DES PLAINES, IL -- Littelfuse has reported its sales and earnings for the third quarter of 2005.

The company said sales declines in the Americas and Europe were driven by lower electronic sales, reflecting continued weakness in telecom end markets and additional third quarter 2004 sales related to the build-up in distribution inventory. The decline in American electronic sales was partially offset by sales increases in automotive and electrical, reflecting new business wins and price realization in both the automotive aftermarket and electrical markets. The sales increase in Asia reflected strong performance in the electronic markets in Taiwan, Southeast Asia and Korea and in the automotive market in Korea.

"Our third quarter sales and earnings performance, although below that of the prior year, showed sequential growth and was at the high end of our expected range," said Gordon Hunter, CEO. "We continue to make progress on our key initiatives including the Heinrich integration and new product programs and believe the business is well positioned for improved performance in the coming year."

"Excluding special charges, operating margin for the third quarter improved sequentially to more than 8 percent," said Phil Franklin, CFO. "This margin improvement was driven by operating leverage on higher sales and continued progress on cost reduction initiatives."

The effective tax rate increased to 41 percent in the third quarter of 2005 compared to 35 percent in the previous two quarters. The tax rate for the third quarter was impacted by several factors including charges related to repatriation of foreign earnings from lower tax jurisdictions and limited tax shield from Ireland restructuring charges.

Free cash flow (cash from operating activities minus net capital expenditures) of $10.1 million for the third quarter of 2005 was down from $16.3 million for the same period in 2004, but up from negative $4.8 million for the first half of 2005. "Because of our weak performance for the first half of the year, free cash flow for 2005 will be below that of recent years," said Franklin. "However, going forward, free cash flow should be more consistent with our historical performance."

For the first three quarters of 2005, sales were $376.6 million, compared to sales of $376.1 million for the same period in 2004. Diluted earnings per share were 66 cents for the first three quarters of 2005, compared to earnings of $1.38 per diluted share for the prior year period.

Littelfuse also announced that it will be further downsizing its operations in Ireland and outsourcing more of its varistor manufacturing to lower cost Asian subcontractors. This will result in future restructuring charges currently estimated at $2.5 million for the fourth quarter of 2005 and $2.1 million in 2006.

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