Littelfuse Reports Record Sales and Earnings

CHICAGO--(BUSINESS WIRE)--Littelfuse, Inc. (NASDAQ:LFUS) today reported sales and earnings for the second quarter of 2011.

Second Quarter Highlights

• Sales for the second quarter of 2011 were $176.6 million, a 12% increase compared to the second quarter of 2010.
  • Electronics sales increased 13% sequentially but declined 1% year over year as channel inventory replenishment bolstered sales in the prior year.
  • The book-to-bill ratio for electronics for the second quarter of 2011 was 0.98.
  • Automotive sales increased 46% year over year. Cole Hersee (acquired in December 2010) contributed $11.2 million for the quarter. Excluding Cole Hersee, automotive sales increased 13% year over year due to improved demand in all geographies and the favorable effects of a stronger euro.
  • Electrical sales increased 16% year over year due to continued growth in protection relays and custom mining products as well as improved demand for industrial fuses.

• On a GAAP basis, diluted earnings per share for the second quarter of 2011 increased to $1.11 from $0.90 in the second quarter of 2010 due primarily to higher sales and the company’s improved cost structure.
• Adjusted earnings of $1.15 per share (see Supplemental Schedule on page 9) increased 28% compared to the prior-year quarter. The adjustment to GAAP earnings was to remove acquisition-related fees and non-cash charges related to refinancing the company’s credit facilities.
• Cash provided by operating activities was $32.4 million for the second quarter of 2011 compared to $19.2 million for the second quarter of 2010 due to improved profitability and working capital performance.
• On August 3, 2011 the company acquired Selco A/S, a Danish company specializing in protection relays for the marine and other industrial markets. Selco’s annual revenue is approximately $9 million.
• The company recently made a $3 million equity investment in Shocking Technologies, a start-up company that manufactures specialty polymer materials which are embedded in printed circuit boards to provide electrostatic discharge protection. Shocking is a licensee of Littelfuse for certain polymer technology.
• On June 13, 2011 the company entered into a new, five-year credit agreement which increased its revolving credit line from $75 million to $150 million.

“We followed up our outstanding first quarter with record performance in the second quarter, although sales and earnings were just below the midpoint of our guidance,” said Gordon Hunter, Chief Executive Officer. “Our automotive and electrical businesses continue to grow in double digits as we execute our growth initiatives, and the electronics business bounced back from a weak first quarter.”

“Despite headwinds from higher commodity prices (particularly copper, silver and gold) and increased freight costs driven by higher oil prices, our operating margin was above 20% for the third time in the last four quarters,” said Phil Franklin, Chief Financial Officer. “This is a testament to strong operational execution and our new, leaner cost structure.”

“Now six months into the Cole Hersee integration, we are pleased with the results so far and excited about the opportunities ahead,” said Hunter. “We are also excited about the acquisition of Selco. Although this is a small business today, it is a great addition to the Startco platform with similar growth potential.”

Outlook

“The strong momentum in sales and orders that we saw earlier in the year has slowed,” said Hunter. “While end demand remains solid across most of our markets, distribution channels have become more cautious and the electronics order rate has softened. That said, we still expect to exceed our original earnings guidance for the year as a result of higher margins than originally projected.”

• Sales for the third quarter are expected to be in the range of $169 to $177 million, which represents 3% to 8% growth over the third quarter of 2010.
• Earnings for the third quarter of 2011 are expected to be in the range of $1.00 to $1.10 per diluted share.

“The expected sequential decline in earnings in the third quarter reflects slowing sales, continued commodity cost pressures and gradual increases in selling and R&D expense to support our key growth initiatives,” said Franklin.

• At the beginning of 2011, the company issued full year guidance for sales of $670 to $690 million and earnings of $3.75 to $4.05 per share. The company still expects to be in this sales range but now expects earnings (excluding special items) to exceed this guidance.
• Capital spending for 2011 is expected to be in the range of $25 to $28 million.

Dividend

The Board has approved a 20% increase in the quarterly cash dividend from $0.15 to $0.18 per common share. This dividend is payable on September 6, 2011 to shareholders of record at the close of business on August 22, 2011.

“This increase in the dividend is an indication of the Board’s confidence in the long-term cash generating capability of the company,” said Hunter. “As we said when we initiated the dividend last November, after funding our organic growth initiatives, ongoing acquisitions and opportunistic share repurchases we expect to have enough cash to also fund a dividend that increases over time.”

Conference Call Webcast Information

Littelfuse will host a conference call today, Thursday, August 4, 2011 at 11:00 a.m. Eastern/10:00 a.m. Central time to discuss the second quarter results. The call will be broadcast live over the Internet and can be accessed through the company’s Web site: www.littelfuse.com. Listeners should go to the Web site at least 15 minutes prior to the call to download and install any necessary audio software. The call will be available for replay through September 30, 2011 and can be accessed through the Web site listed above.

About Littelfuse

Littelfuse, Inc. is the worldwide leader in circuit protection with 2010 revenues of $608 million. Founded in 1927, Littelfuse offers the industry’s broadest and deepest portfolio of circuit protection products and solutions. Backed by industry-leading technical support, design and manufacturing expertise, Littelfuse devices protect products in virtually every market that uses electrical energy, from consumer electronics to automobiles to industrial equipment. In addition to its Chicago, Illinois, world headquarters, Littelfuse has more than 20 sales, distribution, manufacturing and engineering facilities in the Americas, Europe and Asia. Technologies offered by Littelfuse include Fuses; Gas Discharge Tubes (GDTs); Positive Temperature Coefficient Devices (PTCs); Protection Relays; PulseGuard® ESD Suppressors; SIDACtor® Devices; TVS Diode Arrays (SPA™ Family of Products); Switching Thyristors; TVS Diodes and Varistors. The company also offers a comprehensive line of highly reliable Electromechanical and Electronic Switch and Control Devices for commercial and specialty vehicles, as well as underground Power Distribution Centers for safe control and distribution of electricity in the mining industry.

For more information, please visit Littelfuse’s Web site at www.littelfuse.com.

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

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 January 1, 2011. 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 January 1, 2011.

LITTELFUSE, INC.
Net Sales by Business Unit and Geography
(In millions of USD, unaudited)
	Second Quarter						Year-to-Date
	2011		2010*		% Change		2011		2010*		% Change
Business Unit
Electronics	$	98.4	$	99.0	(1	%)	$	185.7	$	183.4	1	%
Automotive		50.4		34.6	46	%		104.3		71.6	46	%
Electrical		27.8		23.9	16	%		53.8		46.9	15	%
Total	$	176.6	$	157.5	12	%	$	343.8	$	301.9	14	%
	Second Quarter						Year-to-Date
	2011		2010*		% Change		2011		2010*		% Change
Geography
Americas	$	75.7	$	58.0	31	%	$	146.5	$	111.3	32	%
Europe		31.1		29.2	6	%		63.6		59.0	8	%
Asia-Pacific		69.8		70.3	(1	%)		133.7		131.6	2	%
Total	$	176.6	$	157.5	12	%	$	343.8	$	301.9	14	%
*In the first quarter of 2011, as previously disclosed, the company adjusted its business segment reporting methodology to roll-up segment financials by product line rather than by sales organization. This change more closely aligns segment reporting with how the company manages its businesses. The company's consolidated revenues and operating income were not affected by this change.

LITTELFUSE, INC.
Condensed Consolidated Balance Sheets
(In thousands of USD, except share amounts)
	July 2, 2011			January 1, 2011
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	163,924		$	109,720
Accounts receivable, less allowances		118,310			97,753
Inventories		79,865			80,182
Deferred income taxes		9,571			10,588
Prepaid expenses and other current assets		15,206			13,882
Assets held for sale		6,839			6,831
Total current assets		393,715			318,956
Property, plant and equipment:
Land		5,934			5,688
Buildings		54,692			53,089
Equipment		278,733			276,371
		339,359			335,148
Accumulated depreciation		(212,060	)		(205,001	)
Net property, plant and equipment		127,299			130,147
Intangible assets, net of amortization:
Patents, licenses and software		10,611			11,211
Distribution network		20,800			9,752
Customer lists, trademarks and tradenames		13,204			20,865
Goodwill		113,005			112,687
		157,620			154,515
Investments		13,085			11,660
Deferred income taxes		1,973			3,271
Other assets		2,797			2,580
Total Assets	$	696,489		$	621,129
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	30,412		$	24,079
Accrued payroll		18,433			24,186
Accrued expenses		9,366			10,307
Accrued severance		2,142			3,279
Accrued income taxes		18,273			14,997
Current portion of long-term debt		70,000			33,000
Total current liabilities		148,626			109,848
Long-term debt, less current portion		-			41,000
Accrued severance		52			486
Accrued post-retirement benefits		5,482			5,564
Other long-term liabilities		14,267			11,571
Total equity		528,062			452,660
Total liabilities and equity	$	696,489		$	621,129
Common shares issued and outstanding of
22,332,413 and 21,752,536, at July 2, 2011,
and January 1, 2011, respectively.

LITTELFUSE, INC.
Consolidated Statements of Income
(In thousands of USD, except per share data, unaudited)
	For the Three Months Ended						For the Six Months Ended
	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010
Net sales	$	176,615		$	157,508		$	343,775		$	301,910
Cost of sales		106,621			98,125			209,078			189,247
Gross profit		69,994			59,383			134,697			112,663
Selling, general and administrative
expenses		28,441			26,208			55,836			52,655
Research and development expenses		4,662			4,403			9,457			8,353
Amortization of intangibles		1,600			1,265			3,195			2,505
		34,703			31,876			68,488			63,513
Operating income		35,291			27,507			66,209			49,150
Interest expense		521			356			857			783
Other (income) expense, net		(11	)		(1,409	)		(37	)		(1,299	)
Income before income taxes		34,781			28,560			65,389			49,666
Income taxes		9,512			8,282			18,542			13,919
Net income	$	25,269		$	20,278		$	46,847		$	35,747
Income per share:
Basic	$	1.13		$	0.91		$	2.12		$	1.61
Diluted	$	1.11		$	0.90		$	2.08		$	1.59
Weighted average shares and
equivalent shares outstanding:
Basic		22,191			22,019			22,034			21,933
Diluted		22,590			22,397			22,460			22,301
Diluted Income Per Share
Net income as reported	$	25,269		$	20,278		$	46,847		$	35,747
Less: income allocated to participating
securities		(103	)		(206	)		(157	)		(365	)
Net income available to common
shareholders	$	25,166		$	20,072		$	46,690		$	35,382
Weighted average shares adjusted for
dilutive securities		22,590			22,397			22,460			22,301
Diluted income per share	$	1.11		$	0.90		$	2.08		$	1.59

LITTELFUSE, INC.
Consolidated Statements of Cash Flows
(In thousands of USD, unaudited)
	For the Six Months Ended
	July 2, 2011			July 3, 2010
OPERATING ACTIVITIES:
Net income	$	46,847		$	35,747
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		12,311			14,398
Amortization of intangibles		3,195			2,505
Non-cash inventory charge*		3,678			-
Stock-based compensation		3,040			2,780
Excess tax benefit on Stock-based compensation		(3,685	)		(688	)
(Gain) on sale of assets		(100	)		(323	)
Changes in operating assets and liabilities:
Accounts receivable		(18,886	)		(30,785	)
Inventories		(1,475	)		(9,180	)
Accounts payable		5,851			4,936
Accrued expenses (including post retirement)		581			(5,354	)
Accrued payroll and severance		(7,437	)		(1,715	)
Accrued taxes		2,888			11,439
Prepaid expenses and other		(739	)		2,376
Net cash provided by operating activities		46,069			26,136
INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(10,559	)		(7,155	)
Business acquisition settlement		50			-
Proceeds from sale of assets		253			4,714
Net cash (used in) investing activities		(10,256	)		(2,441	)
FINANCING ACTIVITIES:
Proceeds from debt		85,000			6,845
Payments of term debt		(49,000	)		(4,000	)
Payments of revolving credit facility		(40,000	)		(11,206	)
Debt issuance costs		(716	)		-
Cash dividends paid		(6,613	)		-
Proceeds from exercise of stock options		20,673			7,482
Excess tax benefit on stock-based compensation		3,685			688
Net cash provided by (used in) financing activities		13,029			(191	)
Effect of exchange rate changes on cash and cash
equivalents		5,362			(6,176	)
Increase in cash and cash equivalents		54,204			17,328
Cash and cash equivalents at beginning of period		109,720			70,354
Cash and cash equivalents at end of period	$	163,924		$	87,682
* Purchase accounting adjustment related to the Cole Hersee acquisition.

LITTELFUSE, INC.
Supplemental Information
(In thousands of USD, except per share data, unaudited)
	For the Three Months Ended
	July 2, 2011
	U.S. GAAP			Special Items				Adjusted
Net sales	$	176,615		$	-			$	176,615
Cost of sales		106,621			-				106,621
Gross profit		69,994			-				69,994
% of sales		39.6	%						39.6	%
Total operating expenses		34,703			(597	)	(1)		34,106
% of sales		19.6	%						19.3	%
Operating income		35,291			597				35,888
% of sales		20.0	%						20.3	%
Interest/other expense (income), net		510			(197	)	(2)		313
Income before income taxes		34,781			794				35,575
Income tax expense		9,512			55				9,567
Effective tax rate		27.3	%		6.9	%			26.9	%
Net income as reported		25,269			739				26,008
Less: Income allocated to participating securities		(103	)		(3	)			(106	)
Net Income available to common shareholders	$	25,166		$	736			$	25,902
Net income per diluted share:	$	1.11						$	1.15
Weighted average shares adjusted for
dilutive securities:		22,590							22,590
Note: The Company believes that adjusted operating income is more indicative of its ongoing operating performance than U.S. GAAP operating income since the former excludes special items as described below.
Special Items:
(1) Acquisition-related fees. These are non-tax deductible.
(2) Non-cash interest expense related to refinancing the company's credit facilities.