Littelfuse Reports Fourth Quarter Results

Littelfuse, Inc. (NASDAQ/NGS:LFUS) today reported sales and earnings for the fourth quarter and full year of 2007. Fourth Quarter Highlights Sales for the fourth quarter of 2007 were $134.9 million, an increase of $7.1 million or 6% compared to the fourth quarter of 2006, reflecting growth in all three business segments and all geographies. The electrical business led the way with a 14% sales increase, while automotive and electronics sales grew 9% and 3%, respectively. Diluted earnings per share for the fourth quarter of 2007 were $0.36 compared to diluted earnings per share of $0.21 for the fourth quarter of 2006. Adjusted diluted earnings per share (see Supplemental Schedule) were $0.38, which excludes $0.8 million of non-cash asset impairment charges related to manufacturing transfers. This was above the company’s guidance of $0.33 to $0.37 per share, due primarily to a lower tax rate reflecting higher earnings in low-tax jurisdictions. Adjusted diluted earnings per share increased 52% compared to the prior-year quarter due to higher sales, improved margins and a lower tax rate. Cash flow from operating activities was $28.7 million for the fourth quarter of 2007 as accounts receivable days sales outstanding was reduced to 58 and inventory turns increased to 6.2. The company repurchased 500,000 shares of its common stock in the fourth quarter at an average price per share of $32.87. At the end of 2007, the company had 500,000 shares remaining on the current board authorization. The book-to-bill ratio for electronics for the fourth quarter of 2007 was .96, which is down from .98 for the third quarter of 2007. Capacity utilization for electronics held steady at approximately 80%. Full Year Highlights Sales for 2007 were $536.1 million, which surpassed last year’s record sales of $534.9 million. Electrical and automotive sales increased 14% and 9%, respectively. This was partially offset by a 5% decline in electronics sales due primarily to a distributor inventory correction earlier in the year and weakness in certain telecom segments. Regionally, Europe and Asia sales increased 6% and 3%, respectively, while the Americas declined 5%. In Europe, favorable currency effects and modest growth in automotive were partially offset by lower electronics sales. Both electronics and automotive contributed to the Asia growth. The decline in the Americas was due to weakness in electronics, partially offset by growth in both electrical and automotive. Diluted earnings per share for 2007 were $1.64 compared to $1.06 in 2006, primarily due to a gain on the sale of property in Ireland in 2007 and higher restructuring charges related to manufacturing transfers in 2006. 2007 was another strong year for cash flow. The company generated $59.9 million of cash from operating activities and $8.6 million from asset disposals (primarily real estate). This enabled funding of $40.5 million of capital expenditures, $4.5 million of acquisitions and $16.4 million of stock repurchases, while cash net of debt increased $21.0 million to $51.6 million. "2007 was a year of many accomplishments and a few disappointments,” said Gordon Hunter, Chief Executive Officer. "The automotive and electrical businesses both had record years. We made excellent progress on our manufacturing transfers, and we achieved record inventory turns and strong cash flow. On the negative side was the weak performance of our electronics business, although the return to growth in the fourth quarter for this business was encouraging.” Current Outlook Sales for the first quarter of 2008 are expected to be in the range of $134 to $138 million, which represents 2 to 5% growth over the prior-year quarter. Margins will be impacted throughout 2008 by increasing costs related to manufacturing transfers, including redundant overhead, equipment move costs, training and retention incentives. These costs are expected to average about $3 million per quarter. Diluted earnings for the first quarter of 2008 are expected to be in the range of $0.32 to $0.37 per share. Sales for fiscal year 2008 are expected to increase 5 to 7% compared to 2007, with the second half of the year being stronger than the first half due to increased new product sales. Diluted earnings per share for 2008 are expected to be in the range of $1.80 to $1.90. The effective tax rate for 2008 is expected to be approximately 30%. Cash from operating activities will be reduced by approximately $20 million of severance payments in 2008, mostly due to the closure of the Ireland facility. Net capital expenditures are expected to increase to approximately $45 million in 2008 due to costs related to the manufacturing transfers and the move to a new headquarters facility. "Our critical initiatives related to improving organic growth and driving to best-in-class manufacturing costs are on schedule. As a result, we remain confident in our ability to deliver earnings of $2.50 per share in 2009 and to achieve a 15% operating margin upon the completion of the manufacturing transfers,” said Hunter. Conference Call Webcast Information Littelfuse will host a conference call today, Wednesday, February 6, 2008 at 11:00 a.m. Eastern/10:00 a.m. Central time to discuss the fourth quarter results. The call will be broadcast live over the Internet and can be accessed through the company’s Web site: www.littelfuse.com. Listeners should go to the Web site at least 15 minutes prior to the call to download and install any necessary audio software. The call will be available for replay through March 31, 2008 and can be accessed through the Web site listed above. About Littelfuse As the worldwide leader in circuit protection products and solutions with annual sales of $536.1 million in 2007, the Littelfuse portfolio is backed by industry leading technical support, design and manufacturing expertise. Littelfuse products are vital components in virtually every product that uses electrical energy, including automobiles, computers, consumer electronics, handheld devices, industrial equipment, and telecom/datacom circuits. Littelfuse offers Teccor®, Wickmann® and Pudenz® brand circuit protection products. In addition to its Des Plaines, Illinois, world headquarters, Littelfuse has sales, distribution, manufacturing and engineering facilities in Brazil, China, England, Germany, Hong Kong, India, Ireland, Japan, Korea, Mexico, the Netherlands, the Philippines, Singapore, Taiwan and the U.S. For more information, please visit Littelfuse’s web site at www.littelfuse.com. "Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. This press release may include statements that constitute "forward looking statements" within the meaning of federal securities regulations and the Private Securities Litigation Reform Act of 1995. Any forward looking statements contained herein involve risks and uncertainties, including, but not limited to, product demand and market acceptance risks, the effect of economic conditions, the impact of competitive products and pricing, product development and patent protection, commercialization and technological difficulties, capacity and supply constraints or difficulties, exchange rate fluctuations, actual purchases under agreements, the effect of the company’s accounting policies, labor disputes, restructuring costs in excess of expectations and other risks that may be detailed in the company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2006 under the heading "Risk Factors” and elsewhere in the company’s other Securities and Exchange Commission filings. These forward looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the company cautions you not to place undue reliance on these forward looking statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward looking statements. The company assumes no obligation to update this forward-looking information, except as required by law. LITTELFUSE, INC. Sales by Geography and Market (in millions, unaudited)     Fourth Quarter Year-to-Date 2007   2006   % Change 2007   2006   % Change Geography Americas $48.8 $48.0 2 % $204.3 $216.0 (5 )% Europe 29.4 26.9 10 % 118.2 111.6 6 % Asia-Pacific 56.7 52.9 7 % 213.6 207.3 3 %   Total $ 134.9 $127.8 6 % $536.1 $534.9 - %     Fourth Quarter Year-to-Date 2007 2006 % Change 2007 2006 % Change Market Electronics $ 88.2 $ 85.5 3 % $348.9 $365.5 (5 )% Automotive 33.6 30.8 9 % 135.1 123.6 9 % Electrical 13.1 11.5 14 % 52.1 45.8 14 %   Total $ 134.9 $127.8 6 % $536.1 $534.9 - % LITTELFUSE, INC. Condensed Consolidated Balance Sheets (in thousands, unaudited)   December 29, 2007 December 30, 2006 Assets Current assets: Cash and cash equivalents $ 64,943 $ 56,704 Accounts receivable 85,607 83,901 Inventories 58,845 65,961 Deferred income taxes 10,986 12,382 Prepaid expenses and other current assets 16,389   9,821   Total current assets 236,770 228,769   Property, plant, and equipment: Land 12,573 10,916 Buildings 49,321 45,518 Equipment 282,416   285,758   344,310 342,192 Accumulated depreciation (199,748 ) (216,676 ) Net property, plant and equipment 144,562 125,516   Intangible assets, net of amortization: Patents, licenses and software 9,231 10,118 Distribution network 13,823 15,209 Trademarks and tradenames 1,192 1,321 Goodwill 73,462   67,500   97,708 94,148   Investments 6,544 5,231 Deferred income taxes 6,141 9,746 Other assets 1,240   1,556     Total Assets $ 492,965   $ 464,966     Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 32,985 $ 23,334 Accrued payroll 19,441 22,468 Accrued expenses 9,988 12,579 Accrued severance 21,092 10,670 Accrued income tax 2,595 4,656 Current portion of long-term debt 12,086   24,328   Total current liabilities 98,187 98,035   Long-term debt, less current portion 1,223 1,785 Accrued severance 8,912 18,879 Accrued post-retirement benefits 20,585 27,971 Other long-term liabilities 10,501 14,488 Minority interest 143 143 Shareholders’ equity 353,414   303,665   Total Liabilities and Shareholders’ Equity $ 492,965   $ 464,966       Common shares issued and outstanding of21,869,824 and 22,110,674, at December 29,2007, and December 30, 2006, respectively LITTELFUSE, INC. Consolidated Statements of Income (in thousands, except per share data, unaudited)     For the Three Months Ended For the Twelve Months Ended Dec 29,   Dec 30, Dec 29,   Dec 30, 2007 2006 2007 2006   Net sales $ 134,966 $ 127,836 $ 536,144 $ 534,859 Cost of sales   92,310     89,747   364,607     373,596   Gross profit 42,656 38,089 171,537 161,263 Selling, general and administrative expenses 26,320 26,986 103,258 110,581 Research and development expenses 5,463 4,609 21,700 18,708 Gain on sale of Ireland property - - (8,037 ) - Amortization of intangibles   894     1,096     3,307     3,116   Operating income 9,979 5,398 51,309 28,858 Interest expense 520 374 1,557 1,626 Other expense (income), net   (846 )   (547 )   (1,536 )   (2,174 ) Earnings from continuing operations before income taxes 10,305 5,571 51,288 29,406   Income taxes   2,367     927     14,453     6,170   Earnings from continuing operations 7,938 4,644 36,835 23,236 Discontinued operations (net of tax)   -     -     -     588   Net income $ 7,938   $ 4,644   $ 36,835   $ 23,824   Net income per share: Basic: Continuing operations $ 0.36   $ 0.21   $ 1.66   $ 1.04   Discontinued operations $ -   $ -   $ -   $ 0.03   Net income $ 0.36   $ 0.21   $ 1.66   $ 1.07     Diluted: Continuing operations $ 0.36   $ 0.21   $ 1.64   $ 1.03   Discontinued operations $ -   $ -   $ -   $ 0.03   Net income $ 0.36   $ 0.21   $ 1.64   $ 1.06     Weighted average shares and equivalent shares outstanding: Basic   22,108     22,296     22,231     22,305   Diluted   22,254     22,424     22,394     22,434   LITTELFUSE, INC. Consolidated Statements of Cash Flows (in thousands, unaudited)   For the Twelve Months Ended   December 29, 2007 December 30, 2006 Operating activities: Net income $ 36,835 $ 23,824 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 26,196 29,749 Amortization of intangibles 3,307 3,116 Stock-based compensation 4,957 5,187 Gain on sale of Ireland property (8,037 ) - Changes in operating assets and liabilities: Accounts receivable (249 ) 2,970 Inventories 9,112 1,240 Accounts payable and accrued expenses (1,914 ) 19,969 Accrued taxes (2,807 ) (6,491 ) Prepaid expenses and other (7,460 ) 1,351   Net cash provided by operating activities 59,940 80,915   Investing activities: Purchases of property, plant and equipment (40,501 ) (19,613 ) Purchase of businesses, net of cash acquired (4,507 ) (37,841 ) Sale of business and property, plant and equipment 10,200   14,901   Net cash used in investing activities (34,808 ) (42,553 )   Financing activities: Proceeds from debt 89,200 43,273 Payments of debt (101,991 ) (45,626 ) Notes receivable, common stock 6 7 Proceeds from exercise of stock options 6,316 5,734 Purchases of common stock (16,434 ) (10,262 ) Excess tax benefit on share-based compensation 610   468   Net cash used in financing activities (22,293 ) (6,406 )   Effect of exchange rate changes on cash 5,400   2,801   Increase in cash and cash equivalents 8,239 34,757   Cash and cash equivalents at beginning of period 56,704   21,947   Cash and cash equivalents at end of period $ 64,943   $ 56,704   LITTELFUSE, INC. Supplemental Information (in thousands, except per share data, unaudited)   For the Three Months Ended   Dec 29, 2007 Dec 30, 2006   Net sales $ 134,966 $ 127,836   Cost of sales 92,310 89,747 Special items (1) (767 ) (2,714 ) Adjusted cost of sales 91,543 87,033   Adjusted gross profit 43,423 40,803 % of sales 32.2 % 31.9 %   Operating expenses 32,677 32,691 Special items -   -     Adjusted operating expenses 32,677   32,691   % of sales 24.2 % 25.6 %   Adjusted operating income 10,746   8,112   % of sales 8.0 % 6.3 %   Interest/other (income) expense (326 ) (173 ) Special items -   -   Adjusted interest/other (income) expense (326 ) (173 ) Adjusted income before tax 11,072 8,285   Adjusted income tax expense 2,547   2,651   Effective rate 23.0 % 32.0 %   Adjusted net income $ 8,525   $ 5,634     Adjusted earnings per share $ 0.38   $ 0.25     Diluted shares 22,254   22,424   Note: The company believes that adjusted operating income is more indicative of its ongoing operating performance than GAAP operating income since it excludes gains on asset sales and special charges that are related to closure of legacy operations. Special Charges: (1) Special items for the period ended December 29, 2007 primarily relate to impairment charges incurred in China and Germany for manufacturing transfers. Special items for the period ended December 30, 2006 primarily relate to Ireland and Teccor severance and asset write-downs.