<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM 1 0 - Q
(Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
for the quarterly period ended July 31, 1995
or
[_] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.
__________________________________
Commission file number 0-2816.
METHODE ELECTRONICS, INC.
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(Exact name of registrant as specified in its charter.)
Delaware 36-2090085
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7444 West Wilson Avenue, Harwood Heights, Illinois 60656
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (708) 867-9600
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None
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(Former name, former address, former fiscal year, if changed since last report)
At September 8, 1995, Registrant had 22,170,059 shares of Class A Common
Stock and 1,268,766 shares of Class B Common Stock outstanding.
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 report(s)), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No
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Page 1 of 9
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INDEX
METHODE ELECTRONICS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets---July 31, 1995 and April 30, 1995.
Condensed consolidated statements of income---Three months ended July 31,
1995 and 1994.
Condensed statements of cash flows---Three months ended July 31, 1995 and
1994.
Note to condensed consolidated financial statements---July 31, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
--------------------------
Item 6. Exhibits and reports on Form 8-K
SIGNATURES
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Page 2
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PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
METHODE ELECTRONICS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
July 31, April 30,
1995 1995
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 44,517,922 $ 40,763,656
Accounts receivable, less allowance
of $1,295,000 36,517,495 39,467,500
Inventories:
Finished products 5,279,307 5,213,948
Work in process 15,005,545 16,863,248
Materials 10,129,495 10,845,224
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30,414,347 32,922,420
Current deferred income taxes 3,601,000 3,601,000
Prepaid expenses 1,608,905 2,939,338
----------- ------------
TOTAL CURRENT ASSETS 116,659,669 119,693,914
PROPERTY, PLANT AND EQUIPMENT 137,053,459 132,740,901
Less allowance for depreciation 79,569,399 76,574,297
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57,484,060 56,166,604
INTANGIBLE BENEFIT PLAN ASSET 4,102,592 4,269,525
OTHER ASSETS 10,946,039 11,365,852
------------ ------------
$189,192,360 $191,495,895
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts and notes payable $ 15,115,961 $ 25,064,915
Other current liabilities 20,404,875 18,607,699
------------ ------------
TOTAL CURRENT LIABILITIES 35,520,836 43,672,614
OTHER LIABILITIES 2,586,815 2,616,815
DEFERRED COMPENSATION 6,613,880 6,654,879
ACCUMULATED BENEFIT PLAN OBLIGATION 3,696,986 3,629,330
SHAREHOLDERS' EQUITY
Common Stock 11,714,062 11,665,489
Paid in capital 18,733,561 17,106,383
Retained earnings 109,626,460 104,322,709
Other shareholders' equity 699,760 1,827,676
------------ ------------
140,773,843 134,922,257
------------ ------------
$189,192,360 $191,495,895
============ ============
</TABLE>
See note to condensed consolidated financial statements.
Page 3
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
METHODE ELECTRONICS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended
July 31,
------------------------
1995 1994
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<S> <C> <C>
INCOME:
Net Sales $68,215,814 $57,763,484
Other 1,165,843 806,642
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Total 69,381,657 58,570,126
COSTS AND EXPENSES:
Cost of products sold 49,590,774 40,981,003
Selling and administrative expenses 9,234,437 8,185,178
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Total 58,825,211 49,166,181
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Income before income taxes 10,556,446 9,403,945
Provision for income taxes 3,853,000 3,575,000
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NET INCOME $ 6,703,446 $ 5,828,945
=========== ===========
Weighted average number of Common
Shares outstanding 23,186,000 23,073,000
Earnings per Common Share $.29 $.25
==== ====
Cash dividends per Common Share
Class A $.06 $.030
Class B $.06 $.025
</TABLE>
See note to condensed consolidated financial statements.
Page 4
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
METHODE ELECTRONICS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended
July 31
--------------------------
1995 1994
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<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 6,703,446 $ 5,828,945
Provision for depreciation
and amortization 3,051,381 2,466,626
Changes in operating assets
and liabilities 3,201,370 (5,474,835)
Other 280,373 400,199
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NET CASH PROVIDED BY
OPERATING ACTIVITIES 13,236,570 3,220,935
INVESTING ACTIVITIES
Purchases of property, plant and
equipment (4,368,837) (4,194,027)
Other 646,278 809,028
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NET CASH USED IN
INVESTING ACTIVITIES (3,722,559) (3,384,999)
FINANCING ACTIVITIES
Dividends (1,399,695) (690,355)
Other (4,360,050) 490,778
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NET CASH USED IN
FINANCING ACTIVITIES (5,759,745) (199,577)
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INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 3,754,266 (363,641)
Cash and cash equivalents at
beginning of period 40,763,656 26,785,962
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CASH AND CASH EQUIVALENTS
AT END OF PERIOD $44,517,922 $26,422,321
=========== ===========
</TABLE>
See note to condensed consolidated financial statements.
Page 5
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METHODE ELECTRONICS, INC. AND SUBSIDIARIES
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
July 31, 1995
NOTE -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes 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 three month period ended July 31, 1995
are not necessarily indicative of the results that may be expected for the year
ending April 30, 1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended April 30, 1995.
Page 6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
---------------------
Net sales for the first quarter of fiscal 1996 increased 18% to
$68,216,000, compared with $57,763,000 for the first quarter last year. The
connector operations had significant sales gains over the prior year first
quarter led by a strong performance by our worldwide fiber optic sales and
boosted by the inclusion of the former ETOS Fujikara International operation
purchased by Methode in the second quarter of fiscal 1995. Sales of automotive
controls, which represent approximately half of Methode's business, posted only
a modest increase during the current quarter compared to the prior year first
quarter. Sales of Network Buss products improved significantly aided by an
improved mainframe computer marketplace and the successful acquisition of the
Rogers Corporation buss bar business which Methode purchased in late fiscal
1994. Sales by our circuit operations were down compared with last year's first
quarter.
Other income consisted primarily of interest income on short-term
investments, earnings from an automotive joint venture, and royalties.
Cost of products sold as a percentage of sales for the quarter increased to
72.7% compared with the year-ago period of 70.9%. Gross margins on connectors
and controls, which represent approximately 85% of our business, narrowed during
the quarter due to price pressure and lower margins on the cable assembly
business acquired in 1995. Margins on our Network Buss products improved due to
the volume gains discussed above.
Selling and administrative expenses as a percentage of sales were 13.5% in
the first quarter of fiscal 1996, down from 14.2% for the year-ago period.
Sales volume gains were primarily responsible for this improvement.
The effective income tax rates were 36.5% and 38% for the quarters ended
July 31, 1995 and 1994, respectively. The effective income tax rates exceed the
statutory federal rate of 35% because of the effect of state income taxes
partially offset by lower statutory rates on foreign operations.
Financial Conditions, Liquidity and Capital Resources
-----------------------------------------------------
Net cash provided by operating activities was $13,237,000 in the first
quarter of fiscal 1996, up from the $3,221,000 provided during the year-ago
period. The increase was primarily the result of decreased working capital
requirements which rose sharply in the first quarter of 1995 to support volume
gains and increased net income.
Capital expenditures and depreciation expense were $4,369,000 and
$3,051,000 in fiscal 1996 and $4,194,000 and $2,467,000 in fiscal 1995. It is
presently expected that fixed asset additions for fiscal 1996 will approximate
$20,000,000 and will be financed with internally generated funds.
Page 7
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PART II. OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits
--------
INDEX TO EXHIBITS
Sequential
Exhibit Page
Number Description Number
------ ----------- ------
3.1 Certificate of Incorporation of Registrant, as amended and
currently in effect(1)
3.2 By-Laws of Registrant, as amended and currently in
effect(1)
4.1 Article Fourth of Certificate of Incorporation of
Registrant, as amended and currently in effect (Included in
Exhibit 3.1)
10.1 Methode Electronics, Inc. Employee Stock Ownership Plan
dated February 24, 1977(3)*
10.2 Methode Electronics, Inc. Employee Stock Ownership Plan and
Trust Amendment No. 1(3)*
10.3 Methode Electronics, Inc. Employee Stock Ownership Trust(3)*
10.4 Methode Electronics, Inc. Employee Stock Ownership Trust-
Amendment No. 1(3)*
10.5 Letter Agreement dated December 27, 1978, between the
Registrant and Kevin Hayes regarding management bonus(2)*
10.6 Letter Agreement dated December 27, 1978, between the
Registrant and William T. Jensen regarding management
bonus(2)*
10.7 Letter Agreement dated December 27, 1978, between the
Registrant and William J. McGinley regarding management
bonus(2)*
10.8 Lease Agreement between the City of Carthage, Illinois and
Carthage Precision Electric Co.(4) dated as of June 1,
1975(2)
10.9 Supplemental Lease Agreement between the City of Carthage,
Illinois and Carthage Precision Electric Co.(4) dated as of
June 1, 1977(2)
10.10 Supplemental Lease Agreement between the City of Carthage,
Illinois and Carthage Precision Electric Co.(4) dated as of
April 1, 1983(5)
10.11 Methode Electronics, Inc. Incentive Stock Award Plan(5)*
10.12 Methode Electronics, Inc. Supplemental Executive Benefit
Plan(6)*
10.13 Methode Electronics, Inc. Managerial Bonus and Matching
Bonus Plan (also referred to as the Longevity Contingent
Bonus Program)(6)*
10.14 Methode Electronics, Inc. Capital Accumulation Plan(6)*
10.15 Incentive Stock Award Plan for Non-Employee Directors(7)*
10.16 Methode Electronics, Inc. 401(k) Savings Plan(7)*
10.17 Methode Electronics, Inc. 401(k) Savings Trust(7)*
10.18 Methode Electronics, Inc. Electronic Controls Division
Cash and Class A Common Stock Bonus Plan(8)*
27 Financial Data Schedules 10
__________
(1) Previously filed with Registrant's Form S-3 Registration Statement No.33-
61940 filed April 30, 1993 and incorporated herein by reference.
(2) Previously filed with Registrant's Registration Statement No.2-80666 filed
December 1, 1982 and incorporated herein by reference.
Page 8
<PAGE>
(3) Previously filed with Registrant's S-8 Registration Statement No.2-60613
and incorporated herein by reference.
(4) Carthage Precision Electric Co., a former subsidiary of the Registrant, was
merged into the Registrant on July 30, 1984.
(5) Previously filed with Registrant's Registration Statement No.2-92902 filed
August 23, 1984 and incorporated herein by reference.
(6) Previously filed with Registrant's Form 10-Q for three months ended January
31, 1994 and incorporated herein by reference.
(7) Previously filed with Registrant's Form 10-K for the year ended April 30,
1994 and incorporated herein by reference.
(8) Previously filed with Registrant's S-8 Registration Statement No.33-88036
and incorporated herein by reference.
*Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this Report on Form 10-Q pursuant to Item 6 of Form
10-Q.
b) Reports on Form 8-K
-------------------
The Company did not file a report on Form 8-K during the three months ended
July 31, 1995.
SIGNATURES
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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.
Methode Electronics, Inc.
-------------------------------------
By: _____________________________________
Kevin Hayes, Vice President
(Principal Financial and
Accounting Officer)
Dated: September 12, 1995
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Page 9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> JUL-31-1995
<CASH> 44,517,922
<SECURITIES> 0
<RECEIVABLES> 37,812,495
<ALLOWANCES> 1,295,000
<INVENTORY> 30,414,347
<CURRENT-ASSETS> 116,659,669
<PP&E> 137,053,459
<DEPRECIATION> 79,569,399
<TOTAL-ASSETS> 189,192,360
<CURRENT-LIABILITIES> 35,520,836
<BONDS> 0
<COMMON> 11,714,062
0
0
<OTHER-SE> 129,059,781
<TOTAL-LIABILITY-AND-EQUITY> 189,192,360
<SALES> 68,215,814
<TOTAL-REVENUES> 69,381,657
<CGS> 49,590,774
<TOTAL-COSTS> 49,590,774
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,421
<INCOME-PRETAX> 10,556,446
<INCOME-TAX> 3,853,000
<INCOME-CONTINUING> 6,703,446
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,703,446
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
</TABLE>
