Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 2005 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
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
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]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filter and large accelerated filter" in Rule 12b-2 of the Exchange Act
(Check one): Large accelerated filer [ ] Accelerated filer [X] Non-accelerated
filer [ ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The aggregate market value of 22,453,183 shares of voting stock held by
non-affiliates of the registrant was approximately $624,647,551 based on the
last reported sale price of the registrant's Common Stock as reported on The
Nasdaq Stock Market on July 2, 2005.
As of February 24, 2006, the registrant had outstanding 23,574,266 shares of
Common Stock.
Portions of the following documents have been incorporated herein by
reference to the extent indicated herein:
Littelfuse, Inc. Proxy Statement for the 2006 Annual Meeting of Stockholders
(the "Proxy Statement") --Part III. Littelfuse, Inc. Annual Report to
Stockholders for the year ended December 31, 2005 (the "Annual Report to
Stockholders") -- Parts II and III.
PART I
ITEM 1. BUSINESS
GENERAL
Littelfuse, Inc. (the "Company" or "Littelfuse") is the world's leading supplier
of circuit protection products for the electronics industry. The Company
provides the broadest line of circuit protection solutions to worldwide
customers. The Company is also the leading provider of circuit protection for
the automotive industry and the third largest producer of electrical fuses in
North America.
The Company serves customers in three major product areas of the circuit
protection market: electronic, automotive and electrical. In the electronic
market, the Company supplies leading manufacturers such as Alcatel, Celestica,
Compaq, Delta, Flextronics, Fuji, GE, HP, Huawei, Hughes, IBM, Intel, Jabil,
Legend, LG, Matsushita, Motorola, Nokia, Palm, Quanta, Samsung, Sanmina-SCI,
Sanyo, Selectron, Siemens, Sony and Toshiba. In the automotive market, the
Company's customers include major automotive manufacturers in North America,
Europe and Asia such as BMW, DaimlerChrysler, Ford Motor, General Motors, Honda
Motor, Hyundai and Toyota. The Company also supplies wiring harness
manufacturers and auto parts suppliers worldwide, including Alcoa Fujikawa, Auto
Zone, Delphi, Lear, Pep Boys, Siemens VDO and Yazaki. In the electrical market,
the Company supplies representative customers such as Abbott, Carrier, Dow
Chemical, DuPont, GE, General Motors, Heinz, International Paper, John Deere,
Lithonia Lighting, Marconi, Merck, Otis Elevator, Poland Springs, Procter &
Gamble, Rockwell and 3M. See "Business Environment: Circuit Protection Market."
The Company manufactures many of its products on fully integrated manufacturing
and assembly equipment. The Company maintains product quality through a Global
Quality Management System with all manufacturing sites certified under ISO
9001:2000. In addition, several of the Littelfuse manufacturing sites are also
certified under TS 16949 and ISO 14001.
The Company's products are sold worldwide through a direct sales force and
manufacturers' representatives. For the year ended December 31, 2005,
approximately 59.8% of the Company's net sales were to customers outside the
United States (exports and foreign operations).
References herein to "2003" or "fiscal 2003" refer to the fiscal year ended
January 3, 2004. References herein to "2004" or "fiscal 2004" refer to the
fiscal year ended January 1, 2005. References herein to "2005" or "fiscal 2005"
refer to the fiscal year ended December 31, 2005.
The Company's annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and all amendments to those reports are currently
available free of charge through the "Investor Relations" section of the
Company's Internet website (http://www.littelfuse.com) as soon as practicable
after such material is electronically filed with, or furnished to, the
Securities and Exchange Commission as well as on the website maintained by the
SEC at http://www.sec.gov.
BUSINESS ENVIRONMENT: CIRCUIT PROTECTION MARKET
The Company serves customers in three major product areas of the circuit
protection market: electronic, automotive and electrical. Net sales by product
area for the periods indicated are as follows:
FISCAL YEAR
(IN THOUSANDS)
2005 2004 2003
----------- ----------- -----------
Electronic $ 305,870 $ 325,617 $ 206,523
Automotive 118,595 113,690 98,327
Electrical 42,624 37,526 34,560
----------- ----------- -----------
Total $ 467,089 $ 476,833 $ 339,410
=========== =========== ===========
ELECTRONIC PRODUCTS
Electronic circuit protection products are used to protect circuits in a
multitude of electronic systems. The Company's product offering includes a
complete line of overcurrent and overvoltage solutions including: (1) fuses and
protectors, (2) positive temperature coefficient, (PTC) resettable fuses, (3)
varistors, (4) polymer electrostatic discharge (ESD) suppressors, (5) discrete
transient voltage suppression (TVS) diodes, TVS diode arrays and protection
thyristors, (6) gas discharge tubes, (7) power switching components, and (8)
fuseholders, blocks and related accessories.
2
Electronic fuses and protectors are devices that contain an element which melts
in an overcurrent condition. Electronic miniature and subminiature fuses are
designed to provide circuit protection in the limited space requirements of
electronic equipment. The Company's fuses are used in a wide variety of
electronic products, including wireless telephones, consumer electronics,
computers, modems and telecommunications equipment. The Company markets these
products under the following trademarked and brand names: PICO(R) II and NANO2
(R) SMF.
Resettables are positive temperature coefficient (PTC) polymer devices that
limit the current when an overcurrent condition exists and then reset themselves
once the overcurrent condition has cleared. The Company's product line offers
both radial leaded and surface mount products.
Varistors are ceramic-based high-energy absorption devices that provide
transient overvoltage and surge suppression for automotive, telecommunication,
consumer electronics and industrial applications. The Company's product line
offers both radial leaded and multilayer surface mount products.
Polymer electrostatic discharge (ESD) suppressors are polymer-based devices that
protect an electronic system from failure due to rapid transfer of electrostatic
charge to the circuit. The Company's PulseGuard(R) line of ESD suppressors is
used in PC and PC peripherals, digital consumer electronics and wireless
applications.
Discrete diodes, diode arrays and protection thyristors are fast switching
silicon semiconductor structures. Discrete diodes protect a wide variety of
applications from overvoltage transients such as ESD, inductive load switching
or lightning, while diode arrays are used primarily as ESD suppressors.
Protection thyristors are commonly used to protect telecommunications circuits
from overvoltage transients such as those resulting from lightning. Applications
include telephones, modems, data transmission lines and alarm systems. The
Company markets these products under the following trademarked brand names:
TECCOR(R), SIDACtor(R) and Battrax(R).
Gas discharge tubes are very low capacitance devices designed to suppress any
transient voltage event that is greater than the breakover voltage of the
device. These devices are primarily used in telecom interface and conversion
equipment applications as protection from overvoltage transients such as
lightning.
Power switching components are used to regulate energy to various type loads
most commonly found in industrial and home equipment. These components are
easily activated from simple control circuits or interfaced to computers for
more complex load control. Typical applications include heating, cooling,
battery chargers and lighting.
In addition to the above products, the Company is also a supplier of fuse
holders (including OMNI-BLOK(R)), fuse blocks and fuse clips primarily to
customers that purchase circuit protection devices from the Company.
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, radios, windows and other controls.
Currently, a typical automobile contains 30 to 100 fuses, depending upon the
options installed. The fuse content per vehicle is expected to continue to grow
as more electronic features are included in automobiles. The Company also
supplies fuses for the protection of electric and hybrid vehicles.
The Company is a primary supplier of automotive fuses to United States, Asian
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. The Company invented and owns most 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's automotive fuse products are marketed under
the following trademarked brand names: ATO(R), MINI(R), MAXI(TM), MIDI(R),
MEGA(TM) and CablePro(TM).
A majority of the Company's North American automotive 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 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) fuses to Asian automotive OEMs and wire harness
manufacturers. The Company also licensed its patented MINI(R) and MAXI(TM)
automotive fuse designs to Bussmann, a division of Cooper Industries.
3
The license with Bussmann expired on May 22, 2005. Bussmann is the Company's
largest domestic competitor. Additionally, see "Business -- Patents, Trademarks
and Other Intellectual Property" and "-- Competition."
ELECTRICAL PRODUCTS
The Company entered the electrical market in 1983 and manufactures and sells a
broad range of low-voltage and medium-voltage circuit protection products to
electrical distributors and their customers in the construction, original
equipment manufacturers ("OEM") and industrial maintenance and repair operations
("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. They are rated and listed under one of many Underwriters' Laboratories
fuse classifications. 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.
The Company's POWR-GARD(R) product line features the Indicator(TM) series power
fuse used in both the OEM and MRO markets. The Indicator(TM) technology provides
visual blown fuse indication at a glance, reducing maintenance and downtime on
production equipment. The Indicator(TM) product offering is widely used in motor
protection and industrial control panel applications.
PRODUCT DESIGN AND DEVELOPMENT
The Company employs scientific, engineering and other personnel to continually
improve its existing product lines and to develop new products at its research
and engineering facilities in Des Plaines, Illinois, Irving, Texas, Swindon, UK,
Witten and Dunsen, Germany and Dundalk, Ireland. The Product Technology
Department maintains a staff of engineers, chemists, material scientists and
technicians whose primary responsibility is 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 ranges from several months to 18 months based on complexity
of development with continuous efforts to reduce the development cycle. During
fiscal years 2005, 2004 and 2003, the Company expended $16.7 million, $16.1
million and $8.7 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 intellectual property and 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 December 31, 2005, the Company owned 150 patents in North America, 76
patents in the European Economic Community and 30 patents in other foreign
countries. The Company has also registered trademark protection for certain of
its brand names and logos. The 150 North American patents are in the following
product categories: 112 electronic, 24 automotive, 14 electrical fuse.
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 granted a license covering the MINI(R) fuse technology to Pacific
Engineering Company, Ltd., a Japanese manufacturer that produces and distributes
the Company's patented automotive fuses to Asian-based automotive OEMs and wire
harness 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 $50,000. This license expires on April 16, 2006.
The Company licensed 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 1989 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. This license expired on May 22, 2005.
License royalties amounted to $0.5 million, $0.5 million and $0.4 million for
fiscal 2005, 2004 and 2003, respectively.
4
MANUFACTURING
The Company performs the majority of its own fabrication and stamps some of the
metal components used in its fuses, holders and switches from raw metal stock
and makes its own contacts and springs. In addition, the Company fabricates
silicon wafers for certain applications and performs its own plating (silver,
nickel, zinc, tin and oxides). All thermoplastic molded component requirements
used for such products as the ATO(R), MINI(R) and MAXI(TM) fuse 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, raw silicon,
solder and various gases. The Company depends upon a sole source for several
heat resistant plastics and zinc. The Company believes that suitable alternative
heat resistant plastics and zinc are available from other sources at prices that
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 and our laboratories test new products, prototype
concepts and production run samples. The Company participates in "Just-in-Time"
delivery programs and with many of its major suppliers and actively promotes the
building of strong cooperative relationships with its suppliers by utilizing
Early Supplier Involvement techniques and involving them in pre-engineering
product and process development.
MARKETING
The Company's domestic sales and marketing staff of over 50 people maintains
relations with major OEMs and distributors. The Company's sales, marketing and
engineering personnel interact directly with the OEM engineers to ensure
appropriate circuit protection and reliability within the parameters of the
OEM's circuit design. Internationally, the Company maintains a sales and
marketing staff of over 80 people and sales offices in The Netherlands, the
U.K., France, Germany, Spain, Ireland, Singapore, Taiwan, Japan, Brazil, Hong
Kong, Korea and China. The Company also markets its products indirectly through
a worldwide organization of over 62 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 one-fourth 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
utilizes manufacturers' representatives and distributors in Japan, Singapore,
Korea, Taiwan, China, Malaysia, Thailand, Hong Kong, India, Indonesia,
Philippines, New Zealand and Australia. In Europe, the Company maintains a
direct sales force and utilizes manufacturers' representatives and distributors
to support a wide array of customers.
AUTOMOTIVE
The Company maintains a direct sales force to 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 and Pep Boys. In Europe,
the Company uses both a direct sales force and manufacturers' representatives to
distribute its products to 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 customers in the region, including
Toyota, Honda and Nissan.
ELECTRICAL
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
1,600 distributor buying locations.
5
These distributors have customers that include electrical contractors,
municipalities, utilities and factories (including both MRO and OEM).
The Company's field sales force (including regional sales managers and
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 geographic business segments: Americas, Europe
and Asia-Pacific. For information with respect to the Company's operations in
its three geographic areas for the fiscal year ended December 31, 2005, see
Business Segment Information included as part of "Item 8. Financial Statements
and Supplementary Data"- 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. During the
2005, 2004 and 2003 fiscal years, net sales to customers outside the United
States (exports and foreign operations) accounted for approximately 59.8%, 58.5%
and 55.9%, respectively, of the Company's total net sales.
COMPETITION
The Company's products compete with similar products of other manufacturers,
some of which have substantially greater financial resources than the Company.
In the electronics market, the Company's competitors include AVX, Bel Fuse,
Bourns, Cooper Electronics, EPCOS, Raychem Division of TYCO International, San-O
Industrial Corp., and STMicroelectronics. In the automotive market, the
Company's competitors, both in sales to automobile manufacturers and in the
aftermarket, include Bussmann Division of Cooper Industries and MTA in Italy.
The Company licenses several of its automotive fuse designs to Bussmann. In the
electrical market, the Company's major competitors include Cooper Bussmann and
Ferraz Shawmut. The Company believes that it competes on the basis of innovative
products, the breadth of its product line, the quality and design of its
products and the responsiveness of its customer service in addition to price.
BACKLOG
The backlog of unfilled orders at December 31, 2005, was approximately $68.5
million, compared to $49.0 million at January 1, 2005. Substantially all of the
orders currently in backlog are scheduled for delivery in 2006.
EMPLOYEES
As of December 31, 2005, the Company employed 5,646 persons. Approximately 35
employees in the U.S., 1,430 employees in Mexico, 113 employees in Ireland and
423 employees in Germany are covered by collective bargaining agreements. The
U.S. agreement expires on March 31, 2008 for 35 employees, the Mexico agreement
expired February 28, 2006 for 1,430 employees, the Ireland agreement expires
December 31, 2006 for 113 employees, and the Germany agreement expired February
28, 2006 for 337 employees and June 30, 2007 for 86 employees. Overall, the
Company has historically maintained satisfactory employee relations and many of
its employees have long experience with the Company.
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 facilities located in Ireland
and Irving, Texas. The Ireland facility was acquired in October 1999 in
connection with the acquisition of the Harris suppression products division.
Certain containment actions have been ongoing and full disclosure with
appropriate agencies in Ireland has been initiated. The Company received an
indemnity from Harris Corporation with respect to these matters. The Irving,
Texas facility lease was assumed in July 2003 in connection with the acquisition
of Teccor Electronics, Inc. The Company is taking the appropriate measures to
bring this facility into compliance with Texas environmental laws, and the
Company also received an indemnity from Invensys plc
6
with respect to this matter. Heinrich Industries, AG ("Heinrich"), acquired by
the Company in May 2004, is responsible for maintaining coal mine shaft
entrances and is compliant with German regulations pertaining to the maintenance
of the mines.
ITEM 1A. RISK FACTORS
Our business, financial condition and results of operations are subject to
various risks and uncertainties, including the risk factors we have identified
below. These factors are not necessarily listed in order of importance. We may
amend or supplement the risk factors from time to time by other reports that we
file with the SEC in the future.
Our Industry is Subject to Intense Competitive Pressures
We operate in markets that are highly competitive. We compete on the basis of
price, quality, service and/or brand name across the industries and markets we
serve. Competitive pressures could affect prices we charge our customers or
demand for our products.
We may not always be able to compete on price, particularly when compared to
manufacturers with lower cost structures, especially those with more significant
offshore facilities located where labor and other costs are lower than ours.
Some of our competitors have substantially greater sales, financial and
manufacturing resources and may have greater access to capital than Littelfuse.
As other companies enter our markets or develop new products, competition may
intensify further. Our failure to compete effectively could materially adversely
affect our business, financial condition and results of operations.
We granted a license covering the MINI(R) fuse technology to Pacific
Engineering Company, Ltd., a Japanese manufacturer that produces and
distributes the Company's patented automotive fuses to Asian-based automotive
OEMs and wire harness manufacturers. This license expires on April 16, 2006.
We May be Unable to Manufacture and Deliver Products in a Manner that is
Responsive to Our Customers' Needs
The end markets for our products are characterized by technological change,
frequent new product introductions and enhancements, changes in customer
requirements and emerging industry standards. The introduction of products
embodying new technologies and the emergence of new industry standards could
render our existing products obsolete and unmarketable before we can recover any
or all of our research, development and commercialization expenses on capital
investments. Furthermore, the life cycles of our products may change and are
difficult to estimate.
Our future success will depend upon our ability to manufacture and deliver
products in a manner that is responsive to our customers' needs. We will need to
develop and introduce new products and product enhancements on a timely basis
that keep pace with technological developments and emerging industry standards
and address increasingly sophisticated requirements of our customers. We invest
heavily in research and development without knowing that we will recover these
costs. Our competitors may develop products or technologies that will render our
products non-competitive or obsolete. If we cannot develop and market new
products or product enhancements in a timely and cost-effective manner, our
business, financial condition and results of operations could be materially
adversely affected.
Our Business May be Interrupted by Labor Disputes or Other Interruptions of
Supplies
A work stoppage could occur at certain of our facilities, most likely as a
result of disputes under existing collective bargaining agreements with labor
unions, or in connection with negotiations of new collective bargaining
agreements. In addition, we may experience a shortage of supplies for various
reasons, such as financial distress, work stoppages, natural disasters or
production difficulties that may affect one of our suppliers. A significant work
stoppage, or an interruption or shortage of supplies for any reason, if
protracted, could substantially adversely affect our business, financial
condition and results of operations.
Our Revenues May Vary Significantly from Period to Period
Our revenues may vary significantly from one accounting period to another due to
a variety of factors. Some of the principal factors that contribute to these
fluctuations may be: changes in our customers' buying decisions; changes in
demand for our products; our product mix; our effectiveness in managing
manufacturing processes; costs and timing of our component purchases; the
effectiveness of our inventory control; the degree to which we are able to
utilize our available manufacturing capacity; our ability to meet delivery
schedules; general economic and industry conditions; and local conditions and
events that may affect our production volumes, such as labor conditions and
political instability.
7
Our Ability to Manage Currency or Commodity Price Fluctuations or Shortages is
Limited
As a resource-intensive manufacturing operation, we are exposed to a variety of
market and asset risks, including the effects of changes in foreign currency
exchange rates, commodity prices and interest rates. We have multiple sources of
supply for each of our major commodity requirements. However, significant
shortages that disrupt the supply of raw materials or price increases could
affect prices we charge our customers, our product costs, and the competitive
position of our products and services. We monitor and manage these exposures as
an integral part of our overall risk management program, which recognizes the
unpredictability of markets and seeks to reduce the potentially adverse effects
on our results. Nevertheless, changes in currency exchange rates, commodity
prices and interest rates cannot always be predicted. In addition, because of
intense price competition and our high level of fixed costs, we may not be able
to address such changes even if they are foreseeable. Substantial changes in
these rates and prices could have a substantial adverse effect on our results of
operations and financial condition. For additional discussion of interest rate,
currency or commodity price risk, see "Item 7A. Quantitative and Qualitative
Disclosures about Market Risks."
The Bankruptcy or Insolvency of a Major Customer Could Adversely Affect Us
Certain of our major customers, such as those in the automotive industry, are
suffering financial hardships. The bankruptcy or insolvency of a major customer
could cause a material adverse effect on our business, financial condition and
results of operations. In addition, the bankruptcy or insolvency of a major U.S.
auto manufacturer likely could lead to substantial disruptions in the automotive
supply base, which likely would have a substantial adverse impact on our
business, financial condition and results of operations.
Operations and Supply Sources Located Outside the United States, Particularly in
Emerging Markets, Are Subject to Increased Risks
Our operating activities outside the United States contribute significantly to
our revenues and earnings. Serving a global customer base and remaining
competitive in the global market place may require that we place more production
in countries other than the United States, including emerging markets, to
capitalize on market opportunities and maintain a cost-efficient structure. In
addition, we source a significant amount of raw materials and other components
from third-party suppliers or joint-venture operations in low-cost countries.
Our operations outside the United States could be disrupted by a natural
disaster, labor strike, war, political unrest, terrorist activity or public
health concerns. Operations outside the United States are also subject to
certain regulatory and economic uncertainties including trade barriers and
restrictions on the exchange and fluctuations of currency. As a result, we may
experience disruptions at these operations that could have a material adverse
effect on our business, financial condition and results of operations.
We Engage in Acquisitions and May Encounter Difficulties in Integrating These
Businesses
We are a company that, from time to time, seeks to grow through strategic
acquisitions. We have in the past acquired a number of businesses or companies
and additional product lines and assets. We intend to continue to expand and
diversify our operations with additional acquisitions. The success of these
transactions depends on our ability to integrate the assets and personnel
acquired in these transactions. We may encounter difficulties in integrating
acquisitions with our operations and may not realize the degree or timing of the
benefits that we anticipated from an acquisition.
We Have Closed, Combined, Sold or Disposed of Certain Subsidiaries, Divisions or
Assets, Which in the Past Has Reduced Our Sales Volume and Resulted in
Restructuring Costs
We are a company that, from time to time, seeks to optimize its manufacturing
capabilities and efficiencies through restructurings, consolidations, plant
closings or asset sales. We may make further specific determinations to
consolidate, close or sell additional facilities. Possible adverse consequences
related to such actions may include various accounting charges such as for idle
capacity, disposition costs, severance costs, impairments of goodwill and
possibly an immediate loss of revenues, and other items in addition to normal or
attendant risks and uncertainties. We may be unsuccessful in any of our current
or future efforts to restructure or consolidate our business. Our plans to
minimize or eliminate any loss of revenues during restructuring or consolidation
may not be achieved. These activities may have a material adverse effect upon
our business, financial condition or results of operations.
Environmental Liabilities Could Adversely Impact Our Financial Position
Federal, state and local laws and regulations impose various restrictions and
controls on the discharge of materials, chemicals and gases used in our
manufacturing processes or in our finished goods. These environmental
regulations have required us to expend a portion of our resources and capital on
relevant compliance programs. Under other laws and regulations, we could be held
financially responsible for remedial measures if our current or former
properties are contaminated or if we send waste to a landfill or recycling
facility that becomes contaminated, even if we did not cause the contamination.
We may be subject to additional common law claims if we release substances that
damage or harm third parties. In addition, future changes in environmental laws
or regulations may
8
require additional investments in capital equipment or the implementation of
additional compliance programs in the future. Any failure to comply with new or
existing environmental laws or regulations could subject us to significant
liabilities and could have material adverse effects on our business, financial
condition or results of operations.
In the conduct of our manufacturing operations, we have handled and do handle
materials that are considered hazardous, toxic or volatile under federal, state
and local laws. The risk of accidental release of such materials cannot be
completely eliminated. In addition, we operate or own facilities located on or
near real property that was formerly owned and operated by others. Certain of
these properties were used in ways that involved hazardous materials.
Contaminants may migrate from or within or through property. These releases or
migrations may give rise to claims. Where third parties are responsible for
contamination, the third parties may not have funds, or not make funds available
when needed, to pay remediation costs imposed upon us under environmental laws
and regulations.
We have an accrual related to coal mine shafts. The accrual is based on an
engineering study estimating the present value of the cost of future
occurrences related to the coal mine shafts (such as a shaft collapse) and the
probability of such occurrences. Actual amounts incurred could differ from the
amount accrued.
We Derive a Substantial Portion of Our Revenues from Customers in the
Automotive, Computer and Communications Industries, and We are Susceptible to
Trends and Factors Affecting Those Industries as Well as the Success of Our
Customers' Products
Net sales to the automotive, computer and communications industries represent a
substantial portion of our revenues. Factors negatively affecting these
industries and the demand for products also negatively affect our business,
financial condition or results of operations. Any adverse occurrence, including
industry slowdown, recession, political instability, costly or constraining
regulations, armed hostilities, terrorism, excessive inflation, prolonged
disruptions in one or more of our customers' production schedules or labor
disturbances, that results in significant decline in the volume of sales in
these industries, or in an overall downturn in the business and operations of
our customers in these industries, could materially adversely affect our
business, financial condition or results of operations. For example, the
automotive industry is highly cyclical in nature and sensitive to changes in
general economic conditions, consumer preferences and interest rates. In
addition, the global automotive industry has overall manufacturing capacity far
exceeding demand. To the extent that demand for certain of our customers'
products decline, the demand for our products may decline. Reduced demand
relating to general economic conditions, consumer preferences, interest rates or
industry over capacity may have a material adverse effect upon our business,
financial condition or results of operations.
Inability to Maintain Access to Capital Markets May Adversely Affect Our
Business and Financial Results
Our ability to invest in our businesses, make strategic acquisitions and
refinance maturing debt obligations may require access to the capital markets
and sufficient bank credit lines to support short-term borrowings. If we are
unable to access the capital markets or bank credit facilities, we could
experience a material adverse affect on our business, financial condition and
results of operations.
Fixed Costs May Reduce Operating Results if Our Sales Fall Below Expectations
Our expense levels are based, in part, on our expectations for future sales.
Many of our expenses, particularly those relating to capital equipment and
manufacturing overhead, are relatively fixed. We might be unable to reduce
spending quickly enough to compensate for reductions in sales. Accordingly,
shortfalls in sales could materially and adversely affect our operating results.
The Volatility of Our Stock Price Could Affect the Value of an Investment in Our
Stock and Our Future Financial Position
The market price of our stock has fluctuated widely. Between January 2, 2005 and
December 31, 2005, the closing sale price of our common stock ranged between a
low of $21.44 and a high of $33.59, experiencing greater volatility over that
time than most of the market did. The volatility of our stock price may be
related to any number of factors, such as general economic conditions, industry
conditions, analysts' expectations concerning our results of operations, or the
volatility of our revenues as discussed above under "--Our Revenues May Vary
Significantly from Period to Period." The historic market price of our common
stock may not be indicative of future market prices. We may not be able to
sustain or increase the value of our common stock. Declines in the market price
of our stock could adversely affect our ability to retain personnel with stock
incentives, to acquire businesses or assets in exchange for stock and/or to
conduct future financing activities with or involving our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
9
ITEM 2. PROPERTIES
LITTELFUSE FACILITIES
The Company's operations are located in 36 owned or leased facilities worldwide,
representing an aggregate of approximately 1,962,545 square feet. The U.S.
headquarters and largest manufacturing facility are located in Des Plaines,
Illinois, supported by the Company's North American distribution center in
nearby Elk Grove Village, Illinois. The Company has additional North American
manufacturing facilities in Arcola, Illinois, Irving, Texas and two plants in
Mexico. The European headquarters and primary European distribution center is in
the Netherlands, with manufacturing plants in the U.K., Ireland, and Germany.
Asian operations include sales and distribution centers located in Singapore,
Taiwan, Japan, China and Korea, with manufacturing plants in 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
SIZE LEASE/ EXPIRATION
LOCATION USE (SQ.FT.) OWN DATE PRIMARY PRODUCT
--------- ------------------- --------- ----- ---------- ---------------
Des Plaines, Illinois Administrative, 340,000 Owned -- Auto, Electronic,
Engineering, Electrical
Manufacturing,
Testing and Research
Elk Grove Village, Illinois Warehousing 183,317 Leased 2007 Auto, Electronic,
and Electrical
Irving, Texas Engineering, 101,000 Leased 2014 Electronic
Manufacturing,
Testing and Research
Brownsville, Texas Distribution 15,750 Leased 2009 Electronic
Birmingham, Michigan Sales 2,076 Leased 2011 Auto
Matamoros, Mexico Manufacturing 77,500 Leased 2007 Electronic
Matamoros, Mexico Administrative, 14,000 Leased 2007 Electronic
Manufacturing
Arcola, Illinois Manufacturing 36,000 Owned -- Electrical
Arcola, Illinois Tech Support 7,000 Leased 2007 Electrical
Piedras Negras, Mexico Administrative, 99,822 Leased 2015 Auto
Manufacturing
Piedras Negras, Mexico Warehousing 2,500 Leased 2006 Electrical
Piedras Negras, Mexico Manufacturing 11,189 Leased 2007 Electrical
Piedras Negras, Mexico Manufacturing 22,380 Leased 2006 Electrical
Piedras Negras, Mexico Manufacturing 67,225 Leased 2008 Electrical
Redditch, U.K. Sales 450 Leased 2006 Electronic
Swindon, U.K. Manufacturing 55,000 Owned -- Electronic
Utrecht, the Netherlands Sales, 34,642 Owned -- Auto
Administrative and and Electronic
Distribution
Witten, Germany Administrative 83,682 Owned -- Auto, Electronic,
Electrical
Dunsen, Germany Manufacturing, Sales 43,971 Owned -- Auto
Eltville, Germany Manufacturing, Sales 88,943 Owned -- Electrical
Uebigau, Germany Manufacturing 72,054 Owned -- Electrical
Witten, Germany Manufacturing, Sales 185,152 Owned -- Electronic
Singapore Sales and Distribution 34,875 Leased 2006 Electronic
10
LEASE
SIZE LEASE/ EXPIRATION
LOCATION USE (SQ.FT.) OWN DATE PRIMARY PRODUCT
--------- ------------------- --------- ----- ---------- ---------------
Seoul, Korea Sales 4,589 Leased 2006 Electronic
and Auto
Lipa City, Philippines Manufacturing 58,095 Owned -- Electronic
Lipa City, Philippines Manufacturing 22,721 Leased 2007 Electronic
Dongguan, China Administrative, 53,860 Leased 2009 Electronic
Manufacturing
Suzhou, China Manufacturing 80,732 Owned -- Electronic
Suzhou, China Manufacturing 12,390 Leased 2007 Electronic
Hong Kong, China Sales 2,000 Leased 2006 Electronic
Hong Kong Sales 3,545 Leased 2006 Electronic
Taipei, Taiwan Sales 1,184 Leased 2007 Electronic
Yokohama, Japan Sales 6,243 Leased 2007 Electronic
Yokohama, Japan Distribution 17,858 Leased 2007 Electronic
Sao Paulo, Brazil Sales 800 Leased 2006 Electronic
and Auto
Dundalk, Ireland Manufacturing 120,000 Owned -- Electronic
and Auto
Properties with lease expirations in 2006 renew at various times throughout the
year. At this point, the Company does not anticipate any material impact as a
result of such expirations.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings that 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 2005.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
NAME AGE POSITION
- ---- --- --------
Gordon Hunter................................... 54 Chairman, President and Chief Operating Officer
Kenneth R. Audino(1)............................ 62 Vice President, Organizational Development and Total Quality
Management
Philip G. Franklin.............................. 54 Vice President, Operations Support and Chief Financial
Officer
Dal Ferbert..................................... 51 Vice President and General Manager of the Electrical
Business Unit
David W. Heinzmann.............................. 42 Vice President and General Manager of the Automotive
Business Unit
David R. Samyn.................................. 45 Vice President and General Manager of the Electronics
Business Unit
Elizabeth C. Calhoun............................ 44 Vice President, Human Resources
Mary S. Muchoney................................ 60 Corporate Secretary
11
(1) Retired March 1, 2006.
Officers of Littelfuse are elected by the Board of Directors and serve at the
discretion of the Board.
Gordon Hunter was elected as the Chairman of the Board of Directors of the
Company and President and Chief Executive Officer effective January 1, 2005. Mr.
Hunter served as Chief Operating Officer of the Company from November 2003 to
January 2005. Mr. Hunter has been a member of the Board of Directors of the
Company since June 2002, where he has served as Chairman of the Technology
Committee. Prior to joining Littelfuse, Mr. Hunter was employed with Intel
Corporation, where he was Vice President, Intel Communications Group, and
General Manager, Optical Products Group, responsible for managing the access and
optical communications business segments, from 2002 to 2003. Mr. Hunter was CEO
for Calmar Optcom during 2001. From 1997 to 2002, he also served as a Vice
President for Raychem Corporation, His experience includes 20 years with Raychem
Corporation in the United States and Europe, with responsibilities in sales,
marketing, engineering and general management.
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 and Des Plaines product evaluation
laboratories. As of March 1, 2006, Mr. Audino retired from the position of Vice
President, Organizational Development and Total Quality Management. 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.
Philip G. Franklin, Vice President, Operations Support and Chief Financial
Officer, has responsibility for investor relations, accounting, information
systems and global supply chain 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.
Dal Ferbert, Vice President and General Manager, Electrical Business Unit,
is responsible for the management of daily operations, sales, marketing and
strategic planning efforts of the Electrical Business Unit (POWR-GARD Products).
Mr. Ferbert joined the Company in 1976 as a member of the electronic distributor
sales team. From 1980 to 1989 he served in the Materials Management Department
as a buyer and then Purchasing Manager. In 1990, he was promoted to National
Sales Manager of the Electrical Business Unit and then promoted to his current
position in 2004.
David W. Heinzmann, Vice President and General Manager, Automotive Business
Unit, is responsible for marketing, sales, product development and manufacturing
for all automotive customers and products. Mr. Heinzmann began his career at the
Company in 1985, and possesses a broad range of experience within the
organization. He has held positions as a Manufacturing Manager, Quality Manager,
Plant Manager and Product Development Manager. Mr. Heinzmann also served as
Director of Global Operations of the Electronics Business Unit from early 2000
through 2003.
David Samyn, Vice President and General Manager, Electronics Business Unit, is
responsible for marketing, sales, product development and manufacturing for all
electronics customers and products. Mr. Samyn joined the Company's management
team in January 2003 as General Manager of the Electronics Business Unit. Prior
to joining the Company, Mr. Samyn served as Vice President - Global Sales with
Airfiber, Inc., an optical wireless telecom company in San Diego, CA from 2001
to 2003. Before that, Mr. Samyn spent five years with ADC Telecommunications
where he took on global sales and marketing responsibilities.
Elizabeth Calhoun, Vice President, Human Resources, has responsibility for the
worldwide human resource function. Ms. Calhoun joined the Company in November
2004 with over seventeen years of experience in human resources. Prior to
joining Littelfuse, she was Director of Human Resources - Home Services for
Sears Roebuck and Company in Hoffman Estates, Illinois, from 2002 to 2004. Ms.
Calhoun's career also includes human resources management positions with Pepsi
Bottling Group, Inc. from 1995 to 2002.
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.
12
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information set forth under "Quarterly Stock Prices" on page 39 of the
Annual Report to Stockholders is incorporated herein by reference. As of
February 24, 2006, there were 162 holders of record of the Company's
Common Stock.
Shares of the Company's Common Stock are traded under 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 credit
agreements which relate to the maintenance of a minimum net worth and certain
financial ratios.
The table below provides information with respect to purchases by the
Company of shares of its common stock during each quarter of fiscal 2005:
ISSUER PURCHASES OF EQUITY SECURITIES
Total Number of Shares
Purchased as Part of Maximum Number of Shares
Total Number of Average Price Publicly Announced that May Yet Be Purchased
Period Shares Purchased Paid per Share Plans or Programs Under the Plans or Programs
October 2005 - - - 755,500
November 2005 27,000 $22.78 27,000 728,500
December 2005 85,000 $26.55 85,000 643,500
Total 112,000 $25.64 112,000 643,500
The Company's Board of Directors authorized the repurchase of up to 1,000,000
shares under a program for the period May 1, 2005 to April 30, 2006.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth under "Selected Financial Data - Five Year Summary" on
page 38 of the Annual Report to Stockholders is incorporated herein by
reference.
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 1 through 3 of the
Annual Report to Stockholders is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The information set forth under "Market Risk" on page 9 of the Annual Report to
Stockholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Report of Independent Registered Public Accounting Firm and the Consolidated
Financial Statements and notes thereto of the Company set forth on pages 12
through 39 of the Annual Report to Stockholders are incorporated herein by
reference.
13
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, and that
such information is accumulated and communicated to the Company's management,
including the Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.
As of the end of the period covered by this Annual Report on Form 10-K for
December 31, 2005, the Chief Executive Officer and Chief Financial Officer of
the Company evaluated the effectiveness of the disclosure controls and
procedures of the Company and concluded that these disclosure controls and
procedures are effective to ensure that material information relating to the
Company and its consolidated subsidiaries has been made known to them by the
employees of the Company and its consolidated subsidiaries during the period
preceding the filing of this Report. There were no significant changes in the
Company's internal controls during the period covered by this Report that could
materially affect these controls or could reasonably be expected to materially
affect the Company's internal control reporting, disclosures and procedures
subsequent to the last day they were evaluated by the Chief Executive Officer
and Chief Financial Officer of the Company.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Littelfuse is responsible for establishing and maintaining
adequate internal control over financial reporting as such term is defined in
Exchange Act Rules 13a-15(f). Littelfuse's internal control system was designed
to provide reasonable assurance to its management and Board of Directors
regarding the preparation and fair presentation of published financial
statements.
All internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined effective can provide only
reasonable assurance with respect to financial statement preparation and
presentation.
Littelfuse's management assessed the effectiveness of the Company's internal
control over financial reporting as of December 31, 2005 based upon the
framework in Internal Control - Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based upon this
assessment, the Company's management concluded that, as of December 31, 2005,
the Company's internal control over financial reporting is effective.
Littelfuse's independent registered public accounting firm, Ernst & Young LLP,
has audited management's assessment of the Company's internal control over
financial reporting. Their report appears on page 11 of the Company's annual
report to stockholders, which report of Ernst & Young LLP is incorporated herein
by reference.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There was no change in the Company's internal control over financial reporting
that occurred during the Company's most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
14
ITEM 9B. OTHER INFORMATION
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. Please also refer to the information set forth
under "Executive Officers of the Registrant" in Part I of this Report. The
Company maintains a code of ethics for its chief executive officer and senior
financial officers and a code of conduct for all of its directors, officers and
associates, which are available for public viewing on the Company's web site
(www.littelfuse.com) under the heading "Investors - Corporate Governance."
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.
STOCK PLAN DISCLOSURE
The following table represents the Company's equity compensation plans,
including both stockholder approved plans and non-stockholder approved plans.
The section entitled "Compensation of Directors" in the Proxy Statement contains
a summary explanation of the Stock Plan for New Directors of Littelfuse, Inc.,
which has been adopted without the approval of stockholders and is incorporated
herein by reference.
NUMBER OF SECURITIES
NUMBER OF SECURITIES REMAINING AVAILABLE
TO BE ISSUED UPON WEIGHTED-AVERAGE FOR FUTURE ISSUANCE
EXERCISE OF EXERCISE PRICE OF UNDER EQUITY
PLAN CATEGORY OUTSTANDING OPTIONS OUTSTANDING OPTIONS COMPENSATION PLANS
------------- ------------------- ------------------- ------------------
Equity compensation plans
approved by security holders 1,809,360 $ 27.68 80,530
Equity compensation plans not
approved by security holders 10,000 $ 23.48 15,000
Total 1,819,360 $ 27.66 95,530
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.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information set forth under "Audit and Non-Audit Fees" in the Proxy
Statement is incorporated herein by reference. Information relating to the
Company's auditors and the Audit Committee's pre-approval policies can be found
under the caption "Report of the Audit Committee" in the Proxy Statement which
is incorporated herein by reference.
15
PART IV
ITEM 15. 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 Registered Public Accounting Firm (pages 12-13).
(ii) Consolidated Balance Sheet as of December 31, 2005 and January 1, 2005
(page 14).
(iii) Consolidated Statements of Income for the years ended December 31,
2005, January 1, 2005, and January 3, 2004 (page 15).
(iv) Consolidated Statements of Cash Flows for the years ended December 31,
2005, January 1, 2005, and January 3, 2004 (page 16).
(v) Consolidated Statements of Shareholders' Equity for the years ended
December 31, 2005, January 1, 2005, and January 3, 2004 (page 17).
(vi) Notes to Consolidated Financial Statements (pages 18-39).
(2) Financial Statement Schedules. The following financial statement
schedule is 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
regulations 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 19-20.
(b) Exhibits
See Exhibit Index on pages 19-20.
(c) Financial Statement Schedules
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, therefore, have been omitted.
16
LITTELFUSE, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(IN THOUSANDS)
ADDITIONS
CHARGED TO
BALANCE AT COSTS AND BALANCE AT
BEGINNING EXPENSES DEDUCTIONS END OF
DESCRIPTION OF YEAR (A) (B) YEAR
- ----------------------------------- ------------ -------- ----------- -----------
Year ended December 31, 2005
Allowance for losses on
accounts receivable............ $ 1,481 $ 1,206 $ 522 $ 2,165
======== ======= ======== ========
Reserves for sales discounts
and allowances................. $ 8,538 $ 1,200 $ -- $ 9,738
======== ======= ======== ========
Year ended January 1, 2005
Allowance for losses on
accounts receivable............ $ 1,042 $ 591 $ 152 $ 1,481
======== ======= ======== ========
Reserves for sales discounts
and allowances................. $ 6,428 $ 2,112 $ 2 $ 8,538
======== ======= ======== ========
Year ended January 3, 2004
Allowance for losses on
accounts receivable............ $ 1,067 $ 50 $ 75 $ 1,042
======== ======= ======== ========
Reserves for sales discounts
and allowances................. $ 6,263 $ 165 $ -- $ 6,428
======== ======= ======== ========
(A) Allowance for losses on accounts receivable includes acquired balances of
$123 for Heinrich and $50 for Teccor in fiscal year 2004 and 2003, respectively.
(B) Write-off of uncollectible accounts, net of recoveries and foreign currency
translation.
17
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/ Gordon Hunter
-------------------------------------
Gordon Hunter,
Chairman of the Board of Directors,
President and Chief Executive Officer
Date: March 16, 2006
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 indicated on March 16, 2006.
/s/ Gordon Hunter Chairman of the Board of Directors, President and
- --------------------------------------------- Chief Executive Officer (Principal Executive Officer)
Gordon Hunter
/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/ Ronald L. Schubel Director
- ---------------------------------------------
Ronald L. Schubel
/s/ Howard B. Witt Director
- ---------------------------------------------
Howard B. Witt
/s/ Philip G. Franklin Vice President, Operations Support and
- --------------------------------------------- Chief Financial Officer
Philip G. Franklin (Principal Financial and Principal Accounting Officer)
18
LITTELFUSE INC.
INDEX TO EXHIBITS
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
3.1 Certificate of Incorporation, as amended to date (filed as 3.1 to the Company's Form 10K for the fiscal year ended
January 3, 1998 (1934 Act File No. 0-20388) and incorporated herein by reference).
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, as amended to date (filed as exhibit 2.1 to the Company's Form 10-Q for the quarterly period ended June 29, 2002
(1934 Act File No. 0-20388) and incorporated herein by reference).
10.1 Employment Agreement dated as of August 8, 2003, between Littelfuse, Inc. and Howard B. Witt (filed as exhibit 10.1 to the
Company's Form 10-Q for the quarterly period ended September 27, 2003 (1934 Act File No. 0-20388) and incorporated herein
by reference).
10.2 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 10-K for the fiscal year ended December 28, 1996 (1934 Act File No. 0-20388) and
incorporated herein by reference).
10.3 MINI(R) and MAXI(TM) License Agreement, dated as of June 21, 1989, between Littelfuse, Inc. and Cooper Industries, Inc.
(filed as exhibit 4.6 to the Company's Form 10 effective September 16, 1992 (1934 Act File No. 0-20388) and incorporated
herein by reference).
10.4 Patent License Agreement, dated as of January 1, 1987, between Littelfuse, Inc. and Cooper Industries, Inc. (filed as
exhibit 4.6 to the Company's Form 10 effective September 16, 1992 (1934 Act File No. 0-20388) and incorporated herein by
reference).
10.5 1993 Stock Plan for Employees and Directors of Littelfuse, Inc., as amended (filed as exhibit 10.1 to the Company's Form
10-Q for the quarterly period ended July 2, 2005 (1934 Act File No. 0-20388) and incorporated herein by reference).
10.6 Littelfuse, Inc. Supplemental Executive Retirement Plan (filed as exhibit 10.10 to the Company's Form 10-K for the year
ended December 31, 1993 (1934 Act File No. 0-20388) and incorporated herein by reference).
10.7 Littelfuse Deferred Compensation Plan for Non-employee Directors, as amended (filed as exhibit 10.4 to the Company's Form
10-Q for the quarterly period ended July 2, 2005 (1934 Act File No. 0-20388) and incorporated herein by reference).
10.8 Littelfuse Executive Loan Program (filed as Exhibit 10.2 to the Company's Form 10-Q for the quarterly period ended June
30, 1995 (1934 Act File No. 0-20388) and incorporated herein by reference).
10.9 Change of Control Employment Agreement dated as of November 3, 2003, between Littelfuse, Inc. and Gordon Hunter (filed as
exhibit 10.10 to the Company's Form 10-K for the annual period ended January 3, 2004 (1934 Act File No. 0-20388) and
incorporated herein by reference (other executives named in this Form 10-K but not listed in this Exhibit Index as having
a Change of Control Employment Agreement are parties to agreements substantially similar to this agreement)).
10.10 Form of Change of Control Employment Agreement dated as of September 1, 2001, between Littelfuse, Inc. and Mr. Franklin
and Ms. Muchoney (filed as exhibit 10.12 to the Company's Form 10-Q for the quarterly period ended September 29, 2001
(1934 Act File No. 0-20388) and incorporated herein by reference).
10.11 Form of Change of Control Employment Agreement dated as of September 1, 2001, between Littelfuse, Inc. and Mr. Kenneth
Audino (filed as exhibit 10.13 to the Company's Form 10-Q for the quarterly period ended September 29, 2001 (1934 Act File
No. 0-20388) and incorporated herein by reference).
19
10.12 Stock Plan for New Directors of Littelfuse, Inc. (filed as exhibit 10.2 to the Company's Form 10-Q for the quarterly
period ended July 2, 2005 (1934 Act File No. 0-20388) and incorporated herein by reference).
10.13 Bank credit agreement among Littelfuse, Inc., as borrower, the lenders named therein and the Bank of America N.A., as
agent, dated as of August 26, 2003 (filed as exhibit 4.1 to the Company's Form 10-Q for the quarterly period ended
September 27, 2003 (1934 Act File No. 0-20388 and incorporated herein by reference).
10.14 Stock Plan for Employees and Directors of Littelfuse, Inc., as amended (filed as exhibit 10.3 to the Company's Form 10-Q
for the quarterly period ended July 2, 2005 (1934 Act File No. 0-20388) and incorporated herein by reference).
10.15 Littelfuse, Inc. Retirement Plan dated January 1, 1992, as amended and restated (filed as exhibit 4.4 to the Company's
Form 10-K for the fiscal year ended December 29, 2001 (1934 Act File No. 0-20388) and incorporated herein by reference).
10.16 First Amendment to the Littelfuse, Inc. Retirement Plan (filed as exhibit 4.5 to the Company's Form 10-K for the fiscal
year ended December 28, 2002 (1934 Act File No. 0-20388) and incorporated herein by reference).
10.17 Littelfuse, Inc. 401(k) Savings Plan (filed as exhibit 4.8 to the Company's Form 10-K for the fiscal year ended
December 31, 1992 (1934 Act File No. 0-20388) and incorporated herein by reference).
10.18 First Amendment to Employment Agreement dated as of December 31, 2004, between Littelfuse, Inc. and Howard B. Witt (filed
as exhibit 10.18 to the Company's Form 10-K for the annual period ended January 1, 2005 (1934 Act File No. 0-20388)
and incorporated herein by reference).
10.19 Consulting Agreement dated as of January 1, 2005, between Littelfuse, Inc. and Howard B. Witt (filed as exhibit 10.19
to the Company's Form 10-K for the annual period ended January 1, 2005 (1934 Act File No. 0-20388) and incorporated herein
by reference).
10.20 Letter Agreement dated November 8, 2004, between Littelfuse, Inc. and Kenneth R. Audino (filed as exhibit 10.20
to the Company's Form 10-K for the annual period ended January 1, 2005 (1934 Act File No. 0-20388) and incorporated herein
by reference).
10.21 Change of Control Employment Agreement dated as of November 8, 2004, between Littelfuse, Inc. and Elizabeth Calhoun (filed
as exhibit 10.21 to the Company's Form 10-K for the annual period ended January 1, 2005 (1934 Act File No. 0-20388) and
incorporated herein by reference).
10.22 Form of Non-Qualified Stock Option Agreement under the 1993 Stock Plan For Employees and Directors of Littelfuse, Inc. for
employees of the Company (filed as exhibit 99.1 to the Company's Current Report on Form 8-K dated November 8, 2004 (1934
Act File No. 0-20388) and incorporated herein by reference).
10.23 Form of Specimen Performance Shares Agreement under the 1993 Stock Plan for Employees and Directors of Littelfuse, Inc.
(filed as exhibit 10.23 to the Company's Form 10-K for the annual period ended January 1, 2005 (1934 Act File No. 0-20388)
and incorporated herein by reference).
10.24 Form of Specimen Non-Qualified Stock Option Agreement under the 1993 Stock Plan for Employees and Directors of
Littelfuse, Inc. for non-employee directors of the Company (filed as exhibit 10.24 to the Company's Form 10-K for the
annual period ended January 1, 2005 (1934 Act File No. 0-20388) and incorporated herein by reference).
10.25 Summary of Executive Officer Compensation.
10.26 Summary of Director Compensation.
10.27 Amendment to Non-Qualified Stock Option Agreement and Agreement for Deferred Compensation between Littelfuse, Inc. and
Gordon Hunter.
13.1 Portions of Littelfuse Annual Report to Stockholders for the fiscal year ended December 31, 2005.
14.1 Code of Ethics for Principal Executive and Financial Officers (filed as exhibit 14.1 to the Company's Form 10-K for the
annual period ended January 1, 2005 (1934 Act File No. 0-20388) and incorporated herein by reference).
21.1 Subsidiaries.
23.1 Consent of Independent Registered Public Accounting Firm.
31.1 Certification of Gordon Hunter, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Philip Franklin, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
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