Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
(Mark One) for the fiscal year ended January 1, 2000 or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the transition period from to
Commission file number 0-20388
Littelfuse, Inc.
(Exact name of registrant as specified in its charter)
Delaware 36-3795742
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
800 East Northwest Highway,
Des Plaines, Illinois 60016
(Address of principal executive offices) (Zip Code)
847/824-1188
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01
par value, and Warrants to purchase shares of Common Stock, $.01 par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of 18,334,779 shares of voting stock held by
non-affiliates of the registrant was approximately $659,760,197 based on the
last reported sale price of the registrant's Common Stock, $.01 par value, as
reported on The Nasdaq Stock Market on March 10, 2000.
As of March 10, 2000, the registrant had outstanding 19,574,337 shares of
Common Stock, $.01 par value, and Warrants to purchase 2,461,309 shares of
Common Stock, $.01 par value.
Portions of the following documents have been incorporated herein by
reference to the extent indicated herein: Littelfuse, Inc. Proxy Statement dated
March 20, 2000 (the "Proxy Statement") --Part III. Littelfuse, Inc. Annual
Report to Stockholders for the year ended January 1, 2000 (the "Annual Report")
- -- Parts II and III.
Part I
ITEM 1. BUSINESS
General
Littelfuse, Inc. (the "Company" or "Littelfuse") is a leading
manufacturer and seller of fuses and other circuit protection devices for use in
the electronic, automotive and general industrial markets. Management believes
the Company is ranked first in market share in both the electronic and
automotive markets and third in the power fuse market in North America.
Management believes the Company, together with its licensees, is also first in
market share in both the electronic and automotive markets worldwide.
In the electronic market, leading manufacturers such as Canon, Compaq,
Dell Computer, IBM, LG Electronics, Lucent Technologies, Motorola, Nokia,
Nortel, Panasonic, Samsung, Sharp and Sony obtain a substantial portion of their
electronic circuit protection requirements from the Company. In the automotive
market, the Company or its licensees have customer relationships with all
leading automobile manufacturers throughout the world. Littelfuse provides
substantially all of the automotive fuse requirements for vehicles manufactured
domestically by General Motors and is the primary supplier for Ford, Daimler
Chrysler and all Japanese and most European auto manufacturer transplants. The
Company also competes in the power fuse market selling to companies such as the
Allen Bradley division of Rockwell International and Reliance Electric. See
"Business Environment: Circuit Protection Market."
The Company manufactures its products on fully integrated manufacturing
and assembly equipment, much of which is designed and built by its own
engineers. The Company fabricates and assembles a majority of its products and
maintains product quality through a rigorous quality assurance program with all
sites certified under ISO 9000 standards and its world headquarters now
certified under the QS9000 standards.
The Company's products are sold worldwide through a direct sales force
and manufacturers' representatives. In the Asia-Pacific region, the Company has
licensed its automotive fuse technology to a Japanese firm that supplies
automotive fuses to Pacific Rim customers. For the year ended January 1, 2000,
approximately 46% of the Company's net sales were to customers outside the
United States (exports and foreign operations).
References herein to "1997" or "fiscal 1997" refer to the calendar year
ended January 3, 1998. References herein to "1998" or "fiscal 1998" refer to the
fiscal year ended January 2, 1999. References herein to "1999" or "fiscal 1999"
refer to the fiscal year ended January 1, 2000.
Business Environment: Circuit Protection Market
The circuit protection market can be broadly categorized into five
major product areas: electronic, automotive, industrial (power), high voltage
and residential. The Company sells products designed for the electronic,
automotive and industrial areas. The Company entered the circuit protection
market in 1927 with the development and introduction of the first small,
fast-acting fuse capable of protecting sensitive test meters. Since that time,
the Company has diversified its involvement in the circuit protection market to
become a leader in the production of electronic and automotive fuses. The
Company also entered the power fuse market in 1983 with a broad line of fuses,
including several proprietary products. The Company believes it is a market
leader in circuit protection devices, offering the broadest line of products in
the industry and the global presence to serve major markets throughout the
world.
Electronic Products. Electronic circuit protection products are used to
protect power circuits in a multitude of electronic systems and fall into five
major categories: (1) fuses, (2) resettables (3) electrostatic discharge
suppressors (4) thyristors and (5) metal-oxide varistors. Electronics fuses are
devices which contain an element which melts in an overcurrent condition.
Resettables are positive temperature coefficient (PTC) polymer devices that
limit the current when an overcurrent condition exists and let current pass
again after the cause of the overcurrent is removed. Electrostatic discharge
(ESD) suppressors are polymer based devices that shunt transient high voltage
energy away from circuitry. Thyristors are fast switching silicon semiconductor
structures commonly used to protect telecommunications circuits from overvoltage
transients such as those resulting from lightning. Metal-oxide varistors are
ceramic based devices designed to absorb high energy transients in order to
maintain the circuit voltage at safe levels. Applications for electronic
products include telecommunications equipment, computers and computer
peripherals, power supplies, test and medical instrumentation, and consumer
electronic products.
Automotive Products. Fuses are extensively used in automobiles, trucks,
buses and off-road equipment to protect electrical circuits and the wires that
supply electrical power to operate lights, heating, air conditioning, windshield
wipers, radios, windows and controls. Currently, a typical automobile contains
30 to 70 fuses, depending upon the options installed. The market for automotive
fuses is expected to grow in the coming years as more electronic features are
included in automobiles, and as the development of electric, hybrid and fuel
cell vehicles increases. Certain new vehicles, such as the Cadillac Seville,
Ford 150 series truck, Jeep Grand Cherokee and the Jaguar, contain as many as 50
to 90 fuses and this higher fuse count is expected to spread to other vehicles.
Power Products. Power fuses include both current limiting and
non-current limiting devices used to protect electrical systems against
overcurrents. Power fuses are rated and listed under one of many Underwriters'
Laboratories fuse classifications. The three main end user market segments for
power fuses include original equipment manufacturers ("OEMs"), industrial
maintenance and repair operations ("MROs") and new commercial and industrial
construction. Major applications for power fuses include protection from
over-load and short-circuit currents in motor branch circuits, heating and
cooling systems, control systems, lighting circuits and electrical distribution
networks.
Littelfuse Products
General. The Company is a leading manufacturer and seller of fuses,
varistors and other circuit protection devices for use in the electronic,
automotive and general industrial markets. The Company's products are marketed
under the general trademarked names of Littelfuse(R) and, where appropriate,
Slo-Blo(R) Fuse as well as the trademarked names of certain of its products
listed below in the description of the Company's electronic, automotive and
power fuse products.
Product Sales. Net sales of the Company's products by industry category for the
periods indicated are as follows:
Fiscal Year
(in thousands)
-----------------------------------------------------------------
-------------------- --------------------- ----------------------
1999 1998 1997
-------------------- --------------------- ----------------------
-------------------- --------------------- ----------------------
Electronic $154,141 $133,085 $135,032
Automotive 101,270 96,686 102,139
Industrial (Power) 40,956 39,769 37,994
-------------------- --------------------- ----------------------
==================== ===================== ======================
Total $296,367 $269,540 $275,165
==================== ===================== ======================
Electronic Products. The Company manufactures and sells a wide range of
electronic circuit protection products, including miniature and subminiature
fuses, protectors and resettables. Electronic miniature and subminiature fuses
are designed to provide circuit protection in the limited space requirements of
electronic equipment. The Company entered the resettable device market in late
1996. The Company entered the ESD suppressor market in late 1998 and the
varistor and thyristor market in 1999.
The Company's electronic circuit protection products are marketed under the
following trademarked and brand names:
PICO(R) II Fuse is a very fast-acting subminiature fuse with axial
leads which can be automatically inserted into a circuit board. It
is used in consumer electronics, computers, medical instruments,
power supplies and telecommunication line cards. It was originally
developed for the aerospace industry where extremely small size
and high reliability were prime requisites. This fuse is
encapsulated with an epoxy coating which protects the fuse from
adverse environmental conditions. It can stand up under the rough
treatment found in high speed automated circuit board assembly
processes used by many different manufacturers.
2AG fuses are a miniature version of the standard 1/4" diameter by
1-1/4" long glass bodied fuses manufactured for more than 40
years. The fuse occupies about 1/3 of the space but still provides
the performance of the larger sized product. The Company has
developed a strong market in the telecommunications industry for a
leaded version of the 2AG fuse. These fuses are used in business
and personal telephone systems, answering machines and other
equipment connected to phone lines. They are used to protect the
system from lightning surges and accidental contact with power
lines. These fuses also are used extensively in electronic
ballasts for lighting.
NANO2 (R) SMF Fuse is a fourth generation surface mount fuse
product line. The compact size (.240" x .100" x .100") of this
rectangular shaped fuse is very attractive to design engineers. In
addition, the flat side design permits efficient pick and
placement by automated assembly equipment. The NANO2 (R) SMF Fuse
is used where space considerations are critical, including laptop
computers, camcorders and battery chargers.
ALF(TM) II or "1206" SMF, and the "0603" SMF are very fast acting
thin film surface mount fuses measuring only .12 inch x .06 inch
and .06 inch X .03 inch, respectively. The subminiature size
assures additional space savings in surface mount applications.
They are completely compatible with common soldering systems used
in surface mount assembly applications, the ALF(TM) is available
on 8mm reels for use with automatic placement equipment.
Applications include hard disk drives, PC main boards, digital
cameras, CD-ROMs and cellular telephones.
SMTelecom(TM) is the first surface mount fuse to comply with UL
1459 and UL 1950 third edition power cross requirements for
telecommunications. The new SMTelecom(TM) Fuse protects all phone
line connected equipment against current surges resulting from
power cross, power induction and lightning strikes. It is rated
for 250 volts with a 600 volt short circuit rating. Four current
ratings are offered, from 0.75 to 1.5 amperes. Applications
include modems, fax machines, desktop telephones, answering
machines and line cards.
Surface Mount PTC is the first in Littelfuse's line of PTC
devices. Its dimensions of 0.200" x 0.290" x 0.120" are ideal for
circuit board applications where space is at a premium. It also is
available in 0.340" x 0.250" x 0.10" and 0.179" x 0.127" x 0.02"
configurations. This polymer surface mount PTC has the ability to
reset itself once the fault or overcurrent condition has cleared.
This new product is used primarily for computer and peripheral
applications such as motherboards, disk drives, PC cards, modems,
printers, etc.
PulseGuard(R), an ESD suppressor, is a polymer based surface mount
or connector style device that utilizes a variable voltage
material to shunt high voltage ESD energy away from circuitry
without affecting data signals. The PulseGuard(R) characteristics
and available packages provide for protection of integrated
circuitry in applications such as PCs and PC peripherals.
Metal Oxide Varistors (MOVs) are high energy absorption products
that provide transient overvoltage and surge suppression for
electronic, telecommunication and industrial applications. MOVs
are available in a radial leaded package, used in applications
such as hand-held electronic devises, cellular telephones and
medical instruments. A surface mount, multilayer package is also
available for circuit board applications where space is at a
premium.
UltraMOV(TM) is a series of radial leaded varistors intended for
AC line applications requiring high peak surge current rating and
high energy absorption capability. Applications include
Uniterruptable Power Supplies (UPS), circuit breakers, AC
appliance/controls and consumer electronics.
The Company also markets a series of industrial MOVs designed to
provide surge suppression in the AC mains outdoors and
distribution panels of buildings. Applications include industrial
heavy motors, HVAC and motor/generator applications.
Automotive Products. The Company is a primary supplier of automotive
fuses to United States, Japanese and European automotive OEMs, automotive
component parts manufacturers and automotive parts distributors. The Company
also sells its fuses in the replacement parts market, with its products being
sold through merchandisers, discount stores and service stations, as well as
under private label by national firms. Management believes that it currently is
the leading worldwide supplier of automotive fuses for new vehicle production
and a leader for the aftermarket/replacement market.
The Company invented and owns all of the U.S. patents related to the
blade type fuse which is the standard and most commonly used fuse in the
automotive industry. The Company believes that, together with its licensees, it
supplies substantially all of the blade type fuses used in the North American
and Japanese markets and a majority in the European market. The Company's
automotive fuse products are marketed under the following trademarked and brand
names:
AUTOFUSE(R) or ATO(R), a standard blade type fuse, is used in
automobiles produced worldwide and designed to provide superior
circuit protection in a small, heat resistant package for low
ampere applications.
MINI(R) Fuse, smaller than its predecessor AUTOFUSE(R), is offered
in a range from two amps to 30 amps and is designed to permit more
fuses in the same amount of space than prior products.
MAXI(TM) Fuse, a larger version of the AUTOFUSE(R), replaces the
commonly used low technology fusible wire or fusible links in
automobile electrical harnesses and is offered in a range from 20
amps to 80 amps.
MIDI(R) Fuse is a bolt down version of the MAXI(TM) fuse. This
style is preferred by some European customers in the 50 to 100 amp
range. Its primary use is for heating, air conditioning and motor
control circuits.
J-CASE(R) Fuse, is a cartridge version of the Maxi(TM) fuse. Its
primary use is for branch circuit protection and protection of
circuits with inductive loads.
MEGA(R)Fuse, a higher current fuse with ratings of 100 to 200
amps, is used for protection of battery cables.
Over half of the Company's North American automotive (blade type) fuse
sales are made to wire harness manufacturers that incorporate the fuses into
their products. The remaining automotive fuse sales are made directly to
automotive manufacturers and through distributors who in turn sell most of their
products to automotive product wholesalers, such as warehouse distributors,
discount stores and service stations.
The Company believes it currently has adequate production capacity to
meet the anticipated increased demand for automotive fuses referred to in
"Business Environment: Circuit Protection Market -- Automotive Fuses." Any
required expenditures for additional machinery and equipment are expected to be
funded by cash flow from operations.
The Company has licensed its patented Mini(R) and Maxi(TM) automotive
fuse designs to Bussmann, a division of Cooper Industries. Bussmann is the
Company's largest domestic competitor. Additionally, the Company has entered
into a licensing agreement with Pacific Engineering Company, Ltd., a Japanese
fuse manufacturer, which produces and distributes the Company's patented Mini(R)
automotive fuses to the Pacific Rim manufacturing operations of Japanese based
automobile manufacturers. See "Competition" and "Business -- Patents, Trademarks
and Other Intellectual Property."
Power Products. The Company entered the power fuse market in 1983 and
manufactures and sells a broad range of low-voltage circuit protection products
to electrical distributors and their customers in the construction, OEM and MRO
markets. Power fuses are used to protect circuits in various types of industrial
equipment and circuits in industrial plants, office buildings and residential
units. The Company's power fuse products are marketed under the following
classifications:
Class L fuses are commonly used as the first line of electrical
protection in building service entrance equipment of high capacity
electrical systems. Other applications include switchboard mains
and feeders, distribution equipment and branch circuit protection
for large motors.
Class R fuses are commonly used downstream from Class L fuses in a
variety of branch circuit applications. Both time delay and fast
acting versions cover a range of applications including main
feeder, motor, transformer and solenoids. The Company's RK5
INDICATOR fuse series has won numerous product awards and wide
recognition by industrial plant personnel. These fuses have an
integrated blown fuse indicator that turns from clear to dark once
a fuse has blown. This reduces troubleshooting time significantly
and helps improve safety.
Class J fuses are less than half the size of Class R to provide
substantial space savings. Applications for Class J are similar to
Class R. Additional applications include back up protection for
circuit breakers and protection for both IEC and NEMA rated
devices. The Company has also introduced an indicating J line of
fuses with indication functionality like the RK5 INDICATOR fuse.
Class CC fuses, Littelfuse's KLDR (for transformer protection) and
CCMR (for motor branch circuit protection) provide protection
formerly supplied by fuses 10 times larger. Littelfuse was the
first to the market with these products and is the only company
with a CCMR rated up to 60 amps.
Semiconductor fuses, designed for supplementary protection of
semiconducting devices, are used in electronic equipment and power
equipment, such as variable speed drives, power rectifiers, UPS
systems and DC power suppliers.
Midget fuses, in seven different series, provide supplementary
overcurrent protection in such diverse applications as control
circuits, control power transformers, solenoids, street lighting
and computers.
Medium voltage fuses, designed for general and back-up protection,
protect motors, transformers and motor controllers. The medium
voltage fuse line was expanded in 1998 with the purchase of the
product line and assets of a medium voltage fuse manufacturer
allowing for very short delivery times of these products.
Other Products. In addition to the above products, the Company supplies
switches, and circuit breakers to the automotive industry and to appliance and
general electronics manufacturers. The Company is also a supplier of fuse
holders (including OMNI-BLOK(R)), fuse blocks (including Powr-Blok(R) power
distribution systems) and fuse clips primarily to customers that purchase
circuit protection devices from the Company.
Product Design and Development
The Company employs scientific, engineering and other personnel to
improve its existing product lines and to develop new products at its research
and engineering facility in Des Plaines, Illinois. The Engineering Department
consists of approximately 60 engineers, chemists, metallurgists, fusologists and
technicians. This department is primarily responsible for the design and
development of new products.
Proposals for the development of new products are initiated primarily
by sales and marketing personnel with input from customers. The entire product
development process typically ranges from 6 to 18 months with continuous efforts
to reduce the development cycle. During the fiscal years ended January 1, 2000,
January 2, 1999, and January 3, 1998, the Company expended approximately $9.5
million, $8.4 million and $7.9 million, respectively, on product design and
development.
Patents, Trademarks and Other Intellectual Property
The Company generally relies on patent and trademark laws and license
and nondisclosure agreements to protect its rights in its trade secrets and its
proprietary products. In cases where it is deemed necessary by management, key
employees are required to sign an agreement that they will maintain the
confidentiality of the Company's proprietary information and trade secrets. This
information, for business reasons, is not disclosed to the public.
As of January 1, 2000, the Company owned 112 patents in North America,
22 patents in the European Economic Community and 34 patents in other foreign
countries. The Company has also registered trademark protection for certain of
its brand names and logos. The 112 North American patents are in the following
categories: 47 Electronic, 16 Resettable, 23 Automotive, 19 Power Fuse and 7
miscellaneous.
New products are continually being developed to replace older products.
The Company regularly applies for patent protection on such new products.
Although in the aggregate the Company's patents are important in the operation
of its businesses, the Company believes that the loss by expiration or otherwise
of any one patent or group of patents would not materially affect its business.
The Company currently licenses its MINI(R) and MAXI(TM) automotive fuse
technology to Bussmann, a division of Cooper Industries and the Company's
largest domestic competitor. The license granted in 1987 is nonexclusive and
grants the Company the right to receive royalties of 4% of the licensee's
revenues from the sale of the licensed products with an annual minimum of
$25,000. Each license expires upon the expiration of the licensed product
patents.
In addition, a second license covering the MINI(R) Fuse technology was
granted to Pacific Engineering Company, Ltd., a Japanese manufacturer that
produces and distributes the Company's patented automotive fuses to Pacific Rim
operations of Pacific Rim-based automotive manufacturers. The license provides
the Company with royalties of 2.5% of the licensee's revenues from the sale of
the licensed products, with an annual minimum of $100,000. This second license
expires on April 6, 2006.
License royalties amounted to $250,000, $286,000 and $332,000 for
fiscal 1999, 1998 and 1997, respectively.
Manufacturing
Much of the Company's manufacturing equipment is custom designed by its
engineers, and the Company performs the majority of its own fabrication. The
Company stamps most of the metal components used in its fuses, holders and
switches from raw metal stock and makes its own contacts and springs. However,
the Company does depend upon a single source for a substantial portion of its
stamped metal end caps for one family of electronic fuses. The Company believes
that alternative stamping sources are available at prices which would not have a
material adverse effect on the Company. The Company also performs its own
plating (silver, nickel, zinc, tin and oxides). In addition, all thermoplastic
molded component requirements used for such products as the AUTOFUSE(R), MINI(R)
and MAXI(TM) product lines are met through the Company's in-house molding
capabilities.
After components are stamped, molded, plated and readied for assembly,
final assembly is accomplished on fully automatic and semi-automatic assembly
machines. Quality assurance and operations personnel, using techniques such as
Statistical Process Control, perform tests, checks and measurements during the
production process to maintain the highest levels of product quality and
customer satisfaction.
The principal raw materials for the Company's products include copper
and copper alloys, heat resistant plastics, zinc, melamine, glass, silver,
solder, sulphate chipboard and linerboard. The Company depends upon a sole
source for several heat resistant plastics. The Company believes that suitable
alternative heat resistant plastics are available from other sources at prices
which would not have a material adverse effect on the Company. All of the other
raw materials are purchased from a number of readily available outside sources.
A computer-aided design and manufacturing system (CAD/CAM) expedites
product development and machine design, while reliability and high power
laboratories test new products, prototype concepts and production run samples.
The Company participates in "Just-in-Time" delivery programs with many of its
major suppliers and actively promotes the building of strong cooperative
relationships with its suppliers by involving them in pre-engineering product
and process development. The Company also sponsors an annual major supplier
conference and conducts a vendor certification program.
Marketing
The Company's domestic sales staff of over 70 people maintains
relations with major OEMs and distributors. The Company's sales and engineering
personnel interact directly with the OEM engineers to ensure maximum circuit
protection and reliability within the parameters of the OEM design.
Internationally, the Company maintains a sales staff of over 30 people and sales
offices in The Netherlands, England, Ireland, Singapore, Korea and China. The
Company also markets its products indirectly through a worldwide organization of
over 120 manufacturers' representatives and distributes through an extensive
network of electronic, automotive and electrical distributors.
Electronic. The Company retains manufacturers' representatives to sell
its electronic products and to call on major domestic and international OEMs and
distributors. The Company distributes approximately 43% of its domestic products
directly to OEMs, with the remainder sold through distributors nationwide.
In the Asia-Pacific region, the Company maintains a direct sales staff
and one or more manufacturers' representatives in Japan, Singapore, Korea,
Taiwan, China, Malaysia, Thailand, Philippines and Australia. The Company also
maintains an engineering facility in Japan. In Europe, the Company maintains a
direct sales force to call on OEMs exclusively and utilizes manufacturers'
representatives to approach distributors and smaller OEMs. Unlike its domestic
representatives, these manufacturers' representatives purchase inventory from
the Company to facilitate delivery and reduce financial risks associated with
currency exchange rate fluctuations.
Automotive. The Company sells automotive fuses to OEMs through a direct
sales force in Detroit consisting of four employees. Salespersons service all
the major automotive OEMs (including the United States manufacturing operations
of foreign-based OEMs) through both the engineering and purchasing departments
of these companies. Twenty-two manufacturers' representatives represent the
Company's products to aftermarket fuse retailers such as Autozone, Pep Boys, and
K-Mart. In Europe, the Company uses both a direct sales force and manufacturers'
representatives to distribute its products to Mercedes Benz, BMW, Volvo, Saab,
Jaguar and other OEMs, as well as aftermarket distributors. In the Asia-Pacific
region, the Company has licensed its automotive fuse technology to a Japanese
firm, which supplies the majority of the automotive fuses to the Japanese
manufacturing operations in the region including Toyota, Honda and Nissan.
Additionally, the Company has a direct sales staff in Korea to call on major
OEMs in that market.
Power. The Company markets and sells its power fuses through
manufacturers' representatives across North America. These representatives sell
power fuse products through an electrical distribution network comprised of
approximately 1,800 distributor buying locations. These distributors have
customers that include electrical contractors, municipalities, utilities and
factories (including both MRO and OEM). Some of the manufacturers'
representatives have consigned inventory in order to facilitate rapid customer
delivery.
The Company's field sales force (including application engineers) and
manufacturers' representatives call on both distributors and end-users
(consulting engineers, municipalities, utilities and OEMs) in an effort to
educate these customers on the capabilities and characteristics of the Company's
products.
Business Segment Information
The Company has three reportable business segments: The Americas, Europe and
Asia-Pacific. For information with respect to the Company's operations in its
three geographic areas for the fiscal year ended January 1, 2000, see "Item 8.
Financial Statements and Supplementary Data - Business Segment Information"
incorporated herein by reference.
Customers
The Company sells to over 10,000 customers worldwide. No single
customer accounted for more than 10% of net sales during the last three years
except for its Japanese stocking representative which accounted for 10.2% and
11% in 1998 and 1997, respectively. The Japanese stocking representative serves
over 100 customers in the Asia-Pacific electronic market. During the 1999, 1998
and 1997 fiscal years, net sales to customers outside the United States (exports
and foreign operations) accounted for approximately 46.1%, 43.0% and 40.6%,
respectively, of the Company's total net sales.
Competition
The Company's products compete with similar products of other
manufacturers, many of which have substantially greater financial resources than
the Company. In the electronic fuse market, the Company's competitors are
Bussmann, a division of Cooper Industries, Bel Fuse, Inc., Raychem Division of
TYCO International, San-O Industrial Corp. and Wickmann-Werke GmbH. In the
circuit protection market, the Company's competitors are Bourns, Raychem
Division of TYCO International, AVX, Maida, Panasonic and Siemens. In the
fuseholder portion of this market, the Company's principal competitor is
Schurter, Inc. In the automotive fuse market, the Company's competitors, both in
sales to automobile manufacturers and in the aftermarket, are Bussmann and
Pudenz Division of Wickmann-Werke. The Company licenses several of its
automotive fuse designs to Bussmann. In the power fuse market, the Company's
major competitors include Bussmann and Ferraz Shawmut. The Company believes that
it competes primarily on the basis of innovative products, the breadth of
available product lines, the quality and design of its products and the
responsiveness of its customer service rather than through price competition.
Backlog
The Company does not consider backlog to be a predictive measure of
results due to the Company's short delivery time. The Company manufactures high
volume products based on its demand forecasts and manufactures low volume
products based on customer orders. The Company attempts to ship such products to
the customer within five business days of the date of the order. Generally,
orders which request delivery within three weeks of the date of the order are
filled on time from available stock or current production.
Employees
During 1999, the Company employed approximately 3,256 persons.
Approximately 54 employees in Des Plaines and 694 employees in Mexico are
covered by collective bargaining agreements. The Des Plaines agreement expires
March 31, 2002 and the Mexico agreement expires January 31, 2001. The Company
has not experienced any work stoppage or other form of labor dispute within the
last 20 years. The Company believes that its employee relations are excellent
and that its employees, many of whom have long experience with the Company,
represent a valuable resource. The Company emphasizes employee training and
development and has established Quality Improvement Process (QIP) training for
its employees worldwide so as to promote product quality and customer
satisfaction.
Year 2000
For information relating to Year 2000 see "Item 7. Management's Discussion and
Analysis of Financial Conditions and Results of Operations - Year 2000"
incorporated herein by reference.
Environmental Regulation
The Company is subject to numerous federal, state and local regulations
relating to air and water quality, the disposal of hazardous waste materials,
safety and health. Compliance with applicable environmental regulations has not
significantly changed the Company's competitive position, capital spending or
earnings in the past and the Company does not presently anticipate that
compliance with such regulations will change its competitive position, capital
spending or earnings for the foreseeable future. The Company employs an
environmental engineer to monitor regulatory matters and believes that it is
currently in compliance in all material respects with applicable environmental
laws and regulations, except with respect to its facility located in Ireland.
This facility was recently acquired in connection with the acquisition of the
Harris suppression products division. Corrective steps are being taken to bring
this facility into compliance with Irish environmental laws, and the Company
received an indemnity from Harris Corporation with respect to these matters.
ITEM 2. PROPERTIES
Littelfuse Facilities
The Company's operations are located in 19 owned or leased facilities
worldwide, containing approximately 702,000 square feet. The U.S. headquarters
and principal fabrication and distribution facility is located in Des Plaines,
Illinois, supported by two additional plants in Illinois and one in Mexico.
European headquarters and the primary European distribution center is in
Utrecht, The Netherlands, with manufacturing plants in England, Ireland and
Switzerland. Asia Pacific operations include a distribution center located in
Singapore, with manufacturing plants in Korea, China and the Philippines. The
Company does not believe that it will encounter any difficulty in renewing its
existing leases upon the expiration of their current terms. Management believes
that the Company's facilities are adequate to meet its requirements for the
foreseeable future.
The following table provides certain information concerning the
Company's facilities:
Lease
Expir-
Size Lease/ Ation Industry
Location Use (sq.ft.) Own Date Focus
Des Plaines, Illinois Administrative, 340,000 Owned -- Auto, Electronic, Power
Engineering,
Manufacturing,
Testing and Research
Centralia, Illinois Manufacturing 45,200 Owned -- Electronic
Arcola, Illinois Manufacturing 36,000 Owned -- Power
Livonia, Michigan Administrative 1,200 Leased 2004 Auto
Piedras Negras, Mexico Manufacturing 50,031 Leased 2000 Auto, Electronic, Power
Piedras Negras, Mexico Manufacturing 12,594 Leased 2003 Electronic and Power
Piedras Negras, Mexico Manufacturing 22,711 Leased 2002 Electronic and Power
Washington, Manufacturing, 60,000 Owned -- Electronic, Auto, Other
England Sales and
Distribution
Utrecht, The Netherlands Warehousing 8,680 Leased 2001 Auto, Electronic, Other
Lease
Expir-
Size Lease/ Ation Industry
Location Use (sq.ft.) Own Date Focus
Utrecht, The Netherlands Sales, 12,000 Owned -- Auto, Electronic, Other
Administrative and
Engineering
Grenchen, Switzerland Manufacturing 11,000 Owned -- Auto
Singapore Sales and 9,827 Leased 2002 Electronic and Auto
Distribution
Seoul, Korea Sales and 29,175 Owned -- Electronic and Auto
Manufacturing
Philippines Manufacturing 10,200 Leased 2000 Electronic
Suzhou, China Manufacturing 40,000 Owned -- Electronic
Hong Kong, China Sales 3,079 Leased 2002 Electronic
Yokohama, Japan Engineering 8,811 Leased 2000 Electronic
Sao Paulo, Brazil Sales and
Distribution 1,200 Leased 2000 Electronic, Auto
Dundalk, Ireland Manufacturing 120,000 Owned -- Electronic, Auto
ITEM 3. Legal Proceedings
The Company is not a party to any legal proceedings which it believes
will have a material adverse effect upon the conduct of its business or its
financial position.
ITEM 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to the Company's stockholders during
the fourth quarter of fiscal 1999.
Executive Officers of the Registrant
The executive officers of the Company are as follows:
Name Age Position
Howard B. Witt 59 Chairman, President and Chief Executive Officer
Kenneth R. Audino 56 Vice President, Organizational Development
and Total Quality Management
William S. Barron 57 Vice President, Marketing and Sales
Philip G. Franklin 48 Vice President, Treasurer and Chief Financial
Officer
Lloyd J. Turner 56 Vice President, Operations
Hans Ouwehand 53 Vice President, European Operations
Mary S. Muchoney 54 Secretary
Officers of Littelfuse are elected by the Board of Directors and serve at the
discretion of the Board.
Howard B. Witt was elected as the Chairman of the Board of the Company
in May, 1993. He was promoted to President and Chief Executive Officer of the
Company in February, 1990. Prior to his appointment as President and Chief
Executive Officer, Mr. Witt served in several other key management positions
with the Company, including Operations Manager from March 1979 to January 1986,
Vice President-Manufacturing Operations from January 1986 to January 1988, and
Executive Vice President with full operating responsibilities for all U.S.
activities from January 1988 to February 1990. Prior to joining Littelfuse, Mr.
Witt was a division president of Keene Corporation from 1974 to 1979. Mr. Witt
serves as a Director of Franklin Electric Co., Inc. and Material Sciences
Corporation and is a member of the Electronic Industries Association Board of
Governors. He also serves as a director of the Artisan Mutual Fund.
Kenneth R. Audino, Vice President, Organizational Development and Total
Quality management, is responsible for the Company's overall quality,
reliability and environmental compliance, quality systems, human resources and
training efforts. Mr. Audino joined Littelfuse as a Control Technician in 1964.
From 1964 to 1977, he progressed through several quality and reliability
positions to Manager of Reliability and Standards. In 1983, he became Managing
Director of the European Headquarters and later was named Corporate Director of
Quality Assurance and Reliability. He was promoted to his current position in
1998.
William S. Barron, Vice President, Sales and Marketing, is responsible for
the Company's overall sales and marketing. Mr. Barron joined Littelfuse in March
1991. From August 1981 to March 1991, Mr. Barron served as Director of Sales and
Marketing of Cinch Manufacturing, a division of TRW, and the General Manager of
one of its domestic divisions.
Philip G. Franklin, Vice President, Treasurer and Chief Financial
Officer, has responsibility for the treasury, investor relations, financial
control, financial reporting and information systems functions of the Company.
Mr. Franklin joined the Company in 1998 from OmniQuip International, a $450
million construction equipment manufacturer which he helped take public.
Lloyd J. Turner, Vice President, Operations, has responsibility for
manufacturing operations and related support functions. Mr. Turner joined
Littelfuse in October 1988, as Director of Manufacturing Operations after having
served as an Operations Manager with Texas Instruments from November 1984 to
September 1988. He was promoted to his current position in 1991.
Hans Ouwehand, Vice President, European Operations, has responsibility
for all sales, marketing, manufacturing and engineering activities in Europe.
Mr. Ouwehand joined Littelfuse in 1984 as Sales Manager, Europe, Electronics
Division. He was later promoted to the position of European Sales and Marketing
Manager for all Littelfuse products and in 1986 to the position of General
Manager-European Operations. Prior to joining Littelfuse, his industrial
background included research and development work with Sperry Rand and sales and
product management with Lameris Medical Instruments.
Mary S. Muchoney has served as Corporate Secretary since 1991, after
joining Littelfuse in 1977. She is responsible for providing all secretarial and
administrative functions for the President and Littelfuse Board of Directors.
Ms. Muchoney is a member of the American Society of Corporate Secretaries.
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters
The information set forth under "Quarterly Stock Price" on page 40 of
the Annual Report to Stockholders is incorporated herein by reference. It is
also included in Exhibit 13.1 as filed with the SEC. As of March 10, 2000, there
were 236 holders of record of the Company's Common Stock and in excess of 2,700
beneficial holders of its Common Stock.
Since September 22, 1992, shares of the Common Stock have been traded
in the over-the-counter market and quotations are reported using the symbol
"LFUS" on The Nasdaq Stock Market.
The Company has not paid any cash dividends in its history. Future
dividend policy will be determined by the Board of Directors based upon their
evaluation of earnings, cash availability and general business prospects.
Currently, there are restrictions on the payment of dividends contained in the
Company's bank credit agreement which relate to the maintenance of certain
restricted payment ratios.
ITEM 6. Selected Financial Data
The information set forth under "Selected Financial Data - Five Year
Summary" on page 40 of the Annual Report to Stockholders is incorporated herein
by reference. It is also included in Exhibit 13.1 as filed with the SEC.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information set forth under "Management's Discussion and Analysis
of Financial Condition and Results of Operations" on pages 20 through 23 of the
Annual Report to Stockholders is incorporated herein by reference. It is also
included in Exhibit 13.1 as filed with the SEC.
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risks
The information set forth under "Market Risk" on page 23 of the Annual
Report to Stockholders is incorporated herein by reference. It is also included
in Exhibit 13.1 as filed with the SEC.
ITEM 8. Financial Statements and Supplementary Data
The Report of Independent Auditors and the Consolidated Financial
Statements and notes thereto of the Company set forth on pages 24 through 35 of
the Annual Report to Stockholders are incorporated herein by reference. They are
also included in Exhibit 13.1 as filed with the SEC.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
The information set forth under "Election of Directors" and "Section
16(a) Beneficial Ownership Reporting Compliance" in the Proxy Statement is
incorporated herein by reference. The information set forth under "Executive
Officers of the Registrant" in Part I of this Report is incorporated herein by
reference.
ITEM 11. Executive Compensation
The information set forth under "Compensation of Executive Officers" in
the Proxy Statement is incorporated herein by reference, except for the sections
captioned "Reports of the Compensation Committee on Executive Compensation" and
"Company Performance."
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
The information set forth under "Ownership of Littelfuse, Inc. Common
Stock" in the Proxy Statement is incorporated herein by reference.
ITEM 13. Certain Relationships and Related Transactions
The information set forth under "Certain Relationships and Related
Transactions" in the Proxy Statement is incorporated herein by reference.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Financial Statements and Schedules
(1) Financial Statements. The following financial
statements included in the Annual Report to
Stockholders are incorporated herein by reference.
(i) Report of Independent Auditors (page 36)
(ii) Consolidated Statements of Financial Condition
as of January 1, 2000 and January 2, 1999
(pages 24 and 25).
(iii) Consolidated Statements of Income for the years
ended January 1, 2000, January 2, 1999 and
January 3, 1998 (page 26).
(iv) Consolidated Statements of Cash Flows for the
years ended January 1, 2000, January 2, 1999
and January 3, 1998 (page 27).
(v) Consolidated Statements of Shareholders' Equity
for the years ended January 1, 2000, January 2,
1999 and January 3, 1998.
(page 28).
(vi) Notes to Consolidated Financial Statements
(pages 29-35).
(2) Financial Statement Schedules. The following financial
statement schedules are submitted herewith for the periods
indicated therein.
(i) Schedule II-Valuation and Qualifying Accounts and
Reserves
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable and, therefore, have been
omitted.
(3) Exhibits
See Exhibit Index on pages 21-23, incorporated herein by
reference.
(b) Reports on Form 8-K
There were no reports on Form 8-K during the fourth quarter of
1999.
LITTELFUSE, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In Thousands)
Additions
Balance at Charged to Balance at
Beginning Costs and Deductions End of
Description Of Year Expenses (A) Year
---------- ---------- ---------- -------
Year ended January 1, 2000
Allowance for losses on
accounts receivable . . . . . . $ 1,103 $ 614 $ 147 $ 1,570
======= ======= ======= =======
Reserves for sales discounts
and allowances . . . . . . . . $ 4,782 $ 769 $ -- $ 5,551
======= ======= ========= =======
Year ended January 2, 1999
Allowance for losses on
accounts receivable . . . . . . $ 1,118 $ 626 $ 641 $ 1,103
======= ======= ======= =======
Reserves for sales discounts
and allowances . . . . . . . . $ 4,781 $ 1 $ -- $ 4,782
======= ======== ========= =======
Year ended January 3, 1998
Allowance for losses on
accounts receivable . . . . . . $ 896 $ 410 $ 188 $ 1,118
======== ======= ======= =======
Reserves for sales discounts
and allowances . . . . . . . . $ 4,161 $ 620 $ -- $ 4,781
======= ====== ========= =======
(A) Write-off of uncollectible accounts, net of recoveries and foreign currency
translation.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Littelfuse, Inc.
By /s/ Howard B. Witt
Howard B. Witt,
Chairman, President and
Chief Executive Officer
Date: March 20, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
/s/ Howard B. Witt Chairman of the Board, President
Howard B. Witt and Chief Executive Officer
/s/ John P. Driscoll Director
John P. Driscoll
/s/ Anthony Grillo Director
Anthony Grillo
/s/ Bruce A. Karsh Director
Bruce A. Karsh
/s/ John E. Major Director
John E. Major
/s/ John J. Nevin Director
John J. Nevin
/s/ Philip G. Franklin Vice President, Treasurer
Philip G. Franklin and Chief Financial Officer
(Principal Financial Officer)
LITTELFUSE INC.
INDEX TO EXHIBITS
Sequentialc)
Page Number
Number Description of Exhibit a)
2.1 Plan of Reorganization under Chapter 11 of the Bankruptcy Code of
Old Littelfuse.
3.1 Certificate of Incorporation (as amended to date).
3.1A Certificate of Designations of Series A Preferred Stock (filed as
Exhibit 4.2 to the Company's Current Report on Form 8-K dated
December 1, 1995 (1934 Act File No. 0-20388) and incorporated herein
by reference.)
3.2 Bylaws
4.1 Second amended restated bank credit agreement among Littelfuse, Inc.,
as borrower, the lenders named therein and the First National Bank of
Chicago, as agent, dated as of September 1, 1998.
4.2 Registration Rights Agreement, dated as of December 27, 1991, between Littelfuse, Inc. and The
Toronto-Dominion Bank Trust Company, as agent.
4.3 Warrant Agreement, dated as of December 27, 1991, between Littelfuse,
Inc., and LaSalle National Trust, N.A., as warrant agent, together
with form of Warrant. (filed as exhibit 4.3A to the Company's Form
10-Q for the quarterly period ended June 28, 1997 (1934 Act File No.
-20388) and incorporated herein by reference), as amended.
4.4 Stock Plan for Employees and Directors of Littelfuse, Inc., as amended d)
4.5 Form of Stock Option Agreement
4.6 Specimen Common Stock certificate.
4.7 Littelfuse, Inc. Retirement Plan dated January 1, 1992, as amended and restated.d)
____________
a) All of the exhibits, (except those filed herewith or specifically noted as
being incorporated by reference from a different filing under the
Securities as of 1933 or Securities act of 1934) were filed as exhibits to
the Company's Form 10 as filed with the Securities and Exchange Commission
which became effective on September 16, 1992 (1934 Act File No. 0-20388)
and are incorporated herein by reference.
b) Filed herewith.
c) This information appears only in the manually signed copy of the report.
d) Indicates an employee benefit plan, management contract or compensatory
plan or arrangement in which a named executive officer participates.
Sequentialc)
Page Number
Description of Exhibit a)
Number
4.8 Littelfuse, Inc. 401(k) Savings Plan.d)
4.9 Note Purchase Agreement, dated as of August 31, 1993, relating to $45,000,000 principal amount of
Littelfuse, Inc. 6.31% Senior Notes due August 31, 2000.
4.10 Littelfuse Rights Plan Agreement, dated as of December 15, 1995,
between Littelfuse, Inc. and LaSalle National Bank, as Rights Agent,
together with Exhibits thereto, as amended.
4.11 Note Purchase Agreement dated as of September 1, 1998, relating to $60,000,000 principal amount of
Littelfuse, Inc. 6.16% Senior Notes due September 1, 2005.
b)4.12 Form of Restricted Share Agreement
10.3 Patent License Agreement, dated as of July 28, 1995, between
Littelfuse, Inc. and Pacific Engineering Company, Ltd.(filed as
exhibit 10.3 to the Company's Form 10K for the year ended December
28, 1996)
10.4 MINI(R) and MAXITM License Agreement, dated as of June 21, 1989, between Littelfuse, Inc. and Cooper
Industries, Inc.
10.5 Patent License Agreement, dated as of January 1, 1987, between Littelfuse, Inc. and Cooper Industries, Inc.
10.6 1993 Stock Plan for Employees and Directors of Littelfuse, Inc., as amended d)
10.7 Littelfuse, Inc. Supplemental Executive Retirement Plan.d)
10.8 Littelfuse Deferred Compensation Plan for Non-employee Directors, as amended.d)
Sequentialc)
Page Number
Number Description of Exhibit a)
10.9 Littelfuse Executive Loan Program (filed as Exhibit 10.2 to the
Company's Form 10Q for the quarterly period ended June 30, 1995 (1934
Act File No. 0-20388) and incorporated herein by reference.)d)
10.10 Employment Agreement dated as of September 1, 1996 between Littelfuse, Inc. and Howard B. Witt. d)
10.11 Change of Control Employment Agreement dated as of September 1, 1996 between Littelfuse, Inc. and Howard B.
Witt. d)
10.12 Form of change of Control Employment Agreement dated as of September 1, 1996 between Littelfuse, Inc. and
Messrs. Anderson, Audino, Barron, Krueger and Turner. d)
10.13 Form of change of Control Employment Agreement dated as of January 4, 1999 between Littelfuse, Inc. and Mr.
Franklin. d)
b)13.1 Portions of Littelfuse Annual Report to Stockholders for the fiscal year ended January 1, 2000.
b)22.1 Subsidiaries.
b)23.1 Consent of Independent Auditors.
Exhibit 22.1
SUBSIDIARIES
Littelfuse, S.A. de C.V.
Littelfuse FSC
Littelfuse Do Brasil Ltda.
Watseka LF, Inc.
Littelfuse, B.V.
Littelfuse, A.G.
Littelfuse Limited
Harris Ireland Development Co., Ltd.
Harris Ireland Limited
Joyrush Investments Ltd.
REMPAT Holding B.V.
REMPAT Financial B.V.
Littelfuse Far East Pte Ltd.
Littelfuse HK Limited
Littelfuse Holdings Pte Ltd.
Suzhou Littelfuse OVS Ltd.
Littelfuse KK
Littelfuse Triad Inc.
Littelfuse Phils Inc.