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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________ to__________
Commission File Number: 1-10431
AVX CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 33-0379007
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
801 17th Avenue South
Myrtle Beach, South Carolina 29577
(Address of principal executive offices) (Zip Code)
(843) 448-9411
(Registrant's telephone number, including area code)
_______________________
Securities registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of each exchange on which registered
Common Stock, $.01par value per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
Based on the closing sales price of $20 15/16 on May 21, 1999, the aggregate
market value of the voting stock held by non-affiliates of the registrant as
of that date was $420,948,960.
As of May 21, 1999, the number of shares outstanding of the registrant's
Common Stock, par value $.01 per share, was 86,255,025 shares.
DOCUMENTS INCORPORATED BY REFERENCE
There is incorporated by reference in Part III of this Annual Report on
Form 10-K the information contained in the registrant's proxy statement for
its annual meeting of shareholders to be held on July 15, 1999.
1
TABLE OF CONTENTS
Part I Page
Item 1. Business 3
Item 2. Properties 11
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters 12
Item 6. Selected Financial Data 13
Item 7. Management's Discussion and Analysis of Results of Operations
and Financial Condition 13
Item 7A.Quantitative and Qualitative Disclosures About Market Risk 18
Item 8. Financial Statements and Supplemental Data 20
Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 20
Part III
Item 10.Directors and Executive Officers of the Registrant 20
Item 11.Executive Compensation. 20
Item 12 Security Ownership of Certain Beneficial Owners and Management 20
Item 13.Certain Relationship and Related Transactions 20
Part IV
Item 14.Exhibits, Financial Statements Schedules, and Reports on
Form 8-K 20
Signatures 22
Cautionary Statement Pursuant to Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995
The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements, including the Notes thereto, appearing
elsewhere herein. Statements in this Annual Report on Form 10-K that
reflect projections or expectations of future financial or economic
performance of the Company, and statements of the Company's plans and
objectives for future operations, including those contained in "Business,"
"Management's Discussion and Analysis of Results of Operations and Financial
Condition, " and "Quantitative and Qualitative Disclosure about Market Risk,"
or relating to the Company's outlook for fiscal 2000, overall volume and
pricing trends, cost reduction strategies and their anticipated results, and
expectations for research, capital expenditures and Year 2000 issues, are
"forward-looking" statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act") and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Words
such as "expects," "anticipates," "approximates," "believes," "estimates,"
"intends," and "hopes" and variations of such words and similar expressions
are intended to identify such forward-looking statements. No assurance can
be given that actual results or events will not differ materially from those
projected, estimated, assumed or anticipated in any such forward-looking
statements. Important factors that could result in such differences, in
addition to the other factors noted with such forward-looking statements,
include: general economic conditions in the Company's market, including
inflation recession, interest rates and other economic factors; casualty to
or other disruption of the Company's facilities and equipment; and other
factors that generally affect the business of manufacturing and supplying
electronic components and related products.
2
PART I
Item 1. Business
AVX Corporation (together with its consolidated subsidiaries, "AVX" or the
"Company") is a leading worldwide manufacturer and supplier of a broad line
of passive electronic components and related products. The Company's passive
electronic component sales include ceramic and tantalum capacitors, both in
"leaded" and "surface-mount" versions, film capacitors, ferrites, varistors
and non-linear resistors manufactured in the Company's facilities located
throughout the world and passive components manufactured by Kyocera
Corporation of Japan, a public company, and the Company's majority
stockholder ("Kyocera"). These products are used in virtually all electronic
products to store, filter or regulate electric energy. The Company also
manufactures and sells electronic connectors and distributes and sells
certain connectors manufactured by Kyocera.
The Company's strategy is to focus on:
* customer service, through the breadth and quality of its product
line, as well as its ability to respond in a timely manner to its customers'
component design and delivery requirements;
* low-cost, high-quality manufacturing, through utilization of state-of-
the-art facilities and skilled labor around the world;
* global coordination of marketing and manufacturing, through manufacturing
operations located worldwide and the assignment of global customer account
executives to cover the Company's major multi-national customers; and
* innovative and unique products and manufacturing processes, developed
through emphasis on advanced technologies at the Company's research
laboratories and participation in its customers' long-range product
development programs.
The Company's customers include leading original equipment manufacturers in
such industries as telecommunications, data processing, automotive electronics,
medical devices and instrumentation, industrial instrumentation, military and
aerospace electronic systems, and consumer electronics. Sales are
coordinated by Company-employed direct sales personnel, independent
manufacturers' representatives, and independent electronic component
distributors.
The overall growth in the electronics industry over the past several years
can be particularly attributed to:
* the development of new products and applications in established electronics
markets, such as cellular telephones and personal computers;
* the proliferating use of electronic systems in products in which such use
had been historically absent or limited, such as automobiles, home
appliances, and medical devices; and
* the increase in the number of capacitors required in certain electronic
products with higher levels of complexity and functionality, such as those
that use state-of-the-art microprocessors.
The Company's executive offices are located in Myrtle Beach, South Carolina
and its manufacturing facilities are located in North America, Latin America,
Europe and Asia.
Products
AVX offers an extensive line of passive components, designed to provide its
customers with "one-stop shopping" for substantially all of their passive
component needs. Passive components represented approximately 91% of the
Company's net sales and connectors accounted for approximately 9% of net
sales in fiscal 1999.
3
* Passive Components
AVX manufactures a full line of multi-layered ceramic and solid tantalum
capacitors in many different sizes and configurations. The Company's
strategic focus on the growing use of ceramic and tantalum capacitors is
reflected in its investment during the past three years of approximately $264.4
million, primarily to increase its capacitor manufacturing capacity. The
Company believes that sales of ceramic and tantalum capacitors will continue
to be among the most rapidly growing in the worldwide capacitor market because
technological advances have been constantly expanding the number and type of
applications for these products.
Tantalum and ceramic capacitors are commonly used in conjunction with
integrated circuits and are best suited for applications requiring lower to
medium capacitance values. Generally, ceramic capacitors are more
cost-effective at lower capacitance values, and tantalum capacitors are more
cost-effective at medium capacitance values. Capacitance is the measure of
the capacitor's ability to store energy.
Ceramic and tantalum capacitors are produced by the Company in two basic
versions, leaded and surface-mount. Leaded capacitors are attached to a
circuit board using lead wires while surface-mount capacitors are attached
directly to a circuit board. In recent years there has been significant
industry-wide growth in the use of surface-mount capacitors, and industry
analysts have predicted that this would cause the market for leaded capacitors
to decline significantly. In certain applications, however, leaded capacitors
continue to be the component of choice. The net sales of surface-mount and
leaded ceramic and tantalum capacitors accounted for approximately 53% of
the Company's passive component net sales in fiscal 1999.
The Company also offers a line of advanced passive component products in
order to fill the special needs of its customers. The Company's advanced
products engineers work with certain customers' in-house technical staffs to
design, produce and manufacture special products to meet the specifications of
particular applications. The manufacture of special products permits AVX,
through its research and development activities, to make technological
advances, provide the customer with a design solution to fit its needs,
gain a marketing inroad with the customer with respect to AVX's complete
product line and, in some cases, develop products that can be sold to
additional customers in the future. AVX's advanced products division
presently has significant ongoing projects with a variety of key customers.
Sales of advanced products accounted for approximately 19% of passive
component net sales in fiscal 1999.
With the acquisition of Thomson-CSF's passive component business ("TPC") in
June of 1998, the Company expanded its family of passive components to included
film capacitors, ferrites, high-energy/voltage power capacitors, varistors
and non-linear resistors. These products share the same distribution and
market channels as the Company's historical product base and further enhance
the Company's product offerings. The sale of TPC products accounted for
approximately 8% of passive component net sales in fiscal 1999.
The Company has a non-exclusive license to distribute and sell Kyocera
products everywhere in the world except Japan. The Company's distribution and
sale of certain Kyocera products broaden the Company's range of products and
further facilitate its ability to offer "one-stop shopping" for its customers'
electronic components needs. Kyocera's passive components sold by the Company
include ceramic capacitors, hybrids, oscillators, saw devices, resistor
networks, trimmers, chip resistors, ceramic filters, resonators and piezo
acoustic devices. Sales of these Kyocera products accounted for approximately
20% of passive component net sales in fiscal 1999.
4
* Connectors
The Company manufactures high-quality electronic connectors and inter-connect
systems for use in the computer, telecommunications, automotive electronics,
medical device, military and aerospace industries. The Company's product
lines include a variety of industry-standard connectors as well as products
designed specifically for its customers' unique applications. The Company
produces fine pitch, or small centerline, connectors, many of which have been
selected by leading OEMs for applications in cellular phones, pagers, printers
and notebook computers. The Company also has developed a value-added
business in flat ribbon cable assembly and in backpanel and card edge
assemblies. The Company also sells certain connectors manufactured by Kyocera.
Marketing, Sales and Distribution
The Company places a high priority on solving customers' electronic
component problems and responding to their needs. AVX frequently forms
teams of its marketing, research and development, and manufacturing
personnel to work with customers to design and manufacture products to suit
their specific requirements.
The Company's products are sold primarily to manufacturers and, to a much
lesser extent, to United States and foreign government agencies. The Company
has also qualified products under various military specifications, approved
and monitored by the United States Defense Electronic Supply Center ("DESC"),
and under certain foreign military specifications.
Approximately 42%, 28% and 30% of the Company's net sales for fiscal 1999,
were to customers in North America, Europe, and Asia, respectively. Financial
information relating to geographic operations is set forth in the Company's
consolidated financial statements contained elsewhere here in. The Company's
products are marketed worldwide by the Company's own sales personnel, as well
as through independent manufacturers' representatives who are compensated
solely on a commission basis, and independent electronic component
distributors. The Company has regional sales personnel in strategic locations
to provide technical and sales support for independent manufacturers'
representatives and independent electronic component distributors. The
Company believes that this combination of distribution channels provides a
high level of market penetration and efficient coverage of its customers on
a cost-effective basis.
Among the Company's customers are Motorola Inc.,Lucent Technologies,
American Telephone and Telegraph Corporation, L.M. Ericsson
Telefonaktiebolaget, OY Nokia AB., Northern Telecom, Uniden and Siemens AG in
the telecommunications industry; International Business Machines Corporation,
Compaq Computer Corp., Seagate Technology International, Western Digital
Corp., Acer Incorporated, Sony Corporation, and Samsung Co. Limited in the
data processing industry; and Ford Motor Co., Robert Bosch GmbH, Siemens AG,
General Motors Corp. and Magneti Marelli S.p.A. in the automotive industry.
The Company's largest customers vary on a year-to-year basis, and no customer
has a long-term commitment to purchase products of the Company. No one
customer has accounted for more than 10% of net sales for the past three years.
AVX had a backlog of orders of approximately $228 million at March 31, 1999,
$196 million at March 31, 1998, and $240 million at March 31, 1997. Orders
may be canceled by a customer at any time, subject to cancellation charges
under certain circumstances. Backlog fluctuates year to year in part due to
the changes in customer order patterns and the utilization of capacity in the
industry. Generally, there has been a trend toward more orders being placed by
customers on an "as needed" basis. The backlog outstanding at any time is not
necessarily indicative of the level of business to be expected in any ensuing
period since certain orders are placed and delivered within the same period.
5
Research, Development and Engineering
AVX's emphasis on research and development is reflected by the fact that
most of the Company's manufactured products and manufacturing processes have
been designed and developed by its own engineers and scientists. The Company's
60,000 square-foot facility in Myrtle Beach, South Carolina dedicated
entirely to pure research and development, and provides centralized
coordination of AVX's global research and development efforts. The Company
also maintains significant research and development staffs at its facilities
in Northern Ireland, Israel and England.
The Company's research, development and engineering effort places a priority
on the design and development of innovative products and manufacturing
processes and engineering advances in existing product lines and
manufacturing operations. Other areas of emphasis include material synthesis
and the integration of passive components for applications requiring reduced
size, and lower manufacturing costs associated with board assembly.
Research, development and engineering expenditures were approximately $42
million, $36 million and $33 million during fiscal 1999, 1998 and 1997,
respectively.
AVX owns United States patents as well as corresponding patents in various
other countries, and also has patent applications pending, although patents
are not in the aggregate material to the successful operation of the business.
Public Offering
From January 1990 through August 15, 1995, the Company was wholly-owned by
Kyocera. On August 15, 1995, Kyocera sold 22.9%, or 19,650,000 shares of the
Company's Common Stock, and the Company sold an additional 2,200,000 shares, in
a public offering. Kyocera currently owns approximately 77% of the Company's
outstanding Common Stock.
Transactions with Kyocera
Since January 1990, Kyocera and AVX have engaged in a significant number and
variety of related party transactions, including, without limitation, the
transactions referred to in the Consolidated Financial Statements of the
Company set forth elsewhere in this report. The Company also has established
several ongoing arrangements with Kyocera and has executed several agreements,
the more significant of which are described below. Except for the Buzzer
Assembly Agreement, each of the agreements described below contains provisions
requiring that the terms of any transaction under such agreement be equivalent
to that which an independent unrelated party would agree at arm's-length and
is subject to the approval of the Special Advisory Committee of the AVX Board
of Directors. The Special Advisory Committee is comprised of the independent
directors of the Company and is required to review and approve such agreements
and any other significant transactions between the Company and Kyocera not
covered by such agreements.
Products Supply and Distribution Agreement. Pursuant to the Products Supply
and Distribution Agreement (the "Distribution Agreement") (i) AVX will act as
the non-exclusive distributor of certain Kyocera-manufactured products in
territories outside of Japan, and (ii) Kyocera will act as the non-exclusive
distributor of certain AVX-manufactured products within Japan. The Distribution
Agreement has a term of one year, with automatic one-year renewals, subject
to the right of termination by either party at the end of the then current
term upon at least three months prior written notice.
6
Disclosure and Option to License Agreement. Pursuant to the Disclosure and
Option to License Agreement (the "License Agreement"), the Company and Kyocera
agree to exchange confidential information relating to the development and
manufacture of multi-layered ceramic capacitors and various other ceramic
products. The expiration date of the License Agreement is March 31, 2005.
Materials Supply Agreement. Pursuant to the Materials Supply Agreement (the
"Supply Agreement"), AVX and Kyocera will from time to time supply the other
party with certain raw and semi-processed materials used in the manufacture
of ceramic capacitors and other ceramic products. The expiration date of the
Supply Agreement is March 31, 2000.
Buzzer Assembly Agreement. Pursuant to the Buzzer Assembly Agreement( the
"Buzzer Agreement"), AVX assembles certain electronic components for Kyocera
in the Company's Juarez, Mexico facility. Kyocera pays AVX a fixed cost
mutually agreed upon by the parties for each component assembled plus a profit
margin. The Buzzer Agreement will terminate on March 31, 2000, subject to the
right of either party to terminate upon six months written notice.
Machinery and Equipment Purchase Agreement. Pursuant to the Machinery and
Equipment Purchase Agreement (the "Machinery Purchase Agreement"), AVX and
Kyocera will from time to time design and manufacture for the other party
certain equipment and machinery of a proprietary and confidential nature used
in the manufacture of capacitors and other electrical components. The
agreement will terminate on March 31, 2000.
Raw Materials
Although most materials incorporated in the Company's products are available
from a number of sources, certain materials (particularly palladium and
tantalum) are available only from a relatively limited number of suppliers.
Palladium, a principal raw material used in the manufacture of ceramic
capacitors, is primarily purchased from various companies in the form of
palladium sponge and ingot. The main areas of mining of palladium are in
Russia and South Africa. Palladium is considered a commodity and is subject
to price volatility and has fluctuated in a range of approximately $120 to
$417 per troy ounce during the last three years. The Company is presently
expanding the development and use of base metals, such as nickel, in place of
palladium in certain multilayer ceramic product applications.
Tantalum powder is a principal material used in the manufacture of tantalum
capacitor products. This product is purchased under annual contracts with
suppliers from various parts of the world at prices that are subject to
periodic adjustment. The Company is a major consumer of the world's annual
tantalum production. Although the Company believes that there is currently
no problem with the procurement of tantalum powder and that the tantalum
required by the Company has generally been available in sufficient quantity,
the limited number of tantalum powder suppliers could lead to higher prices.
An inability of the Company to pass on an increase in palladium and tantalum
cost to its customers could have a material adverse effect on the Company's
results of operations.
AVX internally develops and produces a majority of the ceramic raw materials
used in its production processes and is expanding its ceramic production
operations in order to meet increased demand. The Company believes that it
is the only United States capacitor manufacturer that processes its own
ceramic materials.
7
Competition
The Company encounters strong competition in its various product lines from
both domestic and foreign manufacturers. Competitive factors in the markets
of the Company's products include product quality and reliability, breadth of
product line, customer service, technological innovation, timely delivery and
price. The Company believes that it competes favorably on the basis of each
of these factors. The breadth of the Company's product offering enables AVX
to strengthen its market position by providing its customers with one of the
broadest selections of passive electronic components and connector products
available from one source. The Company's major competitors are Murata
Manufacturing Company Ltd, KEMET Corporation, NEC Corporation, TDK Corporation
and Vishay Intertechnology, Inc.
Employees
As of May 31, 1999, AVX employed approximately 15,100 full time employees.
Approximately 3,400 of these employees are employed in the United States. Of
the employees located in the United States, approximately 1,600 are covered
by collective-bargaining arrangements. In addition, some foreign employees
are members of various trade and government-affiliated unions.
Environmental Matters
The Company is subject in the United States to federal, state and local
laws and regulations concerning the environment and to the environmental laws
and regulations of the other countries in which it has manufacturing
facilities. Based on the Company's periodic review of the operating
policies and practices at all its facilities, the Company believes that its
operations currently comply, in all material respects, with all such laws and
regulations.
The Company has been identified by the federal Environmental Protection
Agency ("EPA"), state governmental agencies or other private parties as a
potentially responsible party ("PRP") under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA") or equivalent state or
local laws for clean-up and response costs associated with thirteen sites
at which remediation is required. Because CERCLA has been construed to
authorize joint and several liability, the EPA could seek to recover all
clean-up costs from any one of the PRPs at a site despite the involvement of
other PRPs. At all but one site, financially responsible PRPs other than the
Company also are, or have been, involved in site investigation and clean-up
activities. Therefore, the Company believes that any liability resulting
from these sites will be apportioned between the Company and other PRPs.
To resolve its liability at each of the sites at which it has been named a
PRP, the Company has entered into various administrative orders and consent
decrees (collectively, "Decrees") with federal and state regulatory agencies,
governing the timing and nature of investigation and remediation. The Company
has paid, or reserved for, all amounts required under the terms of these
Decrees corresponding to its apportioned share of the liabilities. Such
reserves for remediation, compliance and legal costs totaled $2.6 million at
March 31, 1999. As is customary, the Decrees at sites where the PRPs are not
themselves implementing the chosen remedy contain provisions allowing the EPA
to reopen the agreement and seek additional amounts from settling PRPs in the
event that certain contingencies occur, such as the discovery of significant
new information about site conditions during clean-up or substantial cost
overruns for the chosen remedy. The existence of such reopener provisions,
combined with the difficulties of reliably estimating clean-up costs and the
joint and several nature of CERCLA liability, makes it difficult to predict
the ultimate liability at any site with certainty. While no assurance can be
given, the Company does not believe that any additional costs to be incurred
by the Company at any of the sites will have a material adverse effect on the
Company's financial condition, results of operations or cash flows.
8
In addition, the Company does not believe that any investigation or clean-up
that may be required at any other locations will have a material adverse
effect on the Company's financial condition, results of operations or cash
flows.
Executive Officers of the Registrant
The following table provides certain information regarding the executive
officers of the Company as of May 21, 1999:
Name Age Position
Benedict P. Rosen 63 Chief Executive Officer
John S. Gilbertson 55 President and Chief Operating Officer
Donald B. Christiansen 60 Senior Vice President of Finance, Chief Financial
Officer and Treasurer
C. Marshall Jackson 50 Senior Vice President of Sales and Marketing
Ernie Chilton 55 Senior Vice President of Tantalum
S. M. Chan 43 Vice President of Sales and Marketing -Asia
Allan Cole 56 Vice President of Sales
Alan Gordon 50 Vice President of Sales and Marketing - Europe
John L. Mann 56 Vice President of Quality
Roberto E. Salazar 44 Vice President of Latin America Operations
Carl L. Eggerding 49 Vice President of Advanced Products and Technology
Center
Kurt P. Cummings 43 Corporate Controller and Secretary
Benedict P. Rosen
Chairman of the Board and Chief Executive Officer effective July 1997. Chief
Executive Officer and President of the Company from April 1993 until July
1997 and a member of the Board since January 1990. Executive Vice President
from February 1985 to March 1993 and employed by the Company since 1972.
Senior Managing and Representative Director of Kyocera since June 1995 and
previously served as a Managing Director of Kyocera from 1992 to June 1995.
Director of Nitzanim-AVX/Kyocera-Venture Capital Fund Ltd., Aerovox
Corporation and the Nordson Corporation.
John S. Gilbertson
President since July 1997. Chief Operating Officer of the Company since
April 1994, and a member of the Board since January 1990. Executive Vice
President from April 1992 to July 1997, Senior Vice President from September
1990 to March 1992 and employed by the Company since 1981. Director of
Kyocera since June 1995.
Donald B. Christiansen
Senior Vice President of Finance, Chief Financial Officer and Treasurer of
the Company since July 1997 and a member of the Board since April 1992. Vice
President of Finance, Chief Financial Officer and Treasurer from April 1994
to July 1997 and Chief Financial Officer from March 1992 to April 1994.
9
C. Marshall Jackson
Senior Vice President of Sales and Marketing since April 1994. From January
1990 until March 1994, Mr. Jackson was Vice President of AVX and has been
employed by the Company since 1969.
Ernie Chilton
Senior Vice President-Tantalum since April 1994. From January 1990 until
February 1993, Mr. Chilton served as Vice President of AVX. Mr. Chilton has
been employed by the Company since 1979.
S. M. Chan
Vice President of Sales and Marketing Asia since April 1994. From April 1992
until March 1994, Mr. Chan served as the Director of Marketing of AVX. Mr.
Chan has been employed by AVX since October 1990.
Allan Cole
Vice President of Sales of the Company since May 1987. Mr. Cole has been
employed by AVX since 1977 serving in several sales management positions,
both domestic and international.
Alan Gordon
Vice President of European Sales and Marketing of Europe since February 1993.
From January 1991 until February 1993, Mr. Gordon served as the Director of
Marketing of AVX. Mr. Gordon has been employed by AVX since 1991.
John L. Mann
Vice President of Quality of the Company since May 1986. From March 1984
until May 1986, Mr. Mann served as the Corporate Director of Quality.
Carl L. Eggerding
Vice President of Advanced Products and Technology Center since July 1997.
Employed by the Company since April 1996. Prior to April 1996, employed by
IBM as Director of Development for Organic Packaging Technology.
Roberto E. Salazar
Vice President of Latin America Operations since July 1997. Served as General
Manager of El Salvador Operations from 1980 until 1993. Division President
for El Salvador and later Chihuahua Mexico operations. Business manager for
the radial conformed coated devices with worldwide responsibility since 1986.
Kurt P. Cummings
Secretary of the Company since July 1997. Corporate Controller of the Company
since June 1992.
10
Item 2. Properties
The Company conducts manufacturing operations throughout the world. All the
Company's operations around the world are certified to the ISO 9000
international quality control standards. ISO 9000 is a comprehensive set of
quality program standards developed by the International Organization for
Standardization. Many facilities have also been qualified under a new set of
stringent QS 9000 quality standards developed by the US automotive industry.
Virtually all manufacturing, research and development and warehousing
facilities could at any time be involved in the manufacturing, sale or
distribution of passive components (PC) and connector products (CP) .A list
of the Company's facilities, their square footage, whether they are leased or
owned and a description of their use follows:
Type
Square of Description
Location Footage Interest of Use
UNITED STATES
Myrtle Beach, SC 546,098 Owned Manufacturing/Research/
Headquarters -PC - CP
Myrtle Beach, SC 69,000 Owned Office/Warehouse - PC, CP
Conway, SC 70,408 Owned Manufacturing - PC
Biddeford, ME 72,000 Owned Manufacturing - PC
Colorado Springs, CO 15,000 Owned Manufacturing - PC
El Paso, TX 24,460 Leased Warehouse - PC - CP
New Orleans, LA 18,840 Leased Warehouse - PC
Olean, NY 107,400 Owned Manufacturing - PC
Raleigh, NC 206,000 Owned Manufacturing/Warehouse - PC - CP
Sun Valley, CA 25,000 Leased Manufacturing - PC
Vancouver, WA 87,048 Leased Manufacturing - PC
Vancouver, WA 10,800 Leased Warehouse/Office - PC
OUTSIDE THE UNITED STATES
Beaune, France 235,210 Leased Manufacturing - PC
Betzdorf, Germany 101,671 Owned Manufacturing - CP
Biggleswade, England 10,000 Leased Manufacturing - CP
Chihuahua, Mexico 393,952 Owned Manufacturing - PC
Coleraine, N. Ireland 167,000 Owned Manufacturing/Research - PC
Hong Kong 30,257 Owned Warehouse - PC - CP
Jerusalem, Israel 98,200 Leased Manufacturing/Research - PC
Juarez, Mexico 84,000 Owned Manufacturing - PC - CP
Lanskroun, Czech
Republic 197,593 Leased Manufacturing - PC
Lanskroun, Czech
Republic 201,586 Owned Manufacturing - PC
Manaus, Brazil 78,500 Owned Manufacturing - PC - CP
Uherske Hradiste,
Czech Republic 148,910 Leased Manufacturing - PC - CP
Larne, N. Ireland 120,000 Owned Manufacturing/Warehouse PC - CP
Newmarket, England 52,000 Leased Manufacturing - CP
Penang, Malaysia 140,825 Owned Manufacturing - PC
Paignton, England 154,909 Owned Manufacturing/Research -PC
Saint-Apollinaire,
France 321,535 Leased Manufacturing - PC
Seurre, France 134,333 Leased Manufacturing - PC
San Salvador,
El Salvador 232,981 Owned Manufacturing - PC
Singapore 49,500 Leased Manufacturing/Warehouse -PC - CP
Taipei, Taiwan 52,500 Owned Manufacturing - PC
In addition to the foregoing, the Company owns and leases a number of sales
offices throughout the world.
11
Management believes that all its property, plant and equipment is in good
operating condition. The Company is constantly upgrading its equipment and
adding capacity through greater use of automation. The Company's capital
expenditures for plant and equipment were $97.7 million for fiscal 1999 and
$100.4 million in fiscal 1998.
Item 3. Legal Proceedings
The Company is a party to various legal proceedings and administrative
actions, all of which are of an ordinary or routine nature incidental to the
operations of the Company. Although it is difficult to predict the outcome
of any legal proceeding, in the opinion of the Company's management, such
proceedings and actions should not, individually or in the aggregate, have a
material adverse effect on the Company's financial condition, results of
operations or cash flows.
Item 4. Submission of Matters to a Vote of Securities Holders
During the fourth quarter of the fiscal year covered by this report, no
matter was submitted to a vote of security holders of the Company.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
Market for Common Stock
The Company's Common Stock is listed on the New York Stock Exchange and
trades under the symbol AVX. The following presents the high and low sale
prices for the Company's Common Stock for each quarter since June 30, 1997 as
reported on the New York Stock Exchange Composite Tape.
1999 1998
High Low High Low
First quarter $21 5/16 $15 5/8 $29 1/8 $19 3/4
Second Quarter 17 15/16 13 5/8 39 5/8 26 5/8
Third Quarter 20 3/4 13 1/2 34 1/2 17 11/16
Fourth Quarter 17 15/16 12 9/16 23 3/8 18 1/4
Holders of Record
At May 21, 1999, there were approximately 13,000 holders of record of the
Company's Common Stock.
Dividends
The Company has declared and paid cash dividends of $.065 per share of
Common Stock for the quarters ended March 31, 1999, December 31, 1998,
September 30, 1998, June 30, 1998 and March 31, 1998. The Company declared
and paid cash dividends for the quarters ended December 31, 1997, September
30, 1997, June 30, 1997 and March 31, 1997 of $.06 per share of Common Stock.
Future dividends, if any, will depend on the Company's future profitability
and anticipated operating cash requirements.
12
Item 6. Selected Financial Data
The following table sets forth selected financial data for the Company for
the five years ended March 31, 1999. The financial data set forth below
should be read in conjunction with the Company's Consolidated Financial
Statements and the Notes thereto included elsewhere in this Form 10-K.
Selected Financial Data
(dollars in thousands, except share data)
Income Statement data:
Year Ended March 31, 1999 1998 1997 1996 1995
Net sales $1,245,473 $1,267,653 $1,126,178 $1,207,761 $988,893
Cost of sales 1,078,064 970,216 851,863 886,494 777,687
Gross profit 167,409 297,437 274,315 321,267 211,206
Selling, general and
administrative expenses 114,104 110,737 102,369 116,586 101,013
Profit from operations 53,305 186,700 171,946 204,681 110,193
Interest income 7,946 11,268 7,536 5,096 2,018
Interest expense (2,228) (1,921) (2,049) (2,352) (2,229)
Other, net 1,719 1,377 1,010 1,655 1,218
Income before income
taxes 60,742 197,424 178,443 209,080 111,200
Provision for income
taxes 19,226 62,773 57,102 71,344 36,329
Net income $41,516 $134,651 $121,341 $137,736 $74,871
Basic and diluted
income per share $0.48 $1.53 $1.38 $1.58 $0.87
Weighted average common
shares outstanding 87,066,028 88,109,643 88,000,000 87,175,000 85,800,000
Cash dividends
declared per common share $0.26 $0.245 $0.225 $0.229 $0.305
As of March 31, 1999 1998 1997 1996 1995
Balance sheet data:
Working capital $471,253 $552,787 $456,672 $357,930 $224,999
Total assets 1,058,040 1,048,653 949,307 867,516 670,697
Long-term debt 12,714 8,376 12,170 8,507 9,544
Stockholders' equity 830,641 850,884 731,969 624,000 456,266
Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition
General
The modest growth in sales from 1997 to 1999 is primarily the result of the
Company increasing its production capacity to meet the unit expansion of the
electronic components industry and the inclusion of approximately $85 million
of net sales in 1999 as a result of the acquisition of TPC, effective
June 1998. This expansion has been due primarily to the growth of computer,
telecommunications and automotive manufacturers' usage of passive electronic
components, as the use of electronics in all walks of life has become more
widespread and sophisticated.
13
During this period of unit growth in the industry, the average selling
prices of electronic components, as well as the selling prices of end use
products which rely on passive components, have declined. In order to lower
the costs of production, the Company continues to increase automation of
its manufacturing processes, substitute base metals for precious metals in
the manufacture of ceramic capacitors and transfer certain labor intensive
manufacturing processes from countries with higher labor costs to lower
labor cost areas (such as the Czech Republic, El Salvador, Malaysia and
Mexico). The Company also places emphasis on the development of specialty
advanced and connector products in order to take advantage of higher margin
sales growth.
The following table sets forth the percentage relationships to net sales of
certain income statement items for the periods presented.
Year Ended March 31, 1999 1998 1997
Net Sales 100.0% 100.0% 100.0%
Cost of sales 86.6 76.5 75.6
Gross profit 13.4 23.5 24.4
Selling, general and
administrative expenses 9.2 8.7 9.1
Profit from operations 4.3 14.7 15.3
Income before income taxes 4.9 15.6 15.8
Provision for income taxes 1.5 5.0 5.0
Net income 3.3 10.6 10.8
Outlook
Precious metal costs coupled with selling price pressures continue to
create difficult market conditions, although the Company has recently
experienced strengthened demand and firmer selling prices. The Company
believes that there are several factors which may lead to improved
profitability during the next year, including: (a) the expanding use of
electronics and the resulting increased demand for passive components and
interconnect products, (b) the Company's ongoing efforts to substitute
base metals for precious metals in the manufacture of ceramic capacitors,
(c) continued improvements in production processes, (d) the growth of
advanced products through innovation and component design in conjunction
with our customers, and (e) expanded product offerings resulting from the
TPC acquisition.
Results of Operations
Year Ended March 31, 1999 Compared to Year Ended March 31, 1998
Net sales for the year ended March 31, 1999 decreased 1.7% to $1,245.5
million from $1,267.7 million for the year ended March 31, 1998. Sales for
the year ended March 31, 1999 include approximately $85 million of sales from
TPC, a passive component manufacturing business acquired on June 2, 1998.
Exclusive of the acquisition of TPC , sales declined 8.5%, although global
unit sales increased year over year. The decrease in revenue was attributable
to a combination of factors, including, the negative impact of the Asian
economic crisis on worldwide demand and prices, a softening of demand in the
electronic components industry as customers reduced their level of inventory
and suppliers reduced their lead times, and the continued trend toward smaller
part sizes, all of which contributed to lower average selling prices. Partially
offsetting these overall effects was a 6.8% increase in sales of advanced
products within the passive components group and an 8% increase in sales of
connector products.
14
Gross profit as a percentage of net sales for the year ended March 31, 1999
decreased 10.1% to $167.4 million (13.4% of net sales) from $297.4 million
(23.5% of net sales) for the year ended March 31, 1998. As indicated above,
overall sales prices in fiscal1999 were lower compared to fiscal 1998. Gross
profit was also negatively impacted by the rising cost of palladium, a
precious metal used in the manufacture of ceramic capacitors. Compared to
fiscal 1998, the average market price for palladium during fiscal 1999
increased 152% to $315 per troy ounce. The overall impact of rising
palladium prices is estimated to have reduced gross profit for fiscal 1999
by $16.7 million. Slightly lower throughput, which negatively impacts cost
absorption, reflects soft demand and the intentional reduction in the
Company's inventory levels, also contributed to the decline in gross profit.
Partially offsetting these factors were continued production efficiencies and
improvements in production processes, as well as the impact of relatively
higher sales of better margin advanced and connector products. Gross profit
was also negatively impacted by costs associated with the integration of the
recently acquired TPC operation into the Company's organization. . The
benefit of cost cutting measures and organizational changes initiated since
the TPC acquisition is expected to be realized during fiscal 2000.
Selling, general and administrative expenses for the year ended March 31,
1999 were $114.1 million (9.2% of net sales), compared with $110.7 million
(8.7% of net sales) in the year ended March 31, 1998. The increase is
primarily attributable to the integration of the TPC operations and the
amortization of goodwill related to the acquisition.
Research, development and engineering expenditures, which encompass the
personnel and related expenses devoted to developing new products, processes
and technical innovations, were $42 million and $36 million in fiscal 1999
and 1998, respectively. These cost are incurred as the Company continues to
enhance existing product lines and develop new products.
As a result of the above factors, profit from operations for the year ended
March 31, 1999, decreased to $53.3 million from $186.7 million for the year
ended March 31, 1998.
For the reasons set forth above and lower interest income on invested cash,
net income in the year ended March 31, 1999 decreased to $41.5 million (3.3%
of net sales) from $134.6 million (10.6% of net sales) for the year ended March
31, 1998.
Year Ended March 31, 1998 Compared to Year Ended March 31, 1997
Net sales for the year ended March 31, 1998 increased 12.6% to $1,267.7
million from $1,126.2 million for the year ended March 31, 1997. The increase
was primarily attributable to the growth in the ceramic and tantalum products,
particularly surface-mount and advanced products. Despite the overall increase
in sales, the Company's results continue to be impacted by several factors
including: (a) the shortening of lead times as customers reduced their level
of inventory and suppliers reduced lead times, (b) a continuation of the trend
toward surface-mount products and smaller part sizes, which traditionally have
lower average selling prices, (c) an overall reduction in selling prices, (d)
the uncertainties surrounding the Asian economic crisis and (e) the
strengthening of the U.S. dollar and certain European currencies, which had a
modest dampening effect on reported U.S. dollar sales.
15
Gross profit as a percentage of net sales for the year ended March 31, 1998
decreased 0.9% to $297.4 million (23.5% of net sales) from $274.3 million
(24.4% of net sales) for the year ended March 31, 1997. Overall sales prices
in the 1998 year were lower compared to the 1997 year. Gross profit was also
negatively impacted by the rising cost of palladium, a principle raw material
used in the manufacture of ceramic capacitors. Continued automation of the
manufacturing processes and higher volumes of through-put in the factories
have helped to reduce manufacturing costs for products sold and have enabled
the Company to maintain strong gross profit levels. As a result of the
Company's strategy to manufacture in the various regions in which it sells
products, the strengthening of the U.S. dollar and certain European currencies
acted to reduce the overall cost of manufacturing when reported in U.S.
dollars.
Selling, general and administrative expenses for the year ended March 31,
1998 were $110.7 million (8.7% of net sales), compared with $102.4 million
(9.1% of net sales) in the year ended March 31, 1997. The increase in
selling, general, and administrative expenses is due to higher research and
development spending, higher sales commissions, and the benefit of adjustments
to environmental remediation accruals in 1997. As a percentage of sales,
such expenses have declined due to the Company's stringent cost control
measures.
Research, development and engineering expenditures, which encompass the
personnel and related expenses devoted to developing new products, processes
and technical innovations, were $36 million and $33 million in fiscal 1998
and 1997, respectively.
As a result of the above factors, profit from operations for the year ended
March 31, 1998 increased 8.6% to $186.7million from $171.9 million for the
year ended March 31, 1997.
For the reasons set forth above, higher interest income on invested cash
and a $3.1 million dividend from a nonmarketable equity investment, net
income in the year ended March 31, 1998 increased 11.0% to $134.6 million
(10.6% of net sales) from $121.3 million (10.8% of net sales) for the year
ended March 31, 1997.
Financial Condition
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 March 31, 1999, the Company had a current ratio of 3.4 to 1, $173.1
million of cash and cash equivalents, $830.6 million of stockholders' equity
and an insignificant amount of long-term debt.
Net cash from operating activities was $184.4 million for the year ended
March 31, 1999, compared to $136.8 million for the year ended March 31, 1998
and $167.9 million for the year ended March 31, 1997. The increase is primarily
a result of an intentional reduction of inventories, partially offset by lower
earnings before depreciation and amortization.
Purchases of property and equipment were $97.7 million in fiscal 1999, $100.4
million in fiscal 1998, and $93.9 million in fiscal 1997. Virtually all
expenditures related to expanding the production capabilities of the ceramic
and tantalum surface-mount, advanced and interconnect product lines. The
carrying value for the Company's equipment reflects the fact that depreciation
expense for machinery and equipment is generally computed using the accelerated
double-declining balance method. The Company continues to add additional
capacity. The Company expects to construct additional facilities and purchase
equipment totaling from $80 million to $150 million in fiscal 2000.
On June 2, 1998, the Company purchased the passive component business of
Thomson-CSF ("TPC") for $74.0 million, including the assumption of debt. The
Company's net cash outlay was $58.0 million
16
During fiscal 1998, the Company invested $5.3 million in a research and
development company (Electro-Chemical Research Ltd. "ECR"). ECR has developed
and patented a technology for high capacity electrical storage devices.
Although the majority of the Company's funding is internally generated,
certain European subsidiaries of the Company have borrowed German deutsche
marks and French francs under various bank agreements. These borrowings were
used for working capital requirements and to repay other outstanding
obligations.
In fiscal 1999, 1998 and 1997, dividends of $22.7 million, $21.1 million
and $19.4 million, respectively, were paid to stockholders.
In accordance with the Company's stock repurchase program, the Company is
authorized to purchase 2.2 million shares. As of March 31, 1999 the Company
had purchased 1,929,100 shares at a cost of $31.7 million during fiscal 1999.
The repurchased shares are held as treasury stock.
The Company has established reserves in the three years ended March 31, 1999
for its projected share of costs associated with the remediation of, and
compliance with, environmental matters at various sites. Adjustments to such
provisions and related expenditures have not been material in any of these
periods.
Based on the financial condition of the Company as of March 31, 1999, the
Company believes that cash expected to be generated from operating activities
will be sufficient to satisfy the Company's anticipated financing needs for
working capital, capital expenditures, environmental clean-up costs, research
and development expenses, stock repurchases and any dividends to be paid for
the foreseeable future.
Year 2000
The Year 2000 issue concerns the inability of information systems to properly
recognize and process date-sensitive information beginning January 1, 2000.
The Company has determined that it will be required to modify or replace some
of its hardware and software so that those systems will properly process
dates beyond December 31, 1999. However, if such modifications and replacements
are not made, or are not completed on a timely basis, the Year 2000 issue
could have a material impact on the financial position, results of operations
or cash flows of the Company.
The Company's procedures to resolve the Year 2000 issue have involved four
phases: assessment, remediation, testing and implementation. The Company has
completed its assessment of all major systems that could be affected by the
Year 2000 issue. The assessment indicated that most of the Company's
significant systems, such as customer order, manufacturing and accounting
systems, could be affected.
For its information technology systems, the Company is currently 100%
complete with the remediation phase for all major systems and expects to
complete software reprogramming and replacement no later than June 1, 1999.
After completing portions of the reprogramming and replacement of software,
the Company performs integrated testing and implementation. The Company has
completed 90% of its testing and has implemented 80% of its remediated
systems. The testing and remediation of all major systems is expected to be
completed by the quarter ending June 1999 and other systems should be completed
by September 1999.
17
For operating equipment systems, the Company is currently 95% complete with
the remediation phase of the resolution process. The Company has completed
85% of its testing and has implemented 75% of its remediated equipment systems.
The testing and remediation of all critical equipment systems is expected to
be completed by the quarter ending June 1999 and any other systems should be
completed by September 1999.
The Company has queried its important raw material and service suppliers
relative to their resolution of the Year 2000 issue. The Company is not aware
of any supplier problems that would materially impact results of operations,
liquidity or capital resources. The Company has no means of ensuring that
these entities will be Year 2000 ready. If important suppliers or customers
are unable to complete their Year 2000 resolution, it could materially impact
the Company.
The Company does not yet have a comprehensive contingency plan with respect
to the Year 2000 issue, but intends to establish such a plan in the near
future as part of its ongoing Year 2000 effort.
The Company is using both internal and external resources to reprogram, or
replace, test and implement, its software and operating equipment systems.
The total cost of the Year 2000 project is estimated at $5.7 million and is
being funded through operating cash flows. To date, the Company has incurred
approximately $4.4 million ($2.0 million of which has been expensed and $2.4
million capitalized for new software and equipment), related to all phases of
the Year 2000 project.
Of the remaining estimated project costs, approximately $0.5 million is
allocated to the purchase of new software and equipment, which will be
capitalized. The remaining $0.8 million relates to anticipated remediation,
testing and implementation of hardware and software and will be expensed as
incurred.
The Company's plan to complete the Year 2000 project discussed above is
based on management's best estimates, which were derived utilizing numerous
assumptions of future events, including the continued availability of certain
resources and other factors. Estimates concerning the status of completion
and expected completion dates are based on costs incurred to date compared to
total expected costs. However, there can be no guarantee that these estimates
will be achieved and actual results could differ materially from those
estimates.
New Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("SFAS No. 133"). This statement establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. The Company will be required to adopt SFAS No. 133 for the
quarter ended June 30, 2000. Currently, the Company is evaluating this
standard and ithe impact it will have on the Company's consolidated financial
statements
Item 7A. Quantitative and Qualitative Disclosure about Market Risk
18
Foreign Currency
The Company's European sales, which account for approximately one-third of
Company's revenues, generally are denominated in local currencies whereas
those in North America and Asia generally are denominated in U.S. dollars.
Also, certain manufacturing and operating costs denominated in local currencies
are incurred in Europe, Asia, Mexico and Latin America. As a result,
fluctuations in currency exchange rates affect the Company's operating
results and cash flow. In order to minimize the effect of movements in
currency exchange rates, the Company periodically enters into forward exchange
contracts to hedge external and intercompany foreign currency transactions.
The Company does not hold or issue derivative financial instruments for
speculative purposes. Currency exchange gains and losses have been immaterial
during the three years ended March 31, 1999.
Assuming a 10% hypothetical adverse change in all foreign currencies, with
the resulting functional currency gains and losses translated into U.S.
dollars at the spot rate, the resulting net loss in fair value of exchange
contracts held would not be material to the results, financial position or
cash flows of the Company.
Euro
On January 1, 1999 certain member countries of the European Union established
fixed conversion rates between their existing currencies and the European
Union's common currency, the Euro. The Company has successfully completed all
the necessary enhancements to its sales order, banking arrangements and
operational procedures to ensure Euro compliance. The Company is able to
process orders, invoice customers and accept payment in Euros throughout
Europe. The introduction of the Euro has not had any material adverse impact
upon the Company. The Company continues to monitor the risk of price erosion
which could result from increased price transparency among countries using the
Euro.
Precious Metals
The Company is exposed to risk from fluctuations in prices for commodities
used to manufacture its products, primarily palladium and tantalum.
Palladium, a precious metal used in the manufacture of multilayer ceramic
capacitors, is primarily purchased from various companies in the form of
palladium sponge and ingot. The main areas of mining of palladium are in
Russia and South Africa. Palladium is considered a commodity and is subject
to price volatility and has fluctuated in a range of approximately $120 to $417
per troy ounce during the past three years. The Company has managed, through
the use of forward purchase agreements and strategic spot buying, to purchase
palladium at below average market cost each year. The Company is aggressively
stepping up its efforts to substitute base metals for precious metals in the
manufacture of ceramic capacitors. If the conversion to base metals occurs as
planned, the Company anticipates that, by the end of fiscal 2000, it will
have reduced its annual usage of palladium by 80%.
Assuming a 10% hypothetical increase in the average cost of palladium
purchased by the Company, gross profit for the year ended March 31, 1999
would have been negatively impacted by approximately $9.6 million.
Tantalum powder is a principal material used in the manufacture of solid
tantalum capacitors. This product is purchased under annual contracts through
suppliers from various parts of the world at prices that are subject to
periodic adjustment. The Company is a major consumer of the world's annual
tantalum production. Although the Company believes that there is currently
no problem with the procurement of tantalum powder and that the tantalum
required by the Company has generally been available in sufficient quantity
to meet requirements, the limited number of tantalum powder suppliers could
lead to higher prices.
Assuming a 10% hypothetical increase in the average cost of tantalum
purchased by the Company, gross profit for the year ended March 31, 1999
would have been negatively impacted by approximately $6.6 million.
19
Interest Rate Exposure
Interest rate exposure is centrally managed by offsetting surplus cash and
deposits against borrowings on a currency-by-currency basis. The Company
maintains an insignificant amount of foreign currency denominated long-term
and short-term debt. The term of these borrowings range from 3 months to 36
months, with both fixed and variable interest rates. A 10% adverse movement
in interest rates would not have a material impact on the Company's operating
results, financial position or cash flows.
Item 8. Financial Statements and Supplementary Data
The following Consolidated Financial Statements of the Company and its
subsidiaries, together with the Report of Independent Accountants thereon,
are presented beginning on page 44 of this report:
Page
Consolidated Balance Sheets, March 31, 1999 and 1998 23
Consolidated Statements of Income, Years Ended March 31, 1999, 1998 and 1997 24
Consolidated Statements of Stockholders' Equity, Years Ended March 31,
1999, 1998 and 1997 25
Consolidated Statements of Cash Flows, Years Ended March 31, 1999, 1998
and 1997 26
Notes to Consolidated Financial Statements 27
Report of Independent Accountants 44
All financial statement schedules are omitted because of the absence of the
conditions under which they are required or because the information required
is shown in the consolidated financial statements or notes thereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Information with respect to Items 10, 11, 12 and 13 on Form 10-K is set
forth in the Company's definitive proxy statement filed with the Security and
Exchange Commission in June of 1999, which information is incorporated herein
by reference.
PART IV
Item 14. Exhibits, Financial Statements and Financial Statement Schedules and
Reports on Form 8-K
(a) Financial Statements and Financial Statement Schedules - See Index to
Consolidated Financial Statements at Item 8 of this report.
(b) Reports on Form 8-K
None for the quarter ended March 31,1999
20
(c) Exhibits:
Certain of the exhibits to this report, indicated by an asterisk, are
hereby incorporated by reference to other documents on file with the
Securities and Exchange Commission with which they are physically filed,
to be a part hereof as of their respective dates.
*3.1 Restated Certificate of Incorporation (incorporated by reference
to Exhibit 3.1 to Registration statement on Form S-1 (File No.
33-94310 of the Company (the "Form S-1"))).
3.2 By-laws of the Company as amended.
*10.1 Amended AVX Corporation 1995 Stock Option Plan (incorporated by
reference to Exhibit 4.1 to the Registration Statement on Form S-8
(File No. 333-37201) of the Company).
10.2 Non-Employee Directors Stock Option Plan as amended.
*10.3 Form of Employment Agreement between AVX Corporation and Benedict
P. Rosen (incorporated by reference to Exhibit 10.3 to the Form S-1).
*10.4 Products Supply and Distribution Agreement by and between Kyocera
Corporation and AVX Corporation (incorporated by reference to Exhibit
10.4 to the Form S-1).
*10.5 Disclosure and Option to License Agreement by and between Kyocera
Corporation and AVX Corporation (incorporated by reference to Exhibit
10.5 to the Form S-1).
*10.6 Management Incentive Plan (incorporated by reference to Exhibit
10.6
to the Form S-1).
10.7 AVX Nonqualified Supplemental Retirement Plan (formerly known as
Deferred Compensation Plan).
*10.8 Directors Deferred Compensation Plan (incorporated by reference to
Exhibit 10.8 to the Annual Report on Form 10-K of the Company for the
year ended March 31, 1997 (the "1997 Form 10-K")).
*10.9 AVX Corporation SERP (incorporated by reference to Exhibit 10.9 To
the Annual Report on Form 10-K of the Company for the year ended March
31, 1998 (the "1998 Form 10-K")).
21.1 Subsidiaries of the Registrant.
23.1 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney.
27.1 Financial Data Schedule.
21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
AVX Corporation
by: /s/ Donald B. Christiansen
- ---------------------------------
DONALD B. CHRISTIANSEN
Senior Vice President of Finance, Chief Financial Officer and Treasurer
Dated: June 10, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
*
- -------------
Kazuo Inamori Chairman Emeritus of the Board June 10,1999
*
- -------------
Benedict P. Rosen Chairman of the Board and Chief
Executive Officer June 10,1999
*
- -------------
John S. Gilbertson President and Chief Operating
Officer and Director June 10,1999
*
- -------------
Donald B. Christiansen Senior Vice President of Finance,
Chief Financial Officer and Treasurer
and Director June 10,1999
*
- -------------
Marshall D. Butler Director June 10,1999
*
- ------------
Carroll A. Campbell Director June 10,1999
*
- ------------
Richard Tressler Director June 10,1999
*
- ------------
Kensuke Itoh Director June 10,1999
*
- ------------
Rodney N. Lanthorne Director June 10,1999
*
- ------------
Michihisa Yamamoto Director June 10,1999
*
- ------------
Masahiro Umemura Director June 10,1999
*
- ------------
Masahiro Yamamoto Director June 10,1999
*
- ------------
Yuzo Yamamura Director June 10,1999
* by: /s/ Donald B. Christiansen
DONALD B. CHRISTIANSEN, Attorney-in-Fact for each of
the persons indicated