10-Q 1 c71025e10vq.txt QUARTERLY REPORT 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 29, 2002 OR TRANSITION REPORT PURSUANT TO SECTION 13 OF 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 --- As of June 29, 2002, 21,965,897 shares of common stock, $.01 par value, of the Registrant were outstanding. TABLE OF CONTENTS
PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Statements of Income for the periods ended June 29, 2002 and June 30, 2001.............................................................................. 1 Condensed Consolidated Balance Sheets for the periods ended June 29, 2002 and December 29, 2001............................................................. 2 Condensed Consolidated Statements of Cash Flows for the periods ended June 29, 2002 and June 30, 2001.............................................................................. 3 Notes to the Condensed Consolidated Financial Statements.......................... 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................................... 7 Item 3. Qualitative and Quantitative Disclosures about Market Risk ...................... 12 PART II - OTHER INFORMATION Item 4. Submission of matters to a vote of security holders.............................. 13 Item 6. Exhibits and Reports on Form 8-K.................................................. 14
LITTELFUSE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data, unaudited)
For the Three Months EndedFor the Six Months Ended ------------------------------------------------------ JUNE 29, June 30, JUNE 29, June 30, --------- --------- --------- --------- 2002 2001 2002 2001 ---- ---- ---- ---- Net sales ............................ $ 73,900 $ 68,996 $ 139,029 $ 144,586 Cost of sales ........................ 49,623 43,797 94,727 92,452 --------- --------- --------- --------- Gross profit ......................... 24,277 25,199 44,302 52,134 Selling, general and administrative expenses ......................... 15,073 15,809 29,983 32,753 Research and development expenses .... 2,145 2,310 4,166 4,983 Amortization of intangibles .......... 192 1,624 384 3,247 Restructuring expense ................ -- -- 3,744 -- --------- --------- --------- --------- Operating income ..................... 6,867 5,456 6,025 11,151 Interest expense ..................... 727 909 1,442 1,840 Other income ......................... (150) (583) (750) (689) --------- --------- --------- --------- Income before income taxes ........... 6,290 5,130 5,333 10,000 Income taxes ......................... 2,265 1,846 1,920 3,600 Net income ........................... $ 4,025 $ 3,284 $ 3,413 $ 6,400 ========= ========= ========= ========= Net income per share: Basic ............................ $ 0.18 $ 0.17 $ 0.16 $ 0.32 ========= ========= ========= ========= Diluted .......................... $ 0.18 $ 0.15 $ 0.15 $ 0.30 ========= ========= ========= ========= Weighted average shares and equivalent shares outstanding: Basic ............................ 21,915 19,863 21,902 19,829 ========= ========= ========= ========= Diluted .......................... 22,062 21,745 22,059 21,687 ========= ========= ========= =========
1 LITTELFUSE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) JUNE 29, 2002 December 29, 2001 ------------- ----------------- ASSETS: Cash and cash equivalents ...................... $ 31,826 $ 34,527 Marketable securities .......................... 11,944 -- Receivables .................................... 47,280 40,969 Inventories .................................... 44,743 46,208 Other current assets ........................... 15,596 14,478 -------- -------- Total current assets ........................... $151,389 $136,182 Property, plant, and equipment, net ............ 82,200 86,601 Reorganization value, net ...................... 28,066 28,066 Other intangible assets, net ................... 20,111 20,455 Other assets ................................... 1,553 968 -------- -------- $283,319 $272,272 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities excluding current portion of long-term debt .......................... $ 46,835 $ 42,216 Current portion of long-term debt .............. 20,387 21,026 -------- -------- Total current liabilities ...................... 67,222 63,242 Long-term debt ................................. 30,248 30,402 Deferred liabilities ........................... 877 835 Other long-term liabilities .................... 682 124 Shareholders' equity ........................... 184,290 177,669 -------- -------- Shares issued and outstanding at June 29, 2002: 21,965,897; as of December 29, 2001, 21,873,416 ....... $283,319 $272,272 2 LITTELFUSE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited)
For the Three Months Ended For the Six Months Ended -------------------------- ------------------------ JUNE 29, June 30, JUNE 29, June 30, -------- -------- -------- -------- 2001 2001 2002 2001 ---- ---- ---- ---- Operating activities: Net income ................................. $ 4,025 $ 3,284 $ 3,413 $ 6,400 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation ........................... 4,302 4,800 8,623 9,600 Amortization .......................... 192 1,624 384 3,247 Changes in operating assets and liabilities: Accounts receivable ................... (230) (603) (4,886) 3,233 Inventories ........................... 1,145 1,525 2,341 (167) Accounts payable and accrued expenses . 1,846 (5,244) 4,653 (11,661) Other, net ............................ 461 691 (427) (1,542) -------- -------- -------- -------- Net cash provided by operating activities ............................ $ 11,741 $ 6,077 $ 14,101 $ 9,110 Cash used in investing activities: Purchases of property, plant, and equipment, net ........................ (1,592) (4,267) (3,399) (9,398) Purchase of marketable securities .......... (11,944) -- (11,944) -- -------- -------- -------- -------- Net cash used in investing activities ...... (13,536) (4,267) (15,343) (9,398) Cash provided by (used in) financing activities: Proceeds from long-term debt .......... -- 4,802 -- 15,902 Payments of long-term debt ............ (124) (4,134) (1,728) (11,441) Proceeds from exercise of stock options and warrants ....................... 583 895 1,271 1,353 Purchase of common stock and warrants . -- -- -- (1,256) -------- -------- -------- -------- Net cash provided by (used in) financing activities ............................ 459 1,563 (457) 4,558 Effect of exchange rate changes on cash .... (935) 140 (1,002) 189 -------- -------- -------- -------- Increase/(decrease) in cash and cash equivalents ........................... (2,271) 3,513 (2,701) 4,459 Cash and cash equivalents at beginning of period ............................. 34,097 6,437 34,527 5,491 -------- -------- -------- -------- Cash and cash equivalents at end of period ................................ $ 31,826 $ 9,950 $ 31,826 $ 9,950 ======== ======== ======== ========
3 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) JUNE 29, 2002 1. BASIS OF PRESENTATION 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 of normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the period ended June 29, 2002, are not necessarily indicative of the results that may be expected for the year ending December 28, 2002. For further information, refer to the Company's consolidated financial statements and the notes thereto incorporated by reference in the Company's Annual Report on Form 10-K for the year ended December 29, 2001. 2. MARKETABLE SECURITIES The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company has evaluated its investment policies consistent with Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities," and determined that all of its investment securities are to be classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses reported in "Stockholders' Equity" as a component of "Accumulated Other Comprehensive Income (Loss)." The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in interest income. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in selling, general, and administrative expenses. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income. The following is a summary of marketable securities classified as "available-for-sale" securities as required by SFAS 115: 2002 2001 -------------------------------------------------------------------------------- Debt/equity securities: Cost $11,944,215 -- Gross unrealized losses 94 -- -------------------------------------------------------------------------------- Estimated fair value $11,944,121 -- 4 3. INVENTORIES The components of inventories are as follows (in thousands): June 29, June 30, 2002 2001 -------- -------- Raw material $ 9,800 $ 11,844 Work in process 11,482 13,942 Finished goods 23,461 32,331 -------- -------- Total $ 44,743 $ 58,117 ======== ======== 4. DERIVATIVES AND HEDGING On June 11, 2002, the Company entered into cross currency rate swaps, with a notional amount of $11.6 million, as a cash flow hedge of the variability of Yen cash flows attributable to the exchange rate risk on forecasted intercompany sales of inventory to a Japanese subsidiary. The cross currency rate swaps convert a portion of the Company's US Dollar fixed rate debt to fixed rate Japanese Yen debt. The swap agreements were accounted for as a cash flow hedge and reported at fair value. The fair value of the rate swap agreements outstanding at June 29, 2002, was recognized as a $0.5 million liability and as a decrease to consolidated equity as a component of other comprehensive income. Derivative financial instruments involve, to a varying degree, elements of market and credit risk not recognized in the consolidated financial statements. The market risk associated with these instruments resulting from interest rate movements is expected to offset the market risk of the underlying transactions being hedged. The counterparties to the agreements relating to the Company's cross currency rate instruments consist of major international financial institutions with high credit ratings. The Company does not believe that there is significant risk of non-performance by these counterparties because the Company monitors the credit ratings of such counterparties, and limits the financial exposure and amount of agreements entered into with any one financial institution. While the notional amount of the derivative financial instruments provide one measure of the volume of these transactions, they do not represent the amount of the Company's exposure to credit risk. The amounts potentially subject to credit risk (arising from the possible inability of counterparties to meet the terms of their contracts) are generally limited to the amounts, if any, by which the counterparties' obligations under the contracts exceed the obligations of the Company to the counterparty. 5. PER SHARE DATA Net income per share amounts for the three months and six months ended June 29, 2002 and June 30, 2001 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): 5
Three months ended Six months ended June 29, June 30, June 29, June 30, 2002 2001 2002 2001 ------- ------- ------- ------- Average shares outstanding 21,915 19,863 21,902 19,829 Net effect of dilutive stock options, warrants and restricted shares - Basic -- -- -- -- ------- ------- ------- ------- - Diluted 147 1,882 157 1,858 ------- ------- ------- ------- Average shares outstanding - Basic 21,915 19,863 21,902 19,829 ======= ======= ======= ======= - Diluted 22,062 21,745 22,059 21,687 ======= ======= ======= ======= Net income $ 4,025 $ 3,284 $ 3,413 $ 6,400 ======= ======= ======= ======= Net income per share - Basic $ 0.18 $ 0.17 $ 0.16 $ 0.32 ======= ======= ======= ======= - Diluted $ 0.18 $ 0.15 $ 0.15 $ 0.30 ======= ======= ======= =======
6. COMPREHENSIVE INCOME In accordance with Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," total comprehensive income for the three months ended June 29, 2002, and June 30, 2001, was approximately $6.4 million and $3.2 million, respectively, and the six months ended June 29, 2002 and June 30, 2001 was $5.3 million and $3.5 million, respectively. The adjustment for comprehensive income consists of deferred gains and losses from foreign currency translation adjustments and qualified cash flow hedges and unrealized gains and losses on available-for-sales securities. The components of comprehensive income were as follows:
Three months ended Six months ended June 29, June 30, June 29, June 30, 2002 2001 2002 2001 ---------------------- --------------------- Net income $ 4,025 $ 3,284 $ 3,413 $ 6,400 ================================================= Gross unrealized losses on securities -- -- (8) -- Foreign currency translation adjustments 2,910 (57) 2,492 (2,858) Loss on derivative instruments (549) -- (549) -- ------------------------------------------------- Comprehensive income $ 6,386 $ 3,227 $ 5,348 $ 3,542 =================================================
6 7. RECENTLY ISSUED ACCOUNTING STANDARDS In June 2001, the Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations" and No. 142, "Goodwill and Other Intangible Assets", effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the Statement. Other intangible assets will continue to be amortized over their useful lives. The Company has applied the new rules on accounting for goodwill and other intangible assets in the first quarter of 2002. Application of the non-amortization provisions of the Statement resulted in an increase in net income of $0.6 million, or $0.03 per share for the three months ended June 29, 2002 and $1.2 million, or $0.06 per share for the six months ended June 29, 2002. Pro-forma net income for the three and six months ended June 30, 2001, adjusted for the adoption of FAS 142 was $3.8 million or $0.18 per share and $7.6 million or $0.35 per share respectively. The Company performed the first of the required impairment tests of goodwill and indefinite lived intangible assets as of January 1, 2002 in the first quarter of 2002. The effect of these tests did not have a significant impact on the Company's financial position and results of operations. Additionally and unrelated to adoption of SFAS No. 142, there was a scheduled decrease in amortization expense of $0.5 million resulting in increased income of $0.3 million for the period ended June 29, 2002. 8. SUBSEQUENT EVENT On July 16, 2002, the Company announced the acquisition of Semitron Industries Limited of Swindon, England for $15.0 million in cash. Semitron manufactures a broad line of transient voltage suppression devices for applications in the computer, telecommunications, automotive and consumer electronics markets. The addition of Semitron's transient voltage suppression products expands the Company's line of overvoltage products and complements its line of overcurrent products. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Second Quarter, 2002 Sales increased $4.9 million or 7% to $73.9 million in the second quarter of 2002, compared to $69.0 million in the second quarter of 2001. Sales in the Americas increased 6% in the second quarter of 2002, compared to the second quarter of last year. Europe sales increased 1% in dollars, and decreased 3% in constant currency and Asia sales increased 14% in dollars and in constant currency. Electronic sales increased $3.2 million or 9% to $38.8 million in the second quarter of 2002 compared to $35.6 million in the same quarter of last year. During the second quarter electronic sales improved in the Asia and North American regions, with improved fundamentals in our Asia markets and inventory restocking at North American distributors. Automotive sales increased $2.1 million or 9% to $26.1 million in the second quarter of 2002 from $24.0 million in the same quarter last year. Automotive sales increased in all regions, due primarily to strong vehicle build rates. Electrical fuse sales decreased $0.4 million or 5% to $9.0 million in the second quarter of 2002 compared to $9.4 million in the same quarter last year. The electrical fuse market has continued to show weakness, however electrical fuse sales have improved on a sequential basis as a result of market share gains and seasonal trends. Gross margin was $24.3 million or 32.9% of sales for the second quarter of 2002, compared to $25.2 million or 36.5% in the same quarter last year. The decrease in gross margin is mainly attributable to increased pressure for lower pricing. However, on a sequential basis, gross margin increased 210 basis points from the first quarter of 2002 due to increased production levels and cost reduction programs. Operating expenses, excluding amortization, were $17.2 million or 23.3% of sales for the second quarter of 2002 compared to $18.1 million or 26.3% of sales for the same quarter in the prior year. Amortization of the reorganization value and other intangibles decreased to 0.3% of sales for the second quarter of 2002, from 2.4% of sales in the second quarter of 2001. Total operating 7 expenses, including intangible amortization, were 23.6% of sales in the second quarter of 2002 compared to 28.6% of sales in the same quarter last year. The decrease in amortization expense results from the combination of the adoption of SFAS No. 142 and a natural drop off of patent amortization. The adoption of SFAS No. 142 reduced amortization expense by $0.9 million for the quarter, and the natural drop off of patent amortization provided an additional reduction of $0.5 million for the period. Operating income increased 26% to $6.9 million or 9.3% of sales for the second quarter of 2002 compared to $5.5 million or 8.0% of sales for the same quarter of last year. Interest expense was $0.7 million in the second quarter of this year compared to $0.9 million in the second quarter of last year due to lower average debt levels. Other income was $0.1 million for the second quarter of 2002 compared to $0.6 million in the second quarter of the prior year. Income before income taxes was $6.3 million for the second quarter 2002 compared to $5.1 million for the second quarter of 2001. Income taxes were $2.3 million with an effective tax rate of 36% for the second quarter of 2002 compared to $1.8 million with an effective tax rate of 36% in the second quarter of last year. Net income for the second quarter 2002 was $4.0 million or $0.18 per diluted share compared to $3.3 million or $0.15 per diluted share for the same quarter of last year. Six Months, 2002 Sales for the first six months decreased 4% to $139.0 million from $144.6 million for the first six months last year. Six months electronics sales decreased 9% to $72.0 million compared to $79.5 million last year. Automotive sales increased 6% to $50.2 million compared to $47.5 million last year. Electrical sales also decreased 4% to $16.8 million from $17.6 million last year. Gross margin was $44.3 million or 31.9% of sales for the first six months of 2002 compared to $52.1 million or 36.1% of sales for the first six months of last year. As mentioned, the decrease in gross margin was primarily due to increased pricing pressure in the current market environment. Operating income for the first six months of 2002 decreased 46% to $6.0 million from $11.2 million last year. While still below the prior year levels, gross margin has continued to improve on a sequential basis through the first half of 2002 with the benefits of cost reduction activities and increased production levels due to improving demand for electronic and automotive products. Operating expenses, excluding amortization and restructuring expense, were 24.6% of sales for the first six months of 2002 compared to 26.1% last year. The amortization of intangibles was 0.3% of sales for the first half of 2002 compared to 2.2% last year. Total operating expenses, excluding restructuring expense, were 24.8% of sales the first six months 2002 compared to 28.3% of sales the first six months of last year. The adoption of SFAS No. 142 reduced amortization expense by $1.8 million for the first half of the year, and the natural drop off of patent amortization provided an additional reduction of $1.0 million. 8 Interest expense was $1.4 million for the first half 2002 compared to $1.8 million last year. Other income was $0.8 million for the first six months of 2002 compared to $0.7 million for the same period last year. Income before taxes was $5.3 million for the first half of 2002 compared to $10.0 million the first half of last year. Income taxes were $1.9 million the first six months 2002 compared to $3.6 million last year. Net income for the first six months of 2002 decreased 47% to $3.4 million from $6.4 million for the same period last year. Earnings per share for the first six months of 2002 decreased 50% to $0.15 per diluted share compared to $0.30 per diluted 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 both its operations and its current debt obligations for the foreseeable future. Littelfuse started the 2002 year with $34.5 million of cash. Net cash provided by operations was $14.1 million for the first six months. Net cash used to invest in property, plant and equipment and marketable securities was $15.3 million. In addition, cash used to pay long-term debt was $1.7 million and proceeds from stock option exercises were $1.2 million, resulting in net cash used in financing activities of $0.5 million. The net decrease in cash for the six months ended June 29, 2002 was $2.7 million, leaving the Company with a cash balance of $31.8 million at June 29, 2002. The ratio of current assets to current liabilities was 2.3 to 1 at the end of the second quarter 2002 compared to 2.2 to 1 at second quarter 2001. The days sales in receivables was 58 days at the end of the second quarter 2002, compared to 63 days at the end of the second quarter 2001, and 61 days at year-end 2001. The days inventory outstanding was approximately 82 days at the end of the second quarter 2002 compared to 121 days at end of the second quarter 2001 and 108 days at year-end 2001. The Company's capital expenditures were $1.6 million for the second quarter 2002. The Company expects that capital expenditures, which are primarily for new machinery, equipment and information systems, will be approximately $14 million for the full year 2002. The long-term debt at the end of the second quarter 2002 totaled $50.6 million and consisted of the following: (1) 6.16% private placement notes totaling $40.0 million, (2) foreign revolver borrowings totaling $10.0 million, (3) notes payable relating to mortgages totaling $0.3 million and (4) other long-term debt, including capital leases, totaling $0.3 million. Of this indebtedness, $20.4 million is considered to be current liabilities. The Company has a $55.0 million revolver in the U.S., all of which was available at June 29, 2002. The bank revolver loan notes carry an interest rate of prime or LIBOR plus 0.50%. The Company also has an $8.0 million letter of credit facility, of which approximately $2.2 million was being used at June 29, 2002. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. 9 The preceding commentary presents management's discussion and analysis of the Company's financial condition and results of operations for the periods presented. Certain of the statements included above, including those regarding future financial performance or results or those that are not historical facts, are or contain "forward-looking" information as that term is defined in the Securities Exchange Act of 1934, as amended. The words "expect," "believe," "anticipate," "project," "estimate," and similar expressions are intended to identify forward-looking statements. The Company cautions readers that any such statements are not guarantees of future performance or events and such statements involve risks, uncertainties and assumptions, including, but not limited to, product demand and market acceptance risks, the effect of economic conditions, the impact of competitive products and pricing, product development and patent protection, commercialization and technological difficulties, capacity and supply constraints or difficulties, actual purchases under agreements, the effect of the Company's accounting policies, currency rate fluctuations, labor disputes, restructuring costs in excess of expectations, difficulties related to integrating acquisitions and other risks which may be detailed in the Company's Securities and Exchange Commission filings. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual results and outcomes may differ materially from those indicated or implied in the forward-looking statements. This report should be read in conjunction with information provided in the financial statements appearing in the Company's Annual Report on Form 10-K for the year ended December 29, 2001. Business Segment Information The Company designs, manufactures and sells circuit protection devices throughout the world. The Company has three reportable geographic segments: The Americas, Europe and Asia-Pacific. The circuit protection market in these geographical segments is categorized into three major product areas: electronic, automotive and electrical fuses. The Company evaluates the performance of each geographic segment based on its net income or loss. The Company also accounts for intersegment sales as if the sales were to third parties. The Company's reportable segments are the geographical regions where the revenue is earned and expenses are incurred. The Company has subsidiaries in The Americas, Europe and Asia-Pacific where each region is measured based on its sales and operating income or loss. Revenues from no single customer amounted to 10% or more of the Company's total revenues for the quarter ended June 29, 2002. Information concerning the operations in these geographic segments for the period ended June 29, 2002 and June 30, 2001, is as follows (in thousands):
Three Months Three months Three Months Six Months Ended Ended Ended Ended June 29,2002 June 30, 2001 June 29, 2002 June 30, 2001 Revenues The Americas $ 39,880 $ 37,722 $ 74,213 $ 77,939 Europe 12,338 12,205 24,587 29,271 Asia-Pacific 21,682 19,069 40,229 37,376 --------- --------- --------- ---------
10 Combined Total 73,900 68,996 139,029 144,586 Corporate 0 0 0 0 Reconciliation 0 0 0 0 --------- --------- --------- --------- Consolidated Total 73,900 68,996 139,029 144,586 ========= ========= ========= ========= Intersegment Revenues The Americas $ 18,012 $ 15,651 $ 32,414 $ 30,443 Europe 13,567 5,782 23,780 10,748 Asia-Pacific 4,031 2,521 7,092 4,228 --------- --------- --------- --------- Combined Total 35,609 23,954 63,286 45,419 Corporate 0 0 0 0 Reconciliation (35,609) (23,954) (63,286) (45,419) --------- --------- --------- --------- Consolidated Total 0 0 0 0 ========= ========= ========= ========= Interest Expense The Americas $ 665 $ 836 $ 1,322 $ 1,718 Europe 4 13 20 19 Asia-Pacific 58 60 100 103 --------- --------- --------- --------- Combined Total 727 909 1,442 1,840 Corporate 0 0 0 0 Reconciliation 0 0 0 0 --------- --------- --------- --------- Consolidated Total 727 909 1,442 1,840 Depreciation and Amortization The Americas $ 3,265 $ 3,200 $ 6,560 $ 6,300 Europe 605 850 1,232 1,736 Asia-Pacific 432 307 831 677 --------- --------- --------- --------- Combined Total 4,302 4,357 8,623 8,713 Corporate 192 2,067 384 4,134 Reconciliation 0 0 0 0 --------- --------- --------- --------- Consolidated Total 4,494 6,424 9,007 12,847 Other income (loss) The Americas $ 321 $ 311 $ 310 $ 289 Europe (73) 144 571 358 Asia-Pacific (99) 128 (131) 42 --------- --------- --------- --------- Combined Total 149 583 750 689 Corporate 0 0 0 0 Reconciliation 0 0 0 0 --------- --------- --------- --------- Consolidated Total 149 583 750 689 Income Tax Expense The Americas $ 1,425 $ 199 $ 672 $ (325)
11 Europe 351 794 965 2,142 Asia-Pacific 489 853 283 1,783 --------- --------- --------- --------- Combined Total 2,265 1,846 1,920 3,600 --------- --------- Corporate 0 0 0 0 Reconciliation 0 0 0 0 --------- --------- --------- --------- Consolidated Total 2,265 1,846 1,920 3,600 Net Income The Americas $ 1,606 $ 1,804 $ 2,758 $ 1,767 Europe 891 1,652 2,362 5,006 Asia-Pacific 1,720 1,896 2,421 3,763 --------- --------- --------- --------- Combined Total 4,217 5,352 7,541 10,536 Corporate (192) (2,068) (4,128) (4,136) Reconciliation 0 0 0 0 --------- --------- --------- --------- Consolidated Total 4,025 3,284 3,413 6,400 Revenues Electronic $ 38,758 $ 35,569 $ 71,974 $ 79,505 Automotive 26,127 23,958 50,265 47,532 Electrical 9,015 9,469 16,790 17,549 --------- --------- --------- --------- Consolidated Total 73,900 68,996 139,029 144,586
Item 3. Qualitative and Quantitative Disclosures about Market Risk The Company is exposed to market risk from changes in foreign exchange rates, commodities and to a lesser extent, interest rates. The Company had long-term debt outstanding at June 29, 2002 in the form of Senior Notes and foreign lines of credit at variable interest rates. Since substantially all of the debt has fixed interest rates, the Company's interest expense is not sensitive to changes in interest rate levels. A portion of the Company's operations consists of manufacturing and sales activities in foreign countries. The Company has manufacturing facilities in Mexico, England, Ireland, Switzerland, China and the Philippines. Substantially all sales in Europe are denominated in British Pounds Sterling and Euros and substantially all sales in the Asia-Pacific region are denominated in United States Dollars, Japanese Yen and South Korean Won. The Company's identifiable foreign exchange exposures result from the purchase and sale of products from affiliates, repayment of intercompany trade and loan amounts and translation of local currency amounts in consolidation of financial results. Changes in foreign currency exchange rates or weak economic conditions in the foreign countries in which it manufactures and distributes products could affect the Company's sales and financial results. The Company primarily utilizes netting and offsets to reduce known foreign currency exposures and, when appropriate, derivative instruments as hedges of specific foreign currency cash flows. 12 On June 11, 2002, the Company has entered into cross currency rate swaps with a notional amount of $11.6 million. The cross currency swaps convert $11.6 million of the Company's fixed rate 6.16% U.S. Dollar debt to fixed rate Japanese Yen 3.13% debt. The fair value of the rate swap agreements outstanding at June 29, 2002, was recognized as a $0.5 million liability, and is reported in consolidated shareholders' equity as a component of other comprehensive income. A risk management policy has been implemented by the Company which describes the procedures and controls over derivative financial instruments. Under the policy, the Company does not use derivative financial instruments for trading purposes and the use of such instruments is subject to the approval of senior officers. Typically, the use of such derivative instruments is limited to hedging activities related to specific foreign currency cash flows. The Company's exposure related to such transactions is, in the aggregate, not material to the Company's financial position, results of operations and cash flows. The Company uses various metals in the production of its products, including zinc, copper and silver. The Company's earnings are exposed to fluctuations in the prices of these commodities. The Company does not currently use derivative financial instruments to mitigate this commodity price risk. PART II - OTHER INFORMATION Item 4: Submission of Matters to a Vote of Security Holders The annual meeting of stockholders of Littelfuse, Inc. was held on April 26, 2002. The following matters were voted upon at this annual meeting and the results of such votes are provided below: 1. Election of five nominees to the Board of Directors to serve terms of one year or until their successors are elected: (i) Howard B. Witt Withhold Broker For 18,416,794 Authority 2,099,474 Abstentions ___ Nonvotes ___ (ii) John Driscoll Withhold Broker For 20,222,915 Authority 293,353 Abstentions ___ Nonvotes ___ (iii) Anthony Grillo Withhold Broker For 20,225,055 Authority 291,213 Abstentions ___ Nonvotes ___ (iv) Bruce A. Karsh
13 Withhold Broker For 20,224,915 Authority 291,353 Abstentions ___ Nonvotes ___ (v) John E. Major Withhold Broker For 20,225,215 Authority 291,053 Abstentions ___ Nonvotes ___
2. Approval and ratification of the Directors' appointment of Ernst & Young, LLP as the Company's independent auditors for the year ending December 28, 2002 Broker For 19,724,955 Against 758,680 Abstentions 32,633 Nonvotes ___ ---------- ------- -------
3. Approval of an amendment to the 1993 Stock Plan for employees and directors of Littelfuse, Inc. which would increase the maximum aggregate number of shares of Common Stock as to which awards of options, restricted shares, units or rights may be made from time to time from 2,400,000 to 3,400,000 shares Broker For 17,053,518 Against 3,436,608 Abstentions 26,142 Nonvotes ___ ---------- --------- ------
PART II - OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K (a) Exhibit Description ------- ----------- 2.1 By-laws, as amended to date 10.1 1993 Stock Plan for Employees and Directors of Littelfuse, Inc., as amended (b) There were no reports on Form 8-K filed during the quarter ended June 29, 2002. 14 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 June 29, 2002, to be signed on its behalf by the undersigned thereunto duly authorized. LITTELFUSE, INC. Date: August 13, 2002 By /s/ Philip G. Franklin ---------------------- Philip G. Franklin Vice President, Treasurer, and Chief Financial Officer (As duly authorized officer and as the principal financial and accounting officer) 15