Littelfuse, Inc.

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Littelfuse, Inc.

800 East Northwest Highway
Des Plaines, Illinois 60016
U.S.A.
(847) 824-1188
Fax: (847) 391-0894
Web site: http://www.littelfuse.com

Public Company
Incorporated: 1938
Employees: 2,845
Sales: $275.2 million (1997)
Stock Exchanges: NASDAQ
Ticker Symbol: LFUS
SICs: 3613 Switchgear & Switchboard Apparatus; 3625
Relays & Industrial Controls; 3679 Electronic
Components, Not Elsewhere Classified

Littelfuse, Inc., aptly named, is a company that designs, manufacturers, and sells a wide range of electronic, automotive, and industrial products throughout the world. Headquartered in Des Plaines, Illinois, a suburb near Chicago, Littelfuse has manufacturing facilities throughout the United States, and in China, England, Korea, Mexico, the Philippines, and Switzerland, as well as sales and distribution centers in the United States, Brazil, Hong Kong, Japan, the Netherlands, and Singapore. While so many of its fuses and circuit protection devices are “smaller than a speck of pepper,” as the company has stated, Littelfuse’s ubiquitous products—found in telecommunications, computers, appliances, medical equipment, automobiles, and a myriad of other industrial and electronic products—have kept lives running smoothly for years, though few are aware of Littelfuse’s products and even less recognize the company by name.

Starting Off Small, 1920s to 1959

Edward V. Sundt, the founder of Littelfuse, was a man of many trades. The youngest child of a Baptist minister, Sundt was raised in western Manitoba where he later worked as a lumberman, farmer, and a member of the famed Royal Canadian Mounted Police. Sundt attended Brandon College in Manitoba, where he studied engineering. After graduation he moved to Chicago in 1923 and found work at General Electric and later Stewart-Warner. In his work with lamps and vacuum tubes, Sundt found meters repeatedly burned out during tests. Tinkering after hours with a variety of test meters, Sundt developed and eventually patented a small “fast-acting” protective fuse for use in test meters in 1926. At the time, the world was awash in new discoveries and daring adventures. While Sundt had toiled on his fuses, Kodak had produced the first 16mm movie film and Robert Goddard had fired the first liquid-fueled rocket. The next year, as Ford rolled out its 15-millionth Model “T,” Sundt founded his own company. With $150 from selling his Chevrolet, Littelfuse Laboratories set up shop in a second floor room on Wilson Avenue, in Chicago.

Though Sundt’s discovery did not seem spectacular or send Shockwaves around the world, its importance was monumental in the newly evolving electronic marketplace. Though no fuses had been sold, by April 1928 Sundt and an equally dedicated coworker, Ben Kollath, had developed 10 different fuses of varied amperes as well as a couple mountings for protecting the most common meters used in electronics. After placing an ad in Radio News, the fledgling company finally received its first order worth $1.10. Littelfuse’s innovative fuses were the first of their kind and soon very much in demand.

By the beginning of the next decade, America’s obsession with the automobile led to the introduction of similar fuses for horseless carriages, just as the new phenomenon of “technocracy” became less myth and more reality in a country that boasted nearly 35 percent of the world’s industrial production. Sundt and Kollath had continued to experiment and modify fuses for wider applications throughout the 1930s. In 1938 the company was incorporated, and the “Laboratories” dropped from the name. Littelfuse, Inc. had a new name and a new partner, as Thomas Blake, who had been keeping the company’s books, joined Sundt and Kollath.

When global peace began to crumble and nations went to war, Littelfuse turned from manufacturing strictly small instrument related fuses, with a traditionally limited use and marketplace, to producing circuit protection fuses for the communications and aviation industries. This technology, desperately needed and immediately put to use for wartime production, put Littelfuse on the map—though only temporarily. With the dawn of the 1950s, World War II faded from memory and orders suddenly stopped. Luckily Americans had turned to another newfangled invention, the television. Seemingly on the cusp of another new direction, Littelfuse began producing television fuses for the country’s 1.5 million TV sets. The company had also expanded further into the automotive market with a series of new switches, relays, and electromechanical devices. Year-end sales for 1950 hit $1.96 million and Littelfuse’s move into television fuses was an excellent choice. By 1951 there were more than 15 million TV sets in American homes and just three years later, over 29 million. The company’s further diversification into the automotive industry proved just as propitious, since Americans owned 60 percent of all cars in the world by the mid-1950s, despite only having one-sixth of the world’s population.

New Horizons, 1960-80

Littelfuse’s continued growth and need for expansion funds propelled it to the next business level—becoming a publicly traded company—in the early 1960s. Its IPO came in 1962 with 10 million shares at $7 per share, and the next year the company moved to a new state-of-the-art facility in Des Plaines, Illinois. The year also brought the first of what would be a string of awards for the company: Factory Magazine’s “Top Ten Plants” award. In addition, Littelfuse made big news with the introduction of its new MICRO and PICO fuses, advanced subminiature fuse lines recognized by the Martin company as suitable for the world’s newest obsession after automobiles and television: space exploration. Again at the forefront of a new industry, Littelfuse jumped headlong into micro-circuitry, and its latest innovations more than passed muster with NASA as both MICRO and PICO fuses were incorporated into the ambitious Gemini Space Program.

A year later, in 1964, came further recognition for the company’s subminiature fuse lines, when Littelfuse was awarded a Gemini II launch vehicle flag as one of only 31 companies in the United States who supplied parts crucial to the launch of the Gemini Space Program. Littelfuse was considered not only a “critical parts supplier” for its MICRO fuse, but the fuse was deemed as a life-saving component of Gemini’s Man-in-Space exploration initiative.

In 1965 most North Americans became aware of relay switches and related products with the failure of one such relay switch in Ontario which threw 30 million people into an electrical blackout (New York City’s blackout occurred 12 years later). Thoroughly unaffected by the melee, Littelfuse was in the midst of further much-needed expansion, opening its second Illinois manufacturing plant, this one in Centralia, in southern Illinois. The end of the year not only brought stunning sales, at $7.43 million, but the retirement of founder Edward Sundt. Thomas Blake, who had been president since 1954, took over as chairman of the board. By 1965 sales had leapt to $11 million and in 1968, due to its ever-increasing market exposure and success, the company was acquired by the Texas-based Tracor, Inc., an international technological defense and instrument manufacturer. The acquisition also marked the beginning of the company’s European expansion through a new plant in Wear, England, and an additional facility in Tyne, Washington.

With the early 1970s came the second of Littelfuse’s major awards, General Electric’s coveted “Outstanding Supplier” award, due mostly to the company’s manufacturing of shock-proof and waterproof refrigerator door switches. The same year the company opened its third Illinois manufacturing facility, in Watseka, west of Kankakee and near the Indiana border, then moved southwest in 1973, opening a new manufacturing facility in Piedras Negras, Mexico. In 1974 came a major new product introduction with a line of indicator lights called Littelites, for use in industrial machinery, office and business machines, appliances, instrumentation equipment, and a somewhat obscure piece of equipment, the computer. Though the first “electronic brain” or automatic computer was developed in the United States back in 1942, few envisioned the role computers would later play in the lives of virtually everyone on the planet. For its part, Littelfuse was once more at the precipice of a revolution, developing fuses that helped bring computers further into the mainstream for business.

In 1976 Littelfuse debuted an unusual blade-type fast-acting fuse, another first for the market, called the Autofuse, used in automotive manufacturing. Developed for miniature fuse blocks found in all automotive vehicles, the Autofuses were a huge hit with General Motors, and soon became standard for auto manufacturers throughout the United States, Europe, and Japan.

Company Perspectives:

Littelfuse’s mission is to be the world’s leading circuit protection company: to anticipate and respond to the customers’ needs with continuous innovation and improvement in productivity, quality, and service; to provide for the development of associates and teams to achieve superior performance; to always act responsibly, with fairness and integrity, and expect the same in all our business activities; and to create superior value for our customers and shareholders.

Acquisition and Its Aftermath, 1980-89

The early 1980s brought both global and domestic expansion for Littelfuse, with the 1981 acquisition of a fuse and related products manufacturer in the Netherlands, Olvis Smeltzeringenfabriek B.V. (later renamed Littelfuse Tracor, B.V.) and the 1982 purchase of seven acres of land adjacent its Des Plaines headquarters. An existing 48,000-square-foot building on the property was renovated for additional warehouse and packaging space. The next year, 1983, found Littelfuse in court fighting a wave of counterfeit products bearing the company’s name. Filing suit against several outfits manufacturing, importing, and selling bogus Autofuses, Littelfuse sought and was granted an Exclusion Order to prohibit importation of the patented fuses—one of only 28 such grants issued since 1974—and a boon for the company and its products. This year also marked the building of another new manufacturing plant with all the latest technological breakthroughs and most recent state-of-the-art advances in automation, robotics, microprocessor-based testing and controls, CAD/CAM systems, and more. Additionally, Littelfuse spent millions on a new testing laboratory to maintain the highest possible standards.

At the end of the decade, Howard B. Witt joined Littelfuse; in the long term he was to have a profound impact on the company. The 1980s brought a host of technological advances, with IBM’s debut of the first personal computer, or PC, in 1981 and the Apple Macintosh and its silly “mouse” launched in 1984. After returning to the drawing board for several new applications and design breakthroughs of its own, Littelfuse debuted the FLNR and FLSR Slo-Blo power fuse product lines in 1985. The highly automated fuse lines offered what the company deemed “excellent time delay,” as well as “dual element and current-limiting characteristics” for a wide range of electrical products. The company was also honored by another award, the “Ql,” bestowed by Ford Motor Company to Littelfuse’s Watseka plant in Illinois for high quality. The following year, 1986, Ford again presented the company with a Ql for the Des Plaines headquarters plant, while General Motors awarded the company’s Mexico plant with its coveted “Certified Supplier Award” for the enduringly popular appliance switch. Also in 1986, came the opening of another Illinois plant, in Arcóla, as well as several new product introductions including the Minifuse, which replaced the popular Autofuses and took up far less space; the Maxifuses which replaced traditional fusible wire and links; and the superminiature Flat-Pak fuse lines for computers, televisions and VCRs.

In the midst of the leveraged buyout craze of the late 1980s, Littelfuse’s parent company Tracor was bought by Dallas-based defense contractor Westmark Systems, Inc., in 1987. Yet a short time later it became clear that Westmark’s highly leveraged purchase of Tracor and Littelfuse, combined with a downturn in the defense industry, put all of the companies in jeopardy. Top officers of both Westmark and Tracor, along with their senior creditors, began discussions of voluntary bankruptcy. Littelfuse, meanwhile, continued to gain recognition and turn out increasingly sophisticated fuses, including the world’s smallest glass tube fuse in 1988, a full one-third of the size of previous glass tubes. Littelfuse England also became the first division of the company to receive an ISO 9002 rating, followed quickly by Littelfuse Switzerland, and the opening of a new sales office in Singapore.

A Brighter Future, the 1990s and Beyond

Despite the financial wrangling in the early 1990s, Littelfuse maintained operations and ushered in not only a new president and CEO, Howard B. Witt, but another first in the power fuse industry with the debut of the LDC series class “L” fuse, the only such fuse to meet UL criteria for certain AC and DC applications. The next year, 1991, Tracor and Westmark Systems Inc. were awash in financial difficulties and filed for reorganization under Chapter 11. After the companies were awarded bankruptcy protection, Littelfuse evolved from reorganization and became an independent company. Though the move was a costly one, and its stock price went as low as $7 per share, Littelfuse soon picked up speed in sales and shareholder value. By 1992 net sales were $149.8 million with net income of $700,000, while shareholder value leapt to $19.25 per share. In 1993 Witt was appointed chairman of the board, in addition to his duties as president and CEO. Net sales for the year had climbed to $160.7 million, up nearly $11 million from 1992, while net income soared to $10 million. Both sales and income were pushed by a 15 percent sales increase in North America, a 30 percent sales hike in Europe, and a phenomenal 49 percent jump in Asian sales.

Littelfuse’s sales in the mid-1990s continued to climb: 1994 brought in $194.5 million with net income $15.2 million, while 1995’s net sales rose just under 13 percent to $219.5 million with a 25 percent income increase to $19.3 million. Littelfuse had also moved forward with a stock buy-back plan, repurchasing 3.5 million shares by the end of 1995. For both 1994 and 1995 shareholder value continued to fare well.

In 1996 Littelfuse celebrated its fifth year of independence and 70th year in business with a jump in net income of 13 percent to $21.7 million on net sales of $241.4 million, up from the previous year’s $219.5 million. The 10 percent rise in net sales was predominantly generated by a robust automotive market and an ongoing improvement in the global electronics marketplace. Littelfuse’s net income per share also climbed, to a very healthy 17 percent increase, while the company had repurchased 671,000 warrants and 285,000 shares of common stock for $26.8 million to reduce outstanding shares to 12 million.

Internationally, Littelfuse’s performance was stellar—with a 29 percent sales growth spurt in the Asia-Pacific region, nine percent in Europe, and six percent in North America, while having tripled international sales since 1991. For the first time, the company found overseas electronic sales represented more than half its total sales in 1996. In response to the trend, the company had opened a new sales office in Hong Kong, as well as a technical center in Japan, and planned a manufacturing facility and warehouse in Suzhou, China, near Shanghai. The new plant not only allowed Littelfuse access to local markets in China, but it was hoped that the company’s continued success in Japan and China would stimulate weaker sales in neighboring Korea. Other international expansion included enlarging its Great Britain facility, and opening a distribution and engineering center in Sao Paulo, Brazil, as a foundation for South American operations.

New products, such as the newly designed PTCs, or positive temperature coefficient devices, were in part why Littelfuse continued to be at the forefront of the electronics industry. The PTCs, made from a conductive polymer, were originally conceived by the Raychem Corporation, and subsequently developed by Littelfuse to reset themselves after current overflows and eliminate costly downtime. Though surface-mounted and primarily for use in computers and telecommunications equipment, PTCs had applications beyond these categories, including automotive use. With an estimated worldwide marketplace of over $200 million, an alliance between Raychem and Littelfuse provided each with an advantage in the youthful market.

A myriad of products, from barrier fuses (to protect petrochemical electronic networks) in Europe to the automotive industry’s innovative fusible links, or from the development of the Powr-Gard product line to the emergence of PTCs, had kept Littelfuse on the cutting edge of electronics. With the production of more advanced cars and trucks in the late 1990s, especially electric cars, came a greater demand for electrical fuses—a cornerstone of Littelfuse’s past and future. With nine out of 10 automobiles using Littelfuse’s protective circuits, Littelfuse succeeded as an OEM (original equipment manufacturer) as well as a supplier for the MRO (maintenance and repair) market.

With very strong results for 1997, including a stock split in the second quarter and shares reaching an all-time high of $35.50 in the fourth quarter, Littelfuse headed into 1998 and beyond with elevated hopes for its continued growth and success. Though some market and currency fluctuation could be expected, Littelfuse had enjoyed a compounded annual sales rate of 13 percent for the previous five years, and management expected to remain in this range for 1998 and 1999. Investments and acquisitions, like Samjoo, Korea’s largest manufacturer of electronic fuses, and an expansion of the company’s research and manufacturing facility in Grenchen, Switzerland, promised to keep Littelfuse on the cutting edge—a comfortable niche the company had occupied for over seven decades.