-----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, DpKE4bvFzB84OBTriIakm5UwyWIVlcFHIZT9OhamOSCEw0NWrubPk5t2QQZlYTtI 2zjagrxRPVKnPhtHeLGBtA== 0000950152-00-000947.txt : 20000214 0000950152-00-000947.hdr.sgml : 20000214 ACCESSION NUMBER: 0000950152-00-000947 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000211 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: SEC FILE NUMBER: 001-09965 FILM NUMBER: 535390 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, 1999 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: (440) 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 February 1, 2000 there were outstanding 4,464,796 Common Shares, without par value, and 2,692,028 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, ------------ ------------- 1999 1998 1999 ---- ---- ---- Assets Current assets: Cash and cash equivalents $ 13,097 $ 16,961 $ 13,426 Accounts receivable and other, net 17,646 13,785 19,633 Inventories: Raw materials 7,439 5,175 4,853 Work in process 3,389 2,667 4,009 Finished products 2,291 1,875 2,187 ------- ------- ------- Total inventories 13,119 9,717 11,049 Other current assets 3,811 3,873 3,593 ------- ------- ------- Total current assets 47,673 44,336 47,701 ------ ------ ------ Property, plant and equipment, at cost 38,193 39,211 38,293 Less-Accumulated depreciation 25,815 25,526 25,617 ------ ------ ------ Net property, plant and equipment 12,378 13,685 12,676 ------ ------ ------ Other assets 14,531 14,045 14,374 ------ ------ ------ Total assets $74,582 $72,066 $74,751 ====== ====== ====== Liabilities and Shareholders' Equity - ------------------------------------ Current liabilities: Short-term debt and current installments on long-term debt $ 515 $ -- $ -- Accounts payable 8,217 6,207 8,119 Accrued payroll and related expenses 3,866 4,490 5,872 Other accrued expenses 5,988 6,606 6,046 Income taxes payable 3,709 4,965 3,382 ------ ------ ------ Total current liabilities 22,295 22,268 23,419 ------ ------ ------ Long-term debt 3,000 6,599 3,000 Other long-term liabilities 4,951 4,198 4,551 Shareholders' equity: Paid-in-capital 9,127 9,106 9,270 Earnings reinvested in the business 45,866 33,418 42,623 Accumulated other comprehensive income (175) 375 112 Unamortized portion of restricted stock (228) (272) (239) Common shares held in treasury, at cost (10,254) (3,626) (7,985) ------ ------- ------- Total shareholders' equity 44,336 39,001 43,781 ------ ------ ------ Total liabilities and shareholders' equity $74,582 $72,066 $74,751 ====== ====== ======
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, 1999 1998 ---- ---- Net sales $ 29,760 $ 20,881 Cost of goods sold 11,760 8,806 Selling, general and administrative expenses 10,339 8,868 Product development expenses 2,828 2,282 Gain on sale of business (477) (4,808) Net financing income (90) (39) -------- -------- Income before income taxes 5,400 5,772 Income taxes 1,890 1,989 -------- -------- Net income $ 3,510 $ 3,783 ======== ======== Basic earnings per share $ .49 $ .49 ======== ======== Diluted earnings per share $ .46 $ .48 ======== ======== Cash dividends per Common Share $ .041 $ .033 ======== ======== Cash dividends per Class B Common Share $ .033 $ .026 ======== ========
3 4 KEITHLEY INSTRUMENTS, INC. Consolidated Statement of Cash Flows (In Thousands of Dollars) (Unaudited)
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 1998 ---- ---- Cash flows from operating activities: Net income $ 3,510 $ 3,783 Expenses not requiring outlay of cash 832 735 Gain on sale of business (477) (4,808) Changes in working capital (1,579) 2,857 Other operating activities 180 (47) -------- -------- Net cash provided by operating activities 2,466 2,520 -------- -------- Cash flows from investing activities: Payments for property, plant, and equipment (546) (284) Sale of assets - net -- 8,393 Other investing activities-net 37 6 -------- -------- Net cash provided by (used in) investing activities (509) 8,115 -------- -------- Cash flows from financing activities: Increase in short-term debt 515 -- Borrowing of long-term debt -- 500 Cash dividends (267) (235) Repurchase of treasury stock (3,013) (3,246) Other transactions-net 602 -- -------- -------- Net cash used in financing activities (2,163) (2,981) -------- -------- Effect of changes in foreign currency exchange rates (123) (14) -------- -------- Increase (decrease) in cash and cash equivalents (329) 7,640 Cash and cash equivalents at beginning of period 13,426 9,321 -------- -------- Cash and cash equivalents at end of period $ 13,097 $ 16,961 ======== ======== Supplemental disclosures of cash flow information - ------------------------------------------------- Cash paid during the period for: Income taxes $ 730 $ 1,591 Interest 7 45
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. Management Representation ------------------------- The consolidated financial statements at December 31, 1999 and 1998, 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. Earnings per share denominator ------------------------------ The weighted average number of shares and share equivalents used in determining basic earnings per share and diluted earnings per share was 7,094,289 and 7,645,729 for the quarter ended December 31, 1999, respectively, and 7,780,105 and 7,876,240 for the quarter ended December 31, 1998, respectively. Both Common Shares and Class B Common Shares are included in calculating the weighted average number of shares outstanding. C. Sale of assets -------------- On November 9, 1998, the company sold certain assets used in the operation of its Quantox product line to KLA-Tencor Corporation for $9,147 in cash. The agreement, which was effective October 31, 1998, included the sale of the Quantox inventory, certain machinery, equipment and other tangible personal property. The company retained the accounts receivable. The sale resulted in a pretax gain of $4,808, or $0.39 per share after taxes, recorded in the first quarter of fiscal 1999. Additional pretax gains of $345, or $0.03 per share after taxes, and of $477 pretax, or $0.04 per share after taxes, were recorded in the fourth quarter of fiscal 1999 and the first quarter of fiscal 2000, respectively, for businesses previously sold. At the time of the sales of these businesses, the company established liabilities for certain items that were to be settled at future dates. The additional adjustments represent the settlement of certain of these issues. D. Dutch Auction and stock repurchase program ------------------------------------------ On November 11, 1998, the company commenced a tender offer to repurchase up to 2,000,000 of its Common Shares, or approximately 25 percent of the outstanding Common Shares and Class B Common Shares combined. The offer was conducted through a procedure commonly known as a "Dutch Auction" in which shareholders could tender their shares at prices not in excess of $7.00 nor less than $5.75 per share. The offer expired on December 10, 1998, and resulted in the repurchase of 405,733 Common Shares at $7.00 per share plus expenses of approximately $1.00 per share. At the conclusion of the Dutch Auction, the company's Board of Directors approved a program to repurchase up to 1,000,000 Common Shares, or approximately 13 percent of the outstanding Common Shares and Class B Common Shares combined, over a two-year period. The shares repurchased under both the Dutch Auction and the stock repurchase program will initially be held as treasury stock, and from time to time, may be reissued in settlement of stock options and the company's employee stock purchase plan. During the first quarter of fiscal 2000 the Company repurchased 152,400 Common Shares at an average cost of $19.77 per share 5 6 including commissions. The company has repurchased a total of 1,095,203 Common Shares or approximately 14 percent of the combined Common and Class B Common Shares outstanding since the start of repurchase programs, at an average cost of $10.39 per share including commissions. The program, as authorized by the company's Board of Directors, allows for the repurchase of an additional 310,530 shares through December 2000. During the first quarter of fiscal 2000, the company reissued 91,096 shares (191,523 total since the start of the repurchase program) in settlement of shares purchased through the company's employee stock option and employee stock purchase plans. E. Comprehensive income -------------------- On October 1, 1998, the company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130), which establishes rules for reporting comprehensive income and its components. The adoption of SFAS 130 did not impact the company's net income or total shareholders' equity. Comprehensive income for the three months ended December 31, 1999 and 1998 is as follows:
December 31, 1999 1998 ------ ------ Net income $3,510 $3,783 Foreign currency translation adjustments (288) (54) ------ ------ Comprehensive income $3,222 $3,729 ====== ======
6 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results - ------- ----------------------------------------------------------------------- of Operations. - -------------- (In Thousands of Dollars) Results of Operations - --------------------- First Quarter Fiscal 2000 Compared with First Quarter Fiscal 1999 - ----------------------------------------------------------------- Net income for the first quarter of fiscal 2000 before a $0.04 per share gain on the sale of a previously disposed business was $3,207 or $0.42 per share, compared with $693, or $0.09 per share, in last year's quarter on a comparable basis. Net income as reported for the first quarter of fiscal 2000 was $3,510, or $0.46 per share, compared to $3,783, or $0.48 per share, in last year's quarter which includes a gain of $0.39 per share for the sale of a business. (See Note C.) Net sales of $29,760 increased 43 percent from $20,881 in the prior year's first quarter. Excluding sales from the Quantox product line (Quantox) sold in the first quarter of fiscal 1999, net sales increased 47 percent. This was principally due to strong sales for the company's products serving the semiconductor and telecommunications industries. Geographically, sales from the company's current businesses increased in all major geographies. Orders for the first quarter of $37,735 increased 61 percent from the prior year's orders of $23,377, excluding Quantox in last year's quarter, and were a new record high. Several large orders from key customers caused otherwise strong orders to become record orders. These customers ordered in larger quantities and at accelerated levels from what they had previously indicated. Orders were particularly strong for the company's products serving the semiconductor, telecommunications and optoelectronics industries. Order backlog of $24,659 at December 31, 1999, grew $5,318 during the quarter and was also a new record high. Cost of goods sold as a percentage of net sales decreased to 39.5 percent from 42.2 percent in the prior year's first quarter. This was mainly due to improved manufacturing efficiencies resulting from higher sales volume. The effect of foreign exchange hedging on cost of goods sold was immaterial in both periods. Selling, general and administrative expenses increased $1,471, or 17 percent, from the prior year's quarter, but decreased as a percentage of net sales to 34.8 from 42.5 due to higher sales volume. The increase in dollars is due to new marketing initiatives related to the internet and new products, as well as increased employee incentive expenses due to higher earnings. Product development expenses for the quarter of $2,828, or 9.5 percent of net sales, increased from $2,282, or 10.9 percent of net sales, last year. The increase is primarily due to development costs for new products including the Model 2700 Multimeter/Data Acquisition System, PCI Data Acquisition boards and new DriverLINX software. On November 9, 1998, the company sold certain assets used in the operation of its Quantox product line to KLA-Tencor Corporation. The sale was effective October 31, 1998, and resulted in a gain of $4,808 pretax, or $0.39 per share after taxes, recorded in the first quarter of fiscal 1999. During the first quarter of fiscal 2000, an additional pretax gain of $477, or $0.04 per 7 8 share after taxes, was recorded for the sale. At the time of the sale of this business, the company established liabilities for certain items that were to be settled at future dates. The additional adjustment recorded in the first quarter of fiscal 2000 represents the settlement of certain of these issues. (See Note C.) The company generated net financing income during the quarter of $90 versus $39 in the prior year. Lower average debt levels this year, resulting in lower interest expense, combined with better rates on income earned on cash and cash equivalents accounted for the improvement. The effective tax rate for the quarter was 35.0 percent versus 34.5 percent last year. The tax rate in the prior year's quarter on earnings excluding the gain on the sale of a business was 28.1 percent. The tax rate in the 2000 quarter is higher than the 1999 quarter due to higher earnings on normal operations and the utilization of tax credits in the prior year, which are not available in the current year. Liquidity and Capital Resources - ------------------------------- During the first quarter, net cash provided by operations was $2,466. The company used available cash of $3,013 to repurchase 152,400 Common Shares through the stock repurchase program. (See Note D.) Additionally, the company purchased $546 of capital equipment during the quarter. Total cash and cash equivalents decreased $329 during the quarter to $13,097 at December 31, 1999. Total debt of $3,515 at December 31, 1999, increased $515 during the quarter, and the total debt-to-capital ratio was 7.3 percent at December 31, 1999. The company expects to finance debt service, capital spending, the stock repurchase program and working capital requirements through cash on hand and cash provided by operations. At December 31, 1999, the company had available unused lines of credit with domestic and foreign banks aggregating $26,610 of which $4,610 were short-term and $22,000 were long-term. Year 2000 - --------- The company did not experience any significant disruptions or errors in its operating or business systems when the date changed from 1999 to 2000. Based on operations since January 1, 2000, the company does not expect any significant impact to its on-going business as a result of the "Year 2000 issue." The company could still be negatively impacted if its customers or suppliers are adversely affected by the Year 2000 issue, however, the company is not aware of any significant Year 2000 problems that have arisen for its customers or suppliers. 8 9 Outlook - ------- Due to the record backlog level along with current business activity in the semiconductor, telecommunications and optoelectronics industries, management believes that the second quarter fiscal 2000 sales and operating earnings should be better than those of the first quarter. However, quarter-to-quarter results are always order dependent and the company's success is dependent upon continued investment from customers in these key electronics industries. 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 the company's sales and earnings for the second quarter, 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 are sold into the semiconductor industry. Growth in demand for semiconductors, new technology and pricing drive the demand for new semiconductor capital equipment. Historically, sales and order levels for this business have been volatile which can affect revenue and earnings for the company. The company's business relies on the development of new high technology products and services to provide solutions to customers' 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 expectations will eventually result in products that achieve market acceptance. The company incurs significant expenses developing new products 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's cost structure is comprised of costs that are directly related to the level of sales, as well as costs that are fixed and do not fluctuate based on quarterly sales levels. The company's ability to maintain its cost structure or to further improve its cost structure depends on its ability to control those costs that are fixed or semi-variable. The company pays taxes in several jurisdictions throughout the world. The company utilizes available tax credits and other tax planning strategies in an effort to minimize the company's overall tax liability. The company's actual tax rate for fiscal 2000 could change from what is currently anticipated due to changes in various country's tax laws or changes in the company's overall tax planning strategy. 9 10 The company currently has ten subsidiaries or sales offices located outside the United States, and non-U.S. sales made up 43 percent of the company's revenue in the first quarter of fiscal 2000. 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. The company has modified its systems to accommodate the Euro. The cost of these modifications was immaterial to the company's results of operations. Although difficult to predict, any competitive implications and any impact on existing financial instruments are expected to be immaterial to the company's results of operations, financial condition or cash flows of future periods. 10 11 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) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the quarterly period ended December 31, 1999. 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 11, 2000 /s/ Joseph P. Keithley -------------------------------------------- Joseph P. Keithley Chairman, President and Chief Executive Officer (Principal Executive Officer) Date: February 11, 2000 /s/ Mark J. Plush -------------------------------------------- Mark J. Plush Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 11 EX-11 2 EXHIBIT 11 1 11. Statement re computation of per share earnings
First quarter ended First quarter ended December 31, 1999 December 31, 1998 ----------------- ----------------- Net income in thousands $ 3,510 $ 3,783 Weighted average shares outstanding 7,094,289 7,780,105 Assumed exercise of stock options, weighted average of incremental shares 520,122 96,135 Assumed purchase of stock under stock purchase plan, weighted average 31,318 -- ---------- ---------- Diluted shares - adjusted weighted-average shares and assumed conversions 7,645,729 7,876,240 ========== ========== Basic earnings per share $ 0.49 $ 0.49 Diluted earnings per share $ 0.46 $ 0.48
EX-27 3 EXHIBIT 27
5 1,000 3-MOS SEP-30-2000 OCT-31-1999 DEC-31-1999 13,097 0 17,646 645 13,119 47,673 38,193 25,815 74,582 22,295 3,000 0 0 200 44,136 74,582 29,760 29,760 11,760 11,760 2,828 0 (90) 5,400 1,890 3,510 0 0 0 3,510 0.49 0.46
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