(COMTEX) B: Methode Electronics, Inc. Announces Diversified Product O
B: Methode Electronics, Inc. Announces Diversified Product Offerings Contribute
To Record Sales
CHICAGO, Nov 30, 2000 /PRNewswire via COMTEX/ -- Methode Electronics, Inc.
(Nasdaq: METHA) today announced record sales of $127.6 million for the second
quarter ended October 31, 2000, up 22% from $104.4 million a year ago. Second
quarter net income amounted to $9.1 million with earnings per share of $0.25
compared to $0.21 for last year (last year's second quarter earnings of $0.21
per share excludes a charge of $0.06 per share related to the bankruptcy of a
large automotive safety system supplier).
For the six months sales amounted to $242.7 million, up 20% from $203.0 million
last year. Net income was $0.49 per share as compared to $0.45 prior to the bad
debt charge last year.
Until the IRS approves Methode's plan for a tax-free spin-off of Stratos
Lightwave, Inc., Methode continues to operate in two separate and distinct
business segments - the Optical and the Electronic. Chairman Bill McGinley said,
"Our Optical business continues its solid high growth pattern set over the last
several years. The Electronic segment, despite a recent poor earnings
performance in the automotive interconnect and controls business, continues as
Methode's primary cash generator."
Sales for the second quarter for the Optical segment were $37.9 million, nearly
double last year's second quarter sales of $19.5 million with pretax profits up
to $5.9 million from $1.1 million last year. The performance of our Optical
segment includes the results of Stratos Lightwave, Inc. and additional other
Methode Optical business units which were not transferred to Stratos but will be
retained by Methode.
Of the Optical segment's sales of $37.9 million, Stratos accounted for about
$33.8 million with second quarter pretax earnings of $6.1 million (before
minority interest), up eightfold from $0.7 million a year ago. Stratos sales
order backlog continued to strengthen to a record of $52 million as of October
31, 2000. For more details concerning the operations of Stratos Lightwave, see
its separate news release dated November 29, 2000, at www.stratoslightwave.com .
Methode previously indicated its intention to spin off its approximate 84%
ownership of Stratos to Methode shareholders once it receives a favorable ruling
concerning the tax-free nature of such distribution from the Internal Revenue
Service. Methode can neither provide assurance that it will receive a favorable
ruling nor control the IRS' timing for the issuing such ruling. Under the
requested ruling Methode shareholders will receive just under 1.5 shares of
Stratos Lightwave, Inc. for every share of Methode Electronics owned as of the
record date. The cash raised at the time of the public offering ($171.3 million
remaining at October 31) will be retained by Stratos and will not be available
to Methode Electronics.
Dale Phillips, Methode's Chief Financial Officer, commented on the Electronic
segment, "Sales of electronic interconnect devices, connectors, controls and
various cable assemblies were $85.1 million, up 10% from $77.4 million last
year, representing 67% of Methode's consolidated shipments. While Methode's
connector and interconnect business in the telecommunications and computer
markets experienced solid performance improvements, poor earnings performance in
the automotive interconnect and controls business resulted in pretax profits for
the Electronics segment of $10.2 million compared to $10.3 million last year.
"Connector and interconnect devices sold to telecommunications and computer
markets continued to enjoy improved sales and earnings as compared to a year
ago. The three leading business units in this group -- Duel Systems, Adam
Technologies and Methode Singapore -- all reported solid improvements on a
combined sales increase of 36% and a pretax earnings increase of 255% compared
to a year ago.
"The dataMate business continued to strengthen its relationship with Intel and
its OEM customers in the quarter. dataMate began providing its Coppermine
terminator to Dell, Hewlett-Packard and IBM in this quarter. Annual sales
estimates for the Coppermine are now expected to reach $5 million. In addition,
dataMate is the first terminator supplier to qualify for Intel's next generation
processor. This terminator is anticipated to achieve annual sales of $2 - $4
million. dataMate is currently working on designs for the next several
generations of Intel processors."
Commenting on the underperformance in the automotive interconnect and controls
businesses, Mr. Phillips stated, "It has been an interesting and active quarter
for the automotive business. While sales increased 4% to $55.0 million from
$52.7 million, several factors contributed to a disappointing earnings
performance and a subsequent change in leadership for the business.
"First, start-up costs for our Reynosa, Mexico plant ran approximately $1.3
million higher than anticipated for the quarter. Second, we launched over 30 new
product lines in our Carthage and Golden plants this summer compared to five new
product launches in fiscal year 2000. This aggressive launch schedule resulted
in at least $.6 million higher than anticipated operating expenses for these
products. Third, an intense United Auto Workers organizing campaign affected
productivity levels at both Carthage and Golden."
Mr. Phillips further stated, "The initial steps to enhance profitability of this
business have already been taken. First, any further product transfers to
Reynosa have been frozen until next Spring. This step will allow us to better
train and develop the growing work force of over 300 newly-hired workers in that
plant. We expect substantial improvements in productivity and quality from that
unit in the next three to six months. Second, recent internal management changes
at the Carthage and Golden plants are expected to renew focus on production
details for the newly launched product lines and the employee relations issues
generated over the last two years. These initial steps were taken in order to
return to productivity levels more in line with Methode's historical performance
in this business. Finally, the UAW withdrew its organizing petition from the
National Labor Relations Board on November 14, 2000.
"Looking forward, we are concerned that some of these near-term productivity
gains may be overshadowed by current industry trends. After a year and a half of
increasing interest rates, the automotive industry has slowed. Based on recent
production cuts by Methode's major customers, we currently anticipate flat to
modestly down third quarter automotive revenues and flat to modestly up fourth
quarter automotive revenues. Our longer-term projections still reflect
reasonably strong growth for fiscal 2002 over fiscal 2001 based on current
estimates from our customers.
"When these results are overlaid with the rest of Methode, we anticipate total
third and fourth quarter revenues (including Stratos) to continue to increase
with earnings modestly up in the third and fourth quarters. While the current
automotive estimates are fluid at best, they do, however, reflect planned
customer announcements regarding production requirements that we expect will be
made in the next week to ten days. Any further announcements from Detroit beyond
this time frame may cause us to institute a mid-quarter business trend call at
that time."
Methode, as previously announced, will conduct an earnings meeting and
conference call, led by its Executive Vice President and Chief Financial
Officer, Dale W. Phillips, on Thursday November 30 at 10:00 a.m. CT. To
participate call 888-222-2994. A replay of the call will be available for seven
days, beginning at 1:00 p.m. CT, November 30. To hear the replay, call Code No.
142771.
Certain statements in this press release are forward-looking statements that are
subject to certain risks and uncertainties. The Company's results will be
subject to many of the same risks that apply to the automotive, computer and
telecommunication industries, such as general economic conditions, interest
rates, consumer spending patterns and technological change. Other factors which
may result in materially different results for future periods include market
growth; operating costs; currency exchange rates and devaluations; delays in
development, production and marketing of new products; and other factors set
forth from time to time in the Company's Form 10-K and other reports filed with
the Securities and Exchange Commission. The forward-looking statements in this
press release are intended to be subject to the safe harbor protection provided
under the securities law.
Methode Electronics, Inc., with 4,000 full-time and 650 temporary employees in
25 plants worldwide, manufactures component devices for Original Equipment
Manufacturers (OEMs) of information processing and networking equipment, voice
and data communications systems, consumer electronics, automobiles, aerospace
vehicles and industrial equipment. Products employ electrical, electronic and
fiber optic technologies in communication data links, interconnections and
controls.
Methode Electronics, Inc.
Financial Highlights
(In thousands, except per share data, unaudited)
Three Months Ended October 31,
2000 1999
Net sales $127,603 $104,360
Other income 4,043 1,557
Cost of products sold 100,720 80,259
Selling and administrative expenses 16,275 17,368
Income before income taxes and
minority interest 14,651 8,290
Minority interest 693 27
Income taxes 4,900 2,860
Net income 9,058 5,403
Basic and Diluted Earnings per Common Share $0.25 $0.15
Average Number of Common Shares outstanding:
Basic 35,596 35,283
Diluted 35,891 35,471
Six Months Ended October 31,
2000 1999
Net sales $242,699 $202,967
Other income 6,761 3,571
Cost of products sold 190,328 154,371
Selling and administrative expenses 30,840 30,749
Income before income taxes and
minority interest 28,292 21,418
Minority interest 1,005 51
Income taxes 9,675 7,510
Net income 17,612 13,857
Earnings per Common Share:
Basic $0.50 $0.39
Diluted $0.49 $0.39
Average Number of Common Shares outstanding:
Basic 35,550 35,271
Diluted 35,828 35,456
Condensed Consolidated Balance Sheets
(In thousands)
October 31, April 30,
2000 2000
(unaudited)
Cash $205,379 $29,427
Accounts receivable - net 101,553 79,408
Inventories 73,419 58,917
Other current assets 9,921 10,833
Total Current Assets 390,272 178,585
Goodwill - net 51,192 49,228
Other assets 17,031 17,313
Property, plant and equipment - net 111,371 95,847
Total Assets $569,866 $340,973
Accounts and notes payable $44,725 $32,565
Other current liabilities 31,065 21,759
Total current liabilities 75,790 54,324
Other liabilities 10,414 11,905
Minority interest 40,981 912
Shareholders' equity 442,681 273,832
Total Liabilities and Shareholders' Equity $569,866 $340,973
SOURCE Methode Electronics, Inc.
CONTACT: Dale W. Phillips or Michael T. Perkins, both of Methode
Electronics, 708-867-6777
URL: methode.com
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(C) 2000 PR Newswire. All rights reserved.
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KEYWORD: Illinois
INDUSTRY KEYWORD: CPR
SUBJECT CODE: ERN
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