<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, 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.
- ------------------------------------------------------------------------------
(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 3, 1996, Registrant had 34,107,785 shares of Class A Common
Stock and 1,232,770 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
<PAGE>
INDEX
METHODE ELECTRONICS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets October 31, 1996 and April 30, 1996.
Condensed consolidated statements of income---Three months and six months
ended October 31, 1996 and 1995.
Condensed statements of cash flows --- Six months ended October 31, 1996
and 1995.
Note to condensed consolidated financial statements --- October 31, 1996.
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
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
METHODE ELECTRONICS, INC. AND SUBSIDIARIES
October 31, April 30,
1996 1996
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 56,184,137 $ 50,185,934
Accounts receivable, less allowance
(October 31, 1996--$1,233,000; April 30,
1996 - $1,285,000) 52,385,652 48,326,214
Inventories:
Finished products 5,289,162 5,199,125
Work in process 13,898,735 15,330,639
Materials 10,185,884 11,557,591
------------ ------------
29,373,781 32,087,355
Current deferred income taxes 3,029,000 3,029,000
Prepaid expenses 1,900,912 3,382,073
------------ ------------
TOTAL CURRENT ASSETS 142,873,482 137,010,576
PROPERTY, PLANT AND EQUIPMENT 163,936,648 152,507,769
Less allowance for depreciation 92,166,373 85,721,950
------------ ------------
71,770,275 66,785,819
INTANGIBLE BENEFIT PLAN ASSET 3,267,927 3,601,793
OTHER ASSETS 15,734,680 15,881,185
------------ ------------
$233,646,364 $223,279,373
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts and notes payable $ 22,910,647 $ 26,388,255
Other current liabilities 17,632,197 19,567,826
------------ ------------
TOTAL CURRENT LIABILITIES 40,542,844 45,956,081
OTHER LIABILITIES 1,918,391 1,918,391
DEFERRED COMPENSATION 7,264,419 7,301,175
ACCUMULATED BENEFIT PLAN OBLIGATION 3,144,492 2,999,422
SHAREHOLDERS' EQUITY
Common Stock 17,744,408 17,661,116
Paid in capital 17,831,111 15,249,444
Retained earnings 144,648,343 131,073,343
Other shareholders' equity 552,356 1,120,401
------------ ------------
180,776,218 165,104,304
------------ ------------
$233,646,364 $223,279,373
============ ============
</TABLE>
See note to condensed consolidated financial statements.
Page 3
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
METHODE ELECTRONICS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
October 31, October 31,
---------------------------- ------------------------------
1996 1995 1996 1995
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCOME:
Net sales $85,188,636 $78,638,261 $164,154,346 $146,854,075
Other 1,350,577 1,240,497 2,729,460 2,406,340
----------- ----------- ------------ ------------
Total 86,539,213 79,878,758 166,883,806 149,260,415
COSTS AND EXPENSES:
Cost of products sold 61,319,492 57,285,373 118,960,006 106,876,147
Selling and administrative expenses 10,890,695 10,648,198 20,980,186 19,882,635
----------- ----------- ------------ ------------
Total 72,210,187 67,933,571 139,940,192 126,758,782
----------- ----------- ------------ ------------
Income before income taxes 14,329,026 11,945,187 26,943,614 22,501,633
Provision for income taxes 5,230,000 4,360,000 9,835,000 8,213,000
----------- ----------- ------------ ------------
NET INCOME $ 9,099,026 $ 7,585,187 $ 17,108,614 $ 14,288,633
=========== =========== ============ ============
Weighted average number of Common
Shares outstanding 35,218,000 34,950,000 35,194,000 34,873,000
Earnings per Common Share $0.26 $0.22 $0.49 $0.41
===== ===== ===== =====
Cash dividends per Common Share $0.05 $0.04 $0.10 $0.08
</TABLE>
See note to condensed consolidated financial statements.
Page 4
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
METHODE ELECTRONICS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Six Months Ended
October 31,
---------------------------
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 17,108,614 $ 14,288,633
Provision for depreciation
and amortization 6,812,400 6,177,532
Changes in operating assets
and liabilities (4,465,649) (4,931,231)
Other 721,538 847,810
------------ ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 20,176,903 16,382,744
INVESTING ACTIVITIES
Purchases of property, plant and
equipment (11,796,856) (11,155,598)
Other 1,485,125 (241,857)
------------ ------------
NET CASH USED IN
INVESTING ACTIVITIES (10,311,731) (11,397,455)
FINANCING ACTIVITIES
Dividends (3,533,614) (2,808,106)
Other (333,355) (3,699,188)
------------ ------------
NET CASH USED IN
FINANCING ACTIVITIES (3,866,969) (6,507,294)
------------ ------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 5,998,203 (1,522,005)
Cash and cash equivalents at
beginning of period 50,185,934 40,763,656
------------ ------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 56,184,137 $ 39,241,651
============ ============
</TABLE>
See note to condensed consolidated financial statements.
Page 5
<PAGE>
METHODE ELECTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
October 31, 1996
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 and six month periods
ended October 31, 1996 are not necessarily indicative of the results that may be
expected for the year ending April 30, 1997. 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, 1996.
Page 6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Net sales for the second quarter of fiscal 1997 increased 8% to $85,189,000
from $78,638,000 for the second quarter last year. Sales for the six months
ended October 31, 1996 increased 12% to $164,154,000 compared with $146,854,000
for the comparable period last year. Sales of fiber optic connectors and
assemblies increased more than 50% during the current year periods. Sales of
automotive controls, which represent approximately half of Methode's business
also posted strong increases during the current quarter and six-month period
compared to the prior year. Network Buss products declined over 20% due to a
slowing mainframe computer marketplace.
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 72.0% from 72.8% for the year-ago period. For the six month period
ended October 31, 1996 this percentage decreased to 72.5% from 72.8% for the
same period last year. Volume gains were primarily responsible for the margin
improvement in the current year periods.
Selling and administrative expenses as a percentage of sales were 12.8% in
both the current quarter and six month period compared with 13.5% for the year-
ago periods. Sales volume gains were primarily responsible for the improvement
experienced in the current year periods.
The effective income tax rate was 36.5% for the three and six month periods
of the current and prior years. 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 $20,177,000 in the first six
months of fiscal 1997, up from the $16,383,000 provided during the year-ago
period. The increase was primarily the result of increased net income.
Capital expenditures and depreciation expense were $11,797,000 and
$6,812,000 in fiscal 1997 and $11,156,000 and $6,178,000 in fiscal 1996. It is
presently expected that fixed asset additions for fiscal 1997 will approximate
$25,000,000 and will be financed with internally generated funds.
Page 7
<PAGE>
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 10, 1996.
(b) 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.
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:
<TABLE>
<CAPTION>
<S> <C> <C>
For Withheld
Michael G. Andre 29,591,593 639,227
James W. Ashley, Jr. 29,587,520 643,300
William C. Croft 29,696,714 534,106
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 1,189,893 2,917
William T. Jensen 1,189,884 2,926
James W. McGinley 1,189,893 2,917
William J. McGinley 1,189,435 3,375
Raymond J. Roberts 1,189,893 2,917
George C. Wright 1,189,893 2,917
</TABLE>
No other items were voted on at the Annual Stockholders Meeting or
otherwise during the quarter.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
INDEX TO EXHIBITS
Sequential
Page
Number
------
Exhibit
Number Description
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)
Page 8
<PAGE>
PART II. OTHER INFORMATION (CONTINUED)
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits (Continued)
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(2)*
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 Methode Electronics, Inc. Incentive Stock Award Plan(3)*
10.6 Methode Electronics, Inc. Supplemental Executive Benefit Plan(4)*
10.7 Methode Electronics, Inc. Managerial Bonus and Matching Bonus Plan (also
referred to as the Longevity Contingent Bonus Program)(4)*
10.8 Methode Electronics, Inc. Capital Accumulation Plan(4)*
10.9 Incentive Stock Award Plan for Non-Employee Directors(5)*
10.10 Methode Electronics, Inc. 401(k) Savings Plan(5)*
10.11 Methode Electronics, Inc. 401(k) Savings Trust(5)*
10.12 Methode Electronics, Inc. Electronic Controls Division Cash and
Class A Common Stock Bonus Plan (6)*
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 S-8 Registration Statement No.2-60613
and incorporated herein by reference.
(3) Previously filed with Registrant's Registration Statement No.2-92902
filed August 23, 1984 and incorporated herein by reference.
(4) Previously filed with Registrant's Form 10-Q for three months ended
January 31, 1994 and incorporated herein by reference.
(5) Previously filed with Registrant's Form 10-K for the year ended April 30,
1994 and incorporated herein by reference.
(6) 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 October 31, 1996.
Page 9
<PAGE>
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, Chief Financial Officer
(Principal Financial and
Accounting Officer)
Dated: December 10, 1996
Page 10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> OCT-31-1996
<CASH> 56,184,137
<SECURITIES> 0
<RECEIVABLES> 53,618,652
<ALLOWANCES> 1,233,000
<INVENTORY> 29,373,781
<CURRENT-ASSETS> 142,873,482
<PP&E> 163,936,648
<DEPRECIATION> 92,166,373
<TOTAL-ASSETS> 233,646,364
<CURRENT-LIABILITIES> 40,542,844
<BONDS> 0
<COMMON> 17,744,408
0
0
<OTHER-SE> 163,031,810
<TOTAL-LIABILITY-AND-EQUITY> 233,646,364
<SALES> 164,154,346
<TOTAL-REVENUES> 166,883,806
<CGS> 118,960,006
<TOTAL-COSTS> 118,960,006
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 26,943,614
<INCOME-TAX> 9,835,000
<INCOME-CONTINUING> 17,108,614
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,108,614
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0.49
</TABLE>
