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 EXCHANGE ACT OF 1934 FOR
THE QUARTERLY PERIOD ENDED March 30, 1996 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OF
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
Commission file number 0-20388
LITTELFUSE, INC .
(Exact name of registrant as specified in its charter)
Delaware 36-3795742
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
800 East Northwest Highway
Des Plaines, Illinois 60016
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(847) 824-1188
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 by check mark whether the registrant has filed
all documents and reports required to be filed by Sections
12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
As of March 30, 1996, 9,925,620 shares of common stock,
$.01 par value, of the Registrant and warrants to purchase
2,761,437 shares of common stock, $.01 par value, of the
Registrant were outstanding.
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TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
PAGE
Item 1. Consolidated Condensed (unaudited) Statements of Operations,
Financial Condition, and Cash Flows and Notes to the
Consolidated Condensed Financial Statements .............. 1
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 6
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .......................... 8
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Part I - Financial Information
Item 1.
CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
For the Three
Months Ended
March March
30, 31,
1996 1995
Net sales $ 59,078 $ 55,454
Cost of sales 34,966 32,692
Gross profit 24,112 22,762
Selling, administrative
and general expenses 13,462 12,377
Amortization ofintangibles 1,764 1,631
Operating income 8,886 8,754
Interest expense 979 1,174
Other income, net (257) (105)
Income before income taxes 8,164 7,685
Income taxes 2,939 2,690
Net income $ 5,225 $ 4,995
Net income per share $ 0.42 $ 0.40
Weighted average number of common and
common equivalent shares outstanding 12,477 12,354
1
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CONSOLIDATED CONDENSED
STATEMENTS OF FINANCIAL CONDITION
(In thousands)
March 30, Dec. 31,
1996 1995
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 810 $ 1,308
Accounts receivable 35,743 29,722
Inventories 30,267 30,076
Deferred income taxes 1,336 1,336
Prepaid expenses and other 2,767 2,581
Total current assets 70,923 65,023
Property, plant, and equipment,net 60,459 61,229
Reorganization value, net 47,299 48,056
Patents and other identifiable
intangible assets, net 26,944 27,971
Prepaid pension cost and other assets 2,914 2,907
$208,539 $205,186
LIABILITIES AND SHAREHOLDERS'EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 27,580 $ 27,390
Accrued income taxes 10,508 8,362
Current portion of long term debt 10,034 10,065
Total current liabilities 48,122 45,817
Long term debt, less current portion 42,736 40,804
Deferred income taxes 4,615 4,615
Minority interest 489 568
Shareholders' equity:
Preferred stock, par value
$.01 per share: 1,000,000 shares authorized;
no shares issued and outstanding _ _
Common stock, par value $.01 per share:
19,000,000 shares authorized;shares issued
including shares in treasury, 1996 -
10,218,750; 1995 -10,187,890 101 102
Treasury stock, 1996 - 293,130;
1995 - 110,000 (9,542) (3,533)
Additional paid-in capital 72,667 72,364
Notes receivable - common stock (571) (571)
Foreign translation adjustment (450) (120)
Retained earnings 50,372 45,140
Total shareholders' equity 112,577 113,382
$208,539 $205,186
2
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CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(In thousands, except per share data)
(unaudited)
For the Three
Months Ended
March March
30, 31,
1996 1995
Operating activities:
Net income $ 5,225 $ 4,995
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 3,126 2,716
Amortization 1,784 1,631
Provision for bad debts 97 93
Deferred income taxes - -
Minority interest (70) -
Changes in operating assets and liabilities:
Accounts receivable (6,293) (5,805)
Inventories (266) 876
Accounts payable and accrued
payroll/expenses 2,416 1,490
Other, net (103) 269
Net cash provided by operating activities 5,916 6,265
Cash used in investing activities:
Purchases of property,plant, and
equipment, net (2,668) (2,418)
Cash used in financing activities:
Proceeds/(payments) of long term debt, net 1,970 (4,016)
Proceeds from exercise of stock options 303 16
Repurchase of common stock (6,009) -
Other, net - -
(3,736) (4,000)
Effect of exchange rate changes on cash (10) 81
Decrease in cash and cash equivalents (498) (72)
Cash and cash equivalents at
beginning of period 1,308 1,262
Cash and cash equivalents at
end of period $ 810 $ 1,190
3
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Notes to Consolidated Condensed Financial Statements
(Unaudited)
March 30, 1996
1. Basis of Presentation
Littelfuse, Inc. and its subsidiaries (the "Company") are
the successors in interest to the components business
previously conducted by subsidiaries of Tracor Holdings,
Inc. ("Predecessor"). The Company acquired its business as a
result of the Predecessor's reorganization activities
concluded on December 27, 1991.
The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial
information. Accordingly, they do not include all of the
information and notes 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
period ended March 30, 1996 are not necessarily indicative
of the results that may be expected for the year ending
December 28, 1996. For further information, refer to the
Company's consolidated financial statements and the notes
thereto included in the Company's Annual Report on Form 10-
K, for the year ended December 31, 1995.
Beginning in 1996, the Company changed its fiscal year end
to the Saturday nearest December 31 and reports its
quarterly interim financial information on the basis of
periods of thirteen weeks. Previously the Company reported
on a calendar year and quarter basis. The consolidated
condensed statements of operations and cash flows for the
three months ended March 30, 1996 are for the period from
January 1, 1996 to March 30, 1996.
2. Inventories
The components of inventories are as follows (in thousands):
March 30, December 31,
1996 1995
Raw material $ 8,283 $ 8,823
Work in process 2,858 3,445
Finished goods 19,126 17,808
Total $30,267 $30,076
4
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3. Per Share Data
Net income per share amounts for the three months ended
March 30, 1996 and March 31, 1995 are based on the weighted
average number of common and common equivalent shares
outstanding during the periods as follows (in thousands,
except per share data):
Three months ended
March 30, March 31,
1996 1995
Average shares outstanding 10,003 10,088
Net effect of dilutive stock options
and warrants
- Primary 2,414 2,266
- Fully diluted 2,474 2,278
Average shares outstanding
- Primary 12,417 12,354
- Fully diluted 12,477 12,366
Net income $ 5,225 $ 4,995
Net income per share $ .42 $ .40
4. Long Term Debt
The Company concluded a financing package on August 31,
1993. The package consists of a Note Purchase Agreement
which requires principal payments of $9,000,000 payable
annually beginning August 31, 1996 through August 31, 2000.
The package also includes a bank Credit Agreement requiring
term loan payments of $1,250,000 per quarter beginning
September 30, 1993 through June 30 1998, all of which has
been prepaid as of March 30, 1996. The Credit Agreement
further provides an open revolver line of credit of
$40,000,000 less current borrowings subject to a maximum
indebtedness calculation and other traditional covenants.
No revolver principal payments are required until the line
matures on August 31, 1998. At March 30, 1996 the Company
had available $35.5 million of borrowing capability under
the revolver facility.
5
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Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
The Company experienced 7 percent sales growth the first
quarter of 1996, which was reasonable considering the 22
percent sales growth experienced the first quarter of 1995.
Sales increased to $59.1 million the first quarter of 1996,
compared to $55.5 million the first quarter of last year.
Operating income increased to $8.9 million for the quarter
compared to $8.8 million the first quarter of last year.
Net income was $5.2 million or $0.42 per share the first
quarter of 1996 compared to $5.0 million or $0.40 per share
the first quarter 1995.
Cash flow from operations was $5.9 million the first quarter
1996. The Company. repurchased 183,000 shares for $6.0
million the first quarter of 1996. As a result, long term
debt increased $1.9 million in the quarter. The long term
debt to equity ratio was 0.4 to 1 at March 30, 1996 compared
to 0.4 to 1 at year end 1995 and 0.5 to 1 at March 31, 1995.
First Quarter, 1996
Littelfuse enjoyed a sales increase of 7 percent to $59.1
million this year from $55.5 million last year. The gross
margin was 40.8 percent this year compared to 41.0 percent
last year. Operating income decreased to 15.0 percent of
sales the first quarter this year compared to 15.8 percent
last year and income before taxes was unchanged at 13.8
percent of sales the first quarter of both years. Net
income increased 5 percent to $5.2 million this year
compared to $5.0 million last year.
First quarter 1996 sales grew $3.6 million compared to the
same quarter last year. Strong automotive OEM and
aftermarket sales spurred 4 percent sales growth in North
America. Sales grew 7 percent in local currency and 7
percent in dollars in the European Community based upon
strong automotive OEM sales. Electronics sales, including
our new joint venture in Korea, spurred 16 percent sales
growth in the Far East.
Electronic sales grew to $27.1 million in the first quarter
1996 from $26.6 million the same quarter of last year for an
increase of $0.5 million or 2 percent. Sales were
particularly strong in Japan, flat in North America, and
down in Europe and Southeast Asia. Sales of personal
computer and related accessories and products showed the
greatest year over year decrease. Automotive sales grew to
$24.0 million in the first quarter 1996 from $21.1 million
the same quarter last year for an increase of $2.8 million
or 13 percent. Worldwide automotive OEM and North America
aftermarket businesses were very strong. Power fuse sales
grew to $8.1 million in the first quarter 1996 from $7.7
million the same quarter last year for an increase of $0.4
million or 5 percent. The Company continues to improve its
market share in this segment, despite the weather related
slowdown in commercial and industrial construction.
6
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Gross profit was $24.1 million or 40.8 percent of sales for
the first quarter 1996 compared to $22.8 million or 41.0
percent last year. The slight decrease resulted from
startup costs in China and assimilation costs of the Korean
joint venture exceeding improvements in the North American
and European margins. North American margins improved due
to favorable product mix in the auto and electronics
segments.
Selling, general and administrative expenses were $13.5
million or 22.8 percent of sales for the first quarter 1996,
compared to $12.4 million or 22.3 percent of sales for the
same quarter last year. Selling expenses accounted for
approximately two-thirds of the expenses both quarters. The
S,G&A expenses as a percent of sales are holding relatively
steady despite greater investment in research and
development, foreign sales effort, and the implementation of
new systems. The amortization of the reorganization value
and other intangibles was 3.0 percent of sales for the first
quarter of both years. Total S,G&A expenses, including
intangibles amortization, were 25.8 percent of sales the
first quarter 1996 compared to 25.3 percent the same quarter
last year.
Operating income was a record $8.9 million or 15.0 percent
of sales for the first quarter 1996 compared to $8.8 million
or 15.8 percent last year when sales growth was much higher.
Interest expense was $1.0 million for the first quarter 1996
compared to $1.2 million last year due to lower debt levels.
Other income, net, for the first quarter 1996 was $0.3
million compared to $0.1 million last year. Income before
taxes was $8.2 million for the first quarter 1996 compared
to $7.7 million last year. Income taxes were $2.9 million
with an effective tax rate of 36 percent for the first
quarter 1996 compared to $2.7 million with an effective tax
rate of 35 percent the first quarter of last year.
Net income for the first quarter 1996 was $5.2 million or
$0.42 per share compared to $5.0 million or $0.40 per share
last year.
Liquidity and Capital Resources
Assuming no material adverse changes in market conditions or
interest rates, management expects that the Company will
have sufficient cash from operations to support both its
operations and its current debt obligations for the
foreseeable future.
Littelfuse started the 1996 year with $1.3 million of cash.
Net cash provided by operations was $5.9 million for the
first three months. Cash used to invest in property, plant
and equipment was $2.7 million. Cash used to repurchase
stock and long term debt repayment net was $1.9 million.
The net of cash provided, less investing activities and
financing activities, resulted in a reduction in cash of
$0.5 million. This left the Company with a cash balance of
approximately $0.8 million at March 30, 1996.
The ratio of current assets to current liabilities was 1.5
to 1 at the end of the first quarter 1996 compared to 1.4 to
1 at year end 1995 and 1.5 to 1 at the end of the first
quarter 1995. The days sales in receivables was
approximately 55 days at the end of the first
7
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quarter 1996 compared to 52 days at year end 1995 and 53
days at first quarter end 1995 due to the higher foreign
sales which have longer standard terms. The inventory
turnover rate was approximately 4.6 turns at first quarter
end 1996 compared to 4.1 turns at year end 1995 and 4.8
turns at first quarter end 1995.
The Company's capital expenditures were $2.7 million for the
first quarter 1996. The Company expects that capital
expenditures, which will be primarily for new machinery and
equipment, will be approximately $17.5 million in 1996. The
ratio of long term debt to equity was 0.4 to 1 at the end of
the first quarter 1996 compared to 0.4 to 1 at year end 1995
and 0.5 to 1 at the end of the first quarter of 1995. The
improvement in the debt to equity ratio is due primarily to
the lower debt and increased retained earnings.
The long term debt at the end of the first quarter 1996
consisted of five types totaling $52.8 million. They are as
follows: (1) private placement notes totaling $45.0
million, (2) bank revolver facility totaling $5.1 million,
(3) notes payable relating to income taxes totaling $1.0
million, (4) notes payable relating to an agreement not to
compete totaling $1.4 million, and (5) mortgages totaling
$0.3 million. These five items include $10.0 million of the
bank revolver plus the tax notes and mortgage notes, which
are considered to be current liabilities. This leaves net
long term debt totaling $42.7 million at March 30, 1996.
The private placement notes carry an interest rate of 6.31%.
The Company had available at March 30, 1996, a revolver
facility of $35.5 million. The bank revolver loan notes
carry an interest rate of prime or LIBOR plus 0.625%, which
currently is approximately 6.1%. The Company also has a
$3.0 million letter of credit facility of which
approximately $1.7 million was being used at March 30, 1996.
On April 26, 1996, the Company amended and restated its bank
Credit Agreement to, among other things, increase the
revolving credit facility to $65,000,000 and to extend the
maturity to August 31, 2000.
On April 3, 1996, the Company repurchased 665,500 of its
outstanding warrants for approximately $16.4 million. On
April 26, 1996, the Board of Directors of the Company
authorized the repurchase by the Company, during the period
ending April 26, 1997, of up to 1,000,000 shares of the
Company's outstanding common stock or up to 1,000,000 of the
Company's outstanding warrants, or any combination thereof
not exceeding 1,000,000.
PART II - OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
There were no reports on Form 8-K during the
quarter ended March 30,1996.
8
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Quarterly
Report on Form 10-Q for the quarter ended March 30, 1996, to
be signed on its behalf by the undersigned thereunto duly
authorized.
Littelfuse, Inc.
Date: May 9, 1996 By /s/ James F. Brace
James F. Brace
Vice President, Treasurer,
and Chief Financial Officer
(As duly authorized officer
an as the principal financial
and accounting officer)
9
