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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 December 29, 2007 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:
Name of
Each Exchange
On Which
Title of Each Class Registered
---------------------------- ----------------------------
Common Stock, $.01 par value Nasdaq Global Select Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [X] No [ ]
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, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer"
and "small reporting company" in Rule 12b-2 of the Exchange Act (Check one):
Large accelerated filer [X] Accelerated filer [ ] Smaller reporting company [ ]
Non-accelerated filer [ ]
(Do not check if a smaller reporting company)
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 22,355,469 shares of voting stock held by
non-affiliates of the registrant was approximately $754,944,188 based on the
last reported sale price of the registrant's Common Stock as reported on the
Nasdaq Global Select Market on June 30, 2007.
As of February 22, 2008, the registrant had outstanding 22,710,618 shares
of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Littelfuse, Inc. Proxy Statement for the 2008 Annual Meeting of
Stockholders (the "Proxy Statement") are incorporated into Part III of this Form
10-K. Portions of the Littelfuse, Inc. Annual Report to Stockholders for the
year ended December 29, 2007 (the "Annual Report to Stockholders") are
incorporated into Parts II and III of this Form 10-K and are filed as Exhibit
13.1 to this Form 10-K.
2
PART I
The statements in this section, the letter to shareholders and the other
sections of our Annual Report to Shareholders filed herewith and in this Annual
Report on Form 10-K that are not historical facts are intended to constitute
"forward-looking statements" entitled to the safe-harbor provisions of the
Private Securities Litigation Reform Act of 1995 ("PSRLA"). These statements may
involve risks and uncertainties, including, but not limited to, risks relating
to product demand and market acceptance, economic conditions, the impact of
competitive products and pricing, product quality problems or product recalls,
capacity and supply difficulties or constraints, coal mining exposures, failure
of an indemnification for environmental liability, exchange rate fluctuations,
commodity price fluctuations, the effect of the Company's accounting policies,
labor disputes, restructuring costs in excess of expectations, pension plan
asset returns being less than assumed, integration of acquisitions and other
risks that may be detailed in "Item 1A. Risk Factors" below and in the Company's
other Securities and Exchange Commission filings.
ITEM 1. BUSINESS
GENERAL
Littelfuse, Inc. (the "Company" or "Littelfuse") is the world's leading supplier
of circuit protection products for the electronics industry, providing the
broadest line of circuit protection solutions to worldwide customers. In the
electronics market, the Company supplies leading manufacturers such as
Alcatel-Lucent, Celestica, Delta, Flextronics, Foxconn, Hewlett-Packard, Huawei,
IBM, Intel, Jabil, LG, Motorola, Nokia, Panasonic, Quanta, Samsung, Sanmina-SCI,
Seagate, Siemens and Sony.
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. In the automotive market, the Company's end customers include major
automotive manufacturers in North America, Europe and Asia such as BMW,
Chrysler, Daimler, Ford Motor, General Motors, Honda Motor, Hyundai and Toyota.
The Company also supplies wiring harness manufacturers and auto parts suppliers
worldwide, including Alcoa Automotive, Auto Zone, Delphi, Lear, Pep Boys,
Siemens VDO, Sumitomo, Valeo 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."
Net sales by business unit for the periods indicated are as follows (in
thousands):
FISCAL YEAR
---------------------------------------------
2007 2006 2005
----------- ----------- -----------
Electronics $ 348,957 $ 365,418 $ 305,870
Automotive 135,109 123,620 118,595
Electrical 52,078 45,821 42,624
----------- ----------- -----------
Total $ 536,144 $ 534,859 $ 467,089
=========== =========== ===========
The Company operates in three geographic territories, which are the Americas,
Europe and Asia-Pacific. The Company manufactures products and sells to
customers in all three territories. There has been and continues to be a shift
in the Company's revenues, and consequently manufacturing, to the Asia-Pacific
region. Net sales by geographic territories, based upon the shipped to
destination, are as follows (in thousands):
FISCAL YEAR
---------------------------------------------
2007 2006 2005
----------- ----------- -----------
Americas $ 204,305 $ 215,892 $ 199,855
Europe 118,265 111,652 98,337
Asia-Pacific 213,574 207,315 168,897
----------- ----------- -----------
Total $ 536,144 $ 534,859 $ 467,089
=========== =========== ===========
The Company's products are sold worldwide through a direct sales force and
manufacturers' representatives. For the year ended December 29, 2007,
approximately 61.9% of the Company's net sales were to customers outside the
United States (exports and foreign operations) including 18.6% to Hong Kong.
3
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.
References herein to "2005" or "fiscal 2005" refer to the fiscal year ended
December 31, 2005. References herein to "2006" or "fiscal 2006" refer to the
fiscal year ended December 30, 2006. References herein to "2007" or "fiscal
2007" refer to the fiscal year ended December 29, 2007.
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. Except as otherwise provided herein, such information is not incorporated
by reference into this annual report on Form 10-K.
BUSINESS ENVIRONMENT: CIRCUIT PROTECTION MARKET
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.
Electronic fuses and protectors are devices that contain an element that 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 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 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.
4
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 original equipment manufacturers ("OEM"), 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 trademarked brand names including ATO(R), MINI(R),
MAXI(TM), MIDI(R), MEGA(TM), MasterFuse(R), JCASE(R) and CablePro(TM).
A majority of the Company's 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, retailers
who sell automotive parts and accessories and through distributors who in turn
sell most of their products to wholesalers, service stations and non-automotive
OEMs.
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, OEM and
industrial maintenance and repair operations ("MRO") markets.
Power fuses are used to protect circuits in various types of industrial
equipment and in industrial and commercial buildings. 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,
U.K.; Duensen, 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 the
complexity of development, with continuous efforts to reduce the development
cycle. During fiscal years 2007, 2006 and 2005, the Company expended $21.7
million, $18.7 million and $16.7 million, respectively, on research, 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.
5
As of December 29, 2007, the Company owned 173 patents in North America, 90
patents in the European Economic Community and 41 patents in other foreign
countries. The Company has also registered trademark protection for certain of
its brand names and logos. The 173 North American patents are in the following
product categories: 133 electronics, 25 automotive, 15 electrical. Patents and
licenses are amortized over a period of 4-50 years, with a weighted average life
of 11.7 years. Distribution networks are amortized over a period of 4-20 years,
with a weighted average life of 15.3 years. Trademarks and tradenames are
amortized over a period of 5-20 years, with a weighted average life of 18.2
years. The Company recorded amortization expense of $3.3 million, $3.1 million,
and $2.4 million in 2007, 2006, and 2005, respectively related to intangible
assets.
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.
License royalties amounted to $0.3 million, $0.4 million and $0.5 million for
fiscal 2007, 2006 and 2005, respectively.
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 uses a sole source for several heat
resistant plastics and zinc. A particular type of silicon used in many of the
Company's semiconductor products is experiencing high levels of market demand
currently. The Company believes that suitable alternative heat resistant
plastics and zinc as well as raw silicon 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 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 engaging them in pre-engineering
product and process development.
MARKETING
The Company's domestic sales and marketing staff of over 35 people maintain
relationships with major OEMs and distributors. The Company's sales, marketing
and engineering personnel interact directly with 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 100 people with sales offices in The Netherlands, the
U.K., Germany, Spain, Ireland, Italy, Singapore, Taiwan, Japan, Brazil, Hong
Kong, Korea, China and India. The Company also markets its products indirectly
through a worldwide organization of over 60 manufacturers' representatives and
distributes through an extensive network of electronics, automotive and
electrical distributors.
ELECTRONICS
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.
6
AUTOMOTIVE
The Company maintains a direct sales force to service all the major automotive
OEMs and system suppliers. Approximately 22 manufacturers' representatives sell
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 OEMs, major system suppliers and
aftermarket distributors. In the Asia-Pacific region, the Company uses both a
direct sales force and distributors to supply to major OEMs and system
suppliers.
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
3,000 distributor buying locations. 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 operating business unit segments: Electronics, Automotive
and Electrical. For information with respect to the Company's operations in its
three reportable business unit segments for the fiscal year ended December 29,
2007, see Business Unit Segment Information included as part of "Item 8.
Financial Statements and Supplementary Data," which is incorporated herein by
reference.
CUSTOMERS
The Company sells to over 10,000 customers worldwide. Sales to Arrow Pemco Group
were less than 10% for 2007 and 2005, respectively, but 10.6% for 2006. No other
single customer accounted for more than 10% of net sales during the last three
years. During the 2007, 2006 and 2005, net sales to customers outside the United
States (exports and foreign operations) accounted for approximately 61.9%, 61.1%
and 59.8%, 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 Industries, EPCOS, On Semiconductor, STMicroelectronics and Tyco
Electronics. In the automotive market, the Company's competitors include Cooper
Industries, Pacific Engineering (a private company in Japan) and MTA (a private
company in Italy). In the electrical market, the Company's major competitors
include Cooper Industries 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 29, 2007, was approximately $77.2
million, compared to $85.2 million at December 30, 2006. Substantially all of
the orders currently in backlog are scheduled for delivery in 2008.
EMPLOYEES
As of December 29, 2007, the Company employed approximately 6,200 employees.
Approximately 31 employees in the U.S., 1,070 employees in Mexico, 68 employees
in Ireland and 114 employees in Germany are covered by collective bargaining
agreements. The U.S. agreement expires on March 31, 2008, the Mexico agreements
expire February 28, 2010 for 718 employees and January 31, 2010 for 352
employees for Matamoros and Piedras Negras, respectively, the Ireland agreement
expires March 31, 2009, and the Germany agreement expires October 31, 2008 for
28 employees and December 31, 2008 for 86 employees. Overall, the Company has
historically maintained satisfactory employee relations and many of its
employees have long experience with the Company.
7
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
with respect to this matter.
Heinrich Industries, AG ("Heinrich"), which was acquired by the Company in May
2004, is responsible for maintaining coal mine shaft entrances. The Company is
compliant with German regulations pertaining to the maintenance of the mines and
has an accrual related to these coal mine shafts based on an engineering study
estimating the cost of remediating the dangers (such as a shaft collapse) of
abandoned coal mine shafts in Germany. The reserve is calculated based upon the
cost of remediating the shafts that the study deems most risky.
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 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.
8
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 including:
- 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.
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 the majority of our 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 result in lower sales revenue and 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 resulting in lower demand
for our products, which likely would cause a decrease in sales revenue and have
a substantial adverse impact on our business, financial condition and results of
operations.
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 charges for such items as 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.
9
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 has required and may continue to 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 international operating activities are
subject to a number of risks generally associated with international operations,
including risks relating to the following:
- general economic conditions;
- currency fluctuations and exchange restrictions;
- import and export duties and restrictions;
- the imposition of tariffs and other import or export barriers;
- compliance with regulations governing import and export activities;
- current and changing regulatory requirements;
- political and economic instability;
- potentially adverse income tax consequences;
- transportation delays and interruptions;
- labor unrest;
- natural disasters;
- terrorist activities;
- public health concerns;
- difficulties in staffing and managing multi-national operations; and
- limitations on our ability to enforce legal rights and remedies.
Any of these factors 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 acquisitions. 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.
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 these 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 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 these properties. 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.
10
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, consumer electronics 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 December 31, 2006
and December 29, 2007, the closing sale price of our common stock ranged between
a low of $30.16 and a high of $44.99, experiencing greater volatility over that
time than the broader markets. 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.
ITEM 2. PROPERTIES
LITTELFUSE FACILITIES
The Company's operations are located in 36 owned or leased facilities worldwide,
representing an aggregate of 2,282,760 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
Irving, Texas and two plants in Mexico. The European headquarters and primary
European distribution center is in the Netherlands, with manufacturing plants in
Ireland and Germany. Asia-Pacific operations include sales and distribution
centers located in Singapore, Taiwan, Japan, China and Korea, with manufacturing
plants in China, Taiwan 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.
11
The following table provides certain information concerning the Company's
facilities:
LEASE
SIZE EXPIRATION
LOCATION USE (SQ.FT.) LEASE/OWN DATE PRIMARY PRODUCT
----------------------- --------------------- -------- --------- ---------- ------------------
Des Plaines, Illinois Administrative, 340,000 Owned -- Auto, Electronics
Engineering, and Electrical
Manufacturing,
Testing and Research
Elk Grove Village, Warehousing 50,000 Leased 2008 Auto, Electronics
Illinois and Electrical
Campbell, California Engineering 1,710 Leased 2011 Electronics
Irving, Texas Engineering, 101,000 Leased 2010 Electronics
Manufacturing,
Testing and Research
Brownsville, Texas Distribution 15,750 Leased 2009 Electronics
Birmingham, Michigan Sales 2,076 Leased 2011 Auto
Matamoros, Mexico Manufacturing 77,500 Leased 2008 Electronics
Matamoros, Mexico Administrative and 14,000 Leased 2008 Electronics
Manufacturing
Arcola, Illinois Manufacturing 45,000 Owned -- Electrical
Piedras Negras, Mexico Administrative and 99,822 Leased 2015 Auto
Manufacturing
Piedras Negras, Mexico Manufacturing 67,225 Leased 2009 Electrical
Piedras Negras, Mexico Manufacturing 164,785 Leased 2009 Auto
Swindon, U.K. Administrative, 6,500 Leased 2012 Electronics
Marketing and Sales
Utrecht, the Sales, 34,642 Owned -- Auto and
Netherlands Administrative and Electronics
Distribution
Essen, Germany Administrative 8,009 Leased 2011 Electronics and
Auto
Eltville, Germany Leased to third party 88,943 Owned -- --
Essen, Germany Leased to third party 37,670 Owned -- --
Essen/Dortmund, Germany Land leased to third -- Owned -- --
party
Duensen, Germany Manufacturing and 43,971 Owned -- Auto
Sales
Singapore Sales and 8,663 Leased 2008 Electronics
Distribution
Taipei, Taiwan Sales 4,000 Leased 2008 Electronics
Seoul, Korea Sales 4,589 Leased 2008 Electronics and
Auto
Lipa City, Philippines Manufacturing 116,046 Owned -- Electronics
Lipa City, Philippines Manufacturing 22,733 Leased 2008 Electronics
Dongguan, China Administrative and 53,860 Leased 2009 Electronics
Manufacturing
Dongguan, China Manufacturing 104,716 Leased 2008 Electronics
Dongguan, China Manufacturing 261,974 Leased 2012 Electronics
Suzhou, China Manufacturing 80,732 Owned -- Electronics
Suzhou, China Manufacturing 12,390 Leased 2008 Electronics
Yang-Mei, Taiwan Manufactuing, Sales, 40,080 Owned -- Electronics
Distribution and
Administrative
Yung-Ping, Taiwan Manufactuing, Sales, 20,860 Leased 2011 Electronics
Distribution and
Administrative
Wuxi, China Manufacturing 220,068 Owned -- Electronics
Hong Kong Sales 6,403 Leased 2009 Electronics
Yokohama, Japan Sales 6,243 Leased 2009 Electronics
Sao Paulo, Brazil Sales 800 Leased 2009 Electronics and
Auto
Dundalk, Ireland Manufacturing 120,000 Owned -- Electronics and
Auto
Properties with lease expirations in 2008 renew at various times throughout the
year. The Company does not anticipate any material impact as a result of such
expirations.
12
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 2007.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
NAME AGE POSITION
----------------------------------------- --- -------------------------------------------------------------------
Gordon Hunter............................ 56 Chairman of the Board of Directors, President and Chief Executive
Officer
Philip G. Franklin....................... 56 Vice President, Operations Support and Chief Financial Officer
Dal Ferbert.............................. 53 Vice President and General Manager of the Electrical Business Unit
David W. Heinzmann....................... 44 Vice President of Global Operations
David R. Samyn........................... 47 Vice President and General Manager of the Electronics Business Unit
Ryan Stafford............................ 40 General Counsel and Vice President, Human Resources
Mary S. Muchoney......................... 62 Corporate Secretary
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.
Philip G. Franklin, Vice President, Operations Support and Chief Financial
Officer, joined the Company in 1998 and is responsible for finance and
accounting, investor relations, mergers and acquisitions, information systems
and purchasing. Prior to Littelfuse, Mr. Franklin was Vice President and Chief
Financial Officer for OmniQuip International, a private equity sponsored roll-up
in the construction equipment industry, which he helped take public. Before
that, Mr. Franklin served as Chief Financial Officer for both Monarch Marketing
Systems, a subsidiary of Pitney Bowes, and Hill Refrigeration, a company
controlled by Sam Zell. Earlier in his career, he worked in a variety of finance
and general management positions at FMC Corporation.
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.
13
David W. Heinzmann, Vice President, Global Operations, is responsible for
Littelfuse's manufacturing and supply chain groups for all three of the
Company's business units. 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. He served as Vice
President and General Manager, Automotive Business Unit, from 2004 through
August 2007 and then was promoted to his current position.
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 had global sales and marketing responsibilities.
Ryan K. Stafford, General Counsel and Vice President, Human Resources., is
responsible for recruiting, developing and retaining the global workforce and
providing legal expertise. Mr. Stafford joined the Company's management team in
January 2007. Prior to joining the Company, Mr. Stafford served as Vice
President of China Operations for Tyco Engineered Products & Services from 2005
to 2006 and Vice President and General Counsel of it from 2001 to 2005. He
served as Associate General Counsel for Grinnell Corporation from 1998 to 2001.
Prior to that he was with the law firm Sulloway & Hollis P.L.L.C.
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 Society of Corporate Secretaries & Governance
Professionals, as well as honorary member of the Society's Silver Quill Society.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Shares of the Company's Common Stock are traded under the symbol "LFUS" on the
Nasdaq Global Select Market. As of February 22, 2008, there were 155 holders of
record of the Company's Common Stock.
The Company has not paid any cash dividends in its history. Future dividend
policy will be determined by the Board of Directors based upon its 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 the fourth quarter of fiscal 2007:
ISSUER PURCHASES OF EQUITY SECURITIES
Total Number of
Shares Purchased Maximum Number
as Part of of Shares that May
Total Number Average Publicly Yet Be Purchased
of Shares Price Paid Announced Plans Under the Plans or
Period Purchased per Share or Programs Programs
-------------------------------- ------------ ---------- ---------------- -------------------
Sep. 30, 2007 to Oct. 29, 2007 -- -- -- --
Oct. 30, 2007 to Nov. 29, 2007 500,000 $32.87 500,000 500,000
Nov. 30, 2007 to Dec. 29, 2007 -- -- -- --
------------ ---------- ---------------- ------------------
Total 500,000 $32.87 500,000 500,000
============ ========== ================= ===================
The Company's Board of Directors authorized the repurchase of up to 1,000,000
shares under a program for the period May 1, 2007 to April 30, 2008.
14
The table below provides information with respect to the Company's quarterly
stock prices during fiscal 2007 and 2006:
2007 2006
------------------------------------- --------------------------------------
4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q
------ ------ ------ ------ ------ ------ ------ ------
High $37.28 $37.65 $44.99 $41.45 $36.66 $38.00 $37.42 $36.65
Low 30.48 31.00 33.69 30.16 28.14 26.95 30.60 26.42
Close 33.19 35.69 33.77 40.60 31.88 34.70 34.38 34.13
ITEM 6. SELECTED FINANCIAL DATA
The table below provides selected financial data of the Company during the past
five fiscal years (in thousands, except per share data):
2007* 2006* 2005* 2004* 2003**
--------------------------------------- --------- --------- --------- --------- ----------
Net sales $ 536,144 $ 534,859 $ 467,089 $ 476,833 $ 339,410
Gross profit 171,537 161,263 144,552 173,797 104,426
Operating income 51,309 28,858 26,966 57,003 26,081
Income from continuing operations 36,835 23,236 16,582 36,361 15,339
Net income 36,835 23,824 17,710 36,028 15,339
Per share of common stock:
Income from continuing operations
- Basic 1.66 1.04 0.74 1.64 0.70
- Diluted 1.64 1.03 0.73 1.61 0.70
Cash and cash equivalents 64,943 56,704 21,947 28,583 22,128
Total assets 491,365 464,966 403,931 425,769 311,570
Long-term debt 1,223 1,785 -- 1,364 10,201
* Results include Heinrich acquisition. Results also reflect Efen as a
discontinued operation. Refer to the Consolidated Financial Statements and
notes thereto of the Company, set forth on pages 12 though 31 of the
Annual Report to Stockholders incorporated herein by reference, for more
information.
** Results include Teccor acquisition. Refer to the Consolidated Financial
Statements and notes thereto of the Company, set forth on pages 12 though
31 of the Annual Report to Stockholders incorporated herein by reference,
for more information.
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 9 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 8 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 10
through 31 of the Annual Report to Stockholders are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
15
ITEM 9A. CONTROLS AND PROCEDURES
Section 404 of the Sarbanes-Oxley Act of 2002 requires management to include in
this Annual Report on Form 10-K a report on management's assessment of the
effectiveness of the Company's internal control over financial reporting, as
well as an attestation report from the Company's independent registered
accounting firm on the effectiveness of the Company's internal control over
financial reporting. Management's annual report on internal control over
financial reporting is set forth under "Management's Report on Internal Control
over Financial Reporting" on page 9 of the Annual Report to Stockholders and is
incorporated herein by reference. The attestation report of our independent
registered accounting firm is set forth on page 10 of the Annual Report to
Stockholders and is incorporated herein by reference.
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 December 29, 2007, 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 were effective.
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.
ITEM 9B. OTHER INFORMATION
None.
16
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 at
www.littelfuse.com under the heading "Investors - Corporate Governance." There
have been no material changes to the procedures by which security holders may
recommend nominees to the Company's Board of Directors in 2007.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under "Election of Directors - Compensation Committee
Interlocks and Insider Participation" and "Executive Compensation" in the Proxy
Statement is incorporated herein by reference, except the section captioned
"Compensation Committee Report" is hereby "furnished" and not "filed" with this
annual report on Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under "Ownership of Littelfuse, Inc. Common Stock" and
"Compensation Plan Information" in the Proxy Statement is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
The information set forth under "Certain Relationships and Related
Transactions," "Election of Directors - Information Concerning Board of
Directors and its Committees - Policy and Procedures with Respect to Related
Person Transactions" and "Election of Directors" 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.
17
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 (page
9).
(ii) Consolidated Balance Sheets as of December 29, 2007 and
December 30, 2006 (page 12).
(iii) Consolidated Statements of Income for the years ended December
29, 2007, December 30, 2006, and December 31, 2005 (page 13).
(iv) Consolidated Statements of Cash Flows for the years ended
December 29, 2007, December 30, 2006, and December 31, 2005
(page 14).
(v) Consolidated Statements of Shareholders' Equity for the years
ended December 29, 2007, December 30, 2006, and December 31,
2005 (page 15).
(vi) Notes to Consolidated Financial Statements (pages 16-31).
(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 21-22.
(b) Exhibits
See Exhibit Index on pages 21-22.
(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.
18
LITTELFUSE, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(IN THOUSANDS)
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS YEAR
---------------------------------- ---------- ------------ -------------- ----------
Year ended December 29, 2007
Allowance for losses on accounts
receivable..................... $ 983 $ 31 $ 276 $ 738
========== ========= ========== ==========
Reserves for sales discounts and
allowances..................... $ 16,520 $ 45,970 $ 50,231 $ 12,259
========== ========= ========== ==========
Year ended December 30, 2006
Allowance for losses on accounts
receivable..................... $ 2,165 $ 127 $ 1,309 $ 983
========== ========= ========== ==========
Reserves for sales discounts and
allowances..................... $ 9,738 $ 23,819 $ 17,037 $ 16,520
========== ========= ========== ==========
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 $ 17,536 $ 16,336 $ 9,738
========== ========= ========== ==========
19
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: February 26, 2008
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 date indicated.
/s/ Gordon Hunter Chairman of the Board of Directors, President and
--------------------------------------------- Chief Executive Officer (Principal Executive
Gordon Hunter Officer)
/s/ Tzau-Jin Chung Director
---------------------------------------------
Tzau-Jin Chung
/s/ John P. Driscoll Director
---------------------------------------------
John P. Driscoll
/s/ Anthony Grillo Director
---------------------------------------------
Anthony Grillo
/s/ John E. Major Director
---------------------------------------------
John E. Major
/s/ William P. Noglows Director
---------------------------------------------
William P. Noglows
/s/ Ronald L. Schubel Director
---------------------------------------------
Ronald L. Schubel
/s/ Philip G. Franklin Vice President, Operations Support and Chief
--------------------------------------------- Financial Officer (Principal Financial and
Philip G. Franklin Principal Accounting Officer)
20
LITTELFUSE, INC.
INDEX TO EXHIBITS
NUMBER DESCRIPTION OF EXHIBIT
--------------- -----------------------------------------------------------------------------------------------------------------
3(I) Certificate of Incorporation, as amended to date (filed as exhibit 3(I) to the Company's Form 10-K for the fiscal
year ended January 3, 1998 (1934 Act File No. 0-20388) and incorporated herein by reference).
3(I)A 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(II) Bylaws, as amended to date (filed as exhibit 3.1 to the Company's Current Report on Form 8-K dated October 26,
2007 (1934 Act File No. 0-20388) and incorporated herein by reference).
10.1* Amended and Restated Employment Agreement dated as of December 31, 2007, between Littelfuse, Inc. and Gordon
Hunter.
10.2 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).
10.3* Amended and Restated Littelfuse, Inc. Supplemental Executive Retirement Plan.
10.4* Amended and Restated Littelfuse Deferred Compensation Plan for Non-employee Directors.
10.5* Amended and Restated Change of Control Employment Agreement dated as of December 31, 2007, between Littelfuse,
Inc. and Gordon Hunter.
10.6* Amended and Restated Change of Control Employment Agreement dated as of December 31, 2007, between Littelfuse,
Inc. and Philip G. Franklin.
10.7* Amended and Restated Change of Control Employment Agreement dated as of December 31, 2007, between Littelfuse,
Inc. and David R. Samyn.
10.8* Amended and Restated Change of Control Employment Agreement dated as of December 31, 2007, between Littelfuse,
Inc. and David W. Heinzmann.
10.9* Amended and Restated Change of Control Employment Agreement dated as of December 31, 2007, between Littelfuse,
Inc. and Hugh Dalsen Ferbert.
10.10 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).
10.11 Bank credit agreement among Littelfuse, Inc., as borrower, the lenders named therein and the Bank of America
N.A., as agent, dated as of July 21, 2006 (filed as exhibit 10.1 to the Company's Form 10-Q for the quarterly
period ended September 30, 2006 (1934 Act File No. 0-20388) and incorporated herein by reference).
10.12 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).
10.13* Amended and Restated Littelfuse, Inc. Retirement Plan.
10.14 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).
10.15 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).
10.16 Form of 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).
10.17 Form of 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).
10.18* Summary of Director Compensation.
10.19 Amendment to Non-Qualified Stock Option Agreement and Agreement for Deferred Compensation between Littelfuse,
Inc. and Gordon Hunter (filed as exhibit 10.27 to the Company's Form 10-K for the fiscal year ended December 31,
2005 (1934 Act File No. 0-20388) and incorporated herein by reference).
21
LITTELFUSE, INC.
INDEX TO EXHIBITS, continued
NUMBER DESCRIPTION OF EXHIBIT
--------------- -----------------------------------------------------------------------------------------------------------------
10.20 Littelfuse, Inc. Equity Incentive Compensation Plan (filed as exhibit A to Company Proxy Statement for Annual
Meeting of Stockholders held on May 5, 2006 (1934 Act File No. 0-20388) and incorporated herein by reference).
10.21 Littelfuse, Inc. Outside Directors' Stock Option Plan (filed as exhibit B to Company Proxy Statement for Annual
Meeting of Stockholders held on May 5, 2006 (1934 Act File No. 0-20388) and incorporated herein by reference).
10.22 Form of Non-Qualified Stock Option Agreement under the Littelfuse, Inc. Outside Directors Stock Option Plan
(filed as exhibit 99.6 to the Company's Current Report on Form 8-K dated May 5, 2006 (1934 Act File No 0-20388)
and incorporated herein by reference).
10.23 Form of Performance Shares Agreement under the Littelfuse, Inc. Equity Incentive Compensation Plan (filed as
exhibit 99.5 to the Company's Current Report on Form 8-K dated May 5, 2006 (1934 Act File No. 0-20388) and
incorporated herein by reference).
10.24 Form of Non-Qualified Stock Option Agreement under the Littelfuse, Inc. Equity Incentive Compensation Plan (filed
as exhibit 99.4 to the Company's Current Report on Form 8-K dated May 5, 2006 (1934 Act File No. 0-20388) and
incorporated herein by reference).
10.25 Littelfuse, Inc. Outside Directors' Equity Plan (filed as exhibit A to Company's Proxy Statement for Annual
Meeting of Stockholders held on April 27, 2007, dated March 22, 2007, (1934 Act File No. 0-20388) and
incorporated herein by reference).
10.26 Form of Stock Option Agreement under the Littelfuse, Inc. Equity Incentive Compensation Plan (filed as exhibit
99.3 to the Company's Current Report on Form 8-K dated April 27, 2007 (1934 Act File No 0-20388) and incorporated
herein by reference).
10.27 Form of Performance Shares Agreement under the Littelfuse, Inc. Equity Incentive Compensation Plan (filed as
exhibit 99.4 to the Company's Current Report on Form 8-K dated April 27, 2007 (1934 Act File No. 0-20388) and
incorporated herein by reference).
10.28 Form of Stock Option Award Agreement under the Littelfuse, Inc. Outside Directors' Equity Plan (filed as exhibit
99.5 to the Company's Current Report on Form 8-K dated April 27, 2007 (1934 Act File No. 0-20388) and
incorporated herein by reference).
10.29 Form of Restricted Stock Unit Award Agreement under the Littelfuse, Inc. Outside Directors' Equity Plan (filed as
exhibit 99.6 to the Company's Current Report on Form 8-K dated April 27, 2007 (1934 Act File No. 0-20388) and
incorporated herein by reference).
13.1* Portions of Littelfuse Annual Report to Stockholders for the fiscal year ended December 29, 2007.
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* Rule 13a-14(a)/15d-14(a) certification of Gordon Hunter.
31.2* Rule 13a-14(a)/15d-14(a) certification of Philip Franklin.
32.1+ Section 1350 certification.
Except for Exhibit 10.11, Exhibits 10.1 through 10.29 are management contracts
or compensatory plans or arrangements.
* Filed with this Report.
+ Furnished with this Report.
22