-----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, AsOAjNf6sf5x//PB9CpEywTS3gXE/wnYIqdRa6637Nhg6zGPgSbC6V4ww1JLYRXV KIFZRiKwxLdTCZWsU9xVCA== 0000889331-97-000009.txt : 19971114 0000889331-97-000009.hdr.sgml : 19971114 ACCESSION NUMBER: 0000889331-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970927 FILED AS OF DATE: 19971112 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: SEC FILE NUMBER: 000-20388 FILM NUMBER: 97714309 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 27, 1997 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 27, 1997, 19,959,840 shares of common stock, $.01 par value, of the Registrant and warrants to purchase 3,818,302 shares of common stock, $.01 par value, of the Registrant were outstanding. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION PAGE Item 1. Consolidated Condensed Statements of Income, Financial Condition, and Cash Flows and Notes to the Consolidated Condensed Financial Statements (unaudited) ............................................................ ....... 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 CONSOLIDATEDCONDENSED STATEMENTS OFINCOME
(In thousands, except per share data) (Unaudited) For the three For the Nine Months Ended Months Ended Sept. 27, Sept. 28, Sept. 27, Sept. 28, 1997 1996 1997 1996 Net sales $68,993 $60,483 $204,404 $180,404 Cost of sales 41,133 35,948 121,116 106,910 Gross profit 27,860 24,535 83,288 73,494 Selling, administrative and general expenses 14,853 13,139 44,423 40,108 Amortization of intangibles 1,787 1,763 5,293 5,293 Operating income 11,220 9,633 33,572 28,093 Interest expense 1,165 1,111 2,989 3,275 Other income, net (123) (189) (488) (551) Income before income taxes 10,178 8,711 31,071 25,369 Income taxes 3,766 3,136 11,496 9,133 Net income $6,412 $5,575 $19,575 $16,236 Net income per share - Primary $ 0.27 $ 0.24 $ 0.82 $ 0.67 - Fully Diluted $ 0.27 $ 0.24 $ 0.81 $ 0.67 Weighted average number of common and common equivalent shares outstanding - Primary 23,914 23,612 23,821 24,072
1 CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION (In thousands) September 27, December 28, 1997 1996 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 251 $ 1,427 Accounts receivable 44,572 35,468 inventory 40,441 31,586 Deferred income taxes 3,100 3,100 Prepaid expenses and other 2,128 2,228 Total current assets 90,492 73,809 Property, plant, and equipment, net 70,191 63,889 Reorganization value, net 42,404 44,635 patents and other identifiable intangible assets, net 23,751 23,978 Prepaid pension cost and other assets 4,961 3,640 $ 231,799 $ 209,951 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 37,188 $ 30,264 Accrued income taxes 9,856 10,775 Current portion of long-term debt 11,426 10,005 Total current liabilities 58,470 51,044 Long-term debt, less current portion 45,742 44,556 Deferred income taxes 5,416 5,417 Minority interest 306 312 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: 34,000,000 shares authorized; 19,959,840 and 19,775,358 shares issued and outstanding 200 198 Additional paid-in capital 52,893 43,889 Notes receivable - common stock (1,954) (1,470) Foreign translation adjustment (2,590) (870) Retained earnings 73,316 66,875 Total shareholders' equity 121,865 108,622 $ 231,799 $ 209,951
2 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) For the three For the Nine Months Ended Months Ended Sept. 27, Sept. 28, Sept. 27, Sept. 28, 1997 1996 1997 1996 Operating activities: Net income $ 6,412 $ 5,575 $ 19,575 $ 16,236 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,201 3,634 9,781 10,132 Amortization 1,787 1,763 5,293 5,293 Provision for bad debts 120 108 371 322 Deferred income taxes 52 - (1) 22 Minority interest (102) (60) (115) (201) Changes in operating assets and liabilities: Accounts receivable (158) (2,489) (8,955) (11,075) Inventories (3,221) (1,504) (8,363) (2,072) Accounts payable and accrued expenses 717 146 5,546 1,887 Other, net (491) 502 (534) 3,355 Net cash provided by operating activities 8,317 7,675 22,598 23,899 Cash used in investing activities: Purchases of property, plant and equipment,net (5,208) (4,418) (12,545) (12,376) Acquisition of business, net - - (5,060) - (5,208) (4,418) (17,605) (12,376) Cash used in financing activities: (Payments)/proceeds of long-term debt,net (4,330) (2,017) (1,209) 11,940 Proceeds from exercise of stock options 953 1 1,453 1,084 Purchase of common stock and warrants - (2,660) (6,147) (25,400) (3,377) (4,676) (5,903) (12,376) Effect of exchange rate changes on cash (7) 72 (266) 89 Decrease in cash and cash equivalents (275) (1,347) (1,176) (764) Cash and cash equivalents at beginning of period 526 1,891 1,427 1,308 Cash and cash equivalents at end ofperiod $ 251 $ 544 $ 251 $ 544
3 Notes to Consolidated Condensed Financial Statements (Unaudited) September 27, 1997 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 27, 1997 are not necessarily indicative of the results that may be expected for the fiscal year ending January 3, 1998. For further information, refer to the Company's consolidated financial statements and the notes thereto as of December 28, 1996, 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 27, 1997 are for the period from June 29, 1997 to September 27, 1997. 2. Inventories The components of inventories are as follows (in thousands): September 27, December 28, 1997 1996 Raw material $10,250 $ 8,411 Work in process 3,81 3 3,263 Finished goods 26,378 19,912 Total $40,441 $31,586
4 3. Per Share Data Net income per share amounts for the three months and nine months ended September 27, 1997 and September 28, 1996 are based on the weighted average number of common and common equivalent shares outstanding during the periods and reflect adjustment for the two-for-one stock split in the first half of 1997 as follows (in thousands, except per share data): Three months ended Nine months ended Sept. 27, Sept. 28, Sept. 27, Sept. 28, 1997 1996 1997 1996 Average shares outstanding 19,887 19,852 19,777 19,916 Net effect of dilutive stock options and warrants - Primary 4,027 3,760 4,044 4,156 - Fully diluted 4,154 3,814 4,314 4,218 Average shares outstanding - Primary 23,914 23,612 23,821 24,072 - Fully diluted 24,041 23,666 24,091 24,134 Net income $ 6,412 $ 5,575 $19,575 $16,236 Net income per share - Primary $ 0.27 $ 0.24 $ 0.82 $ 0.67 - Fully diluted $ 0.27 $ 0.24 $ 0.81 $ 0.67
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 $65.0 million 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 27, 1997 the Company had available $41.0 million of borrowing capability under the revolver facility. 4 5. Recently Issued Accounting Standard In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted by the Company for interim and annual periods beginning in fiscal year 1998. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating basic earnings per share, the dilutive effect of warrants and stock options will be excluded. The adoption of Statement 128 is expected to result in basic earnings per share being higher than the previously reported primary earnings per share for the third quarters ended September 27, 1997 and September 28, 1996 by $0.05 and $0.04 per share, respectively. The impact of Statement 128 on the calculation of fully diluted earnings per share for these quarters is not expected to be material. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Sales increased 14 percent the third quarter of 1997 to $69.0 million compared to $60.5 million the third quarter of 1996. Operating income increased 16 percent to $11.2 million for the quarter compared to $9.6 million the third quarter of last year. Net income increased 15 percent to $6.4 million for the quarter compared to $5.6 the third quarter of last year. After adjusting for the two-for-one stock split in the first half of 1997, earnings per share increased 13 percent to $0.27 compared to $0.24 per share the third quarter of 1996. Cash flow from operations was $8.3 million the third quarter of 1997. The Company made capital investments of $5.2 million during the third quarter. The debt to equity ratio was 0.47 to 1 at September 27, 1997 compared to 0.50 to 1 at year end 1996 and 0.60 to 1 at September 28, 1996. Third Quarter, 1997 Littelfuse enjoyed a 14 percent sales increase the third quarter 1997 compared to the same period last year. The gross margin was 40.4 percent the third quarter this year compared to 40.6 percent last year. Operating income increased to 16.3 percent of sales the third quarter this year from 15.9 percent last year. Net income increased 15 percent the third quarter this year compared to last year. Earnings per share increased 13 percent to $0.27 compared to $0.24, after adjusting for the two-for-one stock split in the first half of 1997. Third quarter 1997 sales grew $8.5 million compared to the same quarter last year. Strong sales in both electronics and auto OEM spurred 10 percent sales growth in North America. Strong electronics sales growth was partially offset by slightly weaker auto OEM sales in Europe. Although European sales grew by 10 percent in local currency they were down 1 percent in US dollars for the quarter. Very strong electronics sales in Southeast Asia and sales from our recent acquisition in Korea spurred 37 percent sales growth in Asia Pacific. Electronics sales grew to $34.8 million in the third quarter 1997 from $27.8 million the same quarter of last year for an increase of $7.0 million or 25 percent. Electronics sales growth was very strong in all areas except Japan. Personal computer, telecommunications and ballast applications sales were strong worldwide and resettable fuse sales volume is starting to increase. Automotive sales grew to $24.5 million in the third quarter 1997 from $23.2 million the same quarter last year for an increase of $1.3 million or 6 percent. The North American and Asian areas showed strong auto OEM sales growth. This strength was partially offset by slightly weaker European auto OEM sales reduced even further by currency translation this year compared to last year for the quarter. 6 Power fuse sales grew to $9.7 million in the third quarter 1997 from $9.5 million the same quarter last year for an increase of $0.2 million or 2 percent. The Company believes that its electrical business sales continue to grow greater than the electrical industry in general. Gross profit was $27.9 million or 40.4 percent of sales for the third quarter 1997 compared to $24.5 million or 40.6 percent last year. European margins improved slightly compared to last year, while North American margins were held relatively flat by resettable fuse start up expenses. Asia Pacific margins declined slightly due to the China operations and the assimilation of the two Korean operations. Selling, general and administrative expenses were $14.9 million or 21.5 percent of sales for the third quarter 1997, compared to $13.1 million or 21.7 percent of sales for the same quarter last year. The S,G&A expenses as a percent of sales decreased slightly due to lower selling and R&D expense as a percent of sales for the quarter. The amortization of the reorganization value and other intangibles was 2.6 percent of sales for the third quarter 1997 and 2.9 percent of sales for the third quarter of last year. Total S,G&A expenses including intangibles amortization were 24.1 percent of sales the third quarter 1997 compared to 24.6 percent the same quarter last year. Operating income was $11.2 million or 16.3 percent of sales for the third quarter 1997 compared to $9.6 million or 15.9 percent last year. Interest expense was $1.2 million for the third quarter 1997 compared to $1.1 million last year primarily due to the Company's acquisition of Samjoo in Korea and the Company's stock repurchase programs in the first six months of this year. Other income, net, was $0.1 million for the third quarter compared to $0.2 million last year. Income before taxes was $10.2 million for the third quarter 1997 compared to $8.7 million last year. Income taxes were $3.8 million with an effective tax rate of 37 percent for the third quarter 1996 compared to $3.1 million with an effective tax rate of 36 percent the third quarter of last year. Net income for the third quarter 1997 was $6.4 million or $0.27 per share compared to $5.6 million or $0.24 per share last year. Nine Months, 1997 Sales increased 13 percent to $204.4 million from $180.4 million last year. Cash provided by operations before interest expense was $25.6 million and after interest expense was $22.6 million. Earnings per share increased 22 percent to $0.82 the first nine months of 1997 compared to $0.67 for the same period last year. The electronics sales trend has been very strong for the first nine months of 1997. However, auto growth has been slower primarily due to European currency translation and slow worldwide aftermarket sales. Power fuse sales growth has been slower this year partially due to no growth in the industry. 7 Nine months electronics sales were up 22 percent at $101.2 million compared to $83.3 million last year. Asia Pacific electronic sales have been very strong, particularly personal computer and ballast business in Southeast Asia. North American and European electronics sales have also has been strong particularly in telecommunications. Automotive sales were up 7 percent at $76.0 million compared to $71.0 million last year. North American auto OEM business has been strong while both North American and European aftermarket sales have been sluggish. Power fuse sales were up 4 percent to $27.2 million from $26.2 million last year. This business has been growing more slowly the last year and a half. Gross profit was 40.7 percent or $83.3 million for the first nine months of 1997 compared to 40.7 percent or $73.5 million the first nine months of last year. While margin improvements have been made in both North American and European recurring businesses, our investments in resettables, China and the new Korea operations essentially have offset these improvements. Selling, general and administrative expenses were 21.7 percent of sales for the first nine months 1997 compared to 22.2 percent of sales last year. Both selling and R&D expenses have declined as a percent of sales during the first nine months of this year. The amortization of intangibles was 2.6 percent of sales for the first nine months 1997 compared to 2.9 percent last year. Total S,G & A expenses including intangibles amortization were 24.3 percent of sales the first nine months 1997 compared to 25.2 percent of sales the first nine months of last year. Operating income was $33.6 million or 16.4 percent of sales the first nine months 1997 compared to $28.1 million or 15.6 percent last year. Interest expense was $3.0 million the first nine months 1997 compared to $3.3 million the first nine months of last year. Other income, net was $0.5 million the first nine months 1997 compared to $0.6 million last year. Income before taxes was $31.1 million the first nine months 1997 compared to $25.4 million the first nine months of last year. Income taxes were $11.5 million the first nine months 1997 compared to $9.1 million last year. The year to date effective tax rate is 37 percent for 1997 compared to 36 percent last year. Net income the first nine months 1997 was $19.6 million compared to $16.2 million last year. Earnings per share the first nine months of 1997 increased 22 percent to $0.82 per share compared to $0.67 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. 8 Littelfuse started the 1997 year with $ 1.4 million of cash. Net cash provided by operations was $22.6 million for the first nine months. Cash used to invest in property, plant and equipment was $12.5 million, as well as foreign investment of $5.1 million. Cash used to repurchase stock and warrants was $6.1 million, proceeds of option exercises were $1.5 million, and payments of bank debt were $1.2 million for net financing of $5.9 million use of cash. The net of cash provided by operations, less investing activities, less financing activities resulted in a decrease in cash of $1.2 million. This left the Company with a cash balance of approximately $0.3 million at September 27, 1997. The ratio of current assets to current liabilities was 1.5 to 1 at the end of the third quarter 1997, 1.4 to 1 at year end 1996, and 1.5 to 1 at the end of the third quarter 1996. The days sales in receivables was approximately 59 days at the end of the third quarter 1997 compared to 51 days at year end 1996 and 59 days at the end of the third quarter 1996. 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 days inventory outstanding was approximately 89 days at the end of the third quarter 1997 compared to 79 days at year end 1996 and 81 days at the end of the third quarter 1996. The higher days inventory outstanding is primarily due to resettables and auto OEM fuses. Sales of each were lower than originally projected for the third quarter. The Company's capital expenditures were $12.5 million for the first nine months 1997. In addition, the Company made year to date foreign investments of $5.1 million. The Company expects that capital expenditures, which will be primarily for new machinery and equipment, will total approximately $21.0 million in 1997. The ratio of total long-term debt to equity was 0.38 to 1 at the end of the first nine months 1997 compared to 0.41 to 1 at year end 1996. The long term debt at the end of the first nine months 1997 consists of four types totaling $57.2 million. They are as follows: (1) private placement notes totaling $27.0 million, (2) bank revolver borrowings totaling $24.0 million, (3) notes payable relating to income taxes and mortgages totaling $1.3 million, and (4) other long-term debt totaling $4.9 million. These four items include $11.4 million of the bank revolver borrowings, tax and mortgage notes, and other long-term items which are considered to be current. This leaves net long term debt totaling $45.7 million at September 27, 1997. 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 6.4%. The Company had $41.0 million available at September 27, 1997, under its revolver facility. The Company also has a $3.0 million letter of credit facility of which approximately $1.8 million was being used at September 27, 1997. 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 27, 1997. 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 27, 1997 to be signed on its behalf by the undersigned thereunto duly authorized. Littelfuse, Inc. Date: November 11, 1997 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
5 0000889331 LITTELFUSE, INC 1,000 9-MOS JAN-03-1998 SEP-27-1997 $251 0 44,572 0 40,441 90,492 70,191 9,781 231,799 58,470 0 0 0 200 0 231,799 204,404 204,404 121,116 0 0 0 2,989 31,071 11,496 0 0 0 0 19,575 0.82 0.81
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