<PAGE>
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, 1997
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
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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
- --------------------------------------------------------------------------------
(Former name, former address, former fiscal year, if changed since last report)
At February 21, 1997, Registrant had 34,143,889 shares of Class A Common
Stock and 1,202,251 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 sheets January 31, 1997 and April 30, 1996.
Condensed consolidated statements of income -- Three months and nine months
ended January 31,1997 and 1996.
Condensed statements of cash flows -- Nine months ended January 31, 1997
and 1996.
Note to condensed consolidated financial statements -- January 31, 1997.
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>
January 31, April 30,
1997 1996
---- ----
<S> <C> <C>
ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 62,539,836 $ 50,185,934
Accounts receivable, less allowance
(January 31, 1997--$1,229,000; April 30,
1996--$1,285,000) 43,836,100 48,326,214
Inventories:
Finished products 5,848,530 5,199,125
Work in process 17,016,208 15,330,639
Materials 9,137,993 11,557,591
------------ ------------
32,002,731 32,087,355
Current deferred income taxes 3,029,000 3,029,000
Prepaid expenses 1,300,988 3,382,073
------------ ------------
TOTAL CURRENT ASSETS 142,708,655 137,010,576
PROPERTY, PLANT AND EQUIPMENT 169,225,299 152,507,769
Less allowance for depreciation 95,700,225 85,721,950
------------ ------------
73,525,074 66,785,819
INTANGIBLE BENEFIT PLAN ASSET 3,100,994 3,601,793
OTHER ASSETS 16,189,502 15,881,185
------------ ------------
$235,524,225 $223,279,373
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts and notes payable $ 18,027,914 $ 26,388,255
Other current liabilities 17,030,446 19,567,826
------------ ------------
TOTAL CURRENT LIABILITIES 35,058,360 45,956,081
OTHER LIABILITIES 1,918,391 1,918,391
DEFERRED COMPENSATION 7,201,314 7,301,175
ACCUMULATED BENEFIT PLAN OBLIGATION 2,757,568 2,999,422
SHAREHOLDERS' EQUITY
Common Stock 17,747,330 17,661,116
Paid in capital 17,939,244 15,249,444
Retained earnings 152,015,593 131,073,343
Other shareholders' equity 886,425 1,120,401
------------ ------------
188,588,592 165,104,304
------------ ------------
$235,524,225 $223,279,373
============ ============
</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 January 31, Nine Months Ended January 31,
----------------------------- ----------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME:
Net sales $85,943,283 $75,731,809 $250,097,629 $222,585,884
Other 1,984,063 1,193,104 4,713,523 3,599,444
-------------- -------------- -------------- -------------
Total 87,927,346 76,924,913 254,811,152 226,185,328
COSTS AND EXPENSES:
Cost of products sold 62,126,072 55,043,915 181,086,078 161,920,062
Selling and administrative expenses 11,417,133 9,986,372 32,397,319 29,869,007
-------------- -------------- -------------- -------------
Total 73,543,205 65,030,287 213,483,397 191,789,069
-------------- -------------- -------------- -------------
Income before income taxes 14,384,141 11,894,626 41,327,755 34,396,259
Provision for income taxes 5,250,000 4,340,000 15,085,000 12,553,000
-------------- -------------- -------------- -------------
NET INCOME $9,134,141 $7,554,626 $26,242,755 $21,843,259
============== ============== ============== =============
Weighted average number of Common
Shares outstanding 35,261,000 35,029,000 35,217,000 34,921,000
Earnings per Common Share $0.26 $0.22 $0.75 $0.63
============== ============== ============== =============
Cash dividends per Common Share $0.05 $0.04 $0.15 $0.12
</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>
Nine Months Ended January 31,
----------------------------
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $26,242,755 $21,843,259
Provision for depreciation
and amortization 10,392,031 9,282,378
Changes in operating assets
and liabilities (3,766,593) 758,666
Other 1,041,221 1,407,513
------------- ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 33,909,414 33,291,816
INVESTING ACTIVITIES
Purchases of property, plant and
equipment (17,131,286) (15,042,131)
Other 1,092,640 (1,019,707)
------------- ------------
NET CASH USED IN
INVESTING ACTIVITIES (16,038,646) (16,061,838)
FINANCING ACTIVITIES
Dividends (5,300,505) (4,214,929)
Other (216,361) (2,043,009)
------------- ------------
NET CASH USED IN
FINANCING ACTIVITIES (5,516,866) (6,257,938)
------------- ------------
DECREASE IN CASH AND
CASH EQUIVALENTS 12,353,902 10,972,040
Cash and cash equivalents at
beginning of period 50,185,934 40,763,656
------------- ------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $62,539,836 $51,735,696
============= ============
</TABLE>
See notes to condensed consolidated financial statements.
Page 5
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METHODE ELECTRONICS, INC. AND SUBSIDIARIES
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
January 31, 1997
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 nine-month periods
ended January 31, 1997 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
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
- ---------------------
Net sales for the third quarter of fiscal 1997 increased 13% to $85,943,000
from $75,732,000 for the third quarter last year. Sales for the nine months
ended January 31, 1997, increased 12% to $250,098,000, compared with
$222,586,000 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
nine-month period compared to the prior year. Network Buss products declined
over 10% in the current quarter and over 20% year-to-date due to a slowing
mainframe computer marketplace. The 1997 third quarter contained an additional
week of operations as compared to the 1996 quarter.
Other income consisted primarily of interest income from short-term
investments, earnings from our automotive joint venture, royalties, and in the
current quarter a $244,000 gain from the sale of marketable securities.
Cost of products sold as a percentage of sales for the third quarter
decreased to 72.3% from 72.7% for the year-ago period. For the nine-month
period ended January 31, 1997, this percentage decreased to 72.4% from 72.7% for
the same period last year. Volume gains were primarily responsible for the
marginal improvement in the margins for the current year periods.
Selling and administrative expenses as a percentage of sales were 13.3% and
13.0% in the current quarter and nine-month periods compared with 13.2% and
13.4% for the year-ago periods.
The effective income tax rate was 36.5% for the three- and nine-month
periods of the current and prior 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 $33,909,000 in the first
nine months of fiscal 1997, compared with $33,292,000 provided during the year-
ago period. The increase in cash provided as a result of increased net income
was substantially offset by a reduction of accounts payable in the current
quarter.
Capital expenditures and depreciation expense were $17,131,000 and
$10,392,000 in fiscal 1997 and $15,042,000 and $9,282,000 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.
Subsequent to the end of the current quarter, the Company purchased for
cash a 75% interest in Sentorque, Inc., a company controlling a portfolio of
patents in the field of non-contact torque sensors. This technology is expected
to be especially useful for automotive applications requiring economical
techniques to directly measure power transmitted by a rotary shaft. There are
also applications outside the automotive field for which the Company intends to
license this new capability.
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
<TABLE>
<CAPTION>
Sequential
Exhibit Page
Number Description Number
- ------ ----------- ------
<S> <C> <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(2)*
10.2 Methode Electronics, Inc. Employee Stock Ownership Plan and Trust
Amendment No. 1(2)*
10.3 Methode Electronics, Inc. Employee Stock Ownership Trust(2)*
10.4 Methode Electronics, Inc. Employee Stock Ownership Trust-
Amendment No. 1(2)*
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)*
10.1 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)* 10
27 Financial Data Schedules
</TABLE>
_______
(1) Previously filed with Registrant's Form S-3 Registration Statement
No. 33-61940 filed April 30, 1993 and incorporated herein by reference.
Page 8
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(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 January 31, 1997.
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 J. Hayes
Chief Financial Officer
Dated: February 25, 1997
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Page 9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 62,539,836
<SECURITIES> 0
<RECEIVABLES> 45,065,100
<ALLOWANCES> 1,229,000
<INVENTORY> 32,002,731
<CURRENT-ASSETS> 142,708,655
<PP&E> 169,225,299
<DEPRECIATION> 95,700,225
<TOTAL-ASSETS> 235,524,225
<CURRENT-LIABILITIES> 35,058,360
<BONDS> 0
0
0
<COMMON> 17,747,330
<OTHER-SE> 170,841,262
<TOTAL-LIABILITY-AND-EQUITY> 235,524,225
<SALES> 250,097,629
<TOTAL-REVENUES> 254,811,152
<CGS> 181,086,078
<TOTAL-COSTS> 181,086,078
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 94,263
<INCOME-PRETAX> 41,327,755
<INCOME-TAX> 15,085,000
<INCOME-CONTINUING> 26,242,755
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,242,755
<EPS-PRIMARY> 0.75
<EPS-DILUTED> 0.75
</TABLE>
