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 28,
1997 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 28, 1997, 9,855,054 shares of common
stock, $.01 par value, of the Registrant and warrants to
purchase 2,086,225 shares of common stock, $.01 par value,
of the Registrant were outstanding.
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
Part I - Financial Information
Item 1. CONSOLIDATED CONDENSE STATMENTS OF OPERATIONS
(In thousands, except per share data)(unaudited)
For the Three
Months Ended
March 28, March 30,
1997 1996
Net sales $65,583 $59,078
Cost of sales
38,764 34,966
Gross profit 26,819 24,112
Selling, administrative and general expenses 14,490 13,462
Amortization of intangibles 1,747 1,764
Operating income 10,582 8,886
Interest expense 903 979
Other income, net (275) (257)
Income before income taxes 9,954 8,164
Income taxes 3,687 2,939
Net income $6,267 $5,225
Net income per share $ 0.53 $0.42
Weighted average number of common and common
equivalent shares outstanding 11,896 12,477
1
CONSOLIDATED CONDENSED
STATEMENTS OF FINANCIAL CONDITION
(In thousands)
March28,Dece
mber28,
1997
1996
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents 2,003 1,427
Accounts receivable 42,571
35,468
Inventories 32,990
31,586
Deferred income taxes 3,100
3,100
Prepaid expenses and other 2,439
2,228
Total current assets 83,103
73,809
Property, plant, and equipment, net 62,722
63,889
Reorganization value, net 43,892
44,635
Patents and other identifiable intangible
assets, net 22,898
23,978
Prepaid pension cost and other assets 3,746
3,640
$216,361
$209,951 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses 34,118
30,264
Accrued income taxes 12,465
10,775
Current portion of long-term debt 9,956
10,005
Total current liabilities 56,539
51,044
Long-term debt, less current portion 42,465
44,556
Deferred income taxes 5,417
5,417
Minority Interest 232
312
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; 9,855,054
and 9,887,679 shares issued and outstanding 103
103
Cost of Treasury Stock, 1997 - 445,130 shares;
1996 - 395,130 shares (15,713)
(13,442) Additional paid-in capital 57,653
57,426
Notes receivable - common stock (1,541)
(1,470) Foreign translation adjustment (1,936)
(870)
Retained earnings 73,142 66,875
Total shareholders' equity $111,708 $108,622
$216,361 $209,951
2
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(In thousands unaudited)
For the
Three
Months
Ended
March 28, March 30,
1997 1996
Operating activities:
Net income $6,267 $5,225
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 3,331 3,126
Amortization 1,747 1,784
Provision for bad debts 124 97
Minority interest (64) (70)
Other 61 -
Changes in operating assets and liabilities:
Accounts receivable (7,813) (6,293)
Inventories (1,885) (266)
Accounts payable and accrued expenses5,972 2,416
Other, net (360) (242)
Net cash provided by operating activities 7,380 5,777
Cash used in investing activities:
Purchases of property, plant, and
equipment, net (2,533) (2,529)
Cash used in financing activities:
Proceeds/(payments) of
long-term debt, net (2,051) 1,970
Proceeds from exercise of stock options 156 303
Purchase of common stock (2,271) (6,009)
(4,166) (3,736)
Effect of exchange rate
changes on cash (105) (10)
Increase (decrease) in cash
and cash equivalents 576 (498)
Cash and cash equivalents at
beginning of period 1,427 1,308
Cash and cash equivalents at of period $2,003 $810
3
Notes to Consolidated Condensed Financial Statements
(Unaudited)
March 28, 1997
1. Basis of Presentation
Littelfuse, Inc. and its subsidiaries (the "Company")
are the successors in interest to the components
business previously conducted by subsidiaries of Tracor
Holdings, Inc. ("Predecessor"). The Company acquired its
business as a result of the Predecessor's
reorganization activities concluded on December 27,
1991.
The accompanying unaudited consolidated condensed
financial statements have been prepared in accordance
with generally accepted accounting principles for
interim financial
information. Accordingly, they do not include all of
the information and notes required by generally
accepted accounting principles for complete financial
statements. In the opinion of management, all
adjustments, consisting of normal recurring accruals,
considered necessary for a fair presentation have been
included. Operating results for the period ended March
28, 1997 are not necessarily indicative of the results
that may be expected for the year ending January 2,
1998. For further information, refer to the Company's
consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10K, for
the year ended December 28, 1996.
Beginning in 1996, the Company changed its fiscal year
end to the Saturday nearest December
31 and reports its
quarterly interim financial information on the basis
of periods of thirteen weeks. Previously the Company
reported on a calendar year and quarter basis. The
consolidated condensed statements of operations and cash
flows for the three months ended March 28, 1997 are for
the period from December 30, 1996 to March 28, 1997.
2. Inventories
The components of inventories are as follows (in
thousands):
March 28 December 28
1997 1996
Raw material$ 8,535 $ 8,411
Work in process 3,119 3,263
Finished goods 21,336 19,912
Total $32,990 $31,586
4
3. Per Share Data
Net income per
share amounts for the
three months ended
March 28, 1997 and
March 30, 1996 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 monthsended
March 28, March 30,
1997 1996
Average shares outstanding 9,856 10,003
Net effect of dilutive stock options
and warrants
- Primary 2,040 2,414
- Fully diluted 2,040 2,474
Average shares outstanding
- Primary 11,896 12,417
- Fully diluted 11,896 12,477
Net income $ 6,267 $ 5,225
Net income per share $ .53 $ .42
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 providing for an open revolver
line of credit of $65,000,000 subject to a maximum
indebtedness calculation and other traditional covenants.
No revolver principal payments are required until the
line matures on August 31, 2000. At March 28, 1997 the
Company had available $51.5 million of borrowing
capability under the revolver facility.
5. Recently Issued Accounting Standard
In February 1997, the Financial Accounting Standards
Board issued Statement No. 128, Earnings per Share,
which is required to be adopted by the Company on
January 2, 1998. At that time, the Company will be
required to change the method currently used to compute
earnings per share and to restate all prior periods.
Under the new requirements for calculating basic earnings
per share, the dilutive effect of stock options will be
excluded. The adoption of Statement 128 is expected to
result in basic earnings per share being
higher than the previously reported primary earnings
per share for the first quarter ended March 28, 1997 and
March 30, 1996 of $0.11 and $0.10 per share,
respectively. The impact of Statement 128 on the
calculation of fully diluted earnings per share for these
quarters is not expected to be material.
5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
Sales increased 11 percent to $65.6 million the
first quarter of 1997, compared to $59.1 million the first
quarter of 1996. Operating income increased to $10.6
million for
the quarter compared to $8.9 million the first quarter
of last year. Net income was $6.3 million or $0.53 per
share the first quarter of 1997 compared to $5.2 million
or $0.42 per share the first quarter 1996.
Cash flow from operations was $7.4 million the first
quarter 1997. The Company repurchased 50,000 shares of
common stock for $2.3 million and made capital
investments of $2.5 million during the first quarter.
The long term debt to equity ratio was 0.4 to 1 at
March 28, 1997 unchanged from year end 1996 and March 30,
1996.
First Quarter, 1997
Littelfuse sales increased 11 percent to $65.6 million
the first quarter this year compared to $59.1 million last
year. The gross margin was 40.9 percent this year compared
to 40.8 percent last year. Operating income increased
to 16.1 percent of sales the first quarter this year
compared to 15.0 percent last year. Net income increased
20 percent to $6.3 million this year compared to $5.2
million last year and earnings per share increased 26
percent to $.53 this year compared to $.42 per share
last year.
First quarter 1997 sales grew $6.5 million compared to
the same quarter last year.
Strong automotive OEM and
electronics distribution sales spurred 5 percent
sales growth in North America. Sales grew 21 percent
in local currency and 8 percent in dollars in the
European Community based upon strong electronics and
automotive OEM sales. Electronics sales spurred 36
percent sales growth in the Asia Pacific region, which
were well balanced thoughout the region.
Electronic sales grew to $32.1 million in the first
quarter 1997 from $27.1 million the same quarter of last
year for an increase of $5.0 million or 18 percent.
Sales were very strong throughout Asia and Europe and
moderately up in North America. Sales of personal
computer and related accessories, telecom products
and lighting ballasts showed the greatest improvement.
Automotive sales grew to $24.7 million in the first
quarter 1997 from $24.0 million the same quarter last
year for an increase of $0.7 million or 3 percent.
Worldwide automotive OEM businesses were very strong,
but European currency exchange rate against the US
dollar and weak worldwide aftermarket sales reduced the
net sales growth for the quarter. Power fuse sales grew
to $8.8 million in the first quarter 1997 from $8.0
million the same quarter last year for an increase of
$0.8 million or 10 percent. The Company continues to
improve its market share in this segment.
Gross profit was $26.8 million or 40.9 percent of sales
for the first quarter 1997 compared to $24.1 million or
40.8 percent last year. Margins improved slightly in
North America and Europe.
6
Selling, general and administrative expenses were
$14.5 million or 22.1 percent of sales for the first
quarter 1997, compared to $13.5 million or 22.8 percent of
sales for the same quarter last year. Selling
expenses accounted for approximately sixty three
percent of the expenses both quarters. The S,G&A
expenses as a percent of sales are declining slightly
despite greater investment in foreign sales effort and
the implementation of new systems.
The amortization of the reorganization value and
other intangibles was 2.7 percent of sales for the first
quarter of 1997 compared to 3.0 percent the first
quarter of last year. Total S,G&A expenses,
including intangibles amortization, were 24.8 percent
of sales the first quarter 1997 compared to 25.8 percent
the same quarter last year.
Operating income was a record $10.6 million or 16.1
percent of sales for the first quarter 1997 compared to
$8.9 million or 15.0 percent of sales last year.
Interest expense was $0.9 million the first quarter of
this year compared to $1.0 million the first quarter last
year. Other income, net, was $0.3 million for both
quarters. Income before taxes was $10.0 million for the
first quarter 1997 compared to $8.2 million last year.
Income taxes were $3.7 million with an effective tax rate
of 37 percent for the first quarter 1997 compared to
$2.9 million with an effective tax rate of 36 percent
the first quarter of last year.
Net income for the first quarter 1997 was $6.3 million
or $0.53 per share compared to $5.2 million or $0.42 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 1997 year with $1.4 million of
cash. Net cash provided by operations was $7.4 million
for the first three months. Cash used to invest in
property, plant and equipment was $2.5 million. Cash
used to repurchase stock and net repayments of long term
debt was $4.2 million. The net of cash provided, less
investing activities and financing activities, resulted
in an increase in cash of $0.6 million. This left the
Company with a cash balance of approximately $2.0 million
at March 28, 1997.
The ratio of current assets to current liabilities was
1.5 to 1 at the end of the first quarter 1997 compared to
1.4 to 1 at year end 1996 and 1.5 to 1 at the end of
the first quarter 1996. The days sales in
receivables was approximately 59 days at the end of the
first quarter 1997 compared to 52 days at year end 1996
and 55 days at first quarter end 1996 due to the higher
foreign sales which have longer standard terms and
higher sales the second half of the quarter. The
inventory turnover rate was approximately 4.7 turns at
first quarter end 1997 compared to 4.5 turns at
year end 1996 and 4.6 turns at first quarter end 1996.
7
The Company's capital expenditures were $2.5 million for
the first quarter 1997. The Company expects that capital
expenditures, which will be primarily for new machinery
and equipment, will be approximately $20.0 million in
1997. The ratio of long term debt to equity was 0.4 to 1
at the end of the first quarter 1997 unchanged from year
end 1996 and the end of the first quarter of 1996. The
debt to equity ratio has stayed relatively constant as
the free cash flow has been used to repurchase shares and
warrants.
The long term debt at the end of the first quarter
1997 consisted of four types totaling $52.4 million. They
are as follows: (1) private placement notes totaling
$36.0 million, (2) bank revolver facility totaling $13.5
million, (3) notes payable relating to income taxes and
mortgages totaling $0.7 million, and (4) other long-term
debt totaling $2.2 million. These four items include $9.9
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
$42.5 million at March 28, 1997. The private placement
notes carry an interest rate of 6.31%. The Company had
available at March 28, 1997, a revolver facility of
$51.5 million. The bank revolver loan notes carry an
interest rate of prime or LIBOR plus 0.5%, which
currently is approximately 6.3%. The Company also has
a $3.0 million letter of credit facility of which
approximately $2.1 million was being used at March 28,
1997.
Other Matters
On April 25, 1997 the Board of Directors of the
Company authorized a two-for-one split of its common
stock in the form of a stock dividend. Stockholders of
record as of the close of business on May 20, 1997
will receive one additional share for each share held.
The additional shares will be distributed to
stockholders on June 10, 1997. Subject to obtaining
the consent of the warrant holders to an amendment to
the warrants prior to June 10, each outstanding
warrant to purchase shares of the company's common
stock will become two warrants with an exercise price of
$4.18 per share. When the stock split is completed,
Littelfuse will have approximately 23.8 million
equivalent shares outstanding.
The Board of Directors also renewed the
Company's share/warrant repurchase program though April
25, 1998, authorizing the Company to acquire any
combination of up to one million pre-split shares or
warrants or up to two million post-split shares or
warrants. Since the Board first authorized a
share/warrant repurchase program in 1994, Littelfuse has
repurchased a total of 1,221,000 shares and warrants for
a total price of approximately $37 million.
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 28,1997.
8
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
28, 1997, to be signed on its behalf by the undersigned
thereunto duly authorized.
Littelfuse, Inc.
Date: May 14, 1997 By /s/ James F. Brace
James F. Brace
Vice President, Treasurer,
and Chief Financial Officer
(As duly authorized
officer and as the principal
financial and accounting
officer)
9
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
28, 1997, to be signed on its behalf by the undersigned
thereunto duly authorized.
Littelfuse, Inc.
Date: May x,1997
By__________________________
James F. Brace
Vice President, Treasurer,
and Chief Financial Officer
(As duly authorized officer
and as the principal financial and accounting officer)
9
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