. SECURITIES AND EXCHANGE COMMISSION
. Washington, DC 20549
. Form 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1996.
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
. Commission file number 1-10431
. AVX CORPORATION
. Delaware 33-0379007
. (State of other jurisdiction (IRS Employer ID No.)
. of incorporation or organization)
. 801 17th Avenue South, Myrtle Beach, South Carolina 29577
. (Address of principal executive offices)
. (803) 448-9411
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 X No ___
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at July 25, 1996
Common Stock, par value $0.01 per share 88,000,000
. AVX CORPORATION
. INDEX
. Page Number
PART I: Financial Information
ITEM 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1996
and March 31, 1996 1
Consolidated Statements of Income for the three months
ended June 30, 1996 and 1995 2
Consolidated Statements of Cash Flows for the three months
ended June 30, 1996 and 1995 3
Notes to Consolidated Financial Statements 4-5
ITEM 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
PART II: Other Information
Signatures
Exhibits
. AVX CORPORATION AND SUBSIDIARIES
. CONSOLIDATED BALANCE SHEETS
. (dollars in thousands, except share data)
. June 30, 1996 March 31, 1996
. (unaudited)
Current assets:
Cash and cash equivalents $ 123,007 $ 131,601
Accounts receivable, net 131,318 139,545
Inventories 269,300 243,155
Deferred income taxes 30,853 30,853
Other receivables - affiliate 3,091 2,429
Prepaid and other 17,544 13,562
. Total current assets 575,113 561,145
Property and equipment:
Land 10,527 9,370
Buildings and improvements 112,196 109,574
Machinery and equipment 508,263 506,004
Construction in progress 62,607 46,030
. -------- --------
. 693,593 670,978
. -------- --------
Accumulated depreciation (415,108) (404,432)
. -------- --------
. 278,485 266,546
Goodwill, net 35,648 36,067
Other assets 3,941 3,758
. TOTAL ASSETS $ 893,187 $ 867,516
Current liabilities:
Short-term debt - bank $ 19,265 $ 19,398
Current maturities of long-term debt 1,055 1,398
Accounts payable:
. Trade 31,247 31,755
. Affiliates 34,993 33,040
Income taxes payable 46,634 35,546
Accrued payroll and benefits 31,324 40,481
Accrued expenses 40,813 41,597
. Total current liabilities 205,331 203,215
Long-term debt 5,919 8,507
Deferred income taxes 20,611 22,818
Other liabilities 10,363 8,976
. TOTAL LIABILITIES 242,224 243,516
Contingencies (Note 4)
Stockholders' equity:
Preferred stock, par value $0.01 per share:
Authorized, 20,000,000 shares;
none issued or outstanding
Common stock, par value $0.01 per share:
Authorized, 300,000,000 shares;
88,000,000 shares issued and outstanding 880 880
Additional paid-in capital 319,909 319,909
Retained earnings 334,550 306,923
Foreign currency translation adjustment (4,376) (3,712)
TOTAL STOCKHOLDERS' EQUITY 650,963 624,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 893,187 $ 867,516
. See accompanying notes to consolidated financial statements.
. 1
. AVX CORPORATION AND SUBSIDIARIES
. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
. (dollars in thousands, except share data)
. Three Months Ended June 30,
. 1996 1995
Net Sales $ 268,211 $ 304,556
Cost of sales 194,925 226,441
Gross profit 73,286 78,115
Selling, general, and administrative expenses 26,817 32,569
Profit from operations 46,469 45,546
Other income (expense):
Interest income 1,537 505
Interest expense (503) (662)
Other, net 287 72
Income before income taxes 47,790 45,461
Provision for income taxes 15,323 15,053
Net income $ 32,467 $ 30,408
Income per share $ 0.37 $ 0.35
Weighted average number of common
shares outstanding 88,000,000 85,800,000
. See accompanying notes to consolidated financial statements.
. 2
. AVX CORPORATION AND SUBSIDIARIES
. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
. (dollars in thousands)
. Three Months Ended June 30,
. ---------------------------
. 1996 1995
Operating Activities:
Net Income $ 32,467 $ 30,408
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 18,930 15,668
Deferred income taxes (2,235) (1,190)
Changes in operating assets and liabilities:
Accounts receivable 9,569 (24,501)
Inventories (26,329) 3,131
Accounts payable and accrued expenses (6,525) 15,355
Income taxes payable 10,979 13,374
Other assets and liabilities (6,515) 2,489
Net cash from operating activities 30,341 54,734
Investing Activities:
Purchases of property and equipment (31,854) (26,485)
Proceeds from sale of operations to Parent 0 3,973
Other 5 (23)
Net cash used in investing activities (31,849) (22,535)
Financing Activities:
Repayment of debt (2,724) (217)
Dividends paid (4,840) 0
Proceeds from issuance of debt 405 5,486
Net cash from (used in) financing activities (7,159) 5,269
Effect of exchange rate changes on cash 73 16
Increase (decrease) in cash and cash equivalents (8,594) 37,484
Cash and cash equivalents at beginning of period 131,601 43,813
Cash and cash equivalents at end of period $ 123,007 $ 81,297
. See accompanying notes to consolidated financial statements
. 3
. AVX CORPORATION AND SUBSIDIARIES
. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
. (dollars in thousands, except share data)
1. Basis of presentation:
The consolidated financial statements of AVX
Corporation and subsidiaries (the "Company" or
"AVX") include the accounts of the Company and its subsidiaries.
All significant intercompany transactions and accounts have
been eliminated. In the opinion of management, the accompanying
unaudited financial statements reflect all adjustments
(consisting of normal recurring accruals) that are necessary to
a fair presentation of the results for the interim periods
shown. These financial statements should be read in conjunction
with the Company's audited financial statements for the fiscal
year ended March 31, 1996.
2. Accounts Receivable:
Accounts receivable consisted of:
. June 30, March 31,
. 1996 1996
Trade $149,616 $159,798
Less, allowance for doubtful accounts,
sales returns, distributor adjustments
and discounts (18,298) (20,253)
. $131,318 $139,545
3. Inventories:
Inventories consisted of:
. June 30, March 31,
. 1996 1996
Finished goods $96,503 $75,235
Work in process 79,784 77,256
Raw materials and supplies 93,013 90,664
. $269,300 $243,155
. 4
. AVX CORPORATION AND SUBSIDIARIES
. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
4. Environmental Matters and Contingencies:
The Company has been named as a potentially responsible party
in state and federal administrative proceedings seeking
contribution for costs associated with the correction and
remediation of environmental conditions at various waste
disposal sites. Once it becomes probable that the Company will
incur costs in connection with remediation of a site and such
costs can be reasonably estimated, the Company establishes
reserves or adjusts its reserve for its projected share of these
costs. Based upon information known to the Company, the Company
had accrued approximately $8,400 at June 30, 1996 and management
believes that it has adequate reserves with respect to these
matters. Actual costs may vary from these estimated reserves,
but such costs are not expected to have material adverse effect
on the Company's financial condition or results of operations.
AVX is presently under investigation by the United States
Customs Service for possible violations of the custom laws. The
Company does not believe that the ultimate resolution of these
customs matters will materially affect AVX's financial condition
or results of operations.
5. New Accounting Standards
The Company has adopted Statement of Financial Accounting
Standard No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of", which
requires that certain long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. The adoption
did not materially affect the Company's financial condition or
results of operations.
6. Subsequent Event
On July 18, 1996, the Company declared a $0.055 dividend per
share of common stock with respect to the quarter ended June 30,
1996, payable on August 12, 1996.
. 5
. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Three Months Ended June 30, 1996 Compared to Three Months Ended
June 30, 1995
Net sales in the three months ended June 30, 1996 decreased
11.9% to $268.2 million from $304.6 million in the three months
ended June 30, 1995. The decrease was primarily attributable to
the softening in the demand of the electronic component industry
as customers reduce their level of inventory and suppliers
reduce their lead times.
Gross profit in the three months ended June 30, 1996
decreased 6.2% to $73.3 million (27.3% of net sales) from $78.1
million (25.6% of net sales) in the three months ended June 30,
1995. As a percentage of net sales, gross profit increased to
27.3% from 25.6% primarily as a result of the strength of
advanced and surface-mount products and the continued automation
of the manufacturing processes and cost reduction programs.
Selling, general and administrative expenses in the three
months ended June 30, 1996 were $26.8 million (10.0% of net
sales) compared with $32.6 million (10.7% of net sales) in the
three months ended June 30, 1995. The decrease in selling,
general, and administrative expenses is primarily due to higher
adjustments for environmental remediation accruals and charges
related to closing of the Company's previous headquarters
recorded in the quarter ended June 30, 1995 and current year
cost containment programs.
As a result of the above factors, profit from operations in
the three months ended June 30, 1996 increased 2.0% to $46.5
million from $45.6 million in the three months ended June 30,
1995.
For the reasons set forth above and higher interest income
on invested cash, net income in the three months ended June 30,
1996 increased 6.8% to $32.5 million (12.1% of net sales) from
$30.4 million (10.0% of net sales) in the three months ended
June 30, 1995.
Liquidity and Capital Resources
The Company's liquidity needs arise primarily from working
capital requirements, dividends and capital expenditures.
Historically, the Company has satisfied its liquidity
requirements through internally generated funds. As of June 30,
1996, the Company had a current ratio of 2.8 to 1, $123.0
million of cash and cash equivalents, $651.0 million of
stockholders' equity and an insignificant amount of long-term
debt.
Net cash from operating activities was $30.3 million in the
three months ended June 30, 1996 compared to $54.7 in the three
months ended June 30, 1995. The growth in working capital
contributed to the decrease.
Purchases of property and equipment were $31.9 million in the
three month period ended June 30, 1996 and $26.5 million
in three month period ended June 30, 1995. Expenditures for
both periods were primarily for expanding production
capabilities of the tantalum and ceramic surface-mount and
advanced product lines in North America and Europe.
. 6
. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
. RESULTS OF OPERATIONS AND FINANCIAL CONDITION -(continued)
During the three months ended June 30, 1995, a European
subsidiary of the Company borrowed 7.5 million deutschmarks
under a one year bank line of credit to repay an intercompany
loan with AVX in the United States. In the three months ended
June 30, 1996 dividends of $4.8 million were paid.
Based on the financial condition of the Company as of June 30,
1996, the Company believes that cash on hand and expected to be
generated from operating activities will be sufficient to
satisfy the Company's anticipated financing needs for working
capital, capital expenditures, research and development expenses
and any dividends to be paid in the foreseeable future.
. 7
Part II: Other Information
Item 1. Legal Proceedings.
None.
Item 2. Change in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held its Annual Meeting of Stockholders on July
18, 1996 for the purpose of electing a board of directors, and
approving the appointment of auditors. Proxies for the meeting
were solicited pursuant to Regulation 14A of the Securities
Exchange Act of 1934 and there was no solicitation in opposition
to management's solicitations.
All of management's nominees for directors as listed in the
proxy statement were elected with the following vote:
. Shares
. Shares Shares Not
. Voted "For" "Withheld" Voted
Kazuo Inamori 85,563,564 423,990 2,012,446
Benedict P. Rosen 85,587,474 400,080 2,012,446
John S. Gilbertson 85,567,565 419,989 2,012,446
Donald B. Christiansen 85,569,174 418,380 2,012,446
Marshal D. Butler 85,562,529 425,025 2,012,446
Carrol A. Campbell, Jr. 85,825,126 162,428 2,012,446
Kensuke Itoh 85,568,524 419,030 2,012,446
Rodney N. Lanthorne 85,568,424 419,130 2,012,446
Masato Takeda 82,884,472 3,103,082 2,012,446
Richard Tressler 85,803,914 183,640 2,012,446
Mashiro Umemura 85,579,114 408,440 2,012,446
Mashiro Yamamoto 82,886,672 3,100,882 2,012,446
Yuzo Yamamura 82,887,372 3,100,182 2,012,446
The appointment of Coopers & Lybrand L.L.P. as the Company's
independent auditors was approved with the following vote:
Shares voted "For" Shares voted "Against" Shares "Withheld" Shares not Voted
- ----------------- ---------------------- ----------------- ----------------
85,916,163 29,743 41,648 2,012,446
. 8
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
None.
(b) Reports on Form 8-K.
None.
. 9
. 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.
Date: July 25, 1996
. AVX Corporation
. /s/ Donald B. Christiansen
. Donald B. Christiansen
. Chief Financial Officer,
. Vice President and
. Treasurer
. 10