Littelfuse (LFUS) 8-K Littelfuse Reports Second Quarter Results and Announces Dividend Increase

Exhibit 99.1

 

NEWS RELEASE

CONTACT: Phil Franklin,

Vice President, Operations Support, CFO and Treasurer (773) 628-0810

LITTELFUSE REPORTS SECOND QUARTER RESULTS AND ANNOUNCES DIVIDEND INCREASE

CHICAGO, July 31, 2013 –Littelfuse, Inc. (NASDAQ:LFUS) today reported financial results for the second quarter of 2013 and announced a 10% increase in the quarterly cash dividend.

Second Quarter Highlights

●  Sales for the second quarter of 2013 increased 10% sequentially and 7% year over year to $187.8 million. This included $7 million of sales from the Hamlin acquisition which closed on May 31, 2013.

●  On a GAAP basis, second quarter 2013 earnings were $1.18 per diluted share. This included $3.7 million of foreign exchange gains and $2.9 million of costs related to the Hamlin acquisition. The net of these special items was a gain of approximately $.03 per share. As expected, Hamlin added approximately $.02 to earnings per share for the second quarter excluding special items.

●  GAAP operating margin for the second quarter of 2013 was 16.7%. Excluding the $2.9 million of acquisition-related costs but including $0.5 million of amortization of intangibles for Hamlin, operating margin was 18.3% for the second quarter of 2013.

●  Sales and order trends by business unit were as follows:

o  Electronics sales (excluding Hamlin) increased 11% sequentially but declined 2% year over year. The strong sequential increase was the result of normal seasonality combined with relatively lean channel inventories. For the second consecutive quarter, orders were above sales with the second quarter book to bill of 1.01 following a 1.18 book to bill for the first quarter. Orders for July have improved over the second quarter run rate.

o  Automotive sales (excluding Hamlin) increased 18% year over year due to acquisitions (Accel and Terra) and 9% growth in passenger vehicle fuses. The commercial vehicle products business continues to recover with its second consecutive quarter of sequential growth following a sharp decline in the last half of 2012.

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o  Electrical sales declined 1% sequentially and 9% year over year due to weakness in relays and custom products reflecting completion of a few large potash projects and general weakness in the broader mining sector. This was partially offset by strong performance of the power fuse business resulting from continued success in the solar market and share gain in the core industrial market.

●  Cash provided by operating activities was $23.0 million for the second quarter of 2013 compared to $24.7 million for the second quarter of 2012. Capital expenditures for the second quarter of 2013 were $9.0 million compared to $3.5 million for the prior-year quarter reflecting current quarter spending on several capacity expansion projects to support the company’s growth plans and new product introductions.

●  On May 31, 2013, the company entered into a new $325 million credit agreement, consisting of a $225 million revolving credit facility and a $100 million term loan.  This facility, which was completed in conjunction with the Hamlin acquisition, extended the company’s debt maturities until May 2018 at current rates of LIBOR plus 1.25%. Additionally, there is an option to increase the facility by another $150 million to fund future growth opportunities.

“Overall, we had a very solid quarter with no surprises,” said Gordon Hunter, Chief Executive Officer. “The electronics business ramped up as expected. The automotive business continues to benefit from recent acquisitions and global growth in car production as well as content increases for both circuit protection and sensors. The electrical business is being affected by the expected declines in the mining segment, but is still performing well in the solar and industrial markets.”

“Strong execution and increased operating leverage, particularly in the electronics business, resulted in an improved gross margin for the second quarter,” said Phil Franklin, Chief Financial Officer. “Our efforts to drive Lean across the enterprise and focus sales resources on higher-margin niches are beginning to pay dividends.”

Outlook

“Although there is still much uncertainty in the global economy, our order rates continue to be solid with the exception of relays and custom products which are being impacted by weakness in the mining market,” said Hunter. “While none of our business segments are getting noticeably stronger overall, we are seeing strength in certain niche markets such as LED lighting and solar.”

●  Sales for the third quarter of 2013 are expected to be in the range of $195 to $205 million which, at the midpoint, represents 16% growth compared to the third quarter of 2012.

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●  Earnings for the third quarter of 2013 are expected to be in the range of $1.12 to $1.27 per diluted share.

●  The sales and earnings guidance above includes Hamlin.

Dividend

The Board has approved a 10% increase in the quarterly cash dividend from $0.20 to $0.22. This dividend is payable on September 5, 2013 to shareholders of record at the close of business on August 21, 2013. The company has increased its dividend by a double-digit percentage every year since initiation in 2010.

Conference Call and Webcast Information

Littelfuse will host a conference call today, Wednesday, July 31, 2013, at 10:00 a.m. Central / 11:00 a.m. Eastern time to discuss the second quarter results. The call will be broadcast live over the Internet and can be accessed through the company’s website:www.littelfuse.com. Listeners should go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call will be available for replay through September 30, 2013 on the company’s website.

About Littelfuse

Founded in 1927, Littelfuse is the world leader in circuit protection with growing global platforms in power control and sensing. The company serves customers in the electronics, automotive and industrial markets with technologies including fuses, semiconductors, polymers, ceramics, relays and sensors. Littelfuse has over 7,000 employees in more than 35 locations throughout the Americas, Europe and Asia.  For more information, please visit the Littelfuse website:littelfuse.com.

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“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995.

The statements in this press release that are not historical facts are intended to constitute “forward-looking statements” entitled to the safe-harbor provisions of the PSLRA. These statements may involve risks and uncertainties, including, but not limited to, risks relating to product demand and market acceptance, economic conditions, the impact of competitive products and pricing, product quality problems or product recalls, capacity and supply difficulties or constraints, coal mining exposures reserves, failure of an indemnification for environmental liability, exchange rate fluctuations, commodity price fluctuations, the effect of the company’s accounting policies, labor disputes, restructuring costs in excess of expectations, pension plan asset returns less than assumed, integration of acquisitions and other risks which may be detailed in the company’s other Securities and Exchange Commission filings. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual results and outcomes may differ materially from those indicated or implied in the forward-looking statements. This report should be read in conjunction with information provided in the financial statements appearing in the company’s Annual Report on Form 10-K for the year ended December 29, 2012. For a further discussion of the risk factors of the company, please see Item 1A. “Risk Factors” to the company’s Annual Report on Form 10-K for the year ended December 29, 2012.

LFUS - F

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LITTELFUSE, INC.

Net Sales and Operating Income by Business Unit

(In thousands of USD, unaudited)

	Second Quarter							Year-to-Date
	2013		2012		% Change			2013		2012		% Change
Net Sales
Electronics(2)	$	91,450	$	89,508		2	%	$	170,865	$	166,562		3	%
Automotive (3)		64,548		51,450		25	%		123,933		104,076		19	%
Electrical		31,768		34,895		(9%	)		63,886		65,793		(3%	)
Total net sales (1)	$	187,766	$	175,853		7	%	$	358,684	$	336,431		7	%

(1) Total net sales for both the 2013 quarter and year-to-date include $7.0M from the Hamlin acquisition.

(2) Total Electronics net sales for both the 2013 second quarter and year-to-date include $3.4M from the Hamlin acquisition.

(3) Total Automotive net sales for both the 2013 second quarter and year-to-date include $3.6M from the Hamlin acquisition.

	Second Quarter									Year-to-Date
	2013			2012			% Change			2013			2012			% Change
Operating Income
Electronics	$	19,779		$	15,778			25	%	$	31,922		$	25,889			23	%
Automotive		8,913			6,965			28	%		18,396			16,471			12	%
Electrical		5,623			9,353			(40%	)		12,114			15,560			(22%	)
Other(4)		(2,933	)		-		n/a				(2,933	)		-		n/a
Total operating income	$	31,382		$	32,096			(2%	)	$	59,499		$	57,920			3	%
Interest expense		644			421						1,020			844
Investment impairment(5)		-			1,033						10,678			1,558
Other (income) expense, net(6)		(4,659	)		(757	)					(5,568	)		(656	)
Income before taxes	$	35,397		$	31,399			13	%	$	53,369		$	56,174			(5%	)

(4) "Other" typically includes special items such as acquisition-related costs, restructuring costs, asset impairments, and gains and losses on asset sales. For the second quarter of 2013, "other" included legal and investment banking fees and other costs related to the Hamlin acquisition ($1,209K all in G&A) and a purchase accounting adjustment (ASC 805) also related to the Hamlin acquisition ($1,724K all in Cost of sales).

(5) Impairment and loan losses from investment in Shocking Technologies.

(6) Other (income) expense, net includes $3,724K of foreign exchange balance sheet revaluation for the second quarter of 2013.

LITTELFUSE, INC.

Condensed Consolidated Balance Sheets

(In thousands of USD, except share amounts)

	June 29, 2013			December 29, 2012
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	257,672		$	235,404
Short-term investments		8,513			-
Accounts receivable, less allowances		131,122			100,559
Inventories		83,470			75,580
Deferred income taxes		10,964			11,890
Prepaid expenses and other current assets		18,819			16,532
Total net sales		5,500			5,500
Total current assets		516,060			445,465
Land		4,054			6,243
Buildings		58,709			54,559
Equipment		346,728			304,954
		409,491			365,756
Accumulated depreciation		(268,358	)		(244,845	)
Net property, plant and equipment		141,133			120,911
Intangible assets, net of amortization:
Patents, licenses and software		43,042			11,144
Distribution network		33,033			18,964
Customer lists, trademarks and tradenames		23,159			18,704
Goodwill		185,035			133,592
		284,269			182,404
Investment in unconsolidated entity		-			8,666
Investments		11,274			10,327
Deferred income taxes		2,917			8,090
Other assets		4,162			1,865
Total assets	$	959,815		$	777,728
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	36,641		$	27,226
Accrued payroll		19,329			20,540
Accrued expenses		11,295			11,062
Accrued severance		306			1,033
Accrued income taxes		6,226			11,559
Current portion of long-term debt		138,000			84,000
Total current liabilities		211,797			155,420
Long-term debt, less current portion		95,000			-
Accrued post-retirement benefits		14,925			22,338
Other long-term liabilities		15,406			12,412
Total equity		622,687			587,558
Total liabilities and equity	$	959,815		$	777,728

Common shares issued and outstanding of22,429,930 and 22,029,446 at June 29, 2013 andDecember 29, 2012, respectively.

LITTELFUSE, INC.

Consolidated Statements of Comprehensive Income

(In thousands of USD, except per share data, unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Net sales	$	187,766		$	175,853		$	358,684		$	336,431
Cost of sales		114,209			106,291			220,521			206,007
Gross profit		73,557			69,562			138,163			130,424
Selling, general and administrative
		34,452			31,189			63,654			59,598
Research and development expenses		5,793			4,887			11,508			10,048
Amortization of intangibles		1,930			1,390			3,502			2,858
		42,175			37,466			78,664			72,504
Operating income		31,382			32,096			59,499			57,920
Interest expense		644			421			1,020			844
Impairment and loan loss inunconsolidated affiliate		-			1,033			10,678			1,558
Other (income) expense, net		(4,659	)		(757	)		(5,568	)		(656	)
Income before income taxes		35,397			31,399			53,369			56,174
Income taxes		8,749			8,436			11,927			15,648
Net income	$	26,648		$	22,963		$	41,442		$	40,526
Net income per share:
Basic	$	1.19		$	1.05		$	1.87		$	1.86
Diluted	$	1.18		$	1.04		$	1.85		$	1.84
Weighted average shares andequivalent shares outstanding:
Basic		22,296			21,778			22,197			21,693
Diluted		22,499			22,074			22,431			22,004
Diluted Net Income Per Share
Net income as reported	$	26,648		$	22,963		$	41,442		$	40,526
Less: income allocated to participatingsecurities		(10	)		(37	)		(34	)		(91	)
Net income available to commonshareholders	$	26,638		$	22,926		$	41,408		$	40,435
Weighted average shares adjusted forsecurities		22,499			22,074			22,431			22,004
Diluted net income per share	$	1.18		$	1.04		$	1.85		$	1.84
Comprehensive income	$	17,956		$	14,682		$	28,924		$	41,387

LITTELFUSE, INC.

Consolidated Statements of Cash Flows

(In thousands of USD, unaudited)

	For the Six Months Ended
	June 29, 2013			June 30, 2012
OPERATING ACTIVITIES:
Net income	$	41,442		$	40,526
Adjustments to reconcile net income to net cashprovided by operating activities:
Depreciation		12,748			12,659
Amortization of intangibles		3,502			2,858
Impairment and loan loss in unconsolidated affiliate		10,678			1,558
Non-cash inventory charge (1)		1,725			205
Stock-based compensation		4,562			3,725
Excess tax benefit on stock-based compensation		(3,494	)		(2,246	)
Loss on sale of assets		120			60
Changes in operating assets and liabilities:
Accounts receivable		(20,246	)		(21,679	)
Inventories		3,354			(2,150	)
Accounts payable		4,655			7,173
Accrued expenses (including post retirement)		(11,477	)		(6,930	)
Accrued payroll and severance		(1,725	)		(3,163	)
Accrued taxes		(7,563	)		502
Prepaid expenses and other		724			(521	)
Net cash provided by operating activities		39,005			32,577
INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(14,445	)		(6,747	)
Acquisition of businesses, net of cash acquired		(145,000	)		(23,521	)
Purchase of investment		-			(10,000	)
Purchase of short-term investments		(8,478	)		(4,616	)
Proceeds from sales of short-term investments		-			12,401
Proceeds from sale of assets		56			441
Net cash used in investing activities		(167,867	)		(32,042	)
FINANCING ACTIVITIES:
Proceeds from term loan		100,000			17,000
Proceeds of revolving credit facility		152,000			-
Payments of revolving credit facility		(103,000	)		(17,500	)
Debt issuance costs		(808	)		-
Cash dividends paid		(8,865	)		(7,806	)
Proceeds from exercise of stock options		15,401			10,698
Excess tax benefit on stock-based compensation		3,494			2,246
Net cash provided by financing activities		158,222			4,638
Effect of exchange rate changes on cash and cashequivalents		(7,092	)		(371	)
Increase in cash and cash equivalents		22,268			4,802
Cash and cash equivalents at beginning of period		235,404			164,016
Cash and cash equivalents at end of period	$	257,672		$	168,818

(1) Purchase accounting adjustment related to acquisitions.