<PAGE> 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 MARCH 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-9965
KEITHLEY INSTRUMENTS, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
OHIO 34-0794417
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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28775 AURORA ROAD, SOLON, OHIO 44139
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (216) 248-0400
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO _
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As of April 28, 1995 there were outstanding 2,104,709 Common Shares,
without par value, and 1,471,020 Class B Common Shares, without par value.
- - --------------------------------------------------------------------------------
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PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. Financial Statements.
KEITHLEY INSTRUMENTS, INC.
CONSOLIDATED BALANCE SHEET
(In Thousands of Dollars)
(Unaudited)
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<CAPTION>
MARCH 31, SEPTEMBER 30,
-------------------- -------------
1995 1994 1994
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<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,682 $ 5,719 $ 2,712
Accounts receivable and other, net 18,223 13,692 14,462
Inventories:
Raw materials 5,111 3,944 4,137
Work in process 4,340 2,467 2,646
Finished products 3,233 2,351 2,908
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Total inventories 12,684 8,762 9,691
Other current assets 2,748 2,254 2,139
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Total current assets 36,337 30,427 29,004
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Property, plant and equipment, at cost 31,908 30,582 31,244
Less-Accumulated depreciation 21,214 19,558 20,177
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Total property, plant and equipment, net 10,694 11,024 11,067
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Intangible assets, net 6,433 6,897 6,665
Other assets 7,732 4,472 7,674
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Total assets $61,196 $52,820 $54,410
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current
installments on long-term debt $ 85 $ 528 $ 217
Accounts payable 6,517 4,700 6,366
Accrued payroll and related expenses 4,168 2,607 3,389
Other accrued expenses 4,018 3,862 3,781
Income taxes payable 1,875 1,280 1,545
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Total current liabilities 16,663 12,977 15,298
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Long-term debt 7,898 4,067 4,599
Other long-term liabilities 2,828 3,008 2,567
Shareholders' equity:
Paid-in-capital 3,813 3,586 3,647
Earnings reinvested in the business 29,280 29,029 27,943
Cumulative translation adjustment and other 714 153 356
------- ------- -------
Total shareholders' equity 33,807 32,768 31,946
------- ------- -------
Total liabilities and shareholders' equity $61,196 $52,820 $54,410
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KEITHLEY INSTRUMENTS, INC.
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS OF DOLLARS EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
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<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Net sales $27,850 $22,253 $51,375 $43,902
Cost of goods sold 10,842 8,874 19,939 17,474
Selling, general and administrative expenses 11,150 9,300 21,562 18,245
Product development expenses 3,691 2,660 6,896 5,263
Amortization of intangible assets 116 116 232 238
Financing expenses (net of investment income) 313 186 527 367
------- ------- ------- -------
Income before income taxes 1,738 1,117 2,219 2,315
Income taxes 420 265 555 648
------- ------- ------- -------
Net income $ 1,318 $ 852 $ 1,664 $ 1,667
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Net income per share $ 0.37 $ 0.24 $ 0.47 $ 0.47
======= ======= ======= =======
Cash dividends per Common Share $ .05 $ .05 $ .10 $ .10
======= ======= ======= =======
Cash dividends per Class B
Common Share $ .04 $ .04 $ .08 $ .08
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KEITHLEY INSTRUMENTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)
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<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,318 $ 852 $ 1,664 $ 1,667
Expenses not requiring outlay of cash 994 950 2,001 1,930
Changes in working capital (3,174) 276 (5,639) 1,753
Other operating activities (506) (171) 62 2,999
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Net cash provided by (used in) operating activities (1,368) 1,907 (1,912) 8,349
Cash flows from investing activities:
Payments for property, plant, and equipment (729) (916) (1,307) (2,159)
Other investing activities-net 35 8 53 17
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Net cash used in investing activities (694) (908) (1,254) (2,142)
Cash flows from financing activities:
Net decrease in short term debt (86) (169) (455) (608)
Net borrowing (repayment) of long term debt 1,044 (258) 3,551 (1,215)
Cash dividends (164) (161) (327) (323)
Other transactions-net 167 12 169 26
------- ------- ------- -------
Net cash provided by (used in) financing activities 961 (576) 2,938 (2,120)
Effect of exchange rate changes on cash 218 73 198 (20)
------- ------- ------- -------
Increase (decrease) in cash and cash equivalents (883) 496 (30) 4,067
Cash and cash equivalents at beginning of period 3,565 5,223 2,712 1,652
------- ------- ------- -------
Cash and cash equivalents at end of period $ 2,682 $ 5,719 $ 2,682 $ 5,719
======= ======= ======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes $ 300 $ 300 $ 618 $ 111
Interest 228 152 476 510
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DISCLOSURE OF ACCOUNTING POLICY
For purposes of this statement, the Company considers all highly liquid
investments with maturities of three months or less when purchased to be cash
equivalents.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
A. The consolidated financial statements at March 31, 1995 and 1994 and for the
three month periods then ended have not been examined by independents
accountants, but in the opinion of the management of Keithley Instruments,
Inc., all adjustments necessary to a fair statement of the consolidated balance
sheet, consolidated statement of income and consolidated statement of cash
flows for those periods have been included. All adjustments included are of a
normal, recurring nature.
B. The weighted average number of shares outstanding used in determining net
income per share was 3,567,457 for the quarter ended March 31, 1995 and
3,542,356 for the quarter ended March 31, 1994. For the six months ended March
31, 1995 and March 31, 1994, the weighted average number of shares outstanding
was 3,561,020 and 3,539,365, respectively. Both Common Shares and Class B
Common Shares are included in calculating the weighted average number of shares
outstanding. Fully diluted net income per share is not materially different
than net income per share.
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
(In Thousands of Dollars)
RESULTS OF OPERATIONS
SECOND QUARTER 1995 COMPARED WITH SECOND QUARTER 1994
Net income for the second quarter of fiscal 1995 was $1,318, or $.37 per share,
which increased from $852, or $.24 per share, in last year's quarter. The
substantial increase was due to higher sales levels. This improvement occurred
even though the company spent $1,671 during the quarter to develop the Direct
Wafer Measurement (DWM) technology and explore other new growth opportunities.
Excluding these costs, pretax earnings were $3.4 million versus $1.1 million in
last year's second quarter.
Record high net sales of $27,850 for the second quarter increased 25 percent
from $22,253 in the prior year's quarter. The increase was fueled by continued
strong demand for our automated parametric test systems used in the
semiconductor industry and strong shipments of the Model 2000 digital
multimeter introduced during the first quarter. Also, the company has
experienced increased demand from its customers because of growth in their
industries. Sales growth came from all divisions and across all geographic
areas. Europe was particularly strong with sales up 50 percent due in part to
the 13 percent weakening of the U.S. dollar from last year's second quarter.
Order levels were also strong for the quarter, up 16 percent over the prior
year's quarter. Backlog was reduced $1,081 during the quarter, but remained
strong at $11,603 at March 31, 1995.
Cost of goods sold as a percentage of net sales decreased to 38.9 percent from
39.9 percent. This was the result of a weakening U.S. dollar against European
currencies as well as fixed manufacturing costs being spread over higher sales
volume. The effect of the company's hedging activities on cost of goods sold
for the quarter was an increase of .3 percentage points of net sales. The
company does not expect the trend of lower cost of goods sold to continue, as
the general shift has been to sales of products with lower gross margins.
Selling, general and administrative expenses of $11,150 for the second quarter
increased $1,850 or 20 percent from $9,300 in the prior year's quarter, due
mainly to higher marketing costs. The higher marketing costs resulted from
additional costs to explore new business opportunities, higher costs related to
new product introductions, higher commissions due to increased sales volume and
higher costs in Europe due mainly to a 13 percent weaker U.S. dollar.
Product development expenses of $3,691, or 13.3 percent of net sales for the
quarter, increased $1,031 or 39 percent from $2,660 or 12.0 percent of net
sales in the prior year's quarter. This was due primarily to costs associated
with the development of DWM products.
Financing expenses (net of investment income) of $313, increased $127 or 68
percent. This was due to higher debt levels, higher interest rates on the
variable rate debt and related borrowing costs.
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SIX MONTHS ENDED MARCH 31, 1995 COMPARED WITH SIX MONTHS ENDED MARCH 31, 1994
Net income of $1,664 or $.47 per share for the six months ended March 31, 1995,
was flat versus $1,667 or $.47 per share reported for the prior year. For the
first six months of the current year, the company spent $3,041 pretax to
develop the DWM technology and explore other new business opportunities.
Excluding these costs, pretax earnings were up 127 percent from the first six
months of last year.
Net sales of $51,375 increased $7,473 or 17 percent from $43,902 reported for
the six month period last year. Half of the increase was due to strong demand
for the company's products serving the semiconductor industry. Orders for the
six month period were up 20 percent from last year. Over half of this increase
was due to the company's semiconductor business. Increased orders were noted
in all divisions and across all geographic areas.
Cost of goods sold as a percentage of net sales decreased to 38.8 percent from
39.8 percent for the six month period last year. This was due primarily to a
weaker U.S. dollar as well as fixed manufacturing costs being spread over
higher sales volume. The effect of the company's hedging activities on cost of
goods sold for the six months was to increase cost of goods sold by .3
percentage points of net sales.
Selling, general and administrative expenses of $21,562 or 42.0 percent of net
sales increased $3,317 or 18 percent from $18,245 or 41.6 percent of net sales
in the same period in the prior year. This was due mainly to higher marketing
costs. The higher marketing costs resulted from additional costs to explore
new business opportunities, higher costs in Europe due mainly to an 11 percent
weaker U.S. dollar and higher commissions due to a different geographic
channel mix and increased sales levels.
Product development expenses of $6,896, or 13.4 percent of net sales for the
first half of fiscal 1995, increased $1,633 or 31 percent from $5,263 or 12.0
percent of net sales in the same period last year. This was due primarily to
costs associated with the development of DWM products.
Financing expenses (net of investment income) increased $160 or 44 percent due
to higher debt levels, higher interest rates on the variable rate debt and
related borrowing costs.
The effective tax rate for the six month period was 25.0 percent compared to
28.0 percent for the prior year's period. The decrease was due to increased
utilization of the foreign sales corporation and of foreign tax credit
carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operations was $1,368 for the second quarter and $1,912 for the
first six months. Total debt of $7,983 at March 31, 1995, increased $3,167
since the beginning of the year. The increase in debt is supporting increased
working capital requirements due to higher sales and is funding development and
exploration of new business opportunities. Our debt-to-capital ratio at March
31, 1995, was 19.1 percent.
<PAGE> 8
During the remainder of fiscal 1995, the Company expects to finance debt
service, capital spending and working capital requirements through cash
provided by operations. At March 31, 1995, the Company had available unused
lines of credit with domestic and foreign banks aggregating $25,633 of which
$8,405 are short term and $17,228 are long term.
<PAGE> 9
PART II. OTHER INFORMATION
----------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 27 -- Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarterly period ended
March 31, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
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KEITHLEY INSTRUMENTS, INC.
(Registrant)
Date: May 12, 1995 /s/ Joseph P. Keithley
-----------------------------------------------------
Joseph P. Keithley
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
Date: May 12, 1995 /s/ Ronald M. Rebner
-----------------------------------------------------
Ronald M. Rebner
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
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<TABLE> <S> <C>
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<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 2,682
<SECURITIES> 0
<RECEIVABLES> 18,223
<ALLOWANCES> 0
<INVENTORY> 12,684
<CURRENT-ASSETS> 36,337
<PP&E> 31,908
<DEPRECIATION> 21,214
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<CURRENT-LIABILITIES> 16,663
<BONDS> 7,898
<COMMON> 179
0
0
<OTHER-SE> 33,628
<TOTAL-LIABILITY-AND-EQUITY> 61,196
<SALES> 51,375
<TOTAL-REVENUES> 51,375
<CGS> 19,939
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<INCOME-PRETAX> 2,219
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<EPS-PRIMARY> 0.47
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