-----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, U/CmmRHYr9wF5oBjUWiUOwaWLqdUXGTQhzYmrrDg4EWatMBaO8y08ydu0DvEbrc8 CsENINzt/xX76vK9iJ8upg== 0000889331-96-000003.txt : 19961113 0000889331-96-000003.hdr.sgml : 19961113 ACCESSION NUMBER: 0000889331-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960928 FILED AS OF DATE: 19961112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LITTELFUSE INC /DE CENTRAL INDEX KEY: 0000889331 STANDARD INDUSTRIAL CLASSIFICATION: SWITCHGEAR & SWITCHBOARD APPARATUS [3613] IRS NUMBER: 363795742 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20388 FILM NUMBER: 96659483 BUSINESS ADDRESS: STREET 1: 800 E NORTHWEST HWY CITY: DES PLAINES STATE: IL ZIP: 60016 BUSINESS PHONE: 7088241188 MAIL ADDRESS: STREET 1: 800 E. NORTHWEST HWY CITY: DES PLAINES STATE: IL ZIP: 60016 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 SEPTEMBER 28, 1996 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission file number 0-20388 LITTELFUSE, INC. (Exact name of registrant as specified in its charter) Delaware 36-3795742 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 800 East Northwest Highway Des Plaines, Illinois 60016 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (847) 824-1188 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 Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes X No As of September 28, 1996, 9,899,679 shares of common stock, $.01 par value, of the Registrant and warrants to purchase 2,091,782 shares of common stock, $.01 par value, of the Registrant were outstanding. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION PAGE Item 1. Consolidated Condensed (unaudited) Statements of Income, Financial Condition, and Cash Flows and Notes to the Consolidated Condensed Financial Statements .............................................. 1 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 6 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K............................. 9 Part I - Financial Information Item 1. CONSOLIDATED CONDENSED STATEMENTS OF INCOME (In thousands, except per share data) (unaudited) For the Three For the Nine Months Ended Months Ended September September September September 28, 30, 28, 30, 1996 1995 1996 1995 Net sales $ 60,483 $ 54,688 $180,404 $167,091 Cost of sales 35,948 32,484 106,910 98,900 Gross profit 24,535 22,204 73,494 68,191 Selling, administrative and general expenses 13,139 12,164 40,108 36,929 Amortization of intangibles 1,763 1,632 5,293 4,893 Operating income 9,633 8,408 28,093 26,369 Interest expense 1,111 1,019 3,275 3,276 Other income, net (189) (99) (551) (271) Income before income taxes 8,711 7,488 25,369 23,364 Income taxes 3,136 2,658 9,133 8,294 Net income $ 5,575 $ 4,830 $ 16,236 $ 15,070 Net income per share $ 0.47 $ 0.39 $ 1.35 $ 1.21 Weighted average number of common and common equivalent shares outstanding 11,806 12,504 12,036 12,503 1 CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION (In thousands) September December 28, 31, 1996 1995 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 544 $ 1,308 Accounts receivable 40,161 29,722 Inventories 31,814 30,076 Deferred income taxes 1,336 1,336 Prepaid expenses and other 1,924 2,581 Total current assets 75,779 65,023 Property, plant, and equipment, net 62,465 61,229 Reorganization value, net 45,786 48,056 Patents and other identifiable intangible assets, net 24,863 27,971 Prepaid pension cost and other assets 3,598 2,907 $212,491 $205,186 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses 29,111 27,390 Accrued income taxes 10,832 8,362 Current portion of long-term debt 9,925 10,065 Total current liabilities 49,868 45,817 Long-term debt, less current portion 52,587 40,804 Deferred income taxes 4,637 4,615 Minority Interest 338 568 Shareholders' equity: Preferred stock, par value $.01 per share: 1,000,000 shares authorized; no shares issued and outstanding _ _ Common stock, par value $.01 per share: 19,000,000 shares authorized; 9,899,679 and 10,086,000 shares issued and outstanding 101 102 Cost of treasury stock, 1996 - 368,130 shares; 1995 - 110,000 shares (12,203) (3,533) Additional paid-in capital 56,813 72,364 Notes receivable - common stock (571) (571) Foreign translation adjustment (479) (120) Retained earnings 61,400 45,140 Total shareholders' equity $105,061 $113,382 $212,491 $205,186 2 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands) (unaudited) For the Three For the Nine Months Ended Months Ended September September September September 28, 1996 30, 1995 28, 1996 30, 1995 Operating activities: Net income $ 5,575 $ 4,830 $16,236 $15,070 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,634 2,941 10,132 8,505 Amortization 1,763 1,631 5,293 4,893 Provision for bad debts 108 61 322 307 Deferred income taxes - - 22 - Minority interest (60) - (201) - Changes in operating assets and liabilities: Accounts receivable (2,489) (399) (11,075) (7,296) Inventories (1,504) (118) (2,072) 1,501 Accounts payable and accrued expenses 146 278 1,887 8 Other, net 502 (903) 3,355 2,111 Net cash provided by operating activities 7,675 8,321 23,899 25,099 Cash used in investing activities: Purchases of property, plant, and equipment, net (4,418) (2,740) (12,376) (9,567) Cash used in financing activities: Proceeds/(payments) of long- term debt, net (2,017) (3,016) 11,940 (12,549) Proceeds from exercise of stock options 1 202 1,084 1,059 Purchase of common stock and warrants (2,660) (2,251) (25,400) (2,251) Other, net - (17) - (731) (4,676) (5,082) (12,376) (14,472) Effect of exchange rate changes on cash 72 (6) 89 58 Increase (decrease) in cash and cash equivalents (1,347) 493 (764) 1,118 Cash and cash equivalents at beginning of period 1,891 1,887 1,308 1,262 Cash and cash equivalents at end of period $ 544 $2,380 $ 544 $ 2,380 3 Notes to Consolidated Condensed Financial Statements (Unaudited) September 28, 1996 1. Basis of Presentation Littelfuse, Inc. and its subsidiaries (the "Company") are the successors in interest to the components business previously conducted by subsidiaries of Tracor Holdings, Inc. ("Predecessor"). The Company acquired its business as a result of the Predecessor's reorganization activities concluded on December 27, 1991. The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting solely of normal recurring items, considered necessary for a fair presentation have been included. Operating results for the period ended September 28, 1996 are not necessarily indicative of the results that may be expected for the fiscal year ending December 28, 1996. For further information, refer to the Company's consolidated financial statements and the notes thereto as of December 31, 1995, included in the Company's Annual Report on Form 10-K. Beginning in 1996, the Company changed its fiscal year end to the Saturday nearest December 31 and reports its quarterly interim financial information on the basis of periods of thirteen weeks. Previously the Company reported on a calendar year and quarter basis. The consolidated condensed statements of operations and cash flows for the three months ended September 28, 1996 are for the period from June 29, 1996 to September 28, 1996. 2. Inventories The components of inventories are as follows (in thousands): September 28, December 31, 1996 1995 Raw material $ 9,067 $ 8,823 Work in process 3,091 3,445 Finished goods 19,656 17,808 Total $31,814 $ 30,076 4 3. Per Share Data Net income per share amounts for the three months and nine months ended September 28, 1996 and September 30, 1995 are based on the weighted average number of common and common equivalent shares outstanding during the periods as follows (in thousands, except per share data): Three months ended Nine months ended Sept. 28, Sept. 30, Sept. 28, Sept. 30, 1996 1995 1996 1995 Average shares outstanding 9,926 10,134 9,958 10,116 Net effect of dilutive stock options and warrants - Primary 1,880 2,370 2,078 2,347 - Fully diluted 1,907 2,370 2,109 2,387 Average shares outstanding - Primary 11,806 12,504 12,036 12,463 - Fully diluted 11,833 12,504 12,067 12,503 Net income $ 5,575 $ 4,830 $16,236 $15,070 Net income per share - Primary $ 0.47 $ 0.39 $ 1.35 $ 1.21 - Fully diluted $ 0.47 $ 0.39 $ 1.35 $ 1.21 4. Long Term Debt The Company concluded a financing package on August 31, 1993. The package consists of $45,000,000 of Senior Notes issued pursuant to a Note Purchase Agreement which requires annual principal payments of $9,000,000 payable annually beginning August 31, 1996 through August 31, 2000. The package also includes a bank Credit Agreement which provides an open revolver line of credit of $65,000,000 less current borrowings subject to a maximum indebtedness calculation and other traditional covenants. No revolver principal payments are required until the line matures on August 31, 2000. At September 28, 1996 the Company had available $41.5 million of borrowing capability under the revolver facility 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Sales increased 11 percent to $60.5 million the third quarter of 1996 compared to $54.7 million the third quarter of 1995. Operating income and net income each increased 15 percent to $9.6 and $5.6 million respectively for the quarter compared to the third quarter of last year. Earnings per share increased 21 percent to $0.47 per share the third quarter of 1996 compared to $0.39 per share the third quarter of 1995. Cash flow from operations was $7.7 million the third quarter of 1996. The Company repurchased 75,000 shares of its common stock for $2.7 million during the quarter and made capital investments of $4.4 million. The debt to equity ratio was 0.60 to 1 at September 28, 1996 compared to 0.45 to 1 at year end 1995 and 0.48 to 1 at September 30, 1995. Third Quarter, 1996 Littelfuse enjoyed a sales increase of 11 percent to $60.5 million the third quarter 1996 from $54.7 million the same period last year. The gross margin was 40.6 percent for the quarter both years. Operating income increased to 15.9 percent of sales the third quarter this year from 15.4 percent last year. Net income increased 15 percent to $5.6 million the third quarter this year compared to $4.8 million last year. Earnings per share increased 21 percent to $0.47 compared to $0.39 partly due to fewer equivalent shares outstanding related to our share repurchase program. Third quarter 1996 sales grew $5.8 million compared to the same quarter last year. Very strong automotive OEM sales in Europe spurred 21 percent sales growth in U.S. dollars and 26 percent sales growth in local currency. A portion of Europe's automotive OEM sales were due to a non-recurring item approximating $0.7 million accounting for 9 percent of the 21 percent sales growth for the quarter. Very strong electronics sales, particularly in Japan, spurred 24 percent sales growth in Asia Pacific. Respectable automotive and power fuse sales spurred 5 percent sales growth in North America. Electronics sales grew to $27.8 million in the third quarter 1996 from $25.8 million the same quarter of last year for an increase of $2.0 million or 8 percent. Sales were particularly strong in consumer electronics in Japan. Although electronics OEM gained some strength in North America and Europe in the third quarter, electronics distribution remained weak in North America and Europe and the personal computer and telecommunications markets remained weak in Southeast Asia. Automotive sales grew to $23.2 million in the third quarter 1996 from $19.9 million the same quarter last year for an increase of $3.3 million or 16 percent. The European automotive OEM business was very strong and would have shown quite respectable growth even without the $0.7 million non-recurring sale. The North American automotive OEM business also was 6 quite strong in the quarter. Power fuse sales grew to $9.5 million in the third quarter 1996 from $9.0 million the same quarter last year for an increase of $0.5 million or 6 percent. The Company believes that its electrical business sales continue to grow faster than the electrical industry in general. Gross profit was $24.5 million or 40.6 percent of sales for the third quarter 1996 compared to $22.2 million or 40.6 percent last year. North America gross margins improved compared to last year, while Europe declined slightly due to currency and Asia Pacific declined slightly due to the start up of the China operations and the assimilation of the Korean operations. Selling, general and administrative expenses were $13.1 million or 21.7 percent of sales for the third quarter 1996, compared to $12.2 million or 22.2 percent of sales for the same quarter last year. Selling expenses accounted for approximately two-thirds of the expenses both quarters. The S,G&A expenses as a percent of sales decreased slightly due to lower selling and to lower R&D expense as a percent of sales for the quarter. The amortization of the reorganization value and other intangibles was 2.9 percent of sales for the third quarter 1996 and 3.0 percent of sales for the third quarter of last year. Total S,G&A expenses including intangibles amortization were 24.6 percent of sales the third quarter 1996 compared to 25.2 percent the same quarter last year. Operating income was $9.6 million or 15.9 percent of sales for the third quarter 1996 compared to $8.4 million or 15.4 percent last year. Interest expense was $1.1 million for the third quarter 1996 compared to $1.0 million last year partly due to the Company's stock repurchase program. Other income, net, was $0.2 million for the third quarter compared to $0.1 million last year. Income before taxes was $8.7 million for the third quarter 1996 compared to $7.5 million last year. Income taxes were $3.1 million with an effective tax rate of 36 percent for the third quarter 1996 compared to $2.7 million with an effective tax rate of 35.5 percent the third quarter of last year. Net income for the third quarter 1996 was $5.6 million or $0.47 per share compared to $4.8 million or $0.39 per share last year. Nine Months, 1996 Sales increased 8 percent to $180.4 million from $167.1 million last year. Cash provided by operations before interest expense was $27.2 million and after interest expense was $23.9 million. Earnings per share increased 12 percent to $1.35 the first nine months of 1996 compared to $1.21 for the same period last year. The automotive sales trend has been very strong the first nine months of 1996. However, electronics sales growth has been noticeably lower in the first nine months of this year compared to recent years. Nine months electronics sales were up 5 percent at $83.3 million compared to $79.5 million last year. Asia Pacific business has been very strong, particularly consumer electronics in Japan. Automotive sales were up 13 percent at $71.0 million compared to $63.0 million last year. Recent European automotive sales 7 growth has been even stronger than our quite respectable North American automotive sales growth. Power fuse sales were up 6 percent to $26.2 million from $24.6 million last year. This business has benefited from improving economic conditions and market share gains associated with our new product introductions. Gross profit was 40.7 percent or $73.5 million for the first nine months of 1996 compared to 40.8 percent or $68.2 million the first nine months of last year. The slight decline in the gross profit this year is due to start up costs associated with our new operations in Asia Pacific -- the new greenfield plant in China and the new joint venture in Korea. Selling, general and administrative expenses were 22.2 percent of sales for the first nine months 1996 compared to 22.1 percent of sales last year. The increase in new systems implementation and foreign selling expenses were mostly offset by a decline in North American R&D and other general and administrative expenses. The amortization of intangibles was 2.9 percent of sales for the first nine months of both years. Total S,G & A expenses including intangibles amortization were 25.2 percent of sales the first nine months 1996 compared to 25.0 percent of sales the first nine months of last year. Operating income was $28.1 million or 15.6 percent of sales the first nine months 1996 compared to $26.4 million or 15.8 percent last year. Interest expense was $3.3 million the first nine months of both years since the company has invested all its free cash flow after financial expenses and capital expenditures the past twelve months in the repurchase of its own common stock and warrants. Other income, net was $0.6 million the first nine months 1996 compared to $0.3 million last year. Income before taxes was $25.4 million the first nine months 1996 compared to $23.4 million the first nine months of last year. Income taxes were $9.1 million the first nine months 1996 compared to $8.3 million last year. The year to date effective rate is 36 percent for 1996 compared to 35.5 percent last year. Net income the first nine months 1996 was $16.2 million compared to $15.1 million last year. Earnings per share the first nine months of 1996 increased 12 percent to $1.35 per share compared to $1.21 per share last year. Liquidity and Capital Resources Assuming no material adverse changes in market conditions or interest rates, management expects that the Company will have sufficient cash from operations to support its operations, its capital expenditures and its current debt obligations for the foreseeable future. Littelfuse started the 1996 year with $ 1.3 million of cash. Net cash provided by operations was $23.9 million for the first nine months. Cash used to invest in property, plant and equipment was $12.4 million. Cash used to repurchase stock and warrants was $25.4 million, proceeds of option exercises were $1.1 million, and proceeds of bank debt 8 were $11.9 million for net financing of $12.4 million use of cash. The net of cash provided by operations, less investing activities, less financing activities resulted in a decrease in cash of $0.9 million. The effect of exchange rates on cash added $0.1 million. This left the Company with a cash balance of approximately $0.5 million at September 28, 1996. The ratio of current assets to current liabilities was 1.5 to 1 at the end of the third quarter 1996, 1.4 to 1 at year end 1995, and 1.5 to 1 at the end of the third quarter 1995. The days sales in receivables was approximately 59 days at the end of the third quarter 1996 compared to 52 days at year end 1995 and 52 days at the end of the third quarter 1995. The increase in days sales in receivables is primarily due to the strong foreign sales (which have longer payment terms) and higher sales the second half of the quarter. The inventory turnover rate was approximately 4.5 turns at the end of the third quarter 1996 compared to 4.1 turns at year end 1995 and 5.2 turns at the end of the third quarter 1995. The lower turns is primarily due to the new China and Korean operations in Asia Pacific. The Company's capital expenditures were $12.4 million for the first nine months 1996. The Company expects that capital expenditures, which will be primarily for new machinery and equipment, will total approximately $18.0 million in 1996. The ratio of debt to equity was 0.60 to 1 at the end of the first nine months 1996 compared to 0.45 to 1 at year end 1995. The debt to equity ratio increased due to the Company's repurchase of common shares and warrants. The long term debt at the end of the first nine months 1996 consists of four types totaling $62.5 million. They are as follows: (1) private placement notes totaling $36.0 million, (2) bank revolver borrowings totaling $23.5 million, (3) notes payable relating to income taxes and mortgages totaling $1.3 million, and (4) other long-term debt totaling $1.7 million. These four items include $9.9 million of the bank revolver borrowings, tax notes and mortgage notes, which are considered to be current. This leaves net long term debt totaling $52.6 million at September 28, 1996. The private placement notes carry an interest rate of 6.31 percent and the bank revolver debt carries an interest rate of prime or LIBOR plus 0.5%, which currently is approximately 6.3%. The Company had available at September 28, 1996, a revolver facility of $41.5 million. The Company also has a $3.0 million letter of credit facility of which approximately $1.9 million was being used at September 28, 1996. PART II - OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K There were no reports on Form 8-K during the quarter ended September 28, 1996. 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q for the quarter ended September 28, 1996, to be signed on its behalf by the undersigned thereunto duly authorized. Littelfuse, Inc. Date: November 12, 1996 By /s/ James F. Brace James F. Brace Vice President, Treasurer, and Chief Financial Officer (As duly authorized officer and as the principal financial and accounting officer) 10 EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 00000889331 LITTELFUSE, INC 1,000 9-MOS DEC-28-1996 SEP-28-1996 $544 0 40,161 0 31,814 75,779 62,465 3,634 212,491 49,868 0 0 0 101 (12,203) 212,491 180,404 180,404 106,910 0 0 0 3,275 25,369 9,133 0 0 0 0 16,236 1.35 0
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