UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

~~(Mark One)~~
ý	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934

~~For~~ for the quarterly period ended ~~January~~October 31, 2003


		or

	o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Commission file number 0-2816

~~METHODE ELECTRONICS, INC.~~

~~(Exact name of registrant as specified in its charter.)~~

METHODE ELECTRONICS, INC.
(Exact name of registrant as specified in its charter.)

Delaware		36-2090085
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)	~~(I.R.S. Employer~~	Identification No.)

7401 West Wilson Avenue, Harwood Heights, Illinois		60706-4548
(Address of principal executive offices)		(Zip Code)

(Registrant’s telephone number, including area code)		(708) 867-6777

None
(Former name, former address, former fiscal year, if changed since last report)

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~~ ý

Yes

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

~~Yes~~ o

Yes

Noý

At ~~March 7,~~December 5, 2003, Registrant had ~~35,098,759~~35,435,461 shares of Class A Common Stock and ~~1,087,305~~337,705 shares of Class B Common Stock outstanding.

INDEX

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	October 31, 2003		April 30, 2003
	(Unaudited)
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	61,334	$	64,261
Accounts receivable, net	66,235		58,246
Inventories:
Finished products	8,297		6,895
Work in process	16,040		17,845
Materials	6,761		7,196
	31,098		31,936
Deferred income taxes	7,887		7,887
Prepaid expenses	4,221		4,965
Other current assets	—		7,868
TOTAL CURRENT ASSETS	170,775		175,163

PROPERTY, PLANT AND EQUIPMENT	239,168		229,586
Less allowance for depreciation	155,994		146,684
	83,174		82,902

GOODWILL, net	18,077		18,077
INTANGIBLE ASSETS, net	24,336		25,458
OTHER ASSETS	14,754		13,874

	$	311,116	$	315,474

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts and notes payable	$	24,830	$	24,515
Other current liabilities	27,608		24,801
TOTAL CURRENT LIABILITIES	52,438		49,316

OTHER LIABILITIES	3,804		6,345
DEFERRED COMPENSATION	4,731		4,808
SHAREHOLDERS’ EQUITY
Common Stock	18,097		18,316
Paid in capital	38,573		36,584
Retained earnings	192,296		201,845
Other shareholders’ equity	1,177		(1,740		)
	250,143		255,005

	$	311,116	$	315,474

See notes to condensed consolidated financial statements.

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

	Three Months Ended October 31,				Six Months Ended October 31,
	2003		2002		2003			2002

INCOME
Net sales	$	94,502	$	96,823	$	172,460		$	176,864
Other	731		23		1,350			431

	95,233		96,846		173,810			177,295

COSTS AND EXPENSES
Cost of products sold	74,377		76,274		136,385			138,897
Selling and administrative expenses	11,520		11,907		21,432			21,845

	85,897		88,181		157,817			160,742

Income from operations	9,336		8,665		15,993			16,553

Interest, net	52		291		239			574
Other, net	38		221		(540		)	(1,217		)

Income before income taxes	9,426		9,177		15,692			15,910
Income taxes	2,970		3,000		4,945			5,150

NET INCOME	$	6,456	$	6,177	$	10,747		$	10,760

Basic and diluted earnings per common share	$	0.18	$	0.17	$	0.30		$	0.30

Cash dividends per common share	$	0.05	$	0.05	$	0.10		$	0.10

Weighted average number of common shares outstanding:
Basic	35,714		36,168		35,945			36,154
Diluted	36,032		36,360		36,219			36,400

See notes to condensed consolidated financial statements.

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)

January 31,
2003

April 30,
2002

(Unaudited)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$
61,139

$
49,902

Accounts receivable, net

53,796

64,061

Inventories:

Finished products

8,551

6,870

Work in process

20,021

19,902

Materials

7,532

10,188

36,104

36,960

Current deferred income taxes

7,530

7,590

Prepaid expenses

3,591

6,904

TOTAL CURRENT ASSETS

162,160

165,417

PROPERTY, PLANT AND EQUIPMENT

225,113

201,938

Less allowance for depreciation

147,102

131,950

78,011

69,988

GOODWILL, net

19,474

18,200

INTANGIBLE ASSETS, net

25,035

15,013

OTHER ASSETS

23,966

23,308

$
308,646

$
291,926

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts and notes payable

$
21,095

$
27,344

Other current liabilities

26,422

22,852

TOTAL CURRENT LIABILITIES

47,517

50,196

OTHER LIABILITIES

7,213

6,743

DEFERRED COMPENSATION

4,612

5,148

SHAREHOLDERS’ EQUITY

Common Stock

18,307

18,277

Paid in capital

36,480

36,102

Retained earnings

197,000

187,210

Other shareholders’ equity

(2,483
)
(11,750
)

249,304

229,839

$
308,646

$
291,926

	Six Months Ended October 31,
	2003			2002

OPERATING ACTIVITIES
Net income	$	10,747		$	10,760
Provision for depreciation and amortization	10,078			7,898
Changes in operating assets and liabilities	(2,846		)	8,705
Other	103			13

NET CASH PROVIDED BY OPERATING ACTIVITIES	18,082			27,376
INVESTING ACTIVITIES
Purchases of property, plant and equipment	(7,378		)	(8,612		)
Payments for acquired businesses	(1,956		)	—
Collection of note receivable from a related party	6,000			—
Other	3			(669		)

NET CASH USED IN INVESTING ACTIVITIES	(3,331		)	(9,281		)

FINANCING ACTIVITIES
Purchase and retirement of Class B shares	(17,063		)	—
Options exercised	2,144			329
Dividends	(3,608		)	(3,618		)
Other	(78		)	—

NET CASH USED IN FINANCING ACTIVITIES	(18,605		)	(3,289		)

Effect of foreign exchange rate changes on cash	927			1,737

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(2,927		)	16,543

Cash and cash equivalents at beginning of period	64,261			49,902

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	61,334		$	66,445

See notes to condensed consolidated financial statements.

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

~~CONDENSED CONSOLIDATED STATEMENTS OF INCOME~~ ~~(Unaudited)~~

~~(in thousands, except per share data)~~

Three Months
Ended January 31,

Nine Months
Ended January 31,

2003

2002

2003

2002

INCOME

Net sales

$
92,061

$
74,035

$
268,925

$
234,695

Other

359

437

790

1,456

92,420

74,472

269,715

236,151

COSTS AND EXPENSES

Cost of products sold

74,823

65,839

213,214

197,120

Selling and administrative expenses

10,281

9,157

32,632

28,781

85,104

74,996

245,846

225,901

Income (loss) from operations

7,316

(524
)
23,869

10,250

Interest income, net

290

248

864

954

Other income (expense), net

(998
)
298

(2,216
)
900

Income before income taxes

6,608

22

22,517

12,104

Income taxes (credit)

2,150

(350
)
7,300

3,625

NET INCOME

$
4,458

$
372

$
15,217

$
8,479

Basic and diluted earnings per common share

$
0.12

$
0.01

$
0.42

$
0.24

Cash dividends per common share

$
0.05

$
0.05

$
0.15

$
0.15

Weighted average number of common shares outstanding:

Basic

36,178

35,924

36,162

35,845

Diluted

36,421

36,096

36,407

36,020

~~See notes to condensed consolidated financial statements.~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~ ~~(Unaudited)~~

~~(in thousands)~~

Nine Months Ended January 31,

2003

2002

OPERATING ACTIVITIES

Net income

$
15,217

$
8,479

Provision for depreciation and amortization

11,805

12,495

Changes in operating assets and liabilities

12,459

16,988

Other

17

464

NET CASH PROVIDED BY OPERATING ACTIVITIES

39,498

38,426

INVESTING ACTIVITIES

Purchases of property, plant and equipment

(14,880
)
(9,084
)
Acquisitions

(12,257
)
(13,008
)
Other

(626
)
(908
)

NET CASH USED IN INVESTING ACTIVITIES

(27,763
)
(23,000
)

FINANCING ACTIVITIES

Options exercised

407

1,168

Dividends

(5,427
)
(5,380
)
Other

932

473

NET CASH USED IN FINANCING ACTIVITIES

(4,088
)
(3,739
)

Effect of foreign exchange rate changes on cash

3,590

(143
)

INCREASE IN CASH AND CASH EQUIVALENTS

11,237

11,544

Cash and cash equivalents at beginning of period

49,902

42,788

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$
61,139

$
54,332

~~See notes to condensed consolidated financial statements.~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~(Unaudited)~~

~~January~~October 31, 2003

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted ~~accounting principles~~in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes 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 three-month and ~~nine-month~~six-month periods ended ~~January~~October 31, 2003 are not necessarily indicative of the results that may be expected for the year ending April 30, ~~2003.~~2004. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended April 30, ~~2002.~~2003.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Comprehensive income ~~(loss)~~ consists of net income and foreign currency translation adjustments and totaled ~~$8.7~~$9.1 million and ~~$(0.7)~~$6.5 million for the ~~third~~second quarters of fiscal ~~2003~~2004 and ~~2002,~~2003, respectively, and ~~$24.5~~$13.7 million and ~~$7.1~~$15.8 million for the ~~nine~~six months ended ~~January~~October 31, 2003 and 2002, respectively.

2. ~~ACQUISITIONS AND INTANGIBLE ASSETS~~ RELATED PARTY TRANSACTIONS

The Company entered into an agreement dated August 19, 2002, and amended December 26, 2002, with the Marital Trust No. 1 and Marital Trust No. 2, each created under the William J. McGinley Trusts (Marital Trusts), Jane R. McGinley, Margaret J. McGinley, James W. McGinley, and Robert R. McGinley to commence a tender offer to purchase all of the outstanding Class B Common Shares at a price of $20 per share in cash by the terms and conditions provided for in the agreement.

Under the agreement, the Trusts, the Jane R. McGinley Trust, James McGinley, Margaret J. McGinley and Robert McGinley were obligated to tender all of their Class B Common Shares in the offer. This represented an aggregate of 931,759 Class B Common Shares, or 85.7% of the then outstanding Class B Common Shares. The agreement provided that either the Company or the Trusts could terminate the agreement if the tender offer was not completed on or prior to May 31, 2003 provided that the party purporting to terminate was not the cause of the failure to be completed by such time.

On ~~January 31,~~July 3, 2003, Dura Automotive Systems, Inc. (Dura) announced that it planned to commence a tender offer for all of the outstanding Class B Common Stock of the Company at a price of $23.00 per share in cash. The tender offer, which commenced on July 8, 2003, was subject to certain conditions, including a majority of the Company’s Class B shares being tendered and not withdrawn and the holders of Class B Common Stock continuing to have the right to elect directors representing up to approximately 75 percent of the Company’s board of directors.

On July 14, 2003, the William J. McGinley Marital Trusts gave notice of termination of the Agreement dated August 19, 2002, as amended December 26, 2002.

As of July 18, 2003, the Company ~~purchased~~entered into an agreement with the ~~business assets~~Marital Trusts, the Jane R. McGinley Trust, Margaret J. McGinley, James W. McGinley, and Robert R. McGinley (collectively the “McGinley Family”), pursuant to which the McGinley Family sold 750,000 of its exclusive automotive sales representative, Kill & Bolton Associates International, Inc. (KBA), for $11.8 million in cash, including costs of acquisition, and $0.7 million forgiveness of debt. The acquisition of KBA will helpClass B Common Shares to the Company ~~better manage program launches from product design through production~~for $22.75 per share and ~~eventually lower~~agreed to vote their remaining Class B Common Shares in favor of a merger in which all then outstanding Class B Common Shares (including those held by the ~~cost of this customer relationship function. The purchase price was determined based upon~~McGinley Family not previously sold to the ~~projected cost savings that~~Company) would be attained by bringing this function in-house. The tangible assets acquired had a fair value of approximately $0.6. The fair values assigned to intangible assets acquired were $10.8 million for customer relationshipsreceive $23.55 per share and ~~contacts, $0.1 million for covenants not to compete and $1.1 million of goodwill. The intangible assets acquired other than goodwill~~the Class A Common Shares will be ~~amortized over~~converted into new Methode common stock (the “Merger). The Merger is subject to approval by the affirmative vote of a ~~period~~majority of ~~5 years. The pro forma results of operations for~~ the ~~three and nine-month periods ended~~Company’s outstanding shares at a special shareholders’ meeting to be held on January ~~31, 2003 and 2002, assuming the purchase occurred at May 1, 2001, would not differ materially from reported amounts.~~8, 2004.

On August 1, 2001, the Company purchased for $12.6 million in cash, including costs of acquisition, the automotive safety business of American Components, Inc. and formed a new business unit, Automotive Safety Technologies. Additional contingent consideration will be due beginning in fiscal 2004 based on annual sales levels, up to a maximum additional consideration of $11.5 million. Included in this asset purchase are the manufacturing operations and patented intellectual property for a sensor pad currently used by a tier-one automotive supplier in its passenger occupant detection system. Also included in this purchase was patented intellectual property for a rollover airbag curtain that the Company intends to further develop. This acquisition allows the Company to increase its market penetration in the automotive safety related products. The purchase price was determined based upon discounted projected future cash flows for this operation. The tangible assets acquired had a fair value of approximately $0.6. The fair values assigned to intangible assets acquired were $6.9 million for a customer supply agreement, $5.5 million for patents and $2.0 million for covenants not to compete and are being amortized over 10 years, 18 years and 5 years, respectively. In accordance with SFAS No. 141, the excess of fair value of assets acquired over the cash purchase price was recorded as a liability at the date of acquisition. The pro forma results of operations for the nine-month period ended January 31, 2002 assuming the purchase occurred at the beginning of the period would not differ materially from reported amounts.

On August 5, 2003 Dura amended its offer (Revised Offer) to, among other things, increase the offering price to $50 per share, fund a special distribution of $0.35 per share to the holders of the Class A Common Shares, and support the payment to holders of Class A Common Shares of an additional $0.26 dividend from the Company’s own funds. After careful consideration, including a review of the Revised Offer with the Company’s independent financial and legal advisors, the Board of Directors determined to recommend that the holders of Class B Common Shares not tender their shares into the offer. This offer expired on November 17, 2003.

3. INTANGIBLE ASSETS

The following tables present details of the Company’s ~~total~~ intangible assets (in thousands):

	January 31, 2003						October 31, 2003
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Customer relationships and agreements	$	17,680	$	300	$	17,380	$	19,025	$	2,423	$	16,602
Patents	7,255		1,067		6,188		7,957		1,375		6,582
Covenants not to compete	2,100		633		1,467		2,100		948		1,152
Total	$	27,035	$	2,000	$	25,035	$	29,082	$	4,746	$	24,336

	April 30, 2002						April 30, 2003
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Customer relationships and agreements	$	6,930	$	79	$	6,851	$	18,993	$	996	$	17,997
Patents	7,215		720		6,495		7,255		1,156		6,099
Covenants not to compete	2,000		333		1,667		2,100		738		1,362
Total	$	16,145	$	1,132	$	15,013	$	28,348	$	2,890	$	25,458

The estimated aggregate amortization expense for each of the five ~~succeeding~~ fiscal years subsequent to 2003 is as follows (in thousands):

2004	$	3,607	$	3,884
2005	3,881		4,194
2006	3,912		4,225
2007	3,678		3,991
2008	2,978		3,225

3. ~~RECENT ACCOUNTING PRONOUNCEMENTS~~

~~In October 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) 144,~~ ~~Accounting for the Impairment and Disposal of Long Lived Assets.~~ ~~The Company adopted this standard beginning in the first quarter of fiscal 2003. The adoption of this statement did not have a material effect on the Company’s financial statements.~~

~~In June 2001, the FASB issued SFAS No. 142,~~ ~~Goodwill and Other Intangible Assets.~~ This statement changes the accounting for intangible assets and goodwill, which are no longer amortized unless, in the case of intangible assets, the asset has a finite life. Goodwill and intangible assets with indefinite lives are now subject to an annual impairment test. The Company began applying the new rules on accounting for goodwill and other intangibles beginning in the first quarter of 2003. The Company completed the first of the required impairment tests of goodwill and indefinite lived intangible assets during the second quarter of fiscal 2003 and the results of the impairment tests did not have a material effect on the Company’s financial statements.

~~Comparative information for the prior period as if goodwill had not been amortized in that period is as follows:~~

Three Months Ended
January 31,

Nine Months Ended
January 31,

2003

2002

2003

2002

(in thousands, except per share amounts)

Reported net income

$
4,458

$
372

$
15,217

$
8,479

Add back goodwill amortization

—

299

—

767

Adjusted net income

$
4,458

$
671

$
15,217

$
9,246

Basic and diluted earnings per share:

Reported net income

$
0.12

$
0.01

$
0.42

$
0.24

Goodwill amortization

—

0.01

—

0.02

Adjusted net income

$
0.12

$
0.02

$
0.42

$
0.26

4.5. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended January 31,				Nine Months Ended January 31,				Three Months Ended October 31,				Six Months Ended October 31,
	2003		2002		2003		2002		2003		2002		2003		2002
	(in thousands, except per share amounts)								(in thousands, except per share amounts)

Numerator - net income	$	4,458	$	372	$	15,217	$	8,479	$	6,456	$	6,177	$	10,747	$	10,760

Denominator:
Denominator for basic earnings per share-weighted-average shares	36,178		35,924		36,162		35,845		35,714		36,168		35,945		36,154
Dilutive potential common shares- employee stock awards/options	243		172		245		175
Dilutive potential common shares- employee stock options									318		192		274		246
Denominator for diluted earnings per share-adjusted weighted-average shares and assumed conversions	36,421		36,096		36,407		36,020		36,032		36,360		36,219		36,400

Basic and diluted earnings per share	$	.12	$	.01	$	.42	$	.24	$	.18	$	.17	$	.30	$	.30

Options to purchase ~~1,432,116~~663,086 shares of Class A common stock at a weighted average option price of ~~$11.81~~$13.19 per share were outstanding at ~~January~~October 31, 2003, but were not included in the computation of diluted earnings per share because the exercise prices were greater than the average market price of the Class A common stock and, therefore, the effect would be antidilutive.

Effective April 30, 2003, the Company adopted the disclosure provisions of Statement of Financial Accounting Standards (SFAS) No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure.” As it relates to stock options, the Company continues to apply the provisions of Accounting Principles Board Opinion (APB) No. 25, “Accounting for Stock Issued to Employees.” Under APB No. 25, no compensation cost related to stock options granted has been recognized in the Company’s Consolidated Statements of Income because the option terms are fixed and the exercise price equals the market price of the underlying stock on the grant date. In accordance with SFAS No. 123, “Accounting for Stock-Based Compensation,” the fair value of option grants is estimated on the date of grant using the Black-Scholes option pricing model for pro forma footnote purpose s.

The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to all its stock options outstanding during the periods presented:

	Three Months Ended October 31,						Six Months Ended October 31,
	2003			2002			2003			2002
Net income:
As reported	$	6,456		$	6,177		$	10,747		$	10,760
Less total stock based compensation expense determined under fair value based method for all awards, net of tax	(465		)	(416		)	(814		)	(760		)
Pro forma	$	5,991		$	5,761		$	9,933		$	10,000
Earnings per share:
As reported – basic and diluted	$	0.18		$	0.17		$	0.30		$	0.30
Pro forma:
Basic	0.17			0.16			0.28			0.28
Diluted	0.17			0.16			0.27			0.27

6. SEGMENT INFORMATION

Methode Electronics, Inc. is a global manufacturer of component and subsystem devices. The Company designs, manufactures and markets devices employing electrical, electronic, wireless, sensing and optical technologies. ~~The Company’s~~Methode’s components are found in the primary end markets of the automotive, communications (including information processing and storage, networking equipment, wireless and

terrestrial voice/data systems), aerospace, rail and other transportation industries; and the consumer and industrial equipment markets.

The Company reports three business segments: Electronic, Optical and Other. The business units whose results are identified in the Electronic segment principally employ electronic processes to control and convey signals. The business units whose results are identified in the Optical segment principally employ light to control and convey signals. The Company’s business ~~unit~~ that manufactures bus systems as well as its independent laboratories, which provide services for qualification testing and certification of electronic and optical components, are included in the Other segment.

The Company allocates resources to and evaluates performance of its technology segments based on operating income. Transfers between technology segments are recorded using internal transfer prices set by the Company.

The table below presents information about the Company’s reportable segments (in thousands):

Three Months Ended January 31, 2003

Electronic

Optical

Other

Eliminations

Consolidated

Net sales to unaffiliated customers

$
83,405

$
3,967

$
4,689

$
—

$
92,061

Transfers between technology segments

—

—

62

(62
)
—

Total net sales

$
83,405

$
3,967

$
4,751

$
(62
)
$
92,061

Income (loss) before income taxes

$
9,143

$
(649
)
$
169

$
8,663

Corporate expenses, net

(2,055
)
Total income before income taxes

$
6,608

Three Months Ended January 31, 2002

Electronic

Optical

Other

Eliminations

Consolidated

Net sales to unaffiliated customers

$
66,002

$
4,719

$
3,314

$
74,035

Transfers between technology segments

—

—

1

$
(1
)
—

Total net sales

$
66,002

$
4,719

$
3,315

$
(1
)
$
74,035

Income (loss) before income taxes

$
2,754

$
(855
)
$
(10
)

$
1,889

Corporate expenses, net

(1,867
)
Total income before income taxes

$
22

	Nine Months Ended January 31, 2003													Three Months Ended October 31, 2003
	Electronic		Optical			Other		Eliminations			Consolidated			Electronic		Optical		Other		Eliminations			Consolidated
Net sales to unaffiliated customers	$	243,382	$	14,195		$	11,348				$	268,925		$	84,533	$	4,987	$	4,982	$	—		$	94,502
Transfers between technology segments	—		—			185		$	(185	)	—			1		—		158		(159		)	—
Total net sales	$	243,382	$	14,195		$	11,533	$	(185	)	$	268,925		$	84,534	$	4,987	$	5,140	$	(159	)	$	94,502

Income (loss) before income taxes	$	30,010	$	(666	)	$	210				$	29,554
Income before income taxes														$	12,218	$	347	$	633				$	13,198
Corporate expenses, net											(7,037		)										(3,772		)
Total income before income taxes											$	22,517											$	9,426

	Nine Months Ended January 31, 2002												Three Months Ended October 31, 2002
	Electronic		Optical		Other		Eliminations			Consolidated			Electronic		Optical		Other		Eliminations			Consolidated
Net sales to unaffiliated customers	$	201,971	$	21,423	$	11,301	$	—		$	234,695		$	87,822	$	5,191	$	3,810	$	—		$	96,823
Transfers between technology segments	—		—		41		(41		)	—			—		—		97		(97		)	—
Total net sales	$	201,971	$	21,423	$	11,342	$	(41	)	$	234,695		$	87,822	$	5,191	$	3,907	$	(97	)	$	96,823

Income before income taxes	$	16,714	$	1,012	$	810				$	18,536		$	11,601	$	74	$	85				$	11,760
Corporate expenses, net										(6,432		)										(2,583		)
Total income before income taxes										$	12,104											$	9,177

	Six Months Ended October 31, 2003
	Electronic		Optical		Other		Eliminations			Consolidated
Net sales to unaffiliated customers	$	153,220	$	8,805	$	10,435	$	—		$	172,460
Transfers between technology segments	1		—		224		(225		)	—
Total net sales	$	153,221	$	8,805	$	10,659	$	(225	)	$	172,460

Income before income taxes	$	20,578	$	256	$	1,215				$	22,049
Corporate expenses, net										(6,357		)
Total income before income taxes										$	15,692

	Six Months Ended October 31, 2002
	Electronic		Optical			Other		Eliminations			Consolidated
Net sales to unaffiliated customers	$	159,977	$	10,227		$	6,660	$	—		$	176,864
Transfers between technology segments	—		—			124		(124		)	—
Total net sales	$	159,977	$	10,227		$	6,784	$	(124	)	$	176,864

Income (loss) before income taxes	$	20,868	$	(17	)	$	41				$	20,892
Corporate expenses, net											(4,982		)
Total income before income taxes											$	15,910

6.7. RESTRUCTURING

In the fourth quarter of fiscal 2002, in response to the ~~extraordinarily~~ weak economic conditions in the telecommunications and computer sectors, the Company implemented a restructuring plan in an effort to better align the Company’s operations with industry conditions. The restructuring included integrating the operations of Duel Systems, Inc. and Adam Technologies, Inc. into the Company’s domestic and foreign interconnect products group and closing the California and New Jersey manufacturing and distribution operations. Accrued expenses, primarily lease obligations that run through July 31, 2004, related to this restructuring remaining in other accrued expenses on the Consolidated Balance Sheets ~~were:~~were (in thousands):

Involuntary
Severance

Lease and
Other

Total

(in thousands)

Balance April 30, 2002

$
175

$
1,417

$
1,592

Payments made

(147
)
(275
)
(422
)
Balance October 31, 2002

28

1,142

1,170

Payments made

(23
)
(80
)
(103
)
Balance January 31, 2003

$
5

$
1,062

$
1,067

Balance April 30, 2003	$	267
Payments made	(121		)
Balance October 31, 2003	$	146

7.
~~COMMITMENTS AND CONTINGENCIES~~

8. PENDING LITIGATION

Certain litigation arising in the normal course of business is pending against the Company. The Company is from time to time subject to various legal actions and claims incidental to its business, including those arising out of alleged defects, breach of contracts, product ~~warranties,~~issues, employment-related matters and environmental matters. Although the outcome of potential legal actions and claims cannot be determined, it is the opinion of the Company’s management, based on the information available at the time, that it has adequate reserves for these liabilities and that the ultimate resolution of these matters will not have a significant effect on the consolidated financial statements of the Company.

8. ~~RECLASSIFICATIONS~~On September 13, 2002, a holder of 100 shares of Class A common stock filed a class action against Methode and certain of Methode’s directors on behalf of all holders of our Class A common stock and derivatively on behalf of Methode in the Court of Chancery of the State of Delaware. Plaintiff alleged in the Complaint that Methode’s directors breached their fiduciary duties of disclosure, care and loyalty by approving the agreement between Methode and the Trusts and the McGinley family members pursuant to which Methode agreed, among other things, to make a tender offer for the repurchase of all of our Class B common stock at a price of $20 per share. Plaintiff further alleged in the Complaint that Methode’s board approved the tender offer for the repurchase of our Class B common stock, caused Methode to enter into certain employment agreements with Methode’s chairman of the board and certain of its officers and failed to disclose and misrepresented certain information in connection with Methode’s 2002 proxy statement, as part of a scheme to entrench the incumbent board and management. Additionally, Plaintiff alleged in the Complaint that Methode’s directors, by approving the repurchase of the Class B common stock, diverted a corporate opportunity to receive a control premium away from Methode and the Class A stockholders. Plaintiff sought, among other things, to enjoin the repurchase of the Class B common stock, as well as other equitable relief.

~~Certain prior year amounts have been reclassified~~On March 17, 2003, following the December 26, 2002 amendment of the original agreement between Methode and the Trusts and the McGinley family members to ~~conform~~require a vote of the Class A common stockholders, the parties in this litigation entered into a memorandum of understanding providing for the settlement of this litigation. Pursuant to the ~~current year presentation.~~terms of the memorandum of understanding, Methode agreed, among other things, that: (i) it would only proceed with the planned Methode tender offer if it is approved by the affirmative vote of the holders of shares having a majority of the shares of Class A common stock present or represented by proxy at the special meeting (excluding shares held by the Trusts and the McGinley family members); (ii) it would make certain revisions to the disclosures in the proxy statement in connection with the special meeting to approve the making of the planned Methode tender offer as requested by Plaintiff; and (iii) it would declare a special dividend of $0.04 per share of Class A common stock within 60 days following consummation of the planned Methode tender offer. If the offer was not consummated, this special dividend would not be declared or paid.

On July 1, 2003, a Stipulation and Agreement of Compromise Settlement and Release (the “Original Settlement Agreement”) was executed by the parties. Counsel for the parties conferred on certain revisions to be made to the disclosures in our preliminary proxy statement filed with the Securities and Exchange Commission in connection with the special meeting for our Class A common stockholders to approve the making of the planned Methode tender offer, and agreed to certain additional information, which was disclosed in the definitive proxy statement filed with the Securities and Exchange Commission on June 10, 2003 and mailed to our stockholders on June 12, 2003.

McGinley Agreement, and (ii) Methode, acting through its board of directors, would declare and pay a special dividend of $0.04 per share of Class A common stock within 60 days following the acquisition of the balance of the shares of Class B common stock by merger or purchase. The Settlement Agreement also provides for the dismissal of this litigation with prejudice and release of all related claims against Methode and the director defendants. The Court approved the settlement of this litigation in accordance with the terms of the Settlement Agreement on December 3, 2003.

On September 9, 2003, the Company was served with a purported class action complaint on behalf of certain holders of Methode’s Class B common stock in the Court of Chancery of the State of Delaware naming Methode, its directors and certain officers as defendants and alleging that the defendants breached their fiduciary duties with respect to the McGinley Agreement. The Complaint sought, among other things, the entry of an order terminating and/or declaring void the McGinley Agreement and awarding unspecified damages and attorneys’ fees and costs.

On October 1, 2003, plaintiff filed an amended class action complaint, which, among other things, added a request for injunctive relief to preliminarily and permanently enjoin Methode from consummating the proposed merger or soliciting proxies related to the proposed merger. On October 20, 2003, the court denied plaintiff’s motion for expedited proceedings and refused to schedule a hearing on plaintiff’s motion for a preliminary injunction.

The Company believes the allegations in the litigation are without merit, and all defendants have filed a motion to dismiss the action.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company’s business is managed on a technology product basis, with those technology segments being Electronic, Optical and Other. The business units whose results are identified in the Electronic segment principally employ electronic processes to control and convey signals. The business units whose results are identified in the Optical segment principally employ light to control and convey signals. The Other segment includes a manufacturer of bus systems and independent laboratories that provide services for qualification testing and certification of electronic and optical components.

Results of Operations

The following table sets forth certain income statement data as a percentage of net sales for the periods indicated:

	Three Months Ended January 31,				Nine Months Ended January 31,				Three Months Ended October 31,				Six Months Ended October 31,
	2003		2002		2003		2002		2003		2002		2003		2002
Income:
Net sales	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Other	0.4		0.6		0.3		0.6		0.8		—		0.8		0.2
	100.4		100.6		100.3		100.6		100.8		100.0		100.8		100.2
Costs and expenses:
Cost of products sold	81.3		88.9		79.3		84.0		78.7		78.8		79.1		78.5
Selling and administrative expenses	11.2		12.4		12.1		12.3		12.2		12.3		12.4		12.4
Income (Loss) From Operations	7.9		(0.7	)	8.9		4.3
Interest income, net	0.3		0.3		0.3		0.4
Other income (expense), net	(1.1	)	0.4		(0.8	)	0.4
Income From Operations									9.9		8.9		9.3		9.3
Interest, net									0.1		0.3		0.1		0.3
Other, net									—		0.2		-0.3		-0.7
Income Before Income Taxes	7.1		0.0		8.4		5.1		10.0		9.4		9.1		8.9
Income taxes (credit)	2.3		(0.5	)	2.7		1.5
Income taxes									3.1		3.1		2.9		2.9
Net Income	4.8	%	0.5	%	5.7	%	3.6	%	6.9	%	6.3	%	6.2	%	6.0	%

Net sales. ~~Third~~Second quarter consolidated net sales ~~increased 24.4%~~decreased 2.4% to ~~$92.1~~$94.5 million in fiscal ~~2003~~2004 from ~~$74.0~~$96.8 million in fiscal ~~2002.~~2003. Consolidated net sales for the ~~nine-month~~six-month period ended ~~January~~October 31, 2003 ~~increased 14.6%~~decreased 2.5% to ~~$268.9~~$172.5 million from ~~$234.7~~$176.9 million for the comparable period last year. ~~Tooling~~Customer tooling sales were ~~$7.9~~$3.8 million and $3.9 million for the ~~quarter~~three-month and ~~$15.8 for the nine-month period in fiscal~~six-month periods ended October 31, 2003 compared with ~~$1.7 million and $3.5~~$7.9 million in both the ~~comparable~~three-month and six-month periods of fiscal 2002. Translation of foreign subsidiary net sales using a weaker US dollar in fiscal 2003 increased reported sales by $2.3 million in the quarter and $4.9 million in the nine-month period ended January 31, 2003. ~~Excluding the effects of customer paid tooling and foreign currency translation, product net sales increased 13.3% in the quarter and 7.4% in the nine-month period over comparable periods last year.~~

Electronic segment net sales represented ~~90.6%~~89.5% and ~~90.5%~~88.8% of consolidated net sales for the quarter and ~~nine~~six months ended ~~January~~October 31, 2003 compared with ~~89.2%~~90.7% and ~~86.1%~~90.5% for the comparable periods last year. Net sales of the Electronic segment ~~increased 26.4%~~decreased 3.7% to ~~$83.4~~$84.5 million in the ~~third~~second quarter of fiscal ~~2003~~2004 from ~~$66.0~~$87.8 million in fiscal ~~2002.~~2003. Electronic segment net sales for the ~~nine~~six months ended ~~January~~October 31, 2003 ~~increased 20.5%~~decreased 4.2% to ~~$243.4~~$153.2 million from ~~$202.0~~$160.0 million for the same period last year. ~~Excluding the effects of customer paid tooling and foreign currency translation, Electronic segment~~Net product ~~net sales increased 14.5% in the quarter and 12.6% in the nine-month period over comparable periods last year. Net~~ sales to the automotive industry, which represented ~~84.4%~~84.3% of the Electronic segment net product sales in the ~~third~~second quarter and ~~83.8%~~84.6% for the ~~nine~~six months ended ~~January~~October 31, 2003, up from ~~79.9%~~82.8% and ~~79.8%~~82.7% in the comparable periods last year, increased ~~33.4%~~2.9% for the quarter and ~~26.6%~~0.5% for the ~~nine~~six months ended ~~January~~October 31, 2003 compared with the comparable periods last year. ~~Excluding~~

Strong sales growth at the ~~effects~~Company’s Automotive Safety Technology (AST) business and European Automotive Electronics Controls group offset the decline in unit sales experienced by the Company’s traditional North American automotive customers in both the three-month and six-month periods of ~~customer paid tooling and foreign currency translation, product~~fiscal 2004. The net decline in sales to ~~the~~North American automotive ~~industry increased 20.2%~~customers reflects both price concessions and reduced shipments in the quarter and 17.5% in the nine-month period over comparable periods last year. Increased shipments of sensor pads for passenger occupancy detection systems by Automotive Safety Technologies were responsible for 5.9%fiscal 2004. Many of the ~~20.2% increase~~Company’s domestic automotive customers extended their plant shutdowns for model year changeovers in July this year in order to adjust inventory levels, which reduced the ~~quarter and 5.3% of~~Company’s sales for the ~~17.5% increase in the nine-month~~six-month period. ~~The balance of the increase was due to volume gains primarily the result of new product launches and stable vehicle production schedules.~~ Sales for the balance of the Electronic segment for the ~~third~~

second quarter and the ~~nine-month~~six-month period ended ~~January~~October 31, 2003 were down ~~6.2% for both the quarter~~7.7% and ~~the nine-month period~~12.5%, respectively, compared to last year reflecting the continued weakness in the ~~computer and~~ telecommunication ~~markets~~market and increased competition from low cost Chinese manufacturers.

Optical segment net sales represented ~~4.3%~~5.3% and ~~5.3%~~5.1% of consolidated net sales for the quarter and ~~nine~~six months ended ~~January~~October 31, 2003 compared with ~~6.4%~~5.4% and ~~9.1%~~5.8% for the comparable periods last year. Net sales of the Optical segment for the ~~third~~second quarter of fiscal ~~2003~~2004 decreased ~~16.0%~~3.9% to ~~$4.0~~$5.0 million from ~~$4.7~~$5.2 million a year ago. Net sales for the ~~nine-month~~six-month period ended ~~January~~October 31, 2003 decreased ~~33.7% from~~13.9% over the same period a year ago to ~~$14.2~~$8.8 million from ~~$21.4~~$10.2 million. ~~Excluding the effects of foreign currency translation, Optical segment product net sales decreased 22.2%~~Weakness in the ~~quarter and 37.2% in the nine-month period over comparable periods last year. All of~~telecommunication market continues to depress the Company’s Optical segment sales. The majority of the sales decline was experienced by the Company’s European optical businesses ~~experienced sales volume declines and~~caused by price erosion as a result of the continued ~~weakness~~slump in the ~~computer~~telecommunication market, and ~~telecommunication markets.~~reduced shipments due to excess inventory levels at a major optical cable customer.

~~Other segment net sales represented 5.0% and 4.2% of consolidated net sales for the quarter and nine months ended January 31, 2003 compared with 4.5% and 4.8% for the comparable periods last year.~~ Net sales of the Other segment, principally ~~current-carrying~~current carrying bus devices and test laboratories increased ~~41.5%~~30.8% to ~~$4.7~~$5.0 million in the ~~third~~second quarter of fiscal ~~2003~~2004 from ~~$3.3~~$3.8 million in fiscal ~~2002. New bus device programs increased shipments in the quarter by 50.0% and test laboratory activity increased 26.2% over the prior year quarter.~~2003. Other segment net sales for the ~~nine-month~~six-month period ~~were flat at $11.3~~increased 56.7% to $10.4 million ~~for both fiscal years. An~~from $6.7 million last year. The sales increase in ~~net sales of~~this segment is primarily due to new bus ~~devices of 13.2% was offset by a decline of test laboratory sales of 21.2%~~device product shipments and an expanded customer base for ~~the nine-month period ended January 31, 2003.~~these products.

Other income. Other income consisted primarily of earnings from the Company’s ~~equity in the earnings of its~~ automotive joint venture, license fees, royalties, and ~~royalties.~~in fiscal 2004, engineering design fees. Other income ~~decreased~~increased to $0.7 million in the second quarter of fiscal 2004 from $23,000 in the fiscal 2003 period. Other income for the six-month period ended October 31, 2004 increased to $1.4 million from $0.4 million in the comparable period last year. The increase in other income was primarily due to the design fees earned in fiscal 2004. Other income in fiscal 2003 ~~primarily~~was reduced because the automotive joint venture experienced an operating loss in the second quarter due to ~~warranty~~quality issues, which the Company believes have been resolved.

Cost of products sold. Cost of products sold, as a percentage of net sales, was ~~81.3%~~78.7% in the ~~third~~second quarter and ~~79.3%~~79.1% in the ~~nine-month~~six-month period of fiscal ~~2003~~2004 compared with ~~88.9%~~78.8% and ~~84.0%~~78.5% for the ~~third~~second quarter and the ~~nine-month~~six-month period ended January 31, 2002. Cost of products sold in the third quarter last year included a $5 million charge for warranty issues. Excluding this warranty charge and tooling sales, which are primarily zero margin, cost of products sold as a percentage of net sales was 79.5% and 78.0% in the third quarter and nine-month period of fiscal 2003 compared with 81.8% and 81.6% for the third quarter and the nine-month period ended JanuaryOctober 31, 2002.

Gross margins on product sales of the Electronic segment ~~were 21.0%~~decreased to 22.3% and ~~22.8%~~21.7% in the ~~third~~second quarter and ~~nine-month~~six-month period of fiscal ~~2003 compared with 20.9%~~2004 from 24.1% and ~~19.1%~~23.4% for the comparable periods last ~~year, excluding~~year.�� The decline in gross margins was primarily due to price concessions given to automotive customers that were not completely recovered by cost cutting programs, and increased costs for the ~~warranty charge. Gross margins on~~employee medical program in fiscal 2004. Lower sales volume due to the extended plant shutdown by automotive industry were flat for the quarter year-over-year but improved for the nine-month period from the prior fiscal year. Improvements from productivity gains and cost control programs were offset by price erosioncustomers in the third quarter 2003. Gross margins for the balance of the Electronic segment also were flat for the quarter year-over-year but improved for the nine-month period. Benefits from the restructuring and consolidation undertaken in the fourthfirst quarter of fiscal ~~2002 were offset by price erosion and a decline in sales of dataMate products.~~2004 also contributed to the margin decline.

Gross margins of the Optical segment increased to ~~9.1%~~23.7% in the ~~third~~second quarter and ~~16.3%~~21.0% in the ~~nine-month~~six-month period ended October 31, 2003 from 19.1% in both the second quarter and six-month period in fiscal ~~2003 from~~2003. The margin improvement was primarily due to final purchases by a ~~negative 0.9%~~customer re-sourcing its business to a low cost Chinese manufacturer, a reduction in staff at our United Kingdom facility and the introduction of two new products at our facility in the ~~third quarter and 16.0% in the nine-month~~Czech Republic.

~~period of fiscal 2002. The negative margin in the third quarter last year resulted from provisions for excess inventory at the Company’s European fiber optic operations.~~

Gross margins of the Other segment ~~decreased~~improved to ~~15.2%~~24.4% in the ~~third~~second quarter and ~~15.4%~~22.7% in the ~~nine-month~~six-month period of fiscal ~~2003~~2004 from ~~19.2%~~15.4% in the prior year ~~third~~second quarter and ~~21.4%~~15.3% in the ~~nine-month~~six-month period of fiscal ~~2002.~~ 2003. The margin ~~declines were~~improvement was primarily the result of ~~an effort to increase market share for current-carrying~~the increased sales volume of bus ~~devices by gaining new customers using aggressive pricing strategies.~~device products with lower incremental fixed costs.

Selling and administrative expenses. Selling and administrative expenses as a percentage of net sales were ~~11.2%~~12.2% and ~~12.1% for the quarter and nine-month period in fiscal 2003 compared to~~ 12.4% for the quarter and 12.3% for the nine-month period of fiscal 2002. Excluding the effects of customer paid tooling, selling and administrative expenses as a percentage of net sales were 12.0% and 12.7% for the quarter and nine-monthsix-month period in fiscal ~~2003. As a result of increased litigation activity in fiscal 2003, legal expense exceeded the prior year by $0.8 million in the quarter~~2004 compared to 12.3% and ~~$1.4 million~~12.4% for the ~~nine-month period.~~comparable periods of fiscal 2003.

Interest, net. Interest income, net of interest expense ~~increased 16.9%~~declined 82.1% in the ~~third~~second quarter ~~but was down 9.4%~~and 58.4% in the ~~nine-month~~six-month period of fiscal ~~2003~~2004 compared with fiscal ~~2002.~~2003. Interest income ~~was up for~~declined due to sharply lower short-term interest rates during fiscal 2004 and the ~~quarter because available cash balances were higher~~June 30, 2003 maturity of the $6 million

note receivable from a related party that accrued interest at 5.25% during fiscal 2003 and the first two months of fiscal 2004. Interest expense in fiscal 2004 included the commitment fee on the Company’s $30 million credit facility, which was not incurred during the fiscal 2003 ~~but down for the nine-month period due to significantly lower interest rates on short-term cash investments in fiscal 2003.~~periods.

Other, net. Other, net consists primarily of currency exchange gains and losses at the Company’s foreign ~~locations.~~subsidiaries. The functional currencies of these subsidiaries are the Maltese lira, Euro, Singapore dollar, British pound and Czech koruna. The foreign subsidiaries have transactions denominated in currencies other than their functional currencies, primarily sales in US dollars and Euros, creating exchange rate sensitivities. Currency exchange losses were experienced by the Company’s foreign subsidiaries ~~in the first and third quarters of fiscal 2003, the~~as a result of a weak U.S. dollar.

Income taxes. The effective income tax rate was ~~32.5%~~31.5% in both the second quarter and the six-month period of fiscal 2004 compared with 32.7% in the ~~third~~second quarter and 32.4% in the ~~nine-month~~six-month period of fiscal 2003. The effective rates for both ~~periods~~fiscal 2004 and fiscal 2003 reflect the effect of lower tax rates on income from foreign operations. The warranty charge recorded in the third quarter of fiscal 2002 reduced the Company’s worldwide blended effective tax rate by reducing the expected income contribution from operations in the Company’s highest tax jurisdiction. This resulted in an income tax credit in the third quarter of fiscal 2002 and an effective tax rate of 30% for the nine-month period ended January 31, 2002.

Financial Condition, Liquidity and Capital Resources

Net cash provided by operations was ~~$39.5~~$18.1 million and ~~$38.4~~$27.4 million in the first ~~nine~~six months of fiscal ~~2003~~2004 and ~~2002,~~2003, respectively. The ~~increase~~decrease in cash provided by operations was primarily ~~due~~the result of increased working capital requirements to support increased ~~net income in fiscal 2003.~~volumes at the Company’s AST business and European Automotive Electronics Controls group.

Net cash used in investing activities during the first ~~nine~~six months of fiscal ~~2003~~2004 was ~~$27.8~~$3.3 million ~~including the $11.8 million acquisition of Kill & Bolton Associates International, Inc.~~ compared with ~~$23.0 million for fiscal 2002, which included $12.6~~$9.3 million for the ~~Company’s August 1, 2001~~fiscal 2003 period. The reduction of net cash used in investing activities was primarily due to the collection of a $6.0 million note receivable from a related party in fiscal 2004. Cash used in investing activities in fiscal 2004 included a $1.2 million contingent payment related to the acquisition of ~~the automotive safety business~~AST. Up to an additional $10.0 million of ~~American Components, Inc. (AST). Additional~~ contingent cash consideration for this acquisition will be due ~~for the AST acquisition beginning~~ in ~~fiscal 2004~~annual installments based on ~~the attainment~~a percentage of certain sales targets. Purchases of plant and equipment increased by $5.8 million in fiscal 2003 over the first nine months of fiscal 2002 due to the production ramp-up at AST, and expansion at the Company’s Malta manufacturing operation.AST’s annual sales.

Net cash used in financing activities during the first ~~nine~~six months was ~~$4.1~~$18.6 million in fiscal ~~2003~~2004 and ~~$3.7~~$3.3 million in fiscal ~~2002.~~2003. The Company paid $17.1 million for the purchase of 750,000 shares of its Class B shares in connection with its plan to eliminate its Class B common stock as described below. The Company paid cash dividends of ~~$5.4~~$3.6 million in the ~~nine-month~~six-month period of both fiscal ~~2003~~2004 and ~~2002~~2003 and received proceeds from the exercise of stock options of ~~$0.4~~$2.1 million in fiscal ~~2003~~2004 and ~~$1.2~~$0.3 million in fiscal ~~2002.~~2003.

~~The Company’s capital requirements at January 31,~~As of July 18, 2003, ~~include~~the Company entered into an agreement with the William J. McGinley Marital Trust No. 1, the William J. McGinley Marital Trust No. 2, the Jane R. McGinley Trust, Margaret J. McGinley, James W. McGinley, and Robert R. McGinley (collectively the “McGinley Family”), pursuant to which the McGinley Family sold 750,000 of its ~~previously announced tender offer to purchase all outstanding shares of~~ Class B ~~common stock~~Common Shares to the Company for ~~$20.00~~$22.75 per share ~~(the”Offer”~~and agreed to vote their remaining Class B Common Shares in favor of a merger in which all then outstanding Class B Common Shares (including those held by the McGinley Family not previously sold to the Company) would receive $23.55 per share and the Class A Common Shares will remain outstanding (the “Merger”). The ~~Offer~~Merger is subject to approval by the ~~holders~~affirmative vote of a majority of the ~~Class A common stock at a special meeting,~~Company’s outstanding shares, and certain other ~~conditions. The Company expects~~conditions (see Notes 2 to ~~use approximately $15.1~~the Condensed Consolidated Financial Statements). Approximately $8.0 million of ~~available~~ cash will be required to purchase the remaining Class B shares excluding fees and expenses to complete the ~~Offer, net~~merger. The fees and expenses to complete the merger, substantially all of ~~repayment of the Horizon Farms promissory note described in footnote 11 to the financial statements included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2002.~~

In December 2002, the Company executed an agreement with its primary bank to establish a committed $30 million revolving credit facility to provide ready financing for general corporate purposes, including acquisition opportunities thatwhich will be expensed, may ~~become available.~~be significant.

Other future capital requirements will depend on a number of factors, including the Company’s future net sales and the timing and rate of expansion of its business. The Company believes its current cash balances together with the cash flow expected to be generated from its future operations and available credit facility will be sufficient to meet its cash needs for the next twelve months.

Cautionary Statement

Certain statements in this report are forward-looking statements that are subject to certain risks and uncertainties. The Company’s business is highly dependent upon two large automotive customers and specific makes and models of automobiles. Therefore, the Company’s financial results will be subject to many of the same risks that apply to the automotive industry, such as general economic conditions, interest rates and consumer spending patterns. A significant portion of the balance of the Company’s business relates to the computer and telecommunication industries which are subject to many of the same risks facing the automotive industry as well as fast-moving technological change. These industries are currently experiencing a severe economic downturn. Other factors which may result in materially different results for future periods include actual growth in the Company’s various markets; operating costs; currency exchange rates and devaluations; delays in development, production and marketing of new products; and other factors set forth from time to time in the Company’s reports filed with the Securities and Exchange Commission. Any of these factors could cause the Company’s actual results to differ materially from those described in the forward-looking statements. The forward-looking statements in this report are intended to be subject to the safe harbor protection provided under the securities ~~laws.~~law.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Certain of the Company’s foreign subsidiaries enter into transactions in currencies other than their functional currency, primarily the U.S. dollar and the Euro. A 10% change in foreign currency exchange rates from balance sheet date levels could impact the Company’s income before income taxes by ~~$2.1~~$2.4 million and ~~$2.0~~$1.7 million at ~~January~~October 31, 2003 and April 30, ~~2002,~~2003, respectively. The Company also has foreign currency exposure arising from the translation of the Company’s net equity investment in its foreign subsidiaries to U.S. dollars. The Company generally views as long-term its investments in foreign subsidiaries with functional currencies other than the U.S. dollar. The primary currencies to which the Company is exposed are the British pound, Czech koruna, Euro, Maltese lira, and Singapore dollar. A 10% change in foreign currency exchange rates from balance sheet date levels could impact the Company’s net foreign investments by ~~$8.7~~$8.4 million and ~~$7.2~~$7.7 million at ~~January~~October 31, 2003 and April 30, ~~2002,~~2003, respectively.

ITEM 4. CONTROLS AND PROCEDURES

a) ~~Evaluation~~As of the end of the period covered by this quarterly report on Form 10-Q, the Company performed an evaluation under the supervision and with the participation of the Company’s management, including its Chairman (principal executive officer), its President (principal operating officer) and its Vice President, Corporate Finance (principal financial officer), of its “disclosure controls and procedures” (as defined in Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)). The Company’s disclosure controls and ~~procedures.~~ ~~The~~procedures are designed to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s applicable rules and forms. As a result of this evaluation, the Company’s principal executive officer, principal operating officer and principal financial officer after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c)) as of a date (the “Evaluation Date”) within 90 days before the filing date of this quarterly report, have concluded that, as of the ~~Evaluation Date,~~date of such evaluation, the Company’s disclosure controls

and procedures were effective ~~and designed to ensure that material information relating to it and its consolidated subsidiaries would be made known to them by others within those entities.~~for their intended purposes.

~~(b)~~ ~~Changes in internal controls.~~There ~~were~~have been no ~~significant~~ changes in the Company’s internal ~~controls~~control over financial reporting during the fiscal quarter covered by this quarterly report that have materially affected, or ~~in other factors that could significantly~~are reasonably likely to materially affect, ~~these controls subsequent to~~ the ~~evaluation date, including any~~Company’s internal control over financial reporting. There have been no corrective actions with regard to significant deficiencies and material ~~weaknesses.~~weaknesses during the fiscal quarter covered by this report.

1514

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Litigation relating to the Class A common stock

On September 13, 2002, a holder of 100 shares of Class A ~~shareholder of the Company~~common stock filed a class action against ~~the Company~~Methode and certain of ~~the Company’s~~Methode’s directors on behalf of all holders of ~~the Company’s~~our Class A common stock and derivatively on behalf of ~~the Company~~Methode in the Court of Chancery of the State of ~~Delaware (the “Action”).~~Delaware. Plaintiff alleged in the Complaint that ~~the~~Methode’s directors ~~of the Company~~ breached their fiduciary duties of disclosure, care and loyalty by approving anthe agreement between Methode and the ~~Company~~Trusts and ~~certain shareholders of~~ the ~~Company that control a majority of the Class B shares (the “McGinley Family Shareholders”),~~McGinley family members pursuant to which ~~the Company~~Methode agreed, among other things, to make a tender offer ~~(the “Tender Offer”)~~ for the repurchase of all of ~~the Company’s~~our Class B common stock at a price of $20 per ~~share (the “Agreement”). The Agreement~~ ~~was approved by a special committee of Class A directors of the Methode board of directors (the “Special Committee”) and entered into on August 19, 2002~~

share. Plaintiff further alleged in the Complaint that ~~the Company’s~~Methode’s board approved the ~~Tender Offer,~~tender offer for the repurchase of our Class B common stock, caused ~~the Company~~Methode to enter into certain employment agreements with ~~the Company’s~~Methode’s chairman of the board and certain of its officers and failed to disclose and misrepresented certain information in connection with ~~the Company’s~~Methode’s 2002 ~~Proxy Statement,~~proxy statement, as part of a scheme to entrench the incumbent board and management. Additionally, Plaintiff alleged in the Complaint that ~~the~~Methode’s directors, ~~of the Company,~~ by approving the repurchase of the Class B common stock, diverted a corporate opportunity to receive a control premium away from ~~the Company~~Methode and the Class A stockholders. Plaintiff sought, among other things, to enjoin the repurchase of the Class B common stock, as well as other equitable relief.

On March 17, 2003, following the December 26, 2002 amendment of the ~~Special Committee approved an amendment~~original agreement between Methode and the Trusts and the McGinley family members to ~~the Agreement, pursuant to which the Company agreed to call~~require a ~~special meeting~~vote of the Class A shareholders for the purpose of seeking the approval of the Tender Offer by the affirmative vote of a majority of the Class A shares present or represented by proxy at the meeting (excluding the shares held by the McGinley Family Shareholders) (the “Amended Agreement”). The Company filed a preliminary proxy statement for the special meeting on February 21, 2003, with the Securities & Exchange Commission (the “Preliminary Proxy Statement”). Thereafter, Plaintiff’s counsel ~~stated their intention to file an amended complaint challenging the Amended Agreement and the disclosures made in the Preliminary Proxy Statement.~~

~~On March 17, 2003,~~common stockholders, the parties in ~~the Action~~this litigation entered into a memorandum of understanding providing for the settlement of ~~the Action on the terms set forth therein.~~this litigation. Pursuant to the terms of the memorandum of understanding, ~~defendants~~Methode agreed, among other things, that: (i) ~~they~~it would only proceed with the ~~Tender Offer~~planned Methode tender offer if it ~~receives approval~~is approved by the affirmative vote of the holders of shares having a majority of the shares of Class A ~~shares~~common stock present or represented by proxy at athe special meeting (excluding ~~the~~ shares held by the Trusts and the McGinley ~~family)~~family members); (ii) toit would make certain revisions to the disclosures in the proxy statement ~~to be delivered to stockholders~~ in connection with the special meeting to approve the making of the planned Methode tender offer as requested by Plaintiff; and (iii) ~~for the Company to~~it would declare a special dividend of $0.04 per share of Class A ~~share to the Class A shareholders~~common stock within 60 days following consummation of the ~~Tender Offer.~~planned Methode tender offer. If the offer was not consummated, this special dividend would not be declared or paid.

On July 29, 2003, following the termination of the original agreement between Methode, the Trusts and the McGinley family members dated August 19, 2002, and amended December 26, 2002, and the execution of the agreement dated as of July 18, 2003 among Methode, the Trusts and the McGinley family members (the “McGinley Agreement”), the parties to the litigation entered into a stipulation and agreement of compromise, settlement and release (the “Settlement Agreement”) providing for the settlement of this litigation (for a description of the McGinley Agreement, see Financial Condition, Liquidity and Capital Resources in Methode’s Form 10-K filed with the Securities and Exchange Commission on July 29, 2003). Pursuant to the terms of the Settlement Agreement, Defendants agreed, among other things, that: (i) the amended agreement with the Trusts and the McGinley family members requiring the approval of the Class A common stockholders prior to making the planned tender offer by Methode was the result of this litigation and was a benefit to the Class A common stockholders and to Methode and its directors in responding to Dura’s offer and with respect to the decision to enter into the McGinley Agreement, and (ii) Methode, acting through its board of directors, would declare and pay a special dividend of $0.04 per share of Class A common stock within 60 days following the acquisition of the balance of the shares of Class B common stock by merger or purchase. The ~~memorandum of understanding~~ Settlement Agreement

also provides for the dismissal of ~~the Action~~this litigation with prejudice and release of all related claims against Methode and the director defendants. The Court approved the settlement ~~as provided for~~of this litigation in accordance with the terms of the Settlement Agreement on December 3, 2003.

Litigation relating to the Class B common stock

On September 9, 2003, the Company was served with a purported class action complaint on behalf of certain holders of Methode’s Class B common stock in the ~~memorandum~~Court of ~~understanding is contingent upon,~~Chancery of the State of Delaware naming Methode, its directors and certain officers as defendants and alleging that the defendants breached their fiduciary duties with respect to the McGinley Agreement. The Complaint sought, among other things, ~~approval by~~ the ~~Court.~~entry of an order terminating and/or declaring void the McGinley Agreement and awarding unspecified damages and attorneys’ fees and costs.

The Company believes the allegations in the litigation are without merit, and all defendants have filed a motion to dismiss the action.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a) ~~Exhibits- See Index to Exhibits immediately following the certification pages.~~

b) ~~Reports on Form 8-K~~

~~The Company filed a report on Form 8-K on January 2, 2003 reporting that the Company~~ entered into an amendment of the Agreement dated August 19, 2002 with the William J. McGinley Marital Trusts to make a tender offer to purchase all of Methode’s outstanding shares of Class B Common Stock at a

		a)	Exhibits- - See Index to Exhibits immediately following the signature page.

		b)	Reports on Form 8-K

•	On August 4, 2003, the Company filed a report on Form 8-K reporting that on July 31, 2003, Dura Automotive Systems, Inc. (“Dura”) delivered a letter to the Company’s Board of Directors, which stated that Dura may modify its tender offer for the outstanding shares of the Company’s Class B Stock, and that on August 1, 2003, the Company issued a press release announcing that Dura’s letter would be evaluated by the Methode Board of Directors.

•	On September 11, 2003, the Company filed a report on Form 8-K to report that the Company was served with a purported class action complaint filed on behalf of certain holders of Methode’s Class B Common Stock in the Court of Chancery of the State of Delaware naming Methode, its directors and certain officers as defendants and alleging that the defendants breached their fiduciary duties with respect to the agreement dated as of July 18, 2003 among Methode, Marital Trust No. 1 and No. 2, each created under the William J. McGinley Trust, the Jane R. McGinley Trust, Margaret J. McGinley, James W. McGinley and Robert R. McGinley.

•	On October 3, 2003, the Company filed a report on Form 8-K reporting that the Company was served with an amended purported class action complaint filed on behalf of certain holders of Methode’s Class B Common Stock in the Court of Chancery of the State of Delaware naming Methode, its directors and certain officers as defendants and alleging that the defendants breached their fiduciary duties with respect to the agreement dated as of July 18, 2003 among Methode, Marital Trust No. 1 and No. 2, each created under the William J. McGinley Trust, the Jane R. McGinley Trust, Margaret J. McGinley, James W. McGinley and Robert R. McGinley. The amended complaint seeks an order declaring the July 18 Agreement invalid, injunctive relief and other relief.

•	On October 20, 2003, the Company filed a report on Form 8-K to report that on and as of October 16, 2003, James W. McGinley and Robert R. McGinley resigned from the Board of Directors of Methode Electronics, Inc. Their resignations do not affect their obligations under the agreement between the McGinley family trusts and the Company.

price per share of $20.00 in cash. Pursuant to the amendment, the Company intends to call a special meeting of its Class A Stockholders for the purposes of obtaining approval of the tender offer by a majority of the Class A Common Stock present or represented by proxy at the meeting.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

				Methode Electronics, Inc.



		By:	/s/	Douglas A. Koman
				Douglas A. Koman
				Vice President, Corporate Finance
				(principal financial officer)


Dated:	~~March 17, 2003.~~December 12, 2003

~~CERTIFICATIONS~~

~~I, William T. Jensen, certify that:~~

~~1. I have reviewed this quarterly report on Form 10-Q of Methode Electronics, Inc.;~~

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

~~b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and~~

~~c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;~~

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

~~b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and~~

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

~~Dated:~~	~~March 17, 2003.~~
		~~/s/ William T. Jensen~~
		~~Chairman~~
		~~(principal executive officer)~~

~~CERTIFICATIONS~~

~~I, Donald W. Duda, certify that:~~

~~1. I have reviewed this quarterly report on Form 10-Q of Methode Electronics, Inc.;~~

~~c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;~~

~~b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and~~

~~Dated:~~	~~March 17, 2003.~~
		~~/s/ Donald W. Duda~~
		~~President~~
		~~(principal operating officer)~~

~~CERTIFICATIONS~~

~~I, Douglas A. Koman, certify that:~~

~~1. I have reviewed this quarterly report on Form 10-Q of Methode Electronics, Inc.;~~

~~c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;~~

~~b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and~~

~~Dated:~~	~~March 17, 2003.~~
		~~/s/ Douglas A. Koman~~
		~~Vice President, Corporate Finance~~
		~~(principal financial officer)~~

INDEX TO EXHIBITS

Exhibit Number		Description
3.1		Certificate of Incorporation of Registrant, as amended and currently in effect (1)
3.2		Bylaws of Registrant, as amended and currently in effect ~~(1)~~(6)
4.1		Article Fourth of Certificate of Incorporation of Registrant, as amended and currently in effect (included in Exhibit 3.1)
4.2		Form of Rights Agreement between ChaseMellon Shareholder Services LLC and Registrant (7)
4.3		Amendment to Rights Agreement between ChaseMellon Shareholder Services LLC and Registrant
10.1		Methode Electronics, Inc. Incentive Stock Award Plan (2)*
10.2		Methode Electronics, Inc. Managerial Bonus and Matching Bonus Plan (also referred to as the Longevity Contingent Bonus Program) (3)*
10.3		Methode Electronics, Inc. Capital Accumulation Plan (3)*
10.4		Incentive Stock Award Plan for Non-Employee Directors (4)*
10.5		Methode Electronics, Inc. 401(k) Savings Plan (4)*
10.6		Methode Electronics, Inc. 401(k) Saving Trust (4)*
10.7		Methode Electronics, Inc. 1997 Stock Plan (5)*
10.8		~~Form of Master Separation Agreement between Stratos Lightwave, Inc. and Registrant (6)~~
~~10.9~~		~~Form of Initial Public Offering and Distribution Agreement between Stratos Lightwave, Inc. and Registrant (6)~~
~~10.10~~		~~Form of Tax Sharing Agreement between Stratos Lightwave, Inc. and Registrant (6)~~
~~10.11~~		Methode Electronics, Inc. 2000 Stock Plan (8)*
~~10.12~~		Form of Agreement between Kevin J. Hayes and Registrant (9)*
~~10.13~~10.9		Form of Agreement between Horizon Farms, Inc. and Registrant (9)
~~10.14~~10.10		Form of Agreement between William T. Jensen and Registrant (9)*
~~10.15~~10.11		Form of Agreement between Donald W. Duda and Registrant (10)*
~~10.16~~10.12		Form of Agreement between John R. Cannon and Registrant (10)*
~~10.17~~10.13		Form of Agreement between Robert J. Kuehnau and Registrant (10)*
~~10.18~~10.14		Form of Agreement between James F. McQuillen and Registrant (10)*
~~10.19~~10.15		Form of Agreement between Douglas A. Koman and Registrant (12)*
~~10.20~~10.16		Agreement dated August 19, 2002 by and among Methode Electronics, Inc.; Marital Trust No. 1 and Marital Trust No. 2 each created under the William J. McGinley Trust; Jane R. McGinley; Margaret J. McGinley; James W. McGinley; and Robert R. McGinley (11)
~~10.21~~10.17		Credit Agreement dated as of December 19, 2002 among Methode Electronics, Inc. as the Borrower, Bank of America, N.A., as Administrative Agent and L/C Issuer, and The Other Lenders Party Hereto (14)
~~10.22~~10.18		Amendment to Agreement dated August 19, 2002 by and among Methode Electronics, Inc.; Marital Trust No. 1 and Marital Trust No. 2 each created under the William J. McGinley Trust; Jane R. McGinley; Margaret J. McGinley; James W. McGinley; and Robert R. McGinley (13)
~~99.1~~10.19		Agreement dated as of July 18, 2003 by and among Methode Electronics, Inc. and Marital Trust No. 1 and Marital Trust No. 2, each created under the William J. McGinley Trust, Jane R. McGinley Trust, Margaret J. McGinley, James W. McGinley and Robert R. McGinley (6)
10.20		Form of Agreement between Donald W. Duda and Registrant (15)
10.21		Stipulation and Agreement of Compromise, Settlement and Release In re Methode Electronics, Inc. Shareholders Litigation, Civil Action No. 19899, dated July 30, 2003 (16)
31.1		Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
31.2		Rule 13a-14(a)/15d-14(a) Certification of Principal Operating Officer
31.3		Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
32		Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350

(1)		Previously filed with Registrant’s ~~Form S-3 Registration Statement~~Amendment No. ~~33-61940~~2 to the Schedule 13E-3 filed ~~April 30, 1993,~~on May 16, 2003, and incorporated herein by reference.
(2)		Previously filed with Registrant’s Registration Statement No. 2-92902 filed August 23, 1984, and incorporated herein by reference.
(3)		Previously filed with Registrant’s Form 10-Q for the three months ended January 31, 1994, and incorporated herein by reference.
(4)		Previously filed with Registrant’s Form 10-K for the year ended April 30, 1994, and incorporated herein by reference.

(5)		Previously filed with Registrant’s Statement No. 333-49671 and incorporated herein by reference.
(6)		Previously filed with Registrant’s ~~Form 10-K for the year ended April 30, 2000,~~Schedule 14D-9 filed on July 21, 2003, and incorporated herein by reference.
(7)		Previously filed with Registrant’s Form 8-K filed July 7, 2000, and incorporated herein by reference.
(8)		Previously filed with Registrant’s Form 10-Q for the three months ended October 31, 2000, and

		incorporated herein by reference.
(9)		Previously filed with Registrant’s Form 10-K for the year ended April 30, 2001, and incorporated herein by reference.
(10)		Previously filed with Registrant’s Form 10-Q for the three months ended January 31, 2002, and incorporated herein by reference.
(11)		Previously filed with Registrant’s Form 8-K filed August 20, 2002, and incorporated herein by reference.
(12)		Previously filed with Registrant’s Form 10-Q for the three months ended July 31, 2002, and incorporated herein by reference.
(13)		Previously filed with Registrant’s Form 8-K filed January 2, 2003, and incorporated herein by reference.
*(14)		~~Management contract or compensatory plan or arrangement required~~Previously filed with Registrant’s Form 10-Q for the three months ended January 31, 2003, and incorporated herein by reference.
(15)		Previously filed with Registrant’s Form 10-K/A for the year ended April 30, 2003, and incorporated herein by reference.
(16)		Previously filed with Registrant’s Amendment No. 5 to beSchedule 13E-3 filed ~~as an exhibit to this Annual Report~~ on ~~Form 10-K pursuant to Item 14(c) of Form 10-K.~~September 8, 2003,and incorporated herein by reference.

2219

PART I.		FINANCIAL INFORMATION

Item 1.		Financial Statements (unaudited)

	Condensed consolidated balance sheets ~~— January~~as of October 31, 2003 and April 30, ~~2002~~2003

	Condensed consolidated statements of income — Three months and ~~nine~~six months ended ~~January~~October 31, 2003 and 2002

	Condensed consolidated statements of cash flows — ~~Nine~~Six months ended ~~January~~October 31, 2003 and 2002

	Notes to condensed consolidated financial statements — ~~January~~October 31, 2003

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.		Quantitative and Qualitative Disclosure About Market Risk

Item 4.		Controls and Procedures

PART II.		OTHER INFORMATION

Item 1.		Legal Proceedings

Item 6.		Exhibits and Reports on Form 8-K

SIGNATURES

~~CERTIFICATIONS~~INDEX TO EXHIBITS

	January 31, 2003			April 30, 2002
	(Unaudited)
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	61,139		$	49,902
Accounts receivable, net	53,796			64,061
Inventories:
Finished products	8,551			6,870
Work in process	20,021			19,902
Materials	7,532			10,188
	36,104			36,960
Current deferred income taxes	7,530			7,590
Prepaid expenses	3,591			6,904
TOTAL CURRENT ASSETS	162,160			165,417

PROPERTY, PLANT AND EQUIPMENT	225,113			201,938
Less allowance for depreciation	147,102			131,950
	78,011			69,988

GOODWILL, net	19,474			18,200
INTANGIBLE ASSETS, net	25,035			15,013
OTHER ASSETS	23,966			23,308

	$	308,646		$	291,926

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts and notes payable	$	21,095		$	27,344
Other current liabilities	26,422			22,852
TOTAL CURRENT LIABILITIES	47,517			50,196

OTHER LIABILITIES	7,213			6,743
DEFERRED COMPENSATION	4,612			5,148
SHAREHOLDERS’ EQUITY
Common Stock	18,307			18,277
Paid in capital	36,480			36,102
Retained earnings	197,000			187,210
Other shareholders’ equity	(2,483		)	(11,750		)
	249,304			229,839

	$	308,646		$	291,926

	Three Months Ended January 31,						Nine Months Ended January 31,
	2003			2002			2003			2002

INCOME
Net sales	$	92,061		$	74,035		$	268,925		$	234,695
Other	359			437			790			1,456

	92,420			74,472			269,715			236,151

COSTS AND EXPENSES
Cost of products sold	74,823			65,839			213,214			197,120
Selling and administrative expenses	10,281			9,157			32,632			28,781

	85,104			74,996			245,846			225,901

Income (loss) from operations	7,316			(524		)	23,869			10,250

Interest income, net	290			248			864			954
Other income (expense), net	(998		)	298			(2,216		)	900

Income before income taxes	6,608			22			22,517			12,104
Income taxes (credit)	2,150			(350		)	7,300			3,625

NET INCOME	$	4,458		$	372		$	15,217		$	8,479

Basic and diluted earnings per common share	$	0.12		$	0.01		$	0.42		$	0.24

Cash dividends per common share	$	0.05		$	0.05		$	0.15		$	0.15

Weighted average number of common shares outstanding:
Basic	36,178			35,924			36,162			35,845
Diluted	36,421			36,096			36,407			36,020

	Nine Months Ended January 31,
	2003			2002

OPERATING ACTIVITIES
Net income	$	15,217		$	8,479
Provision for depreciation and amortization	11,805			12,495
Changes in operating assets and liabilities	12,459			16,988
Other	17			464

NET CASH PROVIDED BY OPERATING ACTIVITIES	39,498			38,426
INVESTING ACTIVITIES
Purchases of property, plant and equipment	(14,880		)	(9,084		)
Acquisitions	(12,257		)	(13,008		)
Other	(626		)	(908		)

NET CASH USED IN INVESTING ACTIVITIES	(27,763		)	(23,000		)

FINANCING ACTIVITIES
Options exercised	407			1,168
Dividends	(5,427		)	(5,380		)
Other	932			473

NET CASH USED IN FINANCING ACTIVITIES	(4,088		)	(3,739		)

Effect of foreign exchange rate changes on cash	3,590			(143		)

INCREASE IN CASH AND CASH EQUIVALENTS	11,237			11,544

Cash and cash equivalents at beginning of period	49,902			42,788

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	61,139		$	54,332

	Three Months Ended January 31, 2003
	Electronic		Optical			Other		Eliminations			Consolidated
Net sales to unaffiliated customers	$	83,405	$	3,967		$	4,689	$	—		$	92,061
Transfers between technology segments	—		—			62		(62		)	—
Total net sales	$	83,405	$	3,967		$	4,751	$	(62	)	$	92,061

Income (loss) before income taxes	$	9,143	$	(649	)	$	169				$	8,663
Corporate expenses, net											(2,055		)
Total income before income taxes											$	6,608

	Three Months Ended January 31, 2002
	Electronic		Optical			Other			Eliminations			Consolidated
Net sales to unaffiliated customers	$	66,002	$	4,719		$	3,314					$	74,035
Transfers between technology segments	—		—			1			$	(1	)	—
Total net sales	$	66,002	$	4,719		$	3,315		$	(1	)	$	74,035

Income (loss) before income taxes	$	2,754	$	(855	)	$	(10	)				$	1,889
Corporate expenses, net												(1,867		)
Total income before income taxes												$	22

	Involuntary Severance			Lease and Other			Total
	(in thousands)

Balance April 30, 2002	$	175		$	1,417		$	1,592
Payments made	(147		)	(275		)	(422		)
Balance October 31, 2002	28			1,142			1,170
Payments made	(23		)	(80		)	(103		)
Balance January 31, 2003	$	5		$	1,062		$	1,067

PART I.

FINANCIAL INFORMATION

SIGNATURES

CERTIFICATIONSINDEX TO EXHIBITS

Financial Condition, Liquidity and Capital Resources

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

PART II. OTHER INFORMATION