EX-99.1 2 c33798exv99w1.htm EX-99.1 EX-99.1
Exhibit 99.1
(IMAGE)
NEWS RELEASE
CONTACT: Phil Franklin,
     Vice President, Operations Support & CFO (847) 391-0566
LITTELFUSE REPORTS SECOND QUARTER RESULTS
          DES PLAINES, Illinois, July 30, 2008 — Littelfuse, Inc. (NASDAQ/NGS:LFUS) today reported sales and earnings for the second quarter of 2008.
Second Quarter Highlights
  •   Sales for the second quarter of 2008 were $149.8 million, an increase of $20.7 million or 16% compared to the second quarter of 2007 and above the company’s guidance of $142 to $147 million. Foreign currency translation effects favorably impacted sales by $4.8 million on the period to period comparison.
 
  •   Diluted earnings per share for the second quarter of 2008 were $0.42 compared to diluted earnings per share of $0.37 for the second quarter of 2007.
 
  •   Adjusted diluted earnings per share (see Supplemental Information on page 9) were $0.45, which excludes $0.9 million of charges for severance and asset impairment related to manufacturing transfers. This was at the midpoint of the company’s guidance of $0.42 to $0.48 per share.
 
  •   The benefits of higher sales and increased operating leverage in the second quarter of 2008 were mostly offset by higher costs for transportation, materials and utilities driven primarily by increases in the prices of oil and commodity metals. The sales benefits from the strength of foreign currencies (primarily the euro) against the dollar were largely offset by the unfavorable effects of foreign currency denominated costs (primarily the euro, Chinese yuan, Philippine peso and Mexican peso). As expected, costs related to manufacturing transfers (redundant overhead, equipment moved, training, retention incentives, etc.) increased to over $3 million in the second quarter of 2008.
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  •   Cash from operating activities, which was negative in the first quarter of 2008, improved to $15.5 million in the second quarter due primarily to increased earnings and improved working capital performance. Capital expenditures increased as expected in the second quarter of 2008 to $13.6 million, mostly to support the manufacturing transfers.
 
  •   The book-to-bill ratio for electronics for the second quarter of 2008 was 1.0.
          “We were pleased with our sales performance in the second quarter,” said Gordon Hunter, Chief Executive Officer. “Our automotive and electrical businesses both had record sales for the quarter, and electronics bounced back nicely after several weak quarters. This indicates that we continue to make forward strides in each of our three markets.”
          “We did not make as much progress on margins as we might have expected given the sales increases,” said Phil Franklin, Chief Financial Officer. “We are clearly being impacted by higher transportation and material costs coupled with transfer-related costs reaching peak levels. We are taking actions to combat these cost increases including moving more freight from air shipment to sea shipment and implementing selective price increases. In addition, we expect the transfer-related costs will begin to moderate by the fourth quarter.”
          “Cash flow was a bright spot for the quarter as we continue to keep the focus on working capital management despite the distraction of the manufacturing transfers,” added Franklin.
Outlook
          “Through the second quarter, our markets held up well with the exception of the U.S. automotive market,” said Hunter. “However, we have some concerns about the second half of the year. The U.S. automotive market continues to weaken, and we expect some slowing in Europe. The electronics and electrical markets so far remain solid, but uncertain macroeconomic conditions and rising costs give us some concern. On the other hand, our manufacturing transfer projects are on schedule, and we remain confident that we will achieve the targeted savings.”
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Updated Guidance
  •   Sales for the third quarter of 2008 are expected to be in the range of $145 to $150 million, which represents 4 to 7% growth over the prior-year quarter.
 
  •   Diluted earnings for the third quarter of 2008 are expected to be in the range of $0.42 to $0.48 share before special charges. The company expects to book a non-cash charge of approximately $6.5 million pre-tax in accordance with SFAS No. 88, “Employer’s Accounting for Settlements and Curtailments of Defined Benefit Pension Plans for Termination Benefits,” related to curtailment of a pension plan in Ireland. This plan is fully funded from a cash perspective.
 
  •   The company expects earnings per share before restructuring charges and special items for the year 2008 to be approximately $1.70 per share, or approximately $1.29 per share on a GAAP basis (see Supplemental Schedule on page 10).
 
  •   The previously communicated 2009 earnings target was $2.50 per share. While management still believes this number is possible, weaker macroeconomic conditions and cost pressures could reduce this to as low as $2.30 per share.
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Conference Call Webcast Information
          Littelfuse will host a conference call today, Wednesday, July 30, 2008 at 11:00 a.m. Eastern/10:00 a.m. Central time to discuss the second quarter results. The call will be broadcast live over the Internet and can be accessed through the company’s Web site: www.littelfuse.com. Listeners should go to the Web site at least 15 minutes prior to the call to download and install any necessary audio software. The call will be available for replay through September 30, 2008 and can be accessed through the Web site listed above.
About Littelfuse
          As the worldwide leader in circuit protection products and solutions with annual sales of $536.1 million in 2007, the Littelfuse portfolio is backed by industry leading technical support, design and manufacturing expertise. Littelfuse products are vital components in virtually every product that uses electrical energy, including automobiles, computers, consumer electronics, handheld devices, industrial equipment, and telecom/datacom circuits. Littelfuse offers Teccor®, Wickmann® and Pudenz® brand circuit protection products. In addition to its Des Plaines, Illinois, world headquarters, Littelfuse has sales, distribution, manufacturing and engineering facilities in Brazil, China, England, Germany, Hong Kong, India, Ireland, Japan, Korea, Mexico, the Netherlands, the Philippines, Singapore, Taiwan and the U.S.
          For more information, please visit Littelfuse’s web site at www.littelfuse.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995.
This press release may include statements that constitute “forward looking statements” within the meaning of federal securities regulations and the Private Securities Litigation Reform Act of 1995. Any forward looking statements contained herein involve risks and uncertainties, 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, exchange rate fluctuations, actual purchases under agreements, the effect of the company’s accounting policies, labor disputes, restructuring costs in excess of expectations and other risks that may be detailed in the company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2007 under the heading “Risk Factors” and elsewhere in the company’s other Securities and Exchange Commission filings. These forward looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the company cautions you not to place undue reliance on these forward looking statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward looking statements. The company assumes no obligation to update this forward-looking information, except as required by law.
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LITTELFUSE, INC.
Net Sales by Business Unit and Geography
(in millions, unaudited)
                                                 
    Second Quarter     Year-to-Date  
    2008     2007     % Change     2008     2007     % Change  
Business Unit
                                                
Electronics
   $ 95.6     $ 82.2       16 %   $ 180.4     $ 168.3       7 %
Automotive
     38.9       33.8       15 %     75.2       67.6       11 %
Electrical
     15.3       13.1       17 %     27.9       25.1       11 %
 
                                        
 
                                                
Total
   $ 149.8     $ 129.1       16 %   $ 283.5     $ 261.0       9 %
 
                                        
                                                 
    Second Quarter     Year-to-Date  
    2008     2007     % Change     2008     2007     % Change  
Geography
                                                
Americas
   $ 55.1     $ 51.1       8 %   $ 104.8     $ 102.6       2 %
Europe
     35.8       29.4       22 %     69.1       60.6       14 %
Asia-Pacific
     58.9       48.6       21 %     109.6       97.8       12 %
 
                                        
 
                                                
Total
   $ 149.8     $ 129.1       16 %   $ 283.5     $ 261.0       9 %
 
                                        
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LITTELFUSE, INC.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
                 
    June 28, 2008     December 29, 2007  
Assets
               
Current assets:
                
Cash and cash equivalents
   $ 55,258     $ 64,943  
Accounts receivable
     94,292       85,607  
Inventories
     63,874       58,845  
Deferred income taxes
     11,061       10,986  
Prepaid expenses and other current assets
     14,906       14,789  
 
            
Total current assets
     239,391       235,170  
 
                
Property, plant and equipment:
                
Land
     11,407       12,573  
Buildings
     51,750       49,321  
Equipment
     299,639       282,416  
 
            
 
     362,796       344,310  
Accumulated depreciation
     (209,438 )     (199,748 )
 
            
Net property, plant and equipment
     153,358       144,562  
 
                
Intangible assets, net of amortization:
                
Patents, licenses and software
     8,937       9,231  
Distribution network
     13,517       13,823  
Customer lists, trademarks and tradenames
     3,346       1,192  
Goodwill
     82,979       73,462  
 
            
 
     108,779       97,708  
 
                
Investments
     5,919       6,544  
Deferred income taxes
     6,720       6,141  
Other assets
     1,416       1,240  
 
            
Total Assets
   $ 515,583     $ 491,365  
 
            
 
                
Liabilities and Shareholders’ Equity
                
Current liabilities:
                
Accounts payable
   $ 24,855     $ 27,889  
Accrued payroll
     18,677       19,441  
Accrued expenses
     12,021       11,595  
Accrued severance
     19,218       21,092  
Accrued income taxes
     1,544       4,484  
Current portion of long-term debt
     24,018       12,086  
 
            
Total current liabilities
     100,333       96,587  
 
                
Long-term debt, less current portion
     —       1,223  
Accrued severance
     11,277       8,912  
Accrued post-retirement benefits
     19,829       18,371  
Other long-term liabilities
     12,875       12,715  
Minority interest
     143       143  
Total shareholders’ equity
     371,126       353,414  
 
            
Total Liabilities and Shareholders’ Equity
   $ 515,583     $ 491,365  
 
            
 
Common shares issued and outstanding of 21,692,291 and 21,869,824, at June 28, 2008, and December 29, 2007, respectively.
                
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LITTELFUSE, INC.
Consolidated Statements of Income
(in thousands, except per share data, unaudited)
                                 
    For the Three Months Ended     For the Six Months Ended  
    June 28, 2008     June 30, 2007     June 28, 2008     June 30, 2007  
Net sales
   $ 149,826     $ 129,149     $ 283,534     $ 260,963  
 
                                
Cost of sales
     102,364       87,878       197,591       178,371  
 
                        
 
                                
Gross profit
     47,462       41,271       85,943       82,592  
 
                                
Selling, general and administrative expenses
     26,944       23,474       52,622       49,360  
Research and development expenses
     6,213       5,306       11,836       10,593  
Amortization of intangibles
     1,001       879       1,893       1,536  
 
                        
 
Operating income
     13,304       11,612       19,592       21,103  
 
                                
Interest expense
     368       368       702       830  
Other expense (income), net
     43       (545 )     356       (885 )
 
                        
 
                                
Income before income taxes
     12,893       11,789       18,534       21,158  
 
                                
Income taxes
     3,752       3,407       5,281       6,555  
 
                        
 
                                
Net income
   $ 9,141     $ 8,382     $ 13,253     $ 14,603  
 
                        
 
                                
Net income per share:
                                
Basic
   $ 0.42     $ 0.38     $ 0.61     $ 0.66  
 
                        
Diluted
   $ 0.42     $ 0.37     $ 0.61     $ 0.65  
 
                        
 
                                
Weighted average shares and equivalent shares outstanding:
                                
Basic
     21,687       22,294       21,734       22,229  
 
                        
Diluted
     21,869       22,516       21,880       22,427  
 
                        
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LITTELFUSE, INC.
Consolidated Statements of Cash Flows
(in thousands, unaudited)
                 
    For the Six Months Ended  
    June 28, 2008     June 30, 2007  
Operating activities:
                
Net income
   $ 13,253     $ 14,603  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation
     13,725       12,145  
Amortization of intangibles
     1,893       1,536  
Stock-based compensation
     2,506       2,634  
Gain on sale of property, plant and equipment
     (305 )     —  
Changes in operating assets and liabilities:
                
Accounts receivable
     (7,552 )     1  
Inventories
     (4,329 )     1,177  
Accounts payable and accrued expenses
     (3,845 )     (98 )
Accrued payroll and severance
     (784 )     (8,314 )
Accrued taxes
     (3,246 )     (4,455 )
Prepaid expenses and other
     3,208       (3,222 )
 
            
Net cash provided by operating activities
     14,524       16,007  
 
                
Investing activities:
                
Purchases of property, plant and equipment
     (25,101 )     (13,077 )
Purchase of business, net of cash acquired
     (9,280 )     —  
Sale of property, plant and equipment
     3,384       —  
 
            
Net cash used in investing activities
     (30,997 )     (13,077 )
 
                
Financing activities:
                
Proceeds from debt
     54,000       30,500  
Payments of debt
     (43,412 )     (48,025 )
Purchases of common stock
     (6,623 )     —  
Proceeds from exercise of stock options
     1,187       6,064  
 
            
Net cash provided by (used in) financing activities
     5,152       (11,461 )
 
                
Effect of exchange rate changes on cash
     1,636       1,067  
 
            
 
                
Decrease in cash and cash equivalents
     (9,685 )     (7,464 )
Cash and cash equivalents at beginning of period
     64,943       56,704  
 
            
Cash and cash equivalents at end of period
   $ 55,258     $ 49,240  
 
            
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LITTELFUSE, INC.
Supplemental Information
(in thousands, except per share data, unaudited)
                 
    For the Three Months Ended  
    June 28, 2008     June 30, 2007  
Net sales
   $ 149,826     $ 129,149  
 
                
Cost of sales
     102,364       87,878  
Special items (1)
     (548 )     (305 )
 
            
Adjusted cost of sales
     101,816       87,573  
 
                
Adjusted gross profit
     48,010       41,576  
% of sales
     32.0 %     32.2 %
 
                
Total operating expenses
     34,158       29,659  
Special items (2)
     —       (515 )
 
            
Adjusted total operating expenses
     34,158       29,144  
% of sales
     22.8 %     22.6 %
 
                
Adjusted operating income
     13,852       12,432  
 
            
% of sales
     9.2 %     9.6 %
 
                
Interest/other (income) expense
     411       (177 )
Special items (3)
     (386 )     —  
 
            
Adjusted interest/other (income) expense
     25       (177 )
 
                
Adjusted income before tax
     13,827       12,609  
 
                
Adjusted income tax expense
     4,024       3,644  
 
            
Effective rate
     29.1 %     28.9 %
 
                
Adjusted net income
   $ 9,803     $ 8,965  
 
            
 
                
Adjusted diluted earnings per share
   $ 0.45     $ 0.40  
 
            
 
                
Diluted shares
     21,869       22,516  
 
            
Note: The Company believes that adjusted operating income is more indicative of its ongoing operating performance than GAAP operating income since the former excludes special charges that are related to closure of legacy operations.
Special Items:
 
(1)   Special items for 2008 relate to severance and impairment charges for Ireland and Dongguan Wickman (China). Special items for 2007 relate to Ireland severance.
 
(2)   Special items for 2007 relate to termination costs for former Heinrich European sales representatives.
 
(3)   Special items for 2008 reflected the net exchange rate impact of revaluing the Ireland restructuring charges.
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LITTELFUSE, INC.
Supplemental Schedule (unaudited)
Diluted Earnings Per Share — Fiscal Year 2008
                         
    Year-to-Date For     Forecasted For     Forecasted For  
    the Six Months     the Second Six     the Year Ended  
    Ended June 28,     Months of Fiscal     December 27,  
    2008     Year 2008     2008  
Diluted Earnings Per Share — GAAP
   $ 0.61     $ 0.68     $ 1.29  
 
Adjustments / Special Items
     0.20 (1)     0.21 (2)     0.41  
 
                  
 
Diluted Earnings Per Share — Adjusted
   $ 0.81     $ 0.89     $ 1.70  
 
                  
Note: The Company believes that adjusted earnings per share is more indicative of its ongoing operating performance than GAAP earnings per share since the former excludes special charges that are related to closure of legacy operations.
Adjustments / Special Items:
(1)   Special items year-to-date for the six months ended June 28, 2008 relate to restructuring charges involving the transfer of the Company’s Mexico manufacturing operations to China, and severance and impairment charges for Ireland and Dongguan Wickman (China).
(2)   Special items forecasted for the second six months of fiscal year 2008 relate to the expected charge resulting from the curtailment of a pension plan in Ireland.
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