10-K 1 c03417e10vk.txt ANNUAL REPORT 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.
20