Littelfuse Reports Fourth Quarter and 2005 Results
DES PLAINES, Ill.--Feb. 8, 2006--Littelfuse, Inc. today reported sales and earnings for the fourth quarter and full year of 2005.Fourth Quarter Highlights
-- In the fourth quarter of 2005, Littelfuse entered into a definitive agreement to sell the Efen electrical switchgear business acquired as part of its acquisition of Heinrich in 2004. Beginning in the fourth quarter Efen is accounted for as a discontinued operation. The Efen sale is expected to close in the first quarter of 2006. Proceeds from the sale will be approximately $14 million, which will generate a book gain of approximately $1.5 million.
-- Sales for the fourth quarter of 2005 (which exclude Efen) were $115.4 million, a 1.1% increase from sales of $114.1 million in the fourth quarter of 2004 (which exclude Efen). Sales for the fourth quarter of 2005 were down 5.6% sequentially compared to the third quarter of 2005, due primarily to seasonal factors.
-- Diluted earnings per share were $0.23 for the fourth quarter of 2005 compared to earnings of $0.21 per diluted share for the fourth quarter of 2004. Diluted earnings per share from continuing operations were $0.22 for the fourth quarter of 2005 compared to $0.26 per diluted share for the fourth quarter of 2004.
-- The fourth quarter of 2005 included approximately $0.8 million of pre-tax restructuring charges, the majority of which are related to the planned move of thin film fuse manufacturing from Des Plaines, Illinois to the Philippines. The fourth quarter of 2004 included approximately $2.3 million of pre-tax asset impairment charges related to write-down of the Semitron investment.
-- Free cash flow (cash from operating activities minus net capital expenditures) was $5.5 million for the fourth quarter of 2005 compared to $1.9 million for the prior year quarter.
-- In the Littelfuse third quarter 2005 earnings press release, it was stated that the company had announced a downsizing of its Ireland operation and would be booking related charges over the next several quarters. In addition to the $1.6 million charge booked in the third quarter, the company indicated it expected to book additional charges in the fourth quarter of 2005 and the first half of 2006. This was in accordance with FAS 146 which requires that severance charges be amortized over the period between employee notification and employee termination. On further technical review by the company, it was determined that these charges should more appropriately have been accounted for under FAS 112 which requires all charges be booked at the time of notification. The effect of this change in interpretation is that all severance costs related to the announced Ireland downsizing (the $1.6 million previously booked in the third quarter plus an additional $3.3 million) were pushed back to the third quarter of 2005. A revised third quarter summary income statement has been provided in this press release, and this revision will be reflected in the 2005 Form 10-K.
-- By geography, sales for the fourth quarter of 2005 were down 3% in the Americas, down 4% in Europe and up 10% in Asia compared to the fourth quarter of 2004.
-- By market, sales for the fourth quarter of 2005 were flat for electronics, up 1% for automotive and up 16% for electrical compared to the prior year period.
-- The book to bill ratio for electronics in the fourth quarter was 1.11 to one as bookings accelerated late in the quarter.
Fourth Quarter Operating Results
The increase in Asia sales was driven primarily by strong demand for consumer electronics particularly in Greater China, Korea and Southeast Asia. The decline in the Americas reflected lower electronics demand, primarily for telecom products, partially offset by strong electrical sales. Sales in Europe declined due to weakness in electronics.
"Overall sales for the fourth quarter came in about as expected, with electronics a little stronger and automotive slightly weaker," said Gordon Hunter, Chief Executive Officer. "Our electrical business finished the year with record sales and earnings and enters 2006 with strong momentum."
"Our operating margin improved to 7.9% in what is normally a difficult quarter," said Phil Franklin, Chief Financial Officer. "This gives us confidence that, with the expected 2006 cost reductions and leverage from higher sales, a 10% operating margin is achievable this year (excluding stock compensation expense)."
Full Year Results
For the full year 2005, sales were $467.1 million (excluding Efen), down 2% compared to the full year 2004 due to weakness in electronics, primarily in North America, partially offset by increased electrical and automotive sales. Diluted earnings per share were $0.78 for 2005, compared to earnings of $1.59 per diluted share for the prior year period. Earnings from continuing operations were $0.73 per diluted share for 2005 compared to $1.61 per diluted share for 2004. The most significant items contributing to lower earnings in 2005 were a large drop in Teccor sales with the associated negative operating leverage, approximately $8 million in severance related to the Ireland downsizing and other restructurings and a higher effective tax rate.
The effective tax rate for 2005 was 41% compared to 34% for 2004. The high 2005 tax rate reflects several factors, including the limited tax shield on Ireland restructuring charges and the repatriation of foreign earnings from lower tax jurisdictions. The tax rate for 2006 is expected to average 35-37%, but with significant variability from quarter to quarter. In future years, the effective tax rate is expected to be below 35%.
Current Outlook
"Demand for electronic products accelerated in December and so far this strength has continued into 2006," said Hunter. "We now believe our electronics sales in the first quarter will be up 5-10% sequentially and increase over 10% versus prior year. The electrical business continues its strong performance while automotive is trending up slightly versus last year."
Conference Call Webcast Information
Littelfuse will host a conference call today, Wednesday, February 8, 2006 at 12:00 p.m. Eastern/11:00 a.m. Central time to discuss the fourth 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 March 31, 2006 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 $467.1 million in 2005, 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(R) and Pudenz(R) brand circuit protection products. In addition to its Des Plaines, Illinois, world headquarters, Littelfuse has sales, distribution, manufacturing and engineering facilities in Brazil, China, England, Germany, Hong Kong, India, Ireland, Japan, Korea, Mexico, the Netherlands, the Philippines, Singapore, Taiwan 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(1)
(Dollars in millions)
Fourth Quarter Year-to-Date
------------------------- -------------------------
2005 2004 % Change 2005 2004 % Change
------- ------- --------- ------- ------- ---------
Geography
---------
Americas $49.0 $50.6 -3.2% $199.9 $216.5 -7.7%
Europe 23.3 24.3 -4.1% 98.3 98.3 -
Asia Pacific 43.1 39.2 9.9% 168.9 162.0 4.3%
------- ------- --------- ------- ------- ---------
Total $115.4 $114.1 1.1% $467.1 $476.8 -2.0%
======= ======= ========= ======= ======= =========
Fourth Quarter Year-to-Date
------------------------- -------------------------
2005 2004 % Change 2005 2004 % Change
------- ------- --------- ------- ------- ---------
Market
------
Electronics $77.3 $77.6 -0.4% $305.9 $325.6 -6.1%
Automotive 27.8 27.6 0.7% 118.6 113.7 4.3%
Electrical 10.3 8.9 15.7% 42.6 37.5 13.6%
------- ------- --------- ------- ------- ---------
Total $115.4 $114.1 1.1% $467.1 $476.8 -2.0%
======= ======= ========= ======= ======= =========
(1) Certain prior year amounts have been reclassified to conform to
the current year presentation. Amounts exclude Efen.
LITTELFUSE, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share data, unaudited)
For the Three Months For the Twelve Months
Ended Ended
--------------------- ---------------------
Dec 31, Jan 1, Dec 31, Jan 1,
2005 2005 2005 2005
---------- ---------- ---------- ----------
Net sales $115,373 $114,124 $467,089 $476,833
Cost of sales 77,468 74,228 322,537 303,036
---------- ---------- ---------- ----------
Gross profit 37,905 39,896 144,552 173,797
Selling, general and
administrative expenses 24,024 23,617 98,536 96,102
Research and development
expenses 3,890 4,803 16,672 16,079
Impairment of investments - 2,277 - 2,277
Amortization of
intangibles 877 1,041 2,378 2,336
---------- ---------- ---------- ----------
Operating income 9,114 8,158 26,966 57,003
Interest expense 470 147 2,098 1,475
Other (income) expense 147 256 (3,068) 47
---------- ---------- ---------- ----------
Earnings from continuing
operations before taxes
and minority interest
and income taxes 8,497 7,755 27,936 55,481
Minority interest (48) 15 (86) 143
---------- ---------- ---------- ----------
Earnings from continuing
operations before income
taxes 8,545 7,740 28,022 55,338
Income taxes 3,684 1,789 11,440 18,977
---------- ---------- ---------- ==========
Earnings from continuing
operations 4,861 5,951 16,582 36,361
Discontinued operations
(net of tax) 382 (1,123) 1,128 (333)
---------- ---------- ---------- ----------
Net Income 5,243 4,828 17,710 36,028
========== ========== ========== ==========
Income (loss) per share:
Basic:
Continuing operations 0.22 0.27 0.74 1.64
Discontinued operations 0.01 (0.06) 0.05 (0.02)
---------- ---------- ---------- ----------
Net income 0.23 0.21 0.79 1.62
========== ========== ========== ==========
Diluted:
Continuing operations 0.22 0.26 0.73 1.61
Discontinued operations 0.01 (0.05) 0.05 (0.02)
---------- ---------- ---------- ----------
Net income 0.23 0.21 0.78 1.59
========== ========== ========== ==========
Weighted average shares
and equivalent shares
outstanding:
Basic 22,305 22,395 22,413 22,239
========== ========== ========== ==========
Diluted 22,415 21,818 22,582 22,604
========== ========== ========== ==========
LITTELFUSE, INC.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
December 31, 2005 January 1, 2005
----------------- -----------------
Assets:
Cash and cash equivalents $21,354 $28,091
Receivables 79,884 74,824
Inventories 62,581 72,697
Assets of discontinued
operations (Efen) 18,134 19,061
Other current assets 24,681 22,503
----------------- -----------------
Total current assets 206,634 217,176
Property, plant, and equipment,
net 124,680 129,196
Intangible assets, net 14,668 18,427
Goodwill 56,765 55,249
Investments 5,590 4,886
Other assets 490 375
----------------- -----------------
Total assets $408,827 $425,309
================= =================
Liabilities and Shareholders'
Equity:
Current liabilities excluding
current portion of long-term debt $64,552 $77,160
Liabilities of discontinued
operations (Efen) 7,703 6,770
Current portion of long-term debt 26,682 32,958
----------------- -----------------
Total current liabilities 98,937 116,888
Long-term debt - 1,364
Accrued post-retirement benefits 19,646 19,111
Other long-term liabilities 13,109 15,654
Minority interest 69 2,208
Shareholders' equity 277,066 270,084
----------------- -----------------
Total liabilities and
shareholders' equity $408,827 $425,309
================= =================
Common shares issued and
outstanding of 22,229,288 and
22,549,595, at December 31, 2005,
and January 1, 2005,
respectively.
LITTELFUSE, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
For the Three Months For the Twelve Months
Ended Ended
--------------------- ---------------------
Dec 31, Jan 1, Dec 31, Jan 1,
2005 2005 2005 2005
---------- ---------- ---------- ----------
Operating activities:
Net Income $5,243 $4,828 $17,709 $36,028
Adjustments to reconcile
net income to net
Cash provided by
operating activities:
Depreciation 7,039 6,215 28,738 23,859
Amortization 905 1,152 2,495 2,441
Provision for bad debts (25) 225 2,403 802
Impairment of
investments - 2,277 - 2,277
Changes in operating
assets and liabilities:
Accounts receivable (223) 7,834 (11,704) (6,582)
Inventories 1,749 3,790 8,594 (4,277)
Accounts payable and
accrued expenses (2,238) (10,728) (8,235) (7,709)
Prepaid and other, net (1,679) (5,297) (1,897) 6,145
---------- ---------- ---------- ----------
Net cash provided by
operating activities 10,771 10,296 38,103 52,984
Cash used in investing
activities:
Purchases of property,
plant and equipment (5,385) (8,369) (27,328) (24,763)
Acquisitions, net of cash
acquired (1,602) (6,342) (3,019) (41,661)
Sale of property, plant
and equipment 89 - 89 2,684
---------- ---------- ---------- ----------
Net cash used in
investing activities (6,898) (14,711) (30,258) (63,740)
Cash provided by (used
in) financing
activities:
Proceeds from long-term
debt 2,139 9,500 48,819 42,200
Payments of long-term
debt (15,502) (15,752) (55,616) (38,402)
Proceeds from repayment
of notes receivable,
common stock - - 3,533 -
Proceeds from exercise
of stock options 94 6,185 3,844 16,520
Purchase of treasury
stock (2,872) - (12,832) (5,604)
---------- ---------- ---------- ----------
Net cash provided by
(used in) financing
activities. (16,141) (67) (12,252) 14,714
Effect of exchange rate
changes on cash (118) 5,740 (2,229) 2,497
---------- ---------- ---------- ----------
Increase (decrease) in
cash and cash
equivalents (12,386) 1,258 (6,636) 6,455
Cash and cash equivalents
at beginning of period 34,333 27,325 28,583 22,128
---------- ---------- ---------- ----------
Cash and cash equivalents
at end of period $21,947 $28,583 $21,947 $28,583
========== ========== ========== ==========
LITTELFUSE, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share data, unaudited)
For the Three Months Ended
Oct 1, Dec 31,
2005 (1) 2005
------------ ------------
Net sales $122,266 $115,373
Cost of sales 87,957 77,468
------------ ------------
Gross profit 34,309 37,905
Selling, general and administrative 25,513 24,024
Research and development expenses 4,257 3,890
Amortization of intangibles 436 877
------------ ------------
Operating income 4,103 9,114
Interest expense 587 470
Other (income) expense (2,988) 147
------------ ------------
Earnings from continuing operations
before taxes and minority interest 6,504 8,497
Minority interest (40) (48)
------------ ------------
Earnings from continuing operations
before income taxes 6,544 8,545
Income taxes 3,423 3,684
------------ ------------
Earnings from continuing operations 3,121 4,861
Discontinued operations (net of tax) 650 382
------------ ------------
Net Income $3,771 $5,243
============ ============
Income per share:
Basic:
Continuing operations 0.14 0.22
Discontinued operations $0.03 $0.01
------------ ------------
Net income 0.17 0.23
============ ============
Diluted:
Continuing operations 0.14 0.22
Discontinued operations $0.03 $0.01
------------ ------------
Net income 0.17 0.23
============ ============
Weighted average shares and equivalent
shares outstanding:
Basic 22,441 22,305
============ ============
Diluted 22,626 22,415
============ ============
(1) Revised for Ireland severance costs.