LITTELFUSE INC /DE - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - LITTELFUSE INC /DE	lfus20160201_8k.htm

Exhibit 99.1


NEWS RELEASE

CONTACT: Phil Franklin,

Executive Vice President and CFO (773) 628-0810

LITTELFUSE REPORTS FOURTH QUARTER AND FULL YEAR RESULTS

Fourth Quarter Sales and Earnings at the High End of Guidance

CHICAGO, February 2, 2016 – Littelfuse, Inc. (NASDAQ:LFUS) today reported financial results for the fourth quarter and full year ended January 2, 2016.

Fourth Quarter Highlights

	●	Sales for the fourth quarter of 2015 were $220.0 million, which was 6% growth over the prior-year quarter. Excluding currency effects, sales increased 10% compared to the prior-year quarter due to continued strong growth in the automotive segment and continued improvement in the electrical segment.

	●	GAAP earnings for the fourth quarter of 2015 were $1.00 per diluted share. This included $5.7 million of special charges primarily related to transaction and integration planning costs for the pending acquisition of TE Connectivity’s circuit protection devices (“CPD”) business and the transfer of reed switch production to the Philippines. Excluding these special items, adjusted earnings for the fourth quarter of 2015 were $1.21 per diluted share, representing a 19% increase over the prior-year quarter.

	●	The fourth quarter of 2015 included an extra week (14 weeks rather than 13). The impact of the extra week was approximately $9 million in revenue and $0.02 cents per diluted share, which was consistent with the fourth quarter guidance.

	●	Highlights by segment included:

	o	Electronics sales grew 2% year over year (4% excluding currency effects) as growth in passive and semiconductor products was partially offset by lower sensor sales due to capacity constraints related to the Philippines transfer.

	o	Automotive sales increased 10% year over year (16% excluding currency effects) reflecting strong growth across all three geographies.

	o	Electrical sales increased 12% year over year (17% excluding currency effects) due to strong growth in the core fuse business and continued recovery in custom products.

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	●	The electronics book-to-bill ratio for the fourth quarter of 2015 was 1.00.

	●	As announced in November, the company signed a definitive agreement to acquire the CPD business of TE Connectivity and is on track to close the acquisition by the end of the first quarter of 2016.

	Full Year 2015 Highlights

	●	Sales for full year of 2015 were $867.9 million, which was 2% growth over the prior year and a 6% increase excluding currency effects.

	●	GAAP earnings for the full year 2015 were $3.63 per diluted share. Adjusted earnings per diluted share were $5.05, which was 6% growth over the prior year.

	●	Cash provided by operating activities was $166 million for the full year 2015 compared to $153 million in the prior year. Capital expenditures were $44 million for the year compared to $32 million in 2014. The increased capital spending in 2015 was primarily due to capacity expansion for new automotive programs and the Philippines manufacturing transfer.

“This was without question a challenging year, with substantial macroeconomic headwinds and volatility in currency and commodity markets,” said Gordon Hunter, chief executive officer. "Despite these challenges, our teams executed well across many fronts and delivered record performance for sales, adjusted earnings and cash flow. This strong 2015 performance, coupled with the pending acquisition of the CPD business, puts us on track with the five-year growth target we set at the end of 2012.”

Outlook

All comments below relate to the company’s existing businesses and do not include any effects from the pending CPD acquisition.

“We head into 2016 with good momentum and the groundwork laid for substantial margin improvement,” said Phil Franklin, chief financial officer. “Despite concerns about the global economy and weakness in some of our end markets, we believe we can grow revenue in the low to mid single digits in 2016. Assuming modest top-line growth, we believe we can expand our operating margin by approximately 150 basis points compared to 2015 as we benefit from completion of our footprint consolidation projects, further progress on automotive sensor profitability initiatives and continued gains in manufacturing performance.”

●

Sales for the first quarter of 2016 are expected to be in the range of $213 to $223 million, which represents 4% revenue growth over the prior quarter at the midpoint (6% growth excluding currency effects).

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	●	Earnings for the first quarter of 2016 are expected to be in the range of $1.21 to $1.35 per diluted share, excluding special items.

	●	The 2016 full year tax rate is expected to be approximately 22%.

	●	Capital expenditures for the full year 2016 are expected to be in the range of $40 to $45 million.

Dividend

The company will pay a cash dividend of $0.29 per common share on March 10, 2016 to shareholders of record at the close of business on February 25, 2016.

Conference Call and Webcast Information

Littelfuse will host a conference call today, Tuesday, February 2, 2016, at 10:00 a.m. Central / 11:00 a.m. Eastern time to discuss the fourth quarter and full year 2015 results. The call will be broadcast live over the Internet and can be accessed through the company’s website: www.littelfuse.com. Listeners should go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call will be available for replay through March 31, 2016 on the company’s website.

About Littelfuse

Founded in 1927, Littelfuse is the world leader in circuit protection with growing global platforms in power control and sensing. The company serves customers in the electronics, automotive and industrial markets with technologies including fuses, semiconductors, polymers, ceramics, relays and sensors. Littelfuse has over 8,000 employees in more than 35 locations throughout the Americas, Europe and Asia. For more information, please visit the Littelfuse website: www.littelfuse.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995.

The statements in this press release that are not historical facts are intended to constitute “forward-looking statements” entitled to the safe-harbor provisions of the PSLRA. These statements may involve risks and uncertainties, including, but not limited to, risks relating to product demand and market acceptance, economic conditions, the impact of competitive products and pricing, product quality problems or product recalls, capacity and supply difficulties or constraints, coal mining exposures reserves, failure of an indemnification for environmental liability, exchange rate fluctuations, commodity price fluctuations, the effect of the company’s accounting policies, labor disputes, restructuring costs in excess of expectations, pension plan asset returns less than assumed, integration of acquisitions and other risks which may be detailed in the company’s other 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 27, 2014. For a further discussion of the risk factors of the company, please see Item 1A. “Risk Factors” to the company’s Annual Report on Form 10-K for the year ended December 27, 2014.

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LITTELFUSE, INC.

Net Sales and Operating Income by Business Segment

(In thousands of USD, unaudited)

	Fourth Quarter							Year-to-Date
	2015		2014		% Change			2015		2014		% Change

Net Sales
Electronics	$	97,948	$	96,339		2	%	$	405,497	$	410,065		(1%	)
Automotive		88,493		80,332		10	%		339,957		325,415		4	%
Industrial		33,579		29,949		12	%		122,410		116,515		5	%

Total net sales	$	220,020	$	206,620		6	%	$	867,864	$	851,995		2	%

	Fourth Quarter									Year-to-Date
	2015			2014			% Change			2015			2014			% Change

Operating Income/(Expense)
Electronics	$	16,439		$	16,176			2	%	$	78,194		$	86,981			(10%	)
Automotive		13,963			9,928			41	%		53,086			45,086			18	%
Industrial		4,874			3,133			56	%		18,094			10,674			70	%
Other ⁽¹⁾		(5,422	)		(2,846	)		91	%		(45,217	)		(8,911	)		407	%

Total operating income	$	29,854		$	26,391			13	%	$	104,157		$	133,830			(22%	)

Interest expense		1,070			1,167						4,091			4,903
Foreign exchange (gain) loss		259			1,903						(1,465	)		3,925
Other (income) expense, net		(1,659	)		(1,751	)					(5,417	)		(6,644	)

Income before taxes	$	30,184		$	25,072			20	%	$	106,948		$	131,646			(19%	)

(1) "Other" includes special items such as acquisition-related costs, restructuring costs, gains and losses on asset sales and the U.S. Pension wind-up. (See Supplemental Financial Information for details on page 8.)

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LITTELFUSE, INC.

Condensed Consolidated Balance Sheets

(In thousands of USD, except share amounts)

	January 2, 2016			December 27, 2014
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	328,786		$	297,571
Short-term investments		4,179			4,302
Accounts receivable, less allowances		142,882			135,356
Inventories		98,629			97,391
Prepaid expenses and other current assets		8,959			13,904
Assets held for sale		-			5,500
Total current assets		583,435			554,024
Property, plant and equipment:
Land		5,236			5,697
Buildings		71,383			64,609
Equipment		382,429			370,179
		459,048			440,485
Accumulated depreciation		(296,480	)		(281,845	)
Net property, plant and equipment		162,568			158,640
Intangible assets, net of amortization:
Patents, licenses and software		20,221			23,640
Distribution network		16,490			19,428
Customer lists, trademarks and tradenames		54,912			60,605
Goodwill		189,767			196,256
		281,390			299,929
Investments		15,197			12,056
Deferred income taxes		8,333			22,874
Other assets		14,058			23,303
Total assets	$	1,064,981		$	1,070,826

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	51,658		$	50,793
Accrued payroll		32,611			30,511
Accrued expenses		24,145			13,059
Accrued severance		3,798			790
Accrued income taxes		10,621			9,045
Current portion of accrued post-retirement benefits		-			11,768
Current portion of long-term debt		87,000			88,500
Total current liabilities		209,833			204,466
Long-term debt, less current portion		84,474			106,658
Deferred income taxes		8,014			11,076
Accrued post-retirement benefits		5,653			5,147
Other long-term liabilities		12,809			15,814
Total equity		744,198			727,665
Total liabilities and equity	$	1,064,981		$	1,070,826

Common shares issued and outstanding of 22,420,785 and 22,585,529 at January 2, 2016 and December 27, 2014, respectively.

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LITTELFUSE, INC.

Consolidated Statements of Comprehensive Income

(In thousands of USD, except per share data)

	For the Three Months Ended						For the Twelve Months Ended

	January 2, 2016			December 27, 2014			January 2, 2016			December 27, 2014
	(Unaudited)						(Unaudited)
Net sales	$	220,020		$	206,620		$	867,864		$	851,995

Cost of sales		137,314			131,061			537,365			527,567

Gross profit		82,706			75,559			330,499			324,428


Selling, general and administrative expenses		41,595			37,829			153,714			146,975
Research and development expenses		8,578			8,289			30,802			31,122
Pension settlement (income) expense		(266	)		-			29,928			-
Amortization of intangibles		2,945			3,050			11,898			12,501
		52,852			49,168			226,342			190,598

Operating income		29,854			26,391			104,157			133,830

Interest expense		1,070			1,167			4,091			4,903
Foreign exchange loss (gain)		259			1,903			(1,465	)		3,925
Other (income) expense, net		(1,659	)		(1,751	)		(5,417	)		(6,644	)

Income before income taxes		30,184			25,072			106,948			131,646
Income taxes		7,721			5,561			24,482			32,228

Net income	$	22,463		$	19,511		$	82,466		$	99,418

Net income per share:
Basic	$	1.00		$	0.86		$	3.65		$	4.41
Diluted	$	1.00		$	0.86		$	3.63		$	4.37

Weighted average shares and equivalent shares outstanding:
Basic		22,403			22,563			22,565			22,543
Diluted		22,564			22,729			22,719			22,727

Comprehensive income	$	12,025		$	19,511		$	57,921		$	57,875

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LITTELFUSE, INC.

Consolidated Statements of Cash Flows

(In thousands of USD)

	For the Twelve Months Ended
	January 2, 2016			December 27, 2014
	(Unaudited)
OPERATING ACTIVITIES:
Net income	$	82,466		$	99,418
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		29,701			29,374
Amortization of intangibles		11,977			12,501
Impairment of assets		-			293
Provision for bad debts		164			130
Non-cash inventory charge⁽¹⁾		-			2,769
Stock-based compensation		10,266			9,069
Excess tax benefit on stock-based compensation		(1,891	)		(2,843	)
Net loss on pension settlement, net of tax		19,308			-
Loss on sale of assets		1,253			1,042
Deferred income taxes		11,479			(4,488	)
Changes in operating assets and liabilities:
Accounts receivable		(14,377	)		(13,062	)
Inventories		(3,577	)		(2,258	)
Accounts payable		2,573			17,281
Accrued expenses (including post retirement)		6,482			(1,577	)
Accrued payroll and severance		5,883			2,360
Accrued taxes		(1,043	)		(549	)
Prepaid expenses and other		5,162			3,681
Net cash provided by operating activities		165,826			153,141

INVESTING ACTIVITIES:
Acquisition of businesses, net of cash acquired		(4,558	)		(56,368	)
Purchase of short-term investments		-			(4,331	)
Purchase of investments		(3,500	)		-
Proceeds from maturities of short-term investments		-			6,770
Decrease (increase) in entrusted loan receivable		7,811			(17,908	)
Purchases of property, plant and equipment		(44,019	)		(32,281	)
Proceeds from sale of assets		102			125
Net cash used in investing activities		(44,164	)		(103,993	)

FINANCING ACTIVITIES:
Proceeds from debt		49,000			97,500
Payments of term debt		(8,750	)		(5,000	)
Payments of revolving credit facility		(55,500	)		(135,000	)
Proceeds from entrusted loan		-			17,908
Payments of entrusted loan		(7,811	)		-
Proceeds from exercise of stock options		9,150			14,061
Debt issuance costs paid		(42	)		(107	)
Cash dividends paid		(24,341	)		(21,175	)
Purchases of common stock		(31,252	)		(14,283	)
Excess tax benefit on share-based compensation		1,891			2,843
Net cash used in financing activities		(67,655	)		(43,253	)

Effect of exchange rate changes on cash and cash equivalents		(22,792	)		(13,516	)

Increase (decrease) in cash and cash equivalents		31,215			(7,621	)
Cash and cash equivalents at beginning of period		297,571			305,192
Cash and cash equivalents at end of period	$	328,786		$	297,571

(1) Purchase accounting adjustment related to acquisitions.

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LITTELFUSE, INC.

Supplemental Financial Information

(in millions of USD except per share amounts)

GAAP EPS Reconciliation
	Q1-15			Q2-15			Q3-15			Q4-15			YTD-15			Q1-14			Q2-14		Q3-14			Q4-14		YTD-14
GAAP diluted EPS	$	0.88		$	1.26		$	0.50		$	1.00		$	3.63		$	1.12		$	1.08	$	1.32		$	0.86	$	4.37
EPS impact of special items (below)		0.20			0.07			0.93			0.21			1.42			0.04			0.18		0.03			0.16		0.41
Adjusted diluted EPS	$	1.08		$	1.33		$	1.43		$	1.21		$	5.05		$	1.16		$	1.26	$	1.35		$	1.02	$	4.78
Year-over-year adjusted EPS growth		(7%	)		6	%		6	%		19	%		6	%

Special Items (income)/expense

Reed switch manufacturing transfer costs	$	1.0		$	0.9		$	1.2		$	2.1		$	5.2		$	-		$	-	$	-		$	-	$	-
Restructuring		1.2			1.7			0.9			(0.1	)		3.6			-			2.0		1.1			2.2		5.3
Impairment charges		-			-			-			-			-			-			-		-			0.3		0.3
Acquisition expenses		0.2			0.2			0.3			4.0			4.6			-			0.2		-			0.3		0.5
U.S. pension wind-up and settlement costs		0.7			0.7			30.8			(0.3	)		31.9			-			-		-			-		-
Purchase accounting adjustment		-			-			-			-			-			1.4			1.4		-			-		2.8
Other		-			-			0.1			(0.3	)		(0.2	)		-			-		-			-		-
Adjustment to operating income		3.0			3.4			33.4			5.4			45.2			1.4			3.5		1.1			2.8		8.9
Foreign exchange loss/(gain)		3.1			(1.3	)		(3.5	)		0.3			(1.5	)		(0.3	)		2.4		(0.1	)		1.9		3.9
Adjustment to pre-tax income	$	6.1		$	2.1		$	29.8		$	5.7		$	43.8		$	1.2		$	6.0	$	1.0		$	4.7	$	12.8

Total EPS impact	$	0.20		$	0.07		$	0.93		$	0.21		$	1.42		$	0.04		$	0.18	$	0.03		$	0.16	$	0.41

Operating margin / EBITDA reconciliation
	Q1-15			Q2-15			Q3-15			Q4-14			YTD-15			Q1-14			Q2-14			Q3-14			Q4-14			YTD-14

Net sales	$	210.3		$	222.0		$	215.5		$	220.0		$	867.9		$	206.9		$	220.9		$	217.6		$	206.6		$	852.0

GAAP operating income	$	29.5		$	36.2		$	8.6		$	29.9		$	104.2		$	33.6		$	33.7		$	40.1		$	26.4		$	133.8
GAAP operating margin		14.0	%		16.3	%		4.0	%		13.6	%		12.0	%		16.2	%		15.3	%		18.4	%		12.8	%		15.7	%

Add back special operating items		3.0			3.4			33.4			5.4			45.2			1.4			3.5			1.1			2.8			8.9
Adjusted operating income	$	32.5		$	39.6		$	42.0		$	35.3		$	149.4		$	35.0		$	37.2		$	41.3		$	29.2		$	142.7
Adjusted operating margin		15.5	%		17.8	%		19.5	%		16.0	%		17.2	%		16.9	%		16.8	%		19.0	%		14.1	%		16.7	%

Add back amortization		3.1			2.9			3.0			3.0			11.9			3.2			3.1			3.2			3.1			12.6
Add back depreciation		7.4			7.4			7.4			7.5			29.7			7.0			7.5			7.3			7.6			29.3
Adjusted EBITDA	$	43.0		$	49.9		$	52.4		$	45.8		$	191.0		$	45.2		$	47.8		$	51.8		$	39.9		$	184.6
Adjusted EBITDA margin		20.4	%		22.5	%		24.3	%		20.8	%		22.0	%		21.8	%		21.6	%		23.8	%		19.3	%		21.7	%
Year-over-year adjusted EBITDA growth		(5%	)		4	%		1	%		15	%		3	%

Note: Totals will not always foot due to rounding

LITTELFUSE INC /DE - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 2, 2016

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