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
September 30, 2000 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 September 30, 2000, 20,075,025 shares of common stock, $.01 par
value, of the Registrant and warrants to purchase 1,955,189 shares of common
stock, $.01 par value, of the Registrant were outstanding.
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements
Condensed Consolidated Statements of Income for the periods ended
September 30, 2000 and October 2, 1999...........................1
Condensed Consolidated Balance Sheets for the periods ended
September 30, 2000 and January 1, 2000...........................2
Condensed Consolidated Statements of Cash Flows for the periods
ended September 30, 2000 and October 2, 1999.....................3
Notes to the Condensed Consolidated Financial Statements.........4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ..................7
Item 3. Qualitative and Quantitative Disclosures about Market Risk ....12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................13
<PAGE>
<TABLE>
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)
For the Three For the Nine
Months Ended Months Ended
September 30, October 2, September 30, October 2,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 96,362 $ 73,292 $ 289,037 $ 214,357
Cost of sales 57,623 43,975 171,719 131,200
------------ ----------- ------------- ----------
Gross profit 38,739 29,317 117,318 83,157
Selling, general and administrative expenses 17,914 13,911 53,606 39,457
Research and development expenses 2,853 2,138 8,261 7,023
Amortization of intangibles 1,701 1,730 5,249 5,214
------------- ------------ --------------- ------------
Operating income 16,271 11,538 50,202 31,463
Interest expense 1,104 1,330 3,527 4,026
Other (income) /expense (276) (420) (1,877) (978)
-------------- -------------- ---------------- -------------
Income before income taxes 15,443 10,628 48,552 28,415
Income taxes 5,715 4,040 17,964 10,799
Net income $ 9,728 $ 6,588 $ 30,588 $ 17,616
Net income per share -Basic $ 0.49 $ 0.34 $ 1.54 $ 0.90
-Diluted $ 0.44 $ 0.30 $ 1.38 $ 0.81
Weighted-average shares and
Equivalent shares outstanding 20,078 19,505 19,821 19,591
-Basic =========== ============== ============= ============
-Diluted 22,306 21,712 22,202 21,747
=========== ============== ============= ============
</TABLE>
<PAGE>
<TABLE>
CONDENSED CONSOLIDATED
BALANCE SHEETS
(In thousands)
(unaudited)
September 30, January 1,
2000 2000
---- ----
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 6,096 $ 1,888
Receivables 67,992 59,583
Inventories 55,525 48,916
Other current assets 10,271 8,750
------------- -----------
Total current assets $ 139,884 $ 119,137
Property, plant, and equipment, net 91,840 91,791
Reorganization value, net 31,826 33,943
Other intangible assets, net 26,557 29,570
Other assets 583 1,257
--------------- -----------
$ 290,690 $ 275,698
=============== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities excluding current portion
of long-term debt 51,678 57,241
Current portion of long-term debt 17,807 20,974
-------------- ---------
Total current liabilities 69,485 78,215
Long-term debt 50,737 55,460
Deferred liabilities 4,522 4,490
Other long-term liabilities 894 501
Shareholders' Equity 165,052 137,032
-------------- ---------
Shares issued and outstanding: 20,075,025
$ 290,690 $ 275,698
============== ==========
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
For the Nine
Months Ended
September 30, October 2,
2000 1999
---- ----
Operating activities:
<S> <C> <C>
Net income $ 30,588 $ 17,616
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 14,923 13,012
Amortization 5,249 5,214
Changes in operating assets and liabilities:
Accounts receivable (9,818) (15,388)
Inventories (7,039) (3,517)
Accounts payable and accrued expenses (5,593) 6,398
Other, net (146) (1,701)
--------------- ------------
Net cash provided by operating activities $ 28,164 $ 21,634
Cash used in investing activities:
Purchases of property, plant, and equipment, net (15,665) (16,504)
------------ --------
Net cash used in investing activities (15,665) (16,504)
Cash provided by (used in) financing activities:
Payments of long-term debt, net (7,294) (15,036)
Proceeds from exercise of stock options and warrants 4,035 1,207
Purchase of common stock and warrants (4,095) (10,476)
------------ -----------
Net cash used in financing activities (7,354) (24,305)
Effect of exchange rate changes on cash (938) (198)
------------ -------------
Increase/ (decrease) in cash and cash equivalents 4,207 (19,373)
Cash and cash equivalents at
Beginning of period 1,888 27,961
------------ --------------
Cash and cash equivalents at end of period $ 6,096 $ 8,588
============ ==============
</TABLE>
<PAGE>
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2000
1. Basis of Presentation
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 September 30, 2000, are
not necessarily indicative of the results that may be expected for the year
ending December 30, 2000. For further information, refer to the Company's
consolidated financial statements and the notes thereto incorporated by
reference in the Company's Annual Report on Form 10-K for the year ended January
1, 2000.
2. Inventories
The components of inventories are as follows (in thousands):
<TABLE>
September 30, January 1,
2000 2000
-------- ------------
<S> <C> <C>
Raw material $14,998 $ 12,684
Work in process 16,459 14,854
Finished goods 24,068 21,378
------- ---------
Total $55,525 $ 48,916
======== =========
</TABLE>
3. Per Share Data
Net income per share amounts for the three months and nine months ended
September 30, 2000 and October 2, 1999 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):
<PAGE>
<TABLE>
Three months Nine months
ended ended
September 30, October 2, September 30, October 2,
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Average shares outstanding 20,078 19,505 19,821 19,591
Net effect of dilutive stock options,
warrants and restricted shares
- Basic - - - -
----------- ---------- ------------ ----------
- Diluted 2,228 2,207 2,381 2,156
----------- ---------- ------------ ----------
Average shares outstanding
- Basic 20,078 19,505 19,821 19,591
====== ====== ====== ==========
- Diluted 22,306 21,712 22,202 21,747
====== ====== ========== ==========
Net income $9,728 $ 6,588 $ 30,588 $ 17,616
====== ======= ========== ==========
Net income per share
- Basic $ 0.49 $ 0.34 $ 1.54 $ 0.90
======== ======== ========== ==========
- Diluted $ 0.44 $ 0.30 $ 1.38 $ 0.81
======== ======== ========== ==========
</TABLE>
4. Comprehensive Income
In accordance with Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income," total comprehensive income for the three
months ended September 30, 2000, and October 2, 1999, was approximately $8.5
million and $7.2 million, respectively, and the nine months ended September 30,
2000, and October 2, 1999, was $28.1 million and $16.4 million, respectively.
The adjustment for comprehensive income is related to the Company's foreign
currency translation.
5. Recently Issued Accounting Standard
In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivatives and hedging
activities. The Company is required to adopt SFAS 133 on March 31, 2001, and
does not expect adoption to have a material effect on its consolidated financial
statements.
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
Sales for the third quarter 2000 increased 31% or $23.1 million to $96.4
million, compared to $73.3 million in the third quarter of 1999. Growth in
worldwide demand for electronic products, particularly in the telecommunications
and wireless markets, continued to be the driving force behind increased sales.
Sales in the Americas increased 33% over the third quarter of 1999 primarily due
to continued strength in the electronics market. Sales in Europe grew 28% in
dollars and 43% in constant currency, and in the Asia-Pacific region sales
increased 31% in dollars and 30% in constant currency. Increased electronic
product sales contributed to higher sales in all regions of the world.
Electronic sales increased to $61.6 million in the third quarter of 2000 from
$38.6 million in the same quarter of last year for an increase of $23.0 million
or 60%. Excluding sales of suppression products, acquired in October 1999, sales
of electronic products increased $13.4 million or 35% over the prior year.
Automotive sales increased to $23.9 million in the third quarter 2000 from $23.4
million in the same quarter last year for an increase of $0.5 million or 2%.
Automotive sales excluding suppression products were down 3%, as higher U.S.
automotive OEM sales were offset by lower U.S. aftermarket sales and the effects
of the weaker Euro. Power fuse sales decreased $0.5 million or 5% to $10.8
million in the third quarter 2000 from $11.3 million in the same quarter last
year.
Gross margin was $38.7 million or 40.2% of sales for the third quarter of 2000
compared to $29.3 million or 40.0% in the same quarter last year. Operating
income increased to $16.3 million or 16.9% of sales in the third quarter of 2000
compared to $11.5 million or 15.7% in the prior year. The continued benefit from
higher unit volumes and ongoing cost reduction activities contributed to the
increase in gross margin and operating income as compared to the prior year.
Operating expenses, excluding amortization, were $20.8 million or 21.6% of sales
for the third quarter of 2000 compared to $16.0 million or 21.9% of sales for
the same quarter in the prior year. Amortization of the reorganization value and
other intangibles decreased to 1.8% of sales for the third quarter of 2000, from
2.4 % of sales in the third quarter of 1999 due to increased sales. Total
operating expenses, including intangible amortization, were 23.3% of sales in
the third quarter of 2000 compared to 24.3% of sales in the same quarter last
year.
Interest expense was $1.1 million in the third quarter of this year compared to
$1.3 million in the third quarter of last year due to lower average debt levels.
Other income was $0.3 million for the third quarter of 2000 compared to $0.4
million in the third quarter of the prior year.
Income before income taxes was $15.4 million for the third quarter 2000 compared
to $10.6 million for the third quarter of 1999. Income taxes were $5.7 million
with an effective tax rate of 37% for the third quarter of 2000 compared to $4.0
million with an effective tax rate of 38% in the third quarter of last year.
Net income increased 48% to $9.7 million in the third quarter this year compared
to $6.6 million in the third quarter of last year and diluted earnings per share
increased 44% to $0.44 in the third quarter this year compared to $0.30 per
diluted share in the same quarter last year.
Nine Months, 2000.
Sales for the first nine months increased 35% to $289.0 million from $214.4
million last year. Nine months electronics sales were up 68% at $179.4 million
compared to $107.0 million last year. Automotive sales were up 4% at $77.7
million compared to $74.9 million last year. Power fuse sales were down 2% at
$31.9 million from $32.5 million last year. As detailed above in discussion of
the quarterly results, increased sales of electronic products have been driven
by telecommunications and wireless applications.
Gross margin was $117.3 million or 40.6% for the first nine months of 2000
compared to $83.2 million or 38.8% the first nine months of last year. Operating
income for the first nine months of 2000 increased 59.6% to $50.2 million from
$31.5 million last year.
Operating expenses, excluding amortization, were 21.4% of sales for the first
nine months of 2000 compared to 21.7% last year. The amortization of intangibles
was 1.8% of sales for the first nine months of 2000 compared to 2.4% last year.
Total operating expenses including intangibles amortization were 23.2% of sales
for the first nine months of 2000 compared to 24.1% of sales for the first nine
months of last year.
Interest expense was $3.5 million for the first nine months of 2000 compared to
$4.0 million last year. Other income was $1.9 million for the first nine months
of 2000 compared to $1.0 million for the same period last year. Income before
taxes was $48.6 million for the first nine months of 2000 compared to $28.4
million the first nine months of last year. Income taxes were $18.0 million the
first nine months 2000 compared to $10.8 million last year.
Net income for the first nine months of 2000 increased 74% to $30.6 million from
$17.6 million for the same period last year. Earnings per share for the first
nine months of 2000 increased 70% to $1.38 per diluted share compared to $0.81
per diluted 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 2000 year with $1.9 million of cash. Net cash provided by
operations was $28.2 million for the first nine months. Net cash used to invest
in property, plant and equipment was $15.7 million. Cash used to repay long term
debt and to repurchase stock was $11.4 million. In addition, proceeds from
warrant and stock option exercises were $4.0 million, resulting in net cash used
in financing activities of $7.4 million. The net increase in cash for the nine
months ended September 30, 2000 was $4.2 million, leaving the Company with a
cash balance of approximately $6.1 million at September 30, 2000.
The ratio of current assets to current liabilities was 2.0 to 1 at the end of
the third quarter 2000 compared to 1.5 to 1 at year end 1999 and 1.9 to 1 at the
end of the third quarter 1999. The days sales in receivables was approximately
64 days at the end of the third quarter 2000 compared to 68 days at year-end
1999 and 69 days at third quarter end 1999. The days inventory outstanding was
approximately 91 days at third quarter end 2000 compared to 94 days at year-end
1999 and 82 days at third quarter end 1999.
The Company's capital expenditures were $7.6 million for the third quarter 2000.
The Company expects that capital expenditures, which are primarily for new
machinery, equipment and information systems, will be approximately $22 million
for the full year 2000.
The long-term debt at the end of the third quarter 2000 consisted of five types
totaling $68.5 million. They are as follows: (1) private placement notes
totaling $50.0 million, (2) foreign revolver borrowings totaling $3.2 million,
(3) notes payable relating to mortgages totaling $0.3 million, (4) U.S. revolver
borrowings totaling $13.5 million and (5) other long-term debt, including
capital leases, totaling $1.5 million. These five items include $17.8 million of
senior notes and mortgage notes, which are considered to be current liabilities.
This leaves net long-term debt totaling $50.7 million at September 30, 2000.
During the quarter, the Company made the final $9.0 million principal payment on
the 1993 private placement notes. The remaining private placement notes carry an
interest rate of 6.16%. The Company has a $55.0 million revolver in the U.S., of
which $41.5 million was available at September 30, 2000. The bank revolver loan
notes carry an interest rate of prime or LIBOR plus 0.375%, which currently is
approximately 7.0%. The Company also has an $8.0 million letter of credit
facility, of which approximately $1.6 million was being used at September 30,
2000
Business Segment Information
The Company designs, manufactures and sells circuit protection devices
throughout the world. The Company has three reportable geographic segments: The
Americas, Europe and Asia-Pacific. The circuit protection market in these
geographical segments is categorized into three major product areas: electronic,
automotive and power fuses.
The Company evaluates the performance of each geographic segment based on its
net income or loss. The Company also accounts for intersegment sales as if the
sales were to third parties.
The Company's reportable segments are the business units where the revenue is
earned and expenses are incurred. The Company has subsidiaries in The Americas,
Europe and Asia-Pacific where each region is measured based on its sales and
operating income or loss.
Information concerning the operations in these geographic segments for the
period ended September 30, 2000 and October 2, 1999, is as follows (in
thousands):
<PAGE>
<TABLE>
Three Three Nine Nine
Months Months months months
Ended Ended Ended Ended
September 30, 2000 October 2, 1999 September 30, 2000 October 2, 1999
Revenues
<S> <C> <C> <C> <C>
The Americas $56,337 $42,485 $168,472 $124,498
Europe 14,316 11,200 48,031 36,274
Asia-Pacific 25,709 19,607 72,534 53,585
------ ------- ------ ------
Combined Total 96,362 73,292 289,037 214,357
Corporate 0 0 0 0
Reconciliation 0 0 0 0
-- -- -- -
Consolidated Total $96,362 $73,292 $289,037 $214,357
======== ======== ======== ========
Intersegment Revenues
The Americas $12,957 $8,425 $33,181 $23,656
Europe 8,809 2,768 23,861 8,141
Asia-Pacific 1,595 1,005 4,682 2,647
------ ----- ----- -----
Combined Total 23,361 12,198 61,724 34,444
Corporate 0 0 0 0
Reconciliation (23,361) (12,198) (61,724) (34,444)
-------- -------- -------- --------
Consolidated Total 0 0 0 0
== == == ==
Interest Expense
The Americas $1,037 $1,260 $3,262 $3,837
Europe 4 4 75 8
Asia-Pacific 63 66 190 181
--- --- --- ---
Combined Total 1,104 1,330 3,527 4,026
Corporate 0 0 0 0
Reconciliation 0 0 0 0
-- -- -- --
Consolidated Total $1,104 $1,330 $3,527 $4,026
Depreciation and Amortization
The Americas $2,828 $2,767 $8,578 $7,659
Europe 698 431 2,092 1,092
Asia-Pacific 1,155 957 3,133 2,708
------ ---- ----- ------
Combined Total 4,681 4,155 13,803 11,459
Corporate 2,080 2,259 6,369 6,767
Reconciliation 0 0 0 0
-- -- -- --
Consolidated Total $6,761 $6,414 $20,172 $18,226
Other income (loss)
The Americas $(5) $243 $1,167 $782
Europe 153 7 420 144
Asia-Pacific 128 170 290 52
---- --- --- --
Combined Total 276 420 1,877 978
Corporate 0 0 0 0
Reconciliation 0 0 0 0
-- -- -- --
Consolidated Total $276 $420 $1,877 $978
Income Tax Expense
The Americas $3,243 $2,437 $10,530 $5,347
Europe 1,211 814 3,958 3,080
Asia-Pacific 1,261 789 3,476 2,372
------ ---- ----- -----
Combined Total 5,715 4,040 17,964 10,799
Corporate 0 0 0 0
Reconciliation 0 0 0 0
-- -- -- --
Consolidated Total $5,715 $4,040 $17,964 $10,799
Net Income
The Americas $5,849 $5,590 $20,357 $14,841
Europe 2,021 1,683 7,401 5,676
Asia-Pacific 3,938 1,579 9,220 3,871
------ ------ ----- -----
Combined Total 11,808 8,852 36,978 24,388
Corporate (2,080) (2,264) (6,390) (6,772)
Reconciliation 0 0 0 0
-- -- -- --
Consolidated Total $9,728 $6,588 $30,588 $17,616
Revenues
Electronic $61,638 $38,587 $179,438 $106,958
Automotive 23,927 23,376 77,708 74,907
Power 10,797 11,329 31,891 32,492
------- ------- ------ ------
Consolidated Total $96,362 $73,292 $289,037 $214,357
======== ======== ======== ========
</TABLE>
Revenues from no single customer of the Company amount to 10% or more for the
quarter ended September 30, 2000.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995.
The preceding commentary presents management's discussion and analysis of the
Company's financial condition and results of operations for the periods
presented. Certain of the statements included above, including those regarding
future financial performance or results or those that are not historical facts,
are or contain "forward-looking" information as that term is defined in the
Securities Exchange Act of 1934, as amended. The words "expect," "believe,"
"anticipate," "project," "estimate," and similar expressions are intended to
identify forward-looking statements. The Company cautions readers that any such
statements are not guarantees of future performance or events and such
statements involve risks, uncertainties and assumptions, including, but not
limited to, product demand and market acceptance risks, the effect of economic
conditions, the impact of competitive products and pricing, product development
and patent protection, commercialization and technological difficulties,
capacity and supply constraints or difficulties, actual purchases under
agreements, the effect of the Company's accounting policies, currency rate
fluctuations, and other factors discussed above and in the Company's Annual
Report on Form 10-K for the year ended January 1, 2000. Should one or more of
these risks or uncertainties materialize or should the underlying assumptions
prove incorrect, actual results and outcomes may differ materially from those
indicated or implied in the forward-looking statements. This report should be
read in conjunction with information provided in the financial statements
appearing in the Company's Annual Report on Form 10-K for the year ended January
1, 2000.
Item 3. Qualitative and Quantitative Disclosures about Market Risk
The Company is exposed to market risk from changes in interest rates, foreign
exchange rates and commodities.
The Company had long-term debt outstanding at September 30, 2000 in the form of
Senior Notes and lines of credit at both variable and fixed interest rates.
Since substantially all of the debt has fixed interest rates, the Company's
interest expense is not sensitive to changes in interest rate levels.
A portion of the Company's operations consists of manufacturing and sales
activities in foreign countries. The Company has manufacturing facilities in
Mexico, England, Ireland, Switzerland, South Korea, China and the Philippines.
Substantially all sales in Europe are denominated in Dutch Guilders, British
Pounds Sterling, United States Dollars and Euros and substantially all sales in
the Asia-Pacific region are denominated in United States Dollars and South
Korean Won.
The Company's identifiable foreign exchange exposures result from the purchase
and sale of products from affiliates, repayment of intercompany trade and loan
amounts and translation of local currency amounts in consolidation of financial
results. Changes in foreign currency exchange rates or weak economic conditions
in the foreign countries in which it manufactures and distributes products could
affect the Company's sales and financial results. Other than utilizing netting
and offsetting intercompany account management techniques to reduce known
exposures, the Company does not use derivative financial instruments to mitigate
its foreign currency risk at the present time.
The Company uses various metals in the production of its products, including
zinc, copper and silver. The Company's earnings are exposed to fluctuations in
the prices of these commodities. The Company does not currently use derivative
financial instruments to mitigate this commodity price risk.
<PAGE>
PART II - OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibit Description
Exhibit 3.2 Bylaws (as amended)
Exhibit 27 Financial Data Schedule
(b) There were no reports on Form 8-K filed during the quarter
ended September 30, 2000.
<PAGE>
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 September 30, 2000, to be signed on its behalf by the undersigned
thereunto duly authorized.
Littelfuse, Inc.
Date: November 14, 2000 By /s/ Philip G. Franklin
--------------------------------
Philip G. Franklin
Vice President, Treasurer,
and Chief Financial Officer
(As duly authorized officer
and as the principal financial
and accounting officer)
