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Previous: CISCO SYSTEMS INC, 8-K, EX-20.1, 2000-11-06 |
Next: CAPITAL ADVISORS INC/OK, 13F-HR, 2000-11-06 |
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2000.
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission file number 1-10431
AVX CORPORATION
(Exact name of registrant as specified in its charter)
|
Delaware |
33-0379007 |
|
(State or other jurisdiction |
(IRS Employer ID No.) |
|
of incorporation or organization) |
|
801 17th Avenue South |
Myrtle Beach, South Carolina 29577 |
(Address of principal executive offices)
Telephone: (843) 448-9411
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 reports), and (2) has been subject to such filing requirements for the past 90 days.
|
Yes X |
No ___ |
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
|
Class |
Outstanding at November 3, 2000 |
|
Common Stock, par value $0.01 per share |
174,656,864 |
AVX CORPORATION
INDEX
|
Page Number |
|||
|
PART I: |
Financial Information: |
||
|
ITEM 1. |
Financial Statements: |
||
|
Consolidated Balance Sheets as of March 31, 2000 and September 30, 2000 |
2 |
||
|
Consolidated Statements of Income for the three months ended September 30, 1999 and 2000 and for the six months ended September 30, 1999 and 2000 |
3 |
||
|
Consolidated Statements of Cash Flows for the six months ended September 30, 1999 and 2000 |
4 |
||
|
Notes to Consolidated Financial Statements |
5-8 |
||
|
ITEM 2. |
Management's Discussion and Analysis of Results of Operations and Financial Condition |
9-11 |
|
|
ITEM 3. |
Quantitative and Qualitative Disclosures About Market Risk |
12 |
|
|
PART II: |
Other Information: |
||
|
ITEM 6. |
Exhibits and Reports on Form 8-K |
13 |
|
|
Signatures |
|||
|
Exhibits |
|||
|
AVX CORPORATION AND SUBSIDIARIES |
|||||
|
CONSOLIDATED BALANCE SHEETS |
|||||
|
(in thousands, except per share data) |
|||||
|
|
March 31, 2000 |
September 30, 2000 |
|||
|
Assets |
(unaudited) |
||||
|
Current assets: |
|||||
|
Cash and cash equivalents |
$ |
175,654 |
$ |
288,087 |
|
|
Accounts receivable, net |
249,224 |
344,602 |
|||
|
Inventories |
356,406 |
387,694 |
|||
|
Deferred income taxes |
21,406 |
21,292 |
|||
|
Other receivables-affiliates |
5,655 |
8,895 |
|||
|
Prepaid and other |
38,471 |
41,935 |
|||
|
------------------------ |
------------------------ |
||||
|
Total current assets |
846,816 |
1,092,505 |
|||
|
Property and equipment: |
|||||
|
Land |
12,801 |
14,769 |
|||
|
Buildings and improvements |
173,370 |
177,620 |
|||
|
Machinery and equipment |
748,792 |
796,159 |
|||
|
Construction in progress |
77,224 |
86,458 |
|||
|
------------------------ |
------------------------ |
||||
|
1,012,187 |
1,075,006 |
||||
Accumulated depreciation |
(639,380) |
(653,160) |
|||
|
------------------------ |
------------------------ |
||||
|
372,807 |
421,846 |
||||
|
Goodwill, net |
72,495 |
76,145 |
|||
|
Other assets |
16,213 |
11,392 |
|||
|
------------------------ |
------------------------ |
||||
|
TOTAL ASSETS |
$ |
1,308,331 |
$ |
1,601,888 |
|
|
============= |
============= |
||||
|
Liabilities and Stockholders ' Equity |
|||||
|
Current liabilities: |
|
||||
|
Short-term bank debt |
$ |
12,116 |
$ |
11,810 |
|
|
Current maturities of long-term debt |
- |
- |
|||
|
Accounts payable: |
|||||
|
Trade |
83,921 |
88,906 |
|||
|
Affiliates |
65,096 |
69,599 |
|||
|
Income taxes payable |
37,815 |
71,640 |
|||
|
Accrued payroll and benefits |
44,855 |
45,049 |
|||
|
Accrued expenses |
38,884 |
45,586 |
|||
|
------------------------ |
------------------------ |
||||
|
Total current liabilities |
282,687 |
332,590 |
|||
|
Long-term debt |
18,174 |
15,099 |
|||
|
Deferred income taxes |
4,894 |
6,033 |
|||
|
Other liabilities |
20,555 |
19,194 |
|||
|
------------------------ |
------------------------ |
||||
|
TOTAL LIABILITIES |
326,310 |
372,916 |
|||
|
------------------------ |
------------------------ |
||||
|
Contingencies (Note 4) |
|||||
|
Stockholders' equity: |
|||||
|
Preferred stock, par value $0.01 per share: |
|||||
|
Authorized, 20,000 shares; None issued or outstanding |
- |
- |
|||
|
Common stock, par value $0.01 per share: |
|||||
|
Authorized, 300,000 shares; issued and outstanding |
1,764 |
1,764 |
|||
|
176,368 for March 2000 and September 2000 |
|||||
|
Additional paid-in capital |
335,481 |
344,423 |
|||
|
Retained earnings |
675,234 |
939,600 |
|||
|
Accumulated other comprehensive income (loss) |
(14,778) |
(33,147) |
|||
|
Common stock in treasury, at cost: 1,875 (March 2000) and 1,714 (September 2000) shares |
(15,680) |
(23,668) |
|||
|
------------------------ |
------------------------ |
||||
TOTAL STOCKHOLDERS' EQUITY |
982,021 |
1,228,972 |
|||
|
------------------------ |
------------------------ |
||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
1,308,331 |
$ |
1,601,888 |
|
|
============= |
============= |
||||
|
See accompanying notes to consolidated financial statements. |
|||||
|
PAGE 2 |
|||||
|
AVX CORPORATION AND SUBSIDIARIES |
|||||||||||
|
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) |
|||||||||||
|
(in thousands, except per share data) |
|||||||||||
|
|
|||||||||||
|
Three Months ended September 30, |
Six Months ended September 30, |
||||||||||
|
1999 |
2000 |
1999 |
2000 |
||||||||
|
Net sales |
$ |
371,573 |
$ |
695,286 |
$ |
714,723 |
$ |
1,297,734 |
|||
|
Cost of sales |
304,152 |
427,899 |
593,443 |
817,757 |
|||||||
|
-------------- |
-------------- |
-------------- |
-------------- |
||||||||
|
Gross profit |
67,421 |
267,387 |
121,280 |
479,977 |
|||||||
|
Selling, general and administrative expenses |
29,960 |
37,479 |
57,418 |
72,592 |
|||||||
|
-------------- |
-------------- |
-------------- |
-------------- |
||||||||
|
Profit from operations |
37,461 |
229,908 |
63,862 |
407,385 |
|||||||
|
Other income (expense): |
|||||||||||
|
Interest income |
1,872 |
3,607 |
3,703 |
6,295 |
|||||||
|
Interest expense |
(420) |
(614) |
(907) |
(1,199) |
|||||||
|
Other, net |
(521) |
507 |
(1,400) |
689 |
|||||||
|
-------------- |
-------------- |
-------------- |
-------------- |
||||||||
|
Income before income taxes |
38,392 |
233,408 |
65,258 |
413,170 |
|||||||
|
Provision for income taxes |
12,285 |
77,237 |
21,705 |
136,563 |
|||||||
|
-------------- |
-------------- |
-------------- |
-------------- |
||||||||
|
Net income |
$ |
26,107 |
$ |
156,171 |
$ |
43,553 |
$ |
276,607 |
|||
|
========= |
========= |
======== |
======== |
||||||||
|
Income per share: |
|
|
|||||||||
|
Basic |
$ |
0.15 |
$ |
0.89 |
$ |
0.25 |
$ |
1.58 |
|||
|
Diluted |
$ |
0.15 |
$ |
0.89 |
$ |
0.25 |
$ |
1.57 |
|||
|
-------------- |
-------------- |
-------------- |
-------------- |
||||||||
|
Dividends declared |
$ |
0.033 |
$ |
0.035 |
$ |
0.065 |
$ |
0.07 |
|||
|
-------------- |
-------------- |
-------------- |
-------------- |
||||||||
|
Weighted average number of common shares outstanding: |
|||||||||||
|
Basic |
172,920.9 |
174,754.0 |
172,719.8 |
174,835.3 |
|||||||
|
Diluted |
174,652.9 |
176,285.7 |
173,839.7 |
176,431.4 |
|||||||
See accompanying notes to consolidated financial statements.
PAGE 3
|
AVX CORPORATION AND SUBSIDIARIES |
||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
||||
|
(dollars in thousands) |
||||
|
Six Months Ended September 30, |
||||
|
1999 |
2000 |
|||
|
Operating Activities: |
||||
|
Net income |
$ |
43,553 |
$ |
276,607 |
|
Adjustments to reconcile net income to net cash from |
||||
|
operating activities: |
||||
Depreciation and amortization |
45,362 |
60,533 |
||
Changes in operating assets and liabilities, net of |
||||
effects from business acquired: |
||||
Accounts receivable |
(32,758) |
(110,978) |
||
Inventories |
(4,773) |
(39,745) |
||
Accounts payable and accrued expenses |
43,777 |
24,749 |
||
Income taxes payable |
12,649 |
43,245 |
||
Other assets and liabilities |
2,120 |
9,908 |
||
|
-------------- |
-------------- |
|||
|
Net cash from operating activities |
109,930 |
264,319 |
||
|
-------------- |
-------------- |
|||
|
Investing Activities: |
||||
|
Purchases of property and equipment |
(55,843) |
(127,184) |
||
|
Business acquired, net of cash received |
- |
(1,870) |
||
|
Other |
(1,588) |
(281) |
||
|
-------------- |
-------------- |
|||
|
Net cash used in investing activities |
(57,431) |
(129,335) |
||
|
-------------- |
-------------- |
|||
|
Financing Activities: |
||||
|
Repayment of debt |
(9,307) |
(8,740) |
||
|
Proceeds from issuance of debt |
7,318 |
6,424 |
||
|
Dividends paid |
(10,807) |
(12,241) |
||
|
Purchase of treasury stock |
- |
(14,589) |
||
|
Exercise of stock options |
8,939 |
7,492 |
||
|
-------------- |
-------------- |
|||
|
Net cash from (used in) financing activities |
(3,857) |
(21,654) |
||
|
-------------- |
-------------- |
|||
|
Effect of exchange rate changes on cash |
157 |
(897) |
||
|
-------------- |
-------------- |
|||
|
Increase (decrease) in cash and cash equivalents |
48,799 |
112,433 |
||
|
Cash and cash equivalents at beginning of period |
173,106 |
175,654 |
||
|
-------------- |
-------------- |
|||
|
Cash and cash equivalents at end of period |
$ |
221,905 |
$ |
288,087 |
|
========= |
========= |
|||
|
See accompanying notes to consolidated financial statements. |
||||
|
PAGE 4 |
||||
AVX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED
(in thousands, except share data)
1. Basis of presentation:
The consolidated financial statements of AVX Corporation and subsidiaries (the "Company" or "AVX") include the accounts of the Company and its subsidiaries. All significant intercompany transactions and accounts have been eliminated. In the opinion of management, the accompanying unaudited financial statements reflect all adjustments (consisting of normal recurring accruals) that are necessary to a fair presentation of the results for the interim periods shown. These financial statements should be read in conjunction with the Company's audited financial statements for the fiscal year ended March 31, 2000.
On April 20, 2000, the Board of Directors approved a 2-for-1 stock split of our common stock effected in the form of a 100% stock dividend. The additional common stock was distributed on June 1, 2000 to holders of record on May 15, 2000. All references in this report to the number of shares, per share amounts, and market prices of the Company's common stock have been restated to reflect the stock split and the resulting increased number of shares outstanding.
Certain prior year amounts have been reclassified to conform to the current year presentation.
2. Accounts Receivable:
|
Accounts receivable consisted of: |
March 31, |
September 30, |
|||||
|
|
2000 |
2000 |
|||||
|
Trade |
$ |
279,084 |
$ |
378,584 |
|||
|
Less: allowances for doubtful accounts, sales |
|||||||
|
returns, distributor adjustments and discounts |
(29,860) |
(33,982) |
|||||
|
---------------- |
---------------- |
||||||
|
$ |
249,224 |
$ |
344,602 |
||||
|
============== |
============== |
||||||
3. Inventories:
|
Inventories consisted of: |
March 31, |
September 30, |
||
|
2000 |
2000 |
|||
|
Finished goods |
$ |
110,180 |
$ |
122,964 |
|
Work in process |
119,640 |
131,471 |
||
|
Raw materials and supplies |
126,586 |
133,259 |
||
|
-------------- |
-------------- |
|||
|
$ |
356,406 |
$ |
387,694 |
|
|
============ |
============ |
|||
|
PAGE 5 |
||||
AVX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED - (continued)
4. Environmental Matters and Contingencies:
The Company has been named as a potentially responsible party in state and federal administrative proceedings seeking contribution for costs associated with the correction and remediation of environmental conditions at various waste disposal sites. If it becomes probable that the Company will incur costs in connection with remediation of a site and such costs can be reasonably estimated, the Company will establish reserves or adjust its reserves for its projected share of these costs. Management believes that it has adequate reserves with respect to these matters. Actual costs may vary from these estimated reserves, but such costs are not expected to have a material adverse effect on the Company's financial condition or results of operations.
5. Comprehensive Income:
Comprehensive income represents total non-shareowner changes in equity including all changes in equity during a period except those resulting from investments by and distributions to shareowners. The specific components include: net income, deferred gains and losses resulting from foreign currency translation and minimum pension liability adjustments.
Comprehensive income for the three and six month periods ended September 30, 1999 and 2000, includes the following components:
|
Three Months |
Six Months |
||||
|
1999 |
2000 |
1999 |
2000 |
||
|
Net income |
$26,107 |
$156,171 |
$43,553 |
$276,607 |
|
|
Other comprehensive income(loss), net of tax: |
|||||
|
Foreign currency translation adjustment |
8,343 |
(10,525) |
3,484 |
(18,369) |
|
|
-------------- |
-------------- |
-------------- |
-------------- |
||
|
Comprehensive income |
$34,450 |
$145,646 |
$47,037 |
$258,238 |
|
|
========= |
========= |
========= |
========= |
||
The accumulated balance of other comprehensive income (loss), (all of which relate to foreign currency translation adjustments) as of September 30, 1999 and 2000 is as follows:
|
Three Months |
Six Months |
||||
|
1999 |
2000 |
1999 |
2000 |
||
|
Balance at beginning of period |
$(9,648) |
$(22,622) |
$(4,789) |
$(14,778) |
|
|
Translation adjustment |
8,343 |
(10,525) |
3,484 |
(18,369) |
|
|
-------------- |
-------------- |
-------------- |
-------------- |
||
|
Balance at end of period |
$(1,305) |
$(33,147) |
$(1,305) |
$(33,147) |
|
|
========= |
======== |
========= |
========= |
||
|
PAGE 6 |
|||||
AVX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED - (continued)
6. Earnings Per Share:
Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the dilutive effect of potential common stock equivalents during the period. Stock options are the only common stock equivalents and are computed using the treasury stock method.
The table below represents the basic and diluted weighted average number of shares of common stock and potential common stock equivalents outstanding for the three and six month periods ended September 30, 1999 and 2000:
|
Three Months |
Six Months |
|||
|
1999 |
2000 |
1999 |
2000 |
|
|
Basic weighted average shares outstanding |
172,920,920 |
174,753,997 |
172,719,822 |
174,835,270 |
|
Diluted weighted average shares and potential common stock equivalents outstanding |
174,652,926 |
176,285,748 |
173,839,676 |
176,431,386 |
Common stock equivalents, not included in the computation of diluted earnings per share because the option's exercise price was greater than the average market price of the common shares for the respective period, were as follows:
|
September 30, |
|||
|
1999 |
2000 |
||
|
Three months ended |
- |
68,290 |
|
|
Six months ended |
5,482 |
- |
|
7. Segment information:
The Company has three reportable operating segments: Passive Components, Connectors and Research and Development. The Company is organized, exclusive of research and development, on the basis of products being separated into six units. Five of the units which manufacture or distribute ceramic, tantalum, film and power capacitors, ferrites and other passive devices have been aggregated into the segment "Passive Components".
The Company evaluates performance of its segments based upon sales and operating profit. There are no intersegment revenues. The tables below present information about reported segments for the three and six month periods ended September 30, 1999 and 2000:
PAGE 7
AVX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED - (continued)
|
Three Months |
Six Months |
||||
|
1999 |
2000 |
1999 |
2000 |
||
|
Net sales: |
|||||
|
Passive components |
$339,916 |
$648,786 |
$651,964 |
$1,209,875 |
|
|
Connectors |
31,657 |
46,500 |
62,759 |
87,859 |
|
|
-------------- |
-------------- |
-------------- |
-------------- |
||
|
Total |
$371,573 |
$695,286 |
$714,723 |
$1,297,734 |
|
|
========= |
======== |
========= |
========= |
||
|
Three Months |
Six Months |
||||
|
1999 |
2000 |
1999 |
2000 |
||
|
Operating profit: |
|||||
|
Passive components |
$43,707 |
$235,164 |
$74,246 |
$417,425 |
|
|
Connectors |
6,699 |
8,099 |
12,073 |
16,232 |
|
|
Research & development |
(6,900) |
(6,962) |
(12,092) |
(12,719) |
|
|
Corporate administration |
(6,045) |
(6,393) |
(10,365) |
(13,553) |
|
|
-------------- |
-------------- |
-------------- |
-------------- |
||
|
Total |
$37,461 |
$229,908 |
$63,862 |
$407,385 |
|
|
========= |
======== |
========= |
========= |
||
8. Treasury Stock:
In January 1998, the Company's Board of Directors approved a stock repurchase program whereby up to 4.4 million shares of common stock may be purchased from time to time at the discretion of management. As of September 30, 2000, the Company had in treasury 1,713,986 common shares at a cost of $23.7 million. The repurchased shares are held as treasury stock and are available for general corporate purposes.
9. Subsequent Event:
On October 24, 2000, the Company declared a $0.035 dividend per share of common stock with respect to the quarter ended September 30, 2000, payable on November 13, 2000.
PAGE 8
|
ITEM 2. |
|||
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF |
|||
|
RESULTS OF OPERATIONS AND FINANCIAL CONDITION |
|||
|
Results of Operations |
Three months ended September 30, |
||
|
1999 |
2000 |
||
|
Net sales |
100% |
100% |
|
|
Gross profit |
18.1 |
38.5 |
|
|
Selling, general and administrative expenses |
8.1 |
5.4 |
|
|
Income before income taxes |
10.3 |
33.6 |
|
|
Net income |
7.0 |
22.5 |
|
Three Months Ended September 30, 2000 Compared to Three Months Ended September 30, 1999
Net sales in the three months ended September 30, 2000 increased 87.1% to $695.3 million from $371.6 million in the three months ended September 30, 1999. The increase in revenue was attributable to the robust demand across all markets, particularly the telecommunications and information technology hardware industries. Increased production, richer sales mix and selling price increases contributed to the increased sales.
Gross profit in the three months ended September 30, 2000 increased to $267.4 million (38.5% of net sales) from $67.4 million (18.1% of net sales) in the three months ended September 30, 1999. The favorable pricing environment, higher throughput and improvements in our manufacturing processes have contributed to the improvement in gross profit in dollar terms and as a percentage of sales. Gross profit was negatively impacted by increases in the cost of palladium, currently a raw material used in the manufacture of certain multi-layer ceramic capacitors. The Company continues its efforts to reduce the amount of the precious metal used in such parts, and substitute base metals, such as nickel, in the production of multi-layer ceramic capacitors.
Selling, general and administrative expenses in the three months ended September 30, 2000 were $37.5 million (5.4% of net sales) compared with $30.0 million (8.1% of net sales) in the three months ended September 30, 1999. The decline in selling, general and administrative expenses as a percentage of sales is a result of higher sales.
As a result of the above factors, profit from operations in the three months ended September 30, 2000 increased to $229.9 million from $37.5 million in the three months ended September 30, 1999.
For the reasons set forth above and higher interest income on invested cash, net income in the three months ended September 30, 2000 was $156.2 million (22.5% of net sales) compared to $26.1 million (7.0% of net sales) in the three months ended September 30, 1999.
PAGE 9
|
Results of Operations |
Six months ended September 30, |
||
|
1999 |
2000 |
||
|
Net sales |
100% |
100% |
|
|
Gross profit |
17.0 |
37.0 |
|
|
Selling, general and administrative expenses |
8.0 |
5.6 |
|
|
Income before income taxes |
9.1 |
31.8 |
|
|
Net income |
6.1 |
21.3 |
|
Six Months Ended September 30, 2000 Compared to Six Months Ended September 30, 1999
Net sales in the six months ended September 30, 2000 increased 81.6% to $1,297.7 million from $714.7 million in the six months ended September 30, 1999. The increase in revenue was attributable to the robust demand across all markets, particularly the telecommunications and information technology hardware industries. Coupled with increased production and resulting sales volume, selling prices increased as demand outpaced supply.
Gross profit in the six months ended September 30, 2000 increased to $480.0 million (37.0% of net sales) from $121.3 million (17.0% of net sales) in the six months ended September 30, 1999. The favorable pricing environment, higher throughput and improvements in our manufacturing processes have contributed to the improvement in gross profit in dollar terms and as a percentage of sales. Gross profit was negatively impacted by increases in the cost of palladium, currently a raw material used in the manufacture of certain multi-layer ceramic capacitors. The Company continues its efforts to reduce the amount of the precious metal used in such parts, and substitute base metals, such as nickel, in the production of multi-layer ceramic capacitors.
Selling, general and administrative expenses in the six months ended September 30, 2000 were $72.6 million (5.6% of net sales) compared with $57.4 million (8.0% of net sales) in the six months ended September 30, 1999. The decline in selling, general and administrative expenses as a percentage of sales is a result of higher sales. The increase in such costs is due to higher research and development and administrative costs and sales commissions.
As a result of the above factors, profit from operations in the six months ended September 30, 2000 increased to $407.4 million from $63.9 million in the six months ended September 30, 1999.
For the reasons set forth above, higher interest income on invested cash and foreign currency exchange gains, net income in the six months ended September 30, 2000 was $276.6 million (21.3% of net sales) compared to $43.6 million (6.1% of net sales) in the six months ended September 30, 1999.
Liquidity and Capital Resources
The Company's liquidity needs arise primarily from working capital requirements, dividends, capital expenditures and acquisitions. Historically, the Company has satisfied its liquidity
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requirements through internally generated funds. As of September 30, 2000, the Company had a current ratio of 3.28 to 1, $288.1 million of cash and cash equivalents, $1,229.0 million of stockholders' equity and an insignificant amount of long-term debt.
Net cash from operating activities was $264.3 million in the six months ended September 30, 2000 compared to $109.9 million in the six months ended September 30, 1999.
Purchases of property and equipment were $127.2 million in the six month period ended September 30, 2000 and $55.8 million in the six month period ended September 30, 1999. Expenditures for both periods were primarily for expanding production capabilities of the passive component and connector product lines in North America, Europe and Asia.
Although the majority of the Company's funding is internally generated, certain European subsidiaries of the Company have from time to time borrowed German deutsche marks, French francs and Euro loans under various bank agreements.
Pursuant to a previously authorized stock repurchase program, we were authorized to purchase up to 4.4 million shares of our common stock. We purchased 548,500 shares at a cost of $14.6 million during the three month period ended September 30, 2000, which completes the program. The repurchased shares are held as treasury stock and have been used to satisfy stock option exercises.
Based on the financial condition of the Company as of September 30, 2000, the Company believes that cash on hand, and cash expected to be generated from operating activities, will be sufficient to satisfy the Company's anticipated financing needs for working capital, capital expenditures, research, development and engineering costs, and any dividends and acquisition payments to be paid in the foreseeable future.
Outlook
The increase in worldwide demand for passive components has led to stabilization and, in some cases, increases in selling prices. The Company believes that in addition to the increased
worldwide demand for electronic components, there are several other factors which should lead toward continued profitability including: (a) the Company's ongoing efforts to substitute base metals for precious metals in the manufacture of multilayer ceramic capacitors, (b) capacity expansion programs (c) cost control measures and continuous improvements in production processes, and (d) the growth of advanced and connector products through innovation and component design in conjunction with our customers.
As a result of the growth in the electronics component business, our tantalum suppliers have indicated that there may be difficulty obtaining the quantities of tantalum needed to continue to increase tantalum capacitor production, and that the cost of the tantalum material may increase significantly.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Except as indicated below, the Company's market risk exposure at September 30, 2000 is consistent with the types of market risk and amount of exposures presented in the Annual Report on Form 10-K for the year ended March 31, 2000.
Precious Metals
We are at risk to fluctuations in prices for commodities used to manufacture our products, primarily palladium and tantalum.
Palladium, a precious metal used in the manufacture of a portion of our multi-layer ceramic capacitors, is primarily purchased from various companies in the form of palladium sponge and ingot. The main areas of mining of palladium are in Russia and South Africa. Palladium is considered a commodity and is subject to price volatility and has fluctuated in a range of approximately $340 to $837 per troy ounce during the past year. We have managed, through the use of forward purchase agreements and strategic spot buying, to purchase palladium at a cost below the average market cost. We are addressing the volatility in the price of palladium by (i) adjusting the manufacturing process for the parts made with palladium to reduce the amount of the precious metal used in each part, and (ii) substituting base metals, such as nickel, in the production of multi-layer ceramic capacitors. Because of robust demand for ceramic parts, both palladium and nickel based production capacity is currently needed to satisfy our customers' needs.
Tantalum powder is a principal material used in the manufacture of solid tantalum capacitors. This product is purchased through suppliers from various parts of the world at prices that are subject to negotiation under varying length contracts. We are a major consumer of the world's annual tantalum production. Although we historically have had no problem procuring tantalum powder, the increased demand for tantalum products and the limited number of tantalum powder suppliers may lead to availability constraints and higher prices.
Cautionary Statement Pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995
This report may contain "forward-looking" information within the meaning of the federal securities laws. The forward-looking information may include, among other information, statements concerning the Company's outlook for fiscal 2001, overall volume and pricing trends, cost reduction strategies and their anticipated results, and expectations for research and development, and capital expenditures. There may also be other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. The forward-looking information and statements in this report are
subject to risks and uncertainties, including those discussed in the Companys' annual report on Form 10-K for year ended March 31, 2000, that could cause actual results to differ materially from those expressed in or implied by the information or statements.
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Part II: Other Information
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ITEM 6. |
EXHIBITS AND REPORTS ON FORM 8-K. |
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(a) |
Exhibit 27.0 Financial Data Schedule |
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(b) |
Reports on Form 8-K. |
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None. |
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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.
Date: November 3, 2000
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AVX Corporation |
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by: |
/s/ Kurt P. Cummings |
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Kurt P. Cummings |
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Vice President, |
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Chief Financial Officer, |
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Treasurer, and Secretary |
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