SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED September 29, 2001 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM TO
------------- -----------
Commission file number 0-20388
LITTELFUSE, INC.
----------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-3795742
----------------------------- ----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
800 EAST NORTHWEST HIGHWAY
DES PLAINES, ILLINOIS 60016
-------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(847) 824-1188
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 by check mark whether the Registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [X] No [ ]
As of September 29, 2001, 20,012,106 shares of common stock, $.01 par
value, of the Registrant and warrants to purchase 1,847,175 shares of common
stock, $.01 par value, of the Registrant were outstanding.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
PAGE
----
Item 1. Financial Statements
Condensed Consolidated Statements of Income for the periods ended
September 29, 2001 and September 30, 2000
(unaudited).............................................................................................1
Condensed Consolidated Balance Sheets for the periods ended September 29, 2001
(unaudited) and December 30, 2000.......................................................................2
Condensed Consolidated Statements of Cash Flows for the periods ended
September 29, 2001 and September 30, 2000
(unaudited).............................................................................................3
Notes to the Condensed Consolidated Financial Statements (unaudited)....................................4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..........................................................7
Item 3. Qualitative and Quantitative Disclosures about Market Risk ...........................................13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ......................................................................13
1
LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
For the Three For the Nine
Months Ended Months Ended
------------ ------------
SEPTEMBER 29, September 30, SEPTEMBER 29, September 30,
------------- ------------- ------------- -------------
2001 2000 2001 2000
---- ---- ---- ----
Net sales ................................................ $ 66,711 $ 96,362 $ 211,297 $ 289,037
Cost of sales ............................................ 45,202 57,623 137,654 171,719
--------- --------- --------- ---------
Gross profit ............................................. 21,509 38,739 73,643 117,318
Selling, general and administrative
expenses ............................................. 14,517 17,914 47,270 53,606
Research and development expenses ........................ 2,142 2,853 7,125 8,261
Amortization of intangibles .............................. 1,623 1,701 4,870 5,249
--------- --------- --------- ---------
Operating income before restructuring
expense .............................................. 3,227 16,271 14,378 50,202
Restructuring expense .................................... 1,736 -- 1,736 --
--------- --------- --------- ---------
Operating income ......................................... 1,491 16,271 12,642 50,202
Interest expense ......................................... 805 1,104 2,645 3,527
Other (income)/expense ................................... (56) (276) (744) (1,877)
--------- --------- --------- ---------
Income before income taxes ............................... 742 15,443 10,741 48,552
Income taxes ............................................. 268 5,715 3,867 17,964
Net income ............................................... $ 474 $ 9,728 $ 6,874 $ 30,588
========= ========= ========= =========
Net income per share:
Basic ................................................ $ 0.02 $ 0.49 $ 0.35 $ 1.54
========= ========= ========= =========
Diluted .............................................. $ 0.02 $ 0.44 $ 0.32 $ 1.38
========= ========= ========= =========
Weighted average shares and equivalent shares outstanding:
Basic ................................................ 19,958 20,078 19,872 19,821
========= ========= ========= =========
Diluted .............................................. 21,726 22,306 21,716 22,202
========= ========= ========= =========
2
LITTELFUSE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
SEPTEMBER 29, 2001 December 30, 2000
------------------ -----------------
(unaudited)
ASSETS:
Cash and cash equivalents ................... $ 12,685 $ 5,491
Receivables ................................. 49,925 53,152
Inventories ................................. 53,386 59,272
Other current assets ........................ 9,100 8,779
-------- --------
Total current assets ........................ $125,096 $126,694
Property, plant, and equipment, net ......... 90,219 92,673
Reorganization value, net ................... 28,805 30,913
Other intangible assets, net ................ 21,223 24,000
Other assets ................................ 752 98
-------- --------
$266,095 $274,378
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities excluding current portion
of long-term debt ....................... $ 37,444 $ 46,700
Current portion of long-term debt ........... 21,867 17,070
-------- --------
Total current liabilities ................... 59,311 63,770
Long-term debt .............................. 30,579 41,397
Deferred liabilities ........................ 2,149 2,153
Other long-term liabilities ................. 284 331
Shareholders' equity ........................ 173,772 166,727
-------- --------
Shares issued and outstanding: 20,012,106
$266,095 $274,378
======== ========
3
LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
For the Three For the Nine
Months Ended Months Ended
------------ ------------
SEPTEMBER 29, September 30, SEPTEMBER 29, September 30,
------------- ------------- ------------- --------------
2001 2000 2001 2000
---- ---- ---- ----
Operating activities:
Net income ..................................... $ 474 $ 9,728 $ 6,874 $ 30,588
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation ............................... 4,548 5,060 14,148 14,923
Amortization .............................. 1,623 1,701 4,870 5,249
Changes in operating assets and liabilities:
Accounts receivable ....................... (900) (1,419) 2,333 (9,818)
Inventories ............................... 5,438 2,455 5,271 (7,039)
Accounts payable and accrued
expenses ................................ 2,583 (7,703) (9,078) (5,593)
Other, net ................................ 688 1,161 (855) (146)
-------- -------- -------- --------
Net cash provided by operating
activities ................................ $ 14,454 $ 10,983 $ 23,563 $ 28,164
Cash used in investing activities:
Purchases of property, plant, and
equipment, net .......................... (2,384) (7,606) (11,782) (15,665)
Purchase of business ....................... (168) -- (168) --
-------- -------- -------- --------
Net cash used in investing activities ..... (2,552) (7,606) (11,950) (15,665)
Cash provided by (used in) financing activities:
Proceeds from long-term debt .............. -- 18,500 15,883 41,796
Payments of long-term debt ................ (10,298) (23,053) (21,720) (49,090)
Proceeds from exercise of stock
options and warrants .................... 1,225 486 2,578 4,035
Purchase of common stock and
warrants ................................ -- (3,987) (1,256) (4,095)
-------- -------- -------- --------
Net cash used in financing
activities .............................. (9,073) (8,054) (4,515) (7,354)
Effect of exchange rate changes on cash ........ (94) (51) 96 (937)
-------- -------- -------- --------
Increase/(decrease) in cash and cash
equivalents ............................... 2,735 (4,728) 7,194 4,208
Cash and cash equivalents at beginning
of period ................................. 9,950 10,824 5,491 1,888
-------- -------- -------- --------
Cash and cash equivalents at end of
period .................................... $ 12,685 $ 6,096 $ 12,685 $ 6,096
======== ======== ======== ========
4
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and notes 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 period ended September 29, 2001, are
not necessarily indicative of the results that may be expected for the year
ending December 29, 2001. For further information, refer to the Company's
consolidated financial statements and the notes thereto incorporated by
reference in the Company's Annual Report on Form 10-K for the year ended
December 30, 2000.
2. INVENTORIES
The components of inventories are as follows (in thousands):
September 29, December 30,
2001 2000
---- ----
Raw material $10,908 $14,488
Work in process 13,251 15,288
Finished goods 29,227 29,496
------- -------
Total $53,386 $59,272
======= =======
3. PER SHARE DATA
Net income per share amounts for the three months and nine months ended
September 29, 2001 and September 30, 2000 are based on the weighted average
number of common and common equivalent shares outstanding during the periods as
follows (in thousands, except per share data):
5
Three months Nine months
ended ended
September 29, September 30, September 29, September 30,
2001 2000 2001 2000
---- ---- ---- ----
Average shares outstanding 19,958 20,078 19,872 19,821
Net effect of dilutive stock options,
warrants and restricted shares
- Basic -- -- -- --
------- ------- ------- -------
- Diluted 1,768 2,228 1,844 2,381
------- ------- ------- -------
Average shares outstanding
- Basic 19,958 20,078 19,872 19,821
======= ======= ======= =======
- Diluted 21,726 22,306 21,716 22,202
======= ======= ======= =======
Net income $ 474 $ 9,728 $ 6,874 $30,558
======= ======= ======= =======
Net income per share
- Basic $ 0.02 $ 0.49 $ 0.35 $ 1.54
======= ======= ======= =======
- Diluted $ 0.02 $ 0.44 $ 0.32 $ 1.38
======= ======= ======= =======
4. COMPREHENSIVE INCOME
In accordance with Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income," total comprehensive income for the three
months ended September 29, 2001, and September 30, 2000, was approximately $2.2
million and $8.5 million, respectively, and for the nine months ended September
29, 2001, and September 30, 2000, was $5.7 million and $28.1 million,
respectively. The adjustment for comprehensive income is related to the
Company's foreign currency translation.
5. RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivatives and hedging
activities. The Company was required to adopt SFAS 133 on January 1, 2001, the
impact of which did not have a material effect on its consolidated financial
statements.
6
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements". SAB 101
summarizes certain of the Securities and Exchange Commission's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. We have applied the provisions of SAB 101 in the consolidated
financial statements. The adoption of SAB 101 did not have a material impact on
the Company's financial condition or results of operations.
In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" and No. 142, "Goodwill and other Intangible Assets",
effective for fiscal years beginning after December 15, 2001. Under the new
rules, goodwill and intangible assets deemed to have indefinite lives will no
longer be amortized but will be subject to annual impairment tests in accordance
with the Statement. Other intangible assets will continue to be amortized over
their useful lives.
The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
nonamortization provisions of the Statement is expected to result in an increase
in net income of $2.4 million per year. Additionally and unrelated to adoption
of SFAS No. 142, there will be a scheduled decrease in amortization expense of
$2.0 million resulting in increased income of $1.3 million. However, there will
be no impact to operating cash flow. During 2002, the Company will perform the
first of the required impairment tests of goodwill and indefinite lived
intangible assets as of January 1, 2002, but does not believe that there will be
a material effect on the earnings and financial position of the Company.
6. RESTRUCTURING EXPENSE
The Company has recently announced the planned closure of its manufacturing
facility in England as a first phase in a manufacturing rationalization
strategy. This restructuring is designed to achieve cost reductions by
consolidating manufacturing facilities. As a part of the plan, the Company will
cease manufacturing operations at its plant in Washington, England.
The beginning phase of the plan has been initiated, with completion expected by
the end of 2002. For the quarter ended September 29, 2001, the Company has
recorded expenses of $1.7 million for the restructuring. The restructuring
expense consists primarily of employee separation costs for approximately 170
associates in England.
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
Sales for the third quarter 2001 decreased 31% or $29.7 million to $66.7
million, compared to $96.4 million in the third quarter of 2000. Sales in the
Americas decreased 37% over the third quarter of 2000 primarily due to continued
weakness in the electronics market. Sales in Europe decreased
7
22% in dollars and in constant currency, and in the Asia-Pacific region sales
decreased 22% in dollars and 19% in constant currency. The geographic sales
percentage decreases from the prior year have been corrected from those
presented in the third quarter earnings press release of October 24, 2001.
Electronic sales decreased to $35.1 million in the third quarter of 2001 from
$61.7 million in the same quarter of last year for a decrease of $26.6 million
or 43%. The decline in electronic sales results is due to the broad-based
downturn in demand for electronic products.
Automotive sales decreased to $22.5 million in the third quarter 2001 from $23.9
million in the same quarter last year for a decrease of $1.4 million or 6% due
primarily to a reduction in North American vehicle production. European
automotive sales increased over the same period last year, but were offset by
decreases in North America and the Asia-Pacific region.
Electrical fuse sales decreased $1.7 million or 16% to $9.1 million in the third
quarter 2001 from $10.8 million in the same quarter last year reflecting
weakness in the electrical market.
Gross margin was $21.5 million or 32.2% of sales for the third quarter of 2000
compared to $38.7 million or 40.2% in the same quarter last year. Gross margin
continues to be negatively affected by the reduced production levels necessary
to bring inventories in line with lower demand levels. Operating income
decreased to $1.5 million or 2.2% of sales in the third quarter of 2001 compared
to $16.3 million or 16.9% in the prior year. Operating income was also affected
by charges taken in the quarter for the closure of the Company's UK plant, which
is expected to be complete by the end of 2002. The plant closure reflects
continued efforts to take cost out of the business and is a planned part of the
Company's manufacturing rationalization strategy.
Operating expenses, excluding amortization and restructuring expenses, were
$16.7 million for the third quarter of 2001, down 20% from the same quarter in
the prior year. As a percent of sales, operating expenses increased to 25.0% for
the third quarter of 2001 from 21.6% for the same quarter last year, as expense
reductions did not fully offset the decline in sales. Amortization of the
reorganization value and other intangibles increased to 2.4% of sales for the
third quarter of 2001, from 1.8 % of sales in the third quarter of 2000 due to
the decline in sales. Total operating expenses, including intangible
amortization but excluding restructuring expenses, were 27.4% of sales in the
third quarter of 2001 compared to 23.3% of sales in the same quarter last year.
Interest expense was $0.8 million in the third quarter of this year compared to
$1.1 million in the third quarter of last year due to lower average debt levels.
Other income was $0.1 million for the third quarter of 2001 compared to $0.3
million in the third quarter of the prior year.
Income before income taxes was $0.7 million for the third quarter 2001 compared
to $15.4 million for the third quarter of 2000. Income taxes were $0.3 million
with an effective tax rate of 36% for the third quarter of 2001 compared to $5.7
million with an effective tax rate of 37% in the third quarter of last year.
Net income decreased 95% to $0.5 million in the third quarter this year compared
to $9.7 million in the third quarter of last year and diluted earnings per share
decreased 95% to $0.02 in the third quarter this year compared to $0.44 per
diluted share in the same quarter last year.
8
Nine Months, 2001
Sales for the first nine months decreased 27% to $211.3 million from $289.0
million last year. Electronics sales for the first nine months of 2001 were down
36% at $114.6 million compared to $179.4 million last year due to the
broad-based downturn in demand for electronic products. Automotive sales for the
first nine months of 2001 were down 10% at $70.0 million compared to $77.7
million last year due primarily to a decline in North American vehicle
production. Electrical fuse sales for the first nine months of 2001 were down
16% at $26.7 million from $31.9 million last year due to weakness in the
electrical market.
Gross margin was $73.6 million or 34.9% for the first nine months of 2001
compared to $117.3 million or 40.6% for the first nine months of last year.
Gross margin continues to be negatively impacted by reduced production levels
reflecting weaker demand and inventory reduction efforts. Operating income for
the first nine months of 2001 decreased 74.8% to $12.6 million from $50.2
million last year.
Operating expenses, excluding amortization and restructuring, were 25.7% of
sales for the first nine months of 2001 compared to 21.4% last year as expense
reductions did not fully offset the decline in sales. The amortization of
intangibles was 2.3% of sales for the first nine months of 2001 compared to 1.8%
last year. Total operating expenses, including intangibles amortization but
excluding restructuring expenses, were 28.0% of sales for the first nine months
of 2001 compared to 23.2% of sales for the first nine months of last year.
Interest expense was $2.6 million for the first nine months of 2001 compared to
$3.5 million last year. Other income was $0.7 million for the first nine months
of 2001 compared to $1.9 million for the same period last year. Income before
taxes was $10.7 million for the first nine months of 2001 compared to $48.6
million the first nine months of last year. Income taxes were $3.9 million the
first nine months 2001 compared to $18.0 million last year.
Net income for the first nine months of 2001 decreased 77% to $6.9 million from
$30.6 million for the same period last year. Diluted earnings per share for the
first nine months of 2001 decreased 77% to $0.32 per diluted share compared to
$1.38 per diluted share last year.
Liquidity and Capital Resources
Assuming no material adverse changes in market conditions or interest rates,
management expects that the Company will have sufficient cash from operations to
support both its operations and its current debt obligations for the foreseeable
future.
Littelfuse started the 2001 year with $5.5 million of cash. Net cash provided by
operations was $23.6 million for the first nine months. Net cash used to invest
in property, plant and equipment was $12.0 million. Net cash used to repay
long-term debt and to repurchase stock was $7.1
9
million. In addition, proceeds from warrant and stock option exercises were $2.6
million, resulting in net cash used in financing activities of $4.5 million. The
net increase in cash for the nine months ended September 29, 2001 was $7.2
million, leaving the Company with a cash balance of approximately $12.7 million
at September 29, 2001.
The ratio of current assets to current liabilities was 2.1 to 1 at the end of
the third quarter 2001 compared to 2.0 to 1 at year-end 2000 and 2.0 to 1 at the
end of the third quarter 2000. The days sales in receivables was approximately
68 days at the end of the third quarter 2001 compared to 58 days at year-end
2000 and 64 days at third quarter end 2000. The increase in days sales in
receivables was due primarily to heavier shipments toward the end of the
quarter. The days inventory outstanding was approximately 108 days at third
quarter end 2001 compared to 109 days at year-end 2000 and 91 days at third
quarter end 2000.
The Company's capital expenditures were $2.4 million for the third quarter 2000.
The Company expects that capital expenditures, which are primarily for new
machinery, equipment and information systems, will be approximately $16 million
for the full year 2001.
The long-term debt at the end of the third quarter 2001 totaled $52.4 million
and consisted of the following: (1) 6.16% private placement notes totaling $40.0
million, (2) foreign revolver borrowings totaling $11.1 million, (3) notes
payable relating to mortgages totaling $0.3 million and (4) other long-term
debt, including capital leases, totaling $1.0 million. Of this indebtedness,
$21.9 million is considered to be current liabilities. The Company has a $55.0
million revolver in the U.S., all of which was available at September 29, 2001.
The bank revolver loan notes carry an interest rate of prime or LIBOR plus
0.375%. The Company also has an $8.0 million letter of credit facility, of which
approximately $1.7 million was being used at September 29, 2001.
Business Segment Information
The Company designs, manufactures and sells circuit protection devices
throughout the world. The Company has three reportable geographic segments: The
Americas, Europe and Asia-Pacific. The circuit protection market in these
geographical segments is categorized into three major product areas: electronic,
automotive and power fuses.
The Company evaluates the performance of each geographic segment based on its
net income or loss. The Company also accounts for intersegment sales as if the
sales were to third parties.
The Company's reportable segments are the business units where the revenue is
earned and expenses are incurred. The Company has subsidiaries in The Americas,
Europe and Asia-Pacific where each region is measured based on its sales and
operating income or loss.
Information concerning the operations in these geographic segments for the
periods ended September 29, 2001 and September 30, 2000, is as follows (in
thousands):
10
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September 29, September 30, September 29, September 30,
2001 2000 2001 2000
Revenues
The Americas $ 35,399 $ 56,337 $ 113,338 $ 168,472
Europe 11,205 14,316 40,476 48,031
Asia-Pacific 20,107 25,709 57,483 72,534
--------- --------- --------- ---------
Combined Total 66,711 96,362 211,297 289,037
Corporate 0 0 0 0
Reconciliation 0 0 0 0
--------- --------- --------- ---------
Consolidated Total $ 66,711 $ 96,362 $ 211,297 $ 289,037
========= ========= ========= =========
Intersegment Revenues
The Americas $ 12,137 $ 12,957 $ 42,580 $ 33,181
Europe 5,327 8,809 16,075 23,861
Asia-Pacific 2,576 1,595 6,804 4,682
--------- --------- --------- ---------
Combined Total 20,040 23,361 65,459 61,724
Reconciliation (20,040) (23,361) (65,459) (61,724)
--------- --------- --------- ---------
Consolidated Total 0 0 0 0
========= ========= ========= =========
Interest Expense
The Americas $ 757 $ 1,037 $ 2,475 $ 3,262
Europe 3 4 22 75
Asia-Pacific 45 63 148 190
--------- --------- --------- ---------
Consolidated Total $ 805 $ 1,104 $ 2,645 $ 3,527
Depreciation and Amortization
The Americas $ 2,642 $ 2,828 $ 8,942 $ 8,578
Europe 1,056 698 2,792 2,092
Asia-Pacific 406 1,155 1,083 3,133
--------- --------- --------- ---------
Combined Total 4,104 4,681 12,817 13,803
Corporate 2,067 2,080 6,201 6,369
Consolidated Total $ 6,171 $ 6,761 $ 19,018 $ 20,172
Other income (loss)
The Americas $ (124) $ (5) $ 165 $ 1,167
Europe 4 153 361 420
Asia-Pacific 176 128 218 290
--------- --------- --------- ---------
Consolidated Total $ 56 $ 276 $ 744 $ 1,877
Income Tax Expense
The Americas $ (962) $ 3,243 $ (1,288) $ 10,530
Europe 252 1,211 2,394 3,958
Asia-Pacific 978 1,261 2,761 3,476
--------- --------- --------- ---------
Consolidated Total $ 268 $ 5,715 $ 3,867
$ 17,964
Net Income
The Americas $ 789 $ 5,849 $ 2,556 $ 20,357
Europe 1,471 2,021 6,477 7,401
Asia-Pacific 2,017 3,938 5,780 9,220
--------- --------- --------- ---------
Combined Total 4,277 11,808 14,813 36,978
Corporate (3,803) (2,080) (7,939) (6,390)
Consolidated Total $ 474 $ 9,728 $ 6,874 $ 30,588
Revenues
Electronic $ 35,102 $ 61,638 $ 114,607 $ 179,438
Automotive 22,495 23,927 70,027 77,708
Power 9,114 10,797 26,663 31,891
--------- --------- --------- ---------
Consolidated Total $ 66,711 $ 96,362 $ 211,297 $ 289,037
========= ========= ========= =========
Revenues from no single customer of the Company amount to 10% or more for the
quarter ended September 29, 2001.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995.
The preceding commentary presents management's discussion and analysis of the
Company's financial condition and results of operations for the periods
presented. Certain of the statements included above, including those regarding
future financial performance or results or those that are not historical facts,
are or contain "forward-looking" information as that term is defined in the
Securities Exchange Act of 1934, as amended. The words "expect," "believe,"
"anticipate," "project," "estimate," and similar expressions are intended to
identify forward-looking statements. The Company cautions readers that any such
statements are not guarantees of future performance or events and such
statements involve risks, uncertainties and assumptions, including, but not
limited to, product demand and market acceptance risks, the effect of economic
conditions, the impact of competitive products and pricing, product development
and patent protection, commercialization and technological difficulties,
capacity and supply constraints or difficulties, actual purchases under
agreements, the effect of the Company's accounting policies, currency rate
fluctuations, and other factors discussed above and in the Company's Annual
Report on Form 10-K for the year ended December 30, 2000. 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 30, 2000.
11
Item 3. Qualitative and Quantitative Disclosures about Market Risk
The Company is exposed to market risk from changes in foreign exchange rates,
commodities and to a lesser extent, interest rates.
The Company had long-term debt outstanding at September 29, 2001 in the form of
senior notes and foreign lines of credit at variable interest rates. Since
substantially all of the debt has fixed interest rates, the Company's interest
expense is not sensitive to changes in interest rate levels.
A portion of the Company's operations consists of manufacturing and sales
activities in foreign countries. The Company has manufacturing facilities in
Mexico, England, Ireland, Switzerland, South Korea, China and the Philippines.
Substantially all sales in Europe are denominated in Dutch Guilders, British
Pounds Sterling, United States Dollars and Euros and substantially all sales in
the Asia-Pacific region are denominated in United States Dollars, Japanese Yen
and South Korean Won.
The Company's identifiable foreign exchange exposures result from the purchase
and sale of products from affiliates, repayment of intercompany trade and loan
amounts and translation of local currency amounts in consolidation of financial
results. Changes in foreign currency exchange rates or weak economic conditions
in the foreign countries in which it manufactures and distributes products could
affect the Company's sales and financial results. The Company utilizes netting
and offsets to reduce known foreign currency expenses. The Company does not use
any material derivative financial instruments to mitigate its foreign currency
risk at the present time.
The Company uses various metals in the production of its products, including
zinc, copper and silver. The Company's earnings are exposed to fluctuations in
the prices of these commodities. The Company does not currently use derivative
financial instruments to mitigate this commodity price risk.
PART II - OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibit Description
10.12 Form of change of Control
Employment Agreement dated as of
September 1, 2001 between
Littelfuse, Inc. and Messrs.
Barron, Franklin, Ouwehand and
Ms. Mary Muchoney
10.13 Form of change of Control
Employment Agreement dated as of
September 1, 2001 between
Littelfuse, Inc. and Mr. Kenneth
Audino
(b) There were no reports on Form 8-K filed during the
quarter ended September 29, 2001.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report on Form 10-Q for the quarter
ended September 29, 2001, to be signed on its behalf by the undersigned
thereunto duly authorized.
LITTELFUSE, INC.
Date: November 12, 2001 By /s/ Philip G. Franklin
-----------------------
Philip G. Franklin
Vice President,
Treasurer, and Chief
Financial Officer (As
duly authorized
officer and as the
principal financial
and accounting
officer)
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