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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 and Exchange Act of 1934
for the quarterly period ended January 31, 1996
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
--------------------------
None
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(Former name, former address, former fiscal year, if changed since last report)
At March 1, 1996, Registrant had 33,931,145 shares of Class A Common Stock
and 1,237,886 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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INDEX
METHODE ELECTRONICS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements (unaudited)
Condensed consolidated balance January 31, 1996 and April 30, 1995.
Condensed consolidated statements of income - - - Three months and nine
months ended January 31, 1996 and 1995.
Condensed statements of cash flows - - - Nine months ended January 31, 1996
and 1995.
Notes to condensed consolidated financial statements - - - January 31,
1996.
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
- ----------
Page 2
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<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
METHODE ELECTRONICS, INC. AND SUBSIDIARIES
<S> <C> <C>
January 31, April 30,
1996 1995
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 51,735,696 $ 40,763,656
Accounts receivable, less allowance
(1/31/96--$1,260,000; 4/30/95--$1,295,000) 40,544,396 39,467,500
Inventories:
Finished products 5,792,895 5,213,948
Work in process 14,849,833 16,863,248
Materials 12,201,660 10,845,224
------------ ------------
32,844,388 32,922,420
Current deferred income taxes 3,601,000 3,601,000
Prepaid expenses 1,972,795 2,939,338
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TOTAL CURRENT ASSETS 130,698,275 119,693,914
PROPERTY, PLANT AND EQUIPMENT 146,481,728 132,740,901
Less allowance for depreciation 83,942,973 76,574,297
------------ ------------
62,538,755 56,166,604
INTANGIBLE BENEFIT PLAN ASSET 3,768,726 4,269,525
OTHER ASSETS 13,730,704 11,365,852
------------ ------------
$210,736,460 $191,495,895
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts and notes payable $ 24,968,021 $ 25,064,915
Other current liabilities 17,783,613 18,607,699
------------ ------------
TOTAL CURRENT LIABILITIES 42,751,634 43,672,614
OTHER LIABILITIES 2,606,815 2,616,815
DEFERRED COMPENSATION 6,997,288 6,654,879
ACCUMULATED BENEFIT PLAN OBLIGATION 2,982,476 3,629,330
SHAREHOLDERS' EQUITY
Common Stock 17,657,996 11,665,489
Paid in capital 15,114,319 17,106,383
Retained earnings 121,951,039 104,322,709
Other shareholders' equity 674,893 1,827,676
------------ ------------
155,398,247 134,922,257
------------ ------------
$210,736,460 $191,495,895
============ ============
See notes to condensed consolidated financial statements.
</TABLE>
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
METHODE ELECTRONICS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
January 31, January 31,
------------------------------- ----------------------------
1996 1995 1996 1995
--------------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCOME:
Net sales $75,731,809 $67,386,826 $222,585,884 $191,933,901
Other 1,193,104 947,242 3,599,444 2,568,663
----------- ----------- ------------ ------------
Total 76,924,913 68,334,068 226,185,328 194,502,564
COSTS AND EXPENSES:
Cost of products sold 55,043,915 49,509,074 161,920,062 139,485,597
Selling and administrative expenses 9,986,372 9,505,182 29,869,007 26,722,848
----------- ----------- ------------ ------------
Total 65,030,287 59,014,256 191,789,069 166,208,445
----------- ----------- ------------ ------------
Income before income taxes 11,894,626 9,319,812 34,396,259 28,294,119
Provision for income taxes 4,340,000 3,355,000 12,553,000 10,510,000
----------- ----------- ------------ ------------
NET INCOME $ 7,554,626 $ 5,964,812 $ 21,843,259 $ 17,784,119
=========== =========== ============ ============
Weighted average number of Common
Shares outstanding 35,029,000 34,689,000 34,921,000 34,650,000
Earnings per Common Share $ .22 $ .17 $ .63 $ .51
=========== =========== ============ ============
Cash dividends per Common Share:
Class A $ .040 $ .020 $ .120 $ .060
Class B $ .040 $ .017 $ .120 $ .050
</TABLE>
See notes to condensed consolidated financial statements
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
METHODE ELECTRONICS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Nine Months Ended
January 31
--------------------------
1996 1995
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<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 21,843,259 $ 17,784,119
Provision for depreciation
and amortization 9,282,378 7,772,921
Changes in operating assets
and liabilities 758,666 (3,735,956)
Other 1,407,513 1,221,837
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NET CASH PROVIDED BY
OPERATING ACTIVITIES 33,291,816 23,042,921
INVESTING ACTIVITIES
Purchases of property, plant and
equipment (15,042,131) (12,463,056)
Other (1,019,707) (2,024,517)
----------- ------------
NET CASH USED IN
INVESTING ACTIVITIES (16,061,838) (14,487,573)
FINANCING ACTIVITIES
Dividends (4,214,929) (2,071,147)
Other (2,043,009) (969,238)
----------- ------------
NET CASH USED IN
FINANCING ACTIVITIES (6,257,938) (3,040,385)
----------- ------------
INCREASE IN CASH
AND CASH EQUIVALENTS 10,972,040 5,514,963
Cash and cash equivalents at
beginning of period 40,763,656 26,785,962
----------- ------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 51,735,696 $ 32,300,925
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
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METHODE ELECTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
January 31, 1996
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 nine month periods
ended January 31, 1996 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.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
- ---------------------
Net sales for the third quarter of fiscal 1996 and the nine months ended
January 31, 1996 increased 12% to $75,732,000 and 16% to $222,586,000 compared
with $67,387,000 and $191,934,000 for the comparable periods last year. The
connector operations had significant gains over the prior year led by a strong
sales increases of fiber optic devices, dataMate "intelligent" circuitized
connectors and related adaptor products. Sales for the current quarter and nine
month period also were boosted by the inclusion of the former ETOS Fujikara
International operations purchased by Methode in the second quarter of fiscal
1995 and Duel Systems, Inc. purchased July 31, 1995. Domestic automotive
connectors and controls products which represent approximately half of Methode's
business enjoyed a sales increase of nearly 20% for the quarter. Automotive
products sales for the nine month period increased approximately 10% over the
prior year period. Sales of Network Buss products for the quarter dropped nearly
45% but were slightly ahead of prior year sales for the nine month period.
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 third quarter
decreased to 72.7% from 73.5% for the year-ago period. For the nine month period
ended January 31, 1996 this percentage was unchanged at 72.7 compared with the
same period last year. Volume gains were primarily responsible for the margin
improvement in the third quarter of fiscal 1996.
Selling and administrative expenses as a percentage of sales were 13.2% and
13.4% in the current quarter and nine month period compared with 14.1% and 13.9%
for the year-ago periods. The improvement experienced in fiscal 1996 was
primarily the result of sales volume gains.
The effective income tax rate was 36.5% for the three and nine month
periods of the current year compared with 36% and 37% 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 $33,292,000 in the first nine
months of fiscal 1996, up from the $23,043,000 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 fiscal
1995 to support volume gains.
Capital expenditures and depreciation expense were $15,042,000 and
$9,282,000 in fiscal 1996 and $12,463,000 and $7,773,000 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.
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PART II. OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits
--------
<TABLE>
INDEX TO EXHIBITS
Sequential
Exhibit Page
Number Description Number
- ------- ----------- ------
<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 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.
</TABLE>
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(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 January 31, 1996.
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: March 5, 1996
--------------
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 51,735,696
<SECURITIES> 0
<RECEIVABLES> 41,804,396
<ALLOWANCES> 1,260,000
<INVENTORY> 32,844,388
<CURRENT-ASSETS> 130,698,275
<PP&E> 146,481,728
<DEPRECIATION> 83,942,973
<TOTAL-ASSETS> 210,736,460
<CURRENT-LIABILITIES> 42,751,634
<BONDS> 0
<COMMON> 17,657,996
0
0
<OTHER-SE> 137,740,251
<TOTAL-LIABILITY-AND-EQUITY> 210,736,460
<SALES> 222,585,884
<TOTAL-REVENUES> 226,185,328
<CGS> 161,920,062
<TOTAL-COSTS> 161,920,062
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 240,189
<INCOME-PRETAX> 34,396,259
<INCOME-TAX> 12,553,000
<INCOME-CONTINUING> 21,843,259
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,843,259
<EPS-PRIMARY> .63
<EPS-DILUTED> .63
</TABLE>
