-----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, GRxJZ72v6Aeyv4+tkqAYA2Mg1pj5ylLrUOWeCyrtCufnEmpkQ1o3rjhDtvh0rbW7 HuIXYL6j23EIp3tzVl8NCA== 0000950152-97-005911.txt : 19970814 0000950152-97-005911.hdr.sgml : 19970814 ACCESSION NUMBER: 0000950152-97-005911 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NYSE 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: 97658549 BUSINESS ADDRESS: STREET 1: 28775 AURORA RD CITY: SOLON STATE: OH ZIP: 44139 BUSINESS PHONE: 2162480400 10-Q 1 KEITHLEY INSTRUMENTS FORM 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 JUNE 30, 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 August 1, 1997 the Registrant had outstanding 4,850,561 Common Shares, without par value, and 2,786,278 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)
JUNE 30, SEPTEMBER 30, ----------------------- ------------- 1997 1996 1996 ---- ---- ---- Assets - ------ Current assets: Cash and cash equivalents $ 2,018 $ 3,969 $ 3,995 Accounts receivable and other, net 21,038 19,370 18,538 Inventories: Raw materials 7,585 8,017 8,255 Work in process 5,508 5,704 4,880 Finished products 3,800 4,711 4,291 -------- -------- -------- Total inventories 16,893 18,432 17,426 Other current assets 3,016 2,631 3,781 -------- -------- -------- Total current assets 42,965 44,402 43,740 -------- -------- -------- Property, plant and equipment, at cost 41,822 36,592 37,873 Less-Accumulated depreciation 24,896 24,259 22,531 -------- -------- -------- Total property, plant and equipment, net 16,926 12,333 15,342 -------- -------- -------- Intangible assets, net 1,877 7,973 2,064 Other assets 12,712 9,548 12,688 -------- -------- -------- Total assets $ 74,480 $ 74,256 $ 73,834 ======== ======== ======== Liabilities and Shareholders' Equity - ------------------------------------ Current liabilities: Short-term debt and current installments on long-term debt $ 31 $ 84 $ 61 Accounts payable 9,089 7,032 8,162 Accrued payroll and related expenses 4,141 5,232 4,525 Other accrued expenses 7,336 5,246 9,358 Income taxes payable 1,244 1,956 2,955 -------- -------- -------- Total current liabilities 21,841 19,550 25,061 -------- -------- -------- Long-term debt 17,865 11,308 13,308 Other long-term liabilities 3,531 3,125 3,709 Shareholders' equity: Paid-in-capital 7,076 5,074 5,479 Earnings reinvested in the business 24,787 34,911 25,865 Cumulative translation adjustment 218 399 562 Unamortized portion of restricted stock (625) (3) (14) Common shares held in treasury, at cost (213) (108) (136) -------- -------- -------- Total shareholders' equity 31,243 40,273 31,756 -------- -------- -------- Total liabilities and shareholders' equity $ 74,480 $ 74,256 $ 73,834 ======== ======== ========
2 3 KEITHLEY INSTRUMENTS, INC. CONSOLIDATED STATEMENT OF INCOME (LOSS) (In Thousands of Dollars Except for Per Share Data) (Unaudited)
FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED JUNE 30, ENDED JUNE 30, 1997 1996 1997 1996 ---- ---- ---- ---- Net sales $32,410 $29,403 $88,444 $89,245 Cost of goods sold 13,896 11,376 37,396 34,178 Selling, general and administrative expenses 12,842 11,985 37,117 36,263 Product development expenses 3,878 4,664 12,752 13,096 Special charges 306 -- 739 -- Amortization of intangible assets 56 171 170 462 Net financing expenses 344 201 817 536 ------- ------- -------- ------- Income (loss) before income taxes (benefit) 1,088 1,006 (547) 4,710 Income taxes (benefit) 327 245 (132) 1,319 ------- ------- -------- ------- Net income (loss) $ 761 $ 761 $ (415) $ 3,391 ======= ======= ======== ======= Net income (loss) per share $ 0.10 $ 0.10 $ (0.05) $ 0.43 ======= ======= ======== ======= Cash dividends per Common Share $ .031 $ .031 $ .094 $ .094 ======= ======= ======== ======= Cash dividends per Class B Common Share $ .025 $ .025 $ .075 $ .075 ======= ======= ======== =======
3 4 KEITHLEY INSTRUMENTS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (In Thousands of Dollars) (Unaudited)
FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED JUNE 30, ENDED JUNE 30, 1997 1996 1997 1996 ---- ---- ---- ---- Cash flows from operating activities: Net income (loss) $ 761 $ 761 $ (415) $ 3,391 Expenses not requiring outlay of cash 732 1,213 3,188 3,415 Changes in working capital (290) (2,061) (4,095) (5,850) Other operating activities (1,278) (958) (477) (281) ------- ------- ------- ------- Net cash provided by (used in) operating activities (75) (1,045) (1,799) 675 ------- ------- ------- ------- Cash flows from investing activities: Payments for property, plant, and equipment (828) (964) (4,958) (4,419) Acquisitions (excluding cash of $11) -- -- -- (1,408) Other investing activities-net 103 2 119 5 ------- ------- ------- ------- Net cash used in investing activities (725) (962) (4,839) (5,822) ------- ------- ------- ------- Cash flows from financing activities: Net increase (decrease) in short-term debt (15) 12 (30) 13 Net borrowing (repayment) of long-term debt 1,303 1,686 4,920 5,373 Cash dividends (222) (215) (662) (637) Other transactions-net 4 257 778 606 ------- ------- ------- ------- Net cash provided by financing activities 1,070 1,740 5,006 5,355 ------- ------- ------- ------- Effect of exchange rate changes on cash 11 (53) (345) (129) ------- ------- ------- ------- Increase (decrease) in cash and cash equivalents 281 (320) (1,977) 79 Cash and cash equivalents at beginning of period 1,737 4,289 3,995 3,890 ------- ------- ------- ------- Cash and cash equivalents at end of period $ 2,018 $ 3,969 $ 2,018 $ 3,969 ======= ======= ======= ======= Supplemental disclosures of cash flow information - -------------------------------------------------- Cash paid during the period for: Income taxes $ 399 $ 857 $ 1,706 $ 1,543 Interest 306 158 819 505 Supplemental schedule of noncash investing activities - ----------------------------------------------------- The company's acquisitions included the following noncash transactions (See Notes E and F): Fair value of assets acquired -- -- -- $ 2,525 Cash paid -- -- -- (1,408) Common Shares issued -- -- -- (201) ------- ------- ------- ------- Liabilities assumed -- -- -- $ 916 ======= ======= ======= ======= 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 June 30, 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 (loss) 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 7,877,808 for the quarter ended June 30, 1997 and 7,867,335 for the quarter ended June 30, 1996. For the nine months ended June 30, 1997 and June 30, 1996, the weighted average number of shares outstanding was 7,570,062 and 7,804,342, 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 $306 for the third quarter of fiscal 1997 include $706 for the relocation of the Keithley MetraByte operation to Cleveland from Taunton, Massachusetts and a reversal of $400 of expense recorded during 1996 for accrued lease costs. $224 of special charges in the third quarter were non-cash. At June 30, the moving of the operation was substantially complete and any additional expenses recorded in the fourth quarter of fiscal 1997 are expected to be nominal. At June 30, 1997, the company had $2,026 remaining on the Consolidated Balance Sheet ($1,685 in the caption "Other accrued expenses" and $341 in the caption "Other long-term liabilities") for the closing of the Taunton facility and certain 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 four years. E. 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. F. 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 - --------------------- Third Quarter 1997 Compared with Third Quarter 1996 - --------------------------------------------------- The third quarter of 1997 marked the return to profitability for the company, and represented the first quarter of positive earnings since the third quarter of fiscal 1996. Earnings before income taxes and special charges related to the Keithley MetraByte relocation were $1,394, up 39 percent from last year's third quarter. Net income for the quarter was $761, or $.10 per share, which is the same as last year's third quarter. Record net sales of $32,410 for the third quarter of fiscal 1997 were up 10 percent from $29,403 in the same period last year. The increase was due mostly to high demand for the company's recently introduced products designed specifically for the telecommunications industry and the ramp-up in sales for the Quantox(R) Silicon Oxide Monitoring System, offset somewhat by lower sales for Keithley MetraByte's PC board products and lower sales of parametric test products serving the semiconductor industry. Orders for the third quarter of $35,806 increased 30 percent from the prior year's third quarter and represent the fourth consecutive quarterly increase. Geographically, orders were up significantly in the United States and down in the Pacific Basin and Europe. Backlog increased $1,857 during the quarter to a record $18,835 at June 30, 1997. Cost of goods sold as a percentage of net sales increased 4.2 percentage points to 42.9 percent from 38.7 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 was a decrease of 0.2 percentage points of net sales in both this year's and the prior year's quarter. Selling, general and administrative expenses of $12,842 for the third quarter increased $857, or 7 percent from the prior year's quarter, but decreased as a percentage of net sales to 39.6 percent from 40.8 percent. The increase in dollars was due mainly to higher commissions and higher sales promotion expenses. Product development expenses of $3,878 decreased 17 percent from $4,664 in the prior year's quarter. Higher development costs for the company's instrument products were more than offset by lower product development expenses for Keithley MetraByte due to that operation's relocation. Additionally, last year's quarter contained high development expenses for the S600 parametric tester which is essentially complete. Special charges of $306 for the third quarter of fiscal 1997 include $706 for the relocation of the Keithley MetraByte operation to Cleveland from Taunton, Massachusetts and a reversal of $400 of expense recorded during 1996 for accrued lease costs. $224 of special charges were non-cash. At June 30, the moving of the operation was substantially complete and any additional expenses recorded in the fourth quarter of fiscal 1997 are expected to be nominal. At June 30, 1997, the company had 6 7 $2,026 remaining on the Consolidated Balance Sheet ($1,685 in the caption "Other accrued expenses" and $341 in the caption "Other long-term liabilities") for the closing of the Taunton facility and certain European operating subleases. Amortization expense of $56 for the quarter decreased from the prior year's quarter due to the September 1996 write-off of the remaining goodwill associated with Keithley MetraByte. Net financing expenses of $344 increased $143 or 71 percent from last year's third quarter due to higher average debt levels during the quarter. Nine Months Ended June 30, 1997 Compared with Nine Months Ended June 30, 1996 - ----------------------------------------------------------------------------- The company recorded a net loss of $415, or $.05 per share, for the nine months ended June 30, 1997, compared with net income of $3,391, or $.43 per share, for the prior year. Excluding special charges for the nine month period in fiscal 1997, net income was $112, or $.01 per share. Net sales of $88,444 decreased less than 1 percent, from $89,245 reported for the nine month period last year. The decrease was due to decreased sales of parametric testers serving the semiconductor industry and of the company's data acquisition boards, offset by increased sales of Quantox and of the company's instrument products. Orders for the nine month period were up 12 percent from last year. The majority of the increase was due to orders for Quantox and strong demand for the company's instrument products. Geographically, orders for the nine months were up in the United States and Pacific Basin, while down in Europe. Cost of goods sold as a percentage of net sales increased to 42.3 percent from 38.3 percent for the nine 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 effect of the company's hedging activities on cost of goods sold was a decrease of 0.1 percentage points of net sales for the nine months ended June 30, 1997, versus no effect on cost of goods sold in last year's nine month period. Selling, general and administrative expenses of $37,117, or 42.0 percent of net sales, were up $854, or 2 percent, from $36,263, or 40.6 percent of net sales, in the same period in the prior year due to higher marketing costs. Decreased expenses related to Keithley MetraByte's relocation, were offset by increased costs for the company's new business initiatives. Product development expenses of $12,752, or 14.4 percent of net sales, for the first nine months of fiscal 1997, decreased 3 percent from $13,096 , or 14.7 percent of net sales in the same period last year. Higher development costs for the company's instrument products and new business initiatives were more than offset by lower product development expenses for Keithley MetraByte due to that operation's relocation. Additionally, last year's nine month period contained high development expenses for the S600 parametric tester which was essentially completed during fiscal 1997. Special charges of $739 for the nine month period during fiscal 1997 include $1,339 for the relocation of the Keithley MetraByte operation to Cleveland from Taunton, Massachusetts and a reversal of $600 of expense recorded during 1996 for accrued lease costs. $224 of special charges were non-cash. At June 30, the moving of the operation was substantially complete and any additional expenses 7 8 recorded in the fourth quarter of fiscal 1997 are expected to be nominal. At June 30, 1997, the company had $2,026 remaining on the Consolidated Balance Sheet ($1,685 in the caption "Other accrued expenses" and $341 in the caption "Other long-term liabilities") for the closing of the Taunton facility and certain European operating subleases. Net financing expenses of $817 increased $281, or 52 percent, due to higher average debt levels during the period. The effective tax rate was 24.0 percent for the nine month period compared with 28.0 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. Liquidity and Capital Resources - ------------------------------- Cash used in operations was $75 for the third quarter and $1,799 for the nine months ended June 30, 1997. Total debt of $17,896 at June 30, 1997 increased $4,527 from the beginning of the fiscal year. The increase in debt and decrease in cash during the nine month period were used primarily to pay current liabilities, purchase fixed assets, and fund the expansion of the company's Semiconductor and Radiation Measurements facilities. The facilities expansion was substantially completed by the end of the second quarter. The total debt-to-capital ratio was 36.4 percent at June 30, 1997 compared with 29.6 percent at September 30, 1996. During the second quarter of fiscal 1997, 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 June 30, 1997, the Company had available unused lines of credit with domestic and foreign banks aggregating $13,118, of which $5,983 were short term and $7,135 were long term. Outlook - ------- Based on expected order levels and the company's backlog, fourth quarter sales and earnings are expected to be somewhat better than those reported in the third quarter. However, a prolonged strike by the Teamsters at UPS could impact the company's ability to meet its fourth quarter shipment estimate. Additionally, the company's new business initiatives are entering the phase in their commercialization where revenues are beginning to ramp up and the challenge ahead is to manage them profitability. The company expects that by the middle of fiscal 1998, the current new businesses will be close to break even and that fiscal year 1998's profits will be better than 1997's. Gross margins, however, are not expected to improve over the next several quarters due to higher fixed costs resulting from the expansion of manufacturing facilities, increased shipments of Quantox which carry lower margins, and the potential continued strengthening of the U.S. dollar. 8 9 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 the expectations for sales, earnings, new business initiatives 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, Ohio from Taunton, Massachusetts, and form a new business. This relocation is now complete; however, sales of the company's personal computer plug-in boards have declined somewhat. The business decline could be protracted for several reasons, including the continuation of hiring and training qualified personnel to assume duties of employees who did not relocate from Taunton, and assimilation and establishment of 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 47 percent of total revenue for the first nine months 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 ------- ------- 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 June 30, 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: August 13, 1997 /s/ Joseph P. Keithley ------------------------- Joseph P. Keithley Chairman, President and Chief Executive Officer (Principal Executive Officer) Date: August 13, 1997 /s/ Ronald M. Rebner ----------------------- Ronald M. Rebner Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 10 EX-11 2 EXHIBIT 11 1 Exhibit 11 11. Statement re computation of per share earnings
For The Three Months For The Nine Months Ended June 30, Ended June 30, 1997 1996 1997 1996 ---- ---- ---- ---- Shares outstanding at beginning of period 7,635,136 7,392,225 7,450,878 7,227,972 Net issuance of shares under stock award plans, weighted average 627 24,042 119,184 107,323 --------- --------- --------- --------- Weighted average shares outstanding 7,635,763 7,416,267 7,570,062 7,335,295 Assumed exercise of stock options, weighted average of incremental shares 242,045 451,068 -- 469,047 --------- --------- --------- --------- Average shares and common share equivalents outstanding 7,877,808 7,867,335 7,570,062 7,804,342 --------- --------- --------- --------- Net income (loss) per share $ 0.10 $ 0.10 $ (0.05) $ 0.43 ========== ========== =========== ========== Net income (loss) in thousands $ 761 $ 761 $ (415) $ 3,391 ========== ========== =========== ==========
EX-27 3 EXHIBIT 27
5 1,000 9-MOS SEP-30-1997 OCT-01-1996 JUN-30-1997 2,018 0 21,038 0 16,893 42,965 41,822 24,896 74,480 21,841 17,865 191 0 0 31,052 74,480 88,444 88,444 37,396 37,396 12,752 0 817 (547) (132) (415) 0 0 0 (415) (0.05) (0.05)
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