-----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, Sdy3F/JFXHE4yN2I5Nap1PLEqO41G6toWEuk0UyKZWiSStM60VwAATMhbrTVnDEv mGavCnepnv1jfEHElYTebg== 0000950152-97-003898.txt : 19970515 0000950152-97-003898.hdr.sgml : 19970515 ACCESSION NUMBER: 0000950152-97-003898 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 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: 97604834 BUSINESS ADDRESS: STREET 1: 28775 AURORA RD CITY: SOLON STATE: OH ZIP: 44139 BUSINESS PHONE: 2162480400 10-Q 1 KEITHLEY INSTRUMENTS, INC. / QUARTERLY REPORT 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 MARCH 31, 1997 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 April 30, 1997 the Registrant had outstanding 4,841,658 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)
MARCH 31, SEPTEMBER 30, --------- ------------- 1997 1996 1996 ---- ---- ---- Assets - ------ Current assets: Cash and cash equivalents $ 1,737 $ 4,289 $ 3,995 Accounts receivable and other, net 18,873 20,297 18,538 Inventories: Raw materials 7,041 6,908 8,255 Work in process 4,841 5,356 4,880 Finished products 5,073 4,223 4,291 ------- ------- ------- Total inventories 16,955 16,487 17,426 Other current assets 3,851 2,851 3,781 ------- ------- ------- Total current assets 41,416 43,924 43,740 ------ ------ ------ Property, plant and equipment, at cost 41,346 35,843 37,873 Less-Accumulated depreciation 24,148 23,471 22,531 ------ ------ ------ Total property, plant and equipment, net 17,198 12,372 15,342 ------ ------ ------ Intangible assets, net 1,933 8,108 2,064 Other assets 11,613 8,735 12,688 ------ ------- ------ Total assets $72,160 $73,139 $73,834 ====== ====== ====== Liabilities and Shareholders' Equity - ------------------------------------ Current liabilities: Short-term debt and current installments on long-term debt $ 47 $ 72 $ 61 Accounts payable 8,675 7,440 8,162 Accrued payroll and related expenses 4,104 5,104 4,525 Other accrued expenses 7,273 5,492 9,358 Income taxes payable 756 2,696 2,955 -------- ------- ------- Total current liabilities 20,855 20,804 25,061 ------ ------ ------ Long-term debt 16,682 9,685 13,308 Other long-term liabilities 3,944 3,138 3,709 Shareholders' equity: Paid-in-capital 7,050 4,789 5,479 Earnings reinvested in the business 24,248 34,365 25,865 Cumulative translation adjustment 252 443 562 Unamortized portion of restricted stock (680) (4) (14) Common shares held in treasury, at cost (191) (81) (136) -------- --------- --------- Total shareholders' equity 30,679 39,512 31,756 ------ ------ ------ Total liabilities and shareholders' equity $72,160 $73,139 $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 FOR THE SIX MONTHS ENDED MARCH 31, ENDED MARCH 31, 1997 1996 1997 1996 ---- ---- ---- ---- Net sales $28,148 $30,019 $56,034 $59,842 Cost of goods sold 11,746 10,967 23,500 22,802 Selling, general and administrative expenses 11,821 12,336 24,275 24,278 Product development expenses 4,410 4,336 8,874 8,432 Special charges 375 -- 433 -- Amortization of intangible assets 57 159 114 291 Net financing expenses 203 176 473 335 ------- ------- ------ ------ Income (loss) before income taxes (464) 2,045 (1,635) 3,704 Income taxes (benefit) (126) 560 (459) 1,074 ------- ------- ------- ------- Net income (loss) $ (338) $ 1,485 $ (1,176) $ 2,630 ======= ====== ======= ====== Net income (loss) per share $ (0.04) $ 0.19 $ (0.16) $ 0.34 ======== ======= ========= ====== Cash dividends per Common Share $ .031 $ .031 $ .063 $ .063 ======== ======= ======== ======= Cash dividends per Class B Common Share $ .025 $ .025 $ .050 $ .050 ======== ======= ======== =======
3 4 KEITHLEY INSTRUMENTS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (In Thousands of Dollars) (Unaudited)
FOR THE THREE MONTHS FOR THE SIX MONTHS ENDED MARCH 31, ENDED MARCH 31, 1997 1996 1997 1996 ---- ---- ---- ---- Cash flows from operating activities: Net income (loss) $ (338) $ 1,485 $ (1,176) $ 2,630 Expenses not requiring outlay of cash 1,273 1,084 2,456 2,202 Changes in working capital (2,457) (3,237) (3,805) (3,789) Other operating activities (27) (415) 801 677 ------- ------ ------ ------ Net cash provided by (used in) operating activities (1,549) (1,083) (1,724) 1,720 ----- ----- ----- ----- Cash flows from investing activities: Payments for property, plant, and equipment (1,428) (2,267) (4,130) (3,455) Acquisitions (excluding cash of $11) -- (1,208) -- (1,408) Other investing activities-net 14 3 16 3 ------- -------- ------- ------- Net cash used in investing activities (1,414) (3,472) (4,114) (4,860) ----- ----- ----- ----- Cash flows from financing activities: Net increase (decrease) in short term debt (16) 1 (15) 1 Net borrowing (repayment) of long term debt (400) 4,256 3,617 3,687 Cash dividends (221) (213) (440) (422) Other transactions-net 754 142 774 349 ------ ------ ------ ------ Net cash provided by financing activities 117 4,186 3,936 3,615 ------ ----- ----- ----- Effect of exchange rate changes on cash (355) (69) (356) (76) ------ ------ ------- ------ Increase (decrease) in cash and cash equivalents (3,201) (438) (2,258) 399 Cash and cash equivalents at beginning of period 4,938 4,727 3,995 3,890 ------ ------ ------ ------ Cash and cash equivalents at end of period $ 1,737 $ 4,289 $ 1,737 $ 4,289 ====== ====== ====== ====== Supplemental disclosures of cash flow information - ------------------------------------------------- Cash paid during the period for: Income taxes $ 131 $ 528 $ 1,307 $ 686 Interest 273 128 513 347 Supplemental schedule of noncash investing activities - ----------------------------------------------------- The company's acquisitions included the following noncash transactions (See Notes E and F): Liabilities assumed -- $ 359 -- $ 916 Common Shares issued -- 201 -- 201 ------- ------ ------- ------ Total noncash transactions -- $ 560 -- $ 1,117 ======= ====== ======= =====
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 ------------------------------------------ A. The consolidated financial statements at March 31, 1997 and 1996 and for the three month periods then ended have not been examined by independent 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 outstanding used in determining net income per share was 7,609,919 for the quarter ended March 31, 1997 and 7,782,654 for the quarter ended March 31, 1996. For the six months ended March 31, 1997 and March 31, 1996, the weighted average number of shares outstanding was 7,541,830 and 7,764,418, respectively. Both Common Shares and Class B Common Shares are included in calculating the weighted average number of shares outstanding. Fully diluted net income per share is not materially different than net income per share. C. Special charges of $375 for the second quarter of fiscal 1997 relate to the relocation of the Keithley MetraByte operation to Cleveland from Taunton, Massachusetts. Special charges include the reversal of $200 of expense recorded during 1996 for accrued lease costs related to the relocation for which the space has since been sublet. The company estimates that an additional $300 to $500 will be expensed during the year on the transition of the business from Massachusetts to Cleveland, which should be complete by July 1997. At March 31, 1997, the company had $3,505 remaining on the Consolidated Balance Sheet ($3,164 in the caption "Other accrued expenses" and $341 in the caption "Other long-term liabilities") for the closing of the Taunton facility and European operating subleases. D. During the first quarter of fiscal 1997, $846 of income tax related accruals were released to income as circumstances giving rise to the accruals were no longer present. Also during the first 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. E. 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. F. On February 15, 1996, the company consummated the purchase of certain assets of Turner Engineering Technology (Turner) of Roanoke, Texas. Turner specializes in accelerated test methods for determining the quality of semiconductor wafers at various stages of manufacturing. These test methods are designed to save semiconductor manufacturers money by providing process control feedback to allow optimization and continued semiconductor process improvement. 5 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results - ------------------------------------------------------------------------------- of Operations. - -------------- (In Thousands of Dollars) Results of Operations - --------------------- Second Quarter 1997 Compared with Second Quarter 1996 - ----------------------------------------------------- The net loss for the second quarter of fiscal 1997 was $338, or $.04 per share, compared with net income of $1,485, or $.19 per share, in last year's quarter. The loss was the result of decreased sales and lower gross margins. Net sales of $28,148 decreased 6 percent from $30,019 in the prior year's second quarter. The decrease was due to lower sales of our automated parametric test systems used by the semiconductor industry and lower sales of Keithley MetraByte products. The company was pleased to report, however, that the second quarter's sales included the first shipment of the new S600 next generation parametric tester used by the semiconductor industry. Orders for the second quarter of $33,648 increased 21 percent from the prior year's second quarter and 9 percent from the first quarter of 1997. Order levels were the second highest reported in the company's history and included good orders for the company's Quantox(R) Silicon Oxide Monitoring System. Geographically, orders were up in the United States and the Pacific Basin region and down somewhat in Europe. Backlog increased $4,599 during the quarter to a record $16,978 at March 31, 1997. Cost of goods sold as a percentage of net sales increased 5.2 percentage points to 41.7 percent from 36.5 percent. This was due to expected lower margins and start up costs of the company's new business initiatives, and higher fixed costs resulting from the expansion of manufacturing facilities. The effect of the company's hedging activities on cost of goods sold for the quarter was to decrease cost of goods sold by 0.3 percentage points of net sales versus a decrease of 0.2 percentage points in the prior year's quarter. Selling, general and administrative expenses of $11,821 for the second quarter decreased $515, or 4 percent from the prior year's quarter. The decrease was due mainly to lower incentive compensation expense due to the loss. Product development expenses of $4,410 increased less than 2 percent from $4,336 in the prior year's quarter. This was due primarily to increased costs associated with the continued development of the company's new businesses, offset by lower product development expenses for Keithley MetraByte. Special charges of $375 for the quarter relate to the relocation of the Keithley MetraByte operation to Cleveland from Taunton, Massachusetts. Special charges include the reversal of $200 of expense recorded during 1996 for accrued lease costs related to the relocation for which the space has since been sublet. The company estimates that an additional $300 to $500 will be expensed during the year on the transition from Taunton to Cleveland, which should be complete by July 1997. At March 31, 1997, the company had $3,505 remaining on the Consolidated Balance Sheet ($3,164 in the caption "Other accrued expenses" and $341 in the caption "Other long-term liabilities") for the closing of the Taunton facility and European operating subleases. 6 7 Despite higher debt levels during the quarter, net financing expenses of $203, increased only $27 from last year's second quarter. This was due to interest income received on a federal income tax refund as well as the absence of expense related to corporate owned life insurance policies which were terminated during the first quarter. Six Months Ended March 31, 1997 Compared with Six Months Ended March 31, 1996 - ----------------------------------------------------------------------------- The company recorded a net loss of $1,176, or $.16 per share for the six months ended March 31, 1997, compared with net income of $2,630, or $.34 per share for the prior year. The loss resulted primarily from lower sales and lower gross margins during the first half of fiscal 1997 versus 1996. Net sales of $56,034 decreased $3,808, or 6 percent, from $59,842 reported for the six month period last year. The decrease was due to decreased sales of parametric testers serving the semiconductor industry and decreased sales of the company's data acquisition boards, offset somewhat by sales of the Quantox product. Orders for the six month period were up 4 percent from last year. The majority of the increase was due to orders for Quantox, along with a $4,084 contract with the Navy recorded in the first quarter. Cost of goods sold as a percentage of net sales increased to 41.9 percent from 38.1 percent for the six month period last year. This was due to expected lower margins and start up costs of the company's new business initiatives, and higher fixed costs resulting from the expansion of manufacturing facilities. The company's hedging activities decreased cost of goods sold by 0.2 percentage points of net sales for the six months ended March 31, 1997, versus no effect on cost of goods sold in last year's six month period. Selling, general and administrative expenses of $24,275, or 43.3 percent of net sales were flat against $24,278, or 40.6 percent of net sales in the same period in the prior year. Decreased costs related to the Keithley MetraByte operation's relocation were offset by increased costs for the company's new business initiatives. Product development expenses of $8,874, or 15.9 percent of net sales for the first half of fiscal 1997, increased 5 percent from $8,432, or 14.1 percent of net sales in the same period last year. Again, decreased expenses related to Keithley MetraByte more than offset increased costs for the company's new business initiatives. Net financing expenses of $473 increased $138, or 41 percent due to higher average debt levels during the period. The effective tax rate was 28.0 percent for the six month period compared with 29.0 percent for the prior year's period. The effective rate is less than the statutory rate of 34 percent due to the utilization of foreign sales corporation (FSC) benefits. 7 8 Liquidity and Capital Resources - ------------------------------- Cash used in operations was $1,549 for the second quarter and $1,724 for the six months ended March 31, 1997. Total debt of $16,729 at March 31, 1997, decreased $677 during the quarter, but increased $3,360 from the beginning of the fiscal year. The increase in debt and decrease in cash during the six month period were used primarily to pay current liabilities, to purchase fixed assets, and fund the expansion of the company's Semiconductor and Radiation Measurements facilities. The facilities expansion was substantially complete by the end of the second quarter. The total debt-to-capital ratio was 35.3 percent at March 31, 1997 compared with 29.6 percent at September 30, 1996. During the quarter the company amended its $25,000 unsecured, multi-currency debt facility. The agreement was extended until March 2002, and generally includes lower overall borrowing costs than the previous agreement. The company expects to finance capital spending and working capital requirements with cash provided by operations and its available lines of credit. At March 31, 1997, the Company had available unused lines of credit with domestic and foreign banks aggregating $14,404, of which $6,086 were short term and $8,318 were long term. Outlook - ------- The company believes based on recent order and backlog levels, that the worst of the semiconductor capital equipment industry slump may be over. The company expects to return to profitability in the third quarter of fiscal 1997, with even higher profits in the fourth quarter. Additionally, gross margins are not expected to improve for the remainder of the fiscal year. This is due to higher fixed costs due to the expansion of manufacturing facilities, and increased shipments of Quantox which carry lower margins. 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 gross margins, 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 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. Although order growth in this industry has recently increased, the sustainability of this trend cannot be predicted. 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, 8 9 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 52 percent of total revenue for the first half 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. 9 10 PART II. OTHER INFORMATION -------- ----------------- Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) Exhibits. The following exhibits are filed herewith: -------- Exhibit Number Exhibit ------ ------- 10(y) First Amendment dated March 28, 1997, to the Credit Agreement dated May 31, 1994. 11 Statement Re Computation of Per Share Earnings 27 Financial Data Schedule (EDGAR version only) (b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the quarterly period ended March 31, 1997. 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: May 14, 1997 /s/ Joseph P. Keithley ------------------------- Joseph P. Keithley Chairman, President and Chief Executive Officer (Principal Executive Officer) Date: May 14, 1997 /s/ Ronald M. Rebner ------------------------- Ronald M. Rebner Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 10 EX-10.Y 2 EXHIBIT 10(Y) 1 10(y). First Amendment dated March 28, 1997, to the Credit Agreement dated May 31, 1994. FIRST AMENDMENT TO CREDIT AGREEMENT ----------------------------------- THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of March 28, 1997 (this "Amendment"), is among KEITHLEY INSTRUMENTS, INC., an Ohio corporation (the "Company"), KEITHLEY INSTRUMENTS, GMBH, a corporation organized and existing under the laws of the Federal Republic of Germany (the "Borrowing Subsidiary" and, collectively with the Company, the "Borrowers" or each a "Borrower") the banks set forth on the signature pages hereof (collectively, the "Banks") and NBD BANK, a Michigan banking corporation, as agent for the Banks (in such capacity, the "Agent"). RECITALS -------- A. The Borrowers, the Agent and the Banks are parties to a Credit Agreement, dated as of May 31, 1994 (as now and hereafter amended, the "Credit Agreement"), pursuant to which the Banks agreed, subject to the terms and conditions thereof, to extend credit to the Borrowers. B. The Borrowers desire to amend the Credit Agreement and the Agent and the Banks are willing to do so strictly in accordance with the terms hereof. TERMS ----- In consideration of the premises and of the mutual agreements herein contained, the parties agree as follows: ARTICLE 1. AMENDMENTS ---------- Upon fulfillment of the conditions set forth in Article 3 hereof, the Credit Agreement shall be amended as follows: 1.1 Section 1.1 shall be amended as follows: (a) The definition of "Commitment" shall be amended by deleting the last sentence of such definition in its entirety. (b) The definition of "Floating Rate" shall be amended by deleting clause (a) therein in its entirety and inserting the following in place thereof: "(a) zero percent (0%) per annum". 2 (c) The definition of "Leverage Ratio" shall be deleted in its entirety and the following shall be inserted in place thereof: "LEVERAGE RATIO" shall mean, as of any date, the ratio of the Consolidated Funded Debt of the Company and its Subsidiaries to the Consolidated Total Capitalization of the Company and its Subsidiaries. (d) The definition of "Multicurrency Rate" shall be amended by deleting clause (a) in its entirety and inserting the following in place thereof: "(a) Applicable Margin". (e) The definition of "Termination Date" shall be amended by deleting clause (a) in its entirety and inserting the following in place thereof: "March 28, 2002". (f) The following definitions shall be added in appropriate alphabetical order: "APPLICABLE MARGIN" shall mean with respect to any Multicurrency Rate Loan or facility fee, as the case may be, the applicable percentage set forth in the table below as adjusted on the first day of each fiscal quarter of the Company based upon the Leverage Ratio for the fiscal quarter immediately preceding the fiscal quarter most recently ended and shall remain in effect until the next change to be effected pursuant to this definition: Applicable Margin -----------------
==================================================================================== Leverage Ratio Multi-currency Facility Fee Rate Loan --------------------------------------------------- -------------------------------- Less than .30:1.0 0.275% 0.125% --------------------------------------------------- ------------------ ------------- Greater than or equal to .30:1.0 but less than .38:1.0 0.35% 0.15% --------------------------------------------------- ------------------ ------------- Greater than or equal to .38:1.0 0.55% 0.20% --------------------------------------------------- ------------------ -------------
"FIRST AMENDMENT EFFECTIVE DATE" shall mean March 28, 1997. "FIXED CHARGE COVERAGE RATIO" shall mean, as of the end of any fiscal quarter, the ratio of (a) Consolidated EBITDA of the Company and its Subsidiaries for such period, plus the maximum amount of all rents and other payments paid or required to be paid during such period under any operating lease in respect of which the Company or any of its Subsidiaries is obligated as lessee or -2- 3 user, to (b) the sum of Consolidated Interest Expense for such period, plus the maximum amount of all rents and other payments paid or required to be paid during such period under any operating lease in respect of which the Company or any of its Subsidiaries is obligated as lessee or user. "FUNDED DEBT" of any person shall mean, as of any date, the sum of all interest bearing Indebtedness (including obligations under Capital Leases) of such person, other than Indebtedness which is subordinated to Indebtedness owing to the Agent and the Banks under the Loan Documents in form and substance satisfactory to the Banks minus invested cash in excess of $1,500,000. "NET WORTH" of any person shall mean, as of any date, the amount of any capital stock, paid in capital and similar equity accounts plus (or minus in the case of a deficit) the capital surplus and retained earnings of such person and the amount of any foreign currency translation adjustment account shown as a capital account of such person. "TOTAL CAPITALIZATION" of any person shall mean, as of any date, the sum of the Funded Debt of such person plus the Net Worth of such person. (g) The following definitions shall be deleted from Section 1.1 together with all references to such defined terms in the Credit Agreement: "Applicable Tranche B Commitment Fee", "Applicable Multicurrency Rate Margin", "Applicable Floating Rate Margin", "Current Assets" and "Current Liabilities", "Debt Service Coverage Ratio" and "Tangible Net Worth". 1.2 Section 2.1(b) shall be amended by deleting the reference to "Tranche A Commitment" in the last sentence and inserting "Commitment" in place thereof. 1.3 Section 2.1(c) shall be deleted and the following shall be inserted in place thereof: (a) LIMITATION ON AMOUNT OF LOANS. Notwithstanding anything in this Agreement to the contrary, the aggregate principal amount of the Loans made by any Bank at any time outstanding shall not exceed the amount of its respective Commitment as of the date any such Loan is made. 1.4 Section 2.3 shall be deleted and the following shall be inserted in place thereof: -3- 4 2.3 FEES. (a) The Borrowers agree to pay to each Bank a facility fee on the daily average amount of its respective Commitment, for the period from the Effective Date to but excluding the Termination Date, at a per annum rate equal to the Applicable Margin. Accrued facility fees shall be payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing on the first such Business Day occurring after the Effective Date, and on the Termination Date. (b) The Borrowers agree to pay to the Agent an agency fee for its services as Agent under this Agreement in such amounts as may from time to time be agreed upon by the Company and the Agent. 1.5 Sections 5.2(a), (b), (c) and (d) shall be deleted in their entirety and the following shall be inserted in place thereof: (a) [Intentionally Reserved.] (b) NET WORTH. Permit or suffer the Consolidated Net Worth of the Company and its Subsidiaries to be less than the sum of (i) $24,000,000 plus (ii) an amount equal to 50% of Cumulative Net Income (without reduction for net loss) of the Company and its Subsidiaries for each fiscal year of the Company ending after the First Amendment Effective Date. (c) FIXED CHARGE COVERAGE RATIO. Permit or suffer the Consolidated Fixed Charge Coverage Ratio of the Company and its Subsidiaries to be less than (i) for the fiscal quarter ending March 31, 1997, 2.0 to 1.0, (ii) for the fiscal quarter ending June 30, 1997, 2.25 to 1.0 ,and (iii) as of the last day of each fiscal quarter thereafter, 2.75 to 1.0., in each case, calculated for the four (4) consecutive fiscal quarters then ending. (d) LEVERAGE RATIO. Permit or suffer the Consolidated Leverage Ratio of the Company and its Subsidiaries to be greater than .45 to 1.0 at any time. 1.6 The "Commitment Amount" set forth in the signature block of each Bank shall be amended by deleting the entire parenthetical reference directly below the reference to such Bank's Commitment Amount, by deleting the "Commitment Amount" set forth next to the -4- 5 name of each Bank and inserting in place thereof the amount set forth below next to the name of such Bank: Commitment Amount ----------------- NBD Bank $15,000,000 KeyBank National Association $10,000,000 ARTICLE 2. REPRESENTATIONS --------------- Each Borrower represents and warrants to the Agent and the Banks that: 2.1 The execution, delivery and performance of this Amendment is within its powers, has been duly authorized and is not in contravention with any law, of the terms of its Articles of Incorporation or By-laws, or any undertaking to which it is a party or by which it is bound. 2.2 This Amendment is the legal, valid and binding obligation of the Borrower enforceable against it in accordance with the terms hereof. 2.3 After giving effect to the amendments herein contained, the representations and warranties contained in Article IV of the Credit Agreement are true on and as of the date hereof with the same force and effect as if made on and as of the date hereof. 2.4 No Event of Default or any event or condition which might become an Event of Default with notice or lapse of time, or both, exists or has occurred and is continuing on the date hereof. ARTICLE 3. CONDITIONS OF EFFECTIVENESS --------------------------- This Amendment shall not become effective until each of the following has been satisfied: 3.1 This Amendment shall be signed by the Borrowers, the Agent and the Banks. 3.2 The Company shall have delivered to the Agent resolutions adopted by the Board of Directors of the Company, certified by an officer of the Company as being in full force and effect without amendment as of the date hereof, authorizing the Company to execute this Amendment. -5- 6 3.3 An opinion of legal counsel for the Company with respect to the matters contained in Sections 2.1 and 2.2 hereof and otherwise in form and substance satisfactory to the Banks shall have been delivered to the Agent. 3.4 The Borrowers shall have executed new Revolving Credit Notes in favor of each Bank reflecting the Commitment Amounts set forth in Section 1.6 of this Amendment. -6- 7 ARTICLE 4. MISCELLANEOUS. -------------- 41. References in the Credit Agreement or in any note, certificate, instrument or other document to the "Credit Agreement" shall be deemed to be references to the Credit Agreement as amended hereby and as further amended from time to time. 4.2 The Company agrees to pay and to save the Agent harmless for the payment of all costs and expenses arising in connection with this Amendment, including the reasonable fees of counsel to the Agent in connection with preparing this Amendment and the related documents. 4.3 The Company acknowledges and agrees that the Agent and the Banks have fully performed all of their obligations under all documents executed in connection with the Credit Agreement and all actions taken by the Agent and the Banks are reasonable and appropriate under the circumstances and within their rights under the Credit Agreement and all other documents executed in connection therewith and otherwise available. Each Borrower represents and warrants that it is not aware of any claims or causes of action against the Agent or any Bank, any participant lender or any of their successors or assigns. 4.4 Except as expressly amended hereby, each Borrower agrees that the Credit Agreement, the Notes and all other documents and agreements executed by the Borrower in connection with the Credit Agreement in favor of the Agent or any Bank are ratified and confirmed and shall remain in full force and effect and that it has no set off, counterclaim or defense with respect to any of the foregoing. Terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. 4.5 This Amendment may be signed upon any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument. -7- 8 IN WITNESS WHEREOF, the parties signing this Amendment have caused this Amendment to be executed and delivered as of March 28, 1997. KEITHLEY INSTRUMENTS, INC. /s/ Ronald M. Rebner By: _________________________________ Chief Financial Officer Its: _______________________________ KEITHLEY INSTRUMENTS, GMBH /s/ H. Hamm By: _________________________________ Managing Director Its: _______________________________ NBD BANK, as Agent and Individually as a Bank /s/ Winifred S. Pinet By: _________________________________ First Vice President Its: _______________________________ KEYBANK NATIONAL ASSOCIATION, SUCCESSOR BY MERGER TO SOCIETY NATIONAL BANK /s/ Thomas J. Purcell By: _________________________________ Vice President Its: _______________________________ -8- EX-11 3 EXHIBIT 11 1 11. Statement re computation of per share earnings
Second Quarter Ended Six Months Ended 3/31/97 3/31/96 3/31/97 3/31/96 ------- ------- ------- ------- Shares outstanding at beginning of period 7,537,169 7,271,515 7,450,878 7,227,972 Net issuance of shares under stock award plans, weighted average 72,750 67,183 90,952 69,186 ----------- ----------- ----------- ----------- Weighted average shares outstanding 7,609,919 7,338,698 7,541,830 7,297,158 Assumed exercise of stock options, weighted average of incremental shares -- 443,956 -- 467,260 ------------ ------------ ------------ ------------ Average shares and common share equivalents outstanding 7,609,919 7,782,654 7,541,830 7,764,418 ========= ========= ========= ========= Net income (loss) per share $ (.04) $ .19 $ (.16) $ .34 ========== ======== ========== ======== Net income (loss) in thousands $ (338) $1,485 $(1,176) $2,630 ========= ====== ======== ======
EX-27 4 EXHIBIT 27
5 1,000 6-MOS SEP-30-1997 OCT-01-1996 MAR-31-1997 1,737 0 18,873 0 16,955 41,416 41,346 24,148 72,160 20,855 16,682 191 0 0 30,488 72,160 56,034 56,034 23,500 23,500 8,874 0 473 (1,635) (459) (1,176) 0 0 0 (1,176) (0.16) (0.16)
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