<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 October 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.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter.)
Delaware 36-2090085
- ------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7444 West Wilson Avenue, Harwood Heights, Illinois 60656
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (708) 867-9600
--------------------------
None
- -------------------------------------------------------------------------------
(Former name, former address, former fiscal year, if changed since last report)
At December 1, 1995, Registrant had 33,925,049 shares of Class A Common
Stock and 1,237,866 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 _____
-----
Page 1
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INDEX
METHODE ELECTRONICS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
- ---------------------------------
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets---October 31, 1995 and April 30,
1995.
Condensed consolidated statements of income---Three months and six months
ended October 31, 1995 and 1994.
Condensed statements of cash flows---Six months ended October 31, 1995 and
1994.
Notes to condensed consolidated financial statements---October 31, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
- -----------------------------
Item 4. Submission of matters to a vote of security holders.
Item 6. Exhibits and reports on Form 8-K.
SIGNATURES
- ----------
Page 2
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<TABLE>
PART I. FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
METHODE ELECTRONICS, INC. AND SUBSIDIARIES
October 31, April 30,
1995 1995
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 39,241,651 $ 40,763,656
Accounts receivable, less allowance
of $1,295,000 45,816,666 39,467,500
Inventories:
Finished products 4,865,665 5,213,948
Work in process 15,116,395 16,863,248
Materials 10,892,483 10,845,224
------------ ------------
30,874,543 32,922,420
Current deferred income taxes 3,601,000 3,601,000
Prepaid expenses 2,074,439 2,939,338
------------ ------------
TOTAL CURRENT ASSETS 121,608,299 119,693,914
PROPERTY, PLANT AND EQUIPMENT 143,665,190 132,740,901
Less allowance for depreciation 81,908,121 76,574,297
------------ ------------
61,757,069 56,166,604
INTANGIBLE BENEFIT PLAN ASSET 3,935,659 4,269,525
OTHER ASSETS 13,238,978 11,365,852
------------ ------------
$200,540,005 $191,495,895
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts and notes payable $ 20,113,760 $ 25,064,915
Other current liabilities 18,364,948 18,607,699
------------ ------------
TOTAL CURRENT LIABILITIES 38,478,708 43,672,614
OTHER LIABILITIES 2,517,744 2,616,815
DEFERRED COMPENSATION 6,809,453 6,654,879
ACCUMULATED BENEFIT PLAN OBLIGATION 3,569,400 3,629,330
SHAREHOLDERS' EQUITY
Common Stock 17,654,948 11,665,489
Paid in capital 15,025,825 17,106,383
Retained earnings 115,803,236 104,322,709
Other shareholders' equity 680,691 1,827,676
------------ ------------
149,164,700 134,922,257
------------ ------------
$200,540,005 $191,495,895
============ ============
</TABLE>
See notes 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 Six Months Ended
October 31, October 31,
------------------------ --------------------------
1995 1994 1995 1994
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCOME:
Net sales $78,638,261 $66,783,591 $146,854,075 $124,547,075
Other 1,240,497 814,779 2,406,340 1,621,421
----------- ----------- ------------ ------------
Total 79,878,758 67,598,370 149,260,415 126,168,496
COSTS AND EXPENSES:
Cost of products sold 57,285,373 48,995,520 106,876,147 89,976,523
Selling and administrative expenses 10,648,198 9,032,488 19,882,635 17,217,666
----------- ----------- ------------ ------------
Total 67,933,571 58,028,008 126,758,782 107,194,189
----------- ----------- ------------ ------------
Income before income taxes 11,945,187 9,570,362 22,501,633 18,974,307
Provision for income taxes 4,360,000 3,580,000 8,213,000 7,155,000
----------- ----------- ------------ ------------
NET INCOME $ 7,585,187 $ 5,990,362 $ 14,288,633 $ 11,819,307
=========== =========== ============ ============
Weighted average number of Common
Shares outstanding 34,950,000 34,652,000 34,873,000 34,631,000
Earnings per Common Share $ .22 $ .17 $ .41 $ .34
=========== =========== ============ ============
Cash dividends per Common Share:
Class A $ .04 $ .020 $ .08 $ .040
Class B $ .04 $ .017 $ .08 $ .033
</TABLE>
See notes 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>
Six Months Ended
October 31
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 14,288,633 $ 11,819,307
Provision for depreciation
and amortization 6,177,532 5,076,760
Changes in operating assets
and liabilities (4,931,231) (10,477,649)
Other 847,810 765,370
------------ ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 16,382,744 7,183,788
INVESTING ACTIVITIES
Purchases of property, plant
and equipment (11,155,598) (8,736,718)
Other (241,857) (1,643,733)
------------ ------------
NET CASH USED IN
INVESTING ACTIVITIES (11,397,455) (10,380,451)
FINANCING ACTIVITIES
Dividends (2,808,106) (1,380,713)
Other (3,699,188) 421,305
------------ ------------
NET CASH USED IN
FINANCING ACTIVITIES (6,507,294) (959,408)
------------ ------------
DECREASE IN CASH
AND CASH EQUIVALENTS (1,522,005) (4,156,071)
Cash and cash equivalents at
beginning of period 40,763,656 26,785,962
------------ ------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 39,241,651 $ 22,629,891
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
Page 5
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METHODE ELECTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
October 31, 1995
NOTE 1 -- 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 and six month periods
ended October 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.
NOTE 2 -- COMMON STOCK SPLIT
In October, 1995, the Company's Board of Directors declared a three for two
stock split, paid on October 31, 1995, whereby one additional share of Class A
Common Stock was issued for each two shares of Class A and Class B Common Stock
outstanding. All per share amounts give retroactive effect to this stock split.
Page 6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
- ---------------------
Net sales for the second quarter of fiscal 1996 and the six months ended
October 31, 1995 increased 18% to $78,638,000 and $146,854,000 compared with
$66,784,000 and $124,547,000 for the comparable periods last year. The
connector operations had significant sales gains over the prior year led by a
strong performance by our worldwide fiber optic sales and boosted by the
inclusion of the former ETOS Fujikara International operations 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 and six-month period compared to the prior
year. The July 31, 1995 acquisition of Duel Systems, Inc., a manufacturer of
sonic bonded PC card frames helped sales somewhat in the second quarter of
fiscal 1996. 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 completed in early fiscal
1995. Sales by our circuit operations were down compared with last year's first
two quarters.
Other income consisted primarily of earnings from our automotive joint
venture, royalties and interest income from short-term investments.
Cost of products sold as a percentage of sales for the second quarter
decreased to 72.8% from 73.4% for the year-ago period. For the six month period
ended October 31, 1995 this percentage increased to 72.8% from 72.2% for the
same period last year because gross margins on connectors and controls which
represent approximately 85% of our business, narrowed during the first quarter
due to price pressure and lower margins on the cable assembly business acquired
in fiscal 1995. Volume gains were primarily responsible for the margin
improvement in the second quarter of fiscal 1996.
Selling and administrative expenses as a percentage of sales were 13.5% in
both the current quarter and six month period compared with 13.5% and 13.8% for
the year-ago periods. Sales volume gains were primarily responsible for the
modest improvement experienced in the first quarter 1996.
The effective income tax rate was 36.5% for the three and six month periods
of the current year compared with 37.4% and 37.7% last year. The effective
income tax rate exceeds 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 $16,383,000 in the first six
months of fiscal 1996, up from the $7,184,000 provided during the year-ago
period. The increase was primarily the result of increased net income and a
leveling off of working capital requirements which had risen sharply in the
first six months of fiscal 1995 to support volume gains.
Capital expenditures and depreciation expense were $11,156,000 and
$6,178,000 in fiscal 1996 and $8,737,000 and $5,077,000 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
- ----------------------------
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) The Annual Stockholders Meeting of the Company was held on
September 12, 1995.
(c) At the Annual Stockholders Meeting, the Class A and Class B
Stockholders (collectively referred to herein as the
"Stockholders") voted on the following uncontested matters.
Each Class A nominee for director was elected by a vote of the
Class A Stockholders; each Class B nominee for director was
elected by a vote of the Class B Stockholders; and the
proposed amendment to Article Twelfth of the Company's
Certificate of Incorporation relating to the indemnification
of officers and directors was approved by the Stockholders as
follows:
1. Election of the below named Class A Nominees of the Board of
Directors of the Company by the holders of Class A Common Stock:
For Withheld
--------- --------
Michael G. Andre 18,645,742 205,245
William C. Croft 18,643,952 207,035
James W. Ashley, Jr. 18,645,552 205,435
2. Election of the below named Class B Nominees of the Board of
Directors of the Company by the holders of Class B Common Stock:
For Withheld
--------- --------
Kevin J. Hayes 1,201,265 2,161
William J. McGinley 1,201,265 2,161
William T. Jensen 1,201,265 2,161
George C. Wright 1,201,265 2,161
James W. McGinley 1,201,265 2,161
Raymond J. Roberts 1,201,265 2,161
3. Amendment of Article Twelfth of the Company's Certificate of
Incorporation relating to the indemnification of officers and
directors.
The affirmative vote of a majority of the outstanding shares of Class
A Common Stock and Class B Common Stock voting together as a single
class with each share of Class A Common Stock having one-tenth of a
vote per share and each share of Class B Common Stock having one vote
per share was required (and received) for the approval of the
Amendment.
No other items were voted on at the Annual Stockholders Meeting or
otherwise during the quarter.
Page 8
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PART II. OTHER INFORMATION
- -----------------------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits
--------
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequential
Exhibit Page
Number Description Number
- ------ ----------- ------------
<C> <S> <C>
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 11
__________
(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.
</TABLE>
Page 9
<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 six months ended
October 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.
Methode Electronics, Inc.
-------------------------------------
By:
-------------------------------------
Kevin Hayes, Vice President
(Principal Financial and
Accounting Officer)
Dated: December 13, 1995
------------------
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> OCT-31-1995
<CASH> 39,241,651
<SECURITIES> 0
<RECEIVABLES> 47,111,666
<ALLOWANCES> 1,295,000
<INVENTORY> 30,874,543
<CURRENT-ASSETS> 121,608,299
<PP&E> 143,665,190
<DEPRECIATION> 81,908,121
<TOTAL-ASSETS> 200,540,005
<CURRENT-LIABILITIES> 38,478,708
<BONDS> 0
<COMMON> 17,654,948
0
0
<OTHER-SE> 131,509,752
<TOTAL-LIABILITY-AND-EQUITY> 200,540,005
<SALES> 146,854,075
<TOTAL-REVENUES> 149,260,415
<CGS> 106,876,147
<TOTAL-COSTS> 106,876,147
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 99,729
<INCOME-PRETAX> 22,501,633
<INCOME-TAX> 8,213,000
<INCOME-CONTINUING> 14,288,633
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,288,633
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
