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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 DECEMBER 31, 1994
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)
OHIO 34-0794417
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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
- -
As of January 31, 1995 there were outstanding 2,101,443 Common Shares,
without par value, and 1,471,020 Class B Common Shares, without par value.
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<TABLE>
PART I. FINANCIAL INFORMATION
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ITEM 1. Financial Statements.
- - ------ ---------------------
KEITHLEY INSTRUMENTS, INC.
CONSOLIDATED BALANCE SHEET
(In Thousands of Dollars)
(Unaudited)
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------ -------------
1994 1993 1994
---- ---- ----
<S> <C> <C> <C>
Assets
- - ------
Current assets:
Cash and cash equivalents $ 3,565 $ 5,223 $ 2,712
Accounts receivable and other, net 14,679 12,748 14,462
Inventories:
Raw materials 4,673 4,029 4,137
Work in process 3,328 2,262 2,646
Finished products 3,192 2,498 2,908
------ ------ ------
Total inventories 11,193 8,789 9,691
Other current assets 2,610 2,427 2,139
------ ------ ------
Total current assets 32,047 29,187 29,004
------ ------ ------
Property, plant and equipment, at cost 31,385 29,770 31,244
Less-Accumulated depreciation 20,625 18,876 20,177
------ ------ ------
Total property, plant and equipment, net 10,760 10,894 11,067
------ ------ ------
Intangible assets, net 6,549 7,013 6,665
Other assets 7,190 4,262 7,674
------ ------ ------
Total assets $56,546 $51,356 $54,410
====== ====== ======
Liabilities and Shareholders' Equity
- - ------------------------------------
Current liabilities:
Short-term debt and current
installments on long-term debt $ 203 $ 726 $ 217
Accounts payable 5,934 4,352 6,366
Accrued payroll and related expenses 3,190 2,216 3,389
Other accrued expenses 4,061 3,543 3,781
Income taxes payable 1,662 1,438 1,545
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Total current liabilities 15,050 12,275 15,298
------ ------ ------
Long-term debt 6,731 4,292 4,599
Other long-term liabilities 2,668 2,930 2,567
Shareholders' equity:
Paid-in-capital 3,647 3,576 3,647
Earnings reinvested in the business 28,126 28,338 27,943
Cumulative translation adjustment and other 324 (55) 356
------ ------ ------
Total shareholders' equity 32,097 31,859 31,946
------ ------ ------
Total liabilities and shareholders' equity $56,546 $51,356 $54,410
====== ====== ======
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<TABLE>
KEITHLEY INSTRUMENTS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In Thousands of Dollars Except for Per Share Data)
(Unaudited)
<CAPTION>
FOR THE THREE MONTHS
ENDED DECEMBER 31,
1994 1993
---- ----
<S> <C> <C>
Net sales $23,525 $21,649
Cost of goods sold 9,097 8,600
Selling, general and administrative expenses 10,412 8,945
Product development expenses 3,205 2,603
Amortization of intangible assets 116 122
Financing expenses (net of investment income) 214 181
------ ------
Income before income taxes 481 1,198
Income taxes 135 383
------ ------
Net income $ 346 $ 815
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Net income per share $ .10 $ .23
====== ======
Cash dividends per Common Share $ .05 $ .05
====== ======
Cash dividends per Class B
Common Share $ .04 $ .04
====== ======
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<TABLE>
KEITHLEY INSTRUMENTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
<CAPTION>
FOR THE THREE MONTHS
ENDED DECEMBER 31,
1994 1993
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 346 $ 815
Expenses not requiring outlay of cash 1,007 980
Changes in working capital (2,465) 1,477
Other operating activities 568 3,170
----- -----
Net cash provided by (used in) operating activities (544) 6,442
Cash flows from investing activities:
Payments for property, plant, and equipment (578) (1,243)
Other investing activities-net 18 9
----- -----
Net cash used in investing activities (560) (1,234)
Cash flows from financing activities:
Net increase (decrease) in short term debt 18 (439)
Borrowing (repayment) of long term debt 2,120 (957)
Cash dividends (163) (162)
Other transactions-net 2 14
----- -----
Net cash provided by (used in) financing activities 1,977 (1,544)
Effect of changes in foreign currency exchange rates (20) (93)
Increase in cash and cash equivalents 853 3,571
Cash and cash equivalents at beginning of period 2,712 1,652
----- -----
Cash and cash equivalents at end of period $3,565 $5,223
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Supplemental disclosures of cash flow information
- - -------------------------------------------------
Cash paid (refunded) during the period for:
Income taxes $ 318 $ (189)
Interest 248 358
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.
</TABLE>
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----- -- ------------ --------- ----------
A. The consolidated financial statements at December 31, 1994 and 1993 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 3,552,438 for the quarter ended December 31, 1994 and
3,536,897 for the quarter ended December 31, 1993. 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.
C. On December 8, 1994, the company announced the signing of an agreement in
principle to purchase UTI Instruments Company, (UTI), a privately owned
company based in San Jose, California. On February 1, 1995, the company
announced that it had decided not to pursue the purchase of UTI.
5
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ITEM 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations.
----------------------
(In Thousands of Dollars)
Results of Operations
- - ---------------------
First Quarter 1995 Compared with First Quarter 1994
- - ---------------------------------------------------
Net income for the first quarter of fiscal 1995 was $346, or $.10 per share,
which is down from $815, or $.23 per share last year. The expected decline in
earnings was due to additional spending to develop the company's Direct Wafer
Measurement (DWM) technology acquired from IBM in May 1994, as well as to
explore other new business opportunities.
Net sales of $23,525, increased nine percent from $21,649 in the prior year's
first quarter. The increase was due primarily to higher sales in the Pacific
Basin and the United States of the company's Automatic Parametric Test (APT)
systems. Geographically, export sales increased in all divisions, particularly
to the Pacific Basin, while U.S. and European sales were flat. Orders for the
first quarter of 1995 set a new record high. First quarter orders of $27,938
increased 24 percent from the prior year's first quarter and 8 percent from
the fourth quarter of fiscal 1994. Demand for the company's APT systems
continued to be strong as the semiconductor industry continues to grow. Also,
the response to newly introduced products has exceeded the company's
expectations. Strong orders caused a $4,942 increase in backlog to a new
record high of $12,684 at December 31, 1994. The company does not expect to
experience order rates equal to the first quarter's. Orders for APT systems
can be rather large, and the level of these orders can fluctuate significantly
from quarter to quarter.
Cost of goods sold as a percentage of net sales decreased to 38.7 percent from
39.7 percent. This was the result of a nine percent weakening of the U.S.
dollar against European currencies as well as fixed manufacturing costs spread
over higher sales volume. 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 increased $1,467 or 16 percent
from the prior year's quarter, due mainly to higher marketing costs. The
higher marketing costs resulted from new product introductions, higher
commissions due to a different geographic channel sales mix, a nine percent
weaker U.S. dollar and additional costs to explore new business opportunities.
Product development expenses of $3,205 for the quarter increased $602 or 23%.
This was primarily due to costs associated with the development of DWM
products.
Financing expenses (net of investment income) of $214, increased $33 to 0.9
percent of net sales from 0.8 percent in last year's quarter.
The effective tax rate was 28.0 percent for the quarter compared with 32.0
percent last year. The decrease in the effective rate was due to increased
utilization of foreign tax credits.
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Liquidity and Capital Resources
- - -------------------------------
Cash used in operations for the first quarter was $544, and was used primarily
to increase inventory levels to meet production requirements. Last year's
cash provided from operations of $6,442 for the first quarter included $2,503
of cash surrender value from the company's corporate-owned life insurance
program. Cash paid for interest during the first quarter of 1995 and 1994
included $101 and $196, respectively, for interest due on the proceeds from
corporate-owned life insurance. Total debt of $6,934 at December 31, 1994,
increased $2,118 during the quarter. The total debt-to-capital ratio was 17.8
percent at December 31, 1994. Cash and cash equivalents were $3,565 at
December 31, 1994, an $853 increase from September 30, 1994.
During fiscal 1995, the Company expects to finance debt service, capital
spending and working capital requirements through cash provided by operations.
At December 31, 1994, the Company had available unused lines of credit with
domestic and foreign banks aggregating $27,071 of which $7,881 are short term
and $19,190 are long term.
7
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PART II. OTHER INFORMATION
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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 December 31, 1994.
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.
KEITHLEY INSTRUMENTS, INC.
(Registrant)
Date: February 10, 1995 /s/ Joseph P. Keithley
----------------------------------------------
Joseph P. Keithley
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
Date: February 10, 1995 /s/ Ronald M. Rebner
----------------------------------------------
Ronald M. Rebner
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
8
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 3,565
<SECURITIES> 0
<RECEIVABLES> 14,679
<ALLOWANCES> 0
<INVENTORY> 11,193
<CURRENT-ASSETS> 32,047
<PP&E> 31,385
<DEPRECIATION> 20,625
<TOTAL-ASSETS> 56,546
<CURRENT-LIABILITIES> 15,050
<BONDS> 6,731
<COMMON> 178
0
0
<OTHER-SE> 31,919
<TOTAL-LIABILITY-AND-EQUITY> 56,546
<SALES> 23,525
<TOTAL-REVENUES> 23,525
<CGS> 9,097
<TOTAL-COSTS> 9,097
<OTHER-EXPENSES> 3,205
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<INTEREST-EXPENSE> 214
<INCOME-PRETAX> 481
<INCOME-TAX> 135
<INCOME-CONTINUING> 346
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<NET-INCOME> 346
<EPS-PRIMARY> .10
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</TABLE>
