Littelfuse Reports Third Quarter 2005 Results
DES PLAINES, Ill.--Nov. 2, 2005--Littelfuse, Inc. today reported sales and earnings for the third quarter of 2005.Third Quarter 2005 Highlights
-- Sales for the third quarter of 2005 were $131.0 million, a 4% decrease from sales of $135.9 million in the third quarter of 2004.
-- Diluted earnings per share were $0.28 for the third quarter of 2005, compared to earnings of $0.49 per diluted share for the third quarter of 2004.
-- Special items for the third quarter of 2005 included $1.6 million of restructuring charges related to downsizing the Ireland operation, a $1.0 million charge related to Delphi Corporation's bankruptcy filing and a $1.4 million gain on sale of the Company's 40% interest in a wafer fabrication facility in Swindon, England.
-- By geography, sales for the third quarter of 2005 were down 10% in the Americas, down 8% in Europe and up 8% in Asia compared to the third quarter of 2004.
-- By market, sales for the third quarter of 2005 were down 11% for electronics, up 9% for automotive and up 15% for electrical compared to the prior year period.
Third Quarter Operating Results
The sales declines in the Americas and Europe were driven by lower electronic sales reflecting continued weakness in telecom end markets and additional third quarter 2004 sales related to the build-up in distribution inventory. The decline in Americas electronic sales was partially offset by sales increases in automotive and electrical reflecting new business wins and price realization in both the automotive aftermarket and electrical markets. The sales increase in Asia reflected strong performance in the electronic markets in Taiwan, Southeast Asia and Korea and in the automotive market in Korea.
"Our third quarter sales and earnings performance, although below that of the prior year, showed sequential growth and was at the high end of our expected range," said Gordon Hunter, Chief Executive Officer. "We continue to make progress on our key initiatives including the Heinrich integration and new product programs and believe the business is well positioned for improved performance in the coming year."
"Excluding special charges, operating margin for the third quarter improved sequentially to over 8%," said Phil Franklin, Chief Financial Officer. "This margin improvement was driven by operating leverage on higher sales and continued progress on cost reduction initiatives."
The effective tax rate increased to 41% in the third quarter of 2005 compared to 35% in the previous two quarters. The tax rate for the third quarter was impacted by several factors including charges related to repatriation of foreign earnings from lower tax jurisdictions and limited tax shield from Ireland restructuring charges.
Free cash flow (cash from operating activities minus net capital expenditures) of $10.1 million for the third quarter of 2005 was down from $16.3 million for the same period in 2004, but up from negative $4.8 million for the first half of 2005. "Because of our weak performance for the first half of the year, free cash flow for 2005 will be below that of recent years," said Franklin. "However, going forward, free cash flow should be more consistent with our historical performance."
Year to Date Highlights
For the first three quarters of 2005, sales were $376.6 million, compared to sales of $376.1 million for the same period in 2004. Diluted earnings per share were $0.66 for the first three quarters of 2005, compared to earnings of $1.38 per diluted share for the prior year period.
Heinrich Minority Share Squeeze-out
The Heinrich squeeze out has now been registered with the German courts and the Heinrich shares have been de-listed from the local German stock exchange. It is expected that Littelfuse will acquire the remaining 3% of Heinrich shares outstanding before the end of 2005.
Future Restructuring Charges
Littelfuse also announced that it will be further downsizing its Ireland operation and outsourcing more of its varistor manufacturing to lower cost Asian subcontractors. This will result in future restructuring charges currently estimated at $2.5 million for the fourth quarter of 2005 and $2.1 million in 2006.
Conference Call Webcast Information
Littelfuse will host a conference call today, Wednesday, November 2, 2005 at 11:00 a.m. Eastern/10:00 a.m. Central time to discuss the third quarter results. The call will be broadcast live over the Internet and can be accessed through the company's Web site: www.littelfuse.com. Listeners should go to the Web site at least 15 minutes prior to the call to download and install any necessary audio software. The call will be available for replay through December 31, 2005 and can be accessed through the Web site listed above.
About Littelfuse
As the worldwide leader in circuit protection products and solutions with annual sales of $500.2 million in 2004, the Littelfuse portfolio is backed by industry leading technical support, design and manufacturing expertise. Littelfuse products are vital components in virtually every product that uses electrical energy, including automobiles, computers, consumer electronics, handheld devices, industrial equipment, and telecom/datacom circuits. Littelfuse offers Teccor(R), Wickmann, Pudenz and Efen brand circuit protection products. In addition to its Des Plaines, Illinois, world headquarters, Littelfuse has research and manufacturing facilities in China, England, Germany, Ireland, Mexico, the Philippines and the United States. It also has sales, distribution and engineering facilities in Brazil, China, Germany, Hungary, the Netherlands, Japan, Korea, Taiwan, Hong Kong, Singapore and the U.S.
For more information, please visit Littelfuse's web site at www.littelfuse.com
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995.
Any forward looking statements contained herein involve risks and uncertainties, 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, exchange rate fluctuations, actual purchases under agreements, the effect of the company's accounting policies, labor disputes, restructuring costs in excess of expectations and other risks which may be detailed in the company's Securities and Exchange Commission filings.
LITTELFUSE, INC.
Sales by Geography and Market(a)
(Dollars in millions)
Third Quarter Year-to-Date
------------------------- -------------------------
2005 2004 % Change 2005 2004 % Change
------- ------- --------- ------- ------- ---------
Geography
---------
Americas $51.3 $57.1 -10% $150.9 $166.0 -9%
Europe 31.9 34.6 -8% 98.3 86.4 14%
Asia Pacific 47.8 44.2 8% 127.4 123.7 3%
------- ------- --------- ------- ------- ---------
Total $131.0 $135.9 -4% $376.6 $376.1 0%
======= ======= ========= ======= ======= =========
Third Quarter Year-to-Date
------------------------- -------------------------
2005 2004 % Change 2005 2004 % Change
------- ------- --------- ------- ------- ---------
Market
------
Electronics $80.8 $90.9 -11% $228.5 $249.6 -9%
Automotive 29.9 27.4 9% 91.0 84.9 7%
Electrical 20.3 17.6 15% 57.1 41.6 37%
------- ------- --------- ------- ------- ---------
Total $131.0 $135.9 -4% $376.6 $376.1 0%
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(a) Certain prior year amounts have been reclassified to conform to
the current year presentation.
LITTELFUSE, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share data, unaudited)
For the For the
Three Months Ended Nine Months Ended
Oct 1, Oct 2, Oct 1, Oct 2,
2005 2004 2005 2004
--------- --------- --------- ---------
Net sales $131,050 $135,926 $376,605 $376,103
Cost of sales 90,634 86,565 258,843 242,758
--------- --------- --------- ---------
Gross profit 40,416 49,361 117,762 133,345
Selling, general and
administrative 26,982 26,181 79,531 70,296
Research and development
expenses 4,620 4,324 14,063 11,661
Amortization of intangibles 496 480 1,590 1,289
--------- --------- --------- ---------
Operating income 8,318 18,376 22,578 50,099
Interest expense 598 387 1,657 1,305
Other (income) expense (2,989) 303 (3,221) (158)
--------- --------- --------- ---------
Income before minority interest 10,709 17,686 24,142 48,952
Minority interest 25 75 27 135
Income taxes 4,358 6,361 9,093 17,617
--------- --------- --------- ---------
Net income $6,326 $11,250 $15,022 $31,200
========= ========= ========= =========
Net income per share:
Basic $0.28 $0.50 $0.67 $1.41
========= ========= ========= =========
Diluted $0.28 $0.49 $0.66 $1.38
========= ========= ========= =========
Weighted average shares and
equivalent shares outstanding:
Basic 22,441 22,350 22,449 22,189
========= ========= ========= =========
Diluted 22,626 22,844 22,671 22,594
========= ========= ========= =========
LITTELFUSE, INC.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
October 1, 2005 January 1, 2005
--------------- ---------------
Assets:
Cash and cash equivalents $34,333 $28,583
Receivables 83,375 77,726
Inventories 69,246 79,080
Deferred income taxes 23,320 17,056
Other current assets 7,830 6,804
--------------- ---------------
Total current assets 218,104 209,249
Property, plant, and equipment, net 136,785 136,465
Intangible assets, net 17,085 19,052
Goodwill 55,135 55,249
Investments 5,479 4,886
Other assets 410 408
--------------- ---------------
Total assets $432,998 $425,309
=============== ===============
Liabilities and Shareholders' Equity:
Current liabilities excluding current
portion of long-term debt $74,527 $82,196
Current portion of long-term debt 38,486 32,958
--------------- ---------------
Total current liabilities 113,013 115,154
Long-term debt 1,757 1,364
Deferred income taxes 12,281 8,573
Accrued post-retirement benefits 17,111 20,417
Other long-term liabilities 6,051 7,081
Minority interest 928 2,636
Shareholders' equity 281,857 270,084
--------------- ---------------
Total liabilities and shareholders'
equity $432,998 $425,309
=============== ===============
Common shares issued and outstanding
of 22,323,791 and 22,549,595, at
October 1, 2005, and January 1, 2005,
respectively
LITTELFUSE, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
For the For the
Three Months Ended Nine Months Ended
------------------- -------------------
Oct 1, Oct 2, Oct 1, Oct 2,
2005 2004 2005 2004
--------- --------- --------- ---------
Operating activities:
Net Income $6,326 $11,250 $15,022 $31,200
Adjustments to reconcile net
income to net
Cash provided by operating
activities:
Depreciation 7,547 5,828 21,699 17,644
Amortization 496 480 1,590 1,289
Changes in operating assets and
liabilities:
Accounts receivable (2,618) (598) (9,053) (14,416)
Inventories 1,894 (6,834) 6,845 (8,067)
Accounts payable and accrued
expenses 681 1,817 (8,553) 3,596
Other, net 796 11,683 (218) 11,442
--------- --------- --------- ---------
Net cash provided by operating
activities 15,122 23,626 27,332 42,688
Cash used in investing
activities:
Purchases of property, plant
and equipment (4,979) (7,343) (21,943) (16,394)
Acquisitions, net of cash
acquired (398) (2,512) (1,417) (35,319)
Sale of property, plant and
equipment - 2,684 - 2,684
--------- --------- --------- ---------
Net cash used in investing
activities (5,377) (7,171) (23,360) (49,029)
Cash provided by (used in)
financing activities:
Proceeds from long-term debt 19,729 700 46,680 32,700
Payments of long-term debt (23,901) (19,603) (40,114) (22,650)
Proceeds from repayment of
notes receivable, common
stock - - 3,533 -
Proceeds from exercise of
stock options 3,075 2,026 3,750 10,335
Purchase of treasury stock (6,761) (5,604) (9,960) (5,604)
--------- --------- --------- ---------
Net cash provided by (used in)
financing activities (7,858) (22,481) 3,889 14,781
Effect of exchange rate changes
on cash (201) (1,033) (2,111) (3,243)
--------- --------- --------- ---------
Increase (decrease) in cash and
cash equivalents 1,686 (7,059) 5,750 5,197
Cash and cash equivalents at
beginning of period 32,647 34,384 28,583 22,128
--------- --------- --------- ---------
Cash and cash equivalents at
end of period $34,333 $27,325 $34,333 $27,325
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