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 28, 1996
or
[ ] Transition Report Pursuant to
Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the
transition period from to
Commission file number 0-20388
Littelfuse, Inc.
(Exact name of registrant as specified in its charter)
Delaware
36-3795742
(State or other jurisdiction of
(I.R.S. Employer Identification No.)
incorporation or organization)
800 East Northwest Highway,
Des Plaines, Illinois
60016
(Address of principal executive offices)
(Zip Code)
847/824-1188
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value, and Warrants to purchase shares
of Common Stock, $.01 par value
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes
X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
The aggregate market value of 8,414,224 shares of voting
stock held by non-affiliates of the registrant was
approximately $401,779,196 based on the last reported sale
price of the registrant's Common Stock, $.01 par value, as
reported on the NASDAQ National Market System on March 14,
1997.
As of March 14, 1997, the registrant had outstanding
9,851,054 shares of Common Stock, $.01 par value, and Warrants
to purchase 2,086,225 shares of Common Stock, $.01 par value.
The following documents have been incorporated herein by
reference to the extent indicated herein:
Littelfuse, Inc. Proxy Statement dated March 19, 1997
(the "Proxy Statement") -- Part III.
Littelfuse, Inc. Annual Report to Stockholders for the
year ended December 28, 1996 (the "Annual Report") -- Parts
II and III.
Part I
ITEM 1. BUSINESS
General
Littelfuse, Inc. (the "Company" or "Littelfuse") is a
leading manufacturer and seller of fuses and other circuit
protection devices for use in the electronic, automotive and
general industrial markets. Management believes the Company
is ranked first in market share in the electronic market,
first in the automotive market and third in the power fuse
market in North America. Management believes that the
Company, together with its licensees, is also first in market
share in the electronic market and first in the automotive
market worldwide.
In the electronic market, leading manufacturers such as
Amana, Compaq, Daewoo, Hewlett Packard, IBM, LG Electronics,
Lucent Technologies, Motorola, Nortel, Panasonic, Sharp, Sony,
Toshiba and US Robotics obtain a substantial portion of their
electronic circuit protection requirements from the Company.
In the automotive market, the Company or its licensees have
customer relationships with all leading automobile
manufacturers throughout the world. Littelfuse provides
substantially all of the automotive fuse requirements for
vehicles manufactured domestically by General Motors
Corporation and is the primary supplier for Ford Motor
Company, Chrysler Corporation and all Japanese and most
European auto manufacturer transplants. The Company also
competes in the power fuse market selling to companies such as
the Allen Bradley division of Rockwell International and
Reliance Electric. In addition to fuses, the Company
manufactures and supplies relays, switches, circuit breakers
and indicator lights to the automotive industry and to
appliance and general electronics manufacturers. See
"Business Environment: Circuit Protection Market."
The Company manufactures its products on fully integrated
manufacturing and assembly equipment, much of which is
designed and built by its own engineers. The Company
fabricates and assembles a majority of its products and
maintains product quality through a rigorous quality assurance
program with all sites certified under ISO 9000 standards and
its world headquarters now certified under the QS9000
standards.
The Company's products are sold worldwide through a
direct sales force and manufacturers' representatives. In
Asia Pacific, the Company has licensed its automotive fuse
technology to a Japanese firm that supplies automotive fuses
to Pacific Rim customers. For the year ended December 28,
1996, approximately 39% of the Company's net sales were to
customers outside the United States (exports and foreign
operations).
The Company was incorporated under the laws of the State
of Delaware on November 25, 1991. The Company is the
successor to the business and assets of a corporation of the
same name ("Old Littelfuse"), which was originally formed in
1927 and subsequently acquired by Tracor, Inc. ("Tracor") in
1968. Any references to performance, financial results or
other aspects of the Company prior to December 27, 1991,
relate to Old Littelfuse.
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References herein to "1994" or "fiscal 1994" refer to the
calendar year ended December 31,
1994. References herein to "1995" or "fiscal 1995" refer to
the calendar year ended December 31, 1995. References herein
to "1996" or "fiscal 1996" refer to the fiscal year ended
December 28, 1996.
Background: The Reorganization
The Company's predecessor, Old Littelfuse, was one of a
number of wholly owned subsidiaries of Tracor. In addition to
manufacturing fuses and other circuit protection and control
devices through Old Littelfuse, Tracor and its subsidiaries
were involved in a wide range of commercial and defense
related businesses. On October 9, 1987, Tracor was acquired
by Westmark Systems, Inc. ("Westmark") in a highly leveraged
transaction. Due to heavy debt service requirements and
adverse conditions in the defense industry and the resulting
negative impact on the operating results of its defense
related businesses, the senior lenders and certain other
creditors of Tracor reached an agreement in principle to
restructure Tracor and its affiliates through voluntary
bankruptcy proceedings. Accordingly, Tracor and its
affiliates, including Old Littelfuse, filed voluntary
petitions for reorganization on February 15, 1991, under
Chapter 11 of the United States Bankruptcy Code. On
December 6, 1991, the Bankruptcy Court approved the
Littelfuse Plan of Reorganization for Old Littelfuse ("the
Plan"). The Plan, which was implemented effective as of
December 27, 1991, resulted in the Company receiving
substantially all of the assets and businesses of Old
Littelfuse. Pursuant to the Plan, the indebtedness of Old
Littelfuse was restructured with the Company entering new
credit arrangements with the secured lenders. The secured
lenders and other unsecured creditors of Old Littelfuse were
issued equity in the Company as successor entities.
Business Environment: Circuit Protection Market
The circuit protection market can be broadly categorized
into five major product areas: electronic, automotive, indus
trial (power), high voltage and residential. The Company
sells products designed for the electronic, automotive and
industrial areas. The Company entered the circuit protection
market in 1927 with the development and introduction of the
first small, fast-acting fuse capable of protecting sensitive
test meters. Since that time, the Company has diversified its
involvement in the circuit protection market to become a
leader in the production of electronic and automotive fuses.
The Company also entered the power fuse market in 1983 with a
broad line of fuses, including several proprietary products.
The Company believes it is the circuit protection leader
because it designs and produces almost all the products it
sells in all three markets including the two markets where it
holds the number one market share position. See "Littelfuse
Products."
Electronic Fuses. Electronic fuses are used to protect
power circuits in a multitude of electronic systems.
Electronic fuses fall into two major categories: miniature
and subminiature. Miniature fuses are generally tubular in
shape with glass, ceramic and composition bodies.
Subminiature devices are used where space is at a premium.
Applications for electronic fuses include telecommunications
equipment, computers and computer peripherals, power supplies,
test and medical instrumentation, and consumer electronic
products. There is also a special
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segment of the electronic fuse market directed toward the
aerospace industry. These special high-reliability fuses are
manufactured in small quantities under extremely high quality
control standards.
Automotive Fuses. Fuses are extensively used in automo
biles, trucks, buses and off-road equipment to protect
electrical circuits and wiring harnesses supplying electrical
power to operate lights, heating, air conditioning, windshield
wipers, radios, windows and controls. Currently, a typical
automobile contains 30 to 70 fuses, depending upon the options
installed. The market for automotive fuses is expected to
grow in the coming years as more electronic features are
included in automobiles and as larger amperage fuses replace
existing low technology fuses in wiring harnesses. Certain
new vehicles, such as the Cadillac Seville, Ford 150 series
truck, Chrysler Concorde and the Jaguar, contain as many as 50
to 90 fuses and this higher fuse count is expected to spread
to other vehicles.
Power Fuses. Power fuses include both current limiting
and non-current limiting devices used to protect electrical
systems against overcurrents. Power fuses are rated and
listed under one of many Underwriters' Laboratories fuse
classifications. The three main end user market segments for
power fuses include original equipment manufacturers ("OEMs"),
industrial maintenance and repair operations ("MROs") and new
commercial and industrial construction. Major applications
for power fuses include protection from over-load and
short-circuit currents in motor branch circuits, heating and
cooling systems, control systems, lighting circuits and
electrical distribution networks. Other applications include
the protection of semiconductor devices such as SCRs, diodes,
thyristors, triacs and similar solid state devices.
Littelfuse Products
General. The Company is a leading manufacturer and
seller of fuses and other circuit protection devices for use
in the electronic, automotive and general industrial markets.
The Company's products are marketed under the general
trademarked names of Littelfuser and, where appropriate, Slo-
Blor Fuse as well as the trademarked names of certain of its
products listed below in the description of the Company's
electronic, automotive and power fuse products.
Product Sales. Net sales of the Company's products by
industry category for the periods indicated are as follows:
<TABLE>
Fiscal Year
(in thousands)
1996 1995 1994
<S> <C> <C> <C>
Electronic $112,667 $103,809 $ 87,340
Automotive 94,391 83,372 77,787
Industrial (Power) 34,388 32,354 29,327
Total $241,446 $219,535 $194,454
</TABLE>
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Electronic Fuses. The Company manufactures and sells a
wide range of electronic fuse products, including miniature
and subminiature fuses. These miniature and subminiature
fuses are designed to provide circuit protection in the
limited space requirements of electronic equipment. The
Company also entered a new market in 1996 for conductive
polymer PTC devices that behave like a resettable fuse.
While the Company continues to develop its own resettable fuse
products, the Company also entered into agreements with
Raychem Corp. In 1996 which allows the Company to sell
resettable fuses using certain of Raychem's technology.
The Company's electronic fuse products are marketed under the
following trademarked and brand names:
PICOr II Fuse is a very fast-acting
subminiature fuse with axial leads which can
be automatically inserted into a circuit
board. It is used in consumer electronics,
computers, medical instruments, power
supplies and telecommunication line cards.
It was originally developed for the aerospace
industry where extremely small size and high
reliability were prime requisites. This fuse
in encapsulated with an epoxy coating which
protects the fuse from adverse environmental
conditions. It can stand up under the rough
treatment found in high speed automated
circuit board assembly processes used by many
different manufacturers.
2AG fuses are a miniature version of the
standard 1/4" diameter by 1-1/4" long glass
bodied fuses manufactured for more than 40
years. The fuse occupies about 1/3 of the
space but still provides the performance of
the larger sized product. The Company has
developed a strong market in the
telecommunications industry for a leaded
version of the 2AG fuse. These fuses are
used in business and personal telephone
systems, answering machines and other
equipment connected to phone lines. They are
used to protect the system from lightning
surges and accidental contact with power
lines. These fuses also are used extensively
in electronic ballasts for lighting.
MICRO Fuse is a plug-in style fuse about the
size of a pencil eraser. It is a very fast
acting fuse and, like the PICOr Fuse, was
originally designed for the emerging
aerospace industry. Applications are
particularly suited to equipment where the
user might "blow" a fuse during testing or by
accidental shorting out of the power supply.
The "plug-in" feature allows the fuse to be
quickly and easily replaced without the need
for special de-soldering equipment. The
Company also manufactures sockets for the
MICRO Fuse.
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NANO Fuse is a surface mount version of
PICOr Fuse. Because it has no leads, it is
substantially smaller. It is the product
choice where subminiaturization is a key
need. Surface mount circuit boards are often
less than 25% of the size of similar boards
using leaded components. Applications
include cellular telephones and miniature 8mm
video camcorders.
NANO2 r SMF Fuse represents our fourth
generation surface mount fuse product line.
The compact size (.240" x .100" x .100") of
this rectangular shaped fuse is very
attractive to design engineers. In addition,
the flat side design permits efficient pick
and placement by automated assembly
equipment. The NANO2 r SMF Fuse is used
where space considerations are critical
including laptop computers, camcorders and
battery chargers.
ALF II is a very fast acting thin film
surface mount fuse measuring only .12 inch x
.06 inch. The super small subminiature size
assures additional space savings in surface
mount applications. It is completely
compatible with common soldering systems used
in surface mount assembly applications and it
is available on 8mm reels for use with
automatic placement equipment.
"0603" SMF is a very fast acting thin film
surface mount fuse measuring only .06 inch x
.03 inch. The 0603 is the smallest fuse
available and has a very low profile .018
inches. The small physical size along with
low values for resistance and voltage drop
are significant features of this new fuse for
battery and other low voltage applications.
Surface Mount PTC is the first in
Littelfuse's line of PTC devices. Its
dimensions of 0.200" x 0.290" x 0.120" are
ideal for circuit board applications where
space is at a premium. It also is available
in an 0.340" x 0.250" x 0.10" configuration.
This polymer surface mount PTC has the
ability to reset itself once the fault or
overcurrent condition has cleared. This new
product is used primarily for computer and
peripheral applications such as motherboards,
disk drives, PC cards, modems printers, etc.
Radial Leaded PTC series is a 60-volt radial
leaded surface mount product. This series
will be introduced in early 1997. Radial
leaded PTC applications include process and
industrial controls, test and measurement
equipment, security systems, motors and
automotive.
Automotive Fuses. The Company is a primary supplier of
fuses to United States, Japanese and European automotive
OEMs, automotive component parts manufacturers and
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automotive parts distributors. The Company also sells its
fuses in the replacement parts market, with its products
being sold through mass merchandisers, discount stores and
service stations, as well as under private label by national
firms. Management believes that it currently is the leading
worldwide supplier of automotive fuses for new vehicle
production and a leader for the aftermarket/replacement
market.
The Company invented and owns all of the U.S. patents
related to the blade type fuse which is the standard and most
commonly used fuse in the automotive industry. The Company
believes that, together with its licensees, it supplies
substantially all of the blade type fuses used in the North
American and Japanese markets and a majority in the European
market. The Company's automotive fuse products are marketed
under the following trademarked and brand names:
AUTOFUSEr or ATOr, a standard blade type
fuse, is used in automobiles produced
worldwide and designed to provide superior
circuit protection in a small, heat resistant
package for low ampere applications.
MINIr Fuse, smaller than its predecessor
AUTOFUSEr, is offered in a range from two
amps to 30 amps and is designed to permit
more fuses in the same amount of space than
prior products.
MAXI Fuse, a larger version of the
AUTOFUSEr, replaces the commonly used low
technology fusible wire or fusible links in
automobile electrical harnesses and is
offered in a range from 20 amps to 80 amps.
MIDIr Fuse is a bolt down version of the
MAXI fuse. This style is preferred by some
European customers in the 50 to 100 amp
range. Its primary use is for heating, air
conditioning and motor control circuits.
J-Case Fuse, is a cartridge version of the
Maxi fuse. This style is popular with
Japanese customers in the 40 to 80 amp range.
Its primary use is for branch circuit
protection and protection of circuits with
inductive loads.
MEGAr Fuse, a higher current fuse with
ratings of 100 to 200 amps, is used for
protection of battery cables.
Over half of the Company's North American automotive
(blade type) fuse sales are made to wire harness manufacturers
that incorporate the fuses into their products. The remaining
automotive fuse sales are made directly to automotive
manufacturers and through distributors who in turn sell most
of their products to automotive product wholesalers, such as
warehouse distributors, discount stores and service stations.
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<PAGE>
The Company believes it currently has adequate production
capacity to meet the anticipated increased demand for
automotive fuses referred to in "Business Environment: Circuit
Protection Market -- Automotive Fuses." Any required
expenditures for additional machinery and equipment are
expected to be funded by cash flow from operations.
The Company has licensed its patented ATOr, Minir and
Maxi automotive fuse designs to Bussmann, a division of
Cooper Industries. Bussmann is the Company's largest domestic
competitor. Additionally, the Company has entered into a
licensing agreement with Pacific Engineering Company, Ltd., a
Japanese fuse manufacturer, which produces and distributes the
Company's patented ATOr and Minir automotive fuses to the
Pacific Rim manufacturing operations of Pacific Rim-based
automobile manufacturers. See "Competition" and "Business --
Patents, Trademarks and Other Intellectual Property."
Power Fuses. The Company entered the power fuse market
in 1983 and manufactures and sells a broad range of
low-voltage circuit protection products to electrical
distributors and their customers in the construction, OEM and
MRO markets. Power fuses are used to protect circuits in
various types of industrial equipment and circuits in
industrial plants, office buildings and residential units.
The Company's power fuse products are marketed under the
following classifications:
Class L fuses are commonly used as the first
line of electrical protection in building
service entrance equipment of high capacity
electrical systems. Other applications
include switchboard mains and feeders,
distribution equipment and branch circuit
protection for large motors.
Class R fuses are commonly used downstream
from Class L fuses in a variety of branch
circuit applications. Both time delay and
fast acting versions cover a range of
applications including main feeder, motor,
transformer and solenoids. The Company's RK5
INDICATOR fuse series has won numerous
product awards and wide recognition by
industrial plant personnel. These fuses have
an integrated blown fuse indicator that turns
from clear to dark once a fuse has blown.
This reduces troubleshooting time
significantly and helps improve safety.
Class J fuses are less than half the size of
Class R to provide substantial space
savings. Applications for Class J are
similar to Class R. Additional applications
include back up protection for circuit
breakers and protection for both IEC and NEMA
rated devices.
Class CC fuses, Littelfuse's KLDR (for
transformer protection) and CCMR (for motor
branch circuit protection) provide protection
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formerly supplied by fuses 10 times larger.
Littelfuse was the first to the market with
these products and is the only company with a
CCMR rated up to 60 amps.
Semiconductor fuses, designed for
supplementary protection of semiconducting
devices, are used in electronic equipment and
power equipment, such as variable speed
drives, power rectifiers, UPS systems and DC
power suppliers.
Midget fuses, seven different series provide
supplementary overcurrent protection in such
diverse applications as control circuits,
control power transformers, solenoids, street
lighting and computers.
Other Products. In addition to fuses, the Company
supplies relays, switches and indicator lights to the
automotive industry and to appliance and general electronics
manufacturers. The Company is also a supplier of circuit
breakers, fuse holders (including OMNI-BLOKr), fuse blocks
(including Powr-Blokr power distribution systems) and fuse
clips primarily to customers that purchase circuit protection
devices from the Company.
The LITTELITESr indicating lights product line includes
cartridge lamps with miniature and subminiature lampholders
and snap-mount plastic lights. These lights come in
incandescent, neon and solid state versions. LITTELITESr are
sold to producers of industrial machinery, office machines,
appliances, instruments and computers.
Product Design and Development
The Company employs scientific, engineering and other per
sonnel to improve its existing product lines and to develop
new products at its research and engineering facility in Des
Plaines, Illinois. The Engineering Department consists of
approximately 50 engineers, chemists, metallurgists,
fusologists and technicians. This department is primarily
responsible for the design and development of new products and
consists of five major groups. Three of the groups are
dedicated to the design of certain types of products,
specifically electronic fuses, including automotive and
general electronic fuses; electrical fuses, including power
and industrial fuses; and electromechanical devices such as
relays and switches. Another engineering group is dedicated
to materials engineering which brings metallurgy, plating and
other technologies to bear on the development of new products.
Finally, the engineering support group oversees patent and
trademark compliance and maintains the model shop, drafting
rooms and an electronics lab. The electronics lab develops
the necessary tooling, hardware and software for testing the
standards and tolerances of sample products.
Proposals for the development of new products are
initiated primarily by marketing managers, members of the
sales staff and customers. The entire product development pro
cess
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typically takes between 12 and 18 months. During the fiscal
years ended December 28, 1996, December 31, 1995, and
December 31, 1994, the Company expended approximately $7.3
million, $7.9 million and $6.1 million, respectively, on
product design and development.
Patents, Trademarks and Other Intellectual Property
The Company generally relies on patent and trademark laws
and license and nondisclosure agreements to protect its rights
in its trade secrets in its proprietary products. In cases
where it is deemed necessary by management, key employees are
required to sign an agreement that they will maintain the
confidentiality of the Company's proprietary information and
trade secrets. This is information, which for business
reasons, is not disclosed to the public.
As of December 28, 1996, the Company owned 97 patents in
North America, 15 patents in the European Economic Community
and 23 patents in other foreign countries. The Company has
also registered trademark protection for certain of its brand
names and logos. The 97 North American patents are in the
following categories: 46 Electronic, 30 Automotive, 15 Power
Fuse and 6 miscellaneous. Of the 30 automotive patents, 9 are
article and process patents for the ATOr type fuses, 7 are for
the MINIr and MAXITM type fuses, 3 are for the MEGAr and MIDIr
type fuses and 11 are for other automotive products. Patents
expiring in 1997 cover products that accounted for 5% of 1996
sales. Patents covering products that accounted for the
balance of 1996 sales expire between 1998 and 2010.
The first article patent covering the AUTOFUSEr or ATOr
fuse expired on September 30, 1992. However, the last
improvement patent covering the ATOr fuse expires on
August 10, 1999. The ATOr fuse product is further protected
by trademark and trade dress protection which has a remaining
indefinite life so long as it is continued to be correctly
used by the Company and its licensees.
New products are continually being developed to replace
older products. The Company regularly applies for patent
protection on such new products. Although in the aggregate
the Company's patents are important in the operation of its
businesses, the Company believes that the loss by expiration
or otherwise of any one patent or group of patents would not
materially affect its business.
The Company currently licenses its MINIr and MAXI
automotive fuse technology to Bussmann, a division of Cooper
Industries and the Company's largest domestic competitor. The
license granted in 1987 is nonexclusive and grants the Company
the right to receive royalties of 4% of the licensee's
revenues from the sale of the licensed products with an annual
minimum of $25,000. Each license expires upon the expiration
of the licensed product patents.
The Company currently licenses its ATOr automotive fuse
technology to Pacific Engineering Company, Ltd., a Japanese
manufacturer that produces and distributes the Company's
patented automotive fuses to Pacific Rim operations of Pacific
Rim-based
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automotive manufacturers. The license is exclusive as to
Japan and non-exclusive as to other specified Pacific Rim
territories and provides that the Company will receive
royalties of 1.5% of the licensee's revenues from the sales of
the licensed products with a $25,000 annual minimum. This
license expires on August 10, 1999. In addition, a second
license covering the MINIr Fuse technology was granted with
similar territory arrangements to Pacific Engineering and
grants the Company the right to receive royalties of 2.5% of
the licensee's revenues from the sale of the licensed
products, with an annual minimum of $100,000. The second
license expires on April 6, 2006.
License royalties amounted to $266,000, $349,000 and
$552,000 for 1996, 1995 and 1994 respectively.
Manufacturing
Much of the Company's manufacturing equipment is custom
designed by its engineers, and the Company conducts the
majority of its own fabrication. The Company stamps most of
the metal components used in its fuses, relays, holders and
switches from raw metal stock and makes its own contacts and
springs. However, the Company does depend upon a single
source for a substantial portion of its stamped metal end caps
for electronic fuses. The Company believes that alternative
stamping sources are available at prices which would not have
a material adverse effect on the Company. The Company also
performs its own plating (silver, nickel, zinc, tin and
oxides). In addition, all thermoplastic molded component
requirements used for such products as the AUTOFUSEr, MINIr
and Maxi product lines are met through the Company's in-
house molding capabilities.
After components are stamped, molded, plated and readied
for assembly, final assembly is accomplished on fully
automatic and semi-automatic assembly machines. Quality
assurance and operations personnel, using techniques such as
Statistical Process Control, perform tests, checks and
measurements during the production process to maintain the
highest levels of product quality and customer satisfaction.
The principal raw materials for the Company's products
include copper and copper alloys, heat resistant plastics,
zinc, melamine, glass, silver, solder, sulphate clipboard and
linerboard. The Company depends upon a sole source for
several of heat resistant plastics. The Company believes that
suitable alternative heat resistant plastics are available
from other sources at prices which would not have a material
adverse effect on the Company. All of the other raw materials
are purchased from a number of readily available outside
sources.
A computer-aided design and manufacturing system
(CAD/CAM) expedites product development and machine design,
while reliability and high power laboratories test new
products, prototype concepts and production run samples. The
Company participates in "Just-in-Time" delivery programs with
many of its major suppliers and actively promotes the building
of strong cooperative relationships with its suppliers by
involving them in pre-engineering product and process
development. The Company also sponsors an annual major
supplier conference and conducts a vendor certification
program.
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Marketing
The Company's domestic sales staff of approximately 65
people maintains relations with major OEMs and distributors.
The Company's sales and engineering personnel interact
directly with the OEM engineers to ensure maximum circuit
protection and reliability within the parameters of the OEM
design. Internationally, the Company maintains a sales staff
of approximately 25 people and sales offices in The
Netherlands, England, Singapore, Korea and China. The Company
also markets its products indirectly through a worldwide
organization of approximately 125 manufacturers'
representatives and distributes through an extensive network
of electronic, automotive and electrical distributors.
In addition to the normal risks associated with the
Company's domestic operations, the Company's international
operations entail such further risks as currency fluctuations
and the effect of international relations or the domestic
affairs of foreign countries on the conduct of business. As
of December 28, 1996, the Company's operations have not been
significantly affected by such additional risks. For
information relating to foreign sales, see "Item 7.
Management's Discussion and Analysis of Financial Condition
and Results of Operations - Geographical Business Segments."
Electronic. The Company has retained 24 manufacturers'
representatives to sell its electronic products domestically
and additional representatives to sell its electronic products
internationally. These representatives call on major OEMs and
distributors. Since the manufacturers' representatives do not
maintain inventories, the Company distributes approximately
41% of its domestic products directly to OEMs, with the
remainder distributed by more than 670 distributors
nationwide.
In the Pacific Rim, the Company maintains a direct sales
staff of five people in Singapore, one in Hong Kong and four
in Korea, one in Japan and one or more manufacturers' repre
sentatives in Japan, Singapore, Korea, Hong Kong, Taiwan,
China, Malaysia, Thailand, Philippines and Australia. In
Europe, the Company's distribution methods differ from its
domestic methods in that it maintains a direct sales force of
eight people to call on OEMs exclusively and utilizes
approximately 15 manufacturers' representatives to approach
distributors and smaller OEMs. Unlike its domestic
representatives, these manufacturers' representatives purchase
inventory from the Company to facilitate delivery and reduce
financial risks associated with currency exchange rate fluctua
tions.
Automotive. The Company sells automotive fuses through a
direct sales force in Detroit consisting of four employees.
Salespersons service all the major automotive OEMs (including
the United States manufacturing operations of foreign-based
OEMs) through both the engineering and purchasing departments
of these companies. Twenty-eight manufacturers'
representatives distribute the Company's products to
aftermarket fuse retailers such as Autozone, Pep Boys, K-Mart
and NAPA. In Europe, the Company uses both a direct sales
force and manufacturers' representatives to distribute its
products to Mercedes Benz, BMW, Volvo, Saab, Jaguar and other
OEMs, as well as aftermarket distributors. In Asia Pacific,
the
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Company has licensed its automotive fuse technology to a
Japanese firm which supplies the majority of the automotive
fuses to the Japanese manufacturing operations in the region
including Toyota, Honda and Nissan.
Power. The Company markets and sells its power fuses
through 48 manufacturers' representatives across North
America. These representatives sell power fuse products
through an electrical distribution network comprised of
approximately 1,240 distributors. These distributors have
customers that include electrical contractors, municipalities,
utilities and factories (including both MRO and OEM). Some of
the manufacturers' representatives have consigned inventory in
order to facilitate rapid customer delivery.
The Company's field sales force (including application
engineers) and manufacturers' representatives call on both
distributors and end-users (consulting engineers,
municipalities, utilities and OEMs) in an effort to educate
these customers on the capabilities and characteristics of the
Company's products.
Customers
The Company sells to over 10,000 customers worldwide. No
single customer accounted for more than 10% of net sales
during the last three years except for its Japanese stocking
representative which accounted for 11% in 1996. The Japanese
stocking representative serves over 100 customers in the Asia
Pacific electronics market. During the 1996, 1995 and 1994
fiscal years, net sales to customers outside the United States
(exports and foreign operations) accounted for approximately
38.5%, 35.3% and 30.1%, respectively, of the Company's total
net sales.
Competition
The Company's products compete with similar products of
other manufacturers, many of which have substantially greater
financial resources than the Company. In the electronic fuse
market, the Company's competitors are Bussmann, a division of
Cooper Industries, Bel Fuse, Inc., Raychem Corp., San-O
Industrial Corp. and Wickmann-Werke GmbH. In the fuseholder
portion of this market, the Company's principal competitor is
Schurter, Inc. In the automotive fuse market, the Company's
major competitor, both in sales to automobile manufacturers
and in the aftermarket, is Bussmann. The Company licenses
several of its automotive fuse designs to Bussmann. Other
auto fuse competitors include Pudenz and MTA. In the power
fuse market, the Company's major competitors include Bussmann,
Gould, Inc and Ferraz. The Company believes that it competes
primarily on the basis of innovative products, the breadth of
available product lines, the quality and design of its
products and the responsiveness of its customer service rather
than through price competition.
Backlog
The Company does not consider backlog to be a predictive
measure of results due to the Company's short delivery time.
The Company manufactures high volume products based on its
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<PAGE>
demand forecasts and manufactures low volume products based on
customer orders. The Company attempts to ship such products
to the customer within five business days of the date of the
order. Over 90% of all orders, which request delivery within
three weeks of the date of the order, are filled on time from
available stock or current production.
Employees
During 1996, the Company employed approximately 2,550
persons. Approximately 50 employees in Des Plaines and 465
employees in Mexico are covered by collective bargaining
agreements. The Des Plaines agreement expires March 31, 1999
and the Mexico agreement expires February 28, 1998. The
Company has not experienced any work stoppage or other form of
labor dispute within the last 20 years. The Company believes
that its employee relations are excellent and that its
employees, many of whom have long experience with the Company,
represent a valuable resource. The Company emphasizes
employee training and development and has established Quality
Improvement Process (QIP) training for its employees worldwide
so as to promote product quality and customer satisfaction.
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.
ITEM 2. PROPERTIES
Littelfuse Facilities
The Company's operations are located in 19 owned or
leased facilities worldwide, containing approximately 679,000
square feet. The U.S. headquarters and principal fabrication
and distribution facility is located in Des Plaines, Illinois,
supported by three additional plants in Illinois and one in
Mexico. European headquarters and the primary European
distribution center is in Utrecht, The Netherlands, with
manufacturing plants in the United Kingdom and Switzerland.
Asia Pacific operations include a distribution center located
in Singapore, with manufacturing plants in Korea and China.
The leases referenced in the following table account for
annual rentals of approximately $913,000. 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.
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<PAGE>
The following table provides certain information
concerning the Company's facilities:
<TABLE>
Lease
Expir-
Size Lease/ ation Industry
Location Use (sq.ft.) Own Date Focus
<S> <C> <C> <C> <C> <C>
Des Plaines, Administrat 340,000 Owned -- Auto,
Illinois ive, Electronic,
Engineering, Power
Manufacturi
ng, Testing
and
Research
Centralia, Manufacturing 45,200 Owned -- Electronic
Illinois
Arcola, Illinois Manufacturing 36,000 Owned -- Power
Watseka, Manufacturing 26,000 Leased(1)1999 Auto,
Illinois Electronic
Watseka, Storage 5,000 Owned -- Other
Illinois
Farmington Administrative 1,562 Leased 1999 Auto
Hills, Michigan
Piedras Negras, Manufacturing 50,300 Leased 1997 Auto,
Mexico Electronic,
Power
Piedras Negras, Manufacturing 11,848 Leased 1997 Electronic and
Mexico Power
Washington, Manufacturi Electronic,
England ng, 60,000 Owned -- Auto, Other
Sales and
Distribution
Utrecht, The Warehousing 8,680 Leased 1998 Auto,
Netherlands Electronic,
Other
Utrecht, The Sales, 12,000 Owned -- Auto,
Netherlands Administrative Electronic,
and Engineering Other
Grenchen, Manufacturing 11,000 Owned -- Auto
Switzerland
Singapore Sales and 5,845 Leased 1998 Electronic
Distribution
<PAGE> -14-
<CAPTION> Lease
Expir-
Size Lease/ ation Industry
Location Use (sq.ft.) Own Date Focus
<S> <C> <C> <C> <C> <C>
Seoul, Korea Sales and 20,000 Leased 2000 Electronic,
Manufacturing Auto
Suzhou, China Manufacturi 40,000 Owned -- Electronic
ng
Suzhou, China Manufacturi 5,230 Leased 1997 Electronic
ng
Honk Kong, Japan Sales 920 Leased 1998 Electronic
Yokohama, Japan Sales 1,815 Leased 1999 Electronic
Sao Paulo, Sales and
Brazil Distribution 1,200 Leased 1997 Electronic,
Auto
<FN>
<F1>(1) The lease of the manufacturing facility
in Watseka, Illinois, provides that the
Company may purchase the leased facility
upon certain terms and conditions.
</FN>
</TABLE>
ITEM 3. Legal Proceedings
The Company is not a party to any legal proceedings which
it believes will have a material adverse effect upon the
conduct of its business or its financial position.
ITEM 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to the Company's
stockholders during the fourth quarter of fiscal 1996.
Executive Officers of Registrant
The executive officers of the Company are as
follows:
Name Age Position
Howard B. Witt 56 Chairman of the Board, President
and Chief Executive Officer
Jon B. Anderson 48 Vice President, Human Resources
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<PAGE>
Kenneth R. Audino 53 Vice President, Quality Assurance and
Reliability
William S. Barron 54 Vice President, Marketing and Sales
James F. Brace 51 Vice President, Treasurer and Chief
Financial Officer
David J. Krueger 59 Vice President, Engineering
Lloyd J. Turner 53 Vice President, Operations
Hans Ouwehand 50 Vice President, European Operations
Mary S. Muchoney 51 Secretary
Officers of Littelfuse are elected by the Board of Directors
and serve at the discretion of the Board.
Howard B. Witt was elected to the position of Chairman of
the Board in May, 1993. He was promoted to President and
Chief Executive Officer of Old Littelfuse in February 1990.
Prior to his appointment as President and Chief Executive
Officer, Mr. Witt served in several other key management
positions with Old Littelfuse, including Operations Manager
from March 1979 to January 1986, Vice President-Manufacturing
from January 1986 to January 1988, and Executive Vice
President with full operating responsibilities for all U.S.
activities from January 1988 to February 1990. Prior to
joining Old Littelfuse, Mr. Witt was a division president of
Keene Corporation from 1974 to 1979. Mr. Witt currently
serves as a member of the Board of Directors of Franklin
Electric Co., Inc. and is a member of the Electronic
Industries Association Board of Governors. He is also a
director of the Artisan Small Cap Fund.
Jon B. Anderson, Vice President, Human Resources, has
responsibility for implementation of strategic human resources
planning, team development and other related initiatives. He
joined Littelfuse in May 1993 from R.R. Donnelley & Sons
Company, Business Services Division where he was Director of
Administrative Services from 1988 to early 1993. Mr.
Anderson's total employment with Donnelley encompassed over 22
years.
Kenneth R. Audino, Vice President, Quality Assurance and
Reliability, oversees all product reliability and quality
assurance activities corporate-wide and also directs corporate
environmental affairs. Mr. Audino joined Old Littelfuse as a
Control Technician in 1964. From 1964 to 1977, he progressed
through several quality and reliability positions to Manager
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<PAGE>
of Reliability and Standards. In 1983, he became Managing
Director of the European Headquarters of Old Littelfuse and
later was named Corporate Director of Quality Assurance and
Reliability. He was promoted to his current position in 1988.
William S. Barron, Vice President, Sales and Marketing,
has responsibility for the general direction of all sales,
marketing and related support functions. He also is
responsible for the Information Services Department. Mr.
Barron joined Old Littelfuse in March 1991. From August 1981
to March 1991, Mr. Barron served as Director of Sales and
Marketing of Cinch Manufacturing and the General Manager of
one of its domestic divisions. Cinch Manufacturing is a
subsidiary of Labinal Corporation.
James F. Brace, Vice President, Treasurer and Chief
Financial Officer, has responsibility for the treasury,
financial control and financial reporting functions of the
Company. Mr. .Brace joined the Company in May 1992. From
April 1987 to May 1992, he was employed by Sanford
Corporation, a marker, writing instrument and office supplies
manufacturer. At Sanford he was elected Chief Financial
Officer in April 1987, Treasurer in April 1988 and Vice
President in July 1989. From March 1983 to April 1987 he was
Vice President - Finance and Administration of Iroquois
Industries Corp., a paper and office supplies distributor.
David J. Krueger, Vice President, Engineering, directs
all product feasibility, design, development and testing
activities. Joining Old Littelfuse as an Industrial Fuse
Engineering Manager in 1982, he was named Manager of Circuit
Protection Devices in 1984, promoted to Director of
Engineering in January 1986 and promoted to his current
position one year later. Prior to joining Old Littelfuse, Mr.
Krueger worked for 15 years as an Engineering Manager for the
Economy Fuse Division of Federal Electric, and for six years
as a Plant Manager for Federal Pacific Reliance Electric.
Lloyd J. Turner, Vice President, Operations, has
responsibility for manufacturing operations and related
support functions. Mr. Turner joined Old Littelfuse in
October 1988, as Director of Manufacturing Operations after
having served as an Operations Manager with Texas Instruments
from November 1984 to September 1988. He was promoted to his
current position in 1991.
Hans Ouwehand, Vice President, European Operations, has
complete responsibility for all sales, marketing, research and
development, and manufacturing activities covering the entire
range of electronic, automotive and aftermarket products sold
by the Company in Europe. Mr. Ouwehand joined Old Littelfuse
in 1984 as Sales Manager, Europe, Electronics Division. He
was later promoted to the position of European Sales and
Marketing Manager for all Littelfuse products and in 1986 to
the position of General Manager-European Operations. Prior to
joining Old Littelfuse, his industrial background included
research and development work with Sperry Rand and sales and
product management with Lameris Medical Instruments.
-17-
<PAGE>
Mary S. Muchoney has served as Corporate Secretary since
1991, after joining Old Littelfuse in 1977. She is
responsible for providing all secretarial and administrative
functions for the President and Littelfuse Board of Directors.
Ms. Muchoney is a member of the American Society of Corporate
Secretaries.
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The information set forth under "Quarterly Stock Price"
of Exhibit 13.1 filed as a part of this Annual Report on Form
10-K is incorporated herein by reference. As of March 14,
1997 there were 243 holders of record of the Company's Common
Stock and in excess of 1,900 beneficial holders of its Common
Stock.
Since September 22, 1992, shares of the Common Stock have
been traded in the over-the-counter market and quotations are
reported using the symbol "LFUS" on the National Association
of Securities Dealers Automated Quotations ("NASDAQ") National
Market System.
The Company has not paid any cash dividends since reorganization.
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 Agreement which relate to the maintenance of
certain restricted payment ratios.
ITEM 6. Selected Financial Data
The information set forth under "Selected Financial Data
- - Five Year Summary" of Exhibit 13.1 filed as a part of this
Annual Report on Form 10-K 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"
of Exhibit 13.1 filed as a part of this Annual Report on Form
10-K is incorporated herein by reference.
ITEM 8. Financial Statements and Supplementary Data
The Report of Independent Auditors, Management's
Statement of Responsibility and the Consolidated Financial
Statements and notes thereto of the Company set forth on
Exhibit 13.1 filed as a part of this Annual Report on Form 10-
K are incorporated herein by reference.
-18-
<PAGE>
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
The information set forth under "Election of Directors"
in the Proxy Statement is incorporated herein by reference.
The information set forth under "Executive Officers of the
Registrant" in Part I of this Report is incorporated herein by
reference.
ITEM 11. Executive Compensation
The information set forth under "Compensation of
Executive Officers" in the Proxy Statement is incorporated
herein by reference, except for the sections captioned
"Reports of the Compensation Committee and Stock Option
Committee on Executive Compensation" and "Company
Performance."
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management
The information set forth under "Ownership of Littelfuse,
Inc. Common Stock" in the Proxy Statement is incorporated
herein by reference.
ITEM 13. Certain Relationships and Related Transactions
The information set forth under "Certain Relationships
and Related Transactions" in the Proxy Statement is
incorporated herein by reference.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
(a) Financial Statements and Schedules
(1) Financial Statements. The following
financial statements set forth in Exhibit 13.1
filed as a part of the Annual Report on Form
10-K and incorporated herein by reference.
(i) Consolidated Statements of
Financial Condition as of December
28, 1996 and December 31, 1995.
(ii) Consolidated Statements of Income for
the years ended December 28, 1996, December 31, 1995
and 1994.
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<PAGE>
(iii) Consolidated Statements of Cash Flows
for the years ended December 28, 1996, December 31,
1995 and 1994.
(iv) Consolidated Statements of Shareholders' Equity
for the years ended December 28, 1996, December
31, 1995 and 1994.
(v) Notes to Consolidated Financial Statements.
(2) Financial Statement Schedules. The following
financial statement schedules are submitted herewith for the
periods indicated therein.
(I) Schedule II-Valuation and Qualifying
Accounts and Reserves
All other schedules for which provision is made in
the applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable and, therefore,
have been omitted.
(3) Exhibits
See Exhibit Index on pages 21-23, incorporated
herein by reference.
(b) Reports on Form 8-K
There were no reports on Form 8-K during the fourth
quarter of 1996.
-20-
<PAGE>
<TABLE>
LITTELFUSE, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In Thousands)
<CAPTION>
Balance Additions Charged Balance
at Charged to Deductions at
Description Beginni to Other End of Year
ng Costs Accounts (A)
of Year and
Expenses
<S> <C> <C> <C> <C> <C>
Year ended December 28,
1996
Allowance for losses
on accounts receivable $ 863 $ 236 $ 203 $ 896
Reserves for sales
discounts and
allowances $ 3,038 $ 1,123 $ -- $ 4,161
<S>
Year ended December 31, <C> <C> <C> <C> <C>
1995
Allowance for losses
on accounts receivable $ 716 $ 275 $ 128 $ 863
Reserves for sales
discounts
and allowances $2,525 $ 513 $ -- $ 3,038
<S>
Year ended December 31, <C> <C> <C> <C> <C>
1994
Allowance for losses
on accounts receivable $ 692 $ 155 $ 131 $ 716
Reserves for sales
discounts
and allowances . . $2,134 $ 391 $ -- $ 2,525
<FN>
<F1>
(A) Write-off of uncollectible accounts, net of recoveries
and foreign currency translation.
</TABLE>
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Littelfuse, Inc.
By /s/ Howard B. Witt
Howard B. Witt,
Chairman, President and
Chief Executive Officer
Date: March 19, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated:
/s/ Howard B. Witt Chairman of the Board, President
Howard B. Witt and Chief Executive Officer
/s/ Anthony Grillo Director
Anthony Grillo
/s/ Bruce A. Karsh Director
Bruce A. Karsh
/s/ John E. Major Director
John E. Major
/s/ John J. Nevin Director
John J. Nevin
/s/ James F. Brace Vice President, Treasurer
James F. Brace and Chief Financial Officer
(Principal Financial Officer)
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<PAGE>
LITTELFUSE INC.
INDEX TO EXHIBITS
Sequentialc)
Page
Number Description of Exhibita) Number
2.1 Plan of Reorganization under Chapter 11 of
the Bankruptcy Code of Old Littelfuse.
3.1 Certificate of Incorporation (as amended to date).
3.1A Certificate of Designations of Series A Preferred
Stock (filed as Exhibit 4.2 to the Company's Current
Report on Form 8-K dated December 1, 1995 (1934 Act File
No.0-20388) and incorporated herein by reference).
3.2 Bylaws (filed as Exhibit 3.1 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).
4.1 Credit Agreement among Littelfuse, Inc., as borrower, the
lenders named therein and the First National
Bank of Chicago, as agent, dated as of August 31, 1993.
4.1A Amendment No. 1 to Credit Agreement, dated as of March 31,
1994. (Filed as Exhibit 4.1A to the Company's Form 10-K
for the year ended December 31, 1995.)
4.1B Amendment No. 2 to Credit Agreement, dated as of June 16,
1995. (Filed as Exhibit 4.1A to the Company's Form
10-K for the year ended December 31, 1995.)
4.2 Registration Rights Agreement, dated as of
December 27, 1991, between Littelfuse, Inc. and The
Toronto-Dominion Bank Trust Company, as agent.
4.3 Warrant Agreement, dated as of December 27, 1991,
between Littelfuse, Inc., and LaSalle National Trust,
N.A., as warrant agent, together with form of Warrant.
____________
a) All of the exhibits, (except those filed herewith or
specifically noted as being incorporated by reference from a
different filing under the 1933 Act or 1934 Act) were filed as
exhibits to the Company's Form 10 as filed with the
Securities and Exchange Commission which became effective on
September 16, 1992 (1934 Act File No. 0- 20388) and are
incorporated herein by reference.
b) Filed herewith.
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<PAGE>
c) This information appears only in the manually signed
copy of the report.
d) Indicates an employee benefit plan, management
contract or compensatory plan or arrangement in which a named
executive officer participates.
Sequentialc)
Page
Number Description of Exhibit a) Number
4.4 Stock Plan for Employees and Directors of
Littelfuse, Inc. d)
4.5 Form of Stock Option Agreement
4.6 Specimen Common Stock certificate.
4.7 Littelfuse, Inc. Retirement Plan dated January
1, 1992, as amended and restated.d)
4.8 Littelfuse, Inc. 401(k) Savings Plan.d)
4.9 Note Purchase Agreement, dated as of August 31, 1993,
relating to $45,000,000 principal amount of Littelfuse,
Inc. 6.31% Senior Notes due August 31, 2000.
4.10 Littelfuse Rights Plan Agreement, dated as of December 15,
1995, between Littelfuse, Inc. and LaSalle National
Bank, as Rights Agent, together with Exhibits thereto
(filed as Exhibit 1 to the Company's Form 8-A
Registration Statement dated December 4, 1995 (1934
Act File No. 0-20388)
10.1 Lease Agreement (with option to purchase),dated December 27,
1991, between Littelfuse, Inc. and Westmark Systems, Inc.
10.2 Tax Indebtedness Sharing Agreement, dated December 27, 1991,
between Littelfuse, Inc., Tracor, Inc. and certain other companies.
b)10.3 Patent License Agreement, dated as of July 28, 1995, between
Littelfuse, Inc. and Pacific Engineering Company, Ltd.
10.4 MINIr and MAXITM License Agreement, dated as of June 21,
1989, between Littelfuse, Inc. and McGraw-Edison Company.
10.5 Patent License Agreement, dated as of January 1, 1987,
between Littelfuse, Inc. and Cooper Industries, Inc.
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<PAGE>
Sequentialc)
Page
Number Description of Exhibit a) Number
10.6 1993 Stock Plan for Employees and Directors of
Littelfuse, Inc. (filed as Exhibit 10.1 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.d)
10.7 Littelfuse, Inc. Supplemental Executive Retirement Plan.d)
10.8 Littelfuse Deferred Compensation Plan for Non-employee
Directors.d)
10.9 Littelfuse Executive Loan Program (filed as Exhibit
10.2 to the Company's Form 10Q for the quarterly period
ended June 30, 1995 (1934 Act File No. 0-20388) and
incorporated herein by reference.d)
b10.10 Employment Agreement dated as of September1, 1996 between
Littelfuse, Inc. and Howard B. Witt. d)
b)10.11 Change of Control Employment Agreement dated
as of September 1, 1996 between Littelfuse, Inc. and Howard
B. Witt. d)
b)10.12 Form of change of Control Employment Agreement
dated as of September 1, 1996 between Littelfuse, Inc.
and Messrs. Anderson, Audino, Barron, Brace, Krueger
and Turner. d)
b)11.1 Computation of Net Income per Share.
b)13.1 Portions of Littelfuse Annual Report to Stockholders
for the year ended December 28, 1996.
b)22.1 Subsidiaries.
b)23.1 Consent of Independent Auditors.
-25-
<PAGE>
1
Exhibit 10.3
MINI-TYPE FUSE AND ATO-TYPE FUSE
CONSOLIDATED AND AMENDED AGREEMENT
This Mini-Type Fuse And ATO-Type Fuse Consolidated And
Amended Agreement is made and entered this 28th day of July,
1995, between Littelfuse, Inc., a corporation organized under
the laws of the State of Delaware (hereafter called
"Licensor"), having its principal office at 800 East Northwest
Highway, Des Plaines, Illinois 60016, U.S.A., and Pacific
Engineering Company, Ltd., a corporation organized under the
laws of Japan (hereinafter called "Licensee"), having its
principal offices at 450 Hinoki-Cho, Ogaki-shi, Gifu-ken 503,
Japan. Licensor and Licensee are referred to collectively as
"the Parties."
WHEREAS, Licensor is the owner of patents on blade fuses,
and of registered trademark(s) on a blade fuse configuration,
and has claimed ownership of certain technology (know-how) and
of certain trade dress on certain elements of a blade fuse
configuration;
WHEREAS, Licensor and Licensee entered into a "Patent
License Agreement' on December 25, 1977 ("the 1977
Agreement"), and a "Mini Fuse License Agreement" on May 22,
1990 ("the 1990 Agreement");
WHEREAS, disputes over the terms and scope of the 1977
Agreement and the 1990 Agreement have arisen and, in order to
end and resolve these disputes, the Parties entered into an
"Outline of Agreement" on August 19, 1994, and agreed to
consolidate the terms of both the 1977 Agreement and the 1990
Agreement;
NOW, THEREFORE, for good and sufficient consideration
paid, the Parties hereby agree to the terms and conditions set
forth below:
ARTICLE I
Definitions
Whenever used in this Agreement, the terms in this
Article shall have the meanings set forth in the following
paragraphs.
"ATO-Type Fuses" shall mean blade-type fuses marketed
since 1977 by Licensor, now under the "ATO" trademark, and the
similar blade-type fuses which Licensee has marketed since
1978. An example of Licensor's "ATO-Type Fuses" is attached
to this Agreement as Exhibit A. Any fuses that do not include
a metallic fusible link shall not be included in this
definition.
"Mini-Type Fuses" shall mean those blade-type fuses
substantially smaller than the ATO-Type Fuses which are
currently sold by Licensor under the "MINI" trademark, and the
similar blade-type fuses that have been sold by Licensee since
1992. An example of Licensor's "Mini-Type Fuses" is attached
to this Agreement as Exhibit B. Any fuses that
do not include a metallic fusible link shall not be
included in this definition.
"Intellectual Property" shall mean any and all patents,
trademarks, trade dress, copyrights, and all other
intellectual property rights owned by Licensor that currently
exist and can be used in the design, manufacture, sale, or use
of ATO-Type Fuses and Mini-Type Fuses, as well as any other
intellectual property rights that are added pursuant to the
terms of this Agreement.
"Net Sales Price" shall mean the price charged by
Licensee for one ATO-Type Fuse or one Mini-Type Fuse after
deduction of applicable discounts and adjustments, such as
those regarding transportation, packing charges, allowances,
installation, insurance, taxes, returns, and special service
charges. If no such price exists and the ATO-Type Fuse or
Mini-Type Fuse is not provided for promotional purposes or
supplied to an affiliate owned at least 50% by Licensee, then
the price shall be the same as the usual and customary Net
Sales Price charged Licensee's customers.
"Exclusive" shall mean that only Licensor or Licensee is
allowed to manufacture, sell and/or use the Fuses in
accordance with the provisions of the particular paragraphs in
Article II. below that use such terms, except for any rights
that may currently have been granted under existing
agreement(s) between Bussmann or its successors and Licensor.
"Non-Exclusive" shall mean that only Licensor and
Licensee are allowed to manufacture, sell and/or use the Fuses
in accordance with the provisions of the particular paragraphs
in Article II. below that use such terms, except for any
rights that may currently have been granted under existing
agreement(s) between Bussmann or its successors and Licensor.
Territory A' is identified in Appendix I of this
Agreement.
Territories B' and C' are identified in Appendix I of
this Agreement.
Territory D' is Australia, New Zealand, South Korea, and
all other countries of the world that have not been
specifically identified in the categories of any of
Territories A', B' or C'.
ARTICLE II
Rights Granted
Licensor hereby grants to Licensee, and to Licensee's
present and future subsidiaries, affiliates, and other
companies in which Licensee owns at least 50% of the stock or
assets, the rights and license set forth below. (For purposes
of subparagraphs a. and d. below, the corporate headquarters
of any joint venture or otherwise affiliated company shall be
deemed to be in the country of the company owning directly or
indirectly 50% or more of the stock or assets in the joint
venture or otherwise affiliated company. Also, for purposes
of subparagraphs below, the rights extended to Licensor shall
also extend to Licensor's present and future subsidiaries,
affiliates, and other companies in which Licensor owns at
least 50% of the stock or assets.)
a. Territory A'. The exclusive non-transferable rights
and license to practice and use the Intellectual Property
in the manufacture, sale and use of ATO-Type Fuses and
Mini-Type Fuses in Territory A'. Notwithstanding this
right, however, Licensor may sell (but not manufacture)
ATO-Type and Mini-Type Fuses as replacement genuine parts
for vehicles and other equipment manufactured by
companies that (1) have their corporate headquarters in
Territory B', C' and D', and (2) have used Licensor's
fuses as original equipment in Territory A', B', C' and
D'. The importation into Territory A' of vehicles or
equipment having as original equipment the ATO-Type Fuses
or Mini-Type fuses of the Licensor shall not be deemed to
be a violation of Licensee's exclusive right and license
in Territory A'.
b. Territory B'. The exclusive non-transferable rights
and license to practice and use the Intellectual Property
in the manufacture of the Mini-Type Fuses in Territory
B'. Both Licensor and Licensee shall have non-exclusive
rights to manufacture, sell and use ATO-Type Fuses in
Territory B', and Licensor and Licensee shall both have
the right to sell and use the Mini-Type Fuses in
Territory B'.
c. Territory C'. The non-exclusive non-transferable
rights and license to sell (but not manufacture) ATO-Type
Fuses and Mini-Type Fuses in Territory C' as replacement
genuine parts for vehicles and other equipment
manufactured by companies that (1) have their corporate
headquarters in Territories A', B', or D' and (2) have
used Licensee's fuses as original equipment in
Territories A', B', C', or D'. The importation into
Territory C' of vehicles or equipment having as original
equipment ATO-Type Fuses or Mini-Type Fuses of the
Licensee shall not be deemed to be a violation of
Licensor's exclusive right and license in
Territory C'.
d. Territory D'. The non-exclusive non-transferable
rights and license to practice and use the Intellectual
Property in the manufacture, use and sale of the ATO-Type
and Mini-Type Fuses in Territory D'. As this right is
non-exclusive, Licensor shall have these same rights in
Territory D'.
The Parties recognize that, as a matter of practical
business operations and customer relations, they cannot
control the locations to which their customers resell ATO-Type
Fuses and Mini-Type Fuses. Accordingly, Licensor agrees that
any and all sales of ATO-Type Fuses and Mini-Type Fuses by
Licensee's unaffiliated customers in a manner inconsistent
with the territorial terms of this Agreement shall not be
considered a breach of this Agreement by Licensee. Similarly,
Licensee agrees that any sales of ATO-Type Fuses and Mini-Type
Fuses by Licensor's customers in a manner inconsistent with
the territorial terms of this Agreement will not be considered
a breach of this Agreement by Licensor. It is understood that
such customers are not granted any rights they do not
otherwise have under the terms of this Agreement. The Parties
shall make reasonable efforts to the extent lawfully permitted
to control resales of ATO-Type Fuses and Mini-Type Fuses in
accordance with the territorial provisions of this Agreement.
The Parties recognize that there are important customers
of Licensee and Licensor in certain countries. The Parties
also recognize that there may be a desire on the part of such
customers to have a second source of supply for ATO-Type Fuses
and Mini-Type Fuses. The Parties accordingly agree that they
will recommend each other as second source suppliers for their
customers if such second sources are required.
All applicable Intellectual Property, if any, may be used
with the ATO-Type and Mini-Type Fuses conditioned upon the
Fuses having the quality which meets SAE or other quality
standards in the areas where such Fuses will be used.
Licensee shall send Licensor, and Licensor shall send
Licensee, by the end of January and July of each year samples
of each current rating of each Licensed Fuse. The parties
shall identify their ATO-Type and Mini-Type Fuses in such a
manner as to be able to identify the Licensed Fuses
manufacturer. Licensor grants to Licensee the right to use
its Mini-Fuse trademarks on the Licensed Fuses, subject to the
same quality requirements set forth in this paragraph.
Licensee shall not grant sublicenses to others. It is
recognized that this limitation shall not diminish in any way
the rights given under this Agreement.
Nothing in this Agreement shall preclude Licensee from
being able to make fuses using the Intellectual Property that
do not fall within the currently existing Mini-Type and ATO-
Type fuses if any manufacturer should request that such
differences be made. However, Licensee shall first attempt to
continue to use existing fuse configurations and
specifications for any fuses using the Intellectual Property
prior to making such a change.
ARTICLE III
Royalties
Royalties payable by Licensee to Licensor and the terms
therefor shall apply to Licensee's sale of ATO-Type Fuses or
Mini-Type Fuses as set forth below.
Licensee shall pay Licensor 1.5% of the Net Sales Price
of the ATO-Type Fuses. The minimum annual royalty on ATO-Type
Fuses shall be $25,000. These royalties shall be payable for
all ATO-Type Fuses sold by Licensee in any part of the world
through August 10, 1999. This royalty payment obligation will
cease on the earlier date when and if all patents in all
countries specified in this Agreement (whether or not used by
Licensee) and relating to the ATO-Type Fuse expire are
abandoned, or are declared invalid by final judgment of a
court of competent jurisdiction from which no appeal can be or
is taken.
Licensee shall pay Licensor 2.5% of the Net Sales Price
of the Mini-Type Fuses. The minimum annual royalty on Mini-
Type Fuses shall be $50,000. These royalties shall be payable
for all Mini-Type Fuses sold by Licensee in any part of the
world through April 16, 2006. This royalty payment obligation
will cease on the earlier date when and if all patents in all
countries specified in this Agreement (whether or not used by
Licensee) and relating to the Mini-Type Fuse expire, are
abandoned, or are declared invalid by final judgment of a
court of competent jurisdiction from which no appeal can be or
is taken.
Minimum annual royalties shall be measured from April 1
of one year to March 31 of the next year. Minimum royalties
shall be paid by Licensee each year if the royalties due on
sales do not exceed the minimum annual royalty in paragraphs
2. and 3. above. Royalties shall be paid annually for all
sales of Fuses during each annual period beginning April 1,
the payment to be made on or before the date that is sixty
(60) days following the end of each such annual period. If
the total royalties payable on the basis of actual sales for a
given year is less than the minimum royalty due for that year,
then Licensee shall pay Licensor, when the payment for each
year is due, an amount of money equal to the minimal royalty
due. If the royalty payment due on the basis of actual sales
exceeds the minimum royalties, then this amount shall be paid.
All payments shall be made in United States dollars. For
purposes of converting Yen and other sales in different
currencies, the acceptable rate of exchange to convert the Yen
into United States dollars shall be the mid-point between the
Bank of Tokyo's opening quotes on the last working day of
March of each year for: (1) the conversion of Yen into United
States dollars (Telegraphic Transfer Selling Rate), and (2)
the conversion of United States dollars into Yen (Telegraphic
Transfer Buying Rate).
If there should be any restriction imposed against the
payment of the royalty, then, to the extent permitted by law,
an account in Licensor's name shall be established in the
country involved and the royalties due paid into such account.
This account shall be maintained at Licensor's expense from
the deposited funds or otherwise. The deposit of such funds
shall satisfy Licensee's obligations hereunder.
Licensee shall maintain complete, clear and accurate
records in sufficient detail to permit the determination of
the royalties due under this Agreement. At Licensor's
request, Licensee shall cause its outside accountant to
provide Licensor with an annual audited report of the royalty
computation required under this Agreement. Such report shall
be maintained in confidence, and shall not be disclosed to
anyone in the absence of court order which shall be opposed by
Licensor until all reasonable means of opposition have been
exhausted. A protective order acceptable to Licensee shall be
sought from any court requiring such production. Any
underpayment by Licensee that exceeds 10% shall be subject to
prime rate interest on such excess.
The Parties agree that only one royalty payment shall be
due for each Mini-Type Fuse or ATO-Type Fuse.
Licensor shall provide Licensee with notice of any new
Intellectual Property for ATO-Type Fuses and/or Mini-Type
Fuses developed by Licensor that would fall under this
Agreement. If Licensee in its sole option determines it
wishes to include the new Intellectual Property under this
Agreement for its use in connection with ATO-Type Fuses and/or
Mini-Type Fuses, and so advises Licensor of this desire in
writing, then such Intellectual Property shall be covered by
this Agreement. The period for royalty payments under this
Agreement shall then be extended to the date on which any new
patent added to this Agreement is abandoned, expires or is
declared invalid. Nothing herein shall require the payment of
any additional royalty payments except for payments of the
royalties provided for hereunder for any extension of the
period for royalty payments for the ATO-Type Fuse and Mini-
Type Fuse caused by the addition of new patents in accordance
with this paragraph.
When Licensee is no longer obligated to make royalty
payments under this Article for ATO-Type Fuses, then Licensee
shall be considered to have perpetual royalty-free licenses
for the ATO-Type Fuses. When Licensee is no longer obligated
to make royalty payments under this Article for Mini-Type
Fuses, then Licensee shall be considered to have perpetual
royalty-free licenses for the Mini-Type Fuses. Licensee
agrees that it will execute documents necessary to protect any
trademark or trade dress rights that Licensor might have on
the configuration of ATO-Type Fuses and Mini-Type Fuses when
Licensee no longer has any royalty obligations under this
Agreement for those ATO-Type Fuses and Mini-Type Fuses.
Licensor and Licensee also agree that, to the extent lawfully
permissible, they will retain the territorial limitations
imposed in this Agreement on each party's manufacture, sale
and/or use of ATO-Type Fuses and Mini-Type Fuses; provided,
however, that if it is determined that the same limitations
cannot legally be enforced, then no such limitations shall be
applied.
ARTICLE IV
Representations and Warranties
Licensor represents and warrants that: (a) it is a
corporation duly organized and existing in good standing under
the laws of the State of Illinois and the United States; (b)
it is duly authorized and has full corporate power under its
Certificate of Incorporation and under applicable laws to
operate its properties and engage in the business carried on
by it; (c) the execution, delivery and performance of this
Agreement by it has been duly authorized by all proper
corporate action; (d) it has all necessary corporate power and
authority to enter into this Agreement and to consummate the
transactions herein contemplated; and, (e) it is the owner of
the Intellectual Property covered by this Agreement.
Licensee represents and warrants that: (a) it is a
corporation duly organized and existing in good standing under
the laws of Japan; (b) it is duly authorized and has full
corporate power under its Certificate of Incorporation and
under applicable laws to operate its properties and engage in
the business carried on by it; (c) the execution, delivery and
performance of this Agreement by it has been duly authorized
by all proper corporate action, and, (d) it has all necessary
corporate power and authority to enter into this Agreement and
to consummate the transactions herein contemplated.
Licensor makes no representations, extends no warranties,
express or implied, and assumes no responsibilities
whatsoever, with respect to the performance, merchantability
or fitness for a particular purpose of ATO-Type Fuses and Mini-
Type Fuses, to Licensee, its vendees or other transferees.
ARTICLE V
Effect On Prior Agreements
Upon execution by both Parties of the present "Mini-Type
Fuse and ATO-Type Fuse Consolidated and Amended Agreement,"
the Parties mutually agree that the present Agreement shall
consolidate, replace and supersede all terms of the 1977
Agreement, the 1990 Agreement, and the "Outline of Agreement"
dated August 19, 1994.
Licensee and Licensor shall, as of the date of execution
of this Agreement, waive all rights and causes of action
either may have had against the other prior to the execution
of the agreement.
Notwithstanding the provisions of paragraphs 1. and 2. of
this Article, Licensee shall pay to Licensor (1) the
accumulated royalties owed under the 1977 and 1990 Agreements
up to August 31, 1994, and (2) the amount owed under this
Agreement from that date until March 31, 1995, within sixty
(60) days after April 1, 1995. For purposes of simplifying
calculations in this paragraph and in Article III., paragraphs
2. and 3., the last date for applying the royalty rates in the
1977 and 1990 Agreements shall be August 31, 1994.
ARTICLE VI
Liability
The Parties agree to indemnify and to hold each other
harmless against any and all costs, claims, damages and
expenses (including reasonable attorneys' fees) arising out of
their own manufacture, sale or use of ATO-Type Fuses and Mini-
Type Fuses.
Neither party shall be in default of this Agreement or
liable to the other party for any delay or default in
performance where occasioned by any cause of any kind or
extent beyond its control, including but not limited to:
armed conflict or economic dislocation therefrom; embargoes or
shortages of labor, raw materials, fuel, energy, production
facilities or transportation; labor difficulties; civil
disorders of any kind; action of any civil or military
authorities (including priorities and allocations); fires;
floods; accidents; other natural or man-made disasters or
problems.
Each party will protect and hold the other harmless from
and against any costs, damages or expenses incurred as a
result of its breach of any of its representations, agreements
or warranties made herein.
Should any claim of invalidity regarding any Intellectual
Property covered by this Agreement be made by any person or
entity, notice thereof shall be provided to the other party as
soon as one of the Parties is informed about the claim.
Notice shall also be provided to the other party should a
party learn of any claim of infringement made by any person or
entity regarding any of the Intellectual Property covered by
this Agreement. Licensor shall be charged with the
enforcement and protection of those rights.
ARTICLE VII
Infringement and Invalidity
Infringement Prosecution. Either Licensor or Licensee
may initiate the prosecution of any infringer in Territory A'
through an infringement suit or other proceeding designed to
stop a substantial infringement by a material competitor. If
at any time Licensor determines that it does not want the
infringement action to proceed, then it shall inform Licensee
of this fact and such action shall be stopped. Any normal,
reasonable expenses incurred by Licensee as a result of such a
stopped infringement action shall be returned by Licensor to
Licensee within sixty days of receipt of a statement of
expenses certified by Licensee's certified public accountant.
Further, Licensee shall no longer need to pay royalty for the
use of any patents involved in the stopped infringement action
until such competition ceases, and for such period as such
competition persists.
Infringement Actions. Should an infringement action be
commenced by one party, the other party shall be entitled to
join that action if it agrees to pay one half of the legal
fees and expenses required to prosecute the case. The party
initiating the action shall be entitled to hire the
attorney(s) required. However, this selection must be
approved by Licensor who agrees not to unreasonably withhold
such approval. In any event, the party which chooses not to
participate shall be obligated to execute all papers and to
provide such other assistance as is reasonably required to
prosecute all at the other party's expense.
ARTICLE VIII
General Provisions
Governing Law. This Agreement shall be governed by and
interpreted solely in accordance with the laws of the State of
Illinois, U.S.A. The terms of all international conventions
and treaties, unless mandatory, including those dealing with
the international sales of goods, shall not apply with respect
to the interpretation of this Agreement, and, as between
solely the Parties to this Agreement, with respect to any
matter specifically covered by this Agreement or the laws of
the State of Illinois.
Arbitration. Controversies of any kind relating to this
Agreement shall first be negotiated among the Parties or the
Parties' representatives over a period of no less than thirty
days. Failure to achieve agreement during this time period
shall permit one of the Parties to seek resolution of the
controversy through its reference to arbitration under the
rules of the American Arbitration Association. The Parties
shall be required to choose a single arbitrator within thirty
days or to have the American Arbitration Association choose
such an arbitrator within two weeks thereafter. The
arbitrator shall not be either a United States or Japanese
citizen. The place of the arbitration shall be Honolulu,
Hawaii, if brought initially by Licensor and Los Angeles,
California, if initially brought by Licensee. The Parties
shall be bound by the decision of the arbitrator, whose
decision shall be final. At any time before or after the
arbitrator's decision, the Parties may settle the controversy
through other means. The arbitration shall be subject to the
Commercial Arbitration Rules of the American Arbitration
Association ("AAA") then in effect.
Entire Agreement. This Agreement represents the entire
understanding of the Parties hereto with respect to the
subject matter hereof, supersedes all prior written or oral
agreements and shall not be modified except by subsequent
written agreement duly executed by or on behalf of the Parties
by authorized officers. If any of the provisions of this
Agreement shall be held void or unenforceable, the other
provisions shall survive and remain in full force and effect.
Successors and Assigns. This Agreement shall inure to
the benefit of the Parties hereto and their successors and
assigns; provided, however, that the rights of Licensee
hereunder may not be assigned nor its duties hereunder
delegated to a third party unless 100% of Licensee's assets
are sold to such third party.
Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original agreement but all of which shall be
considered one and the same instrument.
Titles and Headings. Titles and headings to paragraphs
and subparagraphs herein are inserted for the convenience of
reference only and are not intended to affect the
interpretation or construction of this Agreement.
Independent Contractors. The Parties recognize and agree
that neither is a co-venturer, partner, or franchisee of the
other.
Validity and Enforceability. The Parties agree that the
validity and enforceability of this Agreement shall not be
affected by the finding that one or more parts or provisions
of the Agreement cannot be enforced for any reason, including
the finding that they are in conflict with the laws of any
jurisdiction, or any treaty or convention.
Export Controls. The Intellectual Property or ATO-Type
Fuses and Mini-Type Fuses themselves may be subject to the
export controls of Japan, the United States or other
countries. The Parties agree that they will undertake all
necessary actions to follow existing and any future
requirements of such countries, including specifically the
requirements of COCOM and the U.S. Department of Commerce
relating to the export of the ATO-Type Fuses and Mini-Type
Fuses and technical information directly or indirectly to
certain countries. Any such existing and future requirements
shall be identified in writing by Licensor to Licensee.
Government Approvals. This Agreement shall be finally
effective upon the approval or validation thereof of
appropriate Japanese authorities, if such approval or
validation is required before the Agreement can be effective
in Japan.
Notices. All notices required herein shall be
transmitted by telefax and by courier to the following
addresses and numbers:
President
Littelfuse, Inc.
800 East Northwest Highway
Des Plaines, Illinois 60016
Fax Number: 1-847-824-3864
President
Pacific Engineering Co., Ltd.
450 Hinoki-cho
Ogaki-shi
Gifu-Ken, Japan
Fax Number: 1-81-584-94-6102
IN WITNESS WHEREOF, the Parties have caused this Agreement to
be executed in duplicate originals by their duly authorized
officers on this 28th day of July 1995.
LITTELFUSE, INC. PACIFIC ENGINEERING CO., LTD.
___________________ _____________________________
Howard B. Witt Hirohisa Ogawa
President President
APPENDIX I
Country in Territory A'
Japan
Countries in Territory B' Countries in Territory C'
Afghanistan Norway
Bangladesh Sweden
Bhutan Finland
Myanmar Denmark
Cambodia United Kingdom
Hong Kong Netherlands
India Belgium
Indonesia Luxembourg
Iran Germany
Laos France
North Korea Spain
Malaysia Portugal
Mongolia Switzerland
Nepal Austria
Pakistan Italy
People's Republic of China Ireland
Singapore Czech Republic
Sri Lanka Slovak Republic
Taiwan Hungary
Thailand Turkey
Vietnam Greece
Philippines All republics formerly
comprising Yugoslavia
Romania
All republics formerly comprising the
USSR
United States
Canada
Mexico
Poland
Countries in Territory D'
Australia, New Zealand, South Korea, and all other countries
not listed under Territories A', B', and C'.
-12-
-7-
Exhibit 10.10
Employment Agreement
This Agreement is made and entered into as of the 1st day of
September, 1996, by and between Littelfuse, Inc., a Delaware
corporation (hereinafter referred to as the OCompanyO), and
Howard B. Witt (hereinafter referred to as the OExecutiveO);
Witnesseth:
Whereas, the Company desires to retain the services of the
Executive in the capacities herein set forth and the Executive
desires to be employed by the Company in such capacities;
Now, Therefore, in consideration of the premises and the
mutual covenants herein contained, the Company and the Executive
hereby agree as follows:
1. Employment. The Company hereby employs the Executive
and the Executive hereby accepts employment with the Company upon
the terms and conditions hereinafter set forth.
2. Term. Subject to the provisions for earlier
termination hereinafter set forth, the term of employment
hereunder shall commence on the date hereof and end on the day
preceding the fifth anniversary of the date hereof (hereinafter
said five-year period is referred to as the OEmployment PeriodO).
3. Compensation. The Company agrees to provide the
Executive with the following compensation for all services
rendered by the Executive under this Agreement:
3.1. Salary. During the Employment Period, the Company
shall pay to the Executive an annual salary of no less than
Three Hundred Ten Thousand Dollars ($310,000), payable
monthly. Commencing with calendar year 1997, the Board of
Directors of the Company (or the Compensation Committee of
the Board of Directors of the Company) shall review the
compensation payable to the Executive at least once each
calendar year during the Employment Period.
3.2. Bonus. During the Employment Period, the Company
shall pay to the Executive such bonuses as the Board of
Directors of the Company may from time to time determine
based upon the evaluation of the ExecutiveOs performance by
the Board of Directors of the Company.
3.3. Other Benefits. To the extent that the Executive
is otherwise eligible to participate therein, during the
Employment Period the Executive shall be entitled to
participate in and receive the benefits of any and all stock
option, pension, retirement, vacation, profit sharing,
health, disability, insurance and other benefit plans,
programs and policies, if any, which may be maintained by
the Company from time to time during the term hereof,
including, without limitation, any supplemental executive
retirement plan and executive loan program.
4. Duties. The Executive shall, subject to election and
removal by the Board of Directors of the Company in its sole
discretion, serve as Chairman, President and Chief Executive
Officer of the Company. As such, the ExecutiveOs duties and
responsibilities shall include, but shall not be limited to:
(i) Primary responsibility for the day-to-day
management of the Company;
(ii) Primary responsibility for ensuring that all
orders and resolutions of the Board of Directors of the
Company are implemented;
(iii) Primary responsibility for reporting to the Board
of Directors of the Company respecting the activities of the
Company; and
(iv) Primary responsibility for supervising the
executive management of the Company.
The Executive shall also be responsible for the performance of
such other duties and responsibilities as may be prescribed from
time to time by the Board of Directors of the Company.
5. Extent of Service. During the Employment Period, the
Executive agrees to devote reasonable attention and time to the
business and affairs of the Company and its subsidiaries and, to
the extent necessary to discharge the responsibilities assigned
to the Executive hereunder, to use the ExecutiveOs reasonable
best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a
violation of this Agreement for the Executive to (i)Eserve on
corporate, civic or charitable boards or committees, (ii)Edeliver
lectures, fulfill speaking engagements or teach at educational
institutions, and (iii)Emanage personal investments, so long as
such activities do not significantly interfere with the
performance of the ExecutiveOs responsibilities as an employee of
the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the date hereof,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) during the
Employment Period shall not thereafter be deemed to interfere
with the performance of the ExecutiveOs responsibilities to the
Company.
6. Working Facilities. The Executive shall be furnished
with office space, furnishings, secretarial assistance and such
other facilities and services as the Board of Directors of the
Company shall decide are reasonably necessary for the performance
of the ExecutiveOs duties. The Company agrees that the Executive
shall not be required to relocate to an office further than 20
miles from the CompanyOs Des Plaines, Illinois facility without
the ExecutiveOs prior written consent.
7. Expenses. The Company will reimburse the Executive for
such reasonable business expenses which are incurred by the
Executive in promoting the business of the Company and its
subsidiaries upon the presentation by the Executive from time to
time (and at least monthly) of an itemized account of such
expenditures containing such detail as may be required by the
Board of Directors of the Company.
8. Termination of Employment.
8.1. Disability. If the Board of Directors of the
Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period
(pursuant to the definition of Disability set forth below),
the Board of Directors of the Company may give written
notice to the Executive of its intention to terminate the
ExecutiveOs employment. In such event, the ExecutiveOs
employment with the Company shall terminate effective on the
30th day after delivery of such notice to the Executive (the
ODisability Effective DateO), provided that, within the 30
days after such delivery, the Executive shall not have
returned to full-time performance of the ExecutiveOs duties.
For purposes of this Agreement, ODisabilityO shall mean the
absence of the Executive from the ExecutiveOs duties with
the Company on a full-time basis for 180 consecutive
business days as a result of incapacity due to mental or
physical illness which is determined to be total and
permanent by a physician selected by the Company or its
insurers and reasonably acceptable to the Executive or the
ExecutiveOs legal representative.
8.2. Cause. The Company may terminate the ExecutiveOs
employment during the Employment Period for Cause. For
purposes of this Agreement, OCauseO shall mean:
(i) the willful and continued failure of the
Executive to perform substantially the ExecutiveOs
duties with the Company (other than any such failure
resulting from incapacity due to physical or mental
illness), after a written demand for substantial
performance is delivered to the Executive by the Board
of Directors of the Company which specifically
identifies the manner in which the Board of Directors
of the Company believes that the Executive has not
substantially performed the ExecutiveOs duties and such
failure is not cured within sixty (60) calendar days
after receipt of such written demand; or
(ii) the willful engaging by the Executive in
illegal conduct or gross misconduct which is materially
and demonstrably injurious to the Company.
For purposes of this provision, any act or failure to act on
the part of the Executive in violation or contravention of
any order, resolution or directive of the Board of Directors
of the Company shall be considered OwillfulO unless such
order, resolution or directive is illegal or in violation of
the certificate of incorporation or by-laws of the Company;
provided, however, that no other act or failure to act on
the part of the Executive shall be considered Owillful,O
unless it is done, or omitted to be done, by the Executive
in bad faith or without reasonable belief that the
ExecutiveOs action or omission was in the best interests of
the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the
Board of Directors of the Company or based upon the advice
of counsel for the Company shall be conclusively presumed to
be done, or omitted to be done, by the Executive in good
faith and in the best interests of the Company. The
cessation of employment of the Executive shall not be deemed
to be for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than a majority
of the entire membership of the Board of Directors of the
Company at a meeting of the Board of Directors of the
Company called and held for such purpose (after reasonable
notice is provided to the Executive and the Executive is
given an opportunity, together with counsel, to be heard
before the Board of Directors of the Company), finding that,
in the good faith opinion of the Board of Directors of the
Company, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
8.3. Good Reason. The ExecutiveOs employment may be
terminated by the Executive for Good Reason. For purposes
of this Agreement, OGood ReasonO shall mean:
(i) the Executive is not elected, or is removed,
as the Chairman, President or Chief Executive Officer
of the Company;
(ii) the assignment by the Board of Directors of
the Company to the Executive of any duties inconsistent
in any respect with the ExecutiveOs position,
authority, duties or responsibilities as contemplated
by SectionE4 hereof, or any other action by the Board
of Directors of the Company which results in a
diminution in such position, authority, duties or
responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Board
of Directors of the Company promptly after receipt of
notice thereof given by the Executive;
(iii) any failure by the Company to comply with any
of the provisions of this Agreement, other than an
isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given
by the Executive; or
(iv) any purported termination by the Board of
Directors of the Company of the ExecutiveOs employment
otherwise than as expressly permitted by this
Agreement.
8.4. Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason,
shall be communicated by Notice of Termination to the other
party hereto given in accordance with SectionE12.8 hereof.
For purposes of this Agreement, a ONotice of TerminationO
means a written notice which (i)Eindicates the specific
termination provision in this Agreement relied upon, (ii)Eto
the extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the ExecutiveOs employment under the
provision so indicated and (iii)Eif the Date of Termination
(as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be
not more than 30 days after the giving of such notice). The
failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the
Company, respectively, from asserting such fact or
circumstance in enforcing the ExecutiveOs or the CompanyOs
rights hereunder.
8.5. Date of Termination. As used in this Agreement,
ODate of TerminationO means (i)Eif the ExecutiveOs
employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of delivery of the
Notice of Termination or any later date specified therein,
as the case may be, (ii)Eif the ExecutiveOs employment is
terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on
which the Company notifies the Executive of such termination
and (iii)Eif the ExecutiveOs employment is terminated by
reason of death or Disability, the Date of Termination shall
be the date of death of the Executive or the Disability
Effective Date, as the case may be.
9. Obligations of the Company upon Termination.
9.1. Good Reason; Other Than for Cause. If, during the
Employment Period, the Company shall terminate the
ExecutiveOs employment other than for Cause or Disability or
the Executive shall terminate his employment for Good
Reason, such termination shall constitute a breach of
contract by the Company and during the period commencing on
the date of such termination and ending on the fifth
anniversary of the date hereof the Company shall, subject to
the provisions of SectionE9.2 hereof: (i) continue to pay
the Executive the salary provided in Section 3.1 hereof,
payable monthly, at the same annual level as was payable to
the Executive immediately prior to such termination; (ii)
continue to provide the Employee with all of the benefits
described in Section 3.3 hereof at the same levels as were
provided to the Executive prior to such termination (except
that no further stock options shall be granted); (iii) pay
to the Executive a bonus on each anniversary of the date the
most recent bonus was paid to the Executive prior to such
termination in an amount equal to the average amount of the
bonuses paid to the Executive in the three calendar years
preceding the calendar year wherein such termination occurs;
(iv) continue to make contributions on behalf of the
Executive to all pension, retirement, supplemental executive
retirement and other plans and programs maintained by the
Company and in which the Executive participated prior to
such termination equal to the amount of the largest
contribution with respect to each such plan or program which
the Company contributed on behalf of the Executive during
any of the three calendar years preceding the calendar year
wherein such termination occurs; (v) amend any documents
which govern any unexercised stock options which were held
by the Executive immediately prior to the termination of his
employment to provide that all such unexercised stock
options, to the extent not then exercisable, shall become
immediately exercisable and not forfeited as a result of
said termination of employment, and that all such
unexercised stock options shall continue to be exercisable
by the Executive during the period of time from the date of
such termination of employment to and including the 90th day
after the fifth anniversary of the date hereof; and (vi) be
liable to the Executive for any and all other damages
sustained by the Executive as a result of any such breach of
contract.
9.2. Mitigation of Damages. If the ExecutiveOs
employment is terminated pursuant to Section 9.1 hereof, the
Executive shall have the duty to use his reasonable efforts
to mitigate his damages by seeking employment comparable to
his employment with the Company with respect to position,
compensation and geographic location.
9.3. Death. If the ExecutiveOs employment is
terminated by reason of the ExecutiveOs death during the
Employment Period, this Agreement shall terminate without
further obligations by the Company to the ExecutiveOs legal
representatives under this Agreement other than for payment
of the compensation set forth under SectionE3 hereof accrued
up to the date of the ExecutiveOs death.
9.4. Disability. If the ExecutiveOs employment is
terminated by reason of the ExecutiveOs Disability during
the Employment Period, this Agreement shall terminate
without further obligations by the Company to the Executive
under this Agreement other than for payment of the
compensation set forth in SectionE3 hereof accrued up to the
Date of Termination.
9.5. Cause; Other than for Good Reason. If the
ExecutiveOs employment shall be terminated for Cause during
the Employment Period, this Agreement shall terminate
without further obligations of the Company to the Executive
under this Agreement other than the payment of the
compensation set forth in SectionE3 hereof accrued up to the
Date of Termination. If the Executive voluntarily
terminates his employment during the Employment Period,
excluding a termination for Good Reason, this Agreement
shall terminate without further obligations of the Company
to the Executive under this Agreement other than the payment
of the compensation set forth in SectionE3 hereof accrued up
to the Date of Termination.
10. Nonexclusivity of Rights. Nothing in this Agreement
shall prevent or limit the ExecutiveOs continuing or future
participation in any plan, program, policy or practice provided
by the Company or any of its affiliated companies and for which
the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with
the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement,
except as explicitly modified by this Agreement.
11. Restrictive Covenants.
11.1. During the period that the Executive is employed
by the Company and, unless the Executive terminates his
employment for Good Reason or the Company terminates his
employment other than for Cause, for a period of two (2)
years after the Date of Termination, if said Date of
Termination occurs prior to the expiration of the fifth
anniversary of the date hereof, or for a period of one (1)
year after the Date of Termination, if said Date of
Termination occurs on or after the fifth anniversary of the
date hereof (hereinafter said two-year or one-year period,
whichever becomes applicable, is referred to as the
ORestrictive PeriodO), the Executive agrees that the
Executive will not (i) own or have any interest, directly or
indirectly, in, or act as an officer, director, employee,
consultant, agent or representative of, or assist in any way
or in any capacity, any Competitor (as such term is
hereinafter defined); or (ii) directly or indirectly entice,
induce or in any manner influence any person who is, or
shall be, in the service of the Company or any of its
Affiliates (as such term is hereinafter defined) to leave
such service for the purpose of owning or having any
interest, directly or indirectly, in, or being employed by
or associated with any Competitor. Notwithstanding the
foregoing, the Executive may beneficially own up to one
percent (1%) of any publicly traded equity securities of any
entity which competes with the Company or any of its
Affiliates provided such ownership is for investment
purposes only. As used in this Section 11, the term
OCompetitorO shall include any corporation, partnership,
sole proprietorship, joint venture, limited liability
company, association or other business organization (x)Ethat
offers at any time during the Restrictive Period any product
or product category offered at any time during the
Restrictive Period by the Company and which product or
product category of the Company exceeds 10% of the gross
revenues or 10% of the pre-tax earnings of the Company on a
consolidated basis during the most recent fiscal year of the
Company ending prior to the Date of Termination or during
any other fiscal year of the Company ending during the
Restrictive Period, and (y) that conducts business in any
location within the United States of America. As used in
this Section 11, the term OAffiliatesO shall include any
entity in which the Company, or any entity which owns,
directly or indirectly, a majority ownership interest in the
Company, owns, directly or indirectly, at least a majority
interest.
11.2. The Executive agrees that all customer, supplier
and distributor lists, financial data, computer software
programs, source codes, plans, contracts, agreements,
literature, manuals, catalogs, brochures, books, records,
maps, correspondence and other materials furnished to the
Executive by the Company, or any of its Affiliates, or
secured through the efforts of the Executive, relating to
the business conducted by the Company or any of its
Affiliates, are and shall remain the property of the
Company, and/or its Affiliates, and the Executive agrees to
deliver all such materials, including all copies thereof, to
the Company upon the termination of the ExecutiveOs
employment hereunder, or at any other time at the CompanyOs
request.
11.3. The Executive agrees that the Executive will not
at any time during or after the ExecutiveOs employment with
the Company reveal, divulge or make known to any person,
firm or corporation any trade secrets or confidential
business information relating to the business of the Company
or any of its Affiliates, and will retain all such knowledge
and information in trust in a fiduciary capacity for the
sole benefit of the Company, its Affiliates and their
respective successors and assigns.
11.4. In the event that any court shall finally hold
that the time or territory or any other provision of this
Section 11 constitutes an unreasonable restriction against
the Executive, the Executive agrees that the provisions
hereof shall not be rendered void but shall apply as to such
time, territory and other extent as such court may
judicially determine or indicate constitutes a reasonable
restriction under the circumstances involved. The Company
and the Executive each request that any such court which
holds that any of the provisions of this Section 11
constitutes an unreasonable restriction against the
Executive make a determination of what would constitute a
reasonable restriction under the circumstances involved and
to reform this Agreement accordingly.
11.5. Except as expressly provided in any other written
agreement between the Company and the Executive, the
provisions of this Section 11 shall survive the termination
of the term of this Agreement and the termination of the
ExecutiveOs employment with the Company and shall run to and
inure to the benefit of the Company, its Affiliates and
their respective successors and assigns.
12. General.
12.1. This Agreement supersedes all prior agreements and
understandings between the Executive and the Company or any
of its Affiliates or their respective directors, officers,
shareholders, employees, attorneys, agents or
representatives, and constitutes the entire Agreement
between the parties, respecting the subject matter hereof
and there are no representations, warranties or commitments
other than those expressed herein.
12.2. The Executive represents and warrants to the
Company that the Executive is not a party to or bound by,
and the employment of the Executive by the Company or the
ExecutiveOs disclosure of any information to the Company or
its utilization of such information will not violate or
breach any, employment, retainer, consulting, license, non-
competition, non-disclosure, trade secrets or other
agreement or understanding between the Executive and any
other person, partnership, corporation, joint venture,
association or other entity.
12.3. No modification or amendment of, or waiver under,
this Agreement shall be valid unless in writing and signed
by the Executive and an officer of the Company pursuant to
express authority granted by the Board of Directors of the
Company.
12.4. The Executive agrees to indemnify the Company and
its Affiliates against, and to hold the Company and its
Affiliates harmless from, any and all claims, lawsuits,
losses, damages, expenses, costs and liabilities, including,
without limitation, court costs and attorneysO fees, which
the Company or any of its Affiliates may sustain as a result
of, or in connection with, either directly or indirectly,
the ExecutiveOs breach or violation of any of the provisions
of this Agreement; provided, however, that the Executive
shall not be liable to the Company for any lost profits of
the Company resulting from any such breaches or violations
which are primarily based upon or related to the poor
performance of any of the duties of the Executive described
in Section 4 hereof and which do not involve any intentional
misconduct or malfeasance on the part of the Executive.
12.5. The Company agrees to indemnify the Executive
against, and to hold the Executive harmless from, any and
all claims, lawsuits, losses, damages, expenses, costs and
liabilities, including, without limitation, court costs and
attorneysO fees, which the Executive may sustain as a result
of, or in connection with, either directly or indirectly,
the CompanyOs breach or violation of any of the provisions
of this Agreement.
12.6. The Executive hereby agrees that in the event of
the violation by the Executive of any of the provisions of
this Agreement, the Company will be entitled, if it so
elects, to institute and prosecute proceedings at law or in
equity to obtain damages with respect to such violation or
to enforce the specific performance of this Agreement by the
Executive or to enjoin the Executive from engaging in any
activity in violation hereof.
12.7. The waiver by the Company or the Executive of a
breach of any provision of this Agreement by the other shall
not operate or be construed as a waiver of any subsequent
breach.
12.8. Each notice, request, demand, approval or other
communication which may be or is required to be given under
this Agreement shall be in writing and shall be deemed to
have been properly given when delivered personally at the
address set forth below for the intended party during normal
business hours at such address, when sent by facsimile or
other electronic transmission to the respective facsimile
transmission numbers of the parties set forth below with
telephone confirmation of receipt, or when sent by
recognized overnight courier or by United States registered
or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Company:
Littelfuse, Inc.
800 E. Northwest Highway
Des Plaines, Illinois 60016
Attention: The Directors of the Company
(other than the Executive)
Facsimile: (847) 824-3865
Confirm: (847) 391-0304
If to the Executive:
Howard B. Witt
93-A Bateman Road
Barrington Hills, Illinois 60010
Facsimile: _________________
Confirm: (847) 382-5821
Notices shall be given to such other addressee or address,
or both, or by way of such other facsimile transmission
number, as a particular party may from time to time
designate by written notice to the other party hereto. Each
notice, request, demand, approval or other communication
which is sent in accordance with this Section shall be
deemed delivered, given and received for all purposes of
this Agreement as of three business days after the date of
deposit thereof for mailing in a duly constituted United
States post office or branch thereof, one business day after
deposit with a recognized overnight courier service or upon
confirmation of receipt of any facsimile transmission.
Notice given to a party hereto by any other method shall
only be deemed to be delivered, given and received when
actually received in writing by such party.
12.9. The Company agrees to reimburse the Executive for
up to $5,000 for any reasonable attorneysO fees or other
expenses incurred by the Executive in connection with the
negotiation, preparation and review of this Agreement.
12.10. This Agreement shall inure to the benefit of and
be binding upon the Company and the Executive and their
respective heirs, personal representatives, successors and
assigns.
12.11. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois.
12.12. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute
one and the same agreement.
In Witness Whereof, the parties hereto have executed this
Employment Agreement as of the day and year first above written.
Littelfuse, Inc. Executive:
By______________________________
__________________________________
Its______________________________ Howard B. Witt
-18-
-3-
Exhibit 10.10
Change of Control
Employment Agreement
This Agreement is made and entered into as of the 1st day
of September, 1996, by and between Littelfuse, Inc., a Delaware
corporation (hereinafter referred to as the OCompanyO), and
Howard B. Witt (hereinafter referred to as the OExecutiveO);
W i t n e s s e t h:
Whereas, the Board of Directors of the Company
(hereinafter referred to as the OBoardO) has determined that it
is in the best interests of the Company and its stockholders to
provide the Executive with certain protections against the
uncertainties usually created by a Change of Control (as such
term is hereinafter defined); and
Whereas, the Board believes that the protections provided
to the Executive in connection with a Change of Control will
better enable the Executive to devote his full time, attention
and energy to the business of the Company prior to and after a
Change of Control, thereby benefitting the Company and its
stockholders;
Now, Therefore, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged and confessed, the Company and
the Executive hereby agree as follows:
SectionE1. Certain Definitions. (a)EThe OEffective DateO
shall mean the first date during the Change of Control Period
(as defined in SectionE1(b) hereof) on which a Change of
Control (as defined in SectionE2 hereof) occurs.
Notwithstanding anything to the contrary contained in this
Agreement, if a Change of Control occurs and if the ExecutiveOs
employment with the Company is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of
employment (i)Ewas at the direct or indirect request of a third
party who theretofore had taken any steps intended to effect a
Change of Control or (ii)Eotherwise arose in connection with or
in anticipation of a Change of Control, then for all purposes
of this Agreement the OEffective DateO shall mean the date
immediately prior to the date of such termination of
employment.
(b) The OChange of Control PeriodO shall mean the period
commencing on the date hereof and ending on the fifth
anniversary of the date hereof.
SectionE2. Change of Control. For the purpose of this
Agreement, a OChange of ControlO shall mean:
(a) The acquisition in one or more transactions by
any individual, entity or group (hereinafter referred to
collectively as a OPersonO) within the meaning of
SectionE13(d)(3) of the Securities Exchange Act of 1934,
as amended (hereinafter referred to as the OExchange
ActO), of beneficial ownership (within the meaning of, and
calculated in accordance with, Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i)Ethe
then outstanding shares of common stock of the Company
(hereinafter referred to as the OOutstanding Company
Common StockO) or (ii)Ethe combined voting power of the
then outstanding voting securities of the Company entitled
to vote generally in the election of directors
(hereinafter referred to as the OOutstanding Company
Voting SecuritiesO); provided, however, that for purposes
of this subsection (a), the following acquisitions shall
not constitute a Change of Control: (i)Eany acquisition
directly from the Company, (ii)Eany acquisition by the
Company, (iii)Eany acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company,
(iv)Eany acquisition by any corporation pursuant to a
transaction which complies with clausesE(i), (ii) and
(iii) of subsectionE(c) of this SectionE2 or (v) any
acquisition by Oaktree Capital Management, LLC, a
California limited liability company, or any of its
Affiliates or Associates (as used herein, the terms
OAffiliateO and OAssociateO shall have the respective
meanings ascribed to such terms in RuleE12b-2 of the
General Rules and Regulations under the Exchange Act); or
(b) Individuals who, as of the date hereof,
constitute the Board (hereinafter referred to as the
OIncumbent BoardO) cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the
CompanyOs stockholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened
election contest with respect to the election or removal
of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than
the Board; or
(c) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company
(hereinafter referred to as a OBusiness CombinationO)
unless, following such Business Combination, (i)Eall or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of common
stock and the combined voting power of the then
outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of the
corporation resulting from such Business Combination
(including, without limitation, a corporation which as a
result of such transaction owns the Company or all or
substantially all of the CompanyOs assets either directly
or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as
the case may be, (ii)Eno Person (excluding any corporation
resulting from such Business Combination or any employee
benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock
of the corporation resulting from such Business
Combination, or the combined voting power of the then
outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the
Business Combination and (iii)Eat least a majority of the
members of the board of directors of the corporation
resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company within
one year after a Business Combination.
SectionE3. Employment Period. The Company hereby agrees
to continue to employ the Executive, and the Executive hereby
agrees to remain as an employee of the Company, subject to the
terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the third
anniversary of such date (the OEmployment PeriodO).
SectionE4. Terms of Employment.
(a) Position and Duties. (i)EDuring the Employment
Period, (A)Ethe ExecutiveOs position (including status,
offices, titles and reporting requirements), authority, duties
and
responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and
assigned at any time during the 120-day period immediately
preceding the Effective Date and (B)Ethe ExecutiveOs services
shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any office
or location less than 20 miles from such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention
and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive
hereunder, to use the ExecutiveOs reasonable best efforts to
perform faithfully and efficiently such responsibilities.
During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A)Eserve on corporate,
civic or charitable boards or committees, (B)Edeliver lectures,
fulfill speaking engagements or teach at educational
institutions, and (C)Emanage personal investments, so long as
such activities do not significantly interfere with the
performance of the ExecutiveOs responsibilities as an employee
of the Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to
the Effective Date, the continued conduct of such activities
(or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter
be deemed to interfere with the performance of the ExecutiveOs
responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary
(hereinafter referred to as the OAnnual Base SalaryO), which
shall be paid at a monthly rate, equal to at least twelve times
the highest monthly base salary paid or payable, including any
base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in
respect of the twelve-month period immediately preceding the
month in which the Effective Date occurs. During the
Employment Period, the Annual Base Salary shall be reviewed no
more than 12 months after the last salary increase awarded to
the Executive prior to the Effective Date and thereafter at
least annually. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as used
in this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term Oaffiliated
companiesO shall include any company controlled by, controlling
or under common control with the Company.
(ii) Annual Bonus. In addition to the Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending
during the Employment Period, an annual bonus (hereinafter
referred to as the OAnnual BonusO) in cash at least equal to
the ExecutiveOs highest bonus under the CompanyOs incentive
bonus program or any comparable bonus under any predecessor or
successor plan, for the last three full fiscal years prior to
the Effective Date (annualized in the event that the Executive
was not employed by the Company for the whole of such fiscal
year) (hereinafter referred to as the ORecent Annual BonusO).
Each such Annual Bonus shall be paid no later than the end of
the third month of the fiscal year next following the fiscal
year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Annual
Bonus.
(iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other
peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities
(measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate,
than the most favorable of those provided by the Company and
its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time
during the 120-day period immediately preceding the Effective
Date or if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the ExecutiveOs family, as the case may
be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices, policies
and programs provided by the Company and its affiliated
companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in
no event shall such plans, practices, policies and programs
provide the Executive with benefits which are less favorable,
in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Executive at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated
companies.
(v) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the most favorable policies, practices and procedures of
the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its
affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including,
without limitation, tax and financial planning services,
payment of club dues, and, if applicable, use of an automobile
and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the
Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its
affiliated companies.
(vii) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices
of a size and with furnishings and other appointments, and to
exclusive personal secretarial and other assistance, at least
equal to the most favorable of the foregoing provided to the
Executive by the Company and its affiliated companies at any
time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as
provided generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with
the most favorable plans, policies, programs and practices of
the Company and its affiliated companies as in effect for the
Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its
affiliated companies.
SectionE5. Termination of Employment.
(a) Disability. If the Company determines in good faith
that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set
forth below), it may give written notice to the Executive of
its intention to terminate the ExecutiveOs employment. In such
event, the ExecutiveOs employment with the Company shall
terminate effective on the 30th day after delivery of such
notice to the Executive (the ODisability Effective DateO),
provided that, within the 30 days after such delivery, the
Executive shall not have returned to full-time performance of
the ExecutiveOs duties. For purposes of this Agreement,
ODisabilityO shall mean the absence of the Executive from the
ExecutiveOs duties with the Company on a full-time basis for
180 consecutive business days as a result of incapacity due to
mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its
insurers and reasonably acceptable to the Executive or the
ExecutiveOs legal representative.
(b) Cause. The Company may terminate the ExecutiveOs
employment during the Employment Period for Cause. For
purposes of this Agreement, OCauseO shall mean:
(i) the willful and continued failure of the
Executive to perform substantially the ExecutiveOs duties
with the Company (other than any such failure resulting
from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered
to the Executive by the Board which specifically
identifies the manner in which the Board believes that the
Executive has not substantially performed the ExecutiveOs
duties and such failure is not cured within sixty (60)
calendar days after receipt of such written demand; or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and
demonstrably injurious to the Company.
For purposes of this provision, any act or failure to act on
the part of the Executive in violation or contravention of any
order, resolution or directive of the Board of Directors of the
Company shall be considered OwillfulO unless such order,
resolution or directive is illegal or in violation of the
certificate of incorporation or by-laws of the Company;
provided, however, that no other act or failure to act on the
part of the Executive, shall be considered Owillful,O unless it
is done, or omitted to be done, by the Executive in bad faith
or without reasonable belief that the ExecutiveOs action or
omission was in the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or upon the instructions
of the Chief Executive Officer or a senior officer of the
Company or based upon the advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests
of the Company. The cessation of employment of the Executive
shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less
than three-quarters of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be
heard before the Board), finding that, in the good faith
opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
(c) Good Reason. The ExecutiveOs employment may be
terminated by the Executive for Good Reason. For purposes of
this Agreement, OGood ReasonO shall mean:
(i) the Executive is not elected, or is removed, as
the Chairman, President or Chief Executive Officer of the
Company;
(ii) the assignment to the Executive of any duties
inconsistent in any respect with the ExecutiveOs position,
authority, duties or responsibilities as contemplated by
SectionE4(a) hereof, or any other action by the Company
which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken
in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive;
(iii) any failure by the Company to comply with any of
the provisions of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iv) the CompanyOs requiring the Executive to travel
on Company business to a substantially greater extent than
required immediately prior to the Effective Date; or
(v) any purported termination by the Company of the
ExecutiveOs employment otherwise than as expressly
permitted by this Agreement.
For purposes of this SectionE5(c), any good faith
determination of OGood ReasonO made by the Executive shall be
conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall
be communicated by Notice of Termination to the other party
hereto given in accordance with SectionE12(b) hereof. For
purposes of this Agreement, a ONotice of TerminationO means a
written notice which (i)Eindicates the specific termination
provision in this Agreement relied upon, (ii)Eto the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
ExecutiveOs employment under the provision so indicated and
(iii)Eif the Date of Termination (as defined below) is other
than the date of delivery of such notice, specifies the
termination date (which date shall be not more than 30 days
after the delivery of such notice). The failure by the
Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from
asserting such fact or circumstance in enforcing the
ExecutiveOs or the CompanyOs rights hereunder.
(e) Date of Termination. ODate of TerminationO means
(i)Eif the ExecutiveOs employment is terminated by the Company
for Cause, or by the Executive for Good Reason, the date of
delivery of the Notice of Termination or any later date
specified therein, as the case may be, (ii)Eif the ExecutiveOs
employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which
the Company notifies the Executive of such termination,
(iii)Eif the ExecutiveOs employment is terminated by reason of
death or Disability, the Date of Termination shall be the date
of death of the Executive or the Disability Effective Date, as
the case may be, and (iv) if the ExecutiveOs employment is
terminated by the Executive without Good Reason, the last day
of employment of the Executive with the Company.
SectionE6. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause, Death or
Disability. If, during the Employment Period, the Company
shall terminate the ExecutiveOs employment other than for Cause
or Disability or the Executive shall terminate his employment
for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination
the aggregate of the following amounts:
A. the sum of (1)Ethe ExecutiveOs Annual Base
Salary through the Date of Termination to the extent
not theretofore paid, plus (2)Ethe product of (x)Ethe
higher of (I)Ethe Recent Annual Bonus and (II)Ethe
Annual Bonus paid or payable, including any bonus or
portion thereof which has been earned but deferred
(and annualized for any fiscal year consisting of
less than twelve full months or during which the
Executive was employed for less than twelve full
months), for the most recently completed fiscal year
during the Employment Period, if any (such higher
amount being hereinafter referred to as the OHighest
Annual BonusO) multiplied by (y)Ea fraction, the
numerator of which is the number of days in the
current fiscal year through the Date of Termination,
and the denominator of which is 365 plus (3)Eany
compensation previously deferred by the Executive
(together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the
amounts described in clausesE(1), (2) and (3) are
hereinafter referred to as the OAccrued
ObligationsO); and
B. the amount equal to the product of (1)
three multiplied by (2)Ethe sum of (x)Ethe
ExecutiveOs Annual Base Salary plus (y)Ethe Highest
Annual Bonus;
(ii) the Company shall credit as of the Date of
Termination the Account of the Executive under the
Littelfuse, Inc. Supplemental Executive Retirement Plan
(hereinafter referred to as the OSERPO) with an amount
equal to the sum of the three respective amounts which
would be credited to the Account of the Executive under
the SERP on the three Valuation Dates (as such term is
defined in the SERP) next succeeding the Date of
Termination assuming (A) the Executive would continue to
be employed by the Company up to and including said third
Valuation Date (hereinafter said period from the Date of
Termination until said third Valuation Date is referred to
as the OAssumed Employment PeriodO), (B) the Compensation
(as such term is defined in the SERP) of the Executive
during each fiscal year during the Assumed Employment
Period would be equal to the amount of the Compensation of
the Executive during the most recently ended Plan Year (as
such term is defined in the SERP) prior to the Date of
Termination, and (C) the Company would continue the SERP
up to and including said third Valuation Date; provided,
however, that if the Executive would reach the age of 62
prior to the expiration of the Assumed Employment Period,
no amounts shall be credited to the Account of the
Executive under the SERP for any Valuation Date occurring
after the date that the Executive reaches age 62;
(iii) until the Executive attains the age of 62, the
Company shall continue to provide medical insurance
benefits to the Executive and/or the ExecutiveOs family at
least equal to those which would have been provided to
them in accordance with the medical insurance benefits
described in SectionE4(b)(iv) hereof if the ExecutiveOs
employment had not been terminated; provided, however,
that if the Executive becomes reemployed with another
employer and is eligible to receive medical insurance
benefits under another employer-provided plan, the medical
insurance benefits described herein shall be secondary to
those provided under such other plan during such
applicable period of eligibility; and
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive
any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies
(such other amounts and benefits shall hereinafter be
referred to collectively as the OOther BenefitsO).
(b) Death. If the ExecutiveOs employment is terminated
by reason of the ExecutiveOs death during the Employment
Period, this Agreement shall terminate without further
obligations by the Company to the ExecutiveOs legal
representatives under this Agreement, other than for payment of
Accrued Obligations and the timely payment or provision of
Other Benefits. Accrued Obligations shall be paid to the
ExecutiveOs estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination. With
respect to the provision of Other Benefits, the term OOther
BenefitsO as utilized in this SectionE6(b) shall include,
without limitation, and the ExecutiveOs estate and/or
beneficiaries shall be entitled to receive, benefits at least
equal to the most favorable benefits provided by the Company
and affiliated companies to the estates and beneficiaries of
peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to
death benefits, if any, as in effect with respect to other peer
executives and their beneficiaries at any time during the 120-
day period immediately preceding the Effective Date.
(c) Disability. If the ExecutiveOs employment is
terminated by reason of the ExecutiveOs Disability during the
Employment Period, this Agreement shall terminate without
further obligations by the Company to the Executive under this
Agreement, other than for payment of Accrued Obligations and
the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination. With respect
to the provision of Other Benefits, the term OOther BenefitsO
as utilized in this SectionE6(c) shall include, and the
Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits at least equal to the
most favorable of those generally provided by the Company and
its affiliated companies to disabled executives and/or their
families in accordance with such plans, programs, practices and
policies relating to disability, if any, as in effect generally
with respect to other peer executives and their families at any
time during the 120-day period immediately preceding the
Effective Date.
(d) Cause; Other than for Good Reason. If the
ExecutiveOs employment shall be terminated for Cause during the
Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation
to pay to the Executive (i)Ehis Annual Base Salary through the
Date of Termination, (ii)Ethe amount of any compensation
previously deferred by the Executive, and (iii)EOther Benefits,
in each case to the extent theretofore unpaid. If the
Executive voluntarily terminates his employment during the
Employment Period, excluding a termination for Good Reason,
this Agreement shall terminate without further obligations of
the Company to the Executive under this Agreement, other than
for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination and the Company
shall timely pay or provide the Other Benefits to the
Executive. In no event shall the Executive be liable to the
Company for any damages caused by such voluntary termination by
the Executive nor shall the Executive be in any way restricted
from being employed by any other party after such voluntary
termination.
(e) Waiver of Certain Restrictions Affecting Executive.
Notwithstanding anything to the contrary contained in any
employment agreement, benefit plan or other document, in the
event that the ExecutiveOs employment shall be terminated
during the Employment Period for any reason whatsoever (i) the
Executive shall not forfeit his Account balance under the SERP
even if his employment was terminated for OCauseO as such term
is defined under the SERP and (ii) on and after the Date of
Termination the Executive shall not be bound or prejudiced by
any non-competition agreement benefitting the Company or its
subsidiaries, and any provisions contained in the SERP which
would penalize the Executive for being employed by a
competitor, including, without limitation, Section 3.6(c)
thereof, shall not apply in any respect to the Executive and,
effective as of the Date of Termination, the Company waives any
right to enforce any such provisions against the Executive.
SectionE7. Nonexclusivity of Rights. Nothing in this
Agreement shall prevent or limit the ExecutiveOs continuing or
future participation in any plan, program, policy or practice
provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor, subject to
SectionE12(f) hereof, shall anything herein limit or otherwise
affect such rights as the Executive may have under any contract
or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program or
contract or agreement, except as explicitly modified by this
Agreement.
SectionE8. Full Settlement. The CompanyOs obligation to
make the payments provided for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the
Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall
not be reduced whether or not the Executive obtains other
employment. The Company agrees to pay as incurred, to the
fullest extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any
contest by the Company, the Executive or others in which the
Executive is the prevailing party and which involves or relates
to the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement),
plus in each case interest on any delayed payment from the due
date thereof until paid at the prime rate from time to time
reported in The Wall Street Journal during said period.
SectionE9. Certain Additional Payments by the Company.
(a)EAnything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be
determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any
additional payments required under this SectionE9) (hereinafter
referred to collectively as a OPaymentO) would be subject to
the excise tax imposed by SectionE4999 of the Code or any
interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively
referred to as the OExcise TaxO), then the Executive shall be
entitled to receive an additional payment (a OGross-Up
PaymentO) in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-
Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of SectionE9(c) hereof, all
determinations required to be made under this SectionE9,
including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by
Ernst & Young LLP or such other independent certified public
accounting firm as may be designated by the Executive
(hereinafter referred to as the OAccounting FirmO) which shall
provide detailed supporting calculations both to the Company
and the Executive within 15 business days of the receipt of
notice from the Executive that there has been a Payment, or
such earlier time as is requested by the Company. In the event
that the Accounting Firm is serving as accountant or auditor
for the individual, entity or group effecting the Change of
Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as
the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this SectionE9,
shall be paid by the Company to the Executive within five days
of the receipt of the Accounting FirmOs determination. Any
determination by the Accounting Firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in
the application of SectionE4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made
by the Company should have been made (hereinafter referred to
as the OUnderpaymentO) consistent with the calculations
required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to SectionE9(c) hereof and the
Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit of
the Executive.
(c) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful,
would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company
(or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company
notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the
Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this SectionE9(c),
the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo
any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct the Executive to pay
the tax claimed and sue for a refund or to contest the claim in
any permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to pay such
claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free
basis and shall indemnify and hold the Executive harmless, on
an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed
income with respect to such advance. The CompanyOs control of
any such contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service
or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to SectionE9(c) hereof, the
Executive becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the CompanyOs
complying with the requirements of SectionE9(c) hereof)
promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of
an amount advanced by the Company pursuant to SectionE9(c)
hereof, a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent
to contest such denial of refund prior to the expiration of 30
days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
SectionE10. Confidential Information. The Executive shall
hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating
to the Company or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the
Executive during the ExecutiveOs employment by the Company or
any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this
Agreement). After termination of the ExecutiveOs employment
with the Company, the Executive shall not, without the prior
written consent of the Company or as may otherwise be required
by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted
violation of the provisions of this SectionE10 constitute a
basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement. The provisions
of this Section 10 shall survive any termination of this
Agreement or any termination of the employment of the Executive
with the Company.
SectionE11. Successors. (a)EThis Agreement is personal to
the Executive and without the prior written consent of the
Company shall not be assignable by the Executive otherwise than
by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by
the ExecutiveOs legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, the
term OCompanyO shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation
of law or otherwise.
SectionE12. Miscellaneous. (a)EThis Agreement shall be
governed by and construed in accordance with the laws of the
State of Illinois, without reference to principles of conflict
of laws. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties
hereto or their respective successors and legal
representatives.
(b) Each notice, request, demand, approval or other
communication which may be or is required to be given under
this Agreement shall be in writing and shall be deemed to have
been properly given when delivered personally at the address
set forth below for the intended party during normal business
hours at such address, when sent by facsimile or other
electronic transmission to the respective facsimile
transmission numbers of the parties set forth below with
telephone confirmation of receipt, or when sent by recognized
overnight courier or by the United States registered or
certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Company:
Littelfuse, Inc.
800 E. Northwest Highway
Des Plaines, Illinois 60016
Attention: President (unless the Executive is
the President, in which case the
communication should be to the
attention of all of the Directors
of the Company other than the
Executive)
Facsimile: (847) 824-3864
Confirm: (847) 391-0304
If to the Executive:
Howard B. Witt
93-A Bateman Road
Barrington Hills, Illinois 60010
Facsimile: ____________
Confirm: (847) 382-5821
Notices shall be given to such other addressee or address, or
both, or by way of such other facsimile transmission number, as
a particular party may from time to time designate by written
notice to the other party hereto. Each notice, request,
demand, approval or other communication which is sent in
accordance with this Section shall be deemed given and received
for all purposes of this Agreement as of two business days
after the date of deposit thereof for mailing in a duly
constituted United States post office or branch thereof, one
business day after deposit with a recognized overnight courier
service or upon confirmation of receipt of any facsimile
transmission. Notice given to a party hereto by any other
method shall only be deemed to be given and received when
actually received in writing by such party.
(c) The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) The ExecutiveOs or the CompanyOs failure to insist
upon strict compliance with any provision of this Agreement or
the failure to promptly assert any right the Executive or the
Company may have hereunder, including, without limitation, the
right of the Executive to terminate employment for Good Reason
pursuant to SectionE5(c)(i)-(v) hereof, shall not be deemed to
be a waiver of such provision or right or any other provision
or right of this Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written
agreement between the Executive and the Company, the employment
of the Executive by the Company is Oat willO and, subject to
SectionE1(a) hereof and/or any other written agreement between
the Executive and the Company, prior to the Effective Date the
ExecutiveOs employment and/or this Agreement may be terminated
by either the Executive or the Company at any time prior to the
Effective Date upon written notice to the other party, in which
case the Executive shall have no further rights under this
Agreement. From and after the Effective Date, this Agreement
shall supersede any other agreement between the parties with
respect to the subject matter hereof.
(g) This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one
and the same agreement.
In Witness Whereof, the parties hereto have executed this
Change of Control Employment Agreement as of the day and year
first above written.
__________________________
____________
Howard B. Witt
Littelfuse, Inc.
By
Its
-110-
-19-
Exhibit 10.12
Change of Control
Employment Agreement
This Agreement is made and entered into as of the 1st day
of September, 1996, by and between Littelfuse, Inc., a Delaware
corporation (hereinafter referred to as the OCompanyO), and ------------
- ----------- (hereinafter referred to as the OExecutiveO);
W i t n e s s e t h:
Whereas, the Board of Directors of the Company
(hereinafter referred to as the OBoardO) has determined that it
is in the best interests of the Company and its stockholders to
provide the Executive with certain protections against the
uncertainties usually created by a Change of Control (as such
term is hereinafter defined); and
Whereas, the Board believes that the protections provided
to the Executive in connection with a Change of Control will
better enable the Executive to devote his full time, attention
and energy to the business of the Company prior to and after a
Change of Control, thereby benefitting the Company and its
stockholders;
Now, Therefore, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged and confessed, the Company and
the Executive hereby agree as follows:
SectionE1. Certain Definitions. (a)EThe OEffective DateO
shall mean the first date during the Change of Control Period
(as defined in SectionE1(b) hereof) on which a Change of
Control (as defined in SectionE2 hereof) occurs.
Notwithstanding anything to the contrary contained in this
Agreement, if a Change of Control occurs and if the ExecutiveOs
employment with the Company is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of
employment (i)Ewas at the direct or indirect request of a third
party who theretofore had taken any steps intended to effect a
Change of Control or (ii)Eotherwise arose in connection with or
in anticipation of a Change of Control, then for all purposes
of this Agreement the OEffective DateO shall mean the date
immediately prior to the date of such termination of
employment.
(b) The OChange of Control PeriodO shall mean the period
commencing on the date hereof and ending on the fifth
anniversary of the date hereof.
SectionE2. Change of Control. For the purpose of this
Agreement, a OChange of ControlO shall mean:
(a) The acquisition in one or more transactions by
any individual, entity or group (hereinafter referred to
collectively as a OPersonO) within the meaning of
SectionE13(d)(3) of the Securities Exchange Act of 1934,
as amended (hereinafter referred to as the OExchange
ActO), of beneficial ownership (within the meaning of, and
calculated in accordance with, Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i)Ethe
then outstanding shares of common stock of the Company
(hereinafter referred to as the OOutstanding Company
Common StockO) or (ii)Ethe combined voting power of the
then outstanding voting securities of the Company entitled
to vote generally in the election of directors
(hereinafter referred to as the OOutstanding Company
Voting SecuritiesO); provided, however, that for purposes
of this subsection (a), the following acquisitions shall
not constitute a Change of Control: (i)Eany acquisition
directly from the Company, (ii)Eany acquisition by the
Company, (iii)Eany acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company,
(iv)Eany acquisition by any corporation pursuant to a
transaction which complies with clausesE(i), (ii) and
(iii) of subsectionE(c) of this SectionE2 or (v) any
acquisition by Oaktree Capital Management, LLC, a
California limited liability company, or any of its
Affiliates or Associates (as used herein, the terms
OAffiliateO and OAssociateO shall have the respective
meanings ascribed to such terms in RuleE12b-2 of the
General Rules and Regulations under the Exchange Act); or
(b) Individuals who, as of the date hereof,
constitute the Board (hereinafter referred to as the
OIncumbent BoardO) cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the
CompanyOs stockholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened
election contest with respect to the election or removal
of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than
the Board; or
(c) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company
(hereinafter referred to as a OBusiness CombinationO)
unless, following such Business Combination, (i)Eall or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of common
stock and the combined voting power of the then
outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of the
corporation resulting from such Business Combination
(including, without limitation, a corporation which as a
result of such transaction owns the Company or all or
substantially all of the CompanyOs assets either directly
or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as
the case may be, (ii)Eno Person (excluding any corporation
resulting from such Business Combination or any employee
benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock
of the corporation resulting from such Business
Combination, or the combined voting power of the then
outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the
Business Combination and (iii)Eat least a majority of the
members of the board of directors of the corporation
resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company within
one year after a Business Combination.
SectionE3. Employment Period. The Company hereby agrees
to continue to employ the Executive, and the Executive hereby
agrees to remain as an employee of the Company, subject to the
terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the second
anniversary of such date (the OEmployment PeriodO).
SectionE4. Terms of Employment.
(a) Position and Duties. (i)EDuring the Employment
Period, (A)Ethe ExecutiveOs position (including status,
offices, titles and reporting requirements), authority, duties
and responsibilities shall be at least commensurate in all
material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period
immediately preceding the Effective Date and (B)Ethe
ExecutiveOs services shall be performed at the location where
the Executive was employed immediately preceding the Effective
Date or any office or location less than 20 miles from such
location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention
and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive
hereunder, to use the ExecutiveOs reasonable best efforts to
perform faithfully and efficiently such responsibilities.
During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A)Eserve on corporate,
civic or charitable boards or committees, (B)Edeliver lectures,
fulfill speaking engagements or teach at educational
institutions, and (C)Emanage personal investments, so long as
such activities do not significantly interfere with the
performance of the ExecutiveOs responsibilities as an employee
of the Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to
the Effective Date, the continued conduct of such activities
(or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter
be deemed to interfere with the performance of the ExecutiveOs
responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary
(hereinafter referred to as the OAnnual Base SalaryO), which
shall be paid at a monthly rate, equal to at least twelve times
the highest monthly base salary paid or payable, including any
base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in
respect of the twelve-month period immediately preceding the
month in which the Effective Date occurs. During the
Employment Period, the Annual Base Salary shall be reviewed no
more than 12 months after the last salary increase awarded to
the Executive prior to the Effective Date and thereafter at
least annually. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as used
in this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term Oaffiliated
companiesO shall include any company controlled by, controlling
or under common control with the Company.
(ii) Annual Bonus. In addition to the Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending
during the Employment Period, an annual bonus (hereinafter
referred to as the OAnnual BonusO) in cash at least equal to
the ExecutiveOs highest bonus under the CompanyOs incentive
bonus program or any comparable bonus under any predecessor or
successor plan, for the last three full fiscal years prior to
the Effective Date (annualized in the event that the Executive
was not employed by the Company for the whole of such fiscal
year) (hereinafter referred to as the ORecent Annual BonusO).
Each such Annual Bonus shall be paid no later than the end of
the third month of the fiscal year next following the fiscal
year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Annual
Bonus.
(iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other
peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities
(measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate,
than the most favorable of those provided by the Company and
its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time
during the 120-day period immediately preceding the Effective
Date or if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the ExecutiveOs family, as the case may
be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices, policies
and programs provided by the Company and its affiliated
companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in
no event shall such plans, practices, policies and programs
provide the Executive with benefits which are less favorable,
in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Executive at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated
companies.
(v) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the most favorable policies, practices and procedures of
the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its
affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including,
without limitation, tax and financial planning services,
payment of club dues, and, if applicable, use of an automobile
and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the
Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its
affiliated companies.
(vii) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices
of a size and with furnishings and other appointments, and to
exclusive personal secretarial and other assistance, at least
equal to the most favorable of the foregoing provided to the
Executive by the Company and its affiliated companies at any
time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as
provided generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with
the most favorable plans, policies, programs and practices of
the Company and its affiliated companies as in effect for the
Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its
affiliated companies.
SectionE5. Termination of Employment.
(a) Disability. If the Company determines in good faith
that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set
forth below), it may give written notice to the Executive of
its intention to terminate the ExecutiveOs employment. In such
event, the ExecutiveOs employment with the Company shall
terminate effective on the 30th day after delivery of such
notice to the Executive (the ODisability Effective DateO),
provided that, within the 30 days after such delivery, the
Executive shall not have returned to full-time performance of
the ExecutiveOs duties. For purposes of this Agreement,
ODisabilityO shall mean the absence of the Executive from the
ExecutiveOs duties with the Company on a full-time basis for
180 consecutive business days as a result of incapacity due to
mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its
insurers and reasonably acceptable to the Executive or the
ExecutiveOs legal representative.
(b) Cause. The Company may terminate the ExecutiveOs
employment during the Employment Period for Cause. For
purposes of this Agreement, OCauseO shall mean:
(i) the willful and continued failure of the
Executive to perform substantially the ExecutiveOs duties
with the Company (other than any such failure resulting
from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered
to the Executive by the Board which specifically
identifies the manner in which the Board believes that the
Executive has not substantially performed the ExecutiveOs
duties and such failure is not cured within sixty (60)
calendar days after receipt of such written demand; or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and
demonstrably injurious to the Company.
For purposes of this provision, any act or failure to act on
the part of the Executive in violation or contravention of any
order, resolution or directive of the Board of Directors of the
Company shall be considered OwillfulO unless such order,
resolution or directive is illegal or in violation of the
certificate of incorporation or by-laws of the Company;
provided, however, that no other act or failure to act on the
part of the Executive, shall be considered Owillful,O unless it
is done, or omitted to be done, by the Executive in bad faith
or without reasonable belief that the ExecutiveOs action or
omission was in the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or upon the instructions
of the Chief Executive Officer or a senior officer of the
Company or based upon the advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests
of the Company. The cessation of employment of the Executive
shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less
than three-quarters of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be
heard before the Board), finding that, in the good faith
opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
(c) Good Reason. The ExecutiveOs employment may be
terminated by the Executive for Good Reason. For purposes of
this Agreement, OGood ReasonO shall mean:
(i) the Executive is not elected to, or is removed
from, any elected office of the Company which the
Executive held immediately prior to the Effective Date;
(ii) the assignment to the Executive of any duties
inconsistent in any respect with the ExecutiveOs position,
authority, duties or responsibilities as contemplated by
SectionE4(a) hereof, or any other action by the Company
which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken
in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive;
(iii) any failure by the Company to comply with any of
the provisions of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iv) the CompanyOs requiring the Executive to travel
on Company business to a substantially greater extent than
required immediately prior to the Effective Date; or
(v) any purported termination by the Company of the
ExecutiveOs employment otherwise than as expressly
permitted by this Agreement.
For purposes of this SectionE5(c), any good faith
determination of OGood ReasonO made by the Executive shall be
conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall
be communicated by Notice of Termination to the other party
hereto given in accordance with SectionE12(b) hereof. For
purposes of this Agreement, a ONotice of TerminationO means a
written notice which (i)Eindicates the specific termination
provision in this Agreement relied upon, (ii)Eto the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
ExecutiveOs employment under the provision so indicated and
(iii)Eif the Date of Termination (as defined below) is other
than the date of delivery of such notice, specifies the
termination date (which date shall be not more than 30 days
after the delivery of such notice). The failure by the
Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from
asserting such fact or circumstance in enforcing the
ExecutiveOs or the CompanyOs rights hereunder.
(e) Date of Termination. ODate of TerminationO means
(i)Eif the ExecutiveOs employment is terminated by the Company
for Cause, or by the Executive for Good Reason, the date of
delivery of the Notice of Termination or any later date
specified therein, as the case may be, (ii)Eif the ExecutiveOs
employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which
the Company notifies the Executive of such termination,
(iii)Eif the ExecutiveOs employment is terminated by reason of
death or Disability, the Date of Termination shall be the date
of death of the Executive or the Disability Effective Date, as
the case may be, and (iv) if the ExecutiveOs employment is
terminated by the Executive without Good Reason, the last day
of employment of the Executive with the Company.
SectionE6. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause, Death or
Disability. If, during the Employment Period, the Company
shall terminate the ExecutiveOs employment other than for Cause
or Disability or the Executive shall terminate his employment
for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination
the aggregate of the following amounts:
A. the sum of (1)Ethe ExecutiveOs Annual Base
Salary through the Date of Termination to the extent
not theretofore paid, plus (2)Ethe product of (x)Ethe
higher of (I)Ethe Recent Annual Bonus and (II)Ethe
Annual Bonus paid or payable, including any bonus or
portion thereof which has been earned but deferred
(and annualized for any fiscal year consisting of
less than twelve full months or during which the
Executive was employed for less than twelve full
months), for the most recently completed fiscal year
during the Employment Period, if any (such higher
amount being hereinafter referred to as the OHighest
Annual BonusO) multiplied by (y)Ea fraction, the
numerator of which is the number of days in the
current fiscal year through the Date of Termination,
and the denominator of which is 365 plus (3)Eany
compensation previously deferred by the Executive
(together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the
amounts described in clausesE(1), (2) and (3) are
hereinafter referred to as the OAccrued
ObligationsO); and
B. the amount equal to the product of (1) two
multiplied by (2)Ethe sum of (x)Ethe ExecutiveOs
Annual Base Salary plus (y)Ethe Highest Annual Bonus;
(ii) the Company shall credit as of the Date of
Termination the Account of the Executive under the
Littelfuse, Inc. Supplemental Executive Retirement Plan
(hereinafter referred to as the OSERPO) with an amount
equal to the sum of the two respective amounts which would
be credited to the Account of the Executive under the SERP
on the two Valuation Dates (as such term is defined in the
SERP) next succeeding the Date of Termination assuming (A)
the Executive would continue to be employed by the Company
up to and including said second Valuation Date
(hereinafter said period from the Date of Termination
until said second Valuation Date is referred to as the
OAssumed Employment PeriodO), (B) the Compensation (as
such term is defined in the SERP) of the Executive during
each fiscal year during the Assumed Employment Period
would be equal to the amount of the Compensation of the
Executive during the most recently ended Plan Year (as
such term is defined in the SERP) prior to the Date of
Termination, and (C) the Company would continue the SERP
up to and including said second Valuation Date; provided,
however, that if the Executive would reach the age of 62
prior to the expiration of the Assumed Employment Period,
no amounts shall be credited to the Account of the
Executive under the SERP for any Valuation Date occurring
after the date that the Executive reaches age 62;
(iii) during the two years following the Date of
Termination, the Company shall continue to provide medical
insurance benefits to the Executive and/or the ExecutiveOs
family at least equal to those which would have been
provided to them in accordance with the medical insurance
benefits described in SectionE4(b)(iv) hereof if the
ExecutiveOs employment had not been terminated; provided,
however, that if the Executive becomes reemployed with
another employer and is eligible to receive medical
insurance benefits under another employer-provided plan,
the medical insurance benefits described herein shall be
secondary to those provided under such other plan during
such applicable period of eligibility;
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive
any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies
(such other amounts and benefits shall hereinafter be
referred to collectively as the OOther BenefitsO); and
(v) notwithstanding anything to the contrary
contained in any employment agreement, benefit plan or
other document, in the event the ExecutiveOs employment
shall be terminated during the Employment Period by the
Executive for Good Reason or by the Company other than for
Cause or Disability, on and after the Date of Termination
the Executive shall not be bound or prejudiced by any non-
competition agreement benefitting the Company or its
subsidiaries, and any provisions contained in the SERP
which would penalize the Executive for being employed by a
competitor, including, without limitation, Section 3.6(c)
thereof, shall not apply in any respect to the Executive
and, effective as of the Date of Termination, the Company
waives any right to enforce any such provisions against
the Executive.
(b) Death. If the ExecutiveOs employment is terminated
by reason of the ExecutiveOs death during the Employment
Period, this Agreement shall terminate without further
obligations by the Company to the ExecutiveOs legal
representatives under this Agreement, other than for payment of
Accrued Obligations and the timely payment or provision of
Other Benefits. Accrued Obligations shall be paid to the
ExecutiveOs estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination. With
respect to the provision of Other Benefits, the term OOther
BenefitsO as utilized in this SectionE6(b) shall include,
without limitation, and the ExecutiveOs estate and/or
beneficiaries shall be entitled to receive, benefits at least
equal to the most favorable benefits provided by the Company
and affiliated companies to the estates and beneficiaries of
peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to
death benefits, if any, as in effect with respect to other peer
executives and their beneficiaries at any time during the 120-
day period immediately preceding the Effective Date.
(c) Disability. If the ExecutiveOs employment is
terminated by reason of the ExecutiveOs Disability during the
Employment Period, this Agreement shall terminate without
further obligations by the Company to the Executive under this
Agreement, other than for payment of Accrued Obligations and
the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination. With respect
to the provision of Other Benefits, the term OOther BenefitsO
as utilized in this SectionE6(c) shall include, and the
Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits at least equal to the
most favorable of those generally provided by the Company and
its affiliated companies to disabled executives and/or their
families in accordance with such plans, programs, practices and
policies relating to disability, if any, as in effect generally
with respect to other peer executives and their families at any
time during the 120-day period immediately preceding the
Effective Date.
(d) Cause; Other than for Good Reason. If the
ExecutiveOs employment shall be terminated for Cause during the
Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation
to pay to the Executive (x)Ehis Annual Base Salary through the
Date of Termination, (y)Ethe amount of any compensation
previously deferred by the Executive, and (z)EOther Benefits,
in each case to the extent theretofore unpaid. If the
Executive voluntarily terminates his employment during the
Employment Period, excluding a termination for Good Reason,
this Agreement shall terminate without further obligations of
the Company to the Executive under this Agreement, other than
for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination and the Company
shall timely pay or provide the Other Benefits to the
Executive. In no event shall the Executive be liable to the
Company for any damages caused by such voluntary termination by
the Executive nor shall the Executive be in any way restricted
from being employed by any other party after such voluntary
termination.
SectionE7. Nonexclusivity of Rights. Nothing in this
Agreement shall prevent or limit the ExecutiveOs continuing or
future participation in any plan, program, policy or practice
provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor, subject to
SectionE12(f) hereof, shall anything herein limit or otherwise
affect such rights as the Executive may have under any contract
or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program or
contract or agreement, except as explicitly modified by this
Agreement.
SectionE8. Full Settlement. The CompanyOs obligation to
make the payments provided for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the
Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall
not be reduced whether or not the Executive obtains other
employment. The Company agrees to pay as incurred, to the
fullest extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any
contest by the Company, the Executive or others in which the
Executive is the prevailing party and which involves or relates
to the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement),
plus in each case interest on any delayed payment from the due
date thereof until paid at the prime rate from time to time
reported in The Wall Street Journal during said period.
SectionE9. Certain Additional Payments by the Company.
(a)EAnything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be
determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any
additional payments required under this SectionE9) (hereinafter
referred to collectively as a OPaymentO) would be subject to
the excise tax imposed by SectionE4999 of the Code or any
interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively
referred to as the OExcise TaxO), then the Executive shall be
entitled to receive an additional payment (a OGross-Up
PaymentO) in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-
Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of SectionE9(c) hereof, all
determinations required to be made under this SectionE9,
including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by
Ernst & Young LLP or such other independent certified public
accounting firm as may be designated by the Executive
(hereinafter referred to as the OAccounting FirmO) which shall
provide detailed supporting calculations both to the Company
and the Executive within 15 business days of the receipt of
notice from the Executive that there has been a Payment, or
such earlier time as is requested by the Company. In the event
that the Accounting Firm is serving as accountant or auditor
for the individual, entity or group effecting the Change of
Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as
the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this SectionE9,
shall be paid by the Company to the Executive within five days
of the receipt of the Accounting FirmOs determination. Any
determination by the Accounting Firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in
the application of SectionE4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made
by the Company should have been made (hereinafter referred to
as the OUnderpaymentO) consistent with the calculations
required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to SectionE9(c) hereof and the
Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit of
the Executive.
(c) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful,
would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company
(or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company
notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the
Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this SectionE9(c),
the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo
any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct the Executive to pay
the tax claimed and sue for a refund or to contest the claim in
any permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to pay such
claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free
basis and shall indemnify and hold the Executive harmless, on
an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed
income with respect to such advance. The CompanyOs control of
any such contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service
or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to SectionE9(c) hereof, the
Executive becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the CompanyOs
complying with the requirements of SectionE9(c) hereof)
promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of
an amount advanced by the Company pursuant to SectionE9(c)
hereof, a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent
to contest such denial of refund prior to the expiration of 30
days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
SectionE10. Confidential Information. The Executive shall
hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating
to the Company or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the
Executive during the ExecutiveOs employment by the Company or
any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this
Agreement). After termination of the ExecutiveOs employment
with the Company, the Executive shall not, without the prior
written consent of the Company or as may otherwise be required
by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted
violation of the provisions of this SectionE10 constitute a
basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement. The provisions
of this Section 10 shall survive any termination of this
Agreement or any termination of the employment of the Executive
with the Company.
SectionE11. Successors. (a)EThis Agreement is personal to
the Executive and without the prior written consent of the
Company shall not be assignable by the Executive otherwise than
by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by
the ExecutiveOs legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, the
term OCompanyO shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation
of law or otherwise.
SectionE12. Miscellaneous. (a)EThis Agreement shall be
governed by and construed in accordance with the laws of the
State of Illinois, without reference to principles of conflict
of laws. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties
hereto or their respective successors and legal
representatives.
(b) Each notice, request, demand, approval or other
communication which may be or is required to be given under
this Agreement shall be in writing and shall be deemed to have
been properly given when delivered personally at the address
set forth below for the intended party during normal business
hours at such address, when sent by facsimile or other
electronic transmission to the respective facsimile
transmission numbers of the parties set forth below with
telephone confirmation of receipt, or when sent by recognized
overnight courier or by the United States registered or
certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Company:
Littelfuse, Inc.
800 E. Northwest Highway
Des Plaines, Illinois 60016
Attention: President (unless the Executive is
the President, in which case the
communication should be to the
attention of all of the Directors
of the Company other than the
Executive)
Facsimile: (847) 824-3864
Confirm: (847) 391-0304
If to the Executive:
-----------------------------
Notices shall be given to such other addressee or address, or
both, or by way of such other facsimile transmission number, as
a particular party may from time to time designate by written
notice to the other party hereto. Each notice, request,
demand, approval or other communication which is sent in
accordance with this Section shall be deemed given and received
for all purposes of this Agreement as of two business days
after the date of deposit thereof for mailing in a duly
constituted United States post office or branch thereof, one
business day after deposit with a recognized overnight courier
service or upon confirmation of receipt of any facsimile
transmission. Notice given to a party hereto by any other
method shall only be deemed to be given and received when
actually received in writing by such party.
(c) The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) The ExecutiveOs or the CompanyOs failure to insist
upon strict compliance with any provision of this Agreement or
the failure to promptly assert any right the Executive or the
Company may have hereunder, including, without limitation, the
right of the Executive to terminate employment for Good Reason
pursuant to SectionE5(c)(i)-(v) hereof, shall not be deemed to
be a waiver of such provision or right or any other provision
or right of this Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written
agreement between the Executive and the Company, the employment
of the Executive by the Company is Oat willO and, subject to
SectionE1(a) hereof and/or any other written agreement between
the Executive and the Company, prior to the Effective Date the
ExecutiveOs employment and/or this Agreement may be terminated
by either the Executive or the Company at any time prior to the
Effective Date upon written notice to the other party, in which
case the Executive shall have no further rights under this
Agreement. From and after the Effective Date, this Agreement
shall supersede any other agreement between the parties with
respect to the subject matter hereof.
(g) This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one
and the same agreement.
In Witness Whereof, the parties hereto have executed this
Change of Control Employment Agreement as of the day and year
first above written.
__________________________
_____
Littelfuse, Inc.
By
Its
<TABLE>
EXHIBIT 11.1 - STATEMENT RE: COMPUTATION OF NET INCOME PER
SHARE
LITTELFUSE, INC. AND SUBSIDIARIES
(in thousands, except net income per share)
<CAPTION>
Year Ended
December 28, December 31,
1996 1995 1994
<S> <C> <C> <C>
Primary
Weighted average shares
outstanding 9,944 10,104 10,048
Net effect of dilutive stock
options and warrants -
based on the treasury stock
method using the average
market price 2,066 2,361 2,136
12,010 12,465 12,184
Net income $21,735 $19,272 $15,227
Net income per share $ 1.81 $ 1.55 $ 1.25
Fully Diluted
Weighted average shares
outstanding 9,944 10,104 10,048
Net effect of dilutive stock
options and warrants - based
on the treasury stock method
using the year-end market
price, if higher than average
market price 2,213 2,494 2,343
Fully diluted average shares
outstanding 12,157 12,598 12,391
Net income $21,735 $19,272 $15,227
Net income per share $ 1.79 $ 1 .53 $ 1.23
</TABLE>
28 3/19/97 12:55 PM
Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion provides an analysis of the information
contained in the consolidated financial statements and accompanying
notes beginning on page 26 for the three years ended December 28,
1996.
Highlights
For Littelfuse, 1996 was an unusual year. For the first time in our
five year history, electronics sales growth was less than our
overall average during the first three quarters and for the year,
while our automotive segment experienced good sales growth all
year. Even though sales growth started off slowly and became
stronger as the year progressed, our product and geographic
balance helped. And our international sales continued to grow much
more strongly than our domestic sales. Sales increased 10 percent
during 1996 compared to 1995. Operating income for 1996 increased
12 percent compared to the prior year and net income increased
by 13 percent. Earnings before interest, taxes, depreciation
and amortization (EBITDA) increased 13 1/2 percent in 1996 compared
to the prior year. The company repurchased 671,000 warrants and
285,000 shares of its common stock for $26.8 million during the
year and our debt increased $3.7 million. The company's total
debt to equity ratio remains at a very reasonable .5 to 1 at the
end of 1996.
The company made significant new product introductions and
international facility expansions during 1996. In the spring, we
introduced a new alarm indicating fuse for use in the electronics
industry and a new J case cartridge style fuse for 20 to 80 amp
applications in the automotive market. In the fall, we introduced an
expanded line of indicating fuses in the electrical market and a
surface mount polymeric PTC device for use in the electronics
industry. This latest device is our first entry into the
conductive polymeric resettable market, which is approximately $200
million in size.
The company also made significant investments for the future
completing a new facility in Washington, England that permitted us
to consolidate our two English leased facilities into one newer
and much larger facility, substantially completing a new facility
in Suzhou, China, and completing the installation of a new computer
system in North America. We also made a significant investment in
equipment and tooling to support our new surface mount resettable
PTC device production. The company's focus on international sales
and marketing produced significant results in 1996 as sales
outside North America grew 19 percent compared to 6 percent sales
growth in North America.
Results of Operations
1996 Compared with 1995
Littelfuse had record sales and earnings for the fifth straight
year. Sales increased 10 percent to $241.4 million in 1996 from
$219.5 million in 1995. The gross margin was 40.7% compared to 40.9%
the prior year and operating income was 15.6% of net sales compared
to 15.4% the prior year. EBITDA was $59.4 million compared to
$52.4 million in 1995. As a result, the company during 1996 was
able to invest $17.1 million in capital improvements and to
repurchase $26.8 million of its warrants and common stock, while
only increasing its debt $3.7 million.
Sales increased $21.9 million during 1996. The sales growth was
strongest in the automotive segment, followed by electronics and
power fuses. Electronic sales increased $8.9 million or 9 percent
to $112.7 million in 1996 compared to $103.8 million in 1995. The
electronics business was very strong in consumer electronics and
datacommunications all year. This resulted in very strong sales
growth in Japan for the year. However, the electronics business was
relatively
weak in personal computers, telecommunications and general industrial
until late in the year. Automotive sales increased $11.0 million
or 13 percent to $94.4 million in 1996 compared to $83.4 million in
1995. Automotive sales were very strong in Europe for the year
and automotive OEM markets were relatively stronger than
automotive aftermarkets all year in North America and Europe.
Power fuse sales increased $2.0 million or 6 percent to $34.4
million in 1996 compared to $32.4 million in 1995. The company
believes that its power fuse business grew slightly faster than
the underlying markets for capital equipment and construction
spending during 1996.
The company's business is dependent upon general economic conditions
in North America, Europe and Asia Pacific. The Company's
electronic and automotive product sales fluctuate with the trends
in their respective end-product markets, while power fuse sales are
dependent upon conditions within the construction and capital
equipment markets. North American and Asia Pacific sales
almost exclusively are denominated in US dollars, while European
sales generally are denominated in Dutch guilders or British
pounds. On a constant currency basis our European sales growth
would have been 13 percent rather than the 9 percent reported and
our consolidated sales growth would have been 11 percent rather
than the 10 percent reported. The company's reported sales in
North America increased 6 percent during 1996, while its sales in
Europe increased 9 percent, and its sales in the Asia Pacific
increased 29 percent.
Gross profit was 40.7% at $98.3 million for 1996 compared to 40.9%
at $89.9 million in 1995. The gross
margin decline of 0.2 percentage points was primarily
caused by the relatively low margins of our new China and Korean
operations having a greater impact than our margin improvements due
to cost reductions and spreading higher sales over our fixed
costs in North America and Europe. Margins for both the
automotive and power fuse product segments improved during 1996,
while the margins for the electronic segment declined slightly.
Auto margins improved due to favorable mix as the fuse portion of
automotive OEM sales grew to about 90 percent of sales in 1996
compared to about 80 percent of sales in 1995.
Selling, general and administrative expenses were 22.2% of sales
for 1996 compared to 22.6% for 1995, with selling expenses
accounting for approximately three-fifths of the expenses. The 0.4
percentage point decrease was due to the general and administrative
expense increase of 0.2 percentage point being more than offset by
the research and development decrease of 0.6 percentage point. The
increase in general and administrative expense was due primarily
to the installation of new information systems. The decrease
in researchand
development was due to lower project and patent expenses.
Amortization of reorganization value and other intangibles was 2.9%
of sales for 1996 compared to 3.0% the prior year. The total
operating expenses including intangibles amortization were 25.1% of
sales for 1996 compared to 25.6% of sales for 1995.
On a constant currency basis, Europe's increase in operating income
would have been $0.5 million higher. Therefore, currency
changes reduced Europe's operating income about 4 percent and
reduced consolidated operating income about 1 percent. Operating
income for 1996 after the intangibles amortization was $37.7
million or 15.6% of sales compared to $33.7 million or 15.4% of sales
the prior year.
Interest expense was $4.2 million for 1996 compared to $4.3 million
for 1995. Interest rates declined slightly and debt increased
slightly year over year due to the stock and warrant repurchase
program. Other income, net, consisting primarily of minority
interest adjustments and royalties, was $0.7 million compared to
$0.4 million the prior year.
Income before taxes was $34.1 million in 1996 compared to $29.9
million in 1995. Income tax expense was $12.4 million in 1996
compared to $10.6 million the prior year. The company's effective
tax rate was 36.25% in 1996 compared to 35.5% in 1995. Net income
for the year was $21.7 million in 1996 compared to $19.3 million
the prior year. Earnings per share increased to $1.81 in 1996
compared to $1.55 in 1995, in part because of the company's stock
and warrant repurchase program reduced the number of shares
outstanding.
EBITDA grew $7.0 million or 13 1/2% to $59.4 million in 1996
compared to $52.4 million in 1995. EBITDA was 24.6% of sales in
1996 compared to
23.8% of sales
in 1995 -- an improvement of 0.8 percentage point. EBITDA for 1996
consisted of the reported operating income of $37.7 million plus
other income of $0.7 million, depreciation of $14.0 million, and
amortization of intangibles of $7.0 million.
1995 Compared with 1994
Sales increased 13 percent to $219.5 million in 1995 from $194.5
million in 1994. The gross margin was 40.9% compared to 39.8% the
prior year and operating income was
15.4% of net sales compared to 14.3% the prior year. EBITDA was
$52.4 million in 1995 compared to $45.7 million in 1994. As a
result, the company during 1995 was able to invest $14.6 million in
capital improvements, to pay down $17.0 million of debt and to
repurchase $3.5 million of its common stock.
Sales increased $25.1 million during 1995. The sales growth was
strongest in the electronics segment, followed by power fuses and
automotive. Electronic sales increased $16.5 million or 19 percent
to $103.8 million in 1995 compared to $87.4 million in 1994. The
electronic OEM business was very strong worldwide --in consumer e
lectronics, personal computers, telecommunications, and
instrumentation/industrial. Automotive sales increased $5.6
million or 7 percent to $83.4 million in 1995 compared to $77.8
million in 1994. Automotive
sales were stronger in Europe particularly in the first half of the
year. North American sales slowed in the second half of 1995 due to
a slower U.S. economy and also due to lower nonrecurring
fuseholder sales and lower electromechanical relay sales compared
to the same period of 1994. Power fuse sales increased $3.1
million or 10 percent to $32.4 million in 1995 compared to $29.3
million in 1994. The company believes that its power fuse business
grew faster than the improving underlying markets for capital
equipment and construction spending.
North American and Asia-Pacific sales almost exclusively are
denominated in US dollars, while European sales generally are
denominated in Dutch guilders or British pounds. On a constant
currency basis, European sales would have increased 17 percent
instead of the reported 30 percent and consolidated sales would
have increased 10 percent instead of the reported 13 percent.
Japanese sales probably were aided indirectly by the fact that our
product cost in local currency averaged approximately 10 percent
less in 1995 compared to 1994. The
company's reported sales in North America increased 5 percent during
1995, while its sales in Europe increased 30 percent, and its
sales in Asia Pacific increased 41 percent.
Gross profit was 40.9% at $89.9 million for 1995 compared to 39.8%
at $77.4 million in 1994. The gross margin improvement of 1.1
percentage points was not greatly influenced by pricing, but rather
the improvement was primarily due to cost reduction activities,
lower fixed manufacturing costs as a percent of sales and favorable
mix. The improvement in gross margin by product segment was
somewhat proportional to each segment's growth in sales. Margins
for both the electronic and power fuse product segments improved
more than the corporate average during 1995, while the margins for
the automotive segment improved less. Auto margins still improved
due to favorable mix as the fuse portion of automotive OEM
sales grew to about 80 percent of sales in 1995 compared to about 70
percent of sales in 1994.
Selling, general and administrative expenses were 22.6% of sales
for 1995 compared to 22.1% for 1994, with selling expenses
accounting for approximately three-fifths of the expenses. The 0.5
percentage point increase was due to research and development
expense increasing 0.5 points and general and
administrative expense increasing 0.4 points, partially offset
by selling expense decreasing 0.4 percentage points. The
increase in general and
administrative expense was due primarily to the installation of new
information systems and expenses
associated with corporate development activities.
Amortization of reorganization and other intangibles was 3.0% of
sales for 1995 compared to 3.4% the prior year. The total
operating expenses including
intangibles amortization were 25.6% of sales for 1995 compared to
25.5% of sales for 1994.
For 1995, the Company adjusted the expected long-term rate of return
assumption for determining pension expense from 8.5% to 9.0% and
changed mortality and turnover assumptions, which resulted in a
$0.2 million net increase in pension expense for the year.
Approximately $1.6 million of Europe's increase in operating
income was due to favorable currency exchange rate changes in 1995
compared to 1994. Therefore, currency changes account for about 40
percent of Europe's increase in operating income and about 25
percent of the consolidated increase in operating income.
Operating income after the intangibles amortization was $33.7
million or 15.4% of sales compared to $27.8 million or 14.3% of
sales the prior year.
Interest expense was $4.3 million for 1995 compared to $5.0 million
for 1994 due to declining debt levels during the year. Other
income, net, consisting primarily of royalties, was $0.4 million
compared to $0.6 million the prior year.
Income before taxes was $29.9 million in 1995 compared to $23.4
million in 1994. Income tax expense was $10.6 million in 1995
compared to $8.2 million the prior year. The company's effective
tax rate was 35.5% in 1995 compared to 35.0% in 1994. Net income
for the year was $19.3 million or $1.55 per share in 1995 compared
to $15.2 million or $1.25 per share the prior year.
EBITDA grew $6.7 million or 15% to $52.4 million in 1995 compared
to $45.7 million in 1994. EBITDA was 23.8 % of sales in 1995
compared to 23.5% of sales in 1994 -- an improvement of 0.3
percentage points. EBITDA for 1995 consisted of the reported
operating income of $33.7 million plus royalty income of $0.4
million, depreciation of $11.6 million, and amortization of
intangibles of $6.6 million.
Geographical Business Segments
During the last three years, the company's international sales
have grown dramatically as a result of increased Asia-Pacific and
European sales efforts, new product introductions, and generally
improved Asia-Pacific and European economies. International
sales increased 20% in 1996 compared to 32% in 1995 and 35% in
1994. USA sales growth was 5 percent in 1996 compared to 5 percent
in 1995 and 16 percent in 1994. Over the last five years
international sales have increased at a compounded annual rate of
23% versus a USA sales compounded annual growth rate of 8%.
The geographic area of greatest sales growth during the past five
years has been the Asia Pacific. Sales growth also was strong in the
European Community during the last three years. International sales
grew to 38.5 % of net sales in 1996 compared to 35.3% of net sales
in 1995 and 30.1% of net sales in 1994.
The following table summarizes sales based upon destination
and total
international sales compared to total company net sales (in
thousands): <TABLE>
1996 1995 1994
<S>
<C> <C> <C>
USA Destinations $148,588 $142,070 $135,865
Other North American 7,968 6,336 6,144
European Community 35,373 32.607 25,017
Asia Pacific & other 49,517 38,522 27,428
Total company sales $241,446 $219,535 $194,454
Total international sales $92,858 $77,465 $58,589
As percent of total company 38.5% 35.3% 30.1%
sales
</TABLE>
Liquidity and Capital Resources
Assuming no material adverse changes in market conditions or
interest rates, management expects that the company will have
sufficient cash from operations to support both its operations and
its debt obligations for the foreseeable future. Approximately
eighty percent of the company's sales are denominated in US
dollars with the balance primarily in two European currencies,
Dutch guilders and British pounds. Since over seventy percent of
European costs also are in European currencies and the rest
of Europe's and the company's costs predominately are
denominated in US dollars, there is little need to hedge the
company's monetary assets, liabilities or commitments. The company
did not have any foreign exchange derivative positions at year end
1996.
Littelfuse started 1996 with $1.3 million of cash. Net cash
provided by operations was $40.0 million for the year, a significant
improvement over 1995. Cash used to invest in net property, plant
and equipment was $17.1 million and to invest in a foreign joint
venture was $0.3 million. Cash used in financing activities
included net borrowings of long term debt of $4.2 million. The
purchase of the company's warrants and common stock of $26.8
million was partially offset by cash proceeds from the exercise of
stock options of $0.3 million. The effect of exchange rate
changes decreased cash by $0.1 million. The net of cash provided
by operations, less investing activities, less financing
activities, plus the effect of exchange rates resulted in an $0.1
million net increase in cash. This left the company with a cash
balance of $1.4 million at the end of 1996.
Net working capital used only $ 1.3 million of cash flow from
operations for 1996. All asset categories used working capital,
except prepaid expenses which declined $0.4 million. Accounts
receivable increased $5.6 million and inventory increased $1.8
million. All accruals provided working capital for the year. The
greatest benefit in 1996 compared to 1995 came from large increases
in accrued taxes of $2.4 million. Accounts payable, accrued
payroll, and accrued expenses each increased by about $1.0 million
and provided funds of almost $2.9 million. Net working capital
changes in 1997 probably will result in a small use of cash, as the
company expects current asset increases to exceed current
liability increases in 1997.
Littelfuse started 1995 with $1.3 million of cash. Net cash
provided by operations was $34.3 million for the year, a significant
improvement over 1994. Cash used to invest in net property, plant
and equipment was $14.6 million, and to invest in a foreign joint
venture was $0.3 million. Cash used in financing activities
included net payments of long-term debt of $17.0 million and the
purchase of the company's common stock for $3.5 million was partially
offset by cash proceeds from the exercise of stock options of $0.6
million. The effect of exchange rate changes increased cash by $0.1
million. The net of cash provided, less investing activities,
less financing activities, plus the effect of exchange rates
resulted in no net change in cash. This left the company with a
cash balance of $1.3 million at the end of 1995.
Net working capital used only $3.1 million of cash flow from
operations for 1995. All asset categories used working capital.
Accounts receivable increased $3.3 million and inventory increased
$1.8 million. All accruals provided working capital for the year.
The greatest benefit in 1995 compared to 1994 came from smaller
increases in accounts receivable and inventory. Accrued payroll,
accrued taxes and accrued expenses provided funds of almost $3.0
million and accounts payable and prepaid expenses used funds of $1.0
million.
The company's capital expenditures were $17.1 million in 1996, $14.6
million in 1995 and $10.7 million in 1994. The company expects
that capital expenditures will be approximately $19.5 million or
7.2% of sales in 1997 compared to 7.1% of
sales in 1996, 6.7% in 1995 and 5.5% in 1994. The primary purposes
for capital expenditures are for capacity expansion and new product
tooling and production equipment. As in 1996, capital expenditures
in 1997 are expected to be financed by cash flow from operations.
The company increased total debt $3.7 million in 1996, after
reducing debt by $17.1 million in 1995 and by $20.6 million in
1994. The company is required to repay $9.0 million of long-term
debt in 1997. The company also repurchased 671,000 warrants and
285,000 common shares for $26.8 million in 1996, 110,000 common
shares for $3.5 million in 1995, and 35,500 warrants for $0.5 million
in 1994.
Net working capital (working capital less cash and the current
portion of longterm debt) as a percent of sales was 13.0% at year end
1996 compared to 12.7% at year end 1995 and to 12.9% at year end
1994. The days sales in receivables was approximately 52 days at
year end 1996 compared to 51 days at year end 1995 and 49 days at
year end 1994. The company's days sales in receivables grows about 1
day per year as international sales increase, since our
international terms average 15 days longer. The inventory turnover
rate was approximately 4.5 turns at year end 1996 compared to 4.1
turns at year end 1995 and 4.2 turns at year end 1994.
The ratio of current assets to current liabilities was 1.4 to 1 at
year end 1996 and 1995 compared to 1.5 to 1 at year end 1994. The
ratio of long-term debt to equity was 0.4 to 1 at year end 1996 and
1995 compared to 0.6 to 1 at year end 1994.
On April 26, 1996 the company announced that its Board of
Directors had authorized the company to repurchase up to 1,000,000
shares of its common stock or 1,000,000 of its warrants, or any
combination not to exceed 1,000,000 shares of common stock and
warrants from time to time depending on market conditions. The
company has repurchased 6,000 warrants and 97,000 common shares in
1996 since the April 26, 1996 authorization. The company has
repurchased an additional 50,000 common shares during the first two
months of 1997.
Long-term debt at year end 1996 consisted of five types of debt
totaling $54.6 million. They are as follows: (1) senior notes due
August, 2000 totaling $36.0 million, (2) revolver borrowings
totaling $16.9 million, (3) notes payable relating to an
agreement not to compete totaling $1.0 million, (4) notes
payable relating to income taxes totaling $0.5 million, and (5)
mortgage notes totaling $0.2 million. These five items include
$10.0 million of the bank revolver, tax notes, non-compete notes
and mortgage notes, which are considered to be current
liabilities, resulting in net long-term debt totaling $44.6
million at the end of the year. The revolver carried an interest
rate of LIBOR + 0.5% for the last four months of 1996 or
approximately 6.2%. The company expects the interest rate paid on
the bank debt to be approximately 6.2% during the first half of
1997. The company at the end of 1996 had unused revolver
availability of $48.5 million. In addition, the company had
outstanding letters of credit totaling $1.8 million at year end 1996.
Outlook
Littelfuse has enjoyed compounded annual sales growth of 12.1% for
the last five years. Although Littelfuse
expects to increase market share during 1997,
particularly in the electronics segment in Asia Pacific and
Europe, in the automotive segment in Europe and in the power fuse
segment in North America, the company expects the sales increases in
1997 to grow at a rate close to our last five year average. We
expect sales growth to be slower in the first and fourth quarter and
stronger in the second and third quarter. We also expect the first
quarter sales growth will not benefit much from our new product
introductions compared to the next three quarters. The fourth
quarter 1997 sales growth will be compared to a very strong quarter
in 1996.
Littelfuse expects prices to decline modestly in 1997. Although
costs and expenses will rise with inflationary pressures, the
company's productivity gains and continued control of spending should
help to offset this pressure as we have
previously succeeded in doing. The company does expect modest
gross margin pressure from expenses related to the start up of the
China operations and the launching of new products including the
new conductive polymeric resettable PTC devices.
The development of new products, global expansion, and
reinvestment for the future are the cornerstones of Littelfuse's
growth strategy. Accordingly, the company intends to continue its
commitment to funding research and development, international sales
and marketing activity, and investments in capital equipment and
operations improvements.
Littelfuse has significantly improved its return on net assets and
its return on capital employed the last five years. The company's
return on net tangible assets was 25.0% in 1996 compared to 23.8%
in 1995 and 19.8% in 1994, or over two times the S&P 500 return
on net tangible assets. The company's return on capital employed
was 13.3% in 1996 compared to 11.8% in 1995 and 9.3% in 1994, or
over 20 percent better than the S&P 500 return on capital employed.
These two comparisons demonstrate the company's ability to
deliver above-average returns on investment for its shareholders.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995
The statements under "Outlook" and the other statements which are not
historical facts contained in this report are forward-looking
statements that involve risks and uncertainties, including, but not
limited to, product demand and market acceptance risks, the
effect of economic conditions, the impact of competitive products
and pricing, product development, commercialization and
technological difficulties, capacity and supply constraints or
difficulties, the results of financing efforts, actual purchases
under agreements, the effect of the company's accounting
policies, and other risks which may be detailed in the company's
Securities and Exchange Commission filings.
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Littelfuse, Inc.
We have audited the accompanying consolidated statements of financial
condition of Littelfuse, Inc. and subsidiaries as of December 28,
1996 and December 31, 1995, and the related consolidated statements
of income, shareholders' equity, and cash flows for each of the three
years in the period ended December 28, 1996. Our audits also
included the financial statement schedule listed in the Index at Item
14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and schedule based
on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Littelfuse, Inc. and subsidiaries at December
28, 1996 and December 31, 1995, and the consolidated results of their
operations and their cash flows for each of the three years in the
period ended December 28, 1996, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ Ernst & Young LLP
Chicago, Illinois
January 20, 1997
<TABLE>
Littelfuse, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
<CAPTION>
December December 28
1996 31 1995
(In Thousands)
<S>
<C> <C>
Assets
Current assets:
Cash and cash equivalents $ $
1,427 1,308
Accounts receivable, less allowances
(1996 - $5,057; 1995 - $3,901) 35,468 29,722
Inventories 31,586 30,076
Deferred income taxes 3,100 1,336
Prepaid expenses and other current 2,228 2,581
assets
Total current assets 73,809 65,023
Property, plant, and equipment:
Land 5,383 4,998
Buildings 19,271 16,871
Equipment 96,657 82,895
121,311 104,764
Less: Allowances for depreciation and 57,422 43,535
amortization
63,889 61,229
Intangible assets, net of amortization:
Reorganization value in excess of
amounts allocable to identifiable 44,635 48,056
assets
Patents and licenses 11,102 13,322
Distribution network 7,935 8,817
Trademarks 3,784 4,037
Other 1,157 1,795
68,613 76,027
Other assets 3,640 2,907
$209,951 $205,186
December December 28
1996 31 1995
(In Thousands) <S>
<C> <C>
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ $
12,775 11,836
Accrued payroll 9,330 8,371
Accrued expenses 8,159 7,183
Accrued income taxes 10,775 8,362
Current portion of long-term debt 10,005 10,065
Total current liabilities 51,044 45,817
Long-term debt, less current portion 44,556 40,804
Deferred income taxes 5,417 4,615
Minority interest in subsidiary 312 568
Shareholders' equity:
Preferred stock, par value $.01 per
share: 1,000,000 shares authorized; no - -
shares issued and outstanding
Common stock, par value $.01 per share:
19,000,000 shares authorized; shares
issued, including shares in treasury, 103 102
1996 - 10,283,000; 1995 - 10,187,000
Additional paid-in capital 57,426 72,364
Notes receivable - Common stock (1,470) (571)
Cumulative foreign currency translation (870) (120)
adjustment
Retained earnings 66,875 45,140
Cost of common stock in treasury, 1996 -
395,130 shares; 1995 - 110,000 shares (13,442) (3,533)
108,622 113,382
$209,951 $205,186
See accompanying notes.
</TABLE>
<TABLE>
Littelfuse, Inc. and Subsidiaries
Consolidated Statements of Income
<CAPTION>
Year
ended Year ended December
December 31
28
1996 1995 1994
(In Thousands, Except Per Share
Amounts)
<S> <C>
<C> <C>
Net sales $241,446 $219,535 $194,454
Cost of sales 143,158 129,663 117,038
Gross profit 98,288 89,872 77,416
Selling expenses 34,369 31,278 28,493
Research and development 7,330 7,901 6,111
expenses
General and administrative 11,912 10,334 8,283
expenses
Amortization of 7,008 6,630 6,683
intangibles
Operating income 37,669 33,729 27,846
Interest expense 4,235 4,279 5,014
Other income, net (660) (430) (595)
Income before income taxes 34,094 29,880 23,427
Income taxes 12,359 10,608 8,200
Net income $ 21,735 $ 19,272 $ 15,227
Net income per share:
Primary $ $ $
1.81 1.55 1.25
Fully diluted $ $ $
1.79 1.53 1.23
Weighted-average number of
common and common
equivalent shares 12,010 12,465 12,184
outstanding - Primary
See accompanying notes.
</TABLE>
<TABLE>
Littelfuse, Inc. and Subsidiaries
Consolidated Statements of Shareholders'
Equity
Period from January 1, 1994 to December 28,
1996
<CAPTION>
Cumulative Cost
Notes Foreign of
Additional Receiveable Currency Retained Common
Common Paid in Common Stock Translation Earnings Stock in
Stock Capital adjustment Treasury Total
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Blance at January 1, 1994 $100 $70,065 $ - $(1,566) $10,641 $ - $79,240
Stock options exercised 1 996 - - - - 997
Redemption of 34,500 warrants - (476) - - - - (476)
Translation adjustment - - - 711 - - 711
Net income for the year - - - - 15,227 - 15,227
Balance at December 31, 1994 101 70,585 (855) 25,868 - 95,699
Stock options exercised 1 1,779 (571) - - - 1,209
Purchase of 110,000 shares of - - - - - 3,533) (3,533)
common stock
Translation adjustment - - - 735 - - 735
Net income for the year - - - - 19,272 - 19,272
Balance at December 31, 1995 102 72,364 (571) (120) 45,140 (3,533) 113,38
2 Stock options exercised 1 1,998 (899) - - - 1,100
Purchase of 285,130 shares of - - - - - (9,909 (9,909)
common stock
Redemption of 671,060 warrants - (16,936) - - - - (16,936)
Translation adjustment - - - (750) - - (750)
Net income for the year - - - 21,735 - 21,735
Balance at December 28, 1996 $103 $57,426 $(1,470) $(870) $66,875 $(13,442)$108,622
See accompanying notes
</TABLE>.
<TABLE>
Littelfuse, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<CAPTION>
Year
ended Year ended
December December 31
28
1996 1995 1994
(In Thousands)
<S>
<C> <C> <C>
Operating activities
Net income $21,735 $19,272 $15,227
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 14,057 11,569 10,527
Amortization of intangibles 7,008 6,630 6,683
Provision for bad debts 236 160 126
Deferred income taxes (962) (78) 1,871
Minority interest (411) (61) -
Other (365) - -
Changes in operating assets
and liabilities:
Accounts receivable (5,630) (3,303) (5,560)
Inventories (1,816) (1,782) (5,930)
Accounts payable and accrued
expenses 6,550 1,408 6,401
Other, net (424) 534 162
Net cash provided by 39,978 34,349 29,507
operating activities
Investing activities
Purchases of property, plant,
and (17,094) (14,636) (10,725)
equipment, net
Foreign investment - (341) 276 -
Noncompete payment
Net cash used in investing (17,435) (14,360) (10,725)
activities
Financing activities
Proceeds (payments) of long- 4,196 (17,028) (20,557)
term debt, net
Proceeds from exercise of 276 570 553
stock options
Purchase of common stock and
redemption of warrants (26,845) (3,533) (476)
Net cash used in financing (22,373) (19,991) (20,480)
activities
Effect of exchange rate (51) 48 72
changes on cash
Increase (decrease) in cash
and cash equivalents 119 46 (1,626)
Cash and cash equivalents at
beginning 1,308 1,262 2,888
of year
Cash and cash equivalents at $ 1,427 $ 1,308 $ 1,262 end
of year
See accompanying notes.
</TABLE>
Littelfuse, Inc. and Subsidiaries Notes
to Consolidated Financial Statements
December 28, 1996
1. Summary of Significant Accounting Policies and Other Information
Nature of Operations
Littlefuse, Inc. and its subsidiaries (the company) design,
manufacture, and sell fuses and other circuit protection devices for
use in the automotive, electronic, and general industrial markets
throughout the world. The company also manufactures and supplies
relays, switches, circuit breakers, and indicator lights to the
automotive industry and to appliance and general electronics
manufacturers. The company's operations represent a single industry
segment for accounting purposes.
Fiscal Year
Effective January 1, 1996, the company changed its fiscal year from
December 31 to a 52-53-week year ending on the Saturday nearest
December 31. Accordingly, the Company's 1996 fiscal year ended on
December 28.
Principles of Consolidation
The consolidated financial statements include the accounts of
Littlefuse, Inc. and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Cash Equivalents
All highly liquid investments, with a maturity of three months or
less when purchased, are considered to be cash equivalents.
Accounts Receivable
The company performs credit evaluations of customers' financial
condition and generally does not require collateral. Credit losses
are provided for in the financial statements and consistently have
been within management's expectations.
Inventories
Inventories are stated at the lower of cost (first in, first out
method) or market, which approximates current replacement cost.
1. Summary of Significant Accounting Policies and Other Information
(continued)
Property, Plant, and Equipment
Land, buildings, and equipment are carried at cost. Depreciation is
provided under accelerated methods using useful lives of 21 years for
buildings, 9 years for equipment, and 7 years for furniture and
fixtures. Tooling and computer software are depreciated using the
straight-line method over 5 years and 3 years, respectively.
Intangible Assets
Reorganization value in excess of amounts allocable to identifiable
assets and trademarks are amortized using the straight-line method
over 20 years. Patents are amortized using the straight-line method
over their estimated useful lives, which average approximately 10
years. The distribution network is amortized using an accelerated
method over 20 years. Licenses are amortized using an accelerated
method over their estimated useful lives, which average approximately
nine years. Other intangible assets consist principally of an
agreement not to compete that is being amortized over the three-year
term of the agreement. Accumulated amortization of these intangible
assets was $34.3 million at December 28, 1996, and $27.3 million at
December 31, 1995.
Revenue Recognition
Sales and associated costs are recognized when products are shipped
to customers.
Advertising Costs
The company expenses advertising costs as incurred which amounted to
$2.7 million in 1996, and $3.1 million in both 1995 and 1994.
Foreign Currency Translation
The financial statements of foreign entities have been translated in
accordance
with Statement of Financial Accounting Standards No. 52 and,
accordingly, unrealized foreign currency translation adjustments are
reflected as a component of shareholders' equity.
Per-Share Data
Net income per share is based on the weighted-average number of
shares of common shares outstanding during each year after giving
effect to stock options and warrants considered to be common stock
equivalents.
1. Summary of Significant Accounting Policies and Other Information
(continued)
Stock-Based Compensation
The company accounts for stock option grants to employees and
directors in accordance with Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (APB No. 25). The
company grants stock options for a fixed number of shares with an
exercise price equal to the market price of the underlying stock at
the date of grant and, accordingly, does not recognize compensation
expense.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
Reclassifications
Certain amounts in the 1995 and 1994 financial statements have been
reclassified to conform with the 1996 financial statement
presentation.
2. Acquisition of Business
On October 28, 1995, the company invested $888,000 in exchange for a
51% interest in Sam Hwa Co. Ltd., a Korean fuse manufacturer, now
doing business as Sam Hwa Littelfuse, Inc. The company acquired an
additional 14% interest on October 9, 1996, in exchange for $637,000.
The company also entered into a three-year noncompete agreement with
the original shareholders in 1995. Under the noncompete agreement,
the company will pay $1.6 million; $427,000 of which was paid in 1996
and $276,000 paid in 1995. The accounts and transactions of the
acquired business have been included in the consolidated financial
statements from the date the company acquired majority interest. Pro
forma results of operations, assuming this purchase transaction had
occurred as of January 1, 1995, would not differ materially from
reported results of operations.
3. Inventories
<TABLE>
The components of inventories are as follows at December 28, 1996 and
December 31, 1995 (in thousands):
1996 1995
<S>
<C> <C>
Raw materials $ 8,411 $ 8,823
Work in process 3,263 3,445
Finished goods 19,912 17,808
$31,586 $30,076 </TABLE>
4. Long-Term Debt
<TABLE>
The carrying amounts of long-term debt, which approximate fair
value, are as
follows at December 28, 1996 and December 31, 1995 (in
thousands):
1996 1995
<S>
<C> <C>
Senior Notes $36,000 $45,000
Term Loan - 2,000
Revolver 16,500 500
Other 2,061 3,369
54,561 50,869
Less: Current 10,005 10,065
maturities
$44,556 $40,804
</TABLE>
The company has an unsecured financing arrangement consisting of
$45,000,000 of Senior Notes with insurance companies and a Credit
Agreement with banks that provides a $65,000,000 revolving loan
facility. The Senior Notes require a minimum principal payment of
$9,000,000 annually. The first payment was made August 30, 1996.
Additional principal payments will be made each year through 2000.
No principal payments are required for borrowings against the
revolving line of credit until the line matures on August 31, 2000.
A commitment fee on the daily unborrowed portion of the revolving
credit line is based on the company's debt-to-capital ratio, and is
payable quarterly. The company can make additional prepayments under
the Credit Agreement at any time without penalty.
4. Long-Term Debt (continued)
Interest is payable semiannually on the Senior Notes at 6.31%.
Interest is payable quarterly under the Credit Agreement borrowings
at LIBOR plus a Eurodollar margin. The Eurodollar margin, which is
based on the company's debt to capital ratio, amounted to 0.5% at
December 28, 1996.
The Credit Agreement provides for letters of credit of up to $3
million as part of the available credit under the revolving line of
credit. At December 28, 1996, the company had $1.8 million of
outstanding letters of credit. The company is required to pay a fee
of .625% of the face amount of each letter of credit issued.
The Senior Notes and Credit Agreement contain covenants that, among
other matters, impose limitations on the incurrence of additional
indebtedness, future mergers, sales of assets, payment of dividends,
and changes in control, as defined. In addition, the company is
required to satisfy certain financial covenants and tests relating
to, among other matters, interest coverage, working capital,
leverage, and net worth.
Aggregate maturities of long-term debt at December 28, 1996, are as
follows (in thousands):
<TABLE>
<S> <C>
1997 $10,005
1998 9,731
1999 9,198
2000 25,550
2001 77
$54,561
</TABLE>
Interest paid on long-term debt totaled $4.0 million in 1996, $4.0
million in 1995, and $4.7 million in 1994.
5. Benefit Plans
The company has a defined-benefit pension plan (the Plan) covering
substantially all of its employees. The amount of the retirement
benefit is based on years of service and final average monthly pay.
The Plan also provides postretirement medical benefits to retirees
and their spouses if the retiree has reached age 62 and has provided
at least ten years of service prior to retirement. Such benefits
generally cease once the retiree attains age 65. The company's
contributions are made in amounts sufficient to satisfy ERISA
funding requirements.
5. Benefit Plans (continued)
The components of pension cost are as follows (in thousands):
<TABLE>
1996 1995 1994
<S>
<C> <C> <C>
Service cost - Benefits earned $1,669 $1,056 $ 982
during the period
Interest cost on projected benefit 2,558 2,055 1,893
obligation
Actual return on plan assets (3,810) (6,512) 353
Net amortization and deferral 1,705 4,933 (2,156)
Total pension cost $2,122 $1,532 $1,072
</TABLE>
Substantially all Plan assets are invested in listed stocks and
bonds. The funded status and amounts recognized in the consolidated
statements of financial condition at December 28, 1996 and December
31, 1995, are as follows (in thousands):
<TABLE>
1996 1995
<S>
<C> <C>
Actuarial present value of benefit
obligations:
Vested benefit obligation $ 26,267 $ 25,586
Accumulated benefit obligation $ 29,366 $ 28,519
Projected benefit obligation $(37,385) $(37,489)
Plan assets at fair value 34,381 28,855
Unrecognized net experience loss 5,866 9,971
Unrecognized prior service cost 377 443
Pension asset recognized in the
consolidated statements of financial
condition (net of a current pension
liability of $530 at December 31, 1995) $ 3,239 $ 1,780
</TABLE>
The following significant assumptions were used in determining
pension cost for the years ended December 28, 1996, December 31,
1995, and December 31, 1994: <TABLE>
1996 1995 1994
<S>
<C> <C> <C>
Discount rate 7.5% 7.0% 7.5%
Rate of increase in 4.5 4.5 5.0
compensation levels
Expected long-term rate of 9.0 9.0 8.5
return on assets
</TABLE>
5. Benefit Plans (continued)
The company provides additional retirement benefits for certain key
executives through its unfunded Supplemental Executive Retirement
Plan. The charge to expense for this plan amounted to $747,000,
$640,000, and $417,000 in 1996, 1995, and 1994, respectively.
The company also maintains a 401(k) savings plan covering
substantially all U.S. employees. The company matches 50% of the
employee's annual contributions for the first 4% of the employee's
gross wages. Employees vest in the company contributions after two
years of service. Company matching contributions amounted to
$457,000 in 1996, $472,000 in 1995, and $346,000 in 1994.
6. Shareholders' Equity
Stock Purchase Warrants
Warrants to purchase 2,086,222 shares of common stock at $8.36 per
share are outstanding at December 28, 1996. The warrants are
exercisable at the option of the holder at any time prior to December
27, 2001, and are not callable by the company.
Stock Options
The company has stock option plans authorizing the granting of both
incentive and nonqualified options and other stock of up to 1,100,000
shares to employees and directors. The stock options vest over a
five-year period and are exercisable over a ten- year period
commencing from the date of vesting.
6. Shareholders' Equity (continued)
A summary of stock option information follows:
<TABLE>
1996 1995 1994
Weighted- Weighted- Weighted-
Average Average Average
Options Exercice Options Exercise Options Exercise
Price Price Price
<S> <C> <C> <C> <C> <C> <C>
Outstanding
at 618,400 $17.52 603,500 $13.08 563,050 $10.40
beginning
of year
Granted 125,700 $36.79 118,800 $32.69 116,000 $22.77
Exercised (87,450) $11.61 (98,600) $ 8.60 (67,050) $ 7.67
Forfeited (27,960) $20.85 (5,300) $19.17 (8,500) $10.72
Outstanding
at end of 628,690 $21.89 618,400 $17.52 603,500 $13.08
year
Exercisable
at end of 230,910 166,050 114,900
year
Available
for future 155,500 297,000 110,500
grant
Weighted-
average
value of
options $18.61 $16.08
granted
during the
year
</TABLE>
As of December 28, 1996, the company had the following
outstanding options: <TABLE>
Weighted- Weighted-
Exercise Options Average Average Options
Price Outstand Exercise Remaining Exercisa
ing Price Life ble
<S> <C> <C> <C>
<C>
$7.357 to 209,400 $ 7.81 3.7 106,200
$10.00
$18.75 to 190,850 21.75 5.1 104,850
$25.25
$32.25 to 228,440 34.97 6.9 19,860
$38.00
</TABLE>
6. Share
holders' Equity (continued)
Disclosure of pro forma information regarding net income and net
income per share is required by Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation, and has
been determined as if the company had accounted for its stock
options granted in 1996 and 1995 under the fair value method using
the Black-Scholes option pricing model. The following assumptions
were utilized in the valuation:
<TABLE>
1996 1995
<S> <C> <C>
Risk-free interest rate 6.76% 6.67%
Expected dividend yield 0 % 0%
Expected stock price volatility .265% .273%
Expected life of options 8 years 8 years
</TABLE>
Had compensation cost for the company's stock options granted in 1996
and 1995 been determined based on the fair value at the dates of
grant, the company's net income and net income per share would have
been reduced to the pro forma amounts indicated:
<TABLE>
1996 1995
<S> <C>
<C>
Pro forma net income (in thousands of $21,340 $19,132
dollars)
Pro forma primary net income per share $ $
1.78 1.54
Pro forma fully diluted net income per $ $
share 1.76 1.52
</TABLE>
The pro forma effect on net income for 1996 and 1995 is not
representative of the pro forma effect on net income in future years
as the pro forma disclosures reflect only the fair value of stock
options granted in 1996 and 1995 and do not reflect the fair value of
outstanding options granted prior to 1995.
Notes Receivable - Common Stock
In 1995, the company established the Executive Loan Program under
which certain
management employees may obtain interest-free loans from the company
to facilitate their exercise of stock options and payment of the
related income tax liabilities. Such loans, limited to 90% of the
exercise price plus related tax liabilities, have a five-year
maturity, subject to acceleration for termination or death of the
employee. Such loans are classified as a reduction of shareholder's
equity.
6. Shareholders' Equity (continued)
Preferred Stock
The Board of Directors may authorize the issuance from time to time
of Preferred Stock in one or more series with such designations,
preferences, qualifications, limitations, restrictions, and optional
or other special rights as the Board may fix by resolution. In
connection with the Rights Plan, the Board of Directors has reserved,
but not issued, 200,000 shares of preferred stock.
Rights Plan
In December 1995, the company adopted a shareholder rights plan
providing for a dividend distribution of one preferred share purchase
right for each share of common stock outstanding on and after
December 15, 1995. The rights can be exercised only if an individual
or group acquires or announces a tender offer for 15% or more of the
company's common stock and warrants. If the rights first become
exercisable as a result of an announced tender offer, each right
would entitle the holder to buy 1/100th of a share of a new series of
preferred stock at an exercise price of $135. Once an individual or
group acquires 15% or more of the company's common stock, each right
held by such individual or group becomes void and the remaining
rights will then entitle the holder to purchase a number of common
shares having a market value of twice the exercise price of the
right. If the attempted takeover succeeds, each right will then
entitle the holder to purchase a number of the acquiring company's
common shares having a market value of twice the exercise price of
the right. After an individual or group acquires 15% of the
company's common stock and before they acquire 50%, the company's
Board of Directors may exchange the rights in whole or in part, at an
exchange ratio of one share of common stock or 1/100th of a share of
a new series of preferred stock per right. Before an individual or
group acquires 15% of the company's common stock, or a majority of
the company's Board of Directors are removed by written consent,
whichever occurs first, the rights are redeemable for $.01 per right
at the option of the company's Board of Directors. The company's
Board of Directors is authorized to reduce the 15% threshold to no
less than 10%. Each right will expire on December 15, 2005, unless
earlier redeemed by the company.
7. Income Taxes
Federal, state, and foreign income tax expense consists of the
following (in thousands):
<TABLE>
1996 1995 1994
<S> <C> <C> <C>
Current:
Federal $7,091 $ 5,552 $2,451
State 1,440 815 1,275
Foreign 4,790 4,319 2,942
13,321 10,686 6,668
Deferred (credit):
Federal (872) 21 1,303
Foreign (90) (99) 229
(962) (78) 1,532
$12,359 $10,608 $8,200
</TABLE>
Domestic and foreign income before income taxes is as follows
(in thousands):
<TABLE>
1996 1995 1994
<S> <C> <C> <C>
Domestic $21,299 $15,908 $13,499
Foreign 12,795 13,972 9,928
$34,094 $29,880 $23,427
</TABLE>
A reconciliation between income taxes computed on income before
income taxes at the federal statutory rate and the provision
for income taxes is provided below (in thousands):
<TABLE>
1996 1995 1994
<S> <C> <C> c>
Tax expense at statutory rate of 35% $11,933 $10,458 $8,199
State and local taxes, net of federal tax benefit 936 530 829
Foreign income taxes (181) (482) (303)
Foreign losses for which no tax benefit is available 703 - -
Other, net (1,032) 102 (525)
$12,359 $10,608 $8,200
</TABLE>
7. Income Taxes (continued)
Deferred income taxes are provided for the tax effects of
temporary differences between the financial reporting bases and
the tax bases of the company's assets and liabilities.
Significant components of the company's deferred tax assets and
liabilities at December 28, 1996 and December 31, 1995, are as
follows (in thousands):
<TABLE>
1996 1995
<S>
<C> <C>
Deferred tax
liabilities
Tax over book $3,200 $3,189
depreciation and
amortization
Prepaid expenses 1,588 2,198
Other 632 730
Total deferred tax 5,420 6,117
liabilities
Deferred tax assets
Accrued expenses 2,373 1,913
Foreign net operating 703 -
loss carryforwards
Other 730 925
Total deferred tax 3,806 2,838
assets
Less: Valuation (703) -
allowance
Net deferred tax 3,103 2,838
assets
Net deferred tax $2,317 $3,279
liabilities
</TABLE>
The deferred tax asset valuation allowance is related to
deferred tax assets from foreign net operating losses. The
company paid income taxes of $9.0 million in 1996, $9.3 million
in 1995, and $6.5 million in 1994.
8. Business Segment Information
Operations by geographic segment are as follows:
<TABLE>
1996 1995 1994
(In Thousands)
<S> <C> <C> <C>
Net sales:
North America $195,052 $177,222 $163,311
European Community 46,394 42,313 31,143
$241,446 $219,535 $194,454
Operating profit:
North America $ 26,009 $ 22,796 $ 20,741
European Community 11,660 10,933 7,105
37,669 33,729 27,846
Interest expense 4,235 4,279 5,014
Corporate income (660) (430) (595)
$ 34,094 $ 29,880 $ 23,427
Identifiable assets:
North America $112,961 $107,144 $ 98,878
Europe Community 23,310 17,800 15,738
Corporate 73,680 80,242 84,712
$209,951 $205,186 $199,328
</TABLE>
8. Business Segment Information (continued)
The company's export sales from the United States, principally
to the Far East and Canada, amounted to approximately
$26.9 million in 1996, $27.0 million in 1995, and $24.0 million
in 1994. One customer accounted for 11% of consolidated net
sales in 1996. No single customer accounted for 10% or more of
consolidated net sales in 1995 or 1994.
Corporate assets consist principally of cash, intangible assets
and prepaid pension cost.
9. Lease Commitments
The company leases certain office and warehouse space under
noncancelable operating leases, as well as certain machinery
and equipment. Rental expense under these leases was
approximately $1,267,000 in 1996, $965,000 in 1995, and
$857,000 in 1994. Future minimum payments for all
noncancelable operating leases with initial terms of one year
or more at December 28, 1996, are as follows (in thousands):
<TABLE>
<S> <C>
1997 $ 448
1998 336
1999 257
2000 129
2001 and thereafter - $1,170
</TABLE>
<TABLE>
Selected Financial Data
<CAPTION>
Five Year
Summary
($ In Thousands, Except Per-Share Data)
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Net sales $241,446 $219,535 $194,454 $160,712 $149,832
Gross profit
98,288 89,872 77,416 62,588 51,485
Operating
income 37,669 33,729 27,846 19,359 10,756
Net income
21,735 19,272 15,227 9,987 654
Net income per
share 1.81 1.55 1.25 0.83 0.06
Net working
capital 31,343 27,963 25,061 17,641 21,855
Total assets $209,951 $205,186 $199,328 $193,294 $197,749
Long-term debt
44,556 40,804 60,344 80,906 100,965
<CAPTION>
Quarterly Results of Operations
(Unaudited)
($ In Thousands,Except Per-Share Data)
1996 1995
4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $ $ $ $ $ $ $ $
61,042 60,483 60,843 59,078 52,444 54,688 56,949 55,454
Gross profit
24,794 24,535 24,847 24,112 21,681 22,204 23,225 22,762
Operating
income 9,576 9,633 9,574 8,886 7,360 8,408 9,207 8,754
Net income
5,499 5,575 5,436 5,225 4,202 4,830 5,245 4,995
Net income per
share:
Primary
0.46 0.47 0.46 0.42 0.34 0.39 0.42 0.40
Fully
diluted 0.46 0.47 0.46 0.42 0.34 0.39 0.42 0.40
<CAPTION>
Quarterly
Stock Price
1996 1995
4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
High 48 5/8 39 3/4 40 38 1/2 38 1/2 35 1/4 36 29 1/2
Low 39 32 3/4 36 32 3/4 30 1/4 30 3/4 28 1/4 25 3/4
Close 48 1/2 38 3/4 37 1/2 37 3/4 36 3/4 32 1/2 31 1/3 28 1/2
</TABLE>
Exhibit 22.1
SUBSIDIARIES
Littelfuse, S.A. de C.V.
Littelfuse FSC
Littelfuse Do Brazil
Littelfuse, B.V.
Littelfuse, A.G.
Littelfuse Limited
Littelfuse Far East PTE Ltd.
Littelfuse HK Limited
Littelfuse Holdings Pte Ltd
Suzhou Littelfuse OVS Ltd
Sam Hwa Littelfuse Inc. (65% owned)
Littelfuse KK
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in Registration
Statements (No. 33-55942, 33-64442, 33-95020, and 333-03260)
on Form S-8 of our report dated January 20, 1997, with
respect to the consolidated financial statements and
schedule of Littelfuse, Inc. and subsidiaries included in
the Annual Report (Form 10-K) for the year ended December
28, 1996.
/s/ Ernst & Young LLP
Chicago, Illinois
March 17, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000889331
<NAME> LITTELFUSE, INC.
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-28-1996 DEC-31-1995
<PERIOD-END> DEC-28-1996 DEC-31-1995
<CASH> 1,427 1,308
<SECURITIES> 0 0
<RECEIVABLES> 35,468 29,722
<ALLOWANCES> 5,057 3,901
<INVENTORY> 31,586 30,076
<CURRENT-ASSETS> 73,809 65,023
<PP&E> 121,311 104,764
<DEPRECIATION> 57,422 43,535
<TOTAL-ASSETS> 209,951 205,186
<CURRENT-LIABILITIES> 51,044 45,817
<BONDS> 0 0
0 0
0 0
<COMMON> 103 102
<OTHER-SE> (13,442) (3,533)
<TOTAL-LIABILITY-AND-EQUITY> 209,951 205,186
<SALES> 241,446 219,535
<TOTAL-REVENUES> 241,446 219,535
<CGS> 143,158 129,663
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 4,235 4,279
<INCOME-PRETAX> 34,094 29,880
<INCOME-TAX> 12,359 10,608
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 21,735 19,272
<EPS-PRIMARY> 1.81 1.55
<EPS-DILUTED> 1.79 1.53
</TABLE>
