DES PLAINES, IL -- Littelfuse reported record first quarter sales for the first quarter of 2006.

The company recorded record sales of $125.6 million for the first quarter of 2006. First quarter 2006 sales increased 10 percent versus the prior-year quarter and 9 percent compared to the fourth quarter of 2005. The sales increase was mostly driven by improvement in the electronics business across all geographies.

Diluted earnings per share from continuing operations were 39 cents for the first quarter of 2006 compared to earnings from continuing operations of 19 cents per diluted share for the first quarter of 2005. Excluding stock-based compensation expense and restructuring charges, diluted earnings per share from continuing operations were 49 cents for the first quarter of 2006 versus the most recent guidance of at least 40 cents and compared to 24 cents for the first quarter of 2005 (see supplemental information table for reconciliation of non-GAAP to GAAP measures).

The restructuring charges booked in the first quarter of 2006 relate to further downsizing of the Heinrich operations that will occur over the next 12 months. These are costs over and above those accounted for in the Heinrich purchase accounting reserves.

By geography, sales for the first quarter of 2006 were up 9 percent in the Americas, up 2 percent in Europe and up 19 percent in Asia compared to the first quarter of 2005. In constant currency, overall sales were up 13 percent, with the Americas up 9 percent, Europe up 11 percent and Asia up 21 percent.

By market, sales for the first quarter of 2006 were up 15 percent for electronics, flat for automotive and up 6 percent for electrical compared to the prior year period. In constant currency, electronics was up 18 percent, automotive was up 4 percent and electrical was up 6 percent.

Operating margin (operating income as a percent of sales) improved to 11 percent in the first quarter of 2006. Excluding stock-based compensation expense and restructuring charges, operating margin was 13.8 percent for the first quarter of 2006, up 630 basis points from the prior-year quarter.

Free cash flow (cash from operating activities minus net capital expenditures) was $9.4 million for the first quarter of 2006 compared to negative $8.6 million for the prior year quarter. This reflects significant improvements in profitability and working capital performance as well as lower capital expenditures.

The book-to-bill ratio for electronics for the first quarter of 2006 was 1.17 due primarily to improving order rates in North America and Europe.

Overall capacity utilization for electronics is currently running at approximately 85 percent, with capacity utilization for Teccor products at about 80 percent.

The sale of Efen closed in the first quarter of 2006. A small gain was recognized and included in discontinued operations. The purchase of Concord Semiconductor is expected to close in May 2006.

Higher sales in the Americas and Europe were driven primarily by increased demand from broadline electronic distributors, reflecting strength in the telecom and general electronics end markets. Continued positive trends in the electrical market also contributed to the Americas increase. The increase in Asia sales was due primarily to strong consumer electronics and telecom demand in Greater China and increased consumer electronics sales in Japan.

"The bounce-back in electronic sales, coupled with continued progress on our cost reduction initiatives, resulted in strong margin expansion and earnings growth in the first quarter," said Gordon Hunter, chief executive officer. "The improvement in our electronics business has been broad based, with all three regions and most of our end markets contributing. The strong book-to-bill ratio for the first quarter bodes well for continued sales growth in the second quarter, although order rates did flatten out in April."

"As we continue to restructure our business for lower cost and improved responsiveness, the operating leverage from increasing sales is substantial," said Phil Franklin, chief financial officer. "We have now exceeded our short-term operating margin target of 10 percent and are within sight of our longer term goal of 15 percent, although our progress may be temporarily impeded by the recent spike in commodity prices, most notably for zinc, copper and silver. Our businesses are planning price increases to mitigate the impact of these increasing commodity costs."

Sales for the second quarter of 2006 are expected to be up 5-8 percent sequentially over the first quarter of 2006.

Earnings per share for the second quarter of 2006 (including stock-based compensation expense but excluding any restructuring charges) are expected to be in the range of 45 to 50 cents.

The company will continue to incur restructuring charges as it further implements its low-cost manufacturing model and further streamlines its logistics network.

On May 5, the Littelfuse board of directors authorized the company to repurchase up to 1,000,000 shares of its common stock.

For more information about Littlefuse, go to: littelfuse.com .

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