SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JULY 4, 1998 OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OF 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 (I.R.S. Employer
of incorporation or organization) Identification No.)
800 East Northwest Highway
Des Plaines, Illinois 60016
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 824-1188
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 whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
As of July 4, 1998, 20,794,455 shares of common stock, $.01 par
value, of the Registrant and warrants to purchase 2,583,673 shares of common
stock, $.01 par value, of the Registrant were outstanding.
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
PAGE
Item 1. Consolidated Condensed (unaudited) Statements of
Income, Financial Condition, and Cash Flows
and Notes to the Consolidated Financial Statements ........1
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................6
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders..........10
Item 5. Other Information .......................................... 11
Item 6. Exhibits and Reports on Form 8-K.............................12
<PAGE>
Part I - Financial Information
Item 1.
<TABLE>
CONSOLIDATED CONDENSED
STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)
For the Three For the Six
Months Ended Months Ended
July 4, June 28, July 4, June 28,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales $ 69,116 $ 69,828 $ 138,447 $ 135,411
Cost of sales
42,785 41,219 85,524 79,983
------- ------- ------- ------
Gross profit
26,331 28,609 52,923 55,428
Selling, administrative and general
expenses
14,912 15,080 30,445 29,570
Amortization of intangibles
1,610 1,759 3,498 3,506
------ ------ ------ -----
Operating income
9,809 11,770 18,980 22,352
Costs associated with consolidation of operations 750
34 - -
Interest expense
889 921 1,732 1,824
Other income, net
(69) (90) (11) (365)
---- ---- ---- -----
Income before income taxes
8,817 10,939 16,509 20,893
Income taxes
3,262 4,043 5,128 7,730
------ ------ ------ -----
Net income $ 5,555 $ 6,896 $ 11,381 $ 13,163
======== ======== ============ ===========
5,555 6,896
Net income per share - Basic $ 0.27 $ 0.35 $ 0.55 $ 0.67
========= ======== =========== ===========
- Diluted $ 0.24 $ 0.29 $ 0.48 $ 0.55
========= ======== =========== ===========
Weighted average number of common and common equivalent
shares outstanding
- Basic 20,934 19,734 20,560 19,722
======== ======== ============ ============
23,525 23,689 23,568 23,748
- Diluted ======== ======== ============ ============
</TABLE>
1
<PAGE>
<TABLE>
CONSOLIDATED CONDENSED
STATEMENTS OF FINANCIAL CONDITION
(In thousands)
July 4, Jan. 3,
1998 1998
----------------- -------------
(unaudited)
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents 4,283 755
Accounts receivable 44,550 37,458
Inventories 38,010 39,075
Deferred income taxes 3,672 3,672
Prepaid expenses and other 2,964 2,896
-------- -------
Total current assets 93,479 83,856
Property, plant, and equipment, net 74,815 70,763
Reorganization value, net 39,708 41,202
Patents and other identifiable intangible
assets, net 20,781 22,786
Prepaid pension cost and other assets 2,991 3,278
-------- --------
$231,774 $221,885
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 33,070 $ 31,601
Accrued income taxes 9,471 9,952
Current portion of long-term debt 10,029 10,172
-------- --------
Total current liabilities 52,570 51,725
Long-term debt, less current portion 40,976 40,385
Deferred income taxes 6,205 6,205
Minority Interest 28 65
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:
34,000,000 shares authorized; 20,794,455
and 19,873,140 shares issued and outstanding 208 199
Additional paid-in capital 58,719 52,908
Notes receivable - common stock (1,960) (1,960)
Foreign currency translation adjustment (4,503) (4,767)
Retained earnings 79,531 77,125
--------- ---------
Total shareholders' equity $131,995 $123,505
--------- ---------
$231,774 $221,885
========= =========
</TABLE>
2
<PAGE>
<TABLE>
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
For the Three For the Six
Months Ended Months Ended
July 4, June 28, July 4, June 28,
1998 1997 1998 1997
Operating activities:
<S> <C> <C> <C> <C>
Net income $ 5,555 $ 6,896 $ 11,381 $ 13,163
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 3,407 3,249 6,731 6,580
Amortization 1,610 1,759 3,498 3,506
Provision for bad debts (33) 127 284 251
Deferred income taxes 11 - - (13)
Minority interest 10 (74) (49) (53)
Changes in operating assets and liabilities:
Accounts receivable (1,339) (984) (7,045) (8,797)
Inventories 341 (3,257) 1,358 (5,142)
Accounts payable and accrued expenses 450 (1,143) 1,103 4,829
Other, net 498 317 178 (43)
------- --------- --------- ---------
Net cash provided by operating activities 10,499 6,901 17,439 14,281
Cash used in investing activities:
Purchases of property, plant, and
equipment, net (4,340) (4,804) (10,053) (7,337)
Acquisition of business, net - (5,060) - (5,060)
--------- --------- --------- ---------
(4,340) (9,864) (10,053) (12,397)
Cash provided by (used in) financing activities:
Payments (borrowings) of long-term debt net 4,773 5,172 (166) 3,121
Proceeds from exercise of stock options and warrants 827 344 5,532 500
Purchase of common stock and warrants (7,334) (3,876) (8,973) (6,147)
-------- --------- --------- ---------
(1,734) 1,640 (3,607) (2,526)
Effect of exchange rate changes on cash (185) (154) (251) (259)
-------- --------- ---------- ---------
Increase/(Decrease) in cash and cash equivalents 4,240 (1,477) 3,528 (901)
Cash and cash equivalents at
beginning of period 43 2,003 755 1,427
--------- --------- ---------- ---------
Cash and cash equivalents at end
of period $ 4,283 $ 526 $ 4,283 $ 526
======== ======== ========= =========
</TABLE>
3
<PAGE>
Notes to Consolidated Condensed Financial Statements
(Unaudited)
July 4, 1998
1. Basis of Presentation
Littelfuse, Inc. and its subsidiaries (the "Company") are the successors in
interest to the components business previously conducted by subsidiaries of
Tracor Holdings, Inc. ("Predecessor"). The Company acquired its business as a
result of the Predecessor's reorganization activities concluded on December 27,
1991.
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
of normal recurring accruals, considered necessary for a fair presentation have
been included. Operating results for the period ended July 4, 1998 are not
necessarily indicative of the results that may be expected for the year ending
January 2, 1999. For further information, refer to the Company's consolidated
financial statements and the notes thereto incorporated by reference in the
Company's Annual Report on Form 10-K for the year ended January 3, 1998.
The Company's fiscal year end is the Saturday nearest December 31. Additionally,
the Company reports its quarterly interim financial information on the basis of
periods of thirteen weeks. The consolidated condensed statements of operations
and cash flows for the three months ended July 4, 1998 are for the period from
April 5, 1998 to July 4, 1998, and for the three months ended June 28, 1997 are
for the period from March 30, 1997 to June 28, 1997.
2. Inventories
The components of inventories are as follows (in thousands):
<TABLE>
July 4, 1998 January 3, 1998
------------ ---------------
<S> <C> <C>
Raw Material $ 9,672 $ 8,788
Work in Process 4,589 3,556
Finished Goods 23,749 26,731
-------- --------
Total $38,010 $39,075
======== ========
</TABLE>
4
<PAGE>
3. Per Share Data and Stock Split
Net income per share amounts for the three months and six months ended July 4,
1998 and June 28, 1997 are based on the weighted average number of common and
common equivalent shares outstanding during the periods after giving retroactive
effect to the June 10, 1997 stock split as follows (in thousands, except per
share data): <TABLE>
Three months ended Six months ended
July 4, June 28, July 4, June 28,
1998 1997 1998 1997
------ ------- ------- --------
<S> <C> <C> <C> <C>
Average shares outstanding 20,934 19,734 20,560 19,722
Net effect of dilutive stock options,
warrants and restricted shares
- Basic - - - -
------- ------- ------- -------
- Diluted 2,591 3,955 3,008 4,014
------- ------- ------- -------
Average shares outstanding
- Basic 20,934 19,734 20,560 19,734
====== ======= ======= =======
- Diluted 23,525 23,689 23,568 23,748
====== ======= ======= =======
Net income $ 5,555 $ 6,896 $11,381 $13,163
======= ======= ======== ========
Net income per share
- Basic $ .27 $ .35 $ .55 $ .67
======== ======== ======== =======
- Diluted $ .24 $ .29 $ .48 $ .55
======== ======== ======== =======
</TABLE>
4. Long-Term Debt
The Company concluded a financing package on August 31, 1993. The package
consists of $45,000,000 of Senior Notes issued pursuant to a Note Purchase
Agreement which requires annual principal payments of $9,000,000 payable
annually beginning August 31, 1996 through August 31, 2000. The package also
includes a bank Credit Agreement which provides an open revolver line of credit
of $65,000,000 less current borrowings subject to a maximum indebtedness
calculation and other traditional covenants. No revolver principal payments are
required until the line matures on August 31, 2000. At July 4, 1998 the Company
had available $46.0 million of borrowing capability under the revolver facility.
5. Comprehensive Income
In accordance with Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income," total comprehensive income for the three
months ended July 4, 1998 and June 28, 1997 was approximately $5.6 million and
$7.3 million respectively and the six months ended July 4, 1998 and June 28,
1997 was $14.6 million and $11.1 million respectively. The adjustment for
comprehensive income is related to the Company's foreign currency translation.
5
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
Sales decreased 1 percent to $69.1 million the second quarter of 1998 compared
to $69.8 million the second quarter of 1997. Operating income decreased 17
percent to $9.8 million for the quarter compared to $11.8 million the second
quarter of last year. Net income decreased to $5.6 million or $0.24 per diluted
share the second quarter of 1998 compared to $6.9 million or $0.29 per diluted
share the second quarter of 1997.
Cash flow from operations was $10.5 million the second quarter of 1998. The
Company repurchased 323,000 shares of its common stock for $7.3 million and made
capital investments of $4.3 million during the quarter. Long-term debt increased
$4.8 million in the second quarter. The total long-term debt to equity ratio was
0.39 to 1 at July 4, 1998 compared to 0.41 to 1 at year end 1997 and 0.54 to 1
at June 28, 1997.
Second Quarter, 1998
Littelfuse sales decreased 1 percent to $69.1 million the second quarter this
year from $69.8 million last year. The gross margin was 38.1 percent the second
quarter this year compared to 41.0 percent last year. Operating income decreased
to 14.2 percent of sales the second quarter this year compared to 16.9 percent
last year. Net income decreased to 8.0 percent of sales the second quarter this
year compared to 9.9 percent of sales last year. Diluted earnings per share
decreased 17 percent to $0.24 compared to $0.29 last year.
Second quarter 1998 sales declined $0.7 million compared to the same quarter
last year. Sales grew 12% in local currency, but they were flat in dollars in
Asia Pacific due to reduced production of consumer electronics and personal
computers. Sales grew 18 percent in local currency and 14 percent in dollars in
the European Community with strong automotive OEM sales and electronics sales.
Sales declined 5 percent in North America due to a decline in automotive sales
partially due to the strike at General Motors.
Electronic sales declined to $34.1 million in the second quarter 1998 from $34.3
million the same quarter of last year for a decrease of $0.2 million or 1
percent. The electronics sales decline was caused primarily by weak sales to
Japanese consumer electronics markets, South Asia personal computer
manufacturers and North America electronics distributors. Automotive sales
declined to $24.8 million in the second quarter 1998 from $26.7 million the same
quarter last year for a decrease of $1.9 million or 7 percent. The North
American automotive OEM market was very weak due to the GM strike this year,
compared to much higher than normal sales last year related to a one-time item
sale and more new model introductions than normal. The North American automotive
aftermarket also was weak, while the European automotive OEM and aftermarkets
were reasonably strong. Power fuse sales grew to $10.2 million in the second
quarter 1998 from $8.8 million the same quarter last year for an increase of
$1.2 million or 12 percent. The Company believes that its electrical business
sales continue to grow faster than its competitors in the electrical industry
due to its product innovation leadership.
6
<PAGE>
Gross profit was $26.3 million or 38.1 percent of sales for the second quarter
1998 compared to $28.6 million or 41.0 percent last year. About 60 percent of
the gross margin decline was due to average selling price declines for
electronics products being much higher than normal and about 40 percent of the
gross margin decline was due to unfavorable North American labor and overhead
absorption. The above normal average selling price declines were limited to
electronics sales and were much more pronounced in Asia than in North America or
Europe. The unfavorable labor and overhead absorption is due to not building
inventory as sales are declining and staff and equipment are available to
support higher sales. The Company has reduced its headcount by 150 people since
the beginning of the year and has identified cost savings programs about twice
the normal annual rate in order to address these margin issues.
Selling, general and administrative expenses were $14.9 million or 21.6 percent
of sales for the second quarter 1998 compared to $15.1 million or 21.6 percent
of sales for the same quarter last year. This resulted from stringent control of
these costs despite lower sales. Selling expenses accounted for approximately
sixty-two percent of S,G&A expenses for the second quarter 1998 and
approximately sixty-five percent for the same quarter last year. The
amortization of the reorganization value and other intangibles was 2.3 percent
of sales for the second quarter 1998 compared to 2.5 percent last year. Total
S,G&A expenses including intangibles amortization were 23.9 percent of sales the
second quarter 1998 compared to 24.1 percent the same quarter last year.
Operating income was $9.8 million or 14.2 percent of sales for the second
quarter 1998 compared to $11.8 million or 16.9 percent last year.
Interest expense was $0.9 million for the second quarter of both years. Income
before taxes was $8.8 million for the second quarter 1998 compared to $10.9
million last year. Income taxes were $3.3 million with an effective tax rate of
37 percent for the second quarter 1998 compared to $4.0 million with an
effective tax rate of 37 percent the second quarter of last year.
Net income for the second quarter 1998 was $5.6 million or $0.24 per share
compared to $6.9 million or $0.29 per share last year.
Six Months, 1998
Sales increased 2 percent for the first half of 1998 to $138.4 million from
$135.4 million the first half of last year. Operating income declined 15 percent
to $19.0 million from $22.4 million the first half of last year. Net income
declined to $11.4 million from $13.2 million last year. Cash provided by
operations before interest expense was $19.2 million and after interest expense
was $17.4 million the first half of this year.
The sales trend in electronics has been weaker than normal the first two
quarters of 1998. First half electronic sales were up 4 percent at $68.6 million
compared to $66.2 million last year. The telecommunications business has been
strong, while the consumer electronics and personal computer business was weaker
in all major areas of the world in the first half. Automotive sales were down 3
percent at $49.8 million compared to $51.1 million last year. Automotive OEM
sales in Europe have been strong the first half, but the effects of the GM
automotive strike, and a one-time item sale of products in North America the
second quarter of 1997 led to the overall decline. Power fuse sales were up 11
percent to $20.0 million from $18.1 million last year.
7
<PAGE>
Gross profit was 38.2 percent for the first half 1998 compared to 40.9 percent
the first half of last year. As mentioned earlier, the decline in gross margin
is due to above normal average selling price declines for electronics products
(particularly in Asia) and to unfavorable labor and overhead absorption due to
not building inventory despite lower than planned sales. Again, the Company is
reducing headcount and redoubling its cost savings efforts to address the
decrease in gross margin.
Selling, general and administrative expenses were 22.0 percent of sales for the
first half 1998 compared to 21.8 percent of sales last year. The amortization of
intangibles was 2.5 percent of sales for the first half 1998 compared to 2.6
percent last year. Total S,G&A expenses including intangibles amortization were
24.5 percent of sales the first half 1998 compared to 24.4 percent of sales the
first half of last year.
Operating income decreased 15 percent to $19.0 million or 13.7 percent of sales
the first half 1998 compared to $22.4 million or 16.5 percent last year.
Interest expense was $1.7 million the first half 1998 compared to $1.8 million
last year. Other income, net was flat the first half of 1998 compared to $0.4
million last year. As a result, income before taxes was $16.5 million the first
half 1998 compared to $20.9 million the first half of last year. Income taxes
were $5.1 million the first half 1998 compared to $7.8 million last year.
Net income the first half 1998 decreased 14 percent to $11.4 million or $.48 per
share compared to $13.2 million or $.56 per share last year.
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 operating and investing needs and its current debt obligations
for the foreseeable future.
Littelfuse started the 1998 year with $0.8 million of cash. Net cash provided by
operations was $17.4 million for the first half. Cash used to invest in
property, plant and equipment was $10.1 million. Cash used to repurchase stock
was $9.0 million, proceeds of option exercises and warrants were $5.6 million,
and payments of bank debt were $0.2 million for net financing of $3.6 million
use of cash. The net of cash provided by operations, less investing activities,
less financing activities, less the effect of exchange rates, resulted in an
increase in cash of $3.5 million. This left the Company with a cash balance of
approximately $4.3 million at July 4, 1998.
The ratio of current assets to current liabilities was 1.8 to 1 at the end of
the second quarter 1998 compared to 1.6 to 1 at year end 1997 and 1.5 to 1 at
the end of the second quarter 1997. The days sales in receivables was
approximately 55 days at the end of the second quarter 1998 compared to 56 days
at year end 1997 and 58 days at the end of the second quarter 1997. The days
inventory outstanding was approximately 81 days at the end of the second quarter
1998 compared to 90 days at year end 1997 and 79 days at the end of the second
quarter 1997.
8
<PAGE>
The Company's capital expenditures were $10.1 million for the first half 1998.
The Company expects that capital expenditures, which will be primarily for new
machinery and equipment, will be approximately $21.5 million in 1998. The ratio
of total long-term debt to equity was 0.39 to 1 at the end of the first half
1998 compared to 0.41 to 1 at year end 1997.
The long-term debt at the end of the first half 1998 consists of five types
totaling $51.0 million. They are as follows: (1) private placement notes
totaling $27.0 million, (2) US revolver borrowings totaling $19.0 million, (3)
foreign revolver borrowings totaling $3.1 million, (4) notes payable relating to
mortgages totaling $0.7 million, and (5) other long-term debt totaling $1.2
million. These five items include $10.0 million of the bank revolver, tax notes
and mortgage notes, which are considered to be current. This leaves net
long-term debt totaling $41.0 million at July 4, 1998. The private placement
notes carry an interest rate of 6.31%. The Company had available at July 4,
1998, a revolver facility of $46.0 million. The bank revolver loan notes carry
an interest rate of prime or LIBOR plus 0.5%, which currently is approximately
6.2%. The Company also has a $8.0 million letter of credit facility, of which
approximately $1.8 million was being used at July 4, 1998.
Year 2000
The Company currently has substantially completed its evaluation of its business
application, process equipment, and communications computer software and
databases to determine whether or not modifications will be required to prepare
the Company's computer systems for the year 2000. These problems, which have
been widely reported in the media, could cause malfunctions in certain software
and databases with respect to dates on or after January 1, 2000, unless
corrected. At this time, the Company has completed the worldwide evaluation of
the modifications required of its computer software or databases for all
business applications and many process and communications applications. However,
if such modifications are not made or completed timely, the Year 2000 issue
could have a material impact on the operations of the Company. Our current best
estimate is the Company will spend $1 to $1 1/2 million more for information
systems consulting and training than the prior two year average in 1998 and $2
to $3 million more than the prior two year average in 1999 to make the changes
needed to support Year 2000 requirements. We expect to have all systems
compliant by the third quarter 1999.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995.
The preceding commentary presents management's discussion and analysis of the
Company's financial condition and results of operations for the periods
presented. Certain of the statements included above, including those regarding
future financial performance or results or those that are not historical facts,
are or contain "forward-looking" information as that term is defined in the
Securities Exchange Act of 1934, as amended. The words "expect," "believe,"
"anticipate," "project," "estimate," and similar expressions are intended to
identify forward-looking statements. The Company cautions readers that any such
statements are not guarantees of future performance or events and such
statements involve risks, uncertainties and assumption, 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
and patent protection, commercialization and technological difficulties,
capacity and supply constraints or difficulties, actual purchases under
agreements, the effect of the Company's accounting policies, and other factors
discussed above and in the Company's Annual Report on Form 10-K for the year
ended January 3, 1998. Should one or more of these
9
<PAGE>
risks or uncertainties materialize or should the underlying assumptions prove
incorrect, actual results and outcomes may differ materially from those
indicated or implied in the forward-looking statements. This review should be
read in conjunction with information provided in the financial statements
appearing in the Company's Annual Report on Form 10-K for the year ended January
3, 1998.
PART II - OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders of Littelfuse, Inc. was held on May
1, 1998. The following matters were voted upon at this annual meeting
and the results of such votes are provided below:
1. Election of six nominees to the Board of Directors to serve terms
of one year or until their successors are elected:
(i) Howard B. Witt
Withhold Broker
For 18,657,313 Authority 139,612 Abstentions ___ Nonvotes ___
---------- -------
(ii) John Driscoll
Withhold Broker
For 18,650,009 Authority 146,916 Abstentions ___ Nonvotes ___
---------- -------
(iii) Anthony Grillo
Withhold Broker
For 18,657,009 Authority 139,916 Abstentions ___ Nonvotes ___
---------- -------
(iv) Bruce A. Karsh
Withhold Broker
For 18,657,309 Authority 139,616 Abstentions ___ Nonvotes ___
---------- -------
(v) John E. Major
Withhold Broker
For 18,656,909 Authority 140,016 Abstentions ___ Nonvotes ___
---------- -------
(vi) John J. Nevin
Withhold Broker
For 18,645,459 Authority 151,466 Abstentions ___ Nonvotes ___
---------- -------
10
<PAGE>
2. Approval and ratification of the Directors' appointment of Ernst &
Young LLP as the Company's independent auditors for the year ending
January 2, 1999
Broker
For 18,721,593 Against 38,000 Abstentions 37,332 Nonvotes ___
---------- ------ ------
3. Approval of the proposed amendment to the 1993 Stock Plan for the
Employees and Directors of Littelfuse, Inc. which would increase the
maximum aggregate number of shares of Common Stock as to which awards
of options, restricted shares, units or rights may be made from time
to time thereunder from 1,200,000 to 1,800,000 shares
Broker
For 16,042,563 Against 2,604,347 Abstentions 150,015 Nonvotes ___
--------- --------- -------
Item 5: Other Information
The Company's bylaws require that in order to nominate persons to the Company's
Board of Directors or to present a proposal for action by stockholders at an
annual meeting of stockholders, a stockholder must provide advance written
notice to the secretary of the Company, which notice must be delivered to or
mailed and received at the Company's principal executive offices not later than
the close of business on the 60th day nor earlier than the close of business on
the 90th day prior to the first anniversary of the preceding year's annual
meeting of stockholders; provided that in the event that the date of the annual
meeting to which such stockholder's notice relates is more than 30 days before
or more than 60 days after such anniversary date, for notice by the stockholder
to be timely it must be so delivered not earlier than the close of business on
the 90th day prior to such annual meeting and not later than the close of
business on the later of the 60th day prior to such annual meeting or the 10th
day following the day on which public announcement of the date of such annual
meeting is first made by the Company. In the event that the number of directors
to be elected to the Board of Directors is increased and there is no public
announcement by the Company naming all of the nominees for director or
specifying the size of the increased Board of Directors at least 70 days prior
to the first anniversary of the preceding year's annual meeting, a stockholder's
notice will be considered timely, but only with respect to nominees for any new
positions created by such increase, if it is delivered to or mailed and received
at the Company's principal executive offices not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the Company. The stockholder's notice must contain detailed
information specified in the Company's bylaws. As to any proposal that a
stockholder intends to present to stockholders without inclusion in the
Company's Proxy Statement for the Company's 1999 Annual Meeting of Stockholders,
the proxies named in management's proxy for that meeting will be entitled to
exercise their discretionary authority on that proposal by advising stockholders
of such proposal and how they intend to exercise their discretion to vote on
such matter, unless the stockholder making the proposal solicits proxies with
respect to the proposal to the extent required by Rule 14a-(c)(2) under the
Securities Exchange Act of 1934, as amended.
11
<PAGE>
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibit Description
Exhibit 10.1 Amendment to 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))
Exhibit No. 27 Financial Data Schedule
(b) There were no reports on Form 8-K during the quarter ended
July 4, 1998.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report on Form 10-Q for the quarter
ended July 4, 1998, to be signed on its behalf by the undersigned thereunto duly
authorized.
Littelfuse, Inc.
Date: August 18, 1998 By /s/ James F. Brace
-------------------
James F. Brace Vice President,
Treasurer and Chief Financial Officer
(As duly authorized officer and as the
principal financial and accounting
officer)
13
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<FISCAL-YEAR-END> Jan-02-1999
<PERIOD-START> Jan-04-1998
<PERIOD-END> Jul-04-1998
<EXCHANGE-RATE> 1
<CASH> 4,283
<SECURITIES> 0
<RECEIVABLES> 44,550
<ALLOWANCES> 0
<INVENTORY> 38,010
<CURRENT-ASSETS> 93,479
<PP&E> 74,815
<DEPRECIATION> 6,731
<TOTAL-ASSETS> 231,774
<CURRENT-LIABILITIES> 52,570
<BONDS> 0
0
0
<COMMON> 208
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 231,774
<SALES> 138,447
<TOTAL-REVENUES> 138,447
<CGS> 85,524
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,732
<INCOME-PRETAX> 16,509
<INCOME-TAX> 5,128
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</TABLE>
Exhibit 10.1
REVISED 5/1/98
1993 STOCK PLAN FOR EMPLOYEES AND DIRECTORS OF
LITTELFUSE, INC.
1. Purpose. Littelfuse, Inc. (the "Corporation") desires to attract and
retain Employees and directors of outstanding talent. The 1993 Stock Plan
for Employees and Directors of Littelfuse, Inc. (the "Plan") affords
eligible Employees and directors the opportunity to acquire proprietary
interests in the Corporation and thereby encourages their highest levels of
performance and interest.
2. Scope and Duration.
a. Awards under the Plan may be granted in the following forms:
(1)incentive stock options ("incentive stock options"), as provided in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and non-qualified stock options ("non-qualified options"; the term
"options" includes incentive stock options and non-qualified options);
(2)shares of Common Stock of the Corporation (the "Common Stock") which are
restricted as provided in paragraph 10. ("restricted shares"); or
(3)rights to acquire shares of Common Stock which are restricted as
provided in paragraph 10. ("units" or "restricted units").
Options may be accompanied by stock appreciation rights ("rights").
b. The maximum aggregate number of shares of Common Stock as
to which awards of options, restricted shares, units, or rights may be
made from time to time under the Plan is 1,800,000 shares. Shares
issued pursuant to this Plan may be in whole or in part, as the Board
of Directors of the Corporation (the "Board of Directors") shall from
time to time determine, authorized but unissued shares or issued shares
reacquired by the Corporation. If for any reason any shares as to which
an option has been granted cease to be subject to purchase thereunder
or any restricted shares or restricted units are forfeited to the
Corporation, or to the extent that any awards under the Plan
denominated in shares or units are paid or settled in cash or are
surrendered upon the exercise of an option, then (unless the Plan shall
have been terminated) such shares or units, and any shares surrendered
to the Corporation upon such exercise, shall become available for
subsequent awards under the Plan; provided, however, that shares
surrendered by the Corporation upon the exercise of an incentive stock
option and shares subject to an incentive stock option surrendered upon
the exercise of a right shall not be available for subsequent award of
additional stock options under the Plan.
c. No incentive stock option shall be granted hereunder after February
11, 2003.
3. Administration.
a. The Plan shall be administered by the Stock Option
Committee or any successor thereto of the Board of Directors of the
Corporation or by such other committee (the "Committee") as shall be
determined by the Board of Directors. The Committee shall consist of
not less than two members of the Board of Directors, each of whom shall
qualify as a "disinterested person" to administer the Plan as
contemplated by Rule 16b-3, as amended, or other applicable rules under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
b. The Committee shall have plenary authority in its sole
discretion, subject to and not inconsistent with the express provisions
of this Plan:
(1)to grant options, to determine the purchase price
of the Common Stock covered by each option, the term of each
option, the persons to whom, and the time or times at which,
options shall be granted and the number of shares to be
covered by each option;
(2)to designate options as incentive stock options or
non-qualified options and to determine which options shall
be accompanied by rights;
(3)to grant rights and to determine the purchase
price of the Common Stock covered by each right or related
option, the term of each right or related option, the
Employees and Eligible Directors (as such terms are defined
below) to whom, and the time or times at which, rights or
related options shall be granted and the number of shares to
be covered by each right or related option;
(4)to grant restricted shares and restricted units
and to determine the term of the Restricted Period (as defined
in paragraph 10.) and other conditions applicable to such
shares or units, the Employees to whom, and the time or times
at which, restricted shares or restricted units shall be
granted and the number of shares or units to be covered by
each grant;
(5)to interpret the Plan;
(6)to prescribe, amend and rescind rules and
regulations relating to the Plan;
(7)to determine the terms and provisions of the
option and rights agreements (which need not be identical) and
the restricted share and restricted unit agreements (which
need not be identical) entered into in connection with awards
under the Plan;
and to make all other determinations deemed necessary or
advisable for the administration of the Plan.
Without limiting the foregoing, the Committee shall have
plenary authority in its sole discretion, subject to, and not
inconsistent with, the express provisions of the Plan, to:
(1)select Participants (as defined below) for participation
in the Plan;
(2)determine the timing, price, and amount of any grant or
award under the Plan to any Participant; and
(3)either
(a)determine the form in which payment of any right
granted or awarded under the Plan will be made (i.e., cash,
securities, or any combination thereof), or
(b)approve the election of the Participant to receive
cash in whole or in part in settlement of any right granted
or awarded under the Plan.
As used in the Plan, the following terms shall have the following
meanings: the term "Littelfuse Officer" shall mean an officer (other
than an assistant officer) of the Corporation or any of its
Subsidiaries and any other person who may be designated as any
executive officer by the Board of Directors of the Corporation; the
term "Participant" shall mean an Employee or Eligible Director; the
term "Employee" shall mean a full-time, non-union, salaried employee of
the Corporation or any of its Subsidiaries; the term "Eligible
Director" shall mean any individual who is a member of the Board of
Directors of the Corporation who is not then an Employee or a
beneficial owner, either directly or indirectly, of more than ten
percent (10%) of the Common Stock of the Corporation; and the term
"Subsidiaries" shall mean all corporations in which the Corporation
owns, directly or indirectly, more than fifty percent (50%) of the
total voting power of all classes of stock.
(c)The Committee may delegate to one or more of its
members or to one or more agents such administrative duties
as it may deem advisable, and the Committee or any person to
whom it has delegated duties as aforesaid may employ one or
more persons to render advice with respect to any
responsibility the Committee or such person may have under
the Plan; provided, that the Committee may not delegate any
duties to a member of the Board of Directors who, if elected
to serve on the Committee, would not qualify as a
"disinterested person" to administer the Plan as
contemplated by Rule 16b-3, as amended, or other applicable
rules under the Exchange Act. The Committee may employ
attorneys, consultants, accountants, or other persons, and
the Committee, the Corporation, its Subsidiaries, and their
respective officers and directors shall be entitled to rely
upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and
binding upon all Participants, the Corporation, its
Subsidiaries, and all other interested persons. No member or
agent of the Committee shall be personally liable for any
action, determination, or interpretation made in good faith
with respect to the Plan or awards made hereunder, and all
members and agents of the Committee shall be fully protected
by the Corporation in respect of any such action,
determination, or interpretation.
4. Eligibility; Factors to Be Considered in Making Awards.
a. Persons eligible to participate in this Plan shall
include all Employees of the Corporation and all Eligible
Directors; provided, however, that Eligible Directors shall only
be eligible to receive grants of options pursuant to subparagraph
4.e.
b. In determining the Employees to whom awards shall be
granted and the number of shares or units to be covered by each
award, the Committee shall take into account the nature of the
Employee's duties, his or her present and potential contributions
to the success of the Corporation or any of its Subsidiaries and
such other factors as it shall deem relevant in connection with
accomplishing the purposes of the Plan.
c. Awards may be granted singly, in combination, or in
tandem and may be made in combination or in tandem with or in
replacement of, or as alternatives to, awards or grants under any
other employee plan maintained by the Corporation or any of its
Subsidiaries. An award made in the form of a unit or a right may
provide, in the discretion of the Committee, for
(1)the crediting to the account of, or the current
payment to, each Employee who has such an award of an amount
equal to the cash dividends and stock dividends paid by the
Corporation upon one share of Common Stock for each restricted
unit or share of Common Stock subject to a right included in
such award ("Dividend Equivalents"), or
(2)the deemed reinvestment of such Dividend
Equivalents and stock dividends in shares of Common Stock,
which deemed reinvestment shall be deemed to be made in
accordance with the provisions of paragraph 10., and credited
to the Employee's account ("Additional Deemed Shares").
Such Additional Deemed Shares shall be subject to the same restrictions
(including but not limited to provisions regarding forfeitures)
applicable with respect to the unit or right with respect to which such
credit is made. Dividend Equivalents not deemed reinvested as stock
dividends shall not be subject to forfeiture, and may bear amounts
equivalent to interest or cash dividends as the Committee may
determine.
d. The Committee, in its sole discretion, may grant to an
Employee who has been granted an award under the Plan or any other
employee plan maintained by the Corporation or any of its Subsidiaries,
or any successor thereto, in exchange for the surrender and
cancellation of such award, a new award in the same or a different form
and containing such terms, including, without limitation, a price which
is different (either higher or lower) than any price provided in the
award so surrendered and cancelled, as the Committee may deem
appropriate.
e. Each Eligible Director shall be automatically granted a
non-qualified option to purchase 2,000 shares of Common Stock, which
option shall be granted on the effective date of the Plan (hereinafter
referred to as the "Initial Eligible Director Stock Options").
"Commencing in 1995, each Eligible Director shall be automatically
granted a non-qualified option to purchase 2,200 shares of Common
Stock, commencing in 1997, each Eligible Director shall be
automatically granted a non-qualified option to purchase 2,500 shares
of Common Stock, and commencing in 1998, each Eligible Director shall
be automatically granted a non-qualified option to purchase 5,000
shares of Common Stock, which option shall be granted on the date of
the first meeting of the Board of Directors of the Corporation
following each annual meeting of the stockholders of the Corporation
(hereinafter sometimes referred to as the "Annual Eligible Director
Stock Options" and sometimes, together with the Initial Eligible
Director Stock Options, as the "Eligible Director Stock Options")." The
number of Annual Eligible Director Stock Options to be granted as of
the date of any such meeting of the Board of Directors shall be
proportionately adjusted to reflect any stock splits, stock dividends,
recapitalizations or similar transactions causing an increase or
decrease in the number of issued and outstanding shares of Common Stock
which have occurred since the date of the most recent grant of Annual
Eligible Director Stock Options. Any Eligible Director may waive his or
her right to be granted Eligible Director Stock Options. In the event
that the granting of any Annual Eligible Director Stock Options would
cause the 1,200,000 share limitation contained in Section 2.b. hereof
to be exceeded (after taking into account any waivers by Eligible
Directors to accept some or all of the Annual Eligible Director Stock
Options to which he or she would otherwise be entitled), the total
number of Annual Eligible Director Stock Options then to be granted
shall be reduced to a number which would cause said 1,200,000 share
limitation not to be exceeded and the amount of non-qualified options
to be granted to each Eligible Director who has not waived his or her
right to receive Annual Eligible Director Stock Options shall be
proportionately reduced. The purchase price for the Common Stock
covered by each Eligible Director Stock Option shall be the fair market
value (as defined below) of the Common Stock on the date the Eligible
Director Stock Option is granted, payable at the time and in the manner
provided in Section 5.b. below. Each Eligible Director Stock Option
granted to an Eligible Director shall be exercisable as follows: with
respect to twenty-percent (20%) of the Common Stock covered thereby
during the ten (10) year period commencing one (1) year following the
date of grant; with respect to an additional twenty percent (20%) of
the Common Stock covered thereby during the ten (10) year period
commencing two (2) years following the date of grant; with respect to
an additional twenty percent (20%) of the Common Stock covered thereby
during the ten (10) year period commencing three (3) years following
the date of grant; with respect to an additional twenty percent (20%)
of the Common Stock covered thereby during the ten (10) year period
commencing four (4) years following the date of grant; and with respect
to the remaining twenty percent (20%) of the Common Stock covered
thereby during the ten (10) year period commencing five (5) years
following the date of grant. The foregoing formula can only be amended
to the extent permitted by Rule 16b-3, as amended, under the Exchange
Act.
5. Option Price.
a. The purchase price of the Common Stock covered by each
option awarded to an Employee shall be determined by the Committee;
provided, however, that in the case of incentive stock options, the
purchase price shall not be less than 100% of the fair market value of
the Common Stock on the date the option is granted. Fair market value
shall mean,
(1)if the Common Stock is duly listed on a national
securities exchange or on the National Association of
Securities Dealers Automatic Quotation System/National Market
System ("NASDAQ") ("Duly Listed"), the closing price of the
Common Stock for the date on which the option is granted, or,
if there are no sales on such date, on the next preceding day
on which there were sales, or
(2)if the Common Stock is not Duly Listed, the fair
market value of the Common Stock for the date on which the
option is granted, as determined by the Committee in good
faith. Such price shall be subject to adjustment as provided
in paragraph 13.
The price so determined shall also be applicable in connection with
the exercise of any related right.
b. The purchase price of the shares as to which an option is
exercised shall be paid in full at the time of exercise; payment may be
made in cash, which may be paid by check or other instrument acceptable
to the Corporation, or, if permitted by the Committee, in shares of the
Common Stock, valued at the closing price of the Common Stock as
reported on either a national securities exchange or NASDAQ for the
date of exercise, or if there were no sales on such date, on the next
preceding day on which there were sales (or, if the Common Stock is not
Duly Listed, the fair market value of the Common Stock on the date of
exercise, as determined by the Committee in good faith), or, if
permitted by the Committee and subject to such terms and conditions as
it may determine, by surrender of outstanding awards under the Plan. In
addition, the Participant shall pay any amount necessary to satisfy
applicable federal, state, or local tax requirements promptly upon
notification of the amount due. The Committee may permit such amount to
be paid in shares of Common Stock previously owned by the Participant,
or a portion of the shares of Common Stock that otherwise would be
distributed to such Participant upon exercise of the option, or a
combination of cash and shares of such Common Stock.
6. Term of Options. The term of each incentive stock option granted
under the Plan shall be such period of time as the Committee
shall determine, but not more than ten years from the date of
grant, subject to earlier termination as provided in paragraphs
11. and 12. The term of each non-qualified option granted under
the Plan to Employees shall be such period of time as the
Committee shall determine, subject to earlier termination as
provided in paragraphs 11. and 12.
7. Exercise of Options.
a. Each option shall become exercisable, in whole or in part,
as the Committee shall determine; provided, however, that the Committee
may also, in its discretion, accelerate the exercisability of any
option in whole or in part at any time.
b. Subject to the provisions of the Plan and unless otherwise
provided in the option agreement, an option granted under the Plan
shall become exercisable in full at the earliest of the Participant's
death, Eligible Retirement (as defined below), Total Disability, or a
Change in Control (as defined in paragraph 12). For purposes of this
Plan, the term "Eligible Retirement" shall mean (1) the date upon which
an Employee, having attained an age of not less than sixty-two,
terminates his employment with the Corporation and its Subsidiaries,
provided that such Employee has been employed by the Corporation or any
of its Subsidiaries or any corporation of which the Corporation or any
of its Subsidiaries is the successor for a period of not less than five
(5) years prior to such termination, or (2) the date upon which an
Eligible Director, having attained the age of not less than sixty-two,
terminates his service as a director of the Corporation.
c. An option may be exercised, at any time or from time to
time (subject, in the case of an incentive stock option, to such
restrictions as may be imposed by the Code), as to any or all full
shares as to which the option has become exercisable; provided,
however, that an option may not be exercised at any one time as to less
than 100 shares or less than the number of shares as to which the
option is then exercisable, if that number is less than 100 shares.
d. Subject to the provisions of paragraphs 11. and 12., in the
case of incentive stock options, no option may be exercised at any time
unless the holder thereof is then an Employee.
e. Upon the exercise of an option or portion thereof in
accordance with the Plan, the option agreement and such rules and
regulations as may be established by the Committee, the holder thereof
shall have the rights of a shareholder with respect to the shares
issued as a result of such exercise.
8. Award and Exercise of Rights.
a. A right may be awarded by the Committee in connection with
any option granted under the Plan, either at the time the option is
granted or thereafter at any time prior to the exercise, termination or
expiration of the option ("tandem right"), or separately ("freestanding
right"). Each tandem right shall be subject to the same terms and
conditions as the related option and shall be exercisable only to the
extent the option is exercisable. No right shall be exercisable for
cash by a Littelfuse Officer within six (6) months from the date the
right is awarded (and then, as to a tandem right, only to the extent
the related option is exercisable) or, if the exercise price of the
right is not fixed on the date of the award, within six (6) months from
the date when the exercise price is so fixed, and in any case only when
the Littelfuse Officer's election to receive cash in full or partial
satisfaction of the right, as well as the Littelfuse Officer's exercise
of the right for cash, is made during a Quarterly Window Period (as
defined below); provided, that a right may be exercised by a Littelfuse
Officer for cash outside a Quarterly Window Period if the date of
exercise is automatic or has been fixed in advance under the Plan and
is outside the Littelfuse Officer's control. The term "Quarterly Window
Period" shall mean the period beginning on the third business day
following the date of release of each of the Corporation's quarterly
and annual summary statements of sales and earnings and ending on the
twelfth business day following such release; and the date of any such
release shall be deemed to be the date it either:
(1)appears on a wire service,
(2)appears on a financial news service,
(3)appears in a newspaper of general circulation, or
(4)is otherwise made publicly available, for example,
by press releases to a wire service, financial news service,
or newspapers or general circulation.
b. A right shall entitle the Employee upon exercise in
accordance with its terms (subject, in the case of a tandem right, to
the surrender unexercised of the related option or any portion or
portions thereof which the Employee from time to time determines to
surrender for this purpose) to receive, subject to the provisions of
the Plan and such rules and regulations as from time to time may be
established by the Committee, a payment having an aggregate value equal
to the product of
(1)the excess of
(a)the fair market value on the exercise date of one share
of Common Stock over
(b)the exercise price per share, in the case of a tandem
right, or the price per share specified in the terms of the
right, in the case of a freestanding right, multiplied by
(2)the number of shares with respect to which the right
shall have been exercised.
The payment may be made only in cash, subject to
subparagraph 8.a. hereof.
c. The exercise price per share specified in a right shall be
as determined by the Committee, provided that, in the case of a tandem
right accompanying an incentive stock option, the exercise price shall
be not less than fair market value of the Common Stock subject to such
option on the date of grant.
d. If upon the exercise of a right the Employee is to receive
a portion of the payment in shares of Common Stock, the number of
shares shall be determined by dividing such portion by the fair market
value of a share on the exercise date. The number of shares received
may not exceed the number of shares covered by any option or portion
thereof surrendered. Cash will be paid in lieu of any fractional share.
e. No payment will be required from an Employee upon exercise
of a right, except that any amount necessary to satisfy applicable
federal, state, or local tax requirements shall be withheld or paid
promptly by the Employee upon notification of the amount due and prior
to or concurrently with delivery of cash or a certificate representing
shares. The Committee may permit such amount to be paid in shares of
Common Stock previously owned by the Employee, or a portion of the
shares of Common Stock that otherwise would be distributed to such
Employee upon exercise of the right, or a combination of cash and
shares of such Common Stock.
f. The fair market value of a share shall mean the closing
price of the Common Stock as reported on either a national securities
exchange or NASDAQ for the date of exercise, or if there are no sales
on such date, on the next preceding day on which there were sales;
provided, however, that in the case of rights that relate to an
incentive stock option, the Committee may prescribe, by rules of
general application, such other measure of fair market value as the
Committee may in its discretion determine but not in excess of the
maximum amount that would be permissible under Section 422 of the Code
without disqualifying such option under Section 422.
g. Upon exercise of a tandem right, the number of shares
subject to exercise under the related option shall automatically be
reduced by the number of shares represented by the option or portion
thereof surrendered.
h. A right related to an incentive stock option may only be
exercised if the fair market value of a share of Common Stock on the
exercise date exceeds the option price.
9. Non-Transferability of Options, Rights, and Units; Holding Periods for
Littelfuse Officers and Eligible Directors.
a. Options, rights, and units granted under the Plan shall not
be transferable by the grantee thereof otherwise than by will or the
laws of descent and distribution; provided, however, that
(1)the designation of a beneficiary by a Participant shall
not constitute a transfer, and
(2)options and rights may be exercised during the lifetime
of the Participant only by the Participant or, unless such
exercise would disqualify an option as an incentive stock
option, by the Participant's guardian or legal
representative.
b. Notwithstanding anything contained in the Plan to the
contrary,
(1)any shares of Common Stock awarded hereunder to a
Littelfuse Officer may not be transferred or disposed of for
at least six (6) months from the date of award thereof,
(2)any option, right, or unit awarded hereunder to a
Littelfuse Officer or Eligible Director, or the shares of
Common Stock into which any such option, right or unit is
exercised or converted, may not be transferred or disposed
of for at least six (6) months following the date of
acquisition by the Littelfuse Officer or Eligible Director
of such option, right, or unit, and
(3)the Committee shall take no action whose effect would
cause a Littelfuse Officer or Eligible Director to be in
violation of clause (1) or (2) above.
c. Notwithstanding the foregoing and anything else contained
in the Plan to the contrary, up to 25% of the number of
non-qualified options (said percentage to be calculated
using as the nominator the sum of the amount of outstanding
and unexercised non-qualified options proposed to be
transferred plus the number of non-qualified options
previously transferred by said Participant within the
previous four years and using as the denominator the
aggregate number of non-qualified options granted to said
Participant within the previous four years) may be
transferred (but only on a gift basis) by a Participant to
an immediate family member of the Participant or a trust
which has as beneficiaries at the time of transfer only the
Participant and/or immediate family members of the
Participant. As used herein, the term "immediate family
members" shall mean the spouse of the Participant, children
of the Participant and their spouses, grandchildren of the
Participant and their spouses and great-grandchildren of the
Participant and their spouses (hereinafter referred to as a
"Permitted Transferee"). All transferred non-qualified
options shall remain subject to all of the provisions of the
Plan and any agreement between the Participant and the
Corporation pertaining thereto, including, without
limitation, all vesting, termination and forfeiture
provisions, and the rights and obligations of a transferee
with respect to a non-qualified option transferred thereto
shall be determined pursuant to the provisions of the Plan
and any such agreement as if the Participant remained the
holder thereof. In no event shall any transferee of a
transferred non-qualified option be entitled to transfer
such non-qualified option except pursuant to the laws of
descent and distribution. Any transfer of non-qualified
options made pursuant to this subsection (c) must be made
pursuant to legal documentation provided by the Corporation,
which legal documentation may contain such terms and
conditions as the Corporation, in its discretion, deems
appropriate, and shall be subject to verification by the
Corporation or its legal counsel that the proposed
transferee is a Permitted Transferee. Notwithstanding the
foregoing, the Committee, in its absolute discretion, may
restrict or deny the transfer of non-qualified options with
respect to one or more Participants. The provisions of this
subsection (c) shall be deemed to override and control over
any provisions in any Non-Qualified Stock Option Agreement
between the Corporation and a Participant which is dated
before January 1, 1998, to the extent such provisions would
not allow a transfer of non-qualified options pursuant to
the provisions of this subsection (c).
10. Award and Delivery of Restricted Shares or Restricted Units.
a. At the time an award of restricted shares or restricted
units is made, the Committee shall establish a period of time (the
"Restricted Period") applicable to such award. Each award of restricted
shares or restricted units may have a different Restricted Period. The
Committee may, in its sole discretion, at the time an award is made,
prescribe conditions for the incremental lapse of restrictions during
the Restricted Period and for the lapse or termination of restrictions
upon the satisfaction of other conditions in addition to or other than
the expiration of the Restricted Period with respect to all or any
portion of the restricted shares or restricted units. Subject to
paragraph 9., the Committee may also, in its sole discretion shorten,
or terminate the Restricted Period, or waive any conditions for the
lapse or termination of restrictions with respect to all or any portion
of the restricted shares or restricted units. Notwithstanding the
foregoing but subject to paragraph 9., all restrictions shall lapse or
terminate with respect to all restricted shares or restricted units
upon the earliest to occur of an Employee's Eligible Retirement, a
Change in Control, death, or Total Disability.
b. (1) Unless such shares are issued as uncertificated shares
pursuant to subparagraph 10.b.(2)(a) below, a stock certificate
representing the number of restricted shares granted to an Employee
shall be registered in the Employee's name but shall be held in custody
by the Corporation or an agent therefor for the Employee's account. The
Employee shall generally have the rights and privileges of a
shareholder as to such restricted shares, including the right to vote
such restricted shares, except that, subject to the provisions of
paragraphs 11. and 12., the following restrictions shall apply:
(a)the Employee shall not be entitled to delivery of
the certificate until the expiration or termination of the
Restricted Period and the satisfaction of any other conditions
prescribed by the Committee;
(b)none of the restricted shares may be sold,
transferred, assigned, pledged, or otherwise encumbered or
disposed of during the Restricted Period and until the
satisfaction of any other conditions prescribed by the
Committee; and
(c)all of the restricted shares shall be forfeited
and all rights of the Employee to such restricted shares shall
terminate without further obligation on the part of the
Corporation unless the Employee has remained an Employee until
the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the
Committee applicable to such restricted shares. At the
discretion of the Committee,
(i)cash and stock dividends with respect to
the restricted shares may be either currently paid or
withheld by the Corporation for the Employee's
account, and interest may be paid on the amount of
cash dividends withheld at a rate and subject to such
terms as determined by the Committee, or
(ii)the Committee may require that all cash
dividends be applied to the purchase of additional
shares of Common Stock, and such purchased shares,
together with any stock dividends related to such
restricted shares (such purchased shares and stock
dividends are hereafter referred to as "Additional
Restricted Shares") shall be treated as Additional
Shares, subject to forfeiture on the same terms and
conditions as the original grant of the restricted
shares to the Employee.
(2) The purchase of any such Additional Restricted Shares
shall be made either
(a)through a dividend reinvestment plan that may be
established by the Corporation which satisfies the
requirements of Rule 16b-2 under the Exchange Act, in which
event the price of such shares so purchased through the
reinvestment of dividends shall be as determined in accordance
with the provisions of that plan and no stock certificate
representing such Additional Restricted Shares shall be in the
Employee's name, or
(b)in accordance with such alternative procedure as is
determined by the Committee in which event the price of such
purchased shares shall be
(i)if the Common Stock is Duly Listed, the
closing price of the Common Stock as reported on
either a national securities exchange or NASDAQ for
the date on which such purchase is made, or if there
were no sales on such date, the next preceding day on
which there were sales, or
(ii)if the Common Stock is not Duly Listed,
the fair market value of the Common Stock for the
date on which such purchase is made, as determined by
the Committee in good faith. In the event that the
Committee shall not require reinvestment, cash, or
stock dividends so withheld by the Committee shall
not be subject to forfeiture. Upon the forfeiture of
any restricted shares (including any Additional
Restricted Shares), such forfeited shares shall be
transferred to the Corporation without further action
by the Employee. The Employee shall have the same
rights and privileges, and be subject to the same
restrictions, with respect to any shares received
pursuant to paragraph 13.
c. Upon the expiration or termination of the Restricted Period
and the satisfaction of any other conditions prescribed by the
Committee or at such earlier time as provided for in paragraphs 11. and
12., the restrictions applicable to the restricted shares (including
Additional Restricted Shares) shall lapse and a stock certificate for
the number of restricted shares (including any Additional Restricted
Shares) with respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions, except any that may be
imposed by law, to the Employee or the Employee's beneficiary or
estate, as the case may be. The Corporation shall not be required to
deliver any fractional share of Common Stock but will pay, in lieu
thereof, the fair market value (determined as of the date the
restrictions lapse) of such fractional share to the Employee or the
Employee's beneficiary or estate, as the case may be. No payment will
be required from the Employee upon the issuance or delivery of any
restricted shares, except that any amount necessary to satisfy
applicable federal, state, or local tax requirements shall be withheld
or paid promptly upon notification of the amount due and prior to or
concurrently with the issuance or delivery of a certificate
representing such shares. The Committee may permit such amount to be
paid in shares of Common Stock previously owned by the Employee, or a
portion of the shares of Common Stock that otherwise would be
distributed to such Employee upon the lapse of the restrictions
applicable to the restricted shares, or a combination of cash and
shares of such Common Stock.
d. In the case of an award of restricted units, no shares of
Common Stock shall be issued at the time the award is made, and the
Corporation shall not be required to set aside a fund for the payment
of any such award.
e. (1) Upon the expiration or termination of the Restricted
Period and the satisfaction of any other conditions prescribed by the
Committee or at such earlier time as provided in paragraphs 11. and
12., the Corporation shall deliver to the Employee or the Employee's
beneficiary or estate, as the case may be, one share of Common Stock
for each restricted unit with respect to which the restrictions have
lapsed ("vested unit").
(2) In addition, if the Committee has not required
the deemed reinvestment of such Dividend Equivalents pursuant to
paragraph 4., at such time the Corporation shall deliver to the
Employee cash equal to any Dividend Equivalents or stock dividends
credited with respect to each such vested unit and, to the extent
determined by the Committee, the interest thereupon. However, if the
Committee has required such deemed reinvestment in connection with such
restricted unit, in addition to the stock represented by such vested
unit, the Corporation shall deliver the number of Additional Deemed
Shares credited to the Employee with respect to such vested unit.
(3) Notwithstanding the foregoing, the Committee may,
in its sole discretion, elect to pay cash or part cash and part Common
Stock in lieu of delivering only Common Stock for the vested units and
related Additional Deemed Shares. If a cash payment is made in lieu of
delivering Common Stock, the amount of such cash payment shall be equal
to
(a)if the Common Stock is Duly Listed, the closing
price of the Common Stock as reported on either a national
securities exchange or NASDAQ for the date on which the
Restricted Period lapsed with respect to such vested unit and
related Additional Deemed Shares (the "Lapse Date") or, if
there are no sales on such date, on the next preceding day on
which there were sales, or
(b)if the Common Stock is not Duly Listed, the fair
market value of the Common Stock for the Lapse Date, as
determined by the Committee in good faith.
f. No payment will be required from the Employee upon the
award of any restricted units, the crediting or payment of any Dividend
Equivalents or Additional Deemed Shares, or the delivery of Common
Stock or the payment of cash in respect of vested units, except that
any amount necessary to satisfy applicable federal, state, or local tax
requirements shall be withheld or paid promptly upon notification of
the amount due. The Committee may permit such amount to be paid in
shares of Common Stock previously owned by the Employee, or a portion
of the shares of Common Stock that otherwise would be distributed to
such Employee in respect of vested units and Additional Deemed Shares,
or a combination of cash and shares of such Common Stock.
g. In addition, the Committee shall have the right, in its
absolute discretion, upon the vesting of any restricted shares
(including Additional Restricted Shares) and restricted units
(including Additional Deemed Shares) to award cash compensation to the
Employee for the purpose of aiding the Employee in the payment of any
and all federal, state, and local income taxes payable as a result of
such vesting, if the performance of the Corporation during the
Restricted Period meets such criteria as then or theretofore determined
by the Committee.
11. Termination of Employment or Service. In the event that the
employment of an Employee or the service as a director of an Eligible Director
to whom an option or right has been granted under the Plan shall be terminated
for any reason other than as set forth in paragraph 12., such option or right
may, subject to the provisions of the Plan, be exercised (but only to the extent
that the Employee or an Eligible Director was entitled to do so at the
termination of his employment or service as a director, as the case may be) at
any time within three (3) months after such termination, but in no case later
than the date on which the option or right terminates.
Unless otherwise determined by the Committee, if an Employee to whom
restricted shares or restricted units have been granted ceases to be an
Employee, for any reason other than as set forth in paragraph 12., prior to the
end of the Restricted Period and the satisfaction of any other conditions
prescribed by the Committee, the Employee shall immediately forfeit all
restricted shares and restricted units, including all Additional Restricted
Shares or Additional Deemed Shares related thereto.
Any option, right, restricted share or restricted unit agreement, or
any rules and regulations relating to the Plan, may contain such provisions as
the Committee shall approve with reference to the determination of the date
employment terminates and the effect of leaves of absence. Any such rules and
regulations with reference to any option agreement shall be consistent with the
provisions of the Code and any applicable rules and regulations thereunder.
Nothing in the Plan or in any award granted pursuant to the Plan shall confer
upon any Participant any right to continue in the employ or service of the
Corporation or any of its Subsidiaries or interfere in any way with the right of
the Corporation or its Subsidiaries to terminate such employment or service at
any time.
12. Eligible Retirement, Death, or Total Disability of Employee or
Eligible Director, Change in Control. If any Employee or Eligible Director to
whom an option, right, restricted share, or restricted unit has been granted
under the Plan shall die or suffer a Total Disability while employed by the
Corporation or in the service of the Corporation as a director, if any Employee
terminates his employment or any Eligible Director terminates his service as a
director pursuant to an Eligible Retirement, or if a Change in Control should
occur, such option or right may be exercised as set forth herein, or such
restricted shares or restricted unit shall be deemed to be vested, whether or
not the Participant was otherwise entitled at such time to exercise such option
or right, or be treated as vested in such share or unit. Subject to the
restrictions otherwise set forth in the Plan, such option or right shall be
exercisable by the Participant, a legatee or legatees of the Participant under
the Participant's last will, or by the Participant's personal representatives or
distributees, whichever is applicable, at the earlier of
a. the date on which the option or right terminates in
accordance with the term of grant, or
b. any time prior to the expiration of three (3) months
after the date of such Participant's Eligible
Retirement, his termination due to total disability, or
the occurrence of a Change in Control, or, if
applicable, within one year of such Participant's
death.
For purposes of this paragraph 12., "Total Disability" is defined as the
permanent inability of a Participant, as a result of accident or sickness, to
perform any and every duty pertaining to such Participant's occupation or
employment for which the Participant is suited by reason of the Participant's
previous training, education, and experience.
A "Change in Control" shall be deemed to have occurred upon
a. a business combination, including a merger or
consolidation, of the Corporation and the shareholders of the
Corporation prior to the combination do not continue to own, directly
or indirectly, more than fifty-one percent (51%) of the equity of the
combined entity;
b. a sale, transfer, or other disposition in one or more
transactions (other than in transactions in the ordinary course of
business or in the nature of a financing) of the assets or earning
power aggregating more than forty-five percent (45%) of the assets or
operating revenues of the Corporation to any person or affiliated or
associated group of persons (as defined by Rule 12b-2 of the Exchange
Act in effect as of the date hereof);
c. the liquidation of the Corporation;
d. one or more transactions which result in the acquisition by
any person or associated group of persons (other than the Corporation,
any employee benefit plan whose beneficiaries are Employees of the
Corporation or any of its Subsidiaries, or TCW Special Credits or any
of its affiliates) of the beneficial ownership (as defined in Rule
13d-3 of the Exchange Act, in effect as of the date hereof) of forty
percent (40%) or more of the Common Stock of the Corporation,
securities representing forty percent (40%) or more of the combined
voting power of the voting securities of the Corporation which
affiliated persons owned less than forty percent (40%) prior to such
transaction or transactions; or
e. the election or appointment, within a twelve (12) month
period, of any person or affiliated or associated group, or its or
their nominees, to the Board of Directors of the Corporation, such that
such persons or nominees, when elected or appointed, constitute a
majority of the Board of Directors of the Corporation and whose
appointment or election was not approved by a majority of those persons
who were directors at the beginning of such period or whose election or
appointment was made at the request of an Acquiring Person.
An "Acquiring Person" is any person who, or which, together with all
affiliates or associates of such person, is the beneficial owner of twenty
percent (20%) or more of the Common Stock of the Corporation then outstanding,
except that an Acquiring Person does not include the Corporation or any employee
benefit plan of the Corporation or any of its Subsidiaries or any person holding
Common Stock of the Corporation for or pursuant to such plan. For the purpose of
determining who is an Acquiring Person, the percentage of the outstanding shares
of the Common Stock of which a person is a beneficial owner shall be calculated
in accordance with Rule 13d-e of the Exchange Act.
13. Adjustments Upon Changes in Capitalization, etc. Notwithstanding
any other provision of the Plan, the Committee may at any time make or provide
for such adjustments to the Plan, to the number and class of shares available
thereunder or to any outstanding options, restricted shares, or restricted units
as it shall deem appropriate to prevent dilution or enlargement of rights,
including adjustments in the event of distributions to holders of Common Stock
other than a normal cash dividend, changes in the outstanding Common Stock by
reason of stock dividends, split-ups, recapitalizations, mergers,
consolidations, combinations, or exchanges of shares, separations,
reorganizations, liquidations, and the like. In the event of any offer to
holders of Common Stock generally relating to the acquisition of their shares,
the Committee may make such adjustment as it deems equitable in respect of
outstanding options, rights, and restricted units including in the Committee's
discretion revision of outstanding options, rights, and restricted units so that
they may be exercisable for or payable in the consideration payable in the
acquisition transaction. Any such determination by the Committee shall be
conclusive. No adjustment shall be made in the minimum number of shares with
respect to which an option may be exercised at any time. Any fractional shares
resulting from such adjustments to options, rights, limited rights, or
restricted units shall be eliminated.
14. Effective Date. The Plan as theretofore amended shall become
effective as of February 12, 1993, provided that the Plan shall be approved by
the Corporation's stockholders on or before February 11, 1994. The Committee
may, in its discretion, grant awards under the Plan, the grant, exercise, or
payment of which shall be expressly subject to the conditions that, to the
extent required at the time of grant, exercise, or payment,
a. the shares of Common Stock covered by such awards shall be
Duly Listed, upon official notice of issuance, and
b. if the Corporation deems it necessary or desirable, a
Registration Statement under the Securities Act of 1933 with
respect to such shares shall be effective.
15. Termination and Amendment. The Board of Directors of the
Corporation may suspend, terminate, modify, or amend the Plan, provided that if
any such amendment requires shareholder approval to meet the requirement of the
then applicable rules under Section 16(b) of the Exchange Act, such amendment
shall be subject to the approval of the Corporation's stockholders. If the Plan
is terminated, the terms of the Plan shall, notwithstanding such termination,
continue to apply to awards granted prior to such termination. In addition, no
suspension, termination, modification, or amendment of the Plan may, without the
consent of the Employee or Eligible Director to whom an award shall theretofore
have been granted, adversely affect the rights of such Employee or Eligible
Director under such award.
16. Written Agreements. Each award of options, rights, restricted
shares, or restricted units shall be evidenced by a written agreement, executed
by the Participant and the Corporation, which shall contain such restrictions,
terms and conditions as the Committee may require.
17. Effect on Other Stock Plans. The adoption of the Plan shall have
no effect on awards made, or to be made, pursuant to other stock plans covering
Employees or Eligible Directors of the Corporation or any successors thereto.