United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 25, 2021July 02, 2022
OR
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___ to ___
Commission file number 0-20388
LITTELFUSE, INC.
(Exact name of registrant as specified in its charter)
| | | | | | | | |
Delaware | | 36-3795742 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
8755 West Higgins Road | | |
Suite 500 | | |
Chicago | Illinois | 60631 |
(Address of principal executive offices) | | (ZIP Code) |
Registrant’s telephone number, including area code: 773-628-1000
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | | | | |
Title of Each Class | | Trading Symbol | | Name of exchange on which registered |
Common Stock, $0.01 par value | | LFUS | | NASDAQ | Global Select Market |
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 submitted electronically, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one): Large accelerated filer [X] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes [ ] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No [X]
As of October 22, 2021,July 29, 2022, the registrant had outstanding 24,632,02724,754,910 shares of Common Stock, net of Treasury Shares.
TABLE OF CONTENTS
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PART I | | |
Item 1. | | |
| Condensed Consolidated Balance Sheets as of September 25, 2021July 02, 2022 (unaudited) and December 26, 2020January 01, 2022 | |
| Condensed Consolidated Statements of Net Income for the three and ninesix months ended September 25, 2021July 02, 2022 (unaudited) and SeptemberJune 26, 20202021 (unaudited) | |
| Condensed Consolidated Statements of Comprehensive Income for the three and ninesix months ended September 25, 2021July 02, 2022 (unaudited) and SeptemberJune 26, 20202021 (unaudited) | |
| Condensed Consolidated Statements of Cash Flows for the ninesix months ended September 25, 2021July 02, 2022 (unaudited) and SeptemberJune 26, 20202021 (unaudited) | |
| Condensed Consolidated Statements of Stockholders' Equity for the ninesix months ended September 25, 2021July 02, 2022 (unaudited) and SeptemberJune 26, 20202021 (unaudited) | |
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Item 2. | | |
Item 3. | | |
Item 4. | | |
PART II | | |
Item 1. | | |
Item 1A. | | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
Item 5. | | |
Item 6. | | |
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ITEM 1. FINANCIAL STATEMENTS
LITTELFUSE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | (Unaudited) | | | (Unaudited) | |
(in thousands) | (in thousands) | | September 25, 2021 | | December 26, 2020 | (in thousands) | | July 2, 2022 | | January 1, 2022 |
ASSETS | ASSETS | | | | | ASSETS | | | | |
Current assets: | Current assets: | | | | | Current assets: | | | | |
Cash and cash equivalents | Cash and cash equivalents | | $ | 690,682 | | | $ | 687,525 | | Cash and cash equivalents | | $ | 809,122 | | | $ | 478,473 | |
Short-term investments | Short-term investments | | 28 | | | 54 | | Short-term investments | | 20 | | | 28 | |
Trade receivables, less allowances of $53,006 and $45,237 at September 25, 2021 and December 26, 2020, respectively | | 325,739 | | | 232,760 | | |
Trade receivables, less allowances of $68,933 and $59,232 at July 2, 2022 and January 1, 2022, respectively | | Trade receivables, less allowances of $68,933 and $59,232 at July 2, 2022 and January 1, 2022, respectively | | 343,321 | | | 275,192 | |
Inventories | Inventories | | 357,024 | | | 258,002 | | Inventories | | 496,207 | | | 445,671 | |
Prepaid income taxes and income taxes receivable | Prepaid income taxes and income taxes receivable | | 2,695 | | | 3,029 | | Prepaid income taxes and income taxes receivable | | 4,861 | | | 2,035 | |
Prepaid expenses and other current assets | Prepaid expenses and other current assets | | 59,768 | | | 35,939 | | Prepaid expenses and other current assets | | 65,294 | | | 68,812 | |
Total current assets | Total current assets | | 1,435,936 | | | 1,217,309 | | Total current assets | | 1,718,825 | | | 1,270,211 | |
| | Net property, plant, and equipment | Net property, plant, and equipment | | 364,329 | | | 344,178 | | Net property, plant, and equipment | | 435,683 | | | 437,889 | |
Intangible assets, net of amortization | Intangible assets, net of amortization | | 295,766 | | | 291,887 | | Intangible assets, net of amortization | | 374,593 | | | 407,126 | |
Goodwill | Goodwill | | 847,205 | | | 816,812 | | Goodwill | | 914,358 | | | 929,790 | |
Investments | Investments | | 39,885 | | | 30,547 | | Investments | | 25,626 | | | 39,211 | |
Deferred income taxes | Deferred income taxes | | 9,575 | | | 11,224 | | Deferred income taxes | | 12,476 | | | 13,127 | |
Right of use lease assets, net | Right of use lease assets, net | | 24,375 | | | 17,615 | | Right of use lease assets, net | | 39,724 | | | 29,616 | |
Other assets | | 21,447 | | | 18,021 | | |
Other long-term assets | | Other long-term assets | | 23,184 | | | 24,734 | |
Total assets | Total assets | | $ | 3,038,518 | | | $ | 2,747,593 | | Total assets | | $ | 3,544,469 | | | $ | 3,151,704 | |
LIABILITIES AND EQUITY | LIABILITIES AND EQUITY | | | | | LIABILITIES AND EQUITY | | | | |
Current liabilities: | Current liabilities: | | | | | Current liabilities: | | | | |
Accounts payable | Accounts payable | | $ | 221,889 | | | $ | 145,984 | | Accounts payable | | $ | 219,764 | | | $ | 222,039 | |
| Accrued liabilities | Accrued liabilities | | 139,670 | | | 110,478 | | Accrued liabilities | | 137,377 | | | 159,689 | |
Accrued income taxes | Accrued income taxes | | 32,462 | | | 19,186 | | Accrued income taxes | | 34,128 | | | 27,905 | |
Current portion of long-term debt | Current portion of long-term debt | | 27,619 | | | — | | Current portion of long-term debt | | 7,500 | | | 25,000 | |
Total current liabilities | Total current liabilities | | 421,640 | | | 275,648 | | Total current liabilities | | 398,769 | | | 434,633 | |
Long-term debt, less current portion | Long-term debt, less current portion | | 620,112 | | | 687,034 | | Long-term debt, less current portion | | 884,569 | | | 611,897 | |
Deferred income taxes | Deferred income taxes | | 50,365 | | | 50,134 | | Deferred income taxes | | 74,286 | | | 81,289 | |
Accrued post-retirement benefits | Accrued post-retirement benefits | | 42,026 | | | 45,802 | | Accrued post-retirement benefits | | 35,090 | | | 37,037 | |
Non-current operating lease liabilities | Non-current operating lease liabilities | | 17,440 | | | 12,950 | | Non-current operating lease liabilities | | 32,334 | | | 22,305 | |
Other long-term liabilities | Other long-term liabilities | | 65,537 | | | 67,252 | | Other long-term liabilities | | 67,478 | | | 71,023 | |
Shareholders’ equity: | Shareholders’ equity: | | Shareholders’ equity: | |
Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, September 25, 2021–26,292,015; December 26, 2020–26,131,544 | | 260 | | | 259 | | |
Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, July 2, 2022–26,440,042; January 1, 2022–26,350,763 | | Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, July 2, 2022–26,440,042; January 1, 2022–26,350,763 | | 261 | | | 260 | |
Additional paid-in capital | Additional paid-in capital | | 935,351 | | | 907,858 | | Additional paid-in capital | | 964,937 | | | 946,588 | |
Treasury stock, at cost: 1,664,571 and 1,644,283 shares, respectively | | (248,078) | | | (242,366) | | |
Treasury stock, at cost: 1,685,172 and 1,664,711 shares, respectively | | Treasury stock, at cost: 1,685,172 and 1,664,711 shares, respectively | | (252,828) | | | (248,120) | |
Accumulated other comprehensive loss | Accumulated other comprehensive loss | | (95,528) | | | (91,157) | | Accumulated other comprehensive loss | | (107,015) | | | (73,463) | |
Retained earnings | Retained earnings | | 1,229,262 | | | 1,034,048 | | Retained earnings | | 1,446,457 | | | 1,268,124 | |
Littelfuse, Inc. shareholders’ equity | Littelfuse, Inc. shareholders’ equity | | 1,821,267 | | | 1,608,642 | | Littelfuse, Inc. shareholders’ equity | | 2,051,812 | | | 1,893,389 | |
Non-controlling interest | Non-controlling interest | | 131 | | | 131 | | Non-controlling interest | | 131 | | | 131 | |
Total equity | Total equity | | 1,821,398 | | | 1,608,773 | | Total equity | | 2,051,943 | | | 1,893,520 | |
Total liabilities and equity | Total liabilities and equity | | $ | 3,038,518 | | | $ | 2,747,593 | | Total liabilities and equity | | $ | 3,544,469 | | | $ | 3,151,704 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)
| | | | Three Months Ended | | Nine Months Ended | | | Three Months Ended | | Six Months Ended |
(in thousands, except per share data) | (in thousands, except per share data) | | September 25, 2021 | | September 26, 2020 | | September 25, 2021 | | September 26, 2020 | (in thousands, except per share data) | | July 2, 2022 | | June 26, 2021 | | July 2, 2022 | | June 26, 2021 |
Net sales | Net sales | | $ | 539,581 | | | $ | 391,566 | | | $ | 1,526,863 | | | $ | 1,044,999 | | Net sales | | $ | 618,436 | | | $ | 523,488 | | | $ | 1,241,766 | | | $ | 987,282 | |
Cost of sales | Cost of sales | | 325,009 | | | 252,735 | | | 954,429 | | | 681,910 | | Cost of sales | | 355,465 | | | 326,092 | | | 720,199 | | | 629,420 | |
Gross profit | Gross profit | | 214,572 | | | 138,831 | | | 572,434 | | | 363,089 | | Gross profit | | 262,971 | | | 197,396 | | | 521,567 | | | 357,862 | |
| Selling, general, and administrative expenses | Selling, general, and administrative expenses | | 67,468 | | | 49,929 | | | 199,071 | | | 154,328 | | Selling, general, and administrative expenses | | 93,093 | | | 73,315 | | | 168,601 | | | 131,603 | |
| Research and development expenses | Research and development expenses | | 15,779 | | | 12,963 | | | 46,912 | | | 40,587 | | Research and development expenses | | 23,488 | | | 16,394 | | | 43,044 | | | 31,133 | |
Amortization of intangibles | Amortization of intangibles | | 10,446 | | | 10,104 | | | 31,608 | | | 29,912 | | Amortization of intangibles | | 11,592 | | | 10,641 | | | 24,316 | | | 21,162 | |
Restructuring, impairment, and other charges | Restructuring, impairment, and other charges | | 772 | | | 1,277 | | | 1,998 | | | 40,904 | | Restructuring, impairment, and other charges | | 634 | | | 789 | | | 852 | | | 1,226 | |
Total operating expenses | Total operating expenses | | 94,465 | | | 74,273 | | | 279,589 | | | 265,731 | | Total operating expenses | | 128,807 | | | 101,139 | | | 236,813 | | | 185,124 | |
Operating income | Operating income | | 120,107 | | | 64,558 | | | 292,845 | | | 97,358 | | Operating income | | 134,164 | | | 96,257 | | | 284,754 | | | 172,738 | |
| Interest expense | Interest expense | | 4,602 | | | 4,988 | | | 13,901 | | | 16,261 | | Interest expense | | 4,368 | | | 4,626 | | | 8,670 | | | 9,299 | |
Foreign exchange loss (gain) | Foreign exchange loss (gain) | | 3,154 | | | (6,174) | | | 8,315 | | | (9,600) | | Foreign exchange loss (gain) | | 14,124 | | | (1,676) | | | 21,860 | | | 5,161 | |
Other income, net | | (1,240) | | | (1,682) | | | (10,867) | | | (1,643) | | |
Other expense (income), net | | Other expense (income), net | | 6,060 | | | (1,890) | | | 10,487 | | | (9,627) | |
Income before income taxes | Income before income taxes | | 113,591 | | | 67,426 | | | 281,496 | | | 92,340 | | Income before income taxes | | 109,612 | | | 95,197 | | | 243,737 | | | 167,905 | |
Income taxes | Income taxes | | 21,537 | | | 12,070 | | | 49,634 | | | 21,331 | | Income taxes | | 22,596 | | | 13,102 | | | 39,203 | | | 28,097 | |
Net income | Net income | | $ | 92,054 | | | $ | 55,356 | | | $ | 231,862 | | | $ | 71,009 | | Net income | | $ | 87,016 | | | $ | 82,095 | | | $ | 204,534 | | | $ | 139,808 | |
| Earnings per share: | Earnings per share: | | | | | | | | | Earnings per share: | | | | | | | | |
Basic | Basic | | $ | 3.74 | | | $ | 2.27 | | | $ | 9.43 | | | $ | 2.92 | | Basic | | $ | 3.52 | | | $ | 3.34 | | | $ | 8.28 | | | $ | 5.69 | |
Diluted | Diluted | | $ | 3.69 | | | $ | 2.25 | | | $ | 9.31 | | | $ | 2.89 | | Diluted | | $ | 3.48 | | | $ | 3.30 | | | $ | 8.19 | | | $ | 5.62 | |
| Weighted-average shares and equivalent shares outstanding: | Weighted-average shares and equivalent shares outstanding: | | Weighted-average shares and equivalent shares outstanding: | |
Basic | Basic | | 24,622 | | | 24,357 | | | 24,582 | | | 24,354 | | Basic | | 24,734 | | | 24,592 | | | 24,712 | | | 24,562 | |
Diluted | Diluted | | 24,926 | | | 24,573 | | | 24,904 | | | 24,535 | | Diluted | | 24,985 | | | 24,900 | | | 24,986 | | | 24,894 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| | | | Three Months Ended | | Nine Months Ended | | | Three Months Ended | | Six Months Ended |
(in thousands) | (in thousands) | | September 25, 2021 | | September 26, 2020 | | September 25, 2021 | | September 26, 2020 | (in thousands) | | July 2, 2022 | | June 26, 2021 | | July 2, 2022 | | June 26, 2021 |
Net income | Net income | | $ | 92,054 | | | $ | 55,356 | | | $ | 231,862 | | | $ | 71,009 | | Net income | | $ | 87,016 | | | $ | 82,095 | | | $ | 204,534 | | | $ | 139,808 | |
Other comprehensive income (loss): | | |
Other comprehensive (loss) income: | | Other comprehensive (loss) income: | |
Pension and postemployment adjustment, net of tax | Pension and postemployment adjustment, net of tax | | 487 | | | 563 | | | 1,270 | | | (9,715) | | Pension and postemployment adjustment, net of tax | | 639 | | | 329 | | | 949 | | | 783 | |
| Cash flow hedge, net of tax | | Cash flow hedge, net of tax | | (541) | | | — | | | (541) | | | — | |
Foreign currency translation adjustments | Foreign currency translation adjustments | | (5,441) | | | 16,418 | | | (5,641) | | | 9,300 | | Foreign currency translation adjustments | | (31,447) | | | 5,125 | | | (33,960) | | | (200) | |
Comprehensive income | Comprehensive income | | $ | 87,100 | | | $ | 72,337 | | | $ | 227,491 | | | $ | 70,594 | | Comprehensive income | | $ | 55,667 | | | $ | 87,549 | | | $ | 170,982 | | | $ | 140,391 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| | | | Nine Months Ended | | | Six Months Ended |
(in thousands) | (in thousands) | | September 25, 2021 | | September 26, 2020 | (in thousands) | | July 2, 2022 | | June 26, 2021 |
OPERATING ACTIVITIES | OPERATING ACTIVITIES | | | | | OPERATING ACTIVITIES | | | | |
Net income | Net income | | $ | 231,862 | | | $ | 71,009 | | Net income | | $ | 204,534 | | | $ | 139,808 | |
Adjustments to reconcile net income to net cash provided by operating activities: | Adjustments to reconcile net income to net cash provided by operating activities: | | Adjustments to reconcile net income to net cash provided by operating activities: | |
Depreciation | Depreciation | | 41,441 | | | 41,953 | | Depreciation | | 31,302 | | | 27,251 | |
Amortization of intangibles | Amortization of intangibles | | 31,608 | | | 29,912 | | Amortization of intangibles | | 24,316 | | | 21,162 | |
| Deferred revenue | Deferred revenue | | (2,154) | | | (438) | | Deferred revenue | | 315 | | | (316) | |
Non-cash inventory charges | Non-cash inventory charges | | 6,807 | | | — | | Non-cash inventory charges | | 4,769 | | | 6,807 | |
Impairment charges | | — | | | 36,078 | | |
| | Stock-based compensation | Stock-based compensation | | 16,010 | | | 14,544 | | Stock-based compensation | | 15,268 | | | 12,238 | |
Gain on investments and other assets | | (9,739) | | | (1,200) | | |
Loss (gain) on investments and other assets | | Loss (gain) on investments and other assets | | 12,506 | | | (8,865) | |
Deferred income taxes | Deferred income taxes | | 1,116 | | | 1,567 | | Deferred income taxes | | (2,422) | | | (2,172) | |
Other | Other | | 11,735 | | | (8,549) | | Other | | 28,605 | | | 7,842 | |
Changes in operating assets and liabilities: | Changes in operating assets and liabilities: | | Changes in operating assets and liabilities: | |
Trade receivables | Trade receivables | | (83,793) | | | (29,362) | | Trade receivables | | (76,807) | | | (69,881) | |
Inventories | Inventories | | (71,232) | | | (1,611) | | Inventories | | (70,285) | | | (38,205) | |
Accounts payable | Accounts payable | | 53,945 | | | 6,661 | | Accounts payable | | 9,153 | | | 38,955 | |
| Accrued liabilities and income taxes | Accrued liabilities and income taxes | | 23,294 | | | (2,095) | | Accrued liabilities and income taxes | | (23,107) | | | 4,488 | |
Prepaid expenses and other assets | Prepaid expenses and other assets | | (10,236) | | | 5,787 | | Prepaid expenses and other assets | | 7,175 | | | (12,766) | |
Net cash provided by operating activities | Net cash provided by operating activities | | 240,664 | | | 164,256 | | Net cash provided by operating activities | | 165,322 | | | 126,346 | |
| INVESTING ACTIVITIES | INVESTING ACTIVITIES | | | | | INVESTING ACTIVITIES | | | | |
Acquisitions of businesses, net of cash acquired | Acquisitions of businesses, net of cash acquired | | (110,646) | | | — | | Acquisitions of businesses, net of cash acquired | | (9,758) | | | (109,852) | |
| Purchases of property, plant, and equipment | Purchases of property, plant, and equipment | | (57,526) | | | (41,536) | | Purchases of property, plant, and equipment | | (56,151) | | | (32,657) | |
Net proceeds from sale of property, plant and equipment, and other | Net proceeds from sale of property, plant and equipment, and other | | 2,561 | | | 148 | | Net proceeds from sale of property, plant and equipment, and other | | 542 | | | 2,569 | |
Net cash used in investing activities | Net cash used in investing activities | | (165,611) | | | (41,388) | | Net cash used in investing activities | | (65,367) | | | (139,940) | |
| FINANCING ACTIVITIES | FINANCING ACTIVITIES | | | | | FINANCING ACTIVITIES | | | | |
Proceeds of revolving credit facility | | — | | | 240,000 | | |
| Payments of revolving credit facility | Payments of revolving credit facility | | (30,000) | | | (60,000) | | Payments of revolving credit facility | | — | | | (30,000) | |
Proceeds of term loan | | Proceeds of term loan | | 300,000 | | | — | |
Payments of senior notes payable | | Payments of senior notes payable | | (25,000) | | | — | |
| Net proceeds related to stock-based award activities | | Net proceeds related to stock-based award activities | | (1,626) | | | 4,413 | |
| Payments of term loan | | — | | | (145,000) | | |
Net proceeds related to stock-based award activities | | 5,771 | | | 6,437 | | |
Purchases of common stock | | — | | | (22,927) | | |
Debt issuance costs | Debt issuance costs | | — | | | (1,786) | | Debt issuance costs | | (2,156) | | | — | |
Cash dividends paid | Cash dividends paid | | (36,648) | | | (35,100) | | Cash dividends paid | | (26,201) | | | (23,596) | |
Net cash used in financing activities | | (60,877) | | | (18,376) | | |
Net cash provided by (used in) financing activities | | Net cash provided by (used in) financing activities | | 245,017 | | | (49,183) | |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | Effect of exchange rate changes on cash, cash equivalents, and restricted cash | | (5,832) | | | 6,259 | | Effect of exchange rate changes on cash, cash equivalents, and restricted cash | | (15,511) | | | (2,894) | |
Increase in cash, cash equivalents, and restricted cash | | 8,344 | | | 110,751 | | |
Increase (decrease) in cash, cash equivalents, and restricted cash | | Increase (decrease) in cash, cash equivalents, and restricted cash | | 329,461 | | | (65,671) | |
Cash, cash equivalents, and restricted cash at beginning of period | Cash, cash equivalents, and restricted cash at beginning of period | | 687,525 | | | 531,139 | | Cash, cash equivalents, and restricted cash at beginning of period | | 482,836 | | | 687,525 | |
Cash, cash equivalents, and restricted cash at end of period | Cash, cash equivalents, and restricted cash at end of period | | $ | 695,869 | | | $ | 641,890 | | Cash, cash equivalents, and restricted cash at end of period | | $ | 812,297 | | | $ | 621,854 | |
Supplementary Cash Flow Information | Supplementary Cash Flow Information | | | | | Supplementary Cash Flow Information | | | | |
Reconciliation of cash and cash equivalents: | Reconciliation of cash and cash equivalents: | | Reconciliation of cash and cash equivalents: | |
Cash and cash equivalents | Cash and cash equivalents | | $ | 690,682 | | | $ | 641,890 | | Cash and cash equivalents | | $ | 809,122 | | | $ | 616,330 | |
Restricted cash included in prepaid expenses and other current assets | Restricted cash included in prepaid expenses and other current assets | | $ | 3,483 | | | — | | Restricted cash included in prepaid expenses and other current assets | | $ | 1,653 | | | 3,790 | |
Restricted cash included in other assets | | $ | 1,704 | | | $ | — | | |
Restricted cash included in other long-term assets | | Restricted cash included in other long-term assets | | $ | 1,522 | | | $ | 1,734 | |
Cash paid interest during the period | Cash paid interest during the period | | $ | 14,830 | | | $ | 17,228 | | Cash paid interest during the period | | $ | 8,365 | | | $ | 8,719 | |
| Capital expenditures, not yet paid | Capital expenditures, not yet paid | | $ | 9,234 | | | $ | 6,267 | | Capital expenditures, not yet paid | | $ | 7,243 | | | $ | 6,826 | |
|
See accompanying Notes to Condensed Consolidated Financial Statements.
LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
| | | Littelfuse, Inc. Shareholders’ Equity | | | | | | Littelfuse, Inc. Shareholders’ Equity | | | | |
(in thousands, except share and per share data) | (in thousands, except share and per share data) | Common Stock | | Addl. Paid in Capital | | Treasury Stock | | Accum. Other Comp. (Loss) | | Retained Earnings | | Non-controlling Interest | | Total | (in thousands, except share and per share data) | Common Stock | | Addl. Paid in Capital | | Treasury Stock | | Accum. Other Comp. (Loss) | | Retained Earnings | | Non-controlling Interest | | Total |
Balance at December 26, 2020 | $ | 259 | | | $ | 907,858 | | | $ | (242,366) | | | $ | (91,157) | | | $ | 1,034,048 | | | $ | 131 | | | $ | 1,608,773 | | |
Net income | — | | | — | | | — | | | — | | | 57,713 | | | — | | | 57,713 | | |
| Other comprehensive loss, net of tax | — | | | — | | | — | | | (4,871) | | | — | | | — | | | (4,871) | | |
Stock-based compensation | — | | | 3,395 | | | — | | | — | | | — | | | — | | | 3,395 | | |
| Stock options exercised | — | | | 7,509 | | | — | | | — | | | — | | | — | | | 7,509 | | |
| Cash dividends paid ($0.48 per share) | — | | | — | | | — | | | — | | | (11,782) | | | — | | | (11,782) | | |
Balance at March 27, 2021 | $ | 259 | | | $ | 918,762 | | | $ | (242,366) | | | $ | (96,028) | | | $ | 1,079,979 | | | $ | 131 | | | $ | 1,660,737 | | |
Net income | — | | | — | | | — | | | — | | | 82,095 | | | — | | | 82,095 | | |
| Other comprehensive income, net of tax | — | | | — | | | — | | | 5,454 | | | — | | | — | | | 5,454 | | |
Stock-based compensation | — | | | 8,843 | | | — | | | — | | | — | | | — | | | 8,843 | | |
| Withheld shares on restricted share units for withholding taxes | — | | | — | | | (5,597) | | | — | | | — | | | — | | | (5,597) | | |
Stock options exercised | 1 | | | 2,501 | | | — | | | — | | | — | | | — | | | 2,502 | | |
| Cash dividends paid ($0.48 per share) | — | | | — | | | — | | | — | | | (11,814) | | | — | | | (11,814) | | |
Balance at June 26, 2021 | $ | 260 | | | $ | 930,106 | | | $ | (247,963) | | | $ | (90,574) | | | $ | 1,150,260 | | | $ | 131 | | | $ | 1,742,220 | | |
Balance at January 1, 2022 | | Balance at January 1, 2022 | $ | 260 | | | $ | 946,588 | | | $ | (248,120) | | | $ | (73,463) | | | $ | 1,268,124 | | | $ | 131 | | | $ | 1,893,520 | |
Net income | Net income | — | | | — | | | — | | | — | | | 92,054 | | | — | | | 92,054 | | Net income | — | | | — | | | — | | | — | | | 117,518 | | | — | | | 117,518 | |
| Other comprehensive loss, net of tax | Other comprehensive loss, net of tax | — | | | — | | | — | | | (4,954) | | | — | | | — | | | (4,954) | | Other comprehensive loss, net of tax | — | | | — | | | — | | | (2,203) | | | — | | | — | | | (2,203) | |
Stock-based compensation | Stock-based compensation | — | | | 3,772 | | | — | | | — | | | — | | | — | | | 3,772 | | Stock-based compensation | — | | | 3,886 | | | — | | | — | | | — | | | — | | | 3,886 | |
| Withheld shares on restricted share units for withholding taxes | Withheld shares on restricted share units for withholding taxes | — | | | — | | | (115) | | | — | | | — | | | — | | | (115) | | Withheld shares on restricted share units for withholding taxes | — | | | — | | | (4) | | | — | | | — | | | — | | | (4) | |
Stock options exercised | Stock options exercised | — | | | 1,473 | | | — | | | — | | | — | | | — | | | 1,473 | | Stock options exercised | — | | | 1,021 | | | — | | | — | | | — | | | — | | | 1,021 | |
| Cash dividends paid ($0.53 per share) | Cash dividends paid ($0.53 per share) | — | | | — | | | — | | | — | | | (13,052) | | | — | | | (13,052) | | Cash dividends paid ($0.53 per share) | — | | | — | | | — | | | — | | | (13,086) | | | — | | | (13,086) | |
Balance at September 25, 2021 | $ | 260 | | | $ | 935,351 | | | $ | (248,078) | | | $ | (95,528) | | | $ | 1,229,262 | | | $ | 131 | | | $ | 1,821,398 | | |
Balance at April 2, 2022 | | Balance at April 2, 2022 | $ | 260 | | | $ | 951,495 | | | $ | (248,124) | | | $ | (75,666) | | | $ | 1,372,556 | | | $ | 131 | | | $ | 2,000,652 | |
| Net income | | Net income | — | | | — | | | — | | | — | | | 87,016 | | | — | | | 87,016 | |
| Other comprehensive loss, net of tax | | Other comprehensive loss, net of tax | — | | | — | | | — | | | (31,349) | | | — | | | — | | | (31,349) | |
Stock-based compensation | | Stock-based compensation | — | | | 11,382 | | | — | | | — | | | — | | | — | | | 11,382 | |
| Withheld shares on restricted share units for withholding taxes | | Withheld shares on restricted share units for withholding taxes | — | | | — | | | (4,704) | | | — | | | — | | | — | | | (4,704) | |
Stock options exercised | | Stock options exercised | 1 | | | 2,060 | | | — | | | — | | | — | | | — | | | 2,061 | |
| Cash dividends paid ($0.53 per share) | | Cash dividends paid ($0.53 per share) | — | | | — | | | — | | | — | | | (13,115) | | | — | | | (13,115) | |
Balance at July 2, 2022 | | Balance at July 2, 2022 | $ | 261 | | | $ | 964,937 | | | $ | (252,828) | | | $ | (107,015) | | | $ | 1,446,457 | | | $ | 131 | | | $ | 2,051,943 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
| | | Littelfuse, Inc. Shareholders’ Equity | | | | | | Littelfuse, Inc. Shareholders’ Equity | | | | |
(in thousands, except share and per share data) | (in thousands, except share and per share data) | Common Stock | | Addl. Paid in Capital | | Treasury Stock | | Accum. Other Comp. (Loss) | | Retained Earnings | | Non-controlling Interest | | Total | (in thousands, except share and per share data) | Common Stock | | Addl. Paid in Capital | | Treasury Stock | | Accum. Other Comp. (Loss) | | Retained Earnings | | Non-controlling Interest | | Total |
Balance at December 28, 2019 | $ | 256 | | | $ | 867,996 | | | $ | (216,447) | | | $ | (106,823) | | | $ | 950,901 | | | $ | 131 | | | $ | 1,496,014 | | |
Balance at December 26, 2020 | | Balance at December 26, 2020 | $ | 259 | | | $ | 907,858 | | | $ | (242,366) | | | $ | (91,157) | | | $ | 1,034,048 | | | $ | 131 | | | $ | 1,608,773 | |
Net income | Net income | — | | | — | | | — | | | — | | | 24,644 | | | — | | | 24,644 | | Net income | — | | | — | | | — | | | — | | | 57,713 | | | — | | | 57,713 | |
| Other comprehensive loss, net of tax | — | | | — | | | — | | | (14,979) | | | — | | | — | | | (14,979) | | |
Other comprehensive income (loss), net of tax | | Other comprehensive income (loss), net of tax | — | | | — | | | — | | | (4,871) | | | — | | | — | | | (4,871) | |
Stock-based compensation | Stock-based compensation | — | | | 2,965 | | | — | | | — | | | — | | | — | | | 2,965 | | Stock-based compensation | — | | | 3,395 | | | — | | | — | | | — | | | — | | | 3,395 | |
| Withheld shares on restricted share units for withholding taxes | — | | | — | | | (443) | | | — | | | — | | | — | | | (443) | | |
| Stock options exercised | Stock options exercised | — | | | 3,399 | | | — | | | — | | | — | | | — | | | 3,399 | | Stock options exercised | — | | | 7,509 | | | — | | | — | | | — | | | — | | | 7,509 | |
Repurchases of common stock | — | | | — | | | (22,927) | | | — | | | — | | | — | | | (22,927) | | |
| Cash dividends paid ($0.48 per share) | Cash dividends paid ($0.48 per share) | — | | | — | | | — | | | — | | | (11,725) | | | — | | | (11,725) | | Cash dividends paid ($0.48 per share) | — | | | — | | | — | | | — | | | (11,782) | | | — | | | (11,782) | |
Balance at March 28, 2020 | $ | 256 | | | $ | 874,360 | | | $ | (239,817) | | | $ | (121,802) | | | $ | 963,820 | | | $ | 131 | | | $ | 1,476,948 | | |
Net loss | — | | | — | | | — | | | — | | | (8,991) | | | — | | | (8,991) | | |
| Other comprehensive loss, net of tax | — | | | — | | | — | | | (2,417) | | | — | | | — | | | (2,417) | | |
Stock-based compensation | — | | | 7,887 | | | — | | | — | | | — | | | — | | | 7,887 | | |
| Withheld shares on restricted share units for withholding taxes | — | | | — | | | (2,375) | | | — | | | — | | | — | | | (2,375) | | |
Stock options exercised | 1 | | | 3,059 | | | — | | | — | | | — | | | — | | | 3,060 | | |
| Cash dividends paid ($0.48 per share) | — | | | — | | | — | | | — | | | (11,678) | | | — | | | (11,678) | | |
Balance at June 27, 2020 | $ | 257 | | | $ | 885,306 | | | $ | (242,192) | | | $ | (124,219) | | | $ | 943,151 | | | $ | 131 | | | $ | 1,462,434 | | |
Balance at March 27, 2021 | | Balance at March 27, 2021 | $ | 259 | | | $ | 918,762 | | | $ | (242,366) | | | $ | (96,028) | | | $ | 1,079,979 | | | $ | 131 | | | $ | 1,660,737 | |
Net income | Net income | — | | | — | | | — | | | — | | | 55,356 | | | — | | | 55,356 | | Net income | — | | | — | | | — | | | — | | | 82,095 | | | — | | | 82,095 | |
| Other comprehensive income, net of tax | Other comprehensive income, net of tax | — | | | — | | | — | | | 16,981 | | | — | | | — | | | 16,981 | | Other comprehensive income, net of tax | — | | | — | | | — | | | 5,454 | | | — | | | — | | | 5,454 | |
Stock-based compensation | Stock-based compensation | — | | | 3,692 | | | — | | | — | | | — | | | — | | | 3,692 | | Stock-based compensation | — | | | 8,843 | | | — | | | — | | | — | | | — | | | 8,843 | |
| Withheld shares on restricted share units for withholding taxes | Withheld shares on restricted share units for withholding taxes | — | | | — | | | (131) | | | — | | | — | | | — | | | (131) | | Withheld shares on restricted share units for withholding taxes | — | | | — | | | (5,597) | | | — | | | — | | | — | | | (5,597) | |
Stock options exercised | Stock options exercised | 1 | | | 2,926 | | | — | | | — | | | — | | | — | | | 2,927 | | Stock options exercised | 1 | | | 2,501 | | | — | | | — | | | — | | | — | | | 2,502 | |
| Cash dividends paid ($0.48 per share) | Cash dividends paid ($0.48 per share) | — | | | — | | | — | | | — | | | (11,697) | | | — | | | (11,697) | | Cash dividends paid ($0.48 per share) | — | | | — | | | — | | | — | | | (11,814) | | | — | | | (11,814) | |
Balance at September 26, 2020 | $ | 258 | | | $ | 891,924 | | | $ | (242,323) | | | $ | (107,238) | | | $ | 986,810 | | | $ | 131 | | | $ | 1,529,562 | | |
Balance at June 26, 2021 | | Balance at June 26, 2021 | $ | 260 | | | $ | 930,106 | | | $ | (247,963) | | | $ | (90,574) | | | $ | 1,150,260 | | | $ | 131 | | | $ | 1,742,220 | |
|
See accompanying Notes to Condensed Consolidated Financial Statements.
Notes to Condensed Consolidated Financial Statements
1. Summary of Significant Accounting Policies and Other Information
Nature of Operations
Founded in 1927, Littelfuse is an industrial technology manufacturing company empowering a sustainable, connected, and safer world. Across more than 15 countries,countries, and with 12,000with 17,000 global associates, we partnerthe Company partners with customers to design and deliver innovative, reliable solutions. Serving over 100,000 end customers, ourthe Company’s products are found in a variety of industrial, transportation and electronics end markets – everywhere, every day.
Basis of Presentation
The Company’s accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and disclosures normally included in the consolidated balance sheets, statements of net income and comprehensive income, statements of cash flows, and statement of stockholders' equity prepared in conformity with U.S. GAAP have been condensed or omitted as permitted by such rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. They have been prepared in accordance with accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2020January 1, 2022 which should be read in conjunction with the disclosures therein. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature. Operating results for interim periods are not necessarily indicative of annual operating results.
Revenue Recognition
Revenue Disaggregation
The following tables disaggregate the Company’s revenue by primary business units for the three and ninesix months ended September 25, 2021July 2, 2022 and SeptemberJune 26, 2020:2021:
| | | | Three Months Ended September 25, 2021 | | Nine Months Ended September 25, 2021 | | | Three Months Ended July 2, 2022 | | Six Months Ended July 2, 2022 |
(in thousands) | (in thousands) | | Electronics Segment | | Automotive Segment | | Industrial Segment | | Total | | Electronics Segment | | Automotive Segment | | Industrial Segment | | Total | (in thousands) | | Electronics Segment | | Transportation Segment | | Industrial Segment | | Total | | Electronics Segment | | Transportation Segment | | Industrial Segment | | Total |
Electronics – Passive Products and Sensors | Electronics – Passive Products and Sensors | | $ | 171,299 | | | $ | — | | | $ | — | | | $ | 171,299 | | | $ | 459,012 | | | $ | — | | | $ | — | | | $ | 459,012 | | Electronics – Passive Products and Sensors | | $ | 162,313 | | | $ | — | | | $ | — | | | $ | 162,313 | | | $ | 332,256 | | | $ | — | | | $ | — | | | $ | 332,256 | |
Electronics – Semiconductor | Electronics – Semiconductor | | 175,941 | | | — | | | — | | | 175,941 | | | 500,110 | | | — | | | — | | | 500,110 | | Electronics – Semiconductor | | 195,863 | | | — | | | — | | | 195,863 | | | 391,741 | | | — | | | — | | | 391,741 | |
Passenger Car Products | Passenger Car Products | | — | | | 64,630 | | | — | | | 64,630 | | | — | | | 200,579 | | | — | | | 200,579 | | Passenger Car Products | | — | | | 59,778 | | | — | | | 59,778 | | | — | | | 124,272 | | | — | | | 124,272 | |
Automotive Sensors | Automotive Sensors | | — | | | 24,112 | | | — | | | 24,112 | | | — | | | 79,081 | | | — | | | 79,081 | | Automotive Sensors | | — | | | 23,201 | | | — | | | 23,201 | | | — | | | 49,338 | | | — | | | 49,338 | |
Commercial Vehicle Products | Commercial Vehicle Products | | — | | | 35,673 | | | — | | | 35,673 | | | — | | | 106,602 | | | — | | | 106,602 | | Commercial Vehicle Products | | — | | | 99,048 | | | — | | | 99,048 | | | — | | | 192,921 | | | — | | | 192,921 | |
Industrial Products | Industrial Products | | — | | | — | | | 67,926 | | | 67,926 | | | — | | | — | | | 181,479 | | | 181,479 | | Industrial Products | | — | | | — | | | 78,233 | | | 78,233 | | | — | | | — | | | 151,238 | | | 151,238 | |
Total | Total | | $ | 347,240 | | | $ | 124,415 | | | $ | 67,926 | | | $ | 539,581 | | | $ | 959,122 | | | $ | 386,262 | | | $ | 181,479 | | | $ | 1,526,863 | | Total | | $ | 358,176 | | | $ | 182,027 | | | $ | 78,233 | | | $ | 618,436 | | | $ | 723,997 | | | $ | 366,531 | | | $ | 151,238 | | | $ | 1,241,766 | |
| | | | Three Months Ended September 26, 2020 | | Nine Months Ended September 26, 2020 | | | Three Months Ended June 26, 2021 | | Six Months Ended June 26, 2021 |
(in thousands) | (in thousands) | | Electronics Segment | | Automotive Segment | | Industrial Segment | | Total | | Electronics Segment | | Automotive Segment | | Industrial Segment | | Total | (in thousands) | | Electronics Segment | | Transportation Segment | | Industrial Segment | | Total | | Electronics Segment | | Transportation Segment | | Industrial Segment | | Total |
Electronics – Passive Products and Sensors | Electronics – Passive Products and Sensors | | $ | 108,253 | | | $ | — | | | $ | — | | | $ | 108,253 | | | $ | 285,697 | | | $ | — | | | $ | — | | | $ | 285,697 | | Electronics – Passive Products and Sensors | | $ | 155,276 | | | $ | — | | | $ | — | | | $ | 155,276 | | | $ | 287,713 | | | $ | — | | | $ | — | | | $ | 287,713 | |
Electronics – Semiconductor | Electronics – Semiconductor | | 147,096 | | | — | | | — | | | 147,096 | | | 407,112 | | | — | | | — | | | 407,112 | | Electronics – Semiconductor | | 170,071 | | | — | | | — | | | 170,071 | | | 324,169 | | | — | | | — | | | 324,169 | |
Passenger Car Products | Passenger Car Products | | — | | | 52,691 | | | — | | | 52,691 | | | — | | | 135,645 | | | — | | | 135,645 | | Passenger Car Products | | — | | | 68,048 | | | — | | | 68,048 | | | — | | | 135,949 | | | — | | | 135,949 | |
Automotive Sensors | Automotive Sensors | | — | | | 26,093 | | | — | | | 26,093 | | | — | | | 64,166 | | | — | | | 64,166 | | Automotive Sensors | | — | | | 26,685 | | | — | | | 26,685 | | | — | | | 54,969 | | | — | | | 54,969 | |
Commercial Vehicle Products | Commercial Vehicle Products | | — | | | 25,940 | | | — | | | 25,940 | | | — | | | 71,682 | | | — | | | 71,682 | | Commercial Vehicle Products | | — | | | 38,585 | | | — | | | 38,585 | | | — | | | 70,929 | | | — | | | 70,929 | |
Industrial Products | Industrial Products | | — | | | — | | | 31,493 | | | 31,493 | | | — | | | — | | | 80,697 | | | 80,697 | | Industrial Products | | 0 | | 0 | | 64,823 | | | 64,823 | | | 0 | | 0 | | 113,553 | | | 113,553 | |
Total | Total | | $ | 255,349 | | | $ | 104,724 | | | $ | 31,493 | | | $ | 391,566 | | | $ | 692,809 | | | $ | 271,493 | | | $ | 80,697 | | | $ | 1,044,999 | | Total | | $ | 325,347 | | | $ | 133,318 | | | $ | 64,823 | | | $ | 523,488 | | | $ | 611,882 | | | $ | 261,847 | | | $ | 113,553 | | | $ | 987,282 | |
See Note 15, Segment Information for net sales by segment and countries.
Revenue Recognition
The Company recognizes revenue on product sales in the period in which the Company satisfies its performance obligation and control of the product is transferred to the customer. The Company’s sales arrangements with customers are predominately short term in nature and generally provide for transfer of control at the time of shipment as this is the point at which title and risk of loss of the product transfers to the customer. At the end of each period, for those shipments where title to the products and the risk of loss and rewards of ownership do not transfer until the product has been received by the customer, the Company adjusts revenues and cost of sales for the delay between the time that the products are shipped and when they are received by the customer. The amount of revenue recorded reflects the consideration to which the Company expects to be entitled in exchange for goods and may include adjustments for customer allowance, rebates and price adjustments. The Company’s distribution channels are primarily through direct sales and independent third-party distributors.
The Company elected the practical expedient under Accounting Standards Codification ("ASC") 340-40-25-4 to expense commissions when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less than one year.
Revenue and Billing
The Company generally accepts orders from customers through receipt of purchase orders or electronic data interchange based on written sales agreements and purchasing contracts. Contract pricing and selling agreement terms are based on market factors, costs, and competition. Pricing is often negotiated as an adjustment (premium or discount) from the Company’s published price lists. The customer is invoiced when the Company’s products are shipped to them in accordance with the terms of the sales agreement. As the Company’s standard payment terms are less than one year, the Company elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company also elected the practical expedient provided in ASC 606-10-25-18B to treat all product shipping and handling activities as fulfillment activities, and therefore recognize the gross revenue associated with the contract, inclusive of any shipping and handling revenue.
Ship and Debit Program
Some of the terms of the Company’s sales agreements and normal business conditions provide customers (distributors) the ability to receive price adjustments on products previously shipped and invoiced. This practice is common in the industry and is referred to as a “ship and debit” program. This program allows the distributor to debit the Company for the difference between the distributors’ contracted price and a lower price for specific transactions. Under certain circumstances (usually in a competitive situation or large volume opportunity), a distributor will request authorization for pricing allowances to reduce its price. When the Company approves such a reduction, the distributor is authorized to “debit” its account for the difference between the contracted price and the lower approved price. The Company establishes reserves for this program based on
historic activity, electronic distributor inventory levels and actual authorizations for the debit and recognizes these debits as a reduction of revenue.
Return to Stock
The Company has a return to stock policy whereby certain customers, with prior authorization from Littelfuse management, can return previously purchased goods for full or partial credit. The Company establishes an estimated allowance for these returns based on historic activity. Sales revenue and cost of sales are reduced to anticipate estimated returns.
Volume Rebates
The Company offers volume based sales incentives to certain customers to encourage greater product sales. If customers achieve their specific quarterly or annual sales targets, they are entitled to rebates. The Company estimates the projected amount of rebates that will be achieved by the customer and recognizes this estimated cost as a reduction to revenue as products are sold.
Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash at September 25, 2021July 2, 2022 and December 26, 2020January 1, 2022 reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statement of Cash Flows.
| (in thousands) | (in thousands) | | September 25, 2021 | | December 26, 2020 | (in thousands) | | July 2, 2022 | | January 1, 2022 |
Cash and cash equivalents | Cash and cash equivalents | | $ | 690,682 | | | $ | 687,525 | | Cash and cash equivalents | | $ | 809,122 | | | $ | 478,473 | |
Restricted cash included in prepaid expenses and other current assets | Restricted cash included in prepaid expenses and other current assets | | 3,483 | | | — | | Restricted cash included in prepaid expenses and other current assets | | 1,653 | | | 2,718 | |
Restricted cash included in other assets | | 1,704 | | | $ | — | | |
Restricted cash included in other long-term assets | | Restricted cash included in other long-term assets | | 1,522 | | | $ | 1,645 | |
Total cash, cash equivalents and restricted cash | Total cash, cash equivalents and restricted cash | | $ | 695,869 | | | $ | 687,525 | | Total cash, cash equivalents and restricted cash | | $ | 812,297 | | | $ | 482,836 | |
Recently Adopted Accounting Standards
In December 2019,November 2021, the Financial Accounting Standards Board (FASB)("FASB") issued Accounting Standards Update ("ASU")ASU No. 2019-12, "Income Taxes2021-10, "Government Assistance (Topic 740) - Simplifying832): Disclosures by Business Entities about Government Assistance". The standard, requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy: 1) Information about the Accountingnature of the transactions and the related accounting policy used to account for Income Taxes" as partthe transactions; 2) The line items on the balance sheet and income statement that are affected by the transactions, and the amounts applicable to each financial statement line item; 3) Significant terms and conditions of its initiative to reduce complexity in the accounting standards.transactions, including commitments and contingencies. The guidance is effective for fiscal years beginning after December 15, 20202021 with early adoption permitted. The adoption of ASU 2019-122021-10 did not have a material impact on ourthe Company's Condensed Consolidated Financial Statements.
In October 2021, the FASB issued ASU No. 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers". The standard requires an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The guidance is effective for fiscal years beginning after December 15, 2022 with early adoption permitted. The adoption of ASU 2021-08 did not have a material impact on the Company's Condensed Consolidated Financial Statements.
2. Acquisitions
The Company accounts for acquisitions using the acquisition method in accordance with ASC 805, “Business Combinations,” in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition. The operating results of the acquired business are included in the Company’s Consolidated Financial Statements from the date of the acquisition.
Embed
On April 12, 2022, the Company acquired Embed Ltd. (“Embed”). Founded in 2005, Embed is a proven provider of embedded software and firmware developed for a broad range of applications serving transportation end markets. The business is included
in the commercial vehicle business within the Company's Transportation segment. The acquisition was funded with the Company’s cash on hand. The total purchase consideration was $9.2 million, net of cash.
Carling Technologies
On November 30, 2021, the Company completed the previously announced acquisition of Carling Technologies, Inc. (“Carling”), pursuant to the Stock Purchase Agreement, dated as of October 19, 2021. Founded in 1920, Carling has a leading position in switching and circuit protection technologies with a strong global presence in commercial vehicle, marine and datacom/telecom infrastructure markets. At the time of acquisition, Carling had annualized sales of approximately $170 million. The operations of Carling are included in the commercial vehicle business within the Company's Transportation segment. The purchase price for Carling Technologies was approximately $315.5 million subject to a working capital adjustment.
The acquisition was funded with cash on hand. The total purchase consideration of $314.1 million, net of cash, has been allocated, on a preliminary basis, to assets acquired and liabilities assumed, as of the completion of the acquisition, based on preliminary estimated fair values. The purchase price allocation is preliminary because the evaluations necessary to assess the fair values of the net assets acquired are still in process. The primary area not yet finalized relates to the completion of the valuation of certain acquired income tax assets and liabilities. As a result, these allocations are subject to change during the purchase price allocation period as the valuations are finalized.
The following table summarizes the preliminary purchase price allocation of the fair value of assets acquired and liabilities assumed in the Carling acquisition:
| | | | | |
(in thousands) | Purchase Price Allocation |
Total purchase consideration: | |
Cash, net of cash acquired | $ | 314,094 | |
Allocation of consideration to assets acquired and liabilities assumed: | |
Trade receivables, net | 26,129 | |
Inventories | 56,657 | |
Other current assets | 3,454 | |
Property, plant, and equipment | 57,329 | |
Intangible assets | 126,390 | |
Goodwill | 97,917 | |
Other non-current assets | 4,007 | |
Current liabilities | (21,495) | |
Other non-current liabilities | (36,294) | |
| $ | 314,094 | |
All Carling goodwill, other assets and liabilities were recorded in the Transportation segment and are reflected in the Americas, Europe and Asia-Pacific geographic areas. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining Carling’s products and technology with the Company’s existing commercial vehicle products portfolio. Goodwill resulting from the Carling acquisition is not expected to be deductible for tax purposes.
During the six months ended July 2, 2022, the Company paid $0.5 million related to final working capital adjustment and made measurement period adjustments to reduce the fair value of property, plant and equipment of $7.0 million, inventories of $0.8 million, net accounts receivable of $0.6 million and an increase in intangible assets attributable to customer relationships intangible assets of $0.5 million. As a result of these adjustments along with a corresponding reduction of deferred tax liabilities of $1.7 million, goodwill was increased by $5.6 million.
As required by purchase accounting rules, the Company recorded a $6.4 million step-up of inventory to its fair value as of the acquisition date based on the preliminary valuation. The step-up was amortized as a non-cash charge to cost of sales during the fourth quarter of 2021 and first quarter of 2022, as the acquired inventory was sold, and reflected as other non-segment costs. The Company recognized a non-cash charge of $4.8 million to cost of sales during the six months ended July 2, 2022.
Hartland Controls
On January 28, 2021, the Company acquired Hartland Controls ("Hartland"), a manufacturer and leading supplier of electrical components used primarily in heating, ventilation, air conditioning (HVAC) and other industrial and control systems applications with annualized sales of approximately $70 million. The purchase price for Hartland was $112.3$111.0 million and the operations of Hartland are included in the Industrial segment.
The total purchase consideration of $109.9$108.5 million, net of cash, cash equivalents, and restricted cash has been allocated on a preliminary basis, to assets acquired and liabilities assumed, as of the completion of the acquisition, based on preliminary estimated fair values. The purchase consideration is subject to change for the final working capital adjustments. As of September 25, 2021,July 2, 2022, the Company had restricted cash of $1.7 million in an escrow account for general indemnification purposes.
The following table summarizes the final purchase price allocation of the fair value of assets acquired and liabilities assumed in the Hartland acquisition:
| | | | | |
(in thousands) | Purchase Price Allocation |
Total purchase consideration: | |
Cash, net of cash acquired, and restricted cash | $ | 109,852108,516 | |
Allocation of consideration to assets acquired and liabilities assumed: | |
Trade receivables, net | 13,02712,915 | |
Inventories | 35,808 | |
Other current assets | 2,224 | |
Property, plant, and equipment | 6,296 | |
Intangible assets | 39,660 | |
Goodwill | 40,44238,502 | |
Other non-current assets | 3,7873,782 | |
Current liabilities | (24,846)(24,861) | |
Other non-current liabilities | (6,546)(5,810) | |
| $ | 109,852108,516 | |
All Hartland goodwill, other assets and liabilities were recorded in the Industrial segment and are primarily reflected in the Americas and Asia-Pacific geographic areas. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining Hartland’s products and technology with the Company’s existing industrial products portfolio. Goodwill resulting from the Hartland acquisition is not expected to be deductible for tax purposes.
Included in the Company’s Condensed Consolidated Statements of Net Income for the three and nine months ended September 25, 2021 are net sales of $29.3 million and $72.3 million respectively, and an income (loss) before income taxes of $1.2 million and $(1.3) million, respectively since the January 28, 2021 acquisition of Hartland.
The Company recorded a $6.8 million step-up of inventory to its fair value as of the acquisition date based on the preliminary valuation.date. The step-up was amortized as a non-cash charge to cost of goods soldsales during the first and second quarters of 2021, as the acquired inventory was sold, and is reflected as other non-segment costs. During the ninethree and six months ended September 25,June 26, 2021, the Company recognized a charge of $6.8$3.3 million and 6.8 million, respectively, for the amortization of this fair value inventory step-up.
During the ninethree and six months ended September 25,June 26, 2021, the Company incurred approximately $0.1 million and $0.8 million, respectively, of legal and professional fees related to this acquisition recognized as Selling, general, and administrative expenses. These costs were reflected as other non-segment costs.
Pro Forma Results
The following table summarizes, on an unaudited pro forma basis, the combined results of operations of the Company, Hartland and HartlandCarling as though the acquisitionacquisitions had occurred as of December 29, 2019. The Company has not included pro forma results of operations for Embed as its operations were not material to the Company. The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the Hartland acquisitionand Carling acquisitions occurred as of December 29, 2019 or of future consolidated operating results.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | For the Nine Months Ended |
(in thousands, except per share amounts) | | September 25, 2021 | | September 26, 2020 | | September 25, 2021 | | September 26, 2020 |
Net sales | | $ | 539,581 | | | $ | 414,100 | | | $ | 1,533,901 | | | $ | 1,101,430 | |
Income before income taxes | | 113,591 | | | 69,478 | | | 289,530 | | | 90,516 | |
Net income | | 92,054 | | | 56,961 | | | 238,197 | | | 69,526 | |
Net income per share — basic | | 3.74 | | | 2.34 | | | 9.69 | | | 2.85 | |
Net income per share — diluted | | 3.69 | | | 2.32 | | | 9.56 | | | 2.83 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | For the Six Months Ended |
(in thousands, except per share amounts) | | July 2, 2022 | | June 26, 2021 | | July 2, 2022 | | June 26, 2021 |
Net sales | | $ | 618,436 | | | $ | 568,328 | | | $ | 1,241,766 | | | $ | 1,085,727 | |
Income before income taxes | | 109,612 | | | 98,748 | | | 248,506 | | | 177,343 | |
Net income | | 87,016 | | | 84,927 | | | 208,254 | | | 147,500 | |
Net income per share — basic | | 3.52 | | | 3.45 | | | 8.43 | | | 6.01 | |
Net income per share — diluted | | 3.48 | | | 3.41 | | | 8.33 | | | 5.93 | |
Pro forma results presented above primarily reflect the following adjustments:
| | | | For the Three Months Ended | | For the Nine Months Ended | | | For the Three Months Ended | | For the Six Months Ended |
(in thousands) | (in thousands) | | September 25, 2021 | | September 26, 2020 | | September 25, 2021 | | September 26, 2020 | (in thousands) | | July 2, 2022 | | June 26, 2021 | | July 2, 2022 | | June 26, 2021 |
Amortization(a) | Amortization(a) | | $ | — | | | $ | (838) | | | $ | (280) | | | $ | (2,514) | | Amortization(a) | | $ | — | | | $ | (2,318) | | | $ | — | | | $ | (4,949) | |
Depreciation | Depreciation | | — | | | 44 | | | 7 | | | 139 | | Depreciation | | — | | | (28) | | | — | | | (71) | |
Transaction costs(b) | Transaction costs(b) | | — | | | — | | | 835 | | | (835) | | Transaction costs(b) | | — | | | 128 | | | — | | | 835 | |
Amortization of inventory step-up(c) | Amortization of inventory step-up(c) | | — | | | — | | | 6,808 | | | (6,796) | | Amortization of inventory step-up(c) | | — | | | 3,319 | | | 4,769 | | | 6,808 | |
Income tax (expense) benefit of above items | | — | | | 167 | | | (1,555) | | | 2,107 | | |
Income tax benefit of above items | | Income tax benefit of above items | | — | | | (208) | | | (1,049) | | | (517) | |
(a)The amortization adjustment for the three and ninesix months ended SeptemberJune 26, 20202021 primarily reflects incremental amortization resulting from the measurement of intangibles at their fair values.
(b)The transaction cost adjustments reflect the reversal of certain legal and professional fees from the ninethree and six months ended September 25, 2021 and recognition of those fees during the nine months ended SeptemberJune 26, 2020.2021.
(c)The amortization of inventory step-up adjustment reflects the reversal of the amount recognized during the ninesix months ended September 25, 2021July 2, 2022, and the recognition of the amortization during the ninethree and six months ended SeptemberJune 26, 2020.2021. The inventory step-up was amortized over four months as the inventory was sold.
3. Inventories
The components of inventories at September 25, 2021July 2, 2022 and December 26, 2020January 1, 2022 are as follows:
| (in thousands) | (in thousands) | | September 25, 2021 | | December 26, 2020 | (in thousands) | | July 2, 2022 | | January 1, 2022 |
Raw materials | Raw materials | | $ | 121,282 | | | $ | 85,394 | | Raw materials | | $ | 209,540 | | | $ | 168,409 | |
Work in process | Work in process | | 109,347 | | | 92,783 | | Work in process | | 124,751 | | | 117,506 | |
Finished goods | Finished goods | | 161,567 | | | 114,641 | | Finished goods | | 198,894 | | | 195,656 | |
Inventory Reserves | | (35,172) | | | (34,816) | | |
Inventory reserves | | Inventory reserves | | (36,978) | | | (35,900) | |
Total | Total | | $ | 357,024 | | | $ | 258,002 | | Total | | $ | 496,207 | | | $ | 445,671 | |
4. Property, Plant, and Equipment
The components of net property, plant, and equipment at September 25, 2021July 2, 2022 and December 26, 2020January 1, 2022 are as follows:
| | | | | | | | | | | | | | |
(in thousands) | | September 25, 2021 | | December 26, 2020 |
Land | | $ | 22,887 | | | $ | 22,851 | |
Building | | 129,135 | | | 123,497 | |
Equipment | | 725,971 | | | 678,220 | |
Accumulated depreciation and amortization | | (513,664) | | | (480,390) | |
Total | | $ | 364,329 | | | $ | 344,178 | |
The Company recorded depreciation expense of $14.2 million for both the three months ended September 25, 2021 and September 26, 2020, and $41.4 million and $42.0 million for the nine months ended September 25, 2021 and September 26, 2020, respectively.
5. Goodwill and Other Intangible Assets
The amounts for goodwill and changes in the carrying value by segment for the nine months ended September 25, 2021 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | | Electronics | | Automotive | | Industrial | | Total |
Net book value of goodwill as of December 26, 2020 | | | | | | | | |
Gross goodwill as of December 26, 2020 | | $ | 676,325 | | | $ | 138,354 | | | $ | 47,551 | | | $ | 862,230 | |
Accumulated impairment losses as of December 26, 2020 | | — | | | (36,423) | | | (8,995) | | | (45,418) | |
Total | | 676,325 | | | 101,931 | | | 38,556 | | | 816,812 | |
Changes during 2021: | | | | | | | | |
Additions(a) | | — | | | 1,614 | | | 40,442 | | | 42,056 | |
| | | | | | | | |
Currency translation | | (9,530) | | | (2,165) | | | 32 | | | (11,663) | |
Net book value of goodwill as of September 25, 2021 | | | | | | | | |
Gross goodwill as of September 25, 2021 | | 666,795 | | | 137,783 | | | 88,133 | | | 892,711 | |
Accumulated impairment losses as of September 25, 2021 | | — | | | (36,403) | | | (9,103) | | | (45,506) | |
Total | | $ | 666,795 | | | $ | 101,380 | | | $ | 79,030 | | | $ | 847,205 | |
(a) The additions primarily resulted from the acquisition of Hartland.
The Company tests its goodwill annually for impairment on the first day of its fiscal fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. During the second quarter of 2020, the Company recorded a non-cash charge of $33.8 million to recognize the impairment of goodwill in the automotive sensors reporting unit within the Automotive segment. The goodwill impairment charge was determined using Level 3 inputs, including discounted cash flow analysis and comparable marketplace fair value data. As of September 25, 2021, the automotive sensors reporting unit had $9.5 million of remaining goodwill.
The components of other intangible assets as of September 25, 2021 and December 26, 2020 are as follows:
| | | | | | | | | | | | | | | | | | | | | |
| | | As of September 25, 2021 |
(in thousands) | | | Gross Carrying Value | | Accumulated Amortization | | Net Book Value |
Land use rights | | | $ | 10,354 | | | $ | 2,230 | | | $ | 8,124 | |
Patents, licenses and software | | | 142,606 | | | 99,834 | | | 42,772 | |
Distribution network | | | 43,601 | | | 40,306 | | | 3,295 | |
Customer relationships, trademarks, and tradenames | | | 399,655 | | | 158,080 | | | 241,575 | |
| | | | | | | |
Total | | | $ | 596,216 | | | $ | 300,450 | | | $ | 295,766 | |
| | | | | | | | | | | | | | | | | |
| As of December 26, 2020 |
(in thousands) | Gross Carrying Value | | Accumulated Amortization | | Net Book Value |
Land use rights | $ | 10,280 | | | $ | 2,007 | | | $ | 8,273 | |
Patents, licenses and software | 137,210 | | | 92,868 | | | 44,342 | |
Distribution network | 43,910 | | | 38,980 | | | 4,930 | |
Customer relationships, trademarks, and tradenames | 372,064 | | | 137,722 | | | 234,342 | |
Total | $ | 563,464 | | | $ | 271,577 | | | $ | 291,887 | |
During the three months ended September 25, 2021 and September 26, 2020, the Company recorded amortization expense of $10.4 million and $10.1 million, respectively. During the nine months ended September 25, 2021 and September 26, 2020, the Company recorded amortization expense of $31.6 million and $29.9 million, respectively.
The Company recognized a $0.3 million non-cash impairment charge in the first quarter of 2020 on a certain patent triggered by the Company’s announcement to consolidate a manufacturing facility within the Industrial segment. | | | | | | | | | | | | | | |
(in thousands) | | July 2, 2022 | | January 1, 2022 |
Land and land improvements | | $ | 21,852 | | | $ | 23,470 | |
Building and building improvements | | 174,931 | | | 151,297 | |
Machinery and equipment | | 762,894 | | | 779,559 | |
| | | | |
Accumulated depreciation | | (523,994) | | | (516,437) | |
Total | | $ | 435,683 | | | $ | 437,889 | |
The Company recorded depreciation expense of $15.7 million and $13.6 million for the three months ended July 2, 2022 and June 26, 2021, respectively, and $31.3 million and $27.3 million for the six months ended July 2, 2022 and June 26, 2021, respectively.
5. Goodwill and Other Intangible Assets
Changes in the carrying value of goodwill by segment for the six months ended July 2, 2022 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | | Electronics | | Transportation | | Industrial | | Total |
Net book value of goodwill as of January 1, 2022 | | | | | | | | |
Gross goodwill as of January 1, 2022 | | $ | 660,245 | | | $ | 228,555 | | | $ | 86,232 | | | $ | 975,032 | |
Accumulated impairment losses as of January 1, 2022 | | — | | | (36,177) | | | (9,065) | | | (45,242) | |
Total | | 660,245 | | | 192,378 | | | 77,167 | | | 929,790 | |
Changes during 2022 | | | | | | | | |
Additions(a) | | — | | | 14,427 | | | — | | | 14,427 | |
| | | | | | | | |
Currency translation | | (23,903) | | | (5,578) | | | (378) | | | (29,859) | |
Net book value of goodwill as of July 2, 2022 | | | | | | | | |
Gross goodwill as of July 2, 2022 | | 636,342 | | | 235,068 | | | 85,761 | | | 957,171 | |
Accumulated impairment losses as of July 2, 2022 | | — | | | (33,841) | | | $ | (8,972) | | | (42,813) | |
Total | | $ | 636,342 | | | $ | 201,227 | | | $ | 76,789 | | | $ | 914,358 | |
(a) The additions resulted from the acquisition of Embed and Carling.
The components of other intangible assets as of July 2, 2022 and January 1, 2022 are as follows:
| | | | | | | | | | | | | | | | | | | |
| | | As of July 2, 2022 |
(in thousands) | | | Gross Carrying Value | | Accumulated Amortization | | Net Book Value |
Land use rights | | | $ | 18,974 | | | $ | 1,892 | | | $ | 17,082 | |
Patents, licenses and software | | | 177,174 | | | 114,658 | | | 62,516 | |
Distribution network | | | 41,575 | | | 39,834 | | | 1,741 | |
Customer relationships, trademarks, and tradenames | | | 458,150 | | | 164,896 | | | 293,254 | |
| | | | | | | |
Total | | | $ | 695,873 | | | $ | 321,280 | | | $ | 374,593 | |
| | | | | | | | | | | | | | | | | |
| As of January 1, 2022 |
(in thousands) | Gross Carrying Value | | Accumulated Amortization | | Net Book Value |
Land use rights | $ | 19,542 | | | $ | 1,906 | | | $ | 17,636 | |
Patents, licenses and software | 164,556 | | | 101,307 | | | 63,249 | |
Distribution network | 43,361 | | | 40,591 | | | 2,770 | |
Customer relationships, trademarks, and tradenames | 487,710 | | | 164,239 | | | 323,471 | |
Total | $ | 715,169 | | | $ | 308,043 | | | $ | 407,126 | |
During the three months ended July 2, 2022 and June 26, 2021, the Company recorded amortization expense of $11.6 million and $10.6 million, respectively. During the ninesix months ended September 25,July 2, 2022 and June 26, 2021, the Company recorded additions to intangible assetsamortization expense of $39.7$24.3 million related to the Hartland acquisition, the components of which were as follows:
and $21.2 million, respectively.
| | | | | | | | | | | |
(in thousands) | Weighted Average Useful Life | | Amount |
Patents, licenses and software | 9.2 | | $ | 7,559 | |
| | | |
Customer relationships, trademarks, and tradenames | 13.7 | | 32,101 | |
Total | | | $ | 39,660 | |
Estimated annual amortization expense related to intangible assets with definite lives as of September 25, 2021July 2, 2022 is as follows:
| | | | | |
(in thousands) | Amount |
2021 | $ | 41,922 | |
2022 | 40,761 | |
2023 | 36,461 | |
2024 | 33,038 | |
2025 | 33,019 | |
2026 and thereafter | 142,173 | |
Total | $ | 327,374 | |
| | | | | |
(in thousands) | Amount |
2022 | $ | 48,574 | |
2023 | 44,664 | |
2024 | 41,320 | |
2025 | 38,567 | |
2026 | 33,571 | |
2027 and thereafter | 192,213 | |
Total | $ | 398,909 | |
6. Accrued Liabilities
The components of accrued liabilities as of September 25, 2021July 2, 2022 and December 26, 2020January 1, 2022 are as follows:
| (in thousands) | (in thousands) | | September 25, 2021 | | December 26, 2020 | (in thousands) | | July 2, 2022 | | January 1, 2022 |
Employee-related liabilities | Employee-related liabilities | | $ | 80,034 | | | $ | 50,689 | | Employee-related liabilities | | $ | 64,857 | | | $ | 92,018 | |
Professional services | | Professional services | | 12,008 | | | 4,299 | |
Operating lease liability | Operating lease liability | | 8,649 | | | 6,811 | | Operating lease liability | | 9,177 | | | 9,018 | |
Other non-income taxes | Other non-income taxes | | 5,352 | | | 2,126 | | Other non-income taxes | | 6,492 | | | 4,280 | |
Professional services | | 3,375 | | | 3,321 | | |
Interest | | Interest | | 4,197 | | | 4,402 | |
Restructuring liability | Restructuring liability | | 3,075 | | | 4,195 | | Restructuring liability | | 3,020 | | | 2,944 | |
Interest | | 2,598 | | | 4,517 | | |
Current post-retirement benefits liability | | Current post-retirement benefits liability | | 1,248 | | | 1,248 | |
Deferred revenue | Deferred revenue | | 867 | | | 2,959 | | Deferred revenue | | 686 | | | 1,105 | |
Customer liability | | 740 | | | 3,858 | | |
| Other | Other | | 34,980 | | | 32,002 | | Other | | 35,692 | | | 40,375 | |
Total | Total | | $ | 139,670 | | | $ | 110,478 | | Total | | $ | 137,377 | | | $ | 159,689 | |
Employee-related liabilities consist primarily of payroll, sales commissions, bonus, employee benefit accruals and workers’ compensation. Bonus accruals include amounts earned pursuant to the Company’s primary employee incentive compensation plans. Other accrued liabilities include miscellaneous operating accruals and other client-related liabilities.
7. Restructuring, Impairment, and Other Charges
The Company recorded restructuring, impairment and other charges for the three and ninesix months ended September 25,July 2, 2022 and June 26, 2021 and September 26, 2020 as follows:
| | | Three months ended September 25, 2021 | | Nine months ended September 25, 2021 | | Three months ended July 2, 2022 | | Six months ended July 2, 2022 |
(in thousands) | (in thousands) | Electronics | | Automotive | | Industrial | | Total | | Electronics | | Automotive | | Industrial | | Total | (in thousands) | Electronics | | Transportation | | Industrial | | Total | | Electronics | | Transportation | | Industrial | | Total |
Employee terminations | Employee terminations | $ | 542 | | | $ | — | | | $ | 133 | | | $ | 675 | | | $ | 1,094 | | | $ | 416 | | | $ | 302 | | | $ | 1,812 | | Employee terminations | $ | 201 | | | $ | 423 | | | $ | — | | | $ | 624 | | | $ | 406 | | | $ | 423 | | | $ | — | | | $ | 829 | |
Other restructuring charges | Other restructuring charges | — | | | 97 | | | — | | | 97 | | | — | | | 186 | | | — | | | 186 | | Other restructuring charges | 3 | | | 7 | | | — | | | 10 | | | 3 | | | 20 | | | — | | | 23 | |
Total restructuring charges | Total restructuring charges | 542 | | | 97 | | | 133 | | | 772 | | | 1,094 | | | 602 | | | 302 | | | 1,998 | | Total restructuring charges | 204 | | | 430 | | | — | | | 634 | | | 409 | | | 443 | | | — | | | 852 | |
| Total | Total | $ | 542 | | | $ | 97 | | | $ | 133 | | | $ | 772 | | | $ | 1,094 | | | $ | 602 | | | $ | 302 | | | $ | 1,998 | | Total | $ | 204 | | | $ | 430 | | | $ | — | | | $ | 634 | | | $ | 409 | | | $ | 443 | | | $ | — | | | $ | 852 | |
| | | Three months ended September 26, 2020 | | Nine months ended September 26, 2020 | | Three months ended June 26, 2021 | | Six months ended June 26, 2021 |
(in thousands) | (in thousands) | Electronics | | Automotive | | Industrial | | Total | | Electronics | | Automotive | | Industrial | | Total | (in thousands) | Electronics | | Transportation | | Industrial | | Total | | Electronics | | Transportation | | Industrial | | Total |
Employee terminations | Employee terminations | $ | 388 | | | $ | 162 | | | $ | 648 | | | $ | 1,198 | | | $ | 2,125 | | | $ | 770 | | | $ | 1,719 | | | $ | 4,614 | | Employee terminations | $ | 295 | | | $ | 416 | | | $ | 6 | | | $ | 717 | | | $ | 552 | | | $ | 416 | | | $ | 169 | | | $ | 1,137 | |
Other restructuring charges | Other restructuring charges | — | | | — | | | 79 | | | 79 | | | — | | | 108 | | | 104 | | | 212 | | Other restructuring charges | — | | | 72 | | | — | | | 72 | | | — | | | 89 | | | — | | | 89 | |
Total restructuring charges | Total restructuring charges | 388 | | | 162 | | | 727 | | | 1,277 | | | 2,125 | | | 878 | | | 1,823 | | | 4,826 | | Total restructuring charges | 295 | | | 488 | | | 6 | | | 789 | | | 552 | | | 505 | | | 169 | | | 1,226 | |
Impairment | — | | | — | | | — | | | — | | | — | | | 33,841 | | | 2,237 | | | 36,078 | | |
| | Total | Total | $ | 388 | | | $ | 162 | | | $ | 727 | | | $ | 1,277 | | | $ | 2,125 | | | $ | 34,719 | | | $ | 4,060 | | | $ | 40,904 | | Total | $ | 295 | | | $ | 488 | | | $ | 6 | | | $ | 789 | | | $ | 552 | | | $ | 505 | | | $ | 169 | | | $ | 1,226 | |
20212022
For the three and ninesix months ended September 25, 2021,July 2, 2022, the Company recorded total restructuring charges of $0.8$0.6 million and $2.0$0.9 million, respectively, primarily for employee termination costs. These charges are primarily related to the reorganization of certain manufacturing, selling and administrative functions within the ElectronicsTransportation and AutomotiveElectronics segments.
20202021
For the three and ninesix months ended SeptemberJune 26, 2020,2021, the Company recorded total restructuring charges of $1.3$0.8 million and $4.8$1.2 million, respectively, primarily for employee termination costs and other restructuring charges.costs. These charges are primarily related to the reorganization of certain manufacturing, selling and administrative functions across all segments and the announced consolidation of a manufacturing facility within the Industrial segment. The Company also recognized $36.1 million of impairment charges for the nine months ended September 26, 2020, respectively, which included a $33.8 million goodwill impairment charge associated with the automotive sensors reporting unit within the Automotive segment in the second quarter of 2020Transportation and $2.2 million related to the land and building associated with the Company’s previously announced consolidation of a manufacturing facility within the Industrial segment in the first quarter of 2020. The impairment charges of the land and building were included in selling, general, and administrative expenses. See Note 5, Goodwill and Other Intangible Assets for further discussion regarding the goodwill impairment charge.Electronics segments.
The restructuring liability as of September 25, 2021July 2, 2022 and December 26, 2020 is $3.1January 1, 2022 is $3.0 million and $4.2$2.9 million, respectively. The restructuring liability is included within accrued liabilities in the Condensed ConsolidatedConsolidated Balance Sheets. The Company anticipates the remaining payments associated with employee terminations will primarily be completed by the third quarter ofin fiscal year 2022.
8. Debt
The carrying amounts of debt at September 25, 2021July 2, 2022 and December 26, 2020January 1, 2022 are as follows:
| (in thousands) | (in thousands) | | September 25, 2021 | | December 26, 2020 | (in thousands) | | July 2, 2022 | | January 1, 2022 |
Revolving Credit Facility | Revolving Credit Facility | | $ | 100,000 | | | $ | 130,000 | | Revolving Credit Facility | | $ | 100,000 | | | $ | 100,000 | |
| Term Loan | | Term Loan | | 300,000 | | | — | |
Euro Senior Notes, Series A due 2023 | Euro Senior Notes, Series A due 2023 | | 137,173 | | | 142,679 | | Euro Senior Notes, Series A due 2023 | | 122,533 | | | 132,444 | |
Euro Senior Notes, Series B due 2028 | Euro Senior Notes, Series B due 2028 | | 111,380 | | | 115,850 | | Euro Senior Notes, Series B due 2028 | | 99,494 | | | 107,540 | |
U.S. Senior Notes, Series A due 2022 | U.S. Senior Notes, Series A due 2022 | | 25,000 | | | 25,000 | | U.S. Senior Notes, Series A due 2022 | | — | | | 25,000 | |
U.S. Senior Notes, Series B due 2027 | U.S. Senior Notes, Series B due 2027 | | 100,000 | | | 100,000 | | U.S. Senior Notes, Series B due 2027 | | 100,000 | | | 100,000 | |
U.S. Senior Notes, Series A due 2025 | U.S. Senior Notes, Series A due 2025 | | 50,000 | | | 50,000 | | U.S. Senior Notes, Series A due 2025 | | 50,000 | | | 50,000 | |
U.S. Senior Notes, Series B due 2030 | U.S. Senior Notes, Series B due 2030 | | 125,000 | | | 125,000 | | U.S. Senior Notes, Series B due 2030 | | 125,000 | | | 125,000 | |
Other | | 2,619 | | | 2,619 | | |
| Unamortized debt issuance costs | Unamortized debt issuance costs | | (3,441) | | | (4,114) | | Unamortized debt issuance costs | | (4,958) | | | (3,087) | |
Total debt | Total debt | | 647,731 | | | 687,034 | | Total debt | | 892,069 | | | 636,897 | |
Less: Current maturities | Less: Current maturities | | (27,619) | | | — | | Less: Current maturities | | (7,500) | | | (25,000) | |
Total long-term debt | Total long-term debt | | $ | 620,112 | | | $ | 687,034 | | Total long-term debt | | $ | 884,569 | | | $ | 611,897 | |
Revolving Credit Facility and Term Loan
On June 30, 2022, the Company amended and restated its Credit Agreement, dated as of April 3, 2020 the Company amended its Credit Agreement(the “Credit Agreement”) to effect certain changes, including, among others:other changes: (i) eliminating the $200.0adding a $300 million unsecured term loan credit facility, the remaining outstanding balance ($140.0 million) of which was repaid in full on April 3, 2020 through the revolving credit facility; (ii) making certain financial and non-financial covenants less restrictive on the Company;Company and its subsidiaries; (iii) replacing LIBOR-based interest rate benchmarks and modifying performance-based interest rate margins and undrawn fees;margins; and (iv) extending the maturity date to April 3, 2025. The amendedJune 30, 2027 (the “Maturity Date”). Pursuant to the Credit Agreement, also allows the Company may, from time to time, increase the size of the revolving credit facility or enter into one or more tranches of term loans in minimum increments of $25 million if there is no event of default and the Company is in compliance with certain financial covenants. The Company made payments of $30.0 million on the amended revolving credit facility during the nine months ended September 25, 2021. The balance under the facility was $100.0 million as of September 25, 2021.
Outstanding borrowingsLoans made under the amendedavailable credit facility pursuant to the Credit Agreement bears("the Credit Facility") bear interest at the Company’s option, at either LIBOR,Secured Overnight Financing Rate ("SOFR"), fixed for interest periods of one, two, three or six-month periods, plus 1.25%1.00% to 2.00%1.75%, plus a SOFR adjustment of 0.10% or at the bank’s Base Rate, as defined in the Credit Agreement,, plus 0.25%—% to 1.00%0.75%, based upon the Company’s Consolidated Leverage Ratio, as defined.defined in the Credit Agreement. The Company is also required to pay commitment fees on unused portions of the credit agreementCredit Facility ranging from 0.125%0.10% to 0.20%0.175%, based on the Consolidated Leverage Ratio, as defined in the agreement.Credit Agreement. The amended Credit Agreement includes representations, covenants and events of default that are customary for financing transactions of this naturenature.
.
Revolving loans may be borrowed, repaid and reborrowed until the Maturity Date, at which time all amounts borrowed must be repaid. The effectiveCompany borrowed $300.0 million under a term loan on June 30, 2022. The principal balance of the term loans must be repaid in quarterly installments on the last day of each calendar quarter in the amount of $1.9 million commencing September 30, 2022, through June 30, 2024, and in the amount of $3.8 million commencing September 30, 2024, through March 31, 2027, with the remaining outstanding principal balance payable in full on the Maturity Date. Accrued interest on the loans is payable in arrears on each interest payment date applicable thereto and at such other times as may be specified in the Credit Agreement. Subject to certain conditions, (i) the Company may terminate or reduce the Aggregate Revolving Commitments, as defined in the Credit Agreement, in whole or in part, and (ii) the Company may prepay the revolving loans or the term loans at any time, without premium or penalty. The revolving loan and term loan balance under the Credit Facility was $100.0 million and $300.0 million, respectively, as of July 2, 2022.
On May 12, 2022, the Company entered into an interest rate swap agreement to manage interest rate risk exposure, effectively converting the interest rate on outstanding borrowings under the credit facilityCompany's SOFR based floating-rate loans to a fixed-rate. The interest rate swap, with a notional value of $200 million, was 1.33%designated as a cash flow hedge against the variability of cash flows associated with the Company's SOFR based loans scheduled to mature on September 25, 2021.June 30, 2027.
As of September 25, 2021,July 2, 2022, the effective interest rate on revolving loan and term loan outstanding borrowings was 2.875%.
As of July 2, 2022, the Company had no amount outstanding in letters of credit and had available $600.0 million of borrowing capacity under the Revolvingrevolving Credit Facility. As of of September 25, 2021,July 2, 2022, the Company was in compliance with all covenants underunder the Credit Agreement.
Debt Issuance Costs
During three and six months ended July 2, 2022, the Company paid debt issuance costs of $2.2 million in connection with the new amended Credit Agreement on June 30, 2022 which, along with the remaining balance of debt issuance costs of the previous credit facility, are being amortized over the life of the new amended Credit Agreement.
Senior Notes
On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold €212 million aggregate principal amount of senior notes in 2 series. The funding date for the Euro denominated senior notes occurred on December 8, 2016 for €117 million in aggregate amount of 1.14% Senior Notes, Series A, due December 8, 2023 (“Euro Senior Notes, Series A due 2023”), and €95 million in aggregate amount of 1.83% Senior Notes, Series B due December 8, 2028 (“Euro Senior Notes, Series B due 2028”) (together, the “Euro Senior Notes”). Interest on the Euro Senior Notes is payable semiannually on June 8 and December 8, commencing June 8, 2017.
On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold $125 million aggregate principal amount of senior notes in 2 series. On February 15, 2017, $25 million in aggregate principal amount of 3.03% Senior Notes, Series A, due February 15, 2022 (“U.S. Senior Notes, Series A due 2022”), and $100 million in
aggregate principal amount of 3.74% Senior Notes, Series B, due February 15, 2027 (“U.S. Senior Notes, Series B due 2027”) (together, the “U.S. Senior Notes due 2022 and 2027”) were funded. Interest on the U.S. Senior Notes due 2022 and 2027 is payable semiannually on February 15 and August 15, commencing August 15, 2017. During the six months ended July 2, 2022, the Company paid $25.0 million of U.S. Senior Notes, Series A due on February 15, 2022.
On November 15, 2017, the Company entered into a Note Purchase Agreement pursuant to which the Company issued and sold $175 million in aggregate principal amount of senior notes in 2 series. On January 16, 2018, $50 million aggregate principal amount of 3.48% Senior Notes, Series A, due February 15, 2025 (“U.S. Senior Notes, Series A due 2025”) and $125 million in aggregate principal amount of 3.78% Senior Notes, Series B, due February 15, 2030 (“U.S. Senior Notes, Series B due 2030”) (together, the “U.S. Senior Notes due 2025 and 2030” and with the Euro Senior Notes and the U.S. Senior Notes due 2022 and 2027, the “Senior Notes”) were funded. Interest on the U.S. Senior Notes due 2025 and 2030 is payable semiannually on February 15 and August 15, commencing on August 15, 2018.
On May 18, 2022, the above note purchase agreements were amended to, among other things, update certain terms, including financial covenants to be consistent with the terms of the 2022 Purchase Agreement, as defined below.
On May 18, 2022, the Company entered into a Note Purchase Agreement (“2022 Purchase Agreement”) pursuant to which the Company issued and funded on July 18, 2022 $100 million in aggregate principal amount of 4.33% Senior Notes, due June 30, 2032 (“U.S. Senior Notes, due 2032”) (together with the U.S. Senior Notes due 2025 and 2030, the Euro Senior Notes and the U.S. Senior Notes due 2022 and 2027, the “Senior Notes”). Interest on the U.S. Senior Notes due 2032 is payable semiannually on June 30 and December 30, commencing on December 30, 2032.
The Senior Notes have not been registered under the Securities Act, or applicable state securities laws. The Senior Notes are general unsecured senior obligations and rank equal in right of payment with all existing and future unsecured unsubordinated indebtedness of the Company.
The Senior Notes are subject to certain customary covenants, including limitations on the Company’s ability, with certain exceptions, to engage in mergers, consolidations, asset sales and transactions with affiliates, to engage in any business that would substantially change the general business of the Company, and to incur liens. In addition, the Company is required to satisfy certain financial covenants and tests relating to, among other matters, interest coverage and leverage. At September 25, 2021,July 2, 2022, the Company was in compliance with all covenants under the Senior Notes.
The Company may redeem the Senior Notes upon the satisfaction of certain conditions and the payment of a make-whole amount to noteholders and are required to offer to repurchase the Senior Notes at par following certain events, including a change of control.
Interest paid on all Company debt was $6.1$2.3 million and $6.4$2.5 million for the three months ended September 25,July 2, 2022 and June 26, 2021 and September 26, 2020,, respectively, and $14.8$8.4 million and $17.2$8.7 million for the ninesix months ended September 25,July 2, 2022 and June 26, 2021, and September 26, 2020, respectively.
9. Fair Value of Assets and Liabilities
For assets and liabilities measured at fair value on a recurring and nonrecurring basis, a three-level hierarchy of measurements based upon observable and unobservable inputs is used to arrive at fair value. Observable inputs are developed based on market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions about valuation based on the best information available in the circumstances. Depending on the inputs, the Company classifies each fair value measurement as follows:
Level 1—Valuations based on unadjusted quoted prices for identical assets or liabilities in active markets;
Level 2—Valuations based upon quoted prices for similar instruments, prices for identical or similar instruments in markets that are not active, or model-derived valuations, all of whose significant inputs are observable, and
Level 3—Valuations based upon one or more significant unobservable inputs.
Following is a description of the valuation methodologies used for instruments measured at fair value and their classification in the valuation hierarchy.
Cash Equivalents
Cash equivalents primarily consist of money market funds, which are held with an institution with sound credit rating and are highly liquid. The Company classified cash equivalents as Level 1 and are valued at cost which approximates fair value.
Investments in Equity Securities
Investments in equity securities listed on a national market or exchange are valued at the last sales price and classified within Level 1 of the valuation hierarchy and recorded in investmentsInvestments and otherOther long-term assets.
Other InvestmentsDerivatives
On May 12, 2022, the Company entered into an interest rate swap agreement to manage interest rate risk exposure, effectively converting the interest rate on the Company's SOFR based floating-rate loans to a fixed-rate. The interest rate swap, with a notional value of $200 million, was designated as a cash flow hedge against the variability of cash flows associated with the Company's SOFR based loans scheduled to mature on June 30, 2027. The fair value of the interest rate swap was valued using an independent third-party valuation model. Changes in fair value of derivatives that are designated as cash flow hedges are deferred in accumulated other comprehensive (loss) income until the underlying transactions are recognized in earnings. The primary inputs into the valuation of the interest rate swap are interest yield curves, interest rate volatility, credit risk, credit spreads and other market information. The interest rate swap is classified within Level 2 of the fair value hierarchy, since all significant inputs are corroborated by market observable data. There were no transfers in or out of Level 1, Level 2 and Level 3 during the period.
The use of derivatives creates exposure to credit risk relating to potential losses that could be recognized in the event that the counterparties to these instruments fail to perform their obligations under the contracts. The Company seeks to minimize this risk by limiting our counterparties to major financial institutions with acceptable credit ratings and monitoring the total value of positions with individual counterparties. In the event of a default by one of our counterparties, the Company may not receive payments provided for under the terms of our derivatives.
As of July 2, 2022, the fair values of our derivative financial instrument and their classifications on the Condensed Consolidated Balance Sheets was as follows:
| | | | | | | | | | | | | |
(in thousands) | Consolidated Balance Sheet Classification | | July 2, 2022 | | |
Derivative assets | | | | | |
Interest rate swap agreement: | | | | | |
Designated as cash flow hedge | Prepaid expenses and other current assets | | $ | 206 | | | |
| Other long-term liabilities | | $ | 918 | | | |
| | | | | |
The Company has certain convertible debt and convertible preferred stock investments that are accounted for under the cost method reflected in other assets in the Condensed Consolidated Balance Sheets. During the nine months ended September 25, 2021, the Company impaired the remaining book value of these investments and recorded an impairment charge of $0.5 million and during the three and nine months ended September 26, 2020, the Company recorded impairment charges of $0.1 million in Other income, netpre-tax losses recognized on derivative financial instruments in the Condensed Consolidated Statements of Net Income. AsOperations for the three and six months ended July 2, 2022 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Three Months Ended | | Six Months Ended |
(in thousands) | | Classification of Loss Recognized in the Condensed Consolidated Statements of Operations | | July 2, 2022 | | | | July 2, 2022 | | |
Derivatives designated as cash flow hedges | | | | | | | | | | |
Interest rate swap agreement | | Interest expense, net | | 21 | | | | | 21 | | | |
The pre-tax losses recognized on derivative financial instruments in the Condensed Consolidated Statements of December 26, 2020,Comprehensive Income for the balancethree and six months ended July 2, 2022 were as follows:
| | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
(in thousands) | | July 2, 2022 | | | | July 2, 2022 | | |
Derivatives designated as cash flow hedges | | | | | | | | |
Interest rate swap agreement | | $ | 712 | | | | | $ | 712 | | | |
The pre-tax gain of these investments was $0.5 million. The fair value of these investments$0.2 million from accumulated other comprehensive (loss) to earnings is measured on a nonrecurring basis using Level 3 inputs underexpected to be recognized during the fair value hierarchy.next twelve months.
Mutual Funds
The Company has a non-qualified Supplemental Retirement and Savings Plan which provides additional retirement benefits for certain management employees and named executive officers by allowing participants to defer a portion of their annual compensation. The Company maintains accounts for participants through which participants make investment elections. The marketable securities are classified as Level 1 under the fair value hierarchy as they are maintained in mutual funds with readily determinable fair value and recorded in otherOther long-term assets.
There werweere no changes during the quarter ended September 25, 2021July 2, 2022 to the Company’s valuation techniques used to measure asset and liability fair values on a recurring basis. As of September 25, 2021July 2, 2022 and December 26, 2020,January 1, 2022, the Company did not hold any non-financial assets or liabilities that are required to be measured at fair value on a recurring basis.
The following table presents assets measured at fair value by classification within the fair value hierarchy as of September 25, 2021:July 2, 2022:
| | | | Fair Value Measurements Using | | | | | Fair Value Measurements Using | | |
(in thousands) | (in thousands) | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Total | (in thousands) | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Total |
Cash equivalents | Cash equivalents | | $ | 15,970 | | | $ | — | | | $ | — | | | $ | 15,970 | | Cash equivalents | | $ | 251,502 | | | $ | — | | | $ | — | | | $ | 251,502 | |
Investments in equity securities | Investments in equity securities | | 27,358 | | | — | | | — | | | 27,358 | | Investments in equity securities | | 12,112 | | | — | | | — | | | 12,112 | |
Mutual funds | Mutual funds | | 14,711 | | | — | | | — | | | 14,711 | | Mutual funds | | 13,441 | | | — | | | — | | | 13,441 | |
Total | Total | | $ | 58,039 | | | $ | — | | | $ | — | | | $ | 58,039 | | Total | | $ | 277,055 | | | $ | — | | | $ | — | | | $ | 277,055 | |
The following table presents assets measured at fair value by classification within the fair value hierarchy as of December 26, 2020:January 1, 2022:
| | | | Fair Value Measurements Using | | | | | Fair Value Measurements Using | | |
(in thousands) | (in thousands) | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Total | (in thousands) | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Total |
Cash equivalents | Cash equivalents | | $ | 73,461 | | | $ | — | | | $ | — | | | $ | 73,461 | | Cash equivalents | | $ | 12,475 | | | $ | — | | | $ | — | | | $ | 12,475 | |
Investments in equity securities | Investments in equity securities | | 19,186 | | | — | | | — | | | 19,186 | | Investments in equity securities | | 26,070 | | | — | | | — | | | 26,070 | |
Mutual funds | Mutual funds | | 13,249 | | | — | | | — | | | 13,249 | | Mutual funds | | 15,021 | | | — | | | — | | | 15,021 | |
Total | Total | | $ | 105,896 | | | $ | — | | | $ | — | | | $ | 105,896 | | Total | | $ | 53,566 | | | $ | — | | | $ | — | | | $ | 53,566 | |
In0In addition to the methods and assumptions used for the financial instruments recorded at fair value as discussed above, the following methods and assumptions are used to estimate the fair value of other financial instruments that are not marked to market on a recurring basis. The Company’s other financial instruments include cash and cash equivalents, short-term investments, accounts receivable and its long-term debt. Due to their short-term maturity, the carrying amounts of cash and cash equivalents, short-term investments and accounts receivable approximate their fair values. The Company’s revolving credit facilities’Credit Facilities’ fair values approximate book value at September 25, 2021July 2, 2022 and December 26, 2020,January 1, 2022, as the rates on these borrowings are variable in nature.
The carrying value and estimated fair values of the Company’s Euro Senior Notes, Series A and Series B and USD Senior Notes, Series A and Series B, as of September 25, 2021July 2, 2022 and December 26, 2020January 1, 2022 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 25, 2021 | | December 26, 2020 |
(in thousands) | | Carrying Value | | Estimated Fair Value | | Carrying Value | | Estimated Fair Value |
Euro Senior Notes, Series A due 2023 | | $ | 137,173 | | | $ | 138,825 | | | $ | 142,679 | | | $ | 144,323 | |
Euro Senior Notes, Series B due 2028 | | 111,380 | | | 116,425 | | | 115,850 | | | 123,588 | |
USD Senior Notes, Series A due 2022 | | 25,000 | | | 25,167 | | | 25,000 | | | 25,437 | |
USD Senior Notes, Series B due 2027 | | 100,000 | | | 106,585 | | | 100,000 | | | 109,552 | |
USD Senior Notes, Series A due 2025 | | 50,000 | | | 52,567 | | | 50,000 | | | 53,474 | |
USD Senior Notes, Series B due 2030 | | 125,000 | | | 133,376 | | | 125,000 | | | 138,036 | |
The Company recognized impairment charges of $1.9 million for the land and building and $0.3 million for a certain patent as a result of the Company’s announcement to consolidate a manufacturing facility within the Industrial segment during the first quarter of 2020. See Note 7, Restructuring, Impairment, and Other Charges, for further discussion. The fair value of the land and building was valued using a real estate appraisal and classified as a Level 3 input under the fair value hierarchy. | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | July 2, 2022 | | January 1, 2022 |
(in thousands) | | Carrying Value | | Estimated Fair Value | | Carrying Value | | Estimated Fair Value |
Euro Senior Notes, Series A due 2023 | | $ | 122,533 | | | $ | 121,472 | | | $ | 132,444 | | | $ | 134,119 | |
Euro Senior Notes, Series B due 2028 | | 99,494 | | | 91,857 | | | 107,540 | | | 110,837 | |
USD Senior Notes, Series A due 2022 | | — | | | — | | | 25,000 | | | 25,055 | |
USD Senior Notes, Series B due 2027 | | 100,000 | | | 96,318 | | | 100,000 | | | 104,828 | |
USD Senior Notes, Series A due 2025 | | 50,000 | | | 48,762 | | | 50,000 | | | 51,720 | |
USD Senior Notes, Series B due 2030 | | 125,000 | | | 117,255 | | | 125,000 | | | 131,837 | |
10. Benefit Plans
The Company has company-sponsored defined benefit pension plans covering employees in the U.K., Germany, the Philippines, China, Japan, Mexico, Italy and France. The amount of the retirement benefits provided under the plans is based on years of service and final average pay.
The Company recognizes interest cost, expected return on plan assets, and amortization of prior service, net within Other income,expense (income), net in the Condensed Consolidated Statements of Net Income. The components of net periodic benefit cost for the three and ninesix months ended September 25,July 2, 2022 and June 26, 2021 and September 26, 2020 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | For the Nine Months Ended |
(in thousands) | | September 25, 2021 | | September 26, 2020 | | September 25, 2021 | | September 26, 2020 |
Components of net periodic benefit cost: | | | | | | | | |
Service cost | | $ | 684 | | | $ | 615 | | | $ | 2,086 | | | $ | 1,825 | |
Interest cost | | 434 | | | 511 | | | 1,317 | | | 1,655 | |
Expected return on plan assets | | (361) | | | (422) | | | (1,099) | | | (1,551) | |
Amortization of prior service and net actuarial loss | | 327 | | | 279 | | | 992 | | | 688 | |
Net periodic benefit cost | | $ | 1,084 | | | $ | 983 | | | $ | 3,296 | | | $ | 2,617 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | For the Six Months Ended |
(in thousands) | | July 2, 2022 | | June 26, 2021 | | July 2, 2022 | | June 26, 2021 |
Components of net periodic benefit cost: | | | | | | | | |
Service cost | | $ | 750 | | | $ | 700 | | | $ | 1,518 | | | $ | 1,402 | |
Interest cost | | 628 | | | 443 | | | 1,272 | | | 883 | |
Expected return on plan assets | | (380) | | | (371) | | | (783) | | | (738) | |
Amortization of prior service and net actuarial loss | | 96 | | | 334 | | | 197 | | | 665 | |
Net periodic benefit cost | | $ | 1,094 | | | $ | 1,106 | | | $ | 2,204 | | | $ | 2,212 | |
The Company expects to make approximately $2.2$2.6 million of contributions to the plans and pay $3.8$1.8 million of benefits directly in 2021.2022.
The Company also sponsors certain post-employment plans in foreign countries and other statutory benefit plans. The Company recorded expense of $0.6 million and $0.5 million for both the three months ended September 25, 2021July 2, 2022 and SeptemberJune 26, 20202021, respectively, and $1.6$1.0 million and $1.5 million expense for both the ninesix months ended September 25, 2021July 2, 2022 and SeptemberJune 26, 2020,2021, respectively,in Cost of Sales and Other income,expense (income), net within the Condensed Consolidated Statements of Net Income. For the three and nine months ended September 25, 2021, theThe pre-tax amounts recognized in other comprehensive income (loss) as components of net periodic benefit costs for these plans were$0.2 million and $0.5 million, respectively. For the three and nine months ended September 26, 2020, the pre-tax amounts recognized in other comprehensive income (loss)loss (income) as components of net periodic benefit costs for these plans were $0.1 million and $0.2 million for the three months ended July 2, 2022 and June 26, 2021, respectively, and$0.2 million and $0.5$0.3 million for the six months ended July 2, 2022 and June 26, 2021, respectively.
On April 7, 2020, the Company entered into a definitive agreement to purchase a group annuity contract, under which an insurance company will be required to directly pay and administer pension payments to certain of the Company’s U.K. pension plan participants, or their designated beneficiaries. The purchase of this group annuity contract will reduce the Company’s outstanding pension benefit obligation by approximately $55 million, representing approximately 37% of the total obligations of the Company’s qualified pension plans, and will be funded with pension plan assets and additional cash on hand. In connection with this transaction, the Company will record a one-time non-cash settlement charge currently estimated between $18 million and $22 million in the fourth quarter of 2021, reflecting the accelerated recognition of unamortized actuarial losses in the plan. The actual amount and timing of the settlement charge could differ from this estimate due to final data and plan wind-up expenses. Due to the signing of the group annuity contract being a significant change in the U.K. pension plan, the liabilities of the plan were remeasured as of April 6, 2020 resulting in an increase of $13.4 million (£10.9 million) to both the net pension liability and unamortized actuarial loss within other comprehensive income (loss) during the second quarter of 2020. Additionally, the Company made a cash contribution of $10.4 million (£8.4 million) under this agreement during the second quarter of 2020.
11. Other Comprehensive (Loss) Income
Changes in other comprehensive (loss) income (loss) by component were as follows:
| (in thousands) | (in thousands) | | Three Months Ended September 25, 2021 | | Three Months Ended September 26, 2020 | (in thousands) | | Three Months Ended July 2, 2022 | | Three Months Ended June 26, 2021 |
| | Pre-tax | | Tax | | Net of Tax | | Pre-tax | | Tax | | Net of Tax | | Pre-tax | | Tax | | Net of Tax | | Pre-tax | | Tax | | Net of Tax |
Defined benefit pension plan and other adjustments | Defined benefit pension plan and other adjustments | | $ | 601 | | | $ | 114 | | | $ | 487 | | | $ | 273 | | | $ | (290) | | | $ | 563 | | Defined benefit pension plan and other adjustments | | $ | 722 | | | $ | 83 | | | $ | 639 | | | $ | 372 | | | $ | 43 | | | $ | 329 | |
| Cash flow hedge | | Cash flow hedge | | (712) | | | (171) | | | (541) | | | — | | | — | | | — | |
Foreign currency translation adjustments(1) | Foreign currency translation adjustments(1) | | (5,441) | | | — | | | (5,441) | | | 16,418 | | | — | | | 16,418 | | Foreign currency translation adjustments(1) | | (32,167) | | | (720) | | | (31,447) | | | 5,125 | | | — | | | 5,125 | |
Total change in other comprehensive (loss) income | Total change in other comprehensive (loss) income | | $ | (4,840) | | | $ | 114 | | | $ | (4,954) | | | $ | 16,691 | | | $ | (290) | | | $ | 16,981 | | Total change in other comprehensive (loss) income | | $ | (32,157) | | | $ | (808) | | | $ | (31,349) | | | $ | 5,497 | | | $ | 43 | | | $ | 5,454 | |
| (in thousands) | (in thousands) | | Nine Months Ended September 25, 2021 | | Nine Months Ended September 26, 2020 | (in thousands) | | Six Months Ended July 2, 2022 | | Six Months Ended June 26, 2021 |
| | Pre-tax | | Tax | | Net of Tax | | Pre-tax | | Tax | | Net of Tax | | Pre-tax | | Tax | | Net of Tax | | Pre-tax | | Tax | | Net of Tax |
Defined benefit pension plan adjustments | Defined benefit pension plan adjustments | | $ | 1,479 | | | $ | 209 | | | $ | 1,270 | | | (12,270) | | | (2,555) | | | $ | (9,715) | | Defined benefit pension plan adjustments | | $ | 1,045 | | | $ | 96 | | | $ | 949 | | | 878 | | | 95 | | | $ | 783 | |
| Cash flow hedge | | Cash flow hedge | | (712) | | | (171) | | | (541) | | | — | | | — | | | — | |
Foreign currency translation adjustments(1) | Foreign currency translation adjustments(1) | | (5,641) | | | — | | | (5,641) | | | $ | 9,300 | | | $ | — | | | $ | 9,300 | | Foreign currency translation adjustments(1) | | (35,382) | | | (1,422) | | | (33,960) | | | $ | (200) | | | $ | — | | | $ | (200) | |
Total change in other comprehensive (loss) income | Total change in other comprehensive (loss) income | | $ | (4,162) | | | $ | 209 | | | $ | (4,371) | | | $ | (2,970) | | | $ | (2,555) | | | $ | (415) | | Total change in other comprehensive (loss) income | | $ | (35,049) | | | $ | (1,497) | | | $ | (33,552) | | | $ | 678 | | | $ | 95 | | | $ | 583 | |
Due to(1) The tax shown above within the signingforeign currency translation adjustments is the U.S. tax associated with the foreign currency translation adjustments of the group annuity contract being a significant changeearnings of non-U.S. subsidiaries which have been previously taxed in the U.K. pension plan, the liabilities of the plan were remeasured as of April 6, 2020 resulting in an increase of $13.4 million to unamortized actuarial loss within other comprehensive income (loss). See Note 10, Benefit Plans for further discussion.U.S. and are not permanently reinvested.
The following tables set forth the changes in accumulated other comprehensive (loss) income by component for the ninesix months ended September 25, 2021July 2, 2022 and SeptemberJune 26, 2020:2021:
| (in thousands) | (in thousands) | | Defined benefit pension plan and other adjustments | | | Foreign currency translation adjustment | | Accumulated other comprehensive (loss) | (in thousands) | | Defined benefit pension plan and other adjustments | | Cash flow hedge | | Foreign currency translation adjustment | | Accumulated other comprehensive loss |
Balance at December 26, 2020 | | $ | (34,141) | | | | $ | (57,016) | | | $ | (91,157) | | |
Balance at January 1, 2022 | | Balance at January 1, 2022 | | $ | (11,928) | | | $ | — | | | $ | (61,535) | | | $ | (73,463) | |
| Activity in the period | Activity in the period | | 1,270 | | | | (5,641) | | | (4,371) | | Activity in the period | | 949 | | | (541) | | | (33,960) | | | (33,552) | |
Balance at September 25, 2021 | | $ | (32,871) | | | | $ | (62,657) | | | $ | (95,528) | | |
Balance at July 2, 2022 | | Balance at July 2, 2022 | | $ | (10,979) | | | $ | (541) | | | $ | (95,495) | | | $ | (107,015) | |
| (in thousands) | (in thousands) | | Defined benefit pension plan and other adjustments | | | Foreign currency translation adjustment | | Accumulated other comprehensive (loss) | (in thousands) | | Defined benefit pension plan and other adjustments | | | Foreign currency translation adjustment | | Accumulated other comprehensive loss |
Balance at December 28, 2019 | | $ | (18,046) | | | | $ | (88,777) | | | $ | (106,823) | | |
Balance at December 26, 2020 | | Balance at December 26, 2020 | | $ | (34,141) | | | | $ | (57,016) | | | $ | (91,157) | |
| Activity in the period | Activity in the period | | (9,715) | | | | 9,300 | | | (415) | | Activity in the period | | 783 | | | | (200) | | | 583 | |
Balance at September 26, 2020 | | $ | (27,761) | | | | $ | (79,477) | | | $ | (107,238) | | |
Balance at June 26, 2021 | | Balance at June 26, 2021 | | $ | (33,358) | | | | $ | (57,216) | | | $ | (90,574) | |
Amounts reclassified from accumulated other comprehensive (loss) income to earnings for the three and ninesix months ended September 25,July 2, 2022 and June 26, 2021 and September 26, 2020 were as follows:
| | | | Three Months Ended | | Nine Months Ended | | | Three Months Ended | | Six Months Ended |
(in thousands) | (in thousands) | | September 25, 2021 | | September 26, 2020 | | September 25, 2021 | | September 26, 2020 | (in thousands) | | July 2, 2022 | | June 26, 2021 | | July 2, 2022 | | June 26, 2021 |
Pension and Postemployment plans: | Pension and Postemployment plans: | | | | | | | | | Pension and Postemployment plans: | | | | | | | | |
Amortization of prior service and net actuarial loss | Amortization of prior service and net actuarial loss | | $ | 501 | | | $ | 452 | | | $ | 1,514 | | | $ | 1,226 | | Amortization of prior service and net actuarial loss | | $ | 198 | | | $ | 509 | | | $ | 395 | | | $ | 774 | |
|
The Company recognizes the amortization of prior service costs in Other income,expense (income), net within the Condensed Consolidated Statements of Net Income.
12. Income Taxes
The effective tax rate for the three and ninesix months ended September 25, 2021July 2, 2022 was 19.0%20.6% and 17.6%16.1%, respectively, compared to the effective tax rate for the three and ninesix months ended SeptemberJune 26, 20202021 of 17.9%13.8% and 23.1%16.7%, respectively. The effective tax rate for the thirdsecond quarter of 20212022 is higher than the effective tax rate for the comparable 20202021 period, primarily due to a reductionforeign exchange losses with no related tax benefit in the 2022 period, as compared to foreign exchange gains with limited tax expense during the third quarter of 2020 in the estimated 2020 annual effective tax rate, the impact of which was recorded during the third quarter of 2020.comparable 2021 period.
The effective tax rate for the first ninesix months of 2021the 2022 period is lower than the applicable U.S. statutory tax rate due to a one-time deduction that resulted from the dissolution of one of the Company’s affiliates, as well as the forecasted impact of income earned in lower tax jurisdictions. The effective tax rate for the comparable 2020 period, primarily due to an increase in the forecasted income earned in lower tax jurisdictions in 2021 as compared to 2020, as well as the impact of the goodwill impairment charge of $33.8 million recorded in the second quarter of 2020, the substantial majority of which did not result in a tax benefit in the annual estimated effective tax rate. The effective tax rate for the 2021 period is lower than the applicable U.S. statutory tax rate primarily due to the forecasted impact of income earned in lower tax jurisdictions.
13. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:
| | | | Three Months Ended | | Nine Months Ended | | | Three Months Ended | | Six Months Ended |
(in thousands, except per share amounts) | (in thousands, except per share amounts) | | September 25, 2021 | | September 26, 2020 | | September 25, 2021 | | September 26, 2020 | (in thousands, except per share amounts) | | July 2, 2022 | | June 26, 2021 | | July 2, 2022 | | June 26, 2021 |
Numerator: | Numerator: | | | | | | | | | Numerator: | | | | | | | | |
Net income as reported | Net income as reported | | $ | 92,054 | | | $ | 55,356 | | | $ | 231,862 | | | $ | 71,009 | | Net income as reported | | $ | 87,016 | | | $ | 82,095 | | | $ | 204,534 | | | $ | 139,808 | |
| Denominator: | Denominator: | | Denominator: | |
Weighted average shares outstanding | Weighted average shares outstanding | | Weighted average shares outstanding | |
Basic | Basic | | 24,622 | | | 24,357 | | | 24,582 | | | 24,354 | | Basic | | 24,734 | | | 24,592 | | | 24,712 | | | 24,562 | |
Effect of dilutive securities | Effect of dilutive securities | | 304 | | | 216 | | | 322 | | | 181 | | Effect of dilutive securities | | 251 | | | 308 | | | 274 | | | 332 | |
Diluted | Diluted | | 24,926 | | | 24,573 | | | 24,904 | | | 24,535 | | Diluted | | 24,985 | | | 24,900 | | | 24,986 | | | 24,894 | |
| Earnings Per Share: | Earnings Per Share: | | Earnings Per Share: | |
Basic earnings per share | Basic earnings per share | | $ | 3.74 | | | $ | 2.27 | | | $ | 9.43 | | | $ | 2.92 | | Basic earnings per share | | $ | 3.52 | | | $ | 3.34 | | | $ | 8.28 | | | $ | 5.69 | |
Diluted earnings per share | Diluted earnings per share | | $ | 3.69 | | | $ | 2.25 | | | $ | 9.31 | | | $ | 2.89 | | Diluted earnings per share | | $ | 3.48 | | | $ | 3.30 | | | $ | 8.19 | | | $ | 5.62 | |
Potential shares of common stock relating to stock options and restricted share units excluded from the earnings per share calculation because their effect would be anti-dilutive were 57,93688,130 and 290,26241,216 for the three months ended September 25,July 2, 2022 and June 26, 2021, and September 26, 2020, respectively, and 32,77372,970 and 194,85720,266 for the ninesix months ended September 25,July 2, 2022 and June 26, 2021, and September 26, 2020, respectively.
Share Repurchase Program
On April 26, 2019, the Company's Board of Directors authorized a program to repurchase up to 1,000,000 shares of the Company's common stock for the period May 1, 2019 to April 30, 2020 ("2019 program"). On April 29, 2020, the Company announced that the Board of Directors authorized a new program to repurchase up to 1,000,000 shares of the Company's common stock for the period May 1, 2020 to April 30, 2021 (the "2020 program") to replace its previous expired 2019 program. On April 28, 2021, the Company announced that the Board of Directors authorized a new three year program to repurchase up to $300.0 million in the aggregate of shares of the Company’s common stock for the period May 1, 2021 to April 30, 2024 to replace its previous 2020 program.
The Company did not repurchase any shares of its common stock for the three and ninesix months ended September 25,July 2, 2022, and June 26, 2021. During the nine months ended September 26, 2020, the Company repurchased 175,110 shares of its common stock totaling $22.9 million.
14. Related Party Transactions
The Company has equity ownership in various investments that are accounted for under the equity method. The following is a description of the investments and related party transactions.
Powersem GmbH: The Company owns 45% of the outstanding equity of Powersem GmbH (“Powersem”), a module manufacturer based in Germany.
EB-Tech Co., Ltd.: The Company owns approximately 19% of the outstanding equity of EB Tech Co., Ltd. (“EB Tech”), a company with expertise in radiation technology based in South Korea.
Automated Technology (Phil), Inc.: The Company owns approximately 24% of the outstanding common shares of Automated Technology (Phil), Inc. (“ATEC”), a supplier located in the Philippines that provides assembly and test services. One member of the Company's Board of Directors serves on the Board of Directors of ATEC.
| | | | For the Three Months Ended September 25, 2021 | | For the Three Months Ended September 26, 2020 | | | Three Months Ended July 2, 2022 | | Three Months Ended June 26, 2021 |
(in millions) | (in millions) | | Powersem | EB Tech | ATEC | | Powersem | EB Tech | ATEC | (in millions) | | Powersem | EB Tech | ATEC | | Powersem | EB Tech | ATEC |
Sales to related party | | $ | — | | $ | — | | $ | — | | | $ | 0.4 | | $ | — | | $ | — | | |
| Purchase material/service from related party | Purchase material/service from related party | | 0.8 | | 0.1 | | 3.1 | | | 0.8 | | — | | 2.4 | | Purchase material/service from related party | | $ | 0.1 | | $ | 0.1 | | $ | 3.0 | | | $ | 0.7 | | $ | 0.1 | | $ | 2.8 | |
| | | For the Nine Months Ended September 25, 2021 | | For the Nine Months Ended September 26, 2020 | | For the Six Months Ended July 2, 2022 | | For the Six Months Ended June 26, 2021 |
(in millions) | (in millions) | | Powersem | EB Tech | ATEC | | Powersem | EB Tech | ATEC | (in millions) | | Powersem | EB Tech | ATEC | | Powersem | EB Tech | ATEC |
Sales to related party | Sales to related party | | $ | 0.2 | | $ | — | | $ | — | | | $ | 1.1 | | $ | — | | $ | — | | Sales to related party | | $ | — | | $ | — | | $ | — | | | $ | 0.2 | | $ | — | | $ | — | |
Purchase material/service from related party | Purchase material/service from related party | | 2.6 | | 0.3 | | 8.9 | | | 1.8 | | — | | 5.8 | | Purchase material/service from related party | | 0.3 | | 0.2 | | 5.9 | | | 1.8 | | 0.2 | | 5.8 | |
| | | | September 25, 2021 | | December 26, 2020 | | | July 2, 2022 | | January 1, 2022 |
(in millions) | (in millions) | | Powersem | EB Tech | ATEC | | Powersem | EB Tech | ATEC | (in millions) | | Powersem | EB Tech | ATEC | | Powersem | EB Tech | ATEC |
Accounts receivable balance | | $ | — | | $ | — | | $ | — | | | $ | 0.1 | | $ | — | | $ | — | | |
| Accounts payable balance | Accounts payable balance | | 0.1 | | — | | 2.1 | | | 0.1 | | — | | 0.2 | | Accounts payable balance | | $ | — | | $ | — | | $ | 1.8 | | | $ | — | | $ | — | | $ | 1.8 | |
15. Segment Information
The Company and its subsidiaries design, manufacture and sell componentscomponent, modules and modules empowering a sustainable, connected,subassemblies to empower the long-term structural themes of sustainability, connectivity and safer world.safety. The Company reports its operations by the following segments: Electronics, Automotive,Transportation, and Industrial. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, and about which separate financial information is regularly evaluated by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources. The CODM is the Company’s President and Chief Executive Officer (“CEO”). The CODM allocates resources to and assesses the performance of each operating segment using information about its revenue and operating income (loss) before interest and taxes, but does not evaluate the operating segments using discrete balance sheet information.
Sales, marketing, and research and development expenses are charged directly into each operating segment. Purchasing, logistics, customer service, finance, information technology, and human resources are shared functions that are allocated back to the 3 operating segments. The Company does not report inter-segment revenue because the operating segments do not record it. Certain expenses, determined by the CODM to be strategic in nature and not directly related to segments'segments current results, are not allocated but identified as “Other”. Additionally, the Company does not allocate interest and other income, interest expense, or taxes to operating segments. These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments. Although the CODM uses operating income (loss) to evaluate the segments, operating costs included in one segment may benefit other segments. Except as discussed above, the accounting policies for segment reporting are the same as for the Company as a whole.
•Electronics Segment: Consists of one of the broadest product offerings in the industry, including fuses and fuse accessories, positive temperature coefficient (“PTC”) resettable fuses, polymer electrostatic discharge (“ESD”) suppressors, varistors, reed switch based magnetic sensing, gas discharge tubes; semiconductor products such as discrete transient voltage suppressor (“TVS”) diodes, TVS diode arrays, protection and switching thyristors, silicon and silicon carbide metal-oxide-semiconductor field effect transistors (“MOSFETs”) and silicon carbide diodes; and insulated gate bipolar transistors (“IGBT”) technologies. The segment covers a broad range of end markets, including industrial motor drives and power conversion, automotive electronics, electric vehicle and related infrastructure, power supplies, data centers and telecommunications, medical devices, alternative energy and energy storage, building and home automation, appliances, and mobile electronics.
•AutomotiveTransportation Segment:Consists of a wide range of circuit protection, power control and sensing technologies for global original equipment manufacturers (“OEMs”), Tier-ITier-one suppliers and parts and aftermarket distributors in passenger car, heavy dutyvehicle, heavy-duty truck, off-road vehicles,vehicle, material handling, agricultural, construction and other commercial vehicle end markets. Passenger car fusevehicle products forare used in internal combustion engine, hybrid and electric vehicles including blade fuses, battery cable protectors, resettable fuses, high-current fuses, high-voltage fuses, and high-voltage fuses.sensor products designed to monitor the occupant’s safety and environment as well as the vehicle’s powertrain. Commercial vehicle products include fuses, switches, circuit breakers, relays, and power distribution modules and units used in applications serving a number of end markets, including heavyheavy-duty truck, construction, agriculture, material handling and material handling. Automotive sensor products include a wide range ofmarine.
automotive and commercial vehicle products designed to monitor the passenger compartment occupant's safety and environment as well as the vehicle’s powertrain.
•Industrial Segment: Consists of industrial circuit protection products (i.e. fuses, power distribution modules, switches)(industrial fuses), industrial controls (protection relays, contactors, and industrial control products (i.e. relays, transformers, contactors, sensors). These products are usedtransformers) and temperature sensors for use in a variety ofvarious applications and end-markets including:such as renewable energy and energy storage HVAC,systems, electric vehicle infrastructure, HVAC systems, industrial equipment, industrial automation,safety, non-residential construction, MRO, mining and oil & gas.industrial automation.
Segment information is summarized as follows:
| | | | Three Months Ended | | Nine Months Ended | | | Three Months Ended | | Six Months Ended |
(in thousands) | (in thousands) | | September 25, 2021 | | September 26, 2020 | | September 25, 2021 | | September 26, 2020 | (in thousands) | | July 2, 2022 | | June 26, 2021 | | July 2, 2022 | | June 26, 2021 |
Net sales | Net sales | | | | | | | | | Net sales | | | | | | | | |
Electronics | Electronics | | $ | 347,240 | | | $ | 255,349 | | | $ | 959,122 | | | $ | 692,809 | | Electronics | | $ | 358,176 | | | $ | 325,347 | | | $ | 723,997 | | | $ | 611,882 | |
Automotive | | 124,415 | | | 104,724 | | | 386,262 | | | 271,493 | | |
Transportation | | Transportation | | 182,027 | | | 133,318 | | | 366,531 | | | 261,847 | |
Industrial | Industrial | | 67,926 | | | 31,493 | | | 181,479 | | | 80,697 | | Industrial | | 78,233 | | | 64,823 | | | 151,238 | | | 113,553 | |
Total net sales | Total net sales | | $ | 539,581 | | | $ | 391,566 | | | $ | 1,526,863 | | | $ | 1,044,999 | | Total net sales | | $ | 618,436 | | | $ | 523,488 | | | $ | 1,241,766 | | | $ | 987,282 | |
| Depreciation and amortization | Depreciation and amortization | | Depreciation and amortization | |
Electronics | Electronics | | $ | 15,503 | | | $ | 15,819 | | | $ | 45,998 | | | 46,967 | | Electronics | | $ | 14,511 | | | $ | 15,114 | | | $ | 29,904 | | | 30,495 | |
Automotive | | 7,075 | | | 7,370 | | | 21,094 | | | 21,628 | | |
Transportation | | Transportation | | 10,628 | | | 6,946 | | | 21,372 | | | 14,019 | |
Industrial | Industrial | | 2,058 | | | 1,140 | | | 5,957 | | | 3,270 | | Industrial | | 2,181 | | | 2,155 | | | 4,342 | | | 3,899 | |
| Total depreciation and amortization | Total depreciation and amortization | | $ | 24,636 | | | $ | 24,329 | | | $ | 73,049 | | | $ | 71,865 | | Total depreciation and amortization | | $ | 27,320 | | | $ | 24,215 | | | $ | 55,618 | | | $ | 48,413 | |
| Operating income | Operating income | | Operating income | |
Electronics | Electronics | | $ | 100,524 | | | $ | 45,860 | | | $ | 230,283 | | | $ | 110,783 | | Electronics | | $ | 105,958 | | | $ | 74,236 | | | $ | 226,535 | | | $ | 129,759 | |
Automotive | | 15,806 | | | 15,383 | | | 55,380 | | | 20,642 | | |
Transportation | | Transportation | | 18,309 | | | 19,258 | | | 44,617 | | | 39,574 | |
Industrial | Industrial | | 6,571 | | | 4,898 | | | 18,452 | | | 8,409 | | Industrial | | 15,285 | | | 8,375 | | | 27,790 | | | 11,881 | |
Other(a) | Other(a) | | (2,794) | | | (1,583) | | | (11,270) | | | (42,476) | | Other(a) | | (5,388) | | | (5,612) | | | (14,188) | | | (8,476) | |
Total operating income | Total operating income | | 120,107 | | | 64,558 | | | 292,845 | | | 97,358 | | Total operating income | | 134,164 | | | 96,257 | | | 284,754 | | | 172,738 | |
Interest expense | Interest expense | | 4,602 | | | 4,988 | | | 13,901 | | | 16,261 | | Interest expense | | 4,368 | | | 4,626 | | | 8,670 | | | 9,299 | |
Foreign exchange loss (gain) | Foreign exchange loss (gain) | | 3,154 | | | (6,174) | | | 8,315 | | | (9,600) | | Foreign exchange loss (gain) | | 14,124 | | | (1,676) | | | 21,860 | | | 5,161 | |
Other income, net | | (1,240) | | | (1,682) | | | (10,867) | | | (1,643) | | |
Other expense (income), net | | Other expense (income), net | | 6,060 | | | (1,890) | | | 10,487 | | | (9,627) | |
Income before income taxes | Income before income taxes | | $ | 113,591 | | | $ | 67,426 | | | $ | 281,496 | | | $ | 92,340 | | Income before income taxes | | $ | 109,612 | | | $ | 95,197 | | | $ | 243,737 | | | $ | 167,905 | |
(a) Included in “Other” Operating income for the thirdsecond quarter of 20212022 was $6.8$4.8 million ($8.6 million year-to-date) of legal and professional fees and other integration expenses related to completed and contemplated acquisitions, and $0.6 million ($0.8 million year-to-date) of restructuring, impairment and other charges, primarily related to employee termination costs, and $4.8 million year-to-date of purchase accounting inventory step-up charges, $2.0charges. See Note 7, Restructuring, Impairment, and Other Charges, for further discussion.
Included in “Other” Operating income for the 2021 second quarter was $3.3 million ($3.46.8 million year-to-date) of purchase accounting inventory step-up charges, $0.5 million ($1.3 million year-to-date) of legal and professional fees and other integration expenses related to Hartland and other contemplated acquisitions, and $0.8 million ($2.01.3 million year-to-date) of restructuring, impairment and other charges, primarily related to employee termination costs. See Note 7, Restructuring, Impairment, and Other Charges, for further discussion. In addition, there was a loss of $1.0 million recorded during the second quarter of 2021 for a total year-to-date gain of $0.9 million recorded forfrom the sale of a building within the Electronics segment.
Included in “Other” Operating income for the 2020 third quarter was $0.3 million ($1.6 million year-to-date) of acquisition-related and integration charges related to the IXYS acquisition and other contemplated acquisitions. In addition, there was $1.3 million ($40.9 million year-to-date) of restructuring, impairment and other charges, primarily related to employee termination costs of $1.2 million ($4.6 million year-to-date), and other restructuring charges of $0.1 million ($0.2 million year-to-date), the goodwill impairment charge of $33.8 million recorded in the second quarter associated with the automotive sensors reporting unit within the Automotive segment, impairment charges of $2.2 million recorded in the first quarter associated with the announced consolidation of a manufacturing facility within the Industrial segment. See Note 5, Goodwill and Other Intangible Assets and Note 7, Restructuring, Impairment, and Other Charges, for further discussion.
The Company’s net sales by country were as follows:
| | | | Three Months Ended | | Nine Months Ended | | | Three Months Ended | | Six Months Ended |
(in thousands) | (in thousands) | | September 25, 2021 | | September 26, 2020 | | September 25, 2021 | | September 26, 2020 | (in thousands) | | July 2, 2022 | | June 26, 2021 | | July 2, 2022 | | June 26, 2021 |
Net sales | Net sales | | | | | | | | | Net sales | | | | | | | | |
United States | United States | | $ | 172,995 | | | $ | 106,121 | | | $ | 458,723 | | | $ | 285,901 | | United States | | $ | 224,743 | | | $ | 154,797 | | | $ | 444,981 | | | $ | 285,728 | |
China | China | | 160,628 | | | 126,506 | | | 455,872 | | | 314,547 | | China | | 162,322 | | | 156,086 | | | 327,104 | | | 295,244 | |
Other countries(a) | Other countries(a) | | 205,958 | | | 158,939 | | | 612,268 | | | 444,551 | | Other countries(a) | | 231,371 | | | 212,605 | | | 469,681 | | | 406,310 | |
Total net sales | Total net sales | | $ | 539,581 | | | $ | 391,566 | | | $ | 1,526,863 | | | $ | 1,044,999 | | Total net sales | | $ | 618,436 | | | $ | 523,488 | | | $ | 1,241,766 | | | $ | 987,282 | |
The Company’s long-lived assets by country were as follows:
| (in thousands) | (in thousands) | | September 25, 2021 | | December 26, 2020 | (in thousands) | | July 2, 2022 | | January 1, 2022 |
Long-lived assets | Long-lived assets | | | | | Long-lived assets | | | | |
United States | United States | | $ | 47,533 | | | $ | 46,132 | | United States | | $ | 65,445 | | | $ | 57,923 | |
China | China | | 90,984 | | | 85,876 | | China | | 115,567 | | | 122,867 | |
Mexico | Mexico | | 82,882 | | | 70,125 | | Mexico | | 108,829 | | | 107,283 | |
Germany | Germany | | 40,115 | | | 37,976 | | Germany | | 36,495 | | | 39,055 | |
Philippines | Philippines | | 68,594 | | | 66,994 | | Philippines | | 77,256 | | | 74,918 | |
Other countries(a) | Other countries(a) | | 34,221 | | | 37,075 | | Other countries(a) | | 32,091 | | | 35,843 | |
Total long-lived assets | Total long-lived assets | | $ | 364,329 | | | $ | 344,178 | | Total long-lived assets | | $ | 435,683 | | | $ | 437,889 | |
The Company’s additions to long-lived assets by country were as follows:
| | | | Nine Months Ended | | | Six Months Ended |
(in thousands) | (in thousands) | | September 25, 2021 | | September 26, 2020 | (in thousands) | | July 2, 2022 | | June 26, 2021 |
Additions to long-lived assets | Additions to long-lived assets | | | | | Additions to long-lived assets | | | | |
United States | United States | | $ | 3,696 | | | $ | 2,712 | | United States | | $ | 6,527 | | | $ | 1,732 | |
China | China | | 13,790 | | | 6,414 | | China | | 15,623 | | | 7,127 | |
Mexico | Mexico | | 22,518 | | | 7,291 | | Mexico | | 14,244 | | | 13,231 | |
Germany | Germany | | 6,994 | | | 3,793 | | Germany | | 2,432 | | | 2,533 | |
Philippines | Philippines | | 10,109 | | | 15,331 | | Philippines | | 10,138 | | | 6,941 | |
Other countries(a) | Other countries(a) | | 3,527 | | | 1,152 | | Other countries(a) | | 2,558 | | | 1,793 | |
Total additions to long-lived assets | Total additions to long-lived assets | | $ | 60,634 | | | $ | 36,693 | | Total additions to long-lived assets | | $ | 51,522 | | | $ | 33,357 | |
(a)Each country included in other countries is less than 10% of net sales.
16. Subsequent eventevents
On October 20, 2021, theJuly 19, 2022, the Company announced that it had entered into a definitive agreement to acquire Carling Technologies, Inc.acquired C&K Switches (“Carling”C&K”) for $315$540 million in cash, subject to a working capital adjustment.cash. Founded in 1920, Carling has1928, C&K is a leading position in switchingdesigner and circuit protection technologiesmanufacturer of high-performance electromechanical switches and interconnect solutions with a strong global presence in commercial vehicle, marineacross a broad range of end markets, including industrial, transportation, aerospace, and datacom/telecom infrastructure markets.datacom. At the time the Company and C&K entered into the definitive agreement, C&K had annualized sales of over $200 million. The business is headquartered in Plainville, Connecticut, with offices and facilities located around the world and will be reported as part of the commercial vehicleElectronics-Passive Products and Sensors business within our Automotivethe Company's Electronics segment. The Company financed the transaction is subject to customary closing conditionsthrough a combination of cash on hand and regulatory approvals, and is expected to close in the fourth quarter of 2021.debt.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements Under the Private Securities Litigation Reform Act of 1995 (“PSLRA”).
Certain statements in this section and other parts of this Quarterly Report on Form 10-Q may constitute "forward-looking statements" within the meaning of the federal securities laws and are entitled to the safe-harbor provisions of the PSLRA. These statements include statements regarding the Company’s future performance, as well as management's expectations, beliefs, intentions, plans, estimates or projections relating to the future. Such statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "estimates," "will," "should," "plans" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy, although not all forward-looking statements contain such terms. The Company cautions that forward-looking statements, which speak only as of the date they are made, are subject to risks, uncertainties and other factors, and actual results and outcomes may differ materially from those indicated or implied by the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, risks and uncertainties relating to general economic conditions; the severity and duration of the coronavirus disease 2019 ("COVID-19") pandemic and the measures taken in response thereto and the effects of those items on the Company’s business; product demand and market acceptance; economic conditions; the impact of competitive products and pricing; product quality problems or product recalls; capacity and supply difficulties or constraints; coal mining exposures reserves; cybersecurity matters; failure of an indemnification for environmental liability; exchange rate fluctuations; commodity price fluctuations; the effect of the Company's accounting policies; labor disputes; restructuring costs in excess of expectations; pension plan asset returns less than assumed; uncertainties related to political or regulatory changes; integration of acquisitions may not be achieved in a timely manner, or at all; and other risks that may be detailed in Item 1A. "Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 26, 2020,January 1, 2022, and the Company's other filings and submissions with the Securities and Exchange Commission. The Company does not undertake any obligation to update or revise any forward-looking statements to reflect future events or circumstances, new information or otherwise.
This report, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations, should be read in conjunction with information provided in the consolidated financial statements and the related Notes thereto appearing in the Company's Annual Report on Form 10-K for the year ended December 26, 2020.January 1, 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is designed to provide information that is supplemental to, and should be read together with, the consolidated financial statements and the accompanying notes. Information in MD&A is intended to assist the reader in obtaining an understanding of (i) the consolidated financial statements, (ii) the changes in certain key items within those financial statements from year-to-year, (iii) the primary factors that contributed to those changes, and (iv) any changes in known trends or uncertainties that we arethe Company is aware of and that may have a material effect on future performance. In addition, MD&A provides information about the Company’s segments and how the results of those segments impact the results of operations and financial condition as a whole.
Executive Overview
Founded in 1927, Littelfuse is an industrial technology manufacturing company empowering a sustainable, connected, and safer world. Across more than 15 countries, and with 12,00017,000 global associates, we partner with customers to design and deliver innovative, reliable solutions. Serving over 100,000 end customers, our products are found in a variety of industrial, transportation and electronics end markets – everywhere, every day.
The Company maintains a network of global laboratories and engineering centers that develop new products and product enhancements, provide customer application support and test products for safety, reliability, and regulatory compliance. The Company conducts its business through three reportable segments: Electronics, Automotive,Transportation, and Industrial. Within these segments, the Company designs, manufactures and sells components and modules empowering a sustainable, connected, and safer world. Our products protect against electrostatic discharge, power surges, short circuits, voltage spikes and other harmful occurrences, safely and efficiently control power and improve productivity and are used to identify and detect temperature, proximity, flow speed and fluid level in various applications.
Executive Summary
For the thirdsecond quarter of 2021,2022, the Company recognized net sales of $539.6$618.4 million, an increase of $148.0$94.9 million, or 37.8%18.1% as compared to $391.6$523.5 million in the thirdsecond quarter of 2020.2021. The increase was primarily driven by higher volumes across each ofin the Electronics and Industrial segments $29.3and $57.8 million or 5.4%11.0% of net sales from the HartlandCarling acquisition within the IndustrialTransportation segment, and $4.2partially offset by $16.4 million or 1.1%3.1% of favorableunfavorable changes in foreign exchange rates. The Company recognized net income of $92.1$87.0 million, or $3.69$3.48 per diluted share, in the thirdsecond quarter of 20212022 compared to $55.4$82.1 million, or $2.25$3.30 per diluted share in the thirdsecond quarter of 2020.2021. The increase in net income reflects higher operating income of $55.5$37.9 million driven by a $54.7 millionprimarily due to an increase in operating income of $31.7 million in the Electronics segment partially offset by higher foreign exchange losses of $15.8 million and acquisition-related and integration charges.higher unrealized losses of $9.1 million associated with the Company’s equity investment.
Supply chain constraints, including material and transportation capacity shortages have and are expected to continue to impact the Company, ourits suppliers and ourits customers.This has resulted in higher transportation and input costs incurred by the Company and supply chain shortages have impacted our suppliers and customers across the markets that we serve.Company.
Net cash provided by operating activities was $240.7$165.3 million for the ninesix months ended September 25, 2021July 2, 2022 as compared to $164.3$126.3 million for the ninesix months ended SeptemberJune 26, 2020.2021. The increase in net cash provided by operating activities was primarily due to higher cash earnings, partially offset by increases in working capital resulting from higher sales growth.growth and higher annual incentive bonus payments made in 2022 as compared to 2021.
On January 28, 2021,June 30, 2022, the Company acquired Hartland Controls ("Hartland"amended its Credit Agreement, dated as of April 3, 2020 (the “Credit Agreement”), to effect certain changes, including, among other changes: (i) adding a manufacturer$300 million unsecured term loan credit facility; (ii) making certain financial and leading suppliernon-financial covenants less restrictive on the Company and its subsidiaries; (iii) replacing LIBOR-based interest rate benchmarks and modifying performance-based interest rate margins; and (iv) extending the maturity date to June 30, 2027 (the “Maturity Date”). Pursuant to the Credit Agreement, the Company may, from time to time, increase the size of electrical components used primarilythe revolving credit facility or enter into one or more tranches of term loans in heating, ventilation, air conditioning (HVAC) and other industrial and control systems applications with annualized salesminimum increments of approximately $70 million. The purchase price for Hartland was $112.3$25 million if there is no event of default and the operations of Hartland are includedCompany is in the Industrial segment.compliance with certain financial covenants.
On October 20, 2021, theJuly 19, 2022, the Company announced that it had entered in a definitive agreement to acquire Carling Technologies, Inc.acquired C&K Switches (“Carling”C&K”) for $315$540 million in cash, subject to a working capital adjustment.cash. Founded in 1920, Carling has1928, C&K is a leading position in switchingdesigner and circuit protection technologiesmanufacturer of high-performance electromechanical switches and interconnect solutions with a strong global presence in commercial vehicle, marineacross a broad range of end markets, including industrial, transportation, aerospace, and datacom/telecom infrastructure markets.datacom. At the time the Company and C&K entered into the definitive agreement, C&K had annualized sales of over $200 million. The business is headquartered in Plainville, Connecticut, with offices and facilities located around the world and will be reported as part of the commercial vehicleElectronics-Passive Products and Sensors business within our Automotivethe Company's Electronics segment. The Company financed the transaction is subject to customary closing conditionsthrough a combination of cash on hand and regulatory approvals, and is expected to closedebt.
On July 28, 2022, the Board of Directors of the Company approved a 13% increase in the fourth quarterquarterly cash dividend from $0.53 to $0.60 per share, payable on September 8, 2022 to stockholders of 2021.record as of August 25, 2022.
Impact of COVID-19 on Business
The effects from COVID-19 continue to drive increasedhigher ongoing costs though lower than 2020 levels. Ongoing costs includeincluding spending on personal protective equipment ("PPE"), additional personnel and employee transportation costs, and manufacturing inefficiencies.inefficiencies as well as an increase in transportationmaterial costs and raw material due to the transportation capacity constraints across the world. The company has also been experiencing higher raw material costs, as well as transportation costs due to global transportationsupply chain and logistics constraints around the world.
During the second quarter of 2022, the outbreak of COVID-19 in China in late March resulted in the temporary shut-down of certain of the Company's China manufacturing facilities during April and May. The Company's other manufacturing facilities were operational and were generally running at normal capacity constraintslevels. The financial impact of these shut-downs was modest to the Company’s financial results during the second quarter of 2022.
The Company anticipates that the disruptions caused by COVID-19 may continue to impact its business activity for the foreseeable future. It is currently difficult to estimate the magnitude of the COVID-19 disruption, if future disruptions will occur due to a further resurgence in COVID-19 cases and its impact on ourthe Company's employees, customers, suppliers and vendors. The Company will continue to actively monitor the situation and may take further actions altering ourits business operations that we determinethe Company determines are in the best interests of ourits employees, customers, partners, suppliers, and other stakeholders, or as required by federal, state, or local authorities. It is not clear what the potential effects any such alterations or modifications may have on our
the Company's business and operations, including the effects on ourits customers, employees, and prospects, or on ourthe Company's financial results for the fiscal year 2021.2022.
Risks Related to Market Conditions
The Company continues to operate in a more volatile macro environment given events related to the war in Ukraine. The company does not have any direct operations in Ukraine or Russia. The war has had a modest impact on the Company, including higher transportation costs due to the Company modifying its shipping logistics as well as suspending sales into and purchases from Russia. Additionally, the war has impacted certain OEM customers who have had lower production levels due to shut-downs and ongoing material shortages.
Results of Operations
The following table summarizes the Company’s unaudited condensed consolidated results of operations for the periods presented. The thirdsecond quarter of 20212022 includes $6.8$4.8 million ($8.6 million year-to-date) of legal and professional fees primarily related to the acquisition of C&K and other integration expenses related to completed and contemplated acquisitions, and $0.6 million ($0.8 million year-to-date) of restructuring, impairment and other charges, primarily related to employee termination costs, and $4.8 million year-to-date of purchase accounting inventory step-up charges, $2.0charges. See Note 7, Restructuring, Impairment, and Other Charges, for further discussion..
The second quarter of 2021 includes $3.3 million ($3.46.8 million year-to-date) of purchase accounting inventory step-up charges, $0.5 million ($1.3 million year-to-date) of legal and professional fees and other integration expenses related to Hartland and other contemplated acquisitions, and $0.8 million ($2.01.3 million year-to-date) of restructuring, impairment and other charges, primarily related to employee termination costs. See Note 7, Restructuring, Impairment, and Other Charges, for further discussion. In addition, there was a loss of $1.0 million recorded during the second quarter of 2021 for a total year-to-date gain of $0.9 million recorded forfrom the sale of a building within the Electronics segment.
The third quarter of 2020 includes $0.3 million ($1.6 million year-to-date) of acquisition-related and integration charges related to the IXYS acquisition and other contemplated acquisitions. In addition, there was $1.3 million ($40.9 million year-to-date) of restructuring, impairment and other charges, primarily related to employee termination costs of $1.2 million ($4.6 million year-to-date), and other restructuring charges of $0.1 million ($0.2 million year-to-date), the goodwill impairment charge of $33.8 million recorded in the second quarter associated with the automotive sensors reporting unit within the Automotive segment, impairment charges of $2.2 million recorded in the first quarter associated with the announced consolidation of a manufacturing facility within the Industrial segment.
| | | | Third Quarter | | First Nine Months | | | Second Quarter | | First Six Months |
(in thousands) | (in thousands) | | 2021 | | 2020 | | Change | | % Change | | 2021 | | 2020 | | Change | | % Change | (in thousands) | | 2022 | | 2021 | | Change | | % Change | | 2022 | | 2021 | | Change | | % Change |
Net sales | Net sales | | $ | 539,581 | | | $ | 391,566 | | | $ | 148,015 | | | 37.8 | % | | $ | 1,526,863 | | | $ | 1,044,999 | | | $ | 481,864 | | | 46.1 | % | Net sales | | $ | 618,436 | | | $ | 523,488 | | | $ | 94,948 | | | 18.1 | % | | $ | 1,241,766 | | | $ | 987,282 | | | $ | 254,484 | | | 25.8 | % |
Cost of sales | Cost of sales | | 325,009 | | | 252,735 | | | 72,274 | | | 28.6 | % | | 954,429 | | | 681,910 | | | 272,519 | | | 40.0 | % | Cost of sales | | 355,465 | | | 326,092 | | | 29,373 | | | 9.0 | % | | 720,199 | | | 629,420 | | | 90,779 | | | 14.4 | % |
Gross profit | Gross profit | | 214,572 | | | 138,831 | | | 75,741 | | | 54.6 | % | | 572,434 | | | 363,089 | | | 209,345 | | | 57.7 | % | Gross profit | | 262,971 | | | 197,396 | | | 65,575 | | | 33.2 | % | | 521,567 | | | 357,862 | | | 163,705 | | | 45.7 | % |
Operating expenses | Operating expenses | | 94,465 | | | 74,273 | | | 20,192 | | | 27.2 | % | | 279,589 | | | 265,731 | | | 13,858 | | | 5.2 | % | Operating expenses | | 128,807 | | | 101,139 | | | 27,668 | | | 27.4 | % | | 236,813 | | | 185,124 | | | 51,689 | | | 27.9 | % |
Operating income | Operating income | | 120,107 | | | 64,558 | | | 55,549 | | | 86.0 | % | | 292,845 | | | 97,358 | | | 195,487 | | | 200.8 | % | Operating income | | 134,164 | | | 96,257 | | | 37,907 | | | 39.4 | % | | 284,754 | | | 172,738 | | | 112,016 | | | 64.8 | % |
Income before income taxes | Income before income taxes | | 113,591 | | | 67,426 | | | 46,165 | | | 68.5 | % | | 281,496 | | | 92,340 | | | 189,156 | | | 204.8 | % | Income before income taxes | | 109,612 | | | 95,197 | | | 14,415 | | | 15.1 | % | | 243,737 | | | 167,905 | | | 75,832 | | | 45.2 | % |
Income taxes | Income taxes | | 21,537 | | | 12,070 | | | 9,467 | | | 78.4 | % | | 49,634 | | | 21,331 | | | 28,303 | | | 132.7 | % | Income taxes | | 22,596 | | | 13,102 | | | 9,494 | | | 72.5 | % | | 39,203 | | | 28,097 | | | 11,106 | | | 39.5 | % |
Net income | Net income | | $ | 92,054 | | | $ | 55,356 | | | $ | 36,698 | | | 66.3 | % | | $ | 231,862 | | | $ | 71,009 | | | $ | 160,853 | | | 226.5 | % | Net income | | $ | 87,016 | | | $ | 82,095 | | | $ | 4,921 | | | 6.0 | % | | $ | 204,534 | | | $ | 139,808 | | | $ | 64,726 | | | 46.3 | % |
Net Sales
Net sales increased $148.0$94.9 million, or 37.8%18.1%, including $4.2$57.8 million or 1.1%11.0% from the Carling acquisition within the Transportation segment and $16.4 million or 3.1% of favorableunfavorable changes in foreign exchange rates for the thirdsecond quarter of 20212022 compared to the thirdsecond quarter of 2020.2021. The remaining increase was primarily driven by growth across each of our segments with the most significant sales growth within theCompany's Electronics and AutomotiveIndustrial segments, which had sales increases of $91.9$32.8 million and $19.7$13.4 million, respectively. The increase within the Electronics segment was led by continued broad-based demand across electronics, transportationnumerous end markets and industrial end markets.price realization. The increase within the Automotive segment was across both the passenger car and commercial vehicle businesses. While global car build declined compared to the same quarter last year largely due to market shortages of semiconductor chips, the automotive growth was due to greater content growth across passenger vehicles from vehicle mix, including growth in electric vehicles, as well as some customers maintaining additional inventory of our products. The growth in the commercial vehicle business was driven largely by continued demand across a number of commercial vehicle end markets. The remaining increase in net sales was primarily due to $29.3 million of net sales resulting from the Hartland acquisition included in the Industrial segment and volume growthwas driven across all businesses within the Industrial segment.segment and price realization.
Net sales increased $481.9$254.5 million, or 46.1%25.8%, including $30.1$113.5 million or 2.9%11.5% from the Carling acquisition and $25.0 million or 2.5% of favorableunfavorable changes in foreign exchange rates for the first ninesix months of 20212022 compared to 2020. The increase was due to volume growth across all segments and businesses while the first ninesix months of 2020 had temporary closures of manufacturing facilities resulting from government directives due to the impact of COVID-19.2021. The remaining increase was primarily due to higherdriven by growth across the Company's Electronics and Industrial segments, which had sales increases of $266.3$112.1 million and $114.8$37.7 million, in the
Electronics and Automotive segments, respectively, driven by higher volumes across all businesses within these segments.respectively. The volume increase within the Electronics segment was led by continued broad-based demand across electronics, transportation and industrialnumerous end markets. The volume increase within the Automotive segment was led by growth in global auto and commercial vehicle market demand, greater content growth across passenger vehicles due to vehicle mix, including growth in electric vehicles and some customers maintaining additional inventory of our products. The remaining increase in net sales was primarily due to $72.3 million of net sales resulting from the Hartland acquisition included in the Industrial segment and volume growthwas driven across all businesses within the Industrial segment.
Cost of Sales
Cost of sales was $325.0$355.5 million, or 60.2%57.5% of net sales, in 2021,2022, compared to $252.7$326.1 million, or 64.5%62.3% of net sales, in 2020.2021. The increase in cost of sales was primarily due to greater volume across allthe Electronics and Industrial segments driven by the factors discussed above along with the acquisition of Hartland.Carling. As a percent of net sales, cost of sales decreased 4.3%4.8% driven by volume leverage, and favorable product mix predominantly in the Electronics segment in 2022 and lower purchase accounting inventory charges of $3.3 million or 0.6%, partially offset by higher transportation, duty and tariff charges of 1.9%, and higher commodity costs.
Cost of sales was $954.4$720.2 million, or 62.5%58.0% of net sales for the first ninesix months of 2021,2022, compared to $681.9$629.4 million, or 65.3%63.8% of net sales for the first ninesix months of 2020.2021. The increase in cost of sales was primarily due to greater volume across allthe Electronics and Industrial segments driven by the factors discussed above along with the acquisition of Hartland.Carling. As a percent of net sales, cost of sales decreased 2.7%5.8% driven by volume leverage and lower purchase accounting inventory charges of $2.0 million or 0.2% in 2022, partially offset by higher commodity costs and higher transportation, duty and tariff charges of 0.8%, the Hartland purchase accounting inventory charges of $6.8 million or 0.4%, and higher commodity costs.0.3%.
Gross Profit
Gross profit was $214.6$263.0 million, or 39.8%42.5% of net sales, in the thirdsecond quarter of 20212022 compared to $138.8$197.4 million, or 35.5%37.7% of net sales, for the thirdsecond quarter of 2020.2021. The $75.7$65.6 million increase in gross profit was primarily due to higher volume and price in the Electronics and Industrial segments along with acquisition of Carling. The increase in gross margin of 4.8% was primarily driven by volume leverage, price realization and favorable product mix within the Electronics segment and lower purchase accounting inventory charges, partially offset by higher commodity costs.
Gross profit was $521.6 million, or 42.0% of net sales, in the first six months of 2022 compared to $357.9 million, or 36.2% of net sales, for the first six months of 2021. The $163.7 million increase in gross profit was primarily due to higher volume in the Electronics segment.and Industrial segments along with acquisition of Carling. The increase in gross margin of 4.3%5.8% was primarily driven by volume leverage, price realization and favorable product mix within the Electronics segment, higher prices,lower purchase accounting inventory charges of $2.0 million or 0.3% in 2022, partially offset by higher commodity costs and higher transportation, duty and tariff charges as a percent of net sales of 1.9%, and higher commodity costs.
Gross profit was $572.4 million, or 37.5% of net sales, in the first nine months of 2021 compared to $363.1 million, or 34.7% of net sales, for the first nine months of 2020. The $209.3 million increase in gross profit was primarily due to higher volume across all segments while the first nine months of 2020 had additional costs associated with government-directed plant shutdowns and supply chain constraints. The increase in gross margin of 2.7% was primarily driven by volume leverage and favorable product mix within the Electronics segment, partially offset by higher transportation, duty and tariff charges as a percent of net sales of 0.8%, the purchase accounting inventory charges of $6.8 million or 0.4%, and higher commodity costs.0.3%.
Operating Expenses
Total operating expenses were $94.5$128.8 million, or 17.5%20.8% of net sales, for the thirdsecond quarter of 20212022 compared to $74.3$101.1 million, or 19.0%19.3% of net sales, for the thirdsecond quarter of 2020.2021. The increase in operating expenses of $20.2$27.7 million was primarily due to the higher selling, general, and administrative expenses of $17.5$19.8 million largely due to higher accrued incentive compensationthe Carling acquisition and the Hartland acquisition,increased acquisition-related expenses of $4.3 million and higher research and development expenses of $2.8$7.1 million.
Total operating expenses were $279.6$236.8 million, or 18.3%19.1% of net sales, for the first ninesix months of 20212022 compared to $265.7$185.1 million, or 25.4%18.8% of net sales, for the first ninesix months of 2020.2021. The increase in operating expenses of $13.9$51.7 million iswas primarily due to the higher selling, general, and administrative expenses of $44.7$37.0 million largely due to higher accrued incentive compensationthe Carling acquisition and the Hartland acquisition, andincreased acquisition-related expenses of $7.3 million, higher research and development expenses of $6.3$11.9 million, partially offset by the 2020 goodwill impairment chargeand higher amortization expense of $33.8$3.2 million or 3.2% of net sales, in the automotive sensors reporting unit within the Automotive segment and impairment charges of $2.2 million relateddue to the Company’s 2020 first quarter announcement to consolidate a manufacturing facility within the Industrial segment.Carling acquisition.
Operating Income
Operating income was $120.1$134.2 million, an increase of $55.5$37.9 million, or 86.0%39.4%, for the thirdsecond quarter of 2022 compared to $96.3 million for the second quarter of 2021. The increase in operating income was due to higher gross profit from all segments, particularly in the Electronics segment, partially offset by higher operating expenses as noted above. Operating margins
increased from 18.4% in the second quarter of 2021 to 21.7% in the second quarter of 2022 driven by the factors mentioned above.
Operating income was $284.8 million, an increase of $112.0 million, or 64.8%, for the first six months of 2022 compared to $64.6$172.7 million for the third quarterfirst six months of 2020.2021. The increase in operating income was due to higher gross profit from all segments, particularly in the Electronics segment, partially offset by higher operating expenses as noted above. Operating margins increased from 16.5%17.5% in the third quarterfirst six months of 20202021 to 22.3%22.9% in the third quarterfirst six months of 20212022 driven by the factors mentioned above.
Operating income was $292.8 million, an increase of $195.5 million, or 200.8%, for the first nine months of 2021 compared to $97.4 million for the first nine months of 2020. The increase in operating income was primarily due to higher gross margin
across all segments partially offset by higher operating expenses noted above. Operating margins increased from 9.3% in the first nine months of 2020 to 19.2% in the first nine months of 2021 driven by the factors mentioned above. The goodwill impairment charge of $33.8 million negatively impacted the operating margin by 3.2% for the first nine months of 2020.
Income Before Income Taxes
Income before income taxes was $113.6$109.6 million, or 21.1%17.7% of net sales, for the thirdsecond quarter of 20212022 compared to $67.4$95.2 million, or 17.2%18.2% of net sales, for the thirdsecond quarter of 2020.2021. In addition to the factors impacting comparative results for operating income discussed above, income before income taxes was primarily impacted by foreign exchange losses of $3.2$14.1 million in the thirdsecond quarter of 2021 2022 compared to foreign exchange gains of $6.2$1.7 million in the thirdsecond quarter of 2020.2021, and $7.8 million of unrealized losses in the second quarter of 2022 compared to unrealized gains of $1.3 million in the second quarter of 2021 related to the Company's equity investment.
Income before income taxes was $281.5$243.7 million, or 18.4% of net sales, for the first nine months of 2021 compared to $92.3 million, or 8.8%19.6% of net sales, for the first ninesix months of 2020.2022 compared to $167.9 million, or 17.0% of net sales, for the first six months of 2021. In addition to the factors impacting comparative results for operating income discussed above, income before income taxes was impacted by $12.5 million of unrealized losses during the six months ended July 2, 2022 compared to unrealized gains of $8.8 million during six months ended June 26, 2021 related to the Company's equity investment, and higher foreign exchange losses of $8.3$16.7 million during the ninesix months ended September 25, 2021 compared to foreign exchange gains of $9.6 million during nine months ended September 26, 2020, partially offset by a $7.7 million increase in unrealized investment gains associated with our equity investment and lower interest expense of $2.4 million due to lower outstanding borrowings under the credit facility along with a lower effective interest rate, and coal mining charges of $1.8 million incurred during the nine months ended September 26, 2020.July 2, 2022.
Income Taxes
Income tax expense for the thirdsecond quarter of 20212022 was $21.5$22.6 million, or an effective tax rate of 19.0%20.6%, compared to $12.1$13.1 million, or an effective tax rate of 17.9%13.8%, for the thirdsecond quarter of 2020.2021. The effective tax rate for the thirdsecond quarter of 20212022 is higher than the effective tax rate for the comparable 20202021 period, primarily due to a reductionforeign exchange losses noted above with no related tax benefit in the 2022 period, as compared to foreign exchange gains with limited tax expense during the third quarter of 2020 in the estimated 2020 annual effective tax rate, the impact of which was recorded during the third quarter of 2020.comparable 2021 period.
Income tax expense for the first ninesix months of 20212022 was $49.6$39.2 million, or an effective tax rate of 17.6%16.1%, compared to $21.3income tax expense of $28.1 million, or an effective tax rate of 23.1%16.7%, for the first ninesix months of 2020.2021. The effective tax rate for the first ninesix months of 2021the 2022 period is lower than the applicable U.S. statutory tax rate due to a one-time deduction that resulted from the dissolution of one of the Company’s affiliates, as well as the forecasted impact of income earned in lower tax jurisdictions. The effective tax rate for the comparable 2020 period primarily due to an increase in the forecasted income earned in lower tax jurisdictions in 2021 compared to 2020, and the impact of the goodwill impairment charge of $33.8 million recorded in the second quarter of 2020, the substantial majority of which did not result in a tax benefit. The effective tax rate for the 2021 period is lower than the applicable U.S. statutory tax rate primarily due to the forecasted impact of income earned in lower tax jurisdictions.
Segment Results of Operations
The Company reports its operations by the following segments: Electronics, AutomotiveTransportation and Industrial. Segment information is described more fully in Note 15, Segment Information, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.
The following table is a summary of the Company’s net sales by segment:
| | | | Third Quarter | | First Nine Months | | | Second Quarter | | First Six Months |
(in thousands) | (in thousands) | | 2021 | | 2020 | | Change | | % Change | | 2021 | | 2020 | | Change | | % Change | (in thousands) | | 2022 | | 2021 | | Change | | % Change | | 2022 | | 2021 | | Change | | % Change |
Electronics | Electronics | | $ | 347,240 | | | $ | 255,349 | | | $ | 91,891 | | | 36.0 | % | | $ | 959,122 | | | $ | 692,809 | | | $ | 266,313 | | | 38.4 | % | Electronics | | $ | 358,176 | | | $ | 325,347 | | | $ | 32,829 | | | 10.1 | % | | $ | 723,997 | | | $ | 611,882 | | | $ | 112,115 | | | 18.3 | % |
Automotive | | 124,415 | | | 104,724 | | | 19,691 | | | 18.8 | % | | 386,262 | | | 271,493 | | | 114,769 | | | 42.3 | % | |
Transportation | | Transportation | | 182,027 | | | 133,318 | | | 48,709 | | | 36.5 | % | | 366,531 | | | 261,847 | | | 104,684 | | | 40.0 | % |
Industrial | Industrial | | 67,926 | | | 31,493 | | | 36,433 | | | 115.7 | % | | 181,479 | | | 80,697 | | | 100,782 | | | 124.9 | % | Industrial | | 78,233 | | | 64,823 | | | 13,410 | | | 20.7 | % | | 151,238 | | | 113,553 | | | 37,685 | | | 33.2 | % |
Total | Total | | $ | 539,581 | | | $ | 391,566 | | | $ | 148,015 | | | 37.8 | % | | $ | 1,526,863 | | | $ | 1,044,999 | | | $ | 481,864 | | | 46.1 | % | Total | | $ | 618,436 | | | $ | 523,488 | | | $ | 94,948 | | | 18.1 | % | | $ | 1,241,766 | | | $ | 987,282 | | | $ | 254,484 | | | 25.8 | % |
Electronics Segment
Net sales increased $91.9$32.8 million, or 36.0%10.1%, in the thirdsecond quarter of 2022 compared to the second quarter of 2021 compared to the third quarter of 2020 and included favorableunfavorable changes in foreign exchange rates of $2.3$9.5 million. The sales increase was primarily due to increased volume for the semiconductor and electronics products and semiconductor businesses of $63.0$25.8 million and $28.8$7.0 million, respectively. The volume increase
within the Electronics segment was ledrespectively, primarily driven by continued broad-based demand across electronics, transportationnumerous end markets and industrial end markets.price realization.
Net sales increased $266.3$112.1 million, or 38.4%18.3%, in the first ninesix months of 20212022 compared to the first ninesix months of 20202021 and included favorableunfavorable changes in foreign exchange rates of $16.2$14.4 million. The sales increase was primarily due to increased volume for the semiconductor and electronics products and semiconductor businesses of $173.3$67.6 million and $93.0$44.5 million, respectively. The volume increases were driven by continued broad-based demand across electronics, transportation and industrialnumerous end markets while the first nine months of 2020 were negatively impacted by production disruptions due to the impact of COVID-19.markets.
AutomotiveTransportation Segment
Net sales increased $19.7$48.7 million, or 18.8%36.5%, in the thirdsecond quarter of 2022 compared to the second quarter of 2021 compared to the third quarter of 2020 and included favorableunfavorable changes in foreign exchange rates of $1.7$6.3 million. The sales increase was primarily due to higher volume in passenger car products and commercial vehicle products businessesthe acquisition of $11.9 million and $9.7 million, respectively, partially offset by lower volume in automotive sensors businessCarling which contributed net sales of $2.0$57.8 million. The increase within the Automotive segment was across both the passenger car and commercial vehicle businesses. While global car build declined compared to the same quarter last year largely due to market shortages of semiconductor chips, the automotive growth was due to greater content growth across passenger vehicles from vehicle mix, including growth in electric vehicles, as well as some customers maintaining additional inventory of our products. The growthNet sales in the commercial vehicle business was drivenincreased by $60.5 million, largely bydue to the Carling acquisition noted previously and continued demand across a number of commercial vehicle end markets. This growth was across all regions, particularlyThe passenger car products and automotive sensors businesses had sales decreases of $8.3 million and $3.5 million, respectively, driven by a decline in Asia-Pacific where volumes and demand increased, but constrained in Europe and North America whereglobal car build compared to the same quarter last year primarily due to supply chain constraints, including China COVID shut-downs and OEM shut downs caused by market shortages have had a detrimental impact onof semiconductor chips partially offset by greater content growth from vehicle output.mix and electric vehicles.
Net sales increased $114.8$104.7 million, or 42.3%40.0%, in the first ninesix months of 20212022 compared to the first ninesix months of 20202021 and included favorable changes in foreign exchange rates of $13.0$9.9 million. TheseThe sales increases wereincrease was primarily due to higher volumethe acquisition of Carling which contributed net sales of $113.5 million. Net sales in the commercial vehicle business increased by $122.0 million, largely due to the Carling acquisition noted previously and continued demand across a number of commercial vehicle end markets. The passenger car products commercial vehicle products, and the automotive sensors businesses had sales decreases of $64.9 million, $34.9$11.7 million and $14.9$5.6 million, respectively. These increases wererespectively, driven by a decline in global car build compared to last year largely due to stronger global autosupply chain constraints and commercial vehicleOEM shut downs caused by market demand. Eachshortages of our regions experienced growth driven by an increasesemiconductor chips as well as a reduction of demand in global auto market demand as compared to the first nine months of 2020, which had production disruptionsEurope due to the impact of COVID-19. Sales also grew due to the launch of new productsUkraine/Russia conflict partially offset by greater content growth from vehicle mix and higher content per vehicle due to automotive vehicle mix.electric vehicles.
Industrial Segment
Net sales increased by $36.4$13.4 million, or 115.7%20.7%, in the thirdsecond quarter of 2022 compared to the second quarter of 2021, compared to the third quarter of 2020, which included favorableunfavorable changes in foreign exchange rates of $0.2$0.6 million. The increase in net sales was primarily due to incremental net sales of $29.3 million or 92.9% from the Hartland acquisition and higher volume and demand across all product lines.lines in renewables, and ongoing improving demand in nonresidential construction, oil & gas, natural resources, and industrial maintenance, repair, and operations end markets along with price realization.
Net sales increased by $100.8$37.7 million, or 124.9%33.2%, in the first ninesix months of 20212022 compared to the first ninesix months of 2020,2021, which included favorable changes in foreign exchange rates of $0.9$0.7 million. The increase in net sales was primarily due to higher volume and demand across product lines in industrial safety, HVAC, renewables, nonresidential construction, oil & gas, natural resources, and industrial maintenance, repair, and operations end markets and incremental one month net sales of $72.3$9.1 million or 89.6%14.0% from the Hartland acquisition, growth across all product lines, and the transfer of the temperature sensor product line totaling $4.7 million which was previously reported in the Electronics segment and moved to Industrial segment in the third quarter of 2020. Additionally, the first nine months of 2020 was negatively impacted by production disruptions and temporary plant shutdown due to the impact of COVID-19. acquisition.
Geographic Net Sales Information
Net sales by geography represent net sales to customer or distributor locations. The following table is a summary of the Company’s net sales by geography:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Third Quarter | | First Nine Months |
(in thousands) | | 2021 | | 2020 | | Change | | % Change | | 2021 | | 2020 | | Change | | % Change |
Asia-Pacific | | $ | 250,880 | | | $ | 186,956 | | | $ | 63,924 | | | 34.2 | % | | $ | 702,542 | | | $ | 483,566 | | | $ | 218,976 | | | 45.3 | % |
Americas | | 167,314 | | | 123,739 | | | 43,575 | | | 35.2 | % | | 500,555 | | | 333,891 | | | 166,664 | | | 49.9 | % |
Europe | | 121,387 | | | 80,871 | | | 40,516 | | | 50.1 | % | | 323,766 | | | 227,542 | | | 96,224 | | | 42.3 | % |
Total | | $ | 539,581 | | | $ | 391,566 | | | $ | 148,015 | | | 37.8 | % | | $ | 1,526,863 | | | $ | 1,044,999 | | | $ | 481,864 | | | 46.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter | | First Six Months |
(in thousands) | | 2022 | | 2021 | | Change | | % Change | | 2022 | | 2021 | | Change | | % Change |
Asia-Pacific | | $ | 252,809 | | | $ | 239,477 | | | $ | 13,332 | | | 5.6 | % | | $ | 513,027 | | | $ | 451,662 | | | $ | 61,365 | | | 13.6 | % |
Americas | | 247,591 | | | 180,335 | | | 67,256 | | | 37.3 | % | | 484,821 | | | 333,241 | | | 151,580 | | | 45.5 | % |
Europe | | 118,036 | | | 103,676 | | | 14,360 | | | 13.9 | % | | 243,918 | | | 202,379 | | | 41,539 | | | 20.5 | % |
Total | | $ | 618,436 | | | $ | 523,488 | | | $ | 94,948 | | | 18.1 | % | | $ | 1,241,766 | | | $ | 987,282 | | | $ | 254,484 | | | 25.8 | % |
Asia-Pacific
Net sales increased $63.9$13.3 million, or 34.2%5.6%, in the thirdsecond quarter of 2022 compared to the second quarter of 2021 compared to the third quarter of 2020 and included favorableunfavorable changes in foreign exchange rates of $2.9$4.5 million. The increase in net sales was primarily due to higher volume from the semiconductor business within the Electronics segment and incremental sales from the Carling acquisition included in the commercial vehicle products business within the Transportation segment compared to the second quarter of 2021.
Net sales increased $61.4 million, or 13.6%, in the first six months of 2022 compared to the first six months of 2021 and included unfavorable changes in foreign exchange rates of $5.5 million. The increase in net sales was primarily due to higher volume across all businesses within the Electronics Automotive,segment and Industrial segments compared toincremental sales from the third quarter of 2020.
Net sales increased $219.0 million, or 45.3%,Carling acquisition included in the first nine months of 2021commercial vehicle products business within the Transportation segment compared to the first ninesix months of 2020 and included favorable changes in foreign exchange rates of $12.0 million. The increase in net sales was primarily due to higher volume across all businesses across all segments compared to the first nine months of 2020 that had production disruptions due to the impact of COVID-19.2021.
Americas
Net sales increased $43.6$67.3 million, or 35.2%37.3%, in the thirdsecond quarter of 2022 compared to the second quarter of 2021 compared to the third quarter of 2020 and included favorableunfavorable changes in foreign exchange rates of $0.2$0.3 million. The increase in net sales was primarily due to incremental sales from the HartlandCarling acquisition included in the Industrial segment, higher volume from the electronics products business within the Electronics segment and commercial vehicle products business within the AutomotiveTransportation segment and higher volume acrossfrom all businesses within the Electronics and Industrial segmentsegments compared to the thirdsecond quarter of 2020.2021.
Net sales increased $166.7$151.6 million, or 49.9%45.5%, in the first ninesix months of 2022 compared to the first six months of 2021 compared to first nine months of 2020 and included favorableunfavorable changes in foreign exchange rates of $0.6$0.5 million. TheThe increase in net sales was primarily due to incremental sales from the HartlandCarling acquisition included in the commercial vehicle products business within the Transportation segment and higher volume acrossfrom all businesses within the Electronics and AutomotiveIndustrial segments compared to the first ninesix months of 2020 that had production disruptions due to the impact of COVID-19.2021.
Europe
Net sales increased $40.5$14.4 million, or 50.1%13.9%, in the thirdsecond quarter of 2022 compared to the second quarter of 2021 compared to the third quarter of 2020 and included favorableunfavorable changes in foreign exchange rates of $1.1$11.6 million. The increase in net sales was primarily due to increased volume across all businesses within the Electronics segment and incremental sales from the Carling acquisition included in the commercial vehicle products business within the Automotive segment, and higher volume cross all businesses within the IndustrialTransportation segment compared to the thirdsecond quarter of 2020.2021.
Net sales increased $96.2$41.5 million, or 42.3%20.5%, in the first ninesix months of 20212022 compared to the first ninesix months of 20202021 and included favorable changes in foreign exchange rates of $17.5$19.0 million. The increase in net sales was primarily due to higherincreased volume across all businesses within the Electronics segment and Automotive segmentsincremental sales from the Carling acquisition included in the commercial vehicle products business within the Transportation segment compared to the first ninesix months of 2020 that had production disruptions due to the impact of COVID-19.2021.
Liquidity and Capital Resources
The Company has historically supported its liquidity needs through cash flows from operations. Management expects that the Company’s (i) current level of cash, cash equivalents, and marketable securities, (ii) current and forecasted cash flows from operations, (iii) availability under existing funding arrangements, and (iv) access to capital in the capital markets will provide sufficient funds to support the Company’s operations, capital expenditures, investments, and debt obligations on both a short-term and long-term basis.
Cash and cash equivalents were $690.7$809.1 million as of September 25, 2021, a decreaseJuly 2, 2022, an increase of $3.2$330.6 million as compared to December 26, 2020.January 1, 2022. As of September 25, 2021, $337.2July 2, 2022, $532.2 million of the Company's $690.7$809.1 million cash and cash equivalents was held by U.S. subsidiaries.
Revolving Credit Facility and Term Loan
On June 30, 2022, the Company amended and restated its Credit Agreement, dated as of April 3, 2020 the Company amended its Credit Agreement(the “Credit Agreement”) to effect certain changes, including, among others:other changes: (i) eliminating the $200.0adding a $300 million unsecured term loan credit facility, the remaining outstanding balance ($140.0 million) of which was repaid in full on April 3, 2020 through the revolving credit facility; (ii) making certain financial and non-financial covenants less restrictive on the Company;Company and its subsidiaries; (iii) replacing LIBOR-based interest rate benchmarks and modifying performance-based interest rate margins and undrawn fees;margins; and (iv) extending the maturity date to April 3, 2025. The amendedJune 30, 2027 (the “Maturity Date”). Pursuant to the Credit Agreement, also allows the Company may, from time to time, increase the size of the revolving credit facility or enter into one or more tranches of term loans in minimum increments of $25 million if there is no event of default and the Company is in compliance with certain financial covenants. The Company made payments of $30.0 million on the amended revolving credit
facility during the nine months ended September 25, 2021. The balance under the facility was $100.0 million as of September 25, 2021.
Outstanding borrowingsLoans made under the amendedavailable credit facility pursuant to the Credit Agreement bears("the Credit Facility") bear interest at the Company’s option, at either LIBOR,Secured Overnight Financing Rate ("SOFR"), fixed for interest periods of one, two, three or six-month periods, plus 1.25%1.00% to 2.00%1.75%, plus a SOFR adjustment of 0.10% or at the bank’s Base Rate, as defined in the Credit Agreement,, plus 0.25%—% to 1.00%0.75%, based upon the Company’s Consolidated Leverage Ratio, as defined.defined in the Credit Agreement. The Company is also required to pay commitment fees on unused portions of the credit agreementCredit Facility ranging from 0.125%0.10% to 0.20%0.175%, based on the Consolidated Leverage Ratio, as defined in the agreement.Credit Agreement. The amended Credit Agreement includes representations, covenants and events of default that are customary for financing transactions of this naturenature.
.
Revolving loans may be borrowed, repaid and reborrowed until the Maturity Date, at which time all amounts borrowed must be repaid. The effectiveCompany borrowed $300.0 million under a term loan on June 30, 2022. The principal balance of the term loans must be repaid in quarterly installments on the last day of each calendar quarter in the amount of $1.9 million commencing September 30, 2022, through June 30, 2024, and in the amount of $3.8 million commencing September 30, 2024, through March 31, 2027, with the remaining outstanding principal balance payable in full on the Maturity Date. Accrued interest on the loans is payable in arrears on each interest payment date applicable thereto and at such other times as may be specified in the Credit Agreement. Subject to certain conditions, (i) the Company may terminate or reduce the Aggregate Revolving Commitments, as defined in the Credit Agreement, in whole or in part, and (ii) the Company may prepay the revolving loans or the term loans at any time, without premium or penalty. The revolving loan and term loan balance under the Credit Facility was $100.0 million and $300.0 million, respectively, as of July 2, 2022.
On May 12, 2022, the Company entered into an interest rate swap agreement to manage interest rate risk exposure, effectively converting the interest rate on outstanding borrowings under the credit facilityCompany's SOFR based floating-rate loans to a fixed-rate. The interest rate swap, with a notional value of $200 million, was 1.33% at September 25, 2021.designated as a cash flow hedge against the variability of cash flows associated with the Company's SOFR based loans scheduled to mature on June 30, 2027.
As of September 25, 2021,July 2, 2022, the effective interest rate on revolving loan and term loan outstanding borrowings was 2.875%.
As of July 2, 2022, the Company had no amount outstanding in letters of credit and had available $600.0 million of borrowing capacity under the Revolvingrevolving Credit Facility. At September 25, 2021,July 2, 2022, the Company was in compliance with all covenants under the Credit Agreement.
Senior Notes
On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold €212 million aggregate principal amount of senior notes in two series. The funding date for the Euro denominated senior notes occurred on December 8, 2016 for €117 million in aggregate amount of 1.14% Senior Notes, Series A, due December 8, 2023 (“Euro Senior Notes, Series A due 2023”), and €95 million in aggregate amount of 1.83% Senior Notes, Series B due December 8, 2028 (“Euro Senior Notes, Series B due 2028”) (together, the “Euro Senior Notes”). Interest on the Euro Senior Notes is payable semiannually on June 8 and December 8, commencing June 8, 2017.
On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold $125 million aggregate principal amount of senior notes in two series. On February 15, 2017, $25 million in aggregate principal amount of 3.03% Senior Notes, Series A, due February 15, 2022 (“U.S. Senior Notes, Series A due 2022”), and $100 million in aggregate principal amount of 3.74% Senior Notes, Series B, due February 15, 2027 (“U.S. Senior Notes, Series B due 2027”) (together, the “U.S. Senior Notes due 2022 and 2027”) were funded. Interest on the U.S. Senior Notes due 2022 and 2027 is payable semiannually on February 15 and August 15, commencing August 15, 2017. During the six months ended July 2, 2022, the Company paid $25.0 million of U.S. Senior Notes, Series A due on February 15, 2022.
On November 15, 2017, the Company entered into a Note Purchase Agreement pursuant to which the Company issued and sold $175 million in aggregate principal amount of senior notes in two series. On January 16, 2018, $50 million aggregate principal amount of 3.48% Senior Notes, Series A, due February 15, 2025 (“U.S. Senior Notes, Series A due 2025”) and $125 million in aggregate principal amount of 3.78% Senior Notes, Series B, due February 15, 2030 (“U.S. Senior Notes, Series B due 2030”) (together, the “U.S. Senior Notes due 2025 and 2030” and with the Euro Senior Notes and the U.S. Senior Notes due 2022 and 2027, the “Senior Notes”) were funded. Interest on the U.S. Senior Notes due 2025 and 2030 is payable semiannually on February 15 and August 15, commencing on August 15, 2018. Further information regarding
On May 18, 2022, the Company’sabove note purchase agreements were amended to, among other things, update certain terms, including financial covenants to be consistent with the terms of the 2022 Purchase Agreement, as defined below.
On May 18, 2022, the Company entered into a Note Purchase Agreement (“2022 Purchase Agreement”) pursuant to which the Company issued and funded on July 18, 2022 $100 million in aggregate principal amount of 4.33% Senior Notes, due June 30, 2032 (“U.S. Senior Notes, due 2032”) (together with the U.S. Senior Notes due 2025 and 2030, the Euro Senior Notes and the U.S. Senior Notes due 2022 and 2027, the “Senior Notes”). Interest on the U.S. Senior Notes due 2032 is provided in Note 8, Debt, of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report.payable semiannually on June 30 and December 30, commencing on December 30, 2032.
Debt Covenants
The Company was in compliance with all covenants under the Credit Agreement and Senior Notes as of September 25, 2021July 2, 2022 and currently expects to remain in compliance based on management’s estimates of operating and financial results for 2021.2022. As of September 25, 2021,July 2, 2022, the Company met all the conditions required to borrow under the Credit Agreement and management expects the Company to continue to meet the applicable borrowing conditions.
Acquisitions
On January 28, 2021,July 19, 2022, the Company acquired C&K Switches (“C&K”) for $540 million in cash. Founded in 1928, C&K is a leading designer and manufacturer of high-performance electromechanical switches and interconnect solutions with a strong global presence across a broad range of end markets, including industrial, transportation, aerospace, and datacom. At the time the Company acquired Hartland Controls ("Hartland"), a manufacturer and leading supplier of electrical components used primarily in heating, ventilation, air conditioning (HVAC) and other industrial and control systems applications withC&K entered into the definitive agreement, C&K had annualized sales of approximately $70over $200 million. The purchase price for Hartland was $112.3 millionbusiness will be reported as part of the Electronics-Passive Products and Sensors business within the operations of Hartland Controls are included in the IndustrialCompany's Electronics segment. The net cash paymentCompany financed the transaction through a combination of $109.9 million for this acquisition was funded by the Company's cash on hand.hand and debt.
Dividends
During the thirdsecond quarter of 20212022 the Company paid quarterly dividends of $13.1$26.2 million to the shareholders. On October 26, 2021,July 28, 2022, the Board of Directors of the Company declaredapproved a 13% increase in the quarterly cash dividend offrom $0.53 to $0.60 per share, payable on December 2nd, 2021September 8, 2022 to stockholders of record as of November 18, 2021.
U.K. pension plan
On April 7, 2020, the Company entered into a definitive agreement to purchase a group annuity contract, under which an insurance company will be required to directly pay and administer pension payments to certain of the Company’s U.K. pension plan participants, or their designated beneficiaries. The purchase of this group annuity contract will reduce the Company’s outstanding pension benefit obligation by approximately $55 million, representing approximately 37% of the total obligations of the Company’s qualified pension plans, and will be funded with pension plan assets and additional cash on hand. In connection with this transaction, the Company will record a one-time non-cash settlement charge currently estimated between $18 million and $22 million in the fourth quarter of 2021, reflecting the accelerated recognition of unamortized actuarial losses in the plan. The actual amount and timing of the settlement charge could differ from this estimate due to final data and plan wind-up expenses. Due to the signing of the group annuity contract being a significant change in the U.K. pension plan, the liabilities of the plan were remeasured as of April 6, 2020 resulting in an increase of $13.4 million (£10.9 million) to both the net pension liability and unamortized actuarial loss within other comprehensive income (loss) during the second quarter of 2020. Additionally, the Company made a cash contribution of $10.4 million (£8.4 million) under this agreement during the second quarter of 2020.
August 25, 2022.
Cash Flow Overview
| | | | First Nine Months | | | First Six Months |
(in thousands) | (in thousands) | | 2021 | | 2020 | (in thousands) | | 2022 | | 2021 |
Net cash provided by operating activities | Net cash provided by operating activities | | $ | 240,664 | | | $ | 164,256 | | Net cash provided by operating activities | | $ | 165,322 | | | $ | 126,346 | |
Net cash used in investing activities | Net cash used in investing activities | | (165,611) | | | (41,388) | | Net cash used in investing activities | | (65,367) | | | (139,940) | |
Net cash used in financing activities | Net cash used in financing activities | | (60,877) | | | (18,376) | | Net cash used in financing activities | | 245,017 | | | (49,183) | |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | Effect of exchange rate changes on cash, cash equivalents, and restricted cash | | (5,832) | | | 6,259 | | Effect of exchange rate changes on cash, cash equivalents, and restricted cash | | (15,511) | | | (2,894) | |
Increase in cash, cash equivalents, and restricted cash | | 8,344 | | | 110,751 | | |
Increase (decrease) in cash, cash equivalents, and restricted cash | | Increase (decrease) in cash, cash equivalents, and restricted cash | | 329,461 | | | (65,671) | |
Cash, cash equivalents, and restricted cash at beginning of period | Cash, cash equivalents, and restricted cash at beginning of period | | 687,525 | | | 531,139 | | Cash, cash equivalents, and restricted cash at beginning of period | | 482,836 | | | 687,525 | |
Cash, cash equivalents, and restricted cash at end of period | Cash, cash equivalents, and restricted cash at end of period | | $ | 695,869 | | | $ | 641,890 | | Cash, cash equivalents, and restricted cash at end of period | | $ | 812,297 | | | $ | 621,854 | |
Cash Flow from Operating Activities
Operating cash inflows are largely attributable to sales of the Company’s products. Operating cash outflows are largely attributable to recurring expenditures for raw materials, labor, rent, interest, taxes and other operating activities.
Net cash provided by operating activities was $240.7$165.3 million for the ninesix months ended September 25, 2021July 2, 2022 as compared to $164.3$126.3 million for the ninesix months ended SeptemberJune 26, 2020.2021. The increase in net cash provided by operating activities was primarily due to
higher cash earnings, partially offset by increases in working capital resulting from higher sales growth. growth and higher annual incentive bonus payments made in 2022 as compared to 2021.
Cash Flow from Investing Activities
Net cash used in investing activities was $165.6$65.4 million for the ninesix months ended September 25, 2021July 2, 2022 compared to $41.4$139.9 million during the ninesix months ended SeptemberJune 26, 2020.2021. Net cash paid for acquisitions was $110.6$9.8 million and $109.9 million for the ninesix months ended September 25, 2021.July 2, 2022 and June 26, 2021, respectively. Capital expenditures were $57.5$56.2 million, representing an increase of $16.0$23.5 million compared to 2020.2021. During the ninesix months ended September 25,July 2, 2022 and June 26, 2021, the Company received proceeds of $0.5 million from the sale of a property within the Transportation segment and $2.6 million from the sale of a property within the Electronics segment.segment, respectively.
Cash Flow from Financing Activities
Net cash used in financing activities was $60.9$245.0 million for the ninesix months ended September 25, 2021July 2, 2022 compared to $18.4$49.2 million for the ninesix months ended SeptemberJune 26, 2020. The2021. On June 30, 2022, the Company amended its Credit Agreement and borrowed of $300.0 million through a term loan. During the six months ended July 2, 2022, the Company paid $25.0 million of U.S. Senior Notes, Series A due on February 15, 2022. During the six months ended June 26, 2021, the Company made payments of $30.0 million on the amended revolving credit facility during the nine months ended September 25, 2021. On April 3, 2020, the Company amended the Credit Agreement to eliminate the $200.0 million unsecured term loan credit facility, with the remaining outstanding balance of $140.0 million repaid in full on April 3, 2020 through a new borrowing of $140.0 million under the amended revolving credit facility. During the nine months ended September 26, 2020, the Company borrowed $100.0 million from its revolving credit
facility to preserve financial flexibility and enhance liquidity, given the increasing levels of uncertainty related to COVID-19. The Company also made principal payments of $5.0 million on the term loan during the nine months ended September 26, 2020. For the nine months ended September 26, 2020, the Company repurchased 175,110 shares of its common stock totaling $22.9 million. Additionally, the Company paid dividends $36.6$26.2 million and $35.1$23.6 million in the ninesix months ended September 25,July 2, 2022 and June 26, 2021, and September 26, 2020, respectively.
Share Repurchase Program
On April 26, 2019, the Company's Board of Directors authorized a program to repurchase up to 1,000,000 shares of the Company's common stock for the period May 1, 2019 to April 30, 2020 ("2019 program"). On April 29, 2020, the Company announced that the Board of Directors authorized a new program to repurchase up to 1,000,000 shares of the Company's common stock for the period May 1, 2020 to April 30, 2021 (the "2020 program") to replace its previous expired 2019 program. On April 28, 2021, the Company announced that the Board of Directors authorized a new three year program to repurchase up to $300.0 million in the aggregate of shares of the Company’s common stock for the period May 1, 2021 to April 30, 2024 to replace its previous 2020 program.
The Company did not repurchase any shares of its common stock for the ninethree and six months ended September 25,July 2, 2022, and June 26, 2021. During the nine months ended September 26, 2020, the Company repurchased 175,110 shares of its common stock totaling $22.9 million.
Off-Balance Sheet Arrangements
As of September 25, 2021,July 2, 2022, the Company did not have any off-balance sheet arrangements, as defined under SEC rules. Specifically, the Company was not liable for guarantees of indebtedness owed by third parties, the Company was not directly liable for the debt of any unconsolidated entity and the Company did not have any retained or contingent interest in assets. The Company does not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.
Critical Accounting Policies and Estimates
The Company’s Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP. In connection with the preparation of the Condensed Consolidated Financial Statements, the Company uses estimates and makes judgments and assumptions about future events that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures. The assumptions, estimates, and judgments are based on historical experience, current trends, and other factors the Company believes are relevant at the time it prepares the Condensed Consolidated Financial Statements.
The significant accounting policies and critical accounting estimates are consistent with those discussed in Note 1, Summary of Significant Accounting Policies and Other Information, to the consolidated financial statements and the MD&A section of the Company’s Annual Report on Form 10-K for the year ended December 26, 2020.January 1, 2022. During the ninesix months ended September 25, 2021,July 2, 2022, there were no significant changes in the application of critical accounting policies.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.RISK
See Item 7A, Quantitative and Qualitative Disclosures about Market Risk, of ourthe Company's Annual Report on Form 10-K for the year ended December 26, 2020.January 1, 2022. During the ninesix months ended September 25, 2021,July 2, 2022, there have been no material changes in ourthe Company's exposure to market risk.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures (as defined in Rules 13a-15(b) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to management, including ourthe Company's Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.
In connection with the preparation of this report, management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of ourthe Company's disclosure controls and procedures as of September 25, 2021.July 2, 2022. Based on that evaluation, ourthe Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the quarter ended September 25, 2021, ourJuly 2, 2022, the Company's disclosure controls and procedures were effective.
(b) Changes in Internal Control over Financial Reporting
ThereExcept as noted in the first quarter of 2022, there were no other changes in ourthe Company's internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(f) and 15d-15(f) under the Exchange Act that occurred during the quarter ended September 25, 2021July 2, 2022 that have materially affected, or are reasonably likely to materially affect, ourthe Company's internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
There have been no material changes in ourthe Company's risk factors from those disclosed in ourthe Company's Annual Report on Form 10-K for ourits year ended December 26, 2020.January 1, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities
On April 26, 2019, the Company's Board of Directors authorized a program to repurchase up to 1,000,000 shares of the Company's common stock for the period May 1, 2019 to April 30, 2020 ("2019 program"). On April 29, 2020, the Company announced that the Board of Directors authorized a new program to repurchase up to 1,000,000 shares of the Company's common stock for the period May 1, 2020 to April 30, 2021 (the "2020 program") to replace its previous expired 2019 program. On April, 28, 2021, the Company announced that the Board of Directors authorized a new three year program to repurchase up to $300.0 million in the aggregate of shares of the Company’s common stock for the period May 1, 2021 to April 30, 2024 to replace its previous 2020 program.
The Company did not repurchase any shares of its common stock for the three months ended September 25, 2021July 2, 2022 and SeptemberJune 26, 2020.2021.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
None.
ITEM 6. EXHIBITS
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| Exhibit | Description |
| 2.1* | | |
| 4.1 | |
| 10.1 | |
| 10.2 | Subsidiary Guaranty Agreement, dated July 18, 2022, among Carling Technologies, Inc., Hartland Controls Holding Corp., Hartland Controls, L.L.C., IXYS Buckeye, LLC, IXYS Integrated Circuits Division, LLC, IXYS Long Beach, Inc., IXYS USA, LLC, IXYS, LLC, LFUS LLC, Littelfuse Commercial Vehicle, LLC, Littelfuse Holding, LLC, Littelfuse International Holding, LLC, Littelfuse Mexico Holding LLC, Monolith Semiconductor Inc., Pele Technology, Inc., Reaction Tech RE, LLC, Reaction Technology Epi, LLC, Reaction Technology Incorporated, SymCom, Inc. and Zilog, Inc. (filed as Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on July 19, 2022, Commission File No. 20388). |
| 10.3 | |
| 10.4 |
|
| 10.5 | |
| 10.6 | Amended and Restated Credit Agreement, dated as of June 30, 2022, by and among Littelfuse, Inc., certain subsidiaries of the company, as designated borrowers, certain subsidiaries of the company, as guarantors, the lenders party thereto and Bank of America, N.A., as agent, JPMorgan Chase Bank, N.A., as syndication agent, PNC Bank, National Association and BMO Harris Bank, N.A., as co-senior documentation agents, Wells Fargo Bank, National Association, as documentation agent, BofA Securities, Inc. as sole bookrunner and joint lead arranger, and JPMorgan Chase Bank, N.A., as joint lead arranger (filed as Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on June 30, 2022, Commission File No. 20388). |
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| 31.1* | |
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| 31.2* | |
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| 32.1** | |
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| 101 | The following financial information from LITTELFUSE, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 25, 2021July 2, 2022 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Net Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Stockholders' Equity , (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements. |
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| 104 | The cover page from this Quarterly Report on Form 10-Q for the quarter ended September 25, 2021,July 2, 2022, formatted in Inline XBRL. |
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| | |
| * | Filed herewith. |
| ** | Furnished herewith. |
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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 September 25, 2021,July 2, 2022, to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | | | | |
| Littelfuse, Inc. | |
| | | |
| By: | /s/ Meenal A. Sethna | |
| | Meenal A. Sethna | |
| Executive Vice President and Chief Financial Officer |
| | | |
Date: October 27, 2021August 3, 2022 | By: | /s/ Jeffrey G. Gorski | |
| | Jeffrey G. Gorski | |
| Vice President and Chief Accounting Officer |