Littelfuse Reports Financial Results
21 October 1998
Littelfuse Reports Financial Results
DES PLAINES, Ill., Oct. 21 -- Littelfuse, Inc.
reported that its sales for the third quarter of 1998 equaled
those reported for the same period last year.
Sales for the quarter ended October 3, 1998 reached $69.0 million,
the same as they were in the third quarter of 1997, when the company's sales
increased 14%. Operating income for the third quarter of 1998 declined 18%,
to $9.2 million, from the $11.2 million reported during the same period last
year. Net income fell by 16%, to $5.4 million, compared to $6.4 million in
the third quarter of 1998. Diluted earnings per share, which include warrants
and options, was $.23, compared to $.27 in the third quarter of 1997.
"Our diversified product lines and presence in all major global
markets is helping us weather difficult conditions in several markets and
regions," said Howard B. Witt, Chairman, President and Chief Executive
Officer. "When measured in terms of constant currency, our sales increased
slightly. Our strong performance in Europe, solid gains in POWR-GARD(R)
products and continued emphasis on cost control helped to offset the
impact of current economic conditions in Asian markets, particularly Japan,
and lower demand for automotive and electronics products in North America."
Sales in Europe grew by 23% for the quarter as telecommunications
manufacturers increased their orders for the company's products and European
auto manufacturers posted strong sales gains. "Our innovative new products
are allowing us to make significant gains in the European market," said Witt.
After growing 39% in the third quarter of 1997, sales in the Asia-Pacific
region were down 10% in the third quarter of 1998 due primarily to weaker
demand in Japanese electronics markets and increased pressure on selling
prices. In North America, electronic distributors continued to aggressively
manage inventories, while the company also continued to feel the effects of
the GM strike, which lasted into the third quarter. Sales in North America
declined one percent for the quarter, after growing 10% in the third quarter
of 1997.
Overall, sales of the company's electronics products declined three
percent during the third quarter of 1998, compared to very strong 25% growth
in the third quarter of 1997, while the GM strike contributed to a one percent
decline in automotive sales. Sales of the company's POWR-GARD(R) power fuses
grew by 12%. "Innovative new products, such as our line of indicating power
fuses, are helping us win a larger share of the power fuse market," commented
Bill Barron, Vice President, Sales and Marketing.
Unfavorable foreign currency exchange rates in the Asia-Pacific region
continued to have an impact on the company's results. If foreign currency
exchange rates had remained the same as they were in 1997, the company's total
sales would have increased by two percent for the quarter. In constant
currency, sales in Asia-Pacific declined by two percent, while European sales
increased by 20%. Electronics sales grew one percent in constant currency,
while automotive sales declined by one percent. Currency exchange rates in
the fourth quarter appear to be turning more favorable.
For the nine months ended October 3, 1998, Littelfuse's sales increased by
two percent to $207.5 million, compared to $204.4 million for the same period
in 1997. Operating income for the first nine months declined 16%, to $28.2
million, compared to $33.6 million in the previous year. Net income totaled
$16.7 million, a decline of 15% from the $19.6 million reported in 1997.
Diluted earnings per share dropped 11%, from $.81 in the first nine months of
1997 to $.72 for the same period in 1998.
After entering into a revised credit agreement and completing a new
senior debt placement on August 31, the company had approximately $30 million
in cash on-hand at the end of the quarter. The funds will be used to
support the company's share repurchase program and its efforts to acquire
additional related products and technologies. Under the terms of the stock
and warrant repurchase program approved by its board of directors in May,
Littelfuse has repurchased 974,800 shares of its stock. Last week the board
expanded its authorization to allow the company to repurchase up to an
additional one million shares and warrants through April 30, 1999.
"Our expanded share repurchase program reflects the confidence we have in
our long-term prospects," said Witt. "We are adapting ourselves to a more
competitive environment. Major worldwide cost reduction efforts will help
offset pressure on prices. An accelerated program to take costs out of all
areas is in place and inventory was reduced $2.5 million during the quarter.
The acquisition of additional products and technologies, innovative new
products and new cross-selling efforts should enable us to increase our
value to customers. In challenging times, we're becoming more productive and
competitive than ever before."
Littelfuse is the world's leading producer of electronic, power and
automotive fuses. In addition to its Des Plaines world headquarters,
Littelfuse has manufacturing facilities in England, Switzerland, Mexico,
Korea, China and the Philippines as well as Centralia, Arcola and Watseka,
Illinois. It also has sales, engineering and distribution facilities in the
Netherlands, Singapore, Hong Kong, Japan, Brazil and Farmington Hills,
Michigan.
For more information, please visit Littelfuse's web site at
http://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, actual purchases under agreements, the effect of
the company's accounting policies, and other risks which may be detailed in
the company's Securities and Exchange Commission filings.
CONSOLIDATED CONDENSED
STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)
For the Three For the Nine
Months Ended Months Ended
Oct. 3, Sept. 27, Oct. 3, Sept. 27,
1998 1997 1998 1997
Net sales $69,035 $68,993 $207,482 $204,404
Cost of sales 43,130 41,133 128,653 121,116
Gross profit 25,905 27,860 78,829 83,288
Selling, administrative and
general expenses 15,066 14,853 45,511 44,423
Amortization of intangibles 1,613 1,787 5,112 5,293
Operating income 9,226 11,220 28,206 33,572
Costs associated with
consolidation of operations (356) -- 395 --
Interest expense 902 1,165 2,634 2,989
Other income, net 162 (123) 151 (488)
Income before income taxes 8,518 10,178 25,026 31,071
Income taxes 3,152 3,766 8,280 11,496
Net income $5,366 $6,412 $16,746 $19,575
Net income per share - Basic $0.26 $0.27 $0.81 $0.82
- Diluted $0.23 $0.27 $0.72 $0.81
Weighted average number of common
and common equivalent shares
outstanding - Basic 20,587 19,887 20,570 19,777
- Diluted 22,979 24,041 23,343 24,091
CONSOLIDATED CONDENSED
STATEMENTS OF FINANCIAL CONDITION
(In thousands)
Oct. 3, Jan. 3,
1998 1998
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $29,824 $755
Accounts receivable 47,527 37,458
Inventories 36,029 39,075
Deferred income taxes 3,672 3,672
Prepaid expenses and other 2,599 2,896
Total current assets 119,651 83,856
Property, plant, and equipment, net 76,880 70,763
Reorganization value, net 38,961 41,202
Patents and other identifiable
intangible assets, net 19,917 22,786
Prepaid pension cost and other assets 4,213 3,278
$259,622 $221,885
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $34,468 $31,601
Accrued income taxes 6,982 9,952
Current portion of long-term debt 4,643 10,172
Total current liabilities 46,093 51,725
Long-term debt, less current portion 78,224 40,385
Deferred income taxes 6,205 6,205
Minority Interest 52 65
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:
34,000,000 shares authorized; 20,305,035
and 19,873,140 shares issued and outstanding 203 199
Additional paid-in capital 57,601 52,540
Notes receivable - common stock (1,960) (1,960)
Foreign translation adjustment (3,437) (4,767)
Retained earnings 76,641 77,493
Total shareholders' equity $129,048 $123,505
$259,622 $221,885
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
For the Three For the Nine
Months Ended Months Ended
Oct. 3, Sept. 27, Oct. 3, Sept. 27
1998 1997 1998 1997
Operating activities:
Net income $5,366 $6,412 $16,746 $19,575
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 3,786 3,201 10,517 9,781
Amortization 1,614 1,787 5,112 5,293
Provision for bad debts 179 120 463 371
Deferred income taxes -- 52 -- (1)
Minority interest 27 (102) (22) (115)
Changes in operating assets
and liabilities:
Accounts receivable (2,449) (158) (9,494) (8,955)
Inventories 2,435 (3,221) 3,793 (8,363)
Accounts payable and
accrued expenses 1,261 717 2,365 5,546
Other, net (3,472) (491) (3,294) (534)
Net cash provided by
operating activities 8,747 8,317 26,186 22,598
Cash used in investing activities:
Purchases of property, plant, and
equipment, net (5,296) (5,208) (15,349) (12,545)
Acquisition of business, net -- -- --
-- -- -- (5,060)
(5,296) (5,208) (15,349) (17,605)
Cash provided by (used in)
financing activities:
Payments of long-term
debt, net 31,938 (4,330) 31,772 (1,209)
Proceeds from exercise
of stock options
and warrants (4) 953 5,528 1,453
Purchase of common
stock and warrants (9,376) -- (18,349) (6,147)
22,558 (3,377) 18,951 (5,903)
Effect of exchange rate
changes on cash (468) (7) (719) (266)
Increase/(Decrease) in cash
and cash equivalents 25,541 (275) 29,069 (1,176)
Cash and cash equivalents at
beginning of period 4,283 526 755 1,427
Cash and cash equivalents
at end of period $29,824 $251 $29,824 $251