 3,786 3,113 3,709 Shareholders' equity: Paid-in-capital 6,274 4,425 5,479 Earnings reinvested in the business 24,807 33,093 25,865 Cumulative translation adjustment 591 580 562 Unamortized portion of restricted stock (736) (5) (14) Common shares held in treasury, at cost (169) (57) (136) ------- ------- ------- Total shareholders' equity 30,767 38,036 31,756 ------- ------- ------- Total liabilities and shareholders' equity $73,420 $67,596 $73,834 ======= ======= =======
2 3 KEITHLEY INSTRUMENTS, INC. CONSOLIDATED STATEMENT OF INCOME (In Thousands of Dollars Except for Per Share Data) (Unaudited)
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 1995 ---- ---- Net sales $27,886 $29,823 Cost of goods sold 11,754 11,835 Selling, general and administrative expenses 12,454 11,942 Product development expenses 4,464 4,096 Special charges 58 -- Amortization of intangible assets 57 132 Net financing expenses 270 159 ------- ------- Income (loss) before income taxes (1,171) 1,659 Income taxes (benefit) (333) 514 ------- ------- Net income (loss) $ (838) $ 1,145 ======= ======= Net income (loss) per share - primary and fully diluted $ (.11) $ .15 ======= ======= Cash dividends per Common Share $ .031 $ .031 ======= ======= Cash dividends per Class B Common Share $ .025 $ .025 ======= =======
3 4 KEITHLEY INSTRUMENTS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (In Thousands of Dollars) (Unaudited)
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 1995 ---- ---- Cash flows from operating activities: Net income (loss) $ (838) $1,145 Expenses not requiring outlay of cash 1,183 1,118 Changes in working capital (1,348) (552) Other operating activities 828 1,092 ------ ------ Net cash provided by (used in) operating activities (175) 2,803 ------ ------ Cash flows from investing activities: Payments for property, plant, and equipment (2,702) (1,188) Acquisition -- (200) Other investing activities-net 2 -- ------ ------ Net cash used in investing activities (2,700) (1,388) ------ ------ Cash flows from financing activities: Net increase in short term debt 1 -- Borrowing (repayment) of long term debt 4,017 (569) Cash dividends (219) (209) Other transactions-net 20 207 ------ ------ Net cash provided by (used in) financing activities 3,819 (571) ------ ------ Effect of changes in foreign currency exchange rates (1) (7) ------ ------ Increase in cash and cash equivalents 943 837 Cash and cash equivalents at beginning of period 3,995 3,890 ------ ------ Cash and cash equivalents at end of period $4,938 $4,727 ====== ====== Supplemental disclosures of cash flow information - ------------------------------------------------- Cash paid during the period for: Income taxes $1,176 $158 Interest 240 219 Supplemental schedule of noncash investing activities - ----------------------------------------------------- The company's acquisition included the following noncash transactions (See Note D): Fair value of assets acquired $ -- $1,576 Cash paid -- (200) Remaining purchase obligation -- (819) ------ ------ Liabilities assumed $ -- $ 557 ====== ====== Disclosure of accounting policy - ------------------------------- For purposes of this statement, the Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents
4 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (In thousands of dollars, except for share data) ------------------------------------------------ A. The consolidated financial statements at December 31, 1996 and 1995, and for the three month periods then ended have not been examined by independents accountants, but in the opinion of the management of Keithley Instruments, Inc., all adjustments necessary to a fair statement of the consolidated balance sheet, consolidated statement of income and consolidated statement of cash flows for those periods have been included. All adjustments included are of a normal recurring nature. B. The weighted average number of shares and share equivalents used in determining net income per share was 7,472,576 for the quarter ended December 31, 1996 and 7,787,927 for the quarter ended December 31, 1995. Both Common Shares and Class B Common Shares are included in calculating the weighted average number of shares outstanding. C. During the quarter, $846 of income tax related accruals were released to income as circumstances giving rise to the accruals were no longer present. Also during the quarter, and in response to a recent tax law change, the company decided to terminate existing corporate owned life insurance policies and a deferred tax charge of $888 was recorded, reflecting the tax on the excess of cash surrender value over premiums paid on the policies. The tax is payable over 4 years. D. On December 5, 1995, the company consummated the purchase of the principal assets of International Sensor Technology, Inc. (IST) of Pullman, Washington. IST pioneered the development of laser heating technology in thermoluminescence dosimetry (TLD) systems for personal radiation protection. The technology has potential uses in radiation therapy, nuclear waste management, radiation processing, environmental and radiation-hard electronics applications in government, medicine and the nuclear industry. 5 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results - ------- ----------------------------------------------------------------------- of Operations. - -------------- (In Thousands of Dollars) Results of Operations - --------------------- First Quarter 1997 Compared with First Quarter 1996 - --------------------------------------------------- The net loss for the first quarter of fiscal 1997 was $838, or $.11 per share, compared with net income of $1,145, or $.15 per share, reported in the first quarter of 1996. The decrease in earnings resulted from lower net sales and higher costs. Net sales of $27,886 decreased 6 percent from $29,823 in the prior year's first quarter. Sales declines were noted in all divisions except Instruments which experienced a slight increase. Geographically, sales were down slightly in the U.S. and Europe and down significantly in the Pacific Basin region due to lower sales of the company's parametric test systems. Lower sales of these test systems serving the semiconductor industry were expected; however, lower sales from the company's other divisions caused the loss. First quarter orders of $30,891 decreased 9 percent from record orders of $34,036 in the prior year's quarter. Included in orders for the current year's quarter was a $4,084 contract awarded by the U.S. Navy for the development and manufacture of personal radiation protection devices utilizing the company's patented Laser-TLD(R) technology. The contract will be completed over the next 18 months. Including the Navy order, backlog grew $3,292 during the quarter to $12,379 at December 31, 1996. Cost of goods sold as a percentage of net sales increased to 42.1 percent from 39.7 percent. This was mainly due to expected lower gross margins from sales of and start up on the Quantox(R) product, and fixed manufacturing costs spread over lower sales volume. The effect of foreign exchange hedging on cost of goods sold was to decrease cost of goods sold as a percentage of net sales by 0.1 percentage points in the first quarter of 1997, compared with an increase of 0.3 percentage points in 1996. Selling, general and administrative expenses increased $512, or 4 percent, from the prior year's quarter to 44.7 percent of net sales from 40.1 percent due mainly to higher marketing costs. The higher marketing costs related to the continuing market development of Quantox and the introduction and market development of the company's new SmartLink(TM) Measurement Modules, offset somewhat by lower costs at Keithley MetraByte due to the relocation of that operation announced in September 1996. Product development expenses of $4,464 for the quarter increased $368, or 9 percent, from the prior year's quarter to 16.0 percent of net sales from 13.7 percent. This was due primarily to increased costs associated with the continued development of the company's new businesses. The increased costs were offset somewhat by lower product development expenses for Keithley MetraByte due to the relocation announced in September 1996. Special charges of $58 for the quarter relate to the relocation of the Keithley MetraByte operation to Cleveland from Taunton, Massachusetts. The company estimates that an additional $1,000 to 6 7 $1,500 will be spent during the year on the move which should be complete by July 1997. At December 31, 1996, the company had $4,085 remaining on the Consolidated Balance Sheet ($3,744 in the caption "Other accrued expenses" and $341 in the caption "Other long-term liabilities") for the closing of the Taunton facility. Net financing expenses of $270, increased $111 from $159 last year. This was due to higher average debt levels during the period. The effective tax rate was 28.4 percent for the quarter compared with 31.0 percent last year. During the quarter, $846 of income tax related accruals were released to income as circumstances giving rise to the accruals were no longer present. Also during the quarter, and in response to a recent tax law change, the company decided to terminate existing corporate owned life insurance policies and a deferred tax charge of $888 was recorded, reflecting the tax on the excess of cash surrender value over premiums paid on the policies. The tax is payable over 4 years. Liquidity and Capital Resources - ------------------------------- Cash used in operations for the first quarter was $125. Total debt of $17,406 at December 31, 1996, increased $4,037 during the quarter, and was used primarily to pay current liabilities and to purchase fixed assets and fund the expansion of the company's Semiconductor and Radiation Measurements facilities. The total debt-to-capital ratio was 36.1 percent at December 31, 1996 compared with 29.6 percent at September 30, 1996. The company expects to finance capital spending, which will be at a lower run rate than in the first quarter, and working capital requirements, including cash necessary to fund the relocation of Keithley MetraByte to Cleveland, with cash provided by operations and draws on its available lines of credit. At December 31, 1996, the Company had available unused lines of credit with domestic and foreign banks aggregating $14,008 of which $6,352 were short term and $7,656 were long term. Outlook - ------- Management is encouraged by the recent indications that the semiconductor industry is improving. However, due to the lag in the semiconductor capital equipment industry, the company's commitment to new business development, and the current order and backlog levels, management expects a loss for the second quarter of fiscal 1997, although smaller than the loss recorded in the first quarter. The company expects to return to profitability in the third quarter ending June 30, 1997. Factors That May Affect Future Results - -------------------------------------- Information included above in the Outlook section of Management's Discussion and Analysis of Financial Condition and Results of Operations relating to expectations as to earnings and expenses, constitute "forward-looking" statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and 7 8 uncertainties that could cause actual results to differ materially from those projected. Some of the factors that may affect future results are discussed below. Although the company operates in a single industry segment, certain of its products and product lines including the Quantox unit and the company's line of parametric test systems, are sold into the semiconductor capital equipment industry. Growth in demand for semiconductors and new technology drives the demand for new semiconductor capital equipment. At the present time, the order growth of this industry has contracted which adversely affects near-term revenues of the company. In September 1996, the company announced its intention to relocate its Keithley MetraByte operation to Cleveland from Taunton, Massachusetts, and form a new business. This relocation could create a decline in sales of the company's personal computer plug-in board business for several reasons, including hiring and training qualified personnel to assume duties of employees who will not relocate from Taunton, and assimilating and establishing sales support and manufacturing processes in Cleveland to sell and produce the plug-in board products. The company's business relies on the development of new high technology products and services to provide solutions to customer's complex measurement needs. This requires anticipation of customers' changing needs and emerging technology trends. The company must make long-term investments and commit significant resources before knowing whether its predictions will eventually result in products that achieve market acceptance. The company incurs significant expenses developing new business opportunities that may or may not result in significant sources of revenue and earnings in the future. In many cases the company's products compete directly with those offered by other manufacturers. If any of the company's competitors were to develop products or services that are more cost-effective or technically superior, demand for the company's product offerings could slow. The company currently has ten subsidiaries or sales offices located outside the United States, and non-U.S. sales made up half of the company's revenue in fiscal 1996, and 37 percent of total revenue for the first quarter of fiscal 1997. The company's future results could be adversely affected by several factors, including changes in foreign currency exchange rates, changes in a country's or region's political or economic conditions, trade protection measures, import or export licensing requirements, unexpected changes in regulatory requirements and natural disasters. 8 9 PART II. OTHER INFORMATION - -------- ----------------- Item 6. Exhibits and Reports on Form 8-K. -------- --- ------- -- ---- ---- (a) Exhibits. The following exhibits are filed herewith: -------- Exhibit Number Exhibit ------ ------- 11 Statement Re Computation of Per Share Earnings 27 Financial Data Schedule (EDGAR version only) (b) No reports on Form 8-K were filed during the quarterly period ended December 31, 1996. SIGNATURES Pursuant to the requirements 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. KEITHLEY INSTRUMENTS, INC. (Registrant) Date: February 13, 1997 /s/ Joseph P. Keithley ------------------------- Joseph P. Keithley Chairman, President and Chief Executive Officer (Principal Executive Officer) Date: February 13, 1997 /s/ Ronald M. Rebner ----------------------- Ronald M. Rebner Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 9 EX-11 2 EXHIBIT 11 1 Exhibit 11 11. Statement re computation of per share earnings
First quarter ended First quarter ended December 31, 1996 December 31, 1995 ----------------- ----------------- Shares outstanding at beginning of period 7,450,878 7,227,972 Net issuance of shares under stock award plans, weighted average 21,698 21,235 Weighted average shares outstanding 7,472,576 7,249,207 Assumed exercise of stock options, weighted average of incremental shares -- 484,858 Assumed purchase of stock under stock purchase plan, weighted average -- 3,862 ---------- ---------- Average shares and common share equivalents - primary EPS calculation 7,472,576 7,787,927 ========== ========== Net income (loss) per share $ (.11) $ .15 ====== ====== Net income (loss) in thousands $ (838) $1,145 ====== ======
EX-27 3 EXHIBIT 27
5 1,000 3-MOS SEP-30-1997 OCT-01-1996 DEC-31-1996 4,938 0 16,592 0 17,084 42,514 40,482 23,500 73,420 21,523 17,344 188 0 0 30,579 73,420 27,886 27,886 11,754 11,754 4,464 0 270 (1,171) (333) (838) 0 0 0 (838) (.11) (.11)
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