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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 March 29, 2003 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 [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes [X] No [ ]
As of March 29, 2003, 21,781,065 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 Operations for the three months ended
March 29, 2003 and March 30, 2002 (unaudited) .....................................................1
Condensed Consolidated Balance Sheets as of March 29, 2003 (unaudited)
and December 28, 2002 .............................................................................2
Condensed Consolidated Statements of Cash Flows for the three months ended
March 29, 2003 and March 30, 2002 (unaudited) .....................................................3
Notes to Condensed Consolidated Financial Statements...............................................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 .......................................11
Item 4. Controls and Procedures...........................................................................12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .................................................................13
LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
For the Three Months Ended
--------------------------
MARCH 29, March 30,
2003 2002
---------- ---------
Net sales ................................................ $ 69,962 65,130
Cost of sales ............................................ 46,884 45,105
-------- --------
Gross profit ............................................. 23,078 20,025
Selling, general and administrative expenses ............. 15,721 14,909
Research and development expenses ........................ 1,934 2,022
Amortization of intangibles .............................. 192 192
Restructuring expense .................................... -- 3,744
-------- --------
Operating income (loss) .................................. 5,231 (842)
Interest expense ......................................... 537 716
Other (income)/expense ................................... (342) (601)
-------- --------
Income (loss) before income taxes ........................ 5,036 (957)
Income taxes (benefit) ................................... 1,813 (345)
-------- --------
Net income (loss) ........................................ $ 3,223 $ (612)
======== ========
Net income (loss) per share:
Basic ................................................ $ 0.15 $ (0.03)
======== ========
Diluted .............................................. $ 0.15 $ (0.03)
======== ========
Weighted average shares and equivalent shares outstanding:
Basic ................................................ 21,771 21,877
======== ========
Diluted .............................................. 21,821 21,877
======== ========
1
LITTELFUSE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
MARCH 29, 2003 December 28, 2002
-------------- -----------------
(unaudited)
ASSETS:
Cash and cash equivalents ................... $ 25,514 $ 27,750
Short-term investments ...................... 10,403 8,806
Receivables ................................. 43,021 40,810
Inventories ................................. 47,057 44,533
Other current assets ........................ 17,569 15,146
-------- --------
Total current assets ........................ $143,564 $137,045
Property, plant, and equipment, net ......... 77,550 81,122
Reorganization value, net ................... 27,665 27,665
Other intangible assets, net ................ 28,078 28,291
Other assets ................................ 3,810 3,355
-------- --------
$280,667 $277,478
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities excluding current portion
of long-term debt ....................... $ 41,058 $ 41,308
Current portion of long-term debt ........... 17,596 18,994
-------- --------
Total current liabilities ................... 58,654 60,302
Long-term debt .............................. 20,219 20,252
Deferred liabilities ........................ 1,747 1,713
Accrued post-retirement benefits ............ 9,722 9,027
Other long-term liabilities ................. 491 473
Shareholders' equity ........................ 189,834 185,711
-------- --------
Shares issued and outstanding
at March 29, 2003: 21,781,065 ........... $280,667 $277,478
======== ========
2
LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, UNAUDITED)
For the Three Months Ended
--------------------------
MARCH 29, March 30,
2003 2002
-------- --------
Operating activities:
Net income (loss) .......................................................... $ 3,223 $ (612)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation .......................................................... 4,342 4,321
Amortization .......................................................... 192 192
Changes in operating assets and liabilities:
Accounts receivable ................................................... (2,335) (4,656)
Inventories ........................................................... (2,497) 1,197
Accounts payable and accrued expenses ................................. 553 2,805
Prepaid expenses and other ............................................ (2,872) (887)
-------- --------
Net cash provided by operating activities .................................. $ 606 $ 2,360
Cash used in investing activities:
Purchases of property, plant, and equipment ........................... (2,627) (1,805)
Sale of property, plant and equipment ................................. 2,213 --
Purchase of marketable securities ..................................... (1,597) --
-------- --------
Net cash used in investing activities ................................. (2,011) (1,805)
Cash provided by (used in) financing activities:
Proceeds from long-term debt .......................................... -- --
Payments of long-term debt ............................................ (1,444) (1,604)
Proceeds from exercise of stock options and warrants .................. 636 687
Purchase of common stock and warrants ................................. -- --
-------- --------
Net cash used in financing activities ................................. (808) (917)
Effect of exchange rate changes on cash .................................... (23) (68)
-------- --------
Decrease in cash and cash equivalents ...................................... (2,236) (430)
Cash and cash equivalents at beginning of period ........................... 27,750 34,527
-------- --------
Cash and cash equivalents at end of period ................................. $ 25,514 $ 34,097
======== ========
3
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 29, 2003
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 March 29, 2003, are not
necessarily indicative of the results that may be expected for the fiscal year
ending January 3, 2004. 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 28, 2002.
2. INVENTORIES
The components of inventories are as follows (in thousands):
March 29, December 28,
2003 2002
--------- ------------
Raw material....... $10,171 $10,084
Work in process.... 12,921 11,615
Finished goods..... 23,965 22,834
------- -------
Total............ $47,057 $44,533
======= =======
3. PER SHARE DATA
Net income (loss) per share amounts for the three months ended March 29, 2003
and March 30, 2002 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):
Three months ended
-----------------------
March 29, March 30,
2003 2002
--------- ---------
Average shares outstanding................ 21,771 21,877
Net effect of dilutive stock options,
4
warrants and restricted shares
- Basic......................... -- --
-------- --------
- Diluted....................... 50 --
-------- --------
Average shares outstanding
- Basic......................... 21,771 21,877
======== ========
- Diluted....................... 21,821 21,877
======== ========
Net income (loss)........................ $ 3,223 $ (612)
======== ========
Net income (loss) per share
- Basic......................... $ 0.15 $ (0.03)
======== ========
- Diluted....................... $ 0.15 $ (0.03)
======== ========
Options to purchase 1,692,105 shares of common stock at exercise prices ranging
from $17.82 to $35.50 and options to purchase 919,580 shares of common stock at
exercise prices ranging from $25.25 to $35.50 were outstanding at March 29, 2003
and March 30, 2002, respectively, but were not included in the computation of
diluted earnings per share because the options' exercise prices were greater
than the average market price of the common shares and, therefore, the effect
would be antidilutive.
4. DERIVATIVES AND HEDGING
On June 11, 2002, the Company entered into cross currency rate swaps, with a
notional amount of $11.6 million, as a cash flow hedge of the variability of Yen
cash flows attributable to the exchange rate risk on forecasted intercompany
sales of inventory to a Japanese subsidiary. The cross currency rate swaps
convert a portion of the Company's US Dollar fixed rate debt to fixed rate
Japanese Yen debt. The swap agreements were accounted for as a cash flow hedge
and reported at fair value. The notional amount outstanding at March 29, 2003
was $9.5 million and the fair value of the outstanding cross currency rate swap
agreements was recognized as a $0.2 million liability and as a charge to
comprehensive loss in the Consolidated Balance Sheet at March 29, 2003.
Derivative financial instruments involve, to a varying degree, elements of
market and credit risk not recognized in the consolidated financial statements.
The market risk associated with these instruments resulting from interest rate
movements is expected to offset the market risk of the underlying transactions
being hedged. The counterparties to the agreements relating to the Company's
cross currency rate instruments consist of major international financial
institutions with high credit ratings. The Company does not believe that there
is significant risk of non-performance by these counterparties because the
Company monitors the credit ratings of such counterparties, and limits the
financial exposure and amount of agreements entered into with any
5
one financial institution. While the notional amount of the derivative financial
instruments provides one measure of the volume of these transactions, they do
not represent the amount of the Company's exposure to credit risk. The amounts
potentially subject to credit risk (arising from the possible inability of
counterparties to meet the terms of their contracts) are generally limited to
the amounts, if any, by which the counterparties' obligations under the
contracts exceed the obligations of the Company to the counterparty.
5. COMPREHENSIVE INCOME
In accordance with Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income," total comprehensive income (loss) for the
three months ended March 29, 2003, and March 30, 2002, was approximately $3.5
million and $(1.0) million, respectively. The adjustment for comprehensive
income consists of deferred gains and losses from foreign currency translation
adjustments and qualified cash flow hedges and unrealized gains and losses on
available-for-sales securities.
6. RECENTLY ISSUED ACCOUNTING STANDARDS
On December 31, 2002, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 148, to provide alternative methods of
transition to the fair value method of accounting for stock-based compensation.
In addition, Statement 148 amends the disclosure provisions of Statement 123 to
require disclosure in the summary of significant accounting policies of the
effects of an entity's accounting policy with respect to stock-based
compensation on reported net income and earnings per share in annual and interim
financial statements. Statement 148 does not amend Statement 123 to require
companies to account for their employee stock-based awards using the fair value
method. However, the disclosure provisions are required for all companies with
stock-based employee compensation, regardless of whether they utilize the fair
value method of accounting described in Statement 123 or the intrinsic method
described in APB Opinion No. 25. The Company has adopted the disclosure
provisions of Statement No. 148 as of December 28, 2002 and determined that the
adoption of the Statement had no significant impact on the Company's financial
position and results of operations. The Company will continue to account for its
stock based compensation according to the provisions of APB Opinion No. 25.
The following table discloses our pro forma net income and diluted net income
per share had the valuation methods under SFAS 123 been used for our stock
option grants. The table also discloses the weighted average assumptions used in
estimating the fair value using the Black-Scholes option pricing model.
(In Thousands, except per share amounts) 2003 Q1 2002 Q1
- ---------------------------------------- --------- -------
Net income as reported........................... $ 3,223 $ (612)
Stock option compensation expense, net of tax.... (262) (250)
Pro forma net income............................. $ 2,961 $ (862)
Basic net income per share
As reported...................................... $ 0.15 $ (0.03)
Pro forma........................................ $ 0.14 $ (0.04)
6
Diluted net income per share
As reported...................................... $ 0.15 $ (0.03)
Pro forma........................................ $ 0.14 $ (0.04)
Risk-free interest rate.......................... 3.72% 5.38%
Expected dividend yield.......................... 0% 0%
Expected stock price volatility.................. 45.7% 39.8%
Expected life of options......................... 8 years 8 years
These pro forma amounts may not be representative of future disclosures because
the estimated fair value of the options is amortized to expense over the vesting
period and additional options may be granted in the future.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Sales for the first quarter of 2003 increased $4.9 million or 7% to $70.0
million, compared to $65.1 million in the first quarter of 2002. On a geographic
basis, sales in the Americas increased 1% in the first quarter of 2003, compared
to the prior year first quarter, Europe sales increased 9% and Asia sales
increased 18%, compared to the first quarter of 2002. First quarter sales were
favorably impacted by foreign currency fluctuations from a weaker dollar. On a
constant currency basis, Europe sales decreased 1% and Asia sales increase 13%
compared to the prior year quarter.
Electronic sales increased $4.0 million or 12% to $37.2 million in the first
quarter of 2003 compared to $33.2 million in the same quarter of last year. The
increase in sales was primarily due to sales of overvoltage products of
approximately $2.0 million from the Semitron acquisition in July 2002 and $1.7
million due to foreign currency fluctuations from a weaker dollar. On a
geographic basis, higher electronic sales in Asia offset weakness in Europe.
Automotive sales increased $0.5 million or 2% to $24.6 million in the first
quarter of 2003 from $24.1 million in the same quarter last year. Excluding $1.4
million, due to foreign currency fluctuations, automotive sales decreased 4%, on
a constant currency basis, compared to the first quarter of 2002. Additionally,
higher year-end inventory levels at two major customers had a negative impact on
automotive sales.
Electrical fuse sales increased $0.4 million or 6% to $8.2 million in the first
quarter of 2003 compared to $7.8 million in the same quarter last year. The
increase in electrical fuse sales was driven by market share gains, as the
electrical fuse market remains weak due to low levels of non-residential
construction and low plant utilization rates.
Gross margin was $23.1 million or 33.0% of sales for the first quarter of 2003,
compared to $20.0 million or 30.7% in the same quarter last year. Gross margin
continues to show gradual improvement due primarily to cost savings resulting
from worldwide manufacturing rationalization and other cost reduction programs
being implemented. These programs include
7
plant closures, movement of manufacturing lines to lower cost regions and
substitution of lower-cost materials.
Total operating expense was $17.8 million for the first quarter of 2003 compared
to $20.9 million for the same quarter in the prior year. Total operating expense
in the first quarter of 2002, included $3.7 million of restructuring expense
related to the worldwide manufacturing rationalization program. Excluding the
restructuring expense, total operating expenses, were $17.8 million or 25.5% of
sales in the first quarter of 2003 compared to $17.1 million or 26.3% of sales
in the same quarter last year. With the increase in sales over the prior year
quarter, operating expenses, excluding restructuring expenses, were lower as a
percentage of sales, but higher in dollars terms due to the effects of the
weaker dollar and the Semitron acquisition in July, 2002.
Operating income was $5.2 million for the first quarter 2003 compared to an
operating loss of $(0.8) million for the same quarter of last year. The
improvement in operating income was due to the higher sales and improved gross
margin described above, as well as $3.7 million of restructuring expenses in the
first quarter of 2002.
Interest expense was $0.5 million in the first quarter of 2003 compared to $0.7
million in the first quarter of last year due to lower average debt levels.
Other income was $0.3 million for the first quarter of 2003 compared to $0.6
million for the prior year quarter. The prior year quarter included a gain of
$0.4 million on the sale of a product line, whereas the first quarter of 2003
included a $0.2 million gain from sale of a Korean manufacturing facility.
Net income before income taxes was $5.0 million for the first quarter 2003
compared to a net loss before income taxes of $(1.0) million for the first
quarter of 2002. The effective tax rate remained unchanged at 36%.
Net income for the first quarter of 2003 was $3.2 million or $0.15 per diluted
share compared to a net loss of $(0.6) million or $(0.03) per diluted share for
the same quarter of 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 2003 fiscal
year.
Littelfuse started the 2003 year with $27.8 million of cash. Net cash provided
by operations was $0.6 million for the first three months of 2003. Cash used in
investing activities included $2.6 million in purchases of property, plant and
equipment and $1.6 million in purchases of marketable securities, offset by $2.2
million from the sale of assets and. Cash used in financing activities included
net payments of long-term debt of $1.4 million and proceeds from warrant and
stock option exercises were $0.6 million. The net cash provided by operations,
less investing and financing activities, resulted in a $2.3 million net decrease
in cash. This left the Company with a cash balance of $25.5 million at March 29,
2003.
The ratio of current assets to current liabilities was 2.4 to 1 at the end of
the first quarter 2003 compared to 2.3 to 1 at year-end 2002 and 2.2 to 1 at the
end of the first quarter 2002. The days sales in receivables was 56 days at the
end of the first quarter 2003 compared to 54 days at year-
8
end 2002, and 62 days at the end of the first quarter 2002. The days inventory
outstanding was approximately 91 days at the end of the first quarter 2003
compared to 88 days at year-end 2002 and 91 days at end of the first quarter
2002.
The Company's net capital expenditures were $0.4 million for the first quarter
2003. Capital expenditures of $2.6 million were offset by asset sales of $2.2
million, primarily the sale of the Korean manufacturing plant. The Company
expects that gross capital expenditures, which are primarily for new machinery,
equipment and plant expansions in China and the Philippines, will be
approximately $13 - $15 million for the full year 2003.
Long-term debt at the end of the first quarter 2003 totaled $37.8 million and
consisted of the following: (1) 6.16% private placement notes totaling $30.0
million, (2) foreign revolver borrowings totaling $7.5 million and (3) notes
payable relating to mortgages totaling $0.3 million. Of this indebtedness, $17.6
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 March 29, 2003. 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 $1.9 million was being used at March 29, 2003.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995
The statements in this section, the letter to shareholders and in the other
sections of this report which are not historical facts contained in this report
are forward-looking statements that 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, pension plan asset returns less than assumed, and other risks
which may be detailed in the Company's Securities and Exchange Commission
filings. Should one or more of these risks or uncertainties materialize or
should the underlying assumptions prove incorrect, actual results and outcomes
may differ materially from those indicated or implied in the forward-looking
statements. This report should be read in conjunction with information provided
in the financial statements appearing in the Company's Annual Report on Form
10-K for the year ended December 28, 2002.
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 electrical 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.
9
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.
Revenues from no single customer amounted to 10% or more of the Company's total
revenues for the quarter ended March 29, 2003.
Information concerning the operations in these geographic segments for the
period ended March 29, 2003 and March 30, 2002, is as follows (in thousands):
REVENUES 2003 Q1 2002 Q1
- -------- ------- -------
The Americas 34,696 34,334
Europe 13,341 12,249
Asia-Pacific 21,925 18,547
Combined Total 69,962 65,130
Corporate -- --
Reconciliation -- --
Consolidated Total 69,962 65,130
INTERSEGMENT REVENUES 2003 Q1 2002 Q1
- --------------------- ------- -------
The Americas 18,064 14,402
Europe 12,018 10,213
Asia-Pacific 5,312 3,061
Combined Total 35,394 27,676
Corporate -- --
Reconciliation (35,394) (27,676)
Consolidated Total -- --
INTEREST EXPENSE 2003 Q1 2002 Q1
- ---------------- ------- -------
The Americas 513 657
Europe 1 17
Asia-Pacific 23 42
Combined Total 537 716
Corporate 0 0
Reconciliation 0 0
Consolidated Total 537 716
DEPRECIATION AND AMORTIZATION 2003 Q1 2002 Q1
- ----------------------------- ------- -------
The Americas 3,240 3,295
Europe 562 627
Asia-Pacific 540 399
Combined Total 4,342 4,321
Corporate 192 192
Reconciliation -- --
10
Consolidated Total 4,534 4,513
Other income (loss) 2003 Q1 2002 Q1
- ------------------- ------- -------
The Americas 85 (11)
Europe 85 644
Asia-Pacific 172 (32)
Combined Total 342 601
Corporate -- --
Reconciliation -- --
Consolidated Total 342 601
Income Tax Expense (Benefit) 2003 Q1 2002 Q1
- ---------------------------- ------- -------
The Americas 713 (753)
Europe (4) 614
Asia-Pacific 1,104 (206)
Combined Total 1,813 (345)
Corporate -- --
Reconciliation -- --
Consolidated Total 1,813 (345)
Net Income (loss) 2003 Q1 2002 Q1
- ----------------- ------- -------
The Americas 1,238 1,152
Europe (194) 1,471
Asia-Pacific 2,371 701
Combined Total 3,415 3,324
Corporate (192) (3,936)
Reconciliation -- --
Consolidated Total 3,223 (612)
2003 Q1 2002 Q1
REVENUES REVENUES
-------- --------
Electronic 37,117 33,216
Automotive 24,624 24,139
Power 8,221 7,775
Consolidated Total 69,962 65,130
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 March 29, 2003, in the form of
senior notes and foreign lines of credit at variable interest rates. Since 79%
of the debt has fixed interest rates, the Company's interest expense is not
materially sensitive to changes in interest rate levels.
11
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, China and the Philippines. Substantially
all sales in Europe are denominated in 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 primarily utilizes
netting and offsets to reduce known foreign currency exposures and, when
appropriate, derivative instruments as hedges of specific foreign currency cash
flows. The Company has entered into cross currency rate swaps with a notional
amount of $11.6 million. The cross currency swaps convert $11.6 million of the
Company's fixed rate 6.16% U.S. Dollar debt to fixed rate 3.13% Japanese Yen
debt. The fair value of the rate swap agreements outstanding at March 29, 2003,
which had a notional amount of $9.5 million, was recognized as a $0.2 million
liability, and is reported in consolidated shareholders' equity as a component
of other comprehensive income.
A risk management policy has been implemented by the Company that describes the
procedures and controls over derivative financial instruments. Under the policy,
the Company does not use derivative financial instruments for trading purposes
and the use of such instruments is subject to the approval of senior officers.
Typically, the use of such derivative instruments is limited to hedging
activities related to specific foreign currency cash flows. The Company's
exposure related to such transactions is, in the aggregate, not material to the
Company's financial position, results of operations and cash flows.
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.
Item 4. Controls and Procedures
Within 90 days prior to the filing of this Quarterly Report, the Chief Executive
Officer and Chief Financial Officer of the Company evaluated the effectiveness
of the disclosure controls and procedures of the Company and concluded that
these disclosure controls and procedures are effective to ensure that material
information relating to the Company and its consolidated subsidiaries has been
made known to them by the employees of the Company and its consolidated
subsidiaries during the period preceding the filing of this Report. There were
no significant changes in the Company's internal controls or in other factors
that could significantly affect these controls subsequent to the last day they
were evaluated by the Company's Chief Executive Officer and Chief Financial
Officer.
12
PART II - OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibit Description
------- -----------
99.1 Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
(b) There were no reports on Form 8-K filed during the quarter
ended March 29, 2003.
13
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 March 29, 2003, to be signed on its behalf by the undersigned thereunto
duly authorized.
LITTELFUSE, INC.
Date: May 12, 2003 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)
14
Littelfuse, Inc.
FORM OF SECTION 302 CERTIFICATION
I, Howard B. Witt, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Littelfuse,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a) Designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of the quarterly report (the "Evaluation
Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Dated: May 12, 2003
/s/ Howard B. Witt
-----------------------------
Howard B. Witt
Chairman, President & CEO
15
Littelfuse, Inc.
FORM OF SECTION 302 CERTIFICATION
I, Philip Franklin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Littelfuse,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a) Designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of the quarterly report (the "Evaluation
Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Dated: May 12, 2003
/s/ Philip Franklin
---------------------------------
Philip Franklin
Vice President, Treasurer & CFO
16