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| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
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| TRANSITION REPORT PURSUANT TO SECTION 13 | ||||
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Delaware | 36-3795742 | |||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
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8755 West Higgins Road | ||||||||
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Chicago | Illinois | 60631 | ||||||
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Common Stock, $0.01 par value | LFUS | NASDAQ | Global Select Market | ||||||||||||||
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PART I Condensed Consolidated Statements of Stockholders' Equity for the three months ended April 01, 2023 (unaudited) and April 02, 2022 (unaudited) Item 2. Item 3. Item 4. Item 1. Item 1A. Item 2. Item 3. Item 4. Item 5. Item 6.PagePage PART IItem 1. 2022 72129293030303030303132
(in thousands) September 30, 2017 December 31, 2016 ASSETS Current assets: Cash and cash equivalents Short-term investments Trade receivables, less allowances (September 30, 2017 - $30,658 December 31, 2016 - $25,874) Inventories Prepaid income taxes Prepaid expenses and other current assets Total current assets Property, plant, and equipment: Land Buildings Equipment Accumulated depreciation and amortization Net property, plant, and equipment Intangible assets, net of amortization: Patents, licenses and software Distribution network Customer relationships, trademarks and tradenames Goodwill Investments Deferred income taxes Other assets Total assets LIABILITIES AND EQUITY Current liabilities: Accounts payable Accrued payroll Accrued expenses Accrued severance Accrued income taxes Current portion of long-term debt Total current liabilities Long-term debt, less current portion Deferred income taxes Accrued post-retirement benefits Other long-term liabilities Shareholders’ equity: Common stock, par value $0.01 per share Treasury stock, at cost Additional paid-in capital Accumulated other comprehensive income Retained earnings Littelfuse, Inc. shareholders’ equity Non-controlling interest Total equity Total liabilities and equity (Unaudited) $ 372,828 $ 275,124 35 3,690 197,539 176,032 136,505 114,063 6,658 11,671 45,799 31,501 759,364 612,081 9,690 9,268 86,111 80,553 493,361 439,542 (344,288 ) (312,188 ) 244,874 217,175 84,455 83,607 20,329 18,995 104,738 110,425 451,131 403,544 10,582 13,933 17,806 20,585 8,913 10,849 $ 1,702,192 $ 1,491,194 $ 103,849 $ 90,712 42,131 42,810 52,786 36,138 1,734 2,785 16,281 8,846 9,375 6,250 226,156 187,541 492,272 447,892 7,719 7,066 16,571 13,398 26,230 20,366 229 228 (41,260 ) (36,510 ) 306,118 291,258 (73,343 ) (74,579 ) 741,363 634,391 933,107 814,788 137 143 933,244 814,931 $ 1,702,192 $ 1,491,194 (Unaudited) (in thousands) April 1,
2023December 31,
2022ASSETS Current assets: Cash and cash equivalents $ 425,127 $ 562,588 Short-term investments 85 84 324,583 306,578 Inventories 559,828 547,690 Prepaid income taxes and income taxes receivable 5,857 7,215 Prepaid expenses and other current assets 86,124 87,641 Total current assets 1,401,604 1,511,796 Net property, plant, and equipment 492,368 481,110 Intangible assets, net of amortization 646,963 593,970 Goodwill 1,289,229 1,186,922 Investments 26,581 24,121 Deferred income taxes 13,780 14,367 Right of use lease assets, net 56,583 57,382 Other long-term assets 34,628 34,066 Total assets $ 3,961,736 $ 3,903,734 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 191,346 $ 208,571 Accrued liabilities 147,776 187,057 Accrued income taxes 42,587 41,793 Current portion of long-term debt 137,929 134,874 Total current liabilities 519,638 572,295 Long-term debt, less current portion 866,925 866,623 Deferred income taxes 109,453 100,230 Accrued post-retirement benefits 29,557 28,037 Non-current operating lease liabilities 43,919 45,661 Other long-term liabilities 84,768 79,510 Shareholders’ equity: Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, April 1, 2023–26,483,444; December 31, 2022–26,445,618 261 261 Additional paid-in capital 983,065 974,097 Treasury stock, at cost: 1,685,471 and 1,685,357 shares, respectively (252,884) (252,866) Accumulated other comprehensive loss (82,481) (95,764) Retained earnings 1,659,265 1,585,466 Littelfuse, Inc. shareholders’ equity 2,307,226 2,211,194 Non-controlling interest 250 184 Total equity 2,307,476 2,211,378 Total liabilities and equity $ 3,961,736 $ 3,903,734
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
(in thousands, except per share data) | September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | ||||||||||||
Net sales | $ | 317,889 | $ | 280,331 | $ | 916,685 | $ | 771,641 | ||||||||
Cost of sales | 184,238 | 166,572 | 536,776 | 472,861 | ||||||||||||
Gross profit | 133,651 | 113,759 | 379,909 | 298,780 | ||||||||||||
Selling, general, and administrative expenses | 56,759 | 56,589 | 156,899 | 150,047 | ||||||||||||
Research and development expenses | 11,991 | 10,403 | 36,872 | 30,884 | ||||||||||||
Amortization of intangibles | 6,292 | 4,432 | 18,407 | 13,384 | ||||||||||||
Impairment of goodwill and intangible assets | — | 14,809 | — | 14,809 | ||||||||||||
Total operating expenses | 75,042 | 86,233 | 212,178 | 209,124 | ||||||||||||
Operating income | 58,609 | 27,526 | 167,731 | 89,656 | ||||||||||||
Interest expense | 3,467 | 2,571 | 9,868 | 6,286 | ||||||||||||
Foreign exchange loss (gain) | 632 | (4,700 | ) | (1,483 | ) | (7,114 | ) | |||||||||
Other income, net | (1,013 | ) | (778 | ) | (962 | ) | (1,040 | ) | ||||||||
Income before income taxes | 55,523 | 30,433 | 160,308 | 91,524 | ||||||||||||
Income taxes | 12,715 | (369 | ) | 29,970 | 14,281 | |||||||||||
Net income | $ | 42,808 | $ | 30,802 | $ | 130,338 | $ | 77,243 | ||||||||
Income per share: | ||||||||||||||||
Basic | $ | 1.88 | $ | 1.36 | $ | 5.75 | $ | 3.43 | ||||||||
Diluted | $ | 1.87 | $ | 1.35 | $ | 5.69 | $ | 3.41 | ||||||||
Weighted-average shares outstanding: | ||||||||||||||||
Basic | 22,713 | 22,578 | 22,678 | 22,515 | ||||||||||||
Diluted | 22,953 | 22,734 | 22,906 | 22,675 | ||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| (in thousands, except per share data) | April 1, 2023 | April 2, 2022 | ||||||||||||||||||||||||
| Net sales | $ | 609,782 | $ | 623,330 | ||||||||||||||||||||||
| Cost of sales | 364,825 | 364,734 | ||||||||||||||||||||||||
| Gross profit | 244,957 | 258,596 | ||||||||||||||||||||||||
| Selling, general, and administrative expenses | 88,310 | 75,508 | ||||||||||||||||||||||||
| Research and development expenses | 27,290 | 19,556 | ||||||||||||||||||||||||
| Amortization of intangibles | 16,866 | 12,724 | ||||||||||||||||||||||||
| Restructuring, impairment, and other charges | 1,850 | 218 | ||||||||||||||||||||||||
| Total operating expenses | 134,316 | 108,006 | ||||||||||||||||||||||||
| Operating income | 110,641 | 150,590 | ||||||||||||||||||||||||
| Interest expense | 9,646 | 4,302 | ||||||||||||||||||||||||
| Foreign exchange (gain) loss | (1,675) | 7,736 | ||||||||||||||||||||||||
| Other (income) expense, net | (6,233) | 4,427 | ||||||||||||||||||||||||
| Income before income taxes | 108,903 | 134,125 | ||||||||||||||||||||||||
| Income taxes | 20,158 | 16,607 | ||||||||||||||||||||||||
| Net income | $ | 88,745 | $ | 117,518 | ||||||||||||||||||||||
| Earnings per share: | ||||||||||||||||||||||||||
| Basic | $ | 3.58 | $ | 4.76 | ||||||||||||||||||||||
| Diluted | $ | 3.54 | $ | 4.70 | ||||||||||||||||||||||
| Weighted-average shares and equivalent shares outstanding: | ||||||||||||||||||||||||||
| Basic | 24,782 | 24,689 | ||||||||||||||||||||||||
| Diluted | 25,062 | 24,981 | ||||||||||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
(in thousands) | September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | ||||||||||||
Net income | $ | 42,808 | $ | 30,802 | $ | 130,338 | $ | 77,243 | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Pension liability adjustments (net of tax of $89 and $30 for the three months ended 2017 and 2016, and $144 and $395 for the nine months ended 2017 and 2016, respectively) | 58 | (138 | ) | (142 | ) | (183 | ) | |||||||||
Pension and post-retirement reclassification adjustments | (118 | ) | 68 | (299 | ) | 212 | ||||||||||
Unrealized (loss) gain on investments | (1,710 | ) | 927 | (1,235 | ) | (559 | ) | |||||||||
Foreign currency translation adjustments | 1,531 | (5,771 | ) | 2,912 | (8,951 | ) | ||||||||||
Comprehensive income | $ | 42,569 | $ | 25,888 | $ | 131,574 | $ | 67,762 | ||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| (in thousands) | April 1, 2023 | April 2, 2022 | ||||||||||||||||||||||||
| Net income | $ | 88,745 | $ | 117,518 | ||||||||||||||||||||||
| Other comprehensive income (loss): | ||||||||||||||||||||||||||
| Pension and postemployment adjustment, net of tax | 6 | 310 | ||||||||||||||||||||||||
| Cash flow hedge, net of tax | (2,518) | — | ||||||||||||||||||||||||
| Foreign currency translation adjustments | 15,795 | (2,513) | ||||||||||||||||||||||||
| Comprehensive income | $ | 102,028 | $ | 115,315 | ||||||||||||||||||||||
(Unaudited)
For the Nine Months Ended | ||||||||
(in thousands) | September 30, 2017 | October 1, 2016 | ||||||
Operating activities | ||||||||
Net income | $ | 130,338 | $ | 77,243 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 28,228 | 24,841 | ||||||
Amortization of intangibles | 18,407 | 13,384 | ||||||
Impairment of goodwill and intangible assets | — | 14,809 | ||||||
Provision for bad debts | 1,586 | — | ||||||
Impairment of long-lived assets | — | 1,391 | ||||||
Non-cash inventory charge | 1,607 | 7,456 | ||||||
Loss on sale of property, plant, and equipment | 584 | 440 | ||||||
Stock-based compensation | 12,437 | 9,166 | ||||||
Excess tax benefit on share-based compensation | — | (2,272 | ) | |||||
Deferred income taxes | 1,863 | — | ||||||
Changes in operating assets and liabilities: | ||||||||
Trade receivables | (26,792 | ) | (17,973 | ) | ||||
Inventories | (17,159 | ) | 4,505 | |||||
Accounts payable | 9,448 | 7,845 | ||||||
Accrued expenses (including post-retirement) | 1,757 | 6,497 | ||||||
Accrued payroll and severance | (3,788 | ) | 1,388 | |||||
Accrued income taxes | 7,267 | (23,613 | ) | |||||
Prepaid expenses and other current assets | 15,537 | (25,092 | ) | |||||
Net cash provided by operating activities | 181,320 | 100,015 | ||||||
Investing activities | ||||||||
Acquisitions of businesses, net of cash acquired | (38,610 | ) | (468,636 | ) | ||||
Proceeds from maturities of short-term investments | 3,739 | 345 | ||||||
Decrease in entrusted loan | 3,599 | 4,056 | ||||||
Purchases of property, plant, and equipment | (48,470 | ) | (34,501 | ) | ||||
Proceeds from sale of property, plant, and equipment | 541 | 255 | ||||||
Net cash used in investing activities | (79,201 | ) | (498,481 | ) | ||||
Financing activities | ||||||||
Proceeds of revolving credit facility | 15,000 | 258,000 | ||||||
Proceeds of term loan | — | 234,000 | ||||||
Proceeds of senior notes payable | 125,000 | — | ||||||
Payments of term loan | (4,687 | ) | (119,125 | ) | ||||
Payments of revolving credit facility | (112,500 | ) | (97,500 | ) | ||||
Net (payments) proceeds related to stock-based award activities | (2,336 | ) | 14,581 | |||||
Payments of entrusted loan | (3,599 | ) | (4,056 | ) | ||||
Debt issuance costs | (2 | ) | (1,701 | ) | ||||
Cash dividends paid | (23,367 | ) | (20,405 | ) | ||||
Excess tax benefit on share-based compensation | — | 2,272 | ||||||
Purchases of common stock | — | (3,685 | ) | |||||
Net cash (used in) provided by financing activities | (6,491 | ) | 262,381 | |||||
Effect of exchange rate changes on cash and cash equivalents | 2,076 | 1,793 | ||||||
Increase (decrease) in cash and cash equivalents | 97,704 | (134,292 | ) | |||||
Cash and cash equivalents at beginning of period | 275,124 | 328,786 | ||||||
Cash and cash equivalents at end of period | $ | 372,828 | $ | 194,494 | ||||
Supplemental disclosure of non-cash investing activities: | ||||||||
Fair value of commitment to purchase non-controlling interest of Monolith | $ | 9,000 | $ | — | ||||
| Three Months Ended | ||||||||||||||
| (in thousands) | April 1, 2023 | April 2, 2022 | ||||||||||||
| OPERATING ACTIVITIES | ||||||||||||||
| Net income | $ | 88,745 | $ | 117,518 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation | 17,616 | 15,574 | ||||||||||||
| Amortization of intangibles | 16,866 | 12,724 | ||||||||||||
| Deferred revenue | 639 | (158) | ||||||||||||
| Non-cash inventory charges | — | 4,769 | ||||||||||||
| Stock-based compensation | 3,730 | 3,886 | ||||||||||||
| (Gain) loss on investments and other assets | (1,779) | 4,729 | ||||||||||||
| Deferred income taxes | 1,624 | (2,112) | ||||||||||||
| Other | (6,138) | 8,554 | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Trade receivables | (13,176) | (45,945) | ||||||||||||
| Inventories | (1,535) | (30,879) | ||||||||||||
| Accounts payable | (16,246) | (6,611) | ||||||||||||
| Accrued liabilities and income taxes | (43,578) | (36,287) | ||||||||||||
| Prepaid expenses and other assets | 6,639 | 5,969 | ||||||||||||
| Net cash provided by operating activities | 53,407 | 51,731 | ||||||||||||
| INVESTING ACTIVITIES | ||||||||||||||
| Acquisitions of businesses, net of cash acquired | (158,260) | — | ||||||||||||
| Purchases of property, plant, and equipment | (25,665) | (29,809) | ||||||||||||
| Net proceeds from sale of property, plant and equipment, and other | 737 | 21 | ||||||||||||
| Net cash used in investing activities | (183,188) | (29,788) | ||||||||||||
| FINANCING ACTIVITIES | ||||||||||||||
| Payments of senior notes payable | — | (25,000) | ||||||||||||
| Repayments of other debts | (668) | — | ||||||||||||
| Payments of term loan | (1,875) | — | ||||||||||||
| Net proceeds related to stock-based award activities | 5,219 | 1,016 | ||||||||||||
| Cash dividends paid | (14,880) | (13,086) | ||||||||||||
| Net cash used in financing activities | (12,204) | (37,070) | ||||||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 4,571 | (2,738) | ||||||||||||
| Decrease in cash, cash equivalents, and restricted cash | (137,414) | (17,865) | ||||||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 564,939 | 482,836 | ||||||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 427,525 | $ | 464,971 | ||||||||||
| Supplementary Cash Flow Information | ||||||||||||||
| Reconciliation of cash and cash equivalents: | ||||||||||||||
| Cash and cash equivalents | $ | 425,127 | $ | 461,617 | ||||||||||
| Restricted cash included in prepaid expenses and other current assets | $ | 812 | $ | 1,745 | ||||||||||
| Restricted cash included in other long-term assets | $ | 1,586 | $ | 1,609 | ||||||||||
| Cash interest during the period | $ | 11,027 | $ | 6,018 | ||||||||||
| Capital expenditures, not yet paid | $ | 7,523 | $ | 9,553 | ||||||||||
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day. hand. The Littelfuse, Inc. Shareholders’ Equity (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 31, 2022 $ 261 $ 974,097 $ (252,866) $ (95,764) $ 1,585,466 $ 184 $ 2,211,378 Net income — — — — 88,745 — 88,745 Other comprehensive gain, net of tax — — — 13,283 — — 13,283 Stock-based compensation — 3,730 — — — — 3,730 Non-controlling interest — — — — (66) 66 — Withheld shares on restricted share units for withholding taxes — — (18) — — — (18) Stock options exercised — 5,238 — — — — 5,238 Cash dividends paid ($0.60 per share) — — — — (14,880) — (14,880) Balance at April 1, 2023 $ 261 $ 983,065 $ (252,884) $ (82,481) $ 1,659,265 $ 250 $ 2,307,476 Littelfuse, Inc. Shareholders’ Equity (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 January 1, 2022 $ 260 $ 946,588 $ (248,120) $ (73,463) $ 1,268,124 $ 131 $ 1,893,520 Net income — — — — 117,518 — 117,518 Other comprehensive loss, net of tax — — — (2,203) — — (2,203) Stock-based compensation — 3,886 — — — — 3,886 Withheld shares on restricted share units for withholding taxes — — (4) — — — (4) Stock options exercised — 1,021 — — — — 1,021 Cash dividends paid ($0.53 per share) — — — — (13,086) — (13,086) Balance at April 2, 2022 $ 260 $ 951,495 $ (248,124) $ (75,666) $ 1,372,556 $ 131 $ 2,000,652 Inc.is an industrial technology manufacturing company empowering a sustainable, connected, and subsidiaries (the “Company”) is one of the world’s leading designer, manufacturersafer world. Across more than 20 countries, and supplier of circuit protection products, with expanding platforms in sensors and power control components and modules. In addition to circuit protection products and solutions,approximately 18,000 global associates, the Company offers electronic reed switchespartners with customers to design and sensors, automotive sensors for comfort and safety systems and a comprehensive line of highlydeliver innovative, reliable electromechanical and electronic switch and control devices for commercial and specialty vehicles, as well as protection relays and power distribution centers forsolutions. Serving over 100,000 end customers, the safe control and distribution of electricity. The Company has a network of global engineering centers and labs that develop new products and product enhancements, provides customer application support and test products for safety, reliability, and regulatory compliance. The Company’s products protect productsare found in virtuallya variety of industrial, transportation and electronics end markets – everywhere, every market that uses electrical energy, from consumer electronics to automobiles to industrial equipment.sheet,sheets, statements of net income and comprehensive income, andstatements 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 31, 2016,2022, 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. Certain reclassifications of prior year amounts for Trade receivables, net and Prepaid expenses and other current assets were made to conform to the 2017 presentation.Goodwill and Indefinite-Lived Intangible AssetsCompany annually tests goodwill and indefinite-lived intangible assets for impairment on the first day of its fiscal fourth quarter or at other dates if there is an event or change in circumstances that indicates the asset may be impaired. Management determines the fair value of each of its reporting units by using a discounted cash flow model (which includes forecasted five-year income statement and working capital projections, a market-based weighted average cost of capital and terminal values after five years) to estimate market value. In addition, the Company compares its derived enterprise value on a consolidated basis tofollowing tables disaggregate the Company’s market capitalization as of its test date to ensure its derived value approximates the market value of the Company when taken as a whole.Factors the Company considers important when performing the impairment tests, which could result in changes to its estimates, include underperformance relative to historical or projected future operating results and declines in acquisitions and trading multiples. Due to the diverse end user base and non-discretionary product demand, the Company does not believe its future operating results will vary significantly relative to its historical and projected future operating results. However, it is possible that impairment charges could be recognized for the Relays reporting unit if there are declines in profitability or projected future operating results and cash flows due to changes in volume, market pricing, cost, or therevenue by primary business environment. As of the most recent annual test conducted on October 2, 2016, the Company concluded the fair value of the Relays reporting unit exceeded its carrying value of invested capital and therefore, no potential goodwill impairment existed. As of the 2016 annual test date, the Relays reporting unit had $41.4 million of goodwill and intangible assets and the excess of fair value over the carrying value of invested capital was 15%. As of September 30, 2017, there were no events or circumstances that indicate the Relays intangible assets were impaired.In the third quarter of 2016, due to continued declines in the potash market the Company conducted a goodwill impairment analysis of the Custom Products reporting unit and concluded that the reporting unit was impaired. The fair value of the unit was estimated using the expected present value of future cash flows over a seven year forecast period and appraisal of certain assets. This analysis required a write down of the reporting unit’s carrying value of $14.8 million. A goodwill impairment loss of $8.8 million and intangible assets impairments aggregating $6.0 million were recognized during the third quarter, including a $3.8 million reduction of the custom products trade names to a $0.7 million remaining value and a $2.2 million reduction of the reporting unit’s customer relationships to zero value. Recently Adopted Accounting StandardsIn July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11 – “Inventory (Topic 330): Simplifying the Measurement of Inventory,” which simplifies the measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. The update is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company adopted the new standard on January 1, 2017. The adoption of the update did not have a material impact on the Company’s consolidated financial position and results of operations. As a result of the adoption of the update, inventories are stated at the lower of cost or net realizable value. Cost is principally determined using the first-in, first-out method. The Company maintains excess and obsolete allowances against inventory to reduce the carrying value to the expected net realizable value. These allowances are based upon a combination of factors including historical sales volume, market conditions, lower of cost or market analysis and expected realizable value of the inventory.In March 2016, the FASB issued ASU No. 2016-09 – “Improvements to Employee Share-Based Payment Accounting,” which amends ASC 718, “Compensation – Stock Compensation.” The update simplifies several aspects of the accounting for employee share-based payment transactions, including accounting for income taxes, forfeitures, and statutory withholding requirements, as well as classification in the Condensed Consolidated Statements of Cash Flows. The update is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company adopted the new standard on January 1, 2017. As a result of the adoption, on a prospective basis, the Company recognized $0.1 million and $1.9 million of excess tax benefits from stock-based compensation as a discrete item in income tax expenseunits for the three and nine months ended September 30, 2017, respectively. Historically, these amounts wereApril 1, 2023 and April 2, 2022: Three Months Ended April 1, 2023 (in thousands) Electronics
SegmentTransportation
SegmentIndustrial
Segment
TotalElectronics – Passive Products and Sensors $ 148,598 $ — $ — $ 148,598 Electronics – Semiconductor 209,995 — — 209,995 Passenger Car Products — 61,697 — 61,697 Automotive Sensors — 20,798 — 20,798 Commercial Vehicle Products — 84,146 — 84,146 Industrial Products — — 84,548 84,548 Total $ 358,593 $ 166,641 $ 84,548 $ 609,782 Three Months Ended April 2, 2022 (in thousands) Electronics
SegmentTransportation
SegmentIndustrial
SegmentElectronics – Passive Products and Sensors $ 169,943 $ — $ — $ 169,943 Electronics – Semiconductor 195,878 — — 195,878 Passenger Car Products — 64,494 — 64,494 Automotive Sensors — 26,137 — 26,137 Commercial Vehicle Products — 93,873 — 93,873 Industrial Products — — 73,005 73,005 Total $ 365,821 $ 184,504 $ 73,005 $ 623,330 additional paid-in capital.the amortization period of the commission asset the Company would have otherwise recognized is less than one year.applytreat all product shipping and handling activities as fulfillment activities, and therefore recognize the change prospectivelygross revenue associated with the contract, inclusive of any shipping and handling revenue.StatementBalance Sheets that sum to the total of Cash Flows. As a result, on a prospective basis, share-based payments will be reported as operating activitiesthe same such amounts shown in the Condensed Consolidated Statement of Cash Flows. The Company elected not to change its policy on accounting for forfeitures and will continue to estimate a requisite forfeiture rate. Additional amendments to the accounting for income taxes and minimum statutory withholding requirements had no impact on the results of operations.(in thousands) April 1, 2023 December 31, 2022 Cash and cash equivalents $ 425,127 $ 562,588 Restricted cash included in prepaid expenses and other current assets 812 802 Restricted cash included in other long-term assets 1,586 1,549 Total cash, cash equivalents and restricted cash $ 427,525 $ 564,939 2017,2023, the FASB issued ASU No. 2017-07 “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-Retirement Benefit Cost,” which changes the presentation of net periodic pension and post-retirement benefit cost (net benefit cost) within the Statement of Income. Under the current guidance, net benefit cost is reported as an employee cost within operating income. The amendment requires the bifurcation of net benefit cost, with the service cost component to be presented with other employee compensation costs in operating income while the other components will be reported separately outside of income from operations. ASU No. 2017-07 will be effective for the first quarter of 2018 and is required to be retrospectively adopted. Had this guidance been adopted as of January 1, 2017, operating income within the Condensed Consolidated Statements of Income for the three months and nine months ended September 30, 2017 would have not changed by a material amount.In January 2017, the FASBFinancial Accounting Standards Board ("FASB") issued ASU No. 2017-04, “Intangibles-Goodwill2023-01, "Leases (Topic 842): Common Control Arrangements". The standard requires that leasehold improvements associated with common control leases be: 1) Amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset (the leased asset) through a lease. However, if the lessor obtained the right to control the use of the underlying asset through a lease with another entity not within the same common control group, the amortization period may not exceed the amortization period of the common control group. 2) Accounted for as a transfer between entities under common control through an adjustment to equity (or net assets for not-for-profit entities) if, and Other” (Topic 350). This ASU modifies the concept of impairment from the condition that exists when, the carrying amountlessee no longer controls the use of goodwill exceeds its implied fair valuethe underlying asset. Additionally, those leasehold improvements are subject to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assetsguidance in Topic 360, Property, Plant, and liabilities as if that reporting unit had been acquired in a business combination. Because the update will eliminate Step 2 from the goodwill impairment test, it should reduce the cost and complexity of evaluating goodwill for impairment.Equipment. This ASUstandard is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020, with early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company expects to adopt the new standard in 2017.In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments-Recognition and Measurement of Financial Assets and Financial Liabilities” which addresses certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. The ASU will require the Company to recognize any changes in the fair value of certain equity investments in net income. These changes are currently recognized in other comprehensive income ("OCI"). This guidance is effective for interim and fiscal years beginning after December 15, 2017.In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606) which supersedes the revenue recognition requirements in ASC 605, “Revenue Recognition.” This ASU provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. In August, 2015, the FASB issued ASU No. 2015-14, which postponed the effective date of ASU No. 2014-09 to fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted on the original effective date of fiscal years beginning after December 15, 2016. The Company is in the process of performing its assessment of the potential impact on its consolidated financial statements, and anticipates adopting this standard using the modified retrospective method. While the Company is currently assessing the impact of the new standard, the Company’s revenue is primarily generated from the sale of finished products to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks, and rewards transfer. These are largely un-affected by the new standard.2024. The Company does not expect this new guidance to have aany material impacteffect on the amount of overall sales recognized; however, the timing of sales on certain projects may be affected. Company's Condensed Consolidated Financial Statements.Company has not yet quantified this potential impact.In February 2016, the FASB issued ASU No. 2016-02, "Leases" (Topic 842). This ASU requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases of greater than twelve months. The accounting by lessors will remain largely unchanged. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. Adoption will require a modified retrospective transition, however the Company plans to adopt the standard in the first quarter of 2019. The Company is currently evaluating the impact of ASU 2016-02.2. AcquisitionsThe 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. These acquisitions were recorded by allocating the cost of the acquisition to the assets acquired, including other intangible assets, based on their estimate fair values at the acquisition date. The excess of the cost over the net amounts assigned to the fair value of the assets acquired was recorded as goodwill. The goodwill associated with these acquisitions is primarily attributable to the synergies expected to arise as a result of these acquisitions. The operating results of the acquired business are included in the Company’s condensed consolidated financial statementsCondensed Consolidated Financial Statements from the date of the acquisition.2017 AcquisitionsIXYS CorporationAugust 28, 2017,February 3, 2023, the Company completed the previously announced that it hadacquisition of Western Automation Research and Development Limited (“Western Automation”) for approximately $162 million in cash. Headquartered in Galway, Ireland, Western Automation is a designer and manufacturer of electrical shock protection devices used across a broad range of high-growth end markets, including e-Mobility off-board charging infrastructure, industrial safety and renewables. At the time the Company and Western Automation entered in ainto the definitive agreement, to acquire IXYS Corporation (“IXYS”), a global pioneer inWestern Automation had annualized sales of approximately $25 million. The business is reported within the power semiconductor and integrated circuit marketsCompany’s Industrial segment.a focuscash on medium to high voltage power control semiconductors across the industrial, communications, consumer and medical markets. IXYS has a broad customer base, serving more than 3,500 customers through its direct salesforce and global distribution partners.Company will acquire all outstanding sharestotal purchase consideration of common stock of IXYS in exchange for a combination$158.3 million, net of cash, has been allocated, on a preliminary basis, to assets acquired and shares of common stockliabilities assumed, as of the Company. Each IXYS stockholder will be entitled to elect to receive, per IXYS share, either $23.00 in cash or 0.1265 of a share of Littelfuse common stock, subject to proration. In total, 50% of IXYS stock will be converted into the cash election option and the remaining will be converted into the stock election option. The equity valuecompletion of the transaction atacquisition, based on preliminary estimated fair values. The purchase price allocation is preliminary because the announcement was approximately $750 million. The exchange ratio is fixed and will not be adjusted for changes inevaluations necessary to assess the market value of shares of Littelfuse or IXYS common stock. The marketfair values of Littelfuse common stockthe 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 number of outstanding shares of IXYS common stock and equity-based awards will continue to fluctuate until the acquisition is completed.liabilities. As a result, these allocations are subject to change during the final purchase price will differ fromallocation period as the initially announced purchase price, and that difference may be material.The transaction is expected to close in the first calendar quarter of 2018 and is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by IXYS stockholders. The Company expects to finance the cash portion of the transaction consideration through a combination of existing cash and additional debt.U.S. SensorOn July 7, 2017, the Company acquired the assets of U.S. Sensor Corporation (“U.S. Sensor”) for $24.4 million. The Company funded the acquisition with available cash. The final purchase price is subject to adjustment for finalization of income tax gross up which is expected to be settled in the fourth quarter of 2017. The acquired business expands the Company’s existing sensor portfolio in several key electronics and industrial end markets. U.S. Sensor manufactures a variety of high quality negative temperature coefficient thermistors as well as thermistor probes and assemblies. Product lines also include thin film platinum resistance temperature detectors (“RTDs”) and RTD assemblies.9
The following table summarizes the preliminary purchase price allocation of the fair value of assets acquired and liabilities assumed in the U.S. SensorWestern Automation acquisition:
(in thousands) | Purchase Price Allocation | |||
Total purchase consideration: | ||||
Cash | $ | 24,439 | ||
Allocation of consideration to assets acquired and liabilities assumed: | ||||
Current assets, net | $ | 4,755 | ||
Patented and unpatented technologies | 1,090 | |||
Trademarks and tradenames | 200 | |||
Non-compete agreement | 50 | |||
Customer relationships | 2,830 | |||
Goodwill | 16,054 | |||
Current liabilities | (540 | ) | ||
| $ | 24,439 | |||
| (in thousands) | Purchase Price Allocation | ||||
| Total purchase consideration: | |||||
| Cash, net of cash acquired | $ | 158,260 | |||
| Allocation of consideration to assets acquired and liabilities assumed: | |||||
| Trade receivables, net | 3,389 | ||||
| Inventories | 3,678 | ||||
| Other current assets | 718 | ||||
| Property, plant, and equipment | 1,328 | ||||
| Intangible assets | 68,000 | ||||
| Goodwill | 94,823 | ||||
| Other non-current assets | 573 | ||||
| Current liabilities | (5,251) | ||||
| Other non-current liabilities | (8,998) | ||||
| $ | 158,260 | ||||
As required by purchase accounting rules,
Monolith
In December 2015,
On February 28, 2017, pursuant to a Securities Purchase Agreement between the Company and the stockholders of Monolith and conditioned on Monolith achieving a product development milestone and other provisions, the Company acquired approximately 62%completion of the outstanding common stock of Monolith for $15 million. The Securities Purchase Agreement includes provisions whereby the Company will acquire the remaining outstanding stock of Monolith (“non-controlling interest”) at a time or timesacquisition, based on Monolith meeting certain technical and sales targets. Consideration forpreliminary estimated fair values. The purchase price allocation is preliminary because the additional investment(s) will range from $1.0 millionevaluations necessary to $10 million and will be paid no later than June 30, 2019.
The additional investment resulted in the Company gaining control of Monolith and was accounted for as a step-acquisition withassess the fair valuevalues of the original investment immediately beforenet assets acquired are still in process. As a result, these allocations are subject to change during the acquisition estimated to be approximately $3.5 million. Aspurchase price allocation period as the fair value of the investment immediately prior to the transaction equaled the carrying value, there was no impact on the Company’s condensed consolidated statement of net income. As the Securities Purchase Agreement includes an obligation of the Company to mandatorily redeem the non-controlling interest for cash, the fair value of the non-controlling interest was recognized as a liability on the Company’s condensed consolidated balance sheet. Changes in the fair value of the non-controlling interestvaluations are recognized in the Company’s condensed consolidated statements of net income.
Commencing March 1, 2017, Monolith was reflected as a consolidated subsidiary within the Company’s condensed consolidated financial statements. Had the acquisition occurred as of January 1, 2017, the impact on the Company’s consolidated results of operations would not have been material.
The following table summarizes the preliminary purchase price allocation of the fair value of assets acquired and liabilities assumed in the MonolithC&K acquisition:
(in thousands) | Purchase Price Allocation | |||
Total purchase consideration: | ||||
Original investment | $ | 3,500 | ||
Cash, net of cash acquired | 14,172 | |||
Fair value of commitment to purchase non-controlling interest | 9,000 | |||
Total purchase consideration | $ | 26,672 | ||
Allocation of consideration to assets acquired and liabilities assumed: | ||||
Current assets, net | $ | 891 | ||
Property, plant, and equipment | 789 | |||
Patented and unpatented technologies | 6,720 | |||
Non-compete agreement | 140 | |||
Goodwill | 20,641 | |||
Current liabilities | (639 | ) | ||
Other non-current liabilities | (1,870 | ) | ||
| $ | 26,672 | |||
| (in thousands) | Purchase Price Allocation | ||||
| Total purchase consideration: | |||||
| Cash, net of cash acquired | $ | 523,014 | |||
| Allocation of consideration to assets acquired and liabilities assumed: | |||||
| Trade receivables, net | 20,967 | ||||
| Inventories | 42,968 | ||||
| Other current assets | 2,932 | ||||
| Property, plant, and equipment | 32,791 | ||||
| Intangible assets | 254,700 | ||||
| Goodwill | 270,245 | ||||
| Other non-current assets | 14,797 | ||||
| Current liabilities | (47,734) | ||||
| Long- term debt | (9,626) | ||||
| Other non-current liabilities | (59,026) | ||||
| $ | 523,014 | ||||
The purchase price allocations for U.S. Sensor and Monolith are preliminary because the evaluations necessary to assess the fair values of the net assets acquired are still in process. The primary areas that are not yet finalized relate to the completion of the independent valuations of other intangible assets.
2016 Acquisitions
ON Portfolio
On August 29, 2016, the Company acquired certain assets of select businesses (the “ON Portfolio”) of ON Semiconductor Corporation for $104.0 million. The Company funded the acquisition with available cash and proceeds from its credit facility. The acquired business, which is included in the Electronics segment, consists of a product portfolio that includes transient voltage suppression (“TVS”) diodes, switching thyristors and insulated gate bipolar transistors (“IGBTs”) for automotive ignition applications. The acquisition expands the Company’s offerings in power semiconductor applications as well as increases its presence in the automotive electronics market. The ON Portfolio products have strong synergies with the Company’s existing circuit protection business and will strengthen its channel partnerships and customer engagement.
The following table summarizes the final purchase price allocation of the fair value of assets acquired and liabilities assumed in the ON Portfolio acquisition:
(in thousands) | Purchase Price Allocation | |||
Total purchase consideration: | ||||
Cash | $ | 104,000 | ||
Allocation of consideration to assets acquired and liabilities assumed: | ||||
Current assets, net | $ | 4,816 | ||
Customer relationships | 31,800 | |||
Patented and unpatented technologies | 8,800 | |||
Non-compete agreement | 2,500 | |||
Goodwill | 56,084 | |||
| $ | 104,000 | |||
All the ON Portfolio business goodwill and other assets were recorded in the Electronics segment and are reflected in the Americas, Europe and EuropeAsia-Pacific geographic areas. The customer relationships are being amortized over 13.5 years. The patented and unpatented technologies are being amortized over 6-8.5 years. The non-compete agreement is being amortized over 4 years. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining the ON Portfolio products with the Company’s existing power semiconductor product portfolio. $7.3 million of goodwill for the above acquisition is expected to be deductible for tax purposes.
As required by purchase accounting rules, the Company recorded a $0.7 million step-up of inventory to its fair value as of the acquisition date based on the preliminary valuation. All of the step-up was amortized as a non-cash charge to cost of goods sold during 2016, as the acquired inventory was sold, and reflected as other non-segment costs.
Menber’s
On April 4, 2016, the Company completed the acquisition of Menber’s S.p.A. (“Menber’s”) headquartered in Legnago, Italy for $19.2 million, net of acquired cash and after settlement of a working capital adjustment. The Company funded the acquisition with cash on hand and borrowings under the Company’s revolving credit facility. The acquired business is part of the Company's commercial vehicle product business within the Automotive segment and specializes in the design, manufacturing, and selling of manual and electrical high current switches and trailer connectors for commercial vehicles. The acquisition expands the Company’s commercial vehicle products business globally.
The following table summarizes the final purchase price allocation of the fair value of assets acquired and liabilities assumed in the Menber’s acquisition:
(in thousands) | Purchase Price Allocation | |||
Total purchase consideration: | ||||
Cash, net of acquired cash | $ | 19,162 | ||
Preliminary allocation of consideration to assets acquired and liabilities assumed: | ||||
Current assets, net | $ | 12,919 | ||
Property, plant, and equipment | 1,693 | |||
Customer relationships | 3,050 | |||
Patented and unpatented technologies | 224 | |||
Trademarks and tradenames | 1,849 | |||
Goodwill | 8,091 | |||
Current liabilities | (7,220 | ) | ||
Other non-current liabilities | (1,444 | ) | ||
| $ | 19,162 | |||
All Menber’s goodwill and other assets and liabilities were recorded in the Automotive segment and reflected in the Europe geographic area. The customer relationships are being amortized over 10 years. The patented and unpatented technologies are being amortized over 5 years. The trademarks and tradenames are being amortized over 10 years. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining Menber’sC&K’s products and technology with the Company’s existing automotive productElectronics products portfolio. Goodwill forresulting from the aboveC&K acquisition is not expected to be deductible for tax purposes.
PolySwitch
On March 25, 2016, the Company acquired 100% of the circuit protection business (“PolySwitch”) of TE Connectivity Ltd. for $348.3 million, net of acquired cashthird and after settlement of certain post-closing adjustments. In the secondfourth quarter of 2017, the Company paid the final consideration of $3.8 million. The Company funded the acquisition with available cash on hand and borrowings under the Company’s revolving credit facility. The PolySwitch business, which is split between the Automotive and Electronics segments, has a leading position in polymer based resettable circuit protection devices, with a strong global presence in the automotive, battery, industrial, communications and mobile computing markets. PolySwitch has manufacturing facilities in Shanghai and Kunshan, China and Tsukuba, Japan. The acquisition allows the Company to strengthen its global circuit protection product portfolio, as well as strengthen its presence in the automotive electronics and battery end markets. The acquisition also significantly increases the Company’s presence in Japan.
The following table summarizes the final purchase price allocation of the fair value of assets acquired and liabilities assumed in the PolySwitch acquisition:
(in thousands) | Purchase Price Allocation | |||
Total purchase consideration: | ||||
Original consideration | $ | 350,000 | ||
Post closing consideration adjustment received | (1,708 | ) | ||
Acquired cash | (3,810 | ) | ||
Acquired cash returned to seller | 3,810 | |||
Total purchase consideration | $ | 348,292 | ||
Allocation of consideration to assets acquired and liabilities assumed: | ||||
Current assets, net | $ | 60,228 | ||
Property, plant, and equipment | 51,613 | |||
Land lease | 4,290 | |||
Patented and unpatented technologies | 56,425 | |||
Customer relationships | 39,720 | |||
Goodwill | 165,088 | |||
Other long-term assets | 11,228 | |||
Current liabilities | (35,280 | ) | ||
Other non-current liabilities | (5,020 | ) | ||
| $ | 348,292 | |||
All PolySwitch goodwill and other assets and liabilities were recorded in the Electronics and Automotive segments and reflected in all geographic areas. The customer relationships are being amortized over 15 years. The patented and unpatented technologies are being amortized over 10 years. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining PolySwitch products with the Company’s existing automotive and electronics product portfolio. $103.8 million and $61.3 million of the goodwill for the above acquisition has been assigned to the Electronics and Automotive segments, respectively, with $64.9 million expected to be deductible for tax purposes.
As required by purchase accounting rules, the Company recorded a $6.9 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 goods sold during the second quarter of 2016,2022 as the acquired inventory was sold and reflected as other non-segment costs.
(in thousands) | Three Months Ended October 1, 2016 | Nine Months Ended October 1, 2016 | ||||||
Net sales | $ | 290,377 | $ | 846,127 | ||||
Income before income taxes | 32,760 | 110,982 | ||||||
Net income | 33,119 | 96,819 | ||||||
Net income — basic | 1.47 | 4.30 | ||||||
Net income — diluted | 1.46 | 4.27 | ||||||
| For the Three Months Ended | ||||||||||||||||||||||||||
| (in thousands, except per share amounts) | April 1, 2023 | April 2, 2022 | ||||||||||||||||||||||||
| Net sales | $ | 611,668 | $ | 691,751 | ||||||||||||||||||||||
| Income before income taxes | 110,613 | 149,479 | ||||||||||||||||||||||||
| Net income | 90,241 | 128,696 | ||||||||||||||||||||||||
| Net income per share — basic | 3.64 | 5.21 | ||||||||||||||||||||||||
| Net income per share — diluted | 3.60 | 5.15 | ||||||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||||||||
| (in thousands) | April 1, 2023 | April 2, 2022 | ||||||||||||||||||||||||
| Amortization (a) | $ | (479) | $ | (3,731) | ||||||||||||||||||||||
| Depreciation | — | 723 | ||||||||||||||||||||||||
| Transaction costs (b) | 1,397 | 1,979 | ||||||||||||||||||||||||
| Amortization of inventory step-up (c) | — | 4,769 | ||||||||||||||||||||||||
| Interest expense (d) | — | 194 | ||||||||||||||||||||||||
| Income tax expense of above items | (115) | (1,195) | ||||||||||||||||||||||||
3. Inventories
| (in thousands) | April 1, 2023 | December 31, 2022 | ||||||||||||
| Raw materials | $ | 241,055 | $ | 231,043 | ||||||||||
| Work in process | 142,665 | 134,792 | ||||||||||||
| Finished goods | 225,857 | 226,215 | ||||||||||||
| Inventory reserves | (49,749) | (44,360) | ||||||||||||
| Total | $ | 559,828 | $ | 547,690 | ||||||||||
| (in thousands) | April 1, 2023 | December 31, 2022 | ||||||||||||
| Land and land improvements | $ | 22,112 | $ | 22,089 | ||||||||||
| Building and building improvements | 196,419 | 191,733 | ||||||||||||
| Machinery and equipment | 840,164 | 812,540 | ||||||||||||
| Accumulated depreciation | (566,327) | (545,252) | ||||||||||||
| Total | $ | 492,368 | $ | 481,110 | ||||||||||
| (in thousands) | Electronics | Transportation | Industrial | Total | ||||||||||||||||||||||
| Net book value of goodwill as of December 31, 2022 | ||||||||||||||||||||||||||
| Gross goodwill as of December 31, 2022 | $ | 909,167 | $ | 234,793 | $ | 84,889 | $ | 1,228,849 | ||||||||||||||||||
| Accumulated impairment losses as of December 31, 2022 | — | (33,401) | (8,526) | (41,927) | ||||||||||||||||||||||
| Total | 909,167 | 201,392 | 76,363 | 1,186,922 | ||||||||||||||||||||||
| Changes during 2023: | ||||||||||||||||||||||||||
Additions (a) | — | — | 94,823 | 94,823 | ||||||||||||||||||||||
| Currency translation | 5,846 | 1,551 | 87 | 7,484 | ||||||||||||||||||||||
| Net book value of goodwill as of April 1, 2023 | ||||||||||||||||||||||||||
| Gross goodwill as of April 1, 2023 | 915,013 | 236,945 | 179,820 | 1,331,778 | ||||||||||||||||||||||
| Accumulated impairment losses as of April 1, 2023 | — | (34,002) | $ | (8,547) | (42,549) | |||||||||||||||||||||
| Total | $ | 915,013 | $ | 202,943 | $ | 171,273 | $ | 1,289,229 | ||||||||||||||||||
| As of April 1, 2023 | |||||||||||||||||||||||
| (in thousands) | Gross Carrying Value | Accumulated Amortization | Net Book Value | ||||||||||||||||||||
| Land use rights | $ | 18,169 | $ | 2,464 | $ | 15,705 | |||||||||||||||||
| Patents, licenses and software | 271,890 | 146,126 | 125,764 | ||||||||||||||||||||
| Distribution network | 43,089 | 42,793 | 296 | ||||||||||||||||||||
| Customer relationships, trademarks, and tradenames | 682,364 | 177,166 | 505,198 | ||||||||||||||||||||
| Total | $ | 1,015,512 | $ | 368,549 | $ | 646,963 | |||||||||||||||||
| December 31, 2022 | |||||||||||||||||
| (in thousands) | Gross Carrying Value | Accumulated Amortization | Net Book Value | ||||||||||||||
| Land use rights | $ | 17,938 | $ | 2,299 | $ | 15,639 | |||||||||||
| Patents, licenses and software | 259,603 | 140,208 | 119,395 | ||||||||||||||
| Distribution network | 41,733 | 40,955 | 778 | ||||||||||||||
| Customer relationships, trademarks, and tradenames | 623,721 | 165,563 | 458,158 | ||||||||||||||
| Total | $ | 942,995 | $ | 349,025 | $ | 593,970 | |||||||||||
(in thousands) | September 30, 2017 | December 31, 2016 | ||||||
Raw materials | $ | 38,320 | $ | 32,231 | ||||
Work in process | 28,477 | 23,354 | ||||||
Finished goods | 69,708 | 58,478 | ||||||
Total | $ | 136,505 | $ | 114,063 | ||||
4.
| (in thousands) | Weighted Average Useful Life | Amount | |||||||||
| Patents, licenses and software | 6.7 | $ | 11,500 | ||||||||
| Customer relationships, trademarks, and tradenames | 14.7 | 56,500 | |||||||||
| Total | $ | 68,000 | |||||||||
(in thousands) | Amount | ||||
| 2023 | $ | 65,821 | |||
| 2024 | 63,021 | ||||
| 2025 | 62,654 | ||||
| 2026 | 51,772 | ||||
| 2027 | 49,673 | ||||
| 2028 and thereafter | 370,888 | ||||
| Total | $ | 663,829 | |||
| (in thousands) | April 1, 2023 | December 31, 2022 | ||||||||||||
| Employee-related liabilities | $ | 66,427 | $ | 99,089 | ||||||||||
| Current lease liability | 12,853 | 12,841 | ||||||||||||
| Other non-income taxes | 7,691 | 10,594 | ||||||||||||
| Professional services | 7,023 | 7,160 | ||||||||||||
| Other customer reserves | 4,790 | 5,064 | ||||||||||||
| Interest | 3,548 | 4,449 | ||||||||||||
| Deferred revenue | 2,886 | 2,593 | ||||||||||||
| Current benefit liability | 1,318 | 1,318 | ||||||||||||
| Restructuring liability | 1,248 | 2,434 | ||||||||||||
| Other | 39,992 | 41,515 | ||||||||||||
| Total | $ | 147,776 | $ | 187,057 | ||||||||||
| Three months ended April 1, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | Electronics | Transportation | Industrial | Total | |||||||||||||||||||||||||||||||||||||||||||
| Employee terminations | $ | 672 | $ | 582 | $ | 317 | $ | 1,571 | |||||||||||||||||||||||||||||||||||||||
| Other restructuring charges | 7 | 272 | — | 279 | |||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 679 | $ | 854 | $ | 317 | $ | 1,850 | |||||||||||||||||||||||||||||||||||||||
| Three months ended April 2, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | Electronics | Transportation | Industrial | Total | |||||||||||||||||||||||||||||||||||||||||||
| Employee terminations | $ | 205 | $ | — | $ | — | $ | 205 | |||||||||||||||||||||||||||||||||||||||
| Other restructuring charges | — | 13 | — | 13 | |||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 205 | $ | 13 | $ | — | $ | 218 | |||||||||||||||||||||||||||||||||||||||
(in thousands) | September 30, 2017 | December 31, 2016 | ||||||
Revolving credit facility | $ | 15,000 | $ | 112,500 | ||||
Term loan | 115,625 | 120,313 | ||||||
Entrusted loan | — | 3,522 | ||||||
Euro Senior Notes, Series A due 2023 | 137,670 | 122,313 | ||||||
Euro Senior Notes, Series B due 2028 | 111,784 | 99,314 | ||||||
USD Senior Notes, Series A due 2022 | 25,000 | — | ||||||
USD Senior Notes, Series B due 2027 | 100,000 | — | ||||||
Unamortized debt issuance costs | (3,432 | ) | (3,820 | ) | ||||
Total debt | 501,647 | 454,142 | ||||||
Less: Current maturities | (9,375 | ) | (6,250 | ) | ||||
Total long-term debt | $ | 492,272 | $ | 447,892 | ||||
| (in thousands) | April 1, 2023 | December 31, 2022 | ||||||||||||
| Revolving Credit Facility | $ | 100,000 | $ | 100,000 | ||||||||||
| Term Loan | 294,375 | 296,250 | ||||||||||||
| Euro Senior Notes, Series A due 2023 | 127,706 | 124,716 | ||||||||||||
| Euro Senior Notes, Series B due 2028 | 103,693 | 101,265 | ||||||||||||
| U.S. Senior Notes, Series A due 2022 | — | — | ||||||||||||
| U.S. Senior Notes, Series B due 2027 | 100,000 | 100,000 | ||||||||||||
| U.S. Senior Notes, Series A due 2025 | 50,000 | 50,000 | ||||||||||||
| U.S. Senior Notes, Series B due 2030 | 125,000 | 125,000 | ||||||||||||
| U.S. Senior Notes, due 2032 | 100,000 | 100,000 | ||||||||||||
| Other | 8,651 | 9,113 | ||||||||||||
| Unamortized debt issuance costs | (4,571) | (4,847) | ||||||||||||
| Total debt | 1,004,854 | 1,001,497 | ||||||||||||
| Less: Current maturities | (137,929) | (134,874) | ||||||||||||
| Total long-term debt | $ | 866,925 | $ | 866,623 | ||||||||||
On March 4, 2016, the Company entered into a new five year credit agreement with a group of lenders for up to $700.0 million. The new credit agreement consists of an unsecured revolving credit facility of $575.0 million and an unsecured term loan credit facility of up to $125.0 million. In addition, the Company has the ability, from time to time, to increase the size of the revolving credit facility and the term loan facility by up to an additional $150.0 million, in the aggregate, in each case in minimum increments of $25.0$25 million subject to certain conditionsif there is no event of default and the agreement of participating lenders. For the term loan credit facility, the Company is required to make quarterly principal payments of $1.6 million through March 31, 2018 and $3.1 million from June 30, 2018 through December 31, 2020in compliance with the remaining balance due on March 4, 2021.
Outstanding borrowingscertain financial covenants.
5.91%.
Senior Notes
Entrusted Loan
During 2014,
5.April 2, 2022, respectively.
Applicable accounting literature establishes a hierarchy for inputs used in measuring
inputs
in Equity Securities
(in thousands) | Consolidated Balance Sheet Classification | April 1, 2023 | |||||||||||||||
| Derivatives Designated as Hedging Instruments | |||||||||||||||||
| Interest rate swap agreement: | |||||||||||||||||
| Designated as cash flow hedge | Prepaid expenses and other current assets | $ | 3,593 | ||||||||||||||
| Other long-term assets | $ | 1,773 | |||||||||||||||
| Derivatives Not Designated as Hedging Instruments | |||||||||||||||||
| Foreign exchange forward contract | Prepaid expenses and other current assets | $ | 7,092 | ||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||
| (in thousands) | Classification of Gain Recognized in the Condensed Consolidated Statements of Operations | April 1, 2023 | ||||||||||||||||||||||||||||||
| Derivatives designated as cash flow hedges | ||||||||||||||||||||||||||||||||
| Interest rate swap agreement | Interest expense | $ | (975) | |||||||||||||||||||||||||||||
| Derivatives Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||
| Foreign exchange forward contract | Foreign exchange (gain) loss | $ | (819) | |||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| (in thousands) | April 1, 2023 | |||||||||||||||||||||||||
| Derivatives designated as cash flow hedges | ||||||||||||||||||||||||||
| Interest rate swap agreement | $ | (5,366) | ||||||||||||||||||||||||
Fair Value Measurements Using | ||||||||||||||||
(in thousands) | Quoted Prices in | Significant | Significant | Total | ||||||||||||
Investment in Polytronics | $ | 10,582 | $ | — | $ | — | $ | 10,582 | ||||||||
April 1, 2023:
| Fair Value Measurements Using | ||||||||||||||||||||||||||
| (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 | $ | 164,073 | $ | — | $ | — | $ | 164,073 | ||||||||||||||||||
| Investments in equity securities | 12,715 | — | — | 12,715 | ||||||||||||||||||||||
| Mutual funds | 17,642 | — | — | 17,642 | ||||||||||||||||||||||
| Total | $ | 194,430 | $ | — | $ | — | $ | 194,430 | ||||||||||||||||||
Fair Value Measurements Using | ||||||||||||||||
(in thousands) | Quoted Prices in | Significant | Significant | Total | ||||||||||||
Investment in Polytronics | $ | 10,435 | $ | — | $ | — | $ | 10,435 | ||||||||
2022:
| Fair Value Measurements Using | ||||||||||||||||||||||||||
| (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 | $ | 304,101 | $ | — | $ | — | $ | 304,101 | ||||||||||||||||||
| Investments in equity securities | 10,653 | — | — | 10,653 | ||||||||||||||||||||||
| Mutual funds | 14,094 | — | — | 14,094 | ||||||||||||||||||||||
| Total | $ | 328,848 | $ | — | $ | — | $ | 328,848 | ||||||||||||||||||
September 30, 2017 | December 31, 2016 | |||||||||||||||
(in thousands) | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||
Euro Senior Notes, Series A due 2023 | $ | 137,670 | $ | 137,581 | $ | 122,313 | $ | 122,586 | ||||||||
Euro Senior Notes, Series B due 2028 | 111,784 | 110,550 | 99,314 | 99,230 | ||||||||||||
USD Senior Notes, Series A due 2022 | 25,000 | 24,938 | — | — | ||||||||||||
USD Senior Notes, Series B due 2027 | 100,000 | 99,884 | — | — | ||||||||||||
6.
| April 1, 2023 | December 31, 2022 | |||||||||||||||||||||||||
| (in thousands) | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||||||||||||
| Euro Senior Notes, Series A due 2023 | $ | 127,706 | $ | 125,554 | $ | 124,716 | $ | 122,270 | ||||||||||||||||||
| Euro Senior Notes, Series B due 2028 | 103,693 | 90,411 | 101,265 | 87,119 | ||||||||||||||||||||||
| USD Senior Notes, Series B due 2027 | 100,000 | 95,299 | 100,000 | 93,764 | ||||||||||||||||||||||
| USD Senior Notes, Series A due 2025 | 50,000 | 48,700 | 50,000 | 48,145 | ||||||||||||||||||||||
| USD Senior Notes, Series B due 2030 | 125,000 | 114,593 | 125,000 | 112,028 | ||||||||||||||||||||||
| USD Senior Notes, due 2032 | 100,000 | 92,406 | 100,000 | 90,131 | ||||||||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
(in thousands) | September 30, 2017 | October 1, 2016 | September 30, 2017 | October 1, 2016 | ||||||||||||
Components of net periodic benefit cost: | ||||||||||||||||
Service cost | $ | 408 | $ | 332 | $ | 1,224 | $ | 997 | ||||||||
Interest cost | 360 | 496 | 1,080 | 1,489 | ||||||||||||
Expected return on plan assets | (476 | ) | (520 | ) | (1,428 | ) | (1,560 | ) | ||||||||
Amortization, net | 84 | 74 | 252 | 220 | ||||||||||||
Net periodic benefit cost | $ | 376 | $ | 382 | $ | 1,128 | $ | 1,146 | ||||||||
The expected return on pension assets is 4.5% and 4.9% in 2017 and 2016, respectively.
| For the Three Months Ended | ||||||||||||||||||||||||||
| (in thousands) | April 1, 2023 | April 2, 2022 | ||||||||||||||||||||||||
| Components of net periodic benefit cost: | ||||||||||||||||||||||||||
| Service cost | $ | 692 | $ | 768 | ||||||||||||||||||||||
| Interest cost | 937 | 644 | ||||||||||||||||||||||||
| Expected return on plan assets | (469) | (403) | ||||||||||||||||||||||||
| Amortization of prior service and net actuarial loss | 11 | 101 | ||||||||||||||||||||||||
| Net periodic benefit cost | $ | 1,171 | $ | 1,110 | ||||||||||||||||||||||
(in thousands) Pension and postretirement liability and reclassification adjustments (a) Unrealized gain/(loss) on investments Foreign currency translation adjustment Accumulated other comprehensive income (loss) Balance at December 31, 2016 Activity in the period Balance at September 30, 2017 For the Three Months Ended For the Nine Months Ended (in thousands, except per share amounts) September 30, 2017 October 1, 2016 September 30, 2017 October 1, 2016 Numerator: Net income as reported Denominator: Weighted average shares outstanding Basic Effect of dilutive securities Diluted Earnings Per Share: Basic earnings per share Diluted earnings per share For the Three Months Ended For the Nine Months Ended (in thousands) September 30, 2017 October 1, 2016 September 30, 2017 October 1, 2016 Net sales Electronics Automotive Industrial Total net sales Depreciation and amortization Electronics Automotive Industrial Other Total depreciation and amortization Operating income (loss) Electronics Automotive Industrial Other(a) Total operating income Interest expense Foreign exchange loss (gain) Other income, net Income before income taxes For the Three Months Ended For the Nine Months Ended (in thousands) September 30, 2017 October 1, 2016 September 30, 2017 October 1, 2016 Net sales United States China(a) Other countries Total net sales7. Accumulated (Loss)(in thousands) Three Months Ended
April 1, 2023Pre-tax Tax Net of Tax Defined benefit pension plan and other adjustments $ 24 $ (18) $ 6 Cash flow hedge (3,313) 795 (2,518) Foreign currency translation adjustments (a) 16,068 (273) 15,795 Total change in other comprehensive income (loss) $ 12,779 $ 504 $ 13,283 table setstables set forth the changes in the components of Accumulated Other Comprehensive Income (Loss) accumulated other comprehensive loss by component for the ninethree months ended September 30, 2017: $ (11,983 ) $ 10,769 $ (73,365 ) $ (74,579 ) (441 ) (1,235 ) 2,912 1,236 $ (12,424 ) $ 9,534 $ (70,453 ) $ (73,343 ) (a) April 1, 2023 and April 2, 2022:(in thousands) Defined benefit pension plan and other adjustments Cash flow hedge Foreign currency
translation adjustmentAccumulated other
comprehensive lossBalance at December 31, 2022 $ (2,193) $ 6,596 $ (100,167) $ (95,764) Activity in the period 6 (2,518) 15,795 13,283 Balance at April 1, 2023 $ (2,187) $ 4,078 $ (84,372) $ (82,481) (in thousands) Defined benefit pension plan and other adjustments Foreign currency translation adjustment Accumulated other comprehensive loss Balance at January 1, 2022 $ (11,928) $ (61,535) $ (73,463) Activity in the period 310 (2,513) (2,203) Balance at April 2, 2022 $ (11,618) $ (64,048) $ (75,666) Three Months Ended (in thousands) April 1, 2023 April 2, 2022 Pension and Postemployment plans: Amortization of prior service and net actuarial (gain) loss $ (11) $ 197 balances at September 30, 2017 and December 31, 2016 areCompany recognizes the amortization of prior service costs in Other (income) expense, net within the Condensed Consolidated Statements of taxes of $1.2 million and $1.1 million, respectively.8.Net Income.the three and nine months ended September 30, 2017 was 22.9% and 18.7%, respectively, compared to effective tax rates for the three and nine months ended October 1, 2016 of (1.2%) and 15.6%, respectively. The effective tax rates for the 2017both periods arewere lower than the applicable U.S. statutory tax rate primarily due to income earned in lower tax jurisdictions, partially offset by a forecasted accrualwhile for taxes on undistributed current year-earnings of certain non-US affiliates. Thethe 2022 period, the effective tax rate for the 2016 periods arealso was lower than the U.S. statutory tax rate primarily due to income earned in lower tax jurisdictions and a one-time deduction with respect to the stock of one of the company’s affiliates partially offset by the impact of the impairment of goodwill for which no tax benefit was recorded.9.one-time deduction referred to in the preceding sentence. $ 42,808 $ 30,802 $ 130,338 $ 77,243 22,713 22,578 22,678 22,515 240 156 228 160 22,953 22,734 22,906 22,675 $ 1.88 $ 1.36 $ 5.75 $ 3.43 $ 1.87 $ 1.35 $ 5.69 $ 3.41 Three Months Ended (in thousands, except per share amounts) April 1, 2023 April 2, 2022 Numerator: Net income as reported $ 88,745 $ 117,518 Denominator: Weighted average shares outstanding Basic 24,782 24,689 Effect of dilutive securities 280 292 Diluted 25,062 24,981 Earnings Per Share: Basic earnings per share $ 3.58 $ 4.76 Diluted earnings per share $ 3.54 $ 4.70 30,57990,297 and 76,84557,928 for the three months ended September 30, 2017April 1, 2023 and October 1, 2016, respectively, and 35,858 and 45,591April 2, 2022, respectively.nineperiod May 1, 2021 to April 30, 2024 to replace its previous 2020 program.September 30, 2017April 1, 2023, and October 1, 2016, respectively.April 2, 2022.17Contentsthe investments and related party transactions.10. Three Months Ended April 1, 2023 Three Months Ended April 2, 2022 (in millions) Powersem EB Tech ATEC Powersem EB Tech ATEC Sales to related party $ 0.5 $ — $ — $ — $ — $ — Purchase material/service from related party $ 1.0 $ 0.1 $ 2.7 $ 0.2 $ 0.1 $ 2.9 April 1, 2023 December 31, 2022 (in millions) Powersem EB Tech ATEC Powersem EB Tech ATEC Accounts payable balance $ 0.6 $ — $ 2.0 $ — $ — $ 1.8 componentscomponent, modules and modules for circuit protection, power controlsubassemblies to empower the long-term structural themes of sustainability, connectivity and sensing throughout the 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.Manufacturing, purchasing,Purchasing, logistics, customer service, finance, information technology, and human resources are shared functions that are allocated back to the three 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 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: Provides circuit protection components for overcurrent and overvoltage protection, as well as power control products and sensor components and modules to leading global manufacturers of a wide range of electronic products. The segment covers a broad range of end markets, including consumer electronics, telecommunications equipment, medical devices, lighting products, and white goods. The Electronics segment supplies circuit protection, sensing and control products to various leading manufacturers. The Electronics segment has one of the broadest product offerings in the industry including fuses and protectors, positive temperature coefficient (“PTC”) resettable fuses, varistors, polymer electrostatic discharge (“ESD”) suppressors, discrete TVS diodes, TVS diode arrays protection and switching thyristors, gas discharge tubes, power switching components, fuseholders, reed switch and sensor assemblies, IGBT blocks, and related accessories.●Automotive Segment: Provides circuit protection and sensor products to the worldwide automotive original equipment manufacturers (“OEM”) and parts distributors of passenger automobiles, trucks, buses, and off-road equipment. In addition, the Company supplies heavy duty power distribution modules, switches and relays to the commercial vehicle industry. The Company also sells its fuses, including blade fuses and high current fuses, battery cable protectors, and varistors, in the automotive replacement parts market. The Company also supplies wiring harness manufacturers and auto parts suppliers worldwide.●Industrial Segment: Provides circuit protection products for industrial and commercial customers. Products include power fuses and other circuit protection devices, including protection and time delay relays, which are used in commercial and industrial buildings and large equipment such as HVAC systems, elevators, and machine tools. The Company also supplies industrial ground fault protection in mining and other large industrial operations.18 $ 175,899 $ 147,730 $ 499,052 $ 378,696 113,797 106,341 338,094 309,644 28,193 26,260 79,539 83,301 $ 317,889 $ 280,331 $ 916,685 $ 771,641 $ 8,986 $ 7,694 $ 26,080 $ 20,783 5,622 4,627 16,572 12,881 1,338 1,733 3,982 4,561 — (937 ) — — $ 15,946 $ 13,117 $ 46,634 $ 38,225 $ 44,345 $ 34,571 $ 122,518 $ 82,246 16,821 15,032 47,599 48,997 3,757 57 5,769 3,758 (6,314 ) (22,134 ) (8,155 ) (45,345 ) 58,609 27,526 167,731 89,656 3,467 2,571 9,868 6,286 632 (4,700 ) (1,483 ) (7,114 ) (1,013 ) (778 ) (962 ) (1,040 ) $ 55,523 $ 30,433 $ 160,308 $ 91,524 (a)Included in “Other” Operating income (loss) for the 2017 third quarter is $4.8 million ($6.6 million year-to-date) of acquisition-related and integration charges associated with the company’s acquisitions, including $1.6 million ($1.6 million year-to-date) of purchase accounting inventory charges related to the company’s 2017 acquisition of US Sensor as described in Note 2 and $1.5 million ($1.5 million year-to-date) of charges related to restructuring and production transfers in our Asia operations.Included in “Other” Operating income (loss) for the 2016 third quarter is $14.8 million (14.8 million year-to-date) of charges related to the impairment of goodwill and other intangible assets within the custom products reporting unit, $5.9 million ($18.2 million year-to-date) of acquisition-related and integration charges associated with the company’s 2016 acquisitions, $0.6 million ($7.5 million year-to-date) of non-cash inventory charges relating to the company’s 2016 acquisitions as described in Note 2, $1.9 million year-to-date in charges related to the closure of the company’s manufacturing facility in Denmark, $1.7 million year-to-date related to the company’s transfer of its reed sensor manufacturing operations from the U.S. and China to the Philippines and $0.9 million ($1.3 million year-to-date) related to internal legal restructuring costs. Three Months Ended (in thousands) April 1, 2023 April 2, 2022 Net sales Electronics $ 358,593 $ 365,821 Transportation 166,641 184,504 Industrial 84,548 73,005 Total net sales $ 609,782 $ 623,330 Depreciation and amortization Electronics $ 19,788 $ 15,393 Transportation 11,291 10,744 Industrial 3,403 2,161 Total depreciation and amortization $ 34,482 $ 28,298 Operating income Electronics $ 90,162 $ 120,577 Transportation 8,532 26,308 Industrial 17,141 12,505 (5,194) (8,800) Total operating income 110,641 150,590 Interest expense 9,646 4,302 Foreign exchange (gain) loss (1,675) 7,736 Other (income) expense, net (6,233) 4,427 Income before income taxes $ 108,903 $ 134,125 $ 103,233 $ 92,475 $ 290,538 $ 270,659 82,986 70,215 240,731 181,134 131,670 117,641 385,416 319,848 $ 317,889 $ 280,331 $ 916,685 $ 771,641 (a) Included in China are net sales in China and Hong Kong.19 Three Months Ended (in thousands) April 1, 2023 April 2, 2022 Net sales United States $ 212,195 $ 220,238 China 133,467 164,782 264,120 238,310 Total net sales $ 609,782 $ 623,330
(in thousands) | September 30, 2017 | December 31, 2016 | ||||||
Long-lived assets | ||||||||
United States | $ | 23,922 | $ | 23,731 | ||||
China(a) | 80,616 | 65,345 | ||||||
Mexico | 61,664 | 52,262 | ||||||
Philippines | 30,760 | 33,345 | ||||||
Other countries | 47,912 | 42,492 | ||||||
Total long-lived assets | $ | 244,874 | $ | 217,175 | ||||
(a) Included in China are long-lived assets in China and Hong Kong.
| (in thousands) | April 1, 2023 | December 31, 2022 | ||||||||||||
| Long-lived assets | ||||||||||||||
| United States | $ | 77,246 | $ | 76,325 | ||||||||||
| China | 135,233 | 129,094 | ||||||||||||
| Mexico | 107,427 | 107,119 | ||||||||||||
| Germany | 41,049 | 39,635 | ||||||||||||
| Philippines | 77,314 | 77,240 | ||||||||||||
Other countries (a) | 54,099 | 51,697 | ||||||||||||
| Total long-lived assets | $ | 492,368 | $ | 481,110 | ||||||||||
For the Nine Months Ended | ||||||||
(in thousands) | September 30, 2017 | October 1, 2016 | ||||||
Additions to long-lived assets | ||||||||
United States | $ | 2,752 | $ | 4,485 | ||||
China(a) | 22,165 | 8,272 | ||||||
Mexico | 15,041 | 12,312 | ||||||
Philippines | 2,018 | 4,054 | ||||||
Other countries | 6,494 | 5,378 | ||||||
Total additions to long-lived assets | $ | 48,470 | $ | 34,501 | ||||
| Three Months Ended | ||||||||||||||
| (in thousands) | April 1, 2023 | April 2, 2022 | ||||||||||||
| Additions to long-lived assets | ||||||||||||||
| United States | $ | 4,091 | $ | 3,174 | ||||||||||
| China | 8,403 | 6,949 | ||||||||||||
| Mexico | 3,744 | 7,918 | ||||||||||||
| Germany | 1,234 | 918 | ||||||||||||
| Philippines | 1,398 | 6,970 | ||||||||||||
Other countries(a) | 2,593 | 1,561 | ||||||||||||
| Total additions to long-lived assets | $ | 21,463 | $ | 27,490 | ||||||||||
OPERATIONS MANAGEMENT’SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.the ability to satisfy the conditions to closingintegration of the Company’s proposed acquisition of IXYS Corporation (“IXYS”), on the expected timing or at all; the occurrence of any event that could give rise to the termination of the merger agreement entered into by the Company and IXYS; the risk of stockholder litigation relating to the proposed transaction, including resulting expense or delay; higher than expected or unexpected costs associated with or relating to the proposed transaction; the risk that expected benefits, synergies and growth prospects of the proposed transactionacquisitions may not be achieved in a timely manner, or at all; the risk that IXYS’ business may not be successfully integrated with the Company’s following the closing of the transaction; the risk that the Company and IXYS will be unable to retain and hire key personnel; and the risk that disruption from the proposed transaction may adversely affect the Company’s or IXYS’ business and their respective relationships with customers, suppliers or employees; and other risks whichthat may be detailed in the Company's other Securities and Exchange Commission filings, including those set forth under Item 1A. "Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2016.2022, 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.Management’sManagement’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 31, 2016. Management’s2022. 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.Inc.is an industrial technology manufacturing company empowering a sustainable, connected, and subsidiaries (the “Company”) is onesafer world. Across more than 20 countries, and with approximately 18,000 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 the world’s leading designer, manufacturerindustrial, transportation and supplier of circuit protection products, with expanding platforms in sensors and power control components and modules. In addition to circuit protection products and solutions, the Company offers electronic reed switches and sensors, automotive sensors for comfort and safety systems and a comprehensive line of highly reliable electromechanical and electronic switch and control devices for commercial and specialty vehicles, as well as protection relays and power distribution centers for the safe control and distribution of electricity. electronics end markets – everywhere, every day.hasmaintains a network of global laboratories and engineering centers and labs that develop new products and product enhancements, provide customer application support and test products for safety, reliability, and regulatory compliance. The Company’s devices protect products in virtually every market that uses electrical energy, from various electronic devices to automobiles to industrial equipment.The Company conducts its business through three reportable segments, which are defined by markets and consist ofsegments: Electronics, Automotive,Transportation, and Industrial. The Company’s customer base includes OEMs, Tier One automotive suppliers,Within these segments, the Company designs, manufactures and distributors.21
Executive Summary
transaction with cash on hand. Results of Operations Third Quarter First Nine Months 2017 2016 Change % Change 2017 2016 Change % Change Net sales Gross profit Operating expenses Operating income Income before income taxes Income taxes Net income Contents higher operating expenses mentioned above. the Company's equity investment. preceding sentence. The following table Third Quarter First Nine Months 2017 2016 Change % Change 2017 2016 Change % Change Electronics Automotive Industrial Total price realization. Third Quarter First Nine Months 2017 2016 Change % Change 2017 2016 Change % Change Americas Europe Asia-Pacific Total 2022. 2022. Senior Notes stockholders of record as of May 25, 2023. First Nine Months (in thousands) 2017 2016 Net cash provided by operating activities Net cash used in investing activities Net cash (used in) provided by financing activities Effect of exchange rate changes on cash and cash equivalents Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period lower cash earnings three months ended April 2, 2022 April 1, 2023 and April 2, 2022, respectively. Off-Balance Sheet Arrangements RISK INFORMATION Meenal A. Sethna Executive Vice President and Chief Financial Officer /s/ Jeffrey G. Gorski Jeffrey G. Gorski Vice President and Chief Accounting OfficerThe Company had strong performance inthirdfirst quarter of 2017 compared to the third quarter of 2016. For the third quarter of 2017,2023, the Company recognized net sales of $317.9$609.8 million, a decrease of $13.5 million, or 2.2% as compared to $280.3$623.3 million in the thirdfirst quarter of 2016 representing an increase of $37.62022 including $10.0 million or 13.4%.1.6% of unfavorable changes in foreign exchange rates. The increasedecrease in net sales was primarily driven bydue to lower volumes in the Electronics and Automotive segments. Net sales for Electronics increased $28.2Transportation segments that more than offset $42.5 million or 19.1%, due to strong growth across all the segment’s business units6.8% and geographic regions as well as the ON Portfolio and U.S. Sensor acquisitions in August 2016 and July 2017, respectively. Net sales for the Automotive segment increased $7.5$2.7 million or 7.0% primarily due to growth in0.4% of incremental net sales from the passenger car fuseC&K and commercial vehicle products businesses. Net salesWestern Automation acquisitions, respectively, and higher volume in the Industrial segment increased $1.9 million or 7.4% due to growth in the fuse and relay businesses, partially offset by the divestiture of the JRS business in October 2016.segment. The Company recognized net income of $42.8$88.7 million, or $1.87 per diluted share, in the third quarter of 2017 compared to net income of $30.8 million, or $1.35 per diluted share in the third quarter of 2016. The increase in net income reflects the impacts of the acquisitions on the current year results as well as a decrease in operating expenses driven by a $14.8 million goodwill and other intangible impairment charge recorded for the Custom Products reporting unit in the third quarter of 2016 and lower acquisition-related costs partially offset by higher income tax expense.Net sales for the first nine months of 2017 were $916.7 million compared to $771.6 million in the first nine months of 2016. The increase of $145.1 million, or 18.8%, reflects increased net sales of $120.4 million, or 31.8%, in the Electronics segment and $28.5 million, or 9.2%, in the Automotive segment, partially offset by lower net sales of $3.8 million, or 4.5%, in the Industrial segment. The increase in net sales for the Electronics segment was due to strong growth across all the segment’s business units as well as the ON Portfolio, PolySwitch and U.S. Sensor acquisitions. The increase in net sales for the Automotive segment was primarily due to the impact of the prior year acquisitions of PolySwitch and Menber’s as well as volume growth in the passenger car and commercial vehicle businesses. The Company recognized net income of $130.3 million, or $5.69$3.54 per diluted share, in the first nine monthsquarter of 20172023 compared to net income of $77.2$117.5 million, or $3.41$4.70 per diluted share in the first nine monthsquarter of 2016. Net2022. The decrease in net income increasedwas primarily due to a decrease in operating income in the impacts of the aforementioned acquisitions, higher gross profit driven largelyElectronics and Transportation segments driven by lower volume.favorable mixdesigner and manufacturer of electrical shock protection devices used across a broad range of high-growth end markets, including e-Mobility off-board charging infrastructure, industrial safety and renewables. Western Automation has annualized sales of approximately $25 million and will be reported within the Electronics segment,company’s Industrial segment. The company does not expect the acquisition to have a $14.8 million goodwill and other intangible assets impairment charge recorded inmaterial impact to its 2023 financial results. The Company financed the Custom Products reporting unit in the third quarter of 2016 and lower acquisition-related costs partially offset by higher income tax expense.$181.3$53.4 million for the ninethree months ended September 30, 2017April 1, 2023 as compared to $100.0$51.7 million for the ninethe three months ended October 1, 2016.April 2, 2022. The increase in net cash provided by operating activities reflected higher cash earnings, lower cash taxes and the timing of supplier paymentswas primarily due to reductions in working capital, partially offset by lower cash earnings.timing of customer payments and increased inventory.On August 28, 2017,ongoing 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, announced that it had entered into a definitive agreement to acquire IXYS, a global pioneer in the power semiconductor and integrated circuit markets with a focus on medium to high voltage power control semiconductors across the industrial, communications, consumer and medical markets. IXYS has a broad customer base, serving more than 3,500 customers through its direct salesforce and global distribution partners. IXYS reported revenues of $322 million in its fiscal year ended March 31, 2017.The Company will acquire all of the outstanding shares of IXYS common stock in exchange for a combination of cash and shares of Company common stock. Each IXYS stockholder will be entitled to elect to receive, per IXYS share, either $23.00 in cash or 0.1265 of a share of Littelfuse common stock, subject to proration so that 50% of the shares of IXYS common stock outstanding immediately priorincluding higher transportation costs due to the effective time of the merger of the subsidiary of the Company withmodifying its shipping logistics as well as suspending sales into and into IXYS will be converted into the cash election option and the remaining shares of IXYS common stock will be converted into the stock election option. The exchange ratio is fixed and will not be adjusted for changes in the market value of Littelfuse common stock or IXYS common stock and IXYS equity-based awards will continue to fluctuate until the acquisition is completed. As a result, the final purchase price will differpurchases from the initially announced purchase price, and that difference may be material. The transaction is subject to customary closing conditions, including approval by IXYS stockholders.On October 13, 2017, the Company amended its existing Credit Agreement to increase the unsecured revolving credit facility from $575.0 million to $700.0 million and increase the unsecured term loan credit facility from $125.0 million to $200.0 million and to extend the expiration date from March 4, 2021 to October 13, 2022. The Credit Agreement also includes the option for the Company to increase the size of the revolving credit facility and the term loan facility by up to an additional $300.0 million, in the aggregate, subject to the satisfaction of certain conditions set forth in the Credit Agreement. Term loans may be made in up to two advances, the first advance occurring on October 13, 2017 and the second advance, in the aggregate amount not to exceed $75.0 million, to occur in the first quarter of 2018.22Company’sCompany’s unaudited condensed consolidated results of operations for the periods presented. The thirdfirst quarter of 20172023 includes approximately $6.3$3.3 million of non-segment charges ($8.2 million year-to-date). These charges were primarily attributable to acquisition-relatedlegal and professional fees and other integration costsexpenses related to legal, accountingcompleted and contemplated acquisitions, and $1.9 million of restructuring, impairment and other expenses associated with completed or contemplated acquisitionscharges, primarily related to employee termination costs. See Note 7, Restructuring, Impairment, and Other Charges, for further discussion.approximately $4.82022 includes $4.8 million ($6.6 million year-to-date), including $1.6 million ($1.6 million year-to-date) of purchase accounting inventory step-up charges,$3.8 million of legal and professional fees and other integration expenses related to the company’s 2017 acquisition completed and other contemplated acquisitions, and $0.2 million of U.S. Sensor as described in Note 2restructuring, impairment and $1.5 million ($1.5 million year-to-date) ofother charges, primarily related to restructuringemployee termination costs. See Note 7, Restructuring, Impairment, and production transfers in our Asia operations.The third quarterOther Charges2016 includes $22.1 million of other non-segment charges ($45.3 million year-to-date). These charges included $14.8 million ($14.8 million year-to-date) of charges related to the impairment of the Custom Products reporting unit, $5.9 million ($18.2 million year-to-date) of acquisition-related and integration costs associated with the company’s 2016 acquisitions, $0.6 million ($7.5 million year-to-date) of non-cash inventory charges relating to the company’s 2016 acquisitions as described in Note 2, $1.9 million year-to-date in charges related to the closure of the company’s manufacturing facility in Denmark, $1.7 million year-to-date related to the company’s transfer of its reed sensor manufacturing operations from the U.S. and China to the Philippines and $0.9 million ($1.3 million year-to-date) related to internal legal restructuring costs.(in thousands) $ 317,889 $ 280,331 $ 37,558 13.4 % $ 916,685 $ 771,641 $ 145,044 18.8 % 133,651 113,759 19,892 17.5 % 379,909 298,780 81,129 27.2 % 75,042 86,233 (11,191 ) (13.0 %) 212,178 209,124 3,053 1.5 % 58,609 27,526 31,083 112.9 % 167,731 89,656 78,075 87.1 % 55,523 30,433 25,090 82.4 % 160,308 91,524 68,784 75.2 % 12,715 (369 ) 13,084 (3,545.8 %) 29,970 14,281 15,689 109.9 % $ 42,808 $ 30,802 $ 12,006 39.0 % $ 130,338 $ 77,243 $ 53,095 68.7 % First Quarter (in thousands) 2023 2022 Change %
ChangeNet sales $ 609,782 $ 623,330 $ (13,548) (2.2) % Cost of sales 364,825 364,734 91 — % Gross profit 244,957 258,596 (13,639) (5.3) % Operating expenses 134,316 108,006 26,310 24.4 % Operating income 110,641 150,590 (39,949) (26.5) % Income before income taxes 108,903 134,125 (25,222) (18.8) % Income taxes 20,158 16,607 3,551 21.4 % Net income $ 88,745 $ 117,518 $ (28,773) (24.5) % increased $37.6decreased $13.5 million, or 13.4%2.2%, for the thirdfirst quarter of 2017 compared to the third quarter of 2016 with increases of $8.5 million and $2.9 million resulting from incremental net sales related to the ON Portfolio and U.S Sensor acquisitions, respectively. The remaining increase in net sales was driven by higher volume across all product lines in the Electronics segment and in the passenger car and commercial vehicle businesses within the Automotive segment.Net sales for the first nine months of 2017 increased $145.0 million, or 18.8%2023 compared to the first nine months of 2016 with $85.9 million resulting from the prior year acquisitions of PolySwitch, ON Portfolio, and Menber’s and $2.9 million from the current year U.S. Sensor acquisition. The remaining increase in net sales was primarily due to higher volume across all product lines in the Electronics segment and passenger car and commercial vehicle businesses within the Automotive segment partially offset by the divestiture of a core product line in the fourth quarter of 2016 and2022 including $10.0 million or 1.6% of unfavorable changes in foreign exchange rates. The sales decrease was due to lower volume in the custom products operations withinElectronics and Transportation segments that more than offset $42.5 million or 6.8% and $2.7 million or 0.4% of incremental net sales associated with the C&K and Western Automation acquisitions included in the Electronics and Industrial segments, respectively, and higher volume in the Industrial segment.Gross ProfitGross profit$133.7$364.8 million, or 42.0%59.8% of net sales, in the thirdfirst quarter of 2017,2023, compared to $113.8$364.7 million, or 40.6%58.5% of net sales, in the thirdfirst quarter of 2016. The increase in gross profit and gross margin reflects the incremental net sales and improved leverage in expenses and profits related to the prior year acquisitions.Gross profit for the first nine months of 2017 was $379.9 million, or 41.4%2022. As a percent of net sales, cost of sales increased 1.3% driven by lower volumes in the Electronics and Transportation segments, partially offset by volume leverage, and favorable product mix from the Industrial segment.$298.8$258.6 million, or 38.7%41.5% of net sales, for the first nine monthsquarter of 2016.2022. The increase$13.6 million decrease in gross profit and gross margin reflects the incremental net sales and improved leverage in expenses and profits related to the prior year acquisitions primarily in the Electronics segment.Operating ExpensesTotal operating expenses were $75.0 million, or 23.6% of net sales, for the third quarter of 2017 compared to $86.2 million, or 30.8% of net sales, for the third quarter of 2016. The decrease in operating expenses of $11.2 million was primarily due to the $14.8 million goodwill and other intangible asset impairment charges related to the Custom Products reporting unit recognizedlower volume in the third quarter of 2016 that wasElectronics and Transportation segments, partially offset by increased amortization expense associated with recent acquisitionsthe acquisition of $1.9C&K within Electronics segment, and volume leverage and favorable product mix from the Industrial segment and $4.8 million and higher research and development expensesor 0.8% of $1.6 million. Selling, general and administrative expenses increased slightly by $0.2 million to $56.8 million, but decreased from 20.2% to 17.9% as a percentage of net sales, for the three months ended September 30, 2017 versus the three months ended October 1, 2016 primarily as a result of cost control initiatives and lower acquisition and integration charges.Total operating expenses forpurchase accounting inventory charges recorded during the first nine monthsquarter of 20172022.$212.2$134.3 million, or 23.1% of net sales compared to $209.1 million, or 27.1%22.0% of net sales, for the first nine monthsquarter of 2016.2023 compared to $108.0 million, or 17.3% of net sales, for the first quarter of 2022. The increase in operating expenses of $3.1$26.3 million was primarily due to acquisitions, higher selling, costs, higher research and development costs of $6.0 million and an increase of $5.0 million in amortization expense of intangible assets due to the acquisitions, partially offset by the $14.8 million of goodwill and other intangible asset impairment charges recognized in 2016 and lower acquisition-related expenses and integration costs of $9.2 million. Selling, general, and administrative expenses increased by $6.9of $12.8 million, to $156.9 million, but decreased from 19.4% to 17.1% as a percentageresearch and development expenses of net sales for the nine months ended September 30, 2017 versus the same period in 2016 primarily as a result of lower acquisition-related expenses and integration costs of $9.2$7.7 million, and cost control initiatives partially offset byhigher amortization expense of $4.1 million mainly due to the C&K and Western Automation acquisitions.$58.6$110.6 million, an increaserepresenting a decrease of $31.1$39.9 million, or 113.0%26.5%, for the thirdfirst quarter of 20172023 compared to $27.5$150.6 million for the thirdfirst quarter of 2016.2022. The increasedecrease in operating income was due to lower gross profit from the acquisitionsElectronics and Transportation segments and higher Electronics volume and associated gross margin increases along with the $14.8 million goodwill and other intangible assets impairment charges recordedoperating expenses as noted above. Operating margins decreased from 24.2% in the thirdfirst quarter of 2016. Operating margins increased from 9.8% for the three months ended October 1, 20162022 to 18.4% for the three months ended September 30, 2017. The 2016 goodwill and other intangible asset impairment charge improved margins by 5.3% while the remaining increase was due to higher volume, improvements18.1% in gross margin percentage, lower acquisition costs and operational efficiencies.Operating income for the first nine monthsquarter of 2017 was $167.7 million, an increase of $78.1 million or 87.1% compared to $89.7 million for the first nine months of 2016. The increase in operating income was the result of acquisitions and higher volume2023 driven by lower volumes in the Electronics and Automotive segments. Operating margins increased from 11.6% to 18.3% forTransportation segments and the nine months ended September 30, 2017 due to the acquisitions, improvement in gross margins, lower acquisition and integration related costs, the prior year goodwill and other intangible asset impairment charge and operational efficiencies.$55.5$108.9 million, or 17.5% of net sales, for the third quarter of 2017 compared to $30.4 million, or 10.9% of net sales, for the third quarter of 2016. Income before income taxes was impacted by higher operating income as described above, partially offset by an unfavorable increase in foreign exchange losses of $5.3 million primarily in the euro and Philippine peso against the U.S. dollar and higher interest expense of $0.9 million, reflecting increased borrowings.Income before income taxes for the first nine months of 2017 was $160.3 million, or 17.5% of net sales compared to $91.5 million, or 11.9%17.9% of net sales, for the first nine monthsquarter of 2016. Income2023 compared to $134.1 million, or 21.5% of net sales, for the first quarter of 2022. In addition to the factors impacting comparative results for operating income discussed above, income before income taxes was primarily impacted by an increase in operating income described above, partially offset by unfavorable changes in foreign exchange ratesgains of $5.6$1.7 million primarily as a result of fluctuations in the eurofirst quarter of 2023 compared to foreign exchange losses of $7.7 million during the first quarter of 2022 and Philippine peso againstunrealized gains ofU.S. dollar and higher interest expensefirst quarter of $3.62023 compared to unrealized losses of $4.7 million dueduring the first quarter of 2022 related to higher borrowings.$12.7$20.2 million, or an effective tax rate of 22.9%18.5%, for the third quarter of 2017 compared to income tax benefit of $0.4$16.6 million, or an effective tax rate of negative 1.2%12.4%, for the thirdfirst quarter of 2016.2022. The effective tax rate for the first quarter of 2023 is higher than the effective tax rate for the comparable 2022 period, primarily due to the impact of a one-time deduction in the first quarter of 2022 that resulted in a net benefit of $7.2 million from the dissolution of one of the Company’s affiliates. The effective tax rates for both the third quarter of 2017 and the third quarter of 2016 areperiods were lower than the applicable U.S. statutory tax rate primarily due to income earned in lower tax jurisdictions. Thejurisdictions, while for the 2022 period, the effective tax rate for the third quarter of 2017 reflected a forecasted accrual for taxes on undistributed current year-earnings of certain non-US affiliates. The effective tax rate for the third quarter of 2016 reflected a one-time deduction with respectalso was lower due to the stock of one of the company’s affiliates partially offset by the impact of the impairment of goodwill for which no tax benefit was recorded.Income tax expense for the first nine months of 2017 was $30.0 million, or an effective tax rate of 18.7% compared to income tax expense of $14.3 million, or an effective tax rate of 15.6%, for the first nine months of 2016. The effective tax rates for both the first nine months of 2017 and the first nine months of 2016 are lower than the U.S. statutory tax rate primarily due to income earned in lower tax jurisdictions. The effective tax rate for the first nine months of 2017 reflected a forecasted accrual for taxes on undistributed current year-earnings of certain non-US affiliates. The effective tax rate for the first nine months of 2016 reflected the third quarter one-time deduction with respectreferred to in the stock of one of the company’s affiliates partially offset by the impact of the impairment of goodwill for which no tax benefit was recorded.AutomotiveTransportation and Industrial. Segment information is described more fully in Note 10, 15, Segment Information, of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report.24providesis a summary of the Company’s net sales by segment:(in thousands) $ 175,899 $ 147,730 $ 28,169 19.1 % $ 499,052 $ 378,696 $ 120,356 31.8 % 113,797 106,341 7,456 7.0 % 338,094 309,644 28,450 9.2 % 28,193 26,260 1,933 7.4 % 79,539 83,301 (3,762 ) (4.5 %) $ 317,889 $ 280,331 $ 37,558 13.4 % $ 916,685 $ 771,641 $ 145,044 18.8 % First Quarter (in thousands) 2023 2022 Change %
ChangeElectronics $ 358,593 $ 365,821 $ (7,228) (2.0) % Transportation 166,641 184,504 (17,863) (9.7) % Industrial 84,548 73,005 11,543 15.8 % Total $ 609,782 $ 623,330 $ (13,548) (2.2) % The Electronics segment netincreased $28.2decreased $7.2 million, or 19.1%, in the third quarter of 2017 compared to the third quarter of 2016 due to incremental net sales related to the ON Portfolio and U.S. Sensor acquisitions, higher volume across all product lines and favorable foreign exchange impacts of $0.8 million.The Electronics segment net sales increased $120.4 million, or 31.8%2.0%, in the first nine monthsquarter of 20172023 compared to the first nine months of 2016 primarily due to the PolySwitch, ON Portfolio and U.S Sensor acquisitions, higher volume across all product lines that were partially offset by unfavorable foreign exchange impacts of $1.3 million.Automotive SegmentThe Automotive segment net sales increased $7.5 million, or 7.0%, in the third quarter of 2017 compared to the third quarter of 2016 primarily due to increased volume in the passenger car2022 and commercial vehicle products businesses and favorableincluded unfavorable changes in foreign exchange rates of $1.7 million that were partially$4.7 million. The sales decrease was mainly due to lower volume from the Electronics products business driven by inventory rebalancing at certain distributors and reduced demand across certain electronics markets, including consumer facing and personal electronics, and telecom, which more than offset by a decrease inthe incremental net sales of $42.5 million from the automotive sensor business.The Automotive segment netC&K acquisition and $14.1 million of higher volume from the semiconductor business driven by increased demand predominantly in our industrial and medical end markets.increased $28.5decreased $17.9 million, or 9.2%9.7%, in the first nine monthsquarter of 20172023 compared to the first nine monthsquarter of 20162022 and included unfavorable changes in foreign exchange rates of $4.8 million. The commercial vehicle business net sales declined $9.7 million driven by reduced demand across various commercial vehicle end markets and inventory rebalancing at certain distributors, partially offset by price realization. The automotive sensors and passenger car products businesses had net sales declines of $5.3 million and $2.8 million, respectively, primarily due to lower demand in China and certain automotive customers rebalancing their inventory levels of the incremental net sales associated with the PolySwitch and Menber’s acquisitions, higher volume in passenger car and commercial vehicleCompany's products, that were partially offset by unfavorable foreign exchange impacts of $1.7 million and lower volume in automotive sensor products.The Industrial segment net$1.9by $11.5 million, or 7.4%15.8%, in the thirdfirst quarter of 20172023 compared to the thirdfirst quarter of 20162022, which included unfavorable changes in foreign exchange rates of $0.5 million. The sales increase was primarily due to higher volume in the power fuseMRO/construction, renewables and relay operations partially offset byindustrial safety end markets, and the divestitureacquisition of a non-core product line in the custom products business.The Industrial segmentWestern Automation which contributed net sales decreased $3.8 million, or 4.5%, in the first nine months of 2017 compared to the first nine months$2.7 million.(in thousands) $ 115,499 $ 106,112 $ 9,387 8.9 % $ 328,563 $ 313,231 $ 15,332 4.9 % 63,365 52,200 11,165 21.4 % 182,534 149,417 33,117 22.2 % 139,025 122,019 17,006 13.9 % 405,588 308,993 96,595 31.3 % $ 317,889 $ 280,331 $ 37,558 13.4 % $ 916,685 $ 771,641 $ 145,044 18.8 % Americas First Quarter (in thousands) 2023 2022 Change %
ChangeAsia-Pacific $ 228,012 $ 260,218 $ (32,206) (12.4) % Americas 233,854 237,230 (3,376) (1.4) % Europe 147,916 125,882 22,034 17.5 % Total $ 609,782 $ 623,330 $ (13,548) (2.2) % in the Americas increased $9.4decreased $32.2 million, or 8.9%12.4%, in the thirdfirst quarter of 20172023 compared to the thirdfirst quarter of 2016 driven2022 and included unfavorable changes in foreign exchange rates of $4.0 million. The decrease in net sales was primarily due to lower net sales from electronics products business within Electronics segment and lower net sales across all businesses within Transportation segments, partially offset by incremental sales from acquisitionsthe acquisition of C&K, and increasedhigher volume infrom the passenger car and commercial vehicle businesses in the Automotive segment and all product lines insemiconductor business within the Electronics segment that were partially offset by lower volume in sensor products within the Automotive segment and the divestiture of a non-core product line in our Industrial segment.25Americasin the Americas increased $15.3decreased $3.4 million, or 4.9%1.4%, in the first nine monthsquarter of 20172023 compared to the first nine monthsquarter of 2016 resulting2022 and included unfavorable changes in foreign exchange rates of $0.3 million. The decrease in net sales was primarily due to lower net sales from acquisitionsElectronics and Transportation segments, partially offset by incremental sales from C&K acquisition within the Electronics segment, and higher volume inwithin the passenger car and commercial vehicle businesses inIndustrial segment compared to the Automotive segment and all product lines in the Electronics segment that were partially offset by lower volume in sensor products and the divestiturefirst quarter of a non-core product line in our Industrial segment.European net$11.2$22.0 million, or 21.4%17.5%, in the thirdfirst quarter of 20172023 compared to the thirdfirst quarter of 2016.2022 and included unfavorable changes in foreign exchange rates of $5.7 million. The increase in net sales was primarily due to incremental sales from the prior year ON Portfolio acquisition and higher volumes inof C&K, increased volume from the passivessemiconductor business inwithin the Electronics segment, and incremental sales from the passenger car and commercial vehicle businesses inWestern Automation acquisition included within the AutomotiveIndustrial segment and $3.0 million in favorable foreign currency effects.European net sales increased $33.1 million, or 22.2%, in the first nine months of 2017 compared to the first nine months of 2016. The increase in net sales was primarily due to acquisitions and increased net sales in the passives business in the Electronics segment and the passenger car business in the Automotive segment and higher volumeAsia-PacificAsia-Pacific net sales increased $17.0 million, or 13.9%, in the third quarter of 2017 compared to the third quarter of 2016 primarily due to incremental net sales from the prior year ON Portfolio acquisition and higher net sales in all of the Electronics segment’s business.Asia-Pacific net sales increased $96.6 million, or 31.3%, in the first nine months of 2017 compared to the first nine months of 2016, primarily due to incremental net sales from prior year acquisitions and increased volume in the passive and semiconductor businesses in the Electronics segment.Company’sCompany’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.Facility/Facility and Term LoanOctober 13, 2017,June 30, 2022, the Company amended and restated its existing Credit Agreement, dated as of April 3, 2020 (the “Credit Agreement”) to increase the unsecured revolving credit facility from $575.0effect certain changes, including, among other changes: (i) adding a $300 million to $700.0 million and increase the unsecured term loan credit facility from $125.0 millionfacility; (ii) making certain financial and non-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 $200.0 million andJune 30, 2027 (the “Maturity Date”). Pursuant to extend the expiration date from March 4, 2021 to October 13, 2022. The Credit Agreement, also includes the option for the Company may, from time to time, increase the size of the revolving credit facility and theor enter into one or more tranches of term loan facility by up to an additional $300.0 million, in the aggregate, subject to the satisfaction of certain conditions set forth in the Credit Agreement. Term loans may be made in up to two advances, the first advance occurring on October 13, 2017 and the second advance, in the aggregate amount not to exceed $75.0 million, to occur in the first quarter of 2018.On March 4, 2016, the Company entered into a new five-year credit agreement with a group of lenders for up to $700.0 million. The new credit agreement consists of an unsecured revolving credit facility of $575.0 million and an unsecured term loan credit facility of up to $125.0 million. In addition, the Company has the ability, from time to time, to increase the size of the revolving credit facility and the term loan facility by up to an additional $150.0 million, in the aggregate, in each case in minimum increments of $25.0$25 million subject to certain conditionsif there is no event of default and the agreement of participating lenders. For the term loan credit facility, the Company is required to make quarterly principal paymentsin compliance with certain financial covenants.agreementfacility pursuant to the Credit Agreement ("the Credit Facility") bear interest at the Company’sCompany’s option, at either LIBOR,Secured Overnight Financing Rate ("SOFR"), fixed for interest periods of one, two, three or six monthsix-month periods, plus 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 0.00% 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 0.15%0.10% to 0.30%0.175%, based on the Consolidated Leverage Ratio, as defined.defined in the Credit Agreement. The Credit Agreement includes representations, covenants and events of default that are customary for financing transactions of this nature.under the credit facility was 2.73% at September 30, 2017. 5.91%.September 30, 2017,April 1, 2023, the Company had $0.1 millionno outstanding in letters of credit under the Credit Facility and had available $559.9$600.0 million of borrowing capacity available under the revolving credit facility. Further information regardingCredit Facility. As of April 1, 2023, the Company’s credit agreement is providedCompany was in Note 4, Debt, ofcompliance with all covenants under the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report.Credit Agreement.26(together, the “U.S. Senior Notes,” and together with the Euro(“U.S. Senior Notes, the “Senior Notes”Series B due 2027”) were funded. During the first quarter of 2022, the Company paid off $25 million of U.S. Senior Notes, Series A due on February 15, 2022. Interest on the U.S. Senior Notes will bedue 2027 is payable semiannually on February 15 and August 15, commencing August 15, 2017. Further information regardingSenior Notes is provided in Note 4, Debt,Industrial segment. The Company financed the transaction with cash on hand.NotesCompany declared quarterly cash dividend of $0.60 per share, payable on June 8, 2023 to the Condensed Consolidated Financial Statements included in this Quarterly Report. $ 181,320 $ 100,015 (79,201 ) (498,481 ) (6,491 ) 262,381 2,076 1,793 97,704 (134,292 ) 275,124 328,786 $ 372,828 $ 194,494 The following describes the Company’s cash flows for the nine months ended September 30, 2017 and October 1, 2016. First Three Months (in thousands) 2023 2022 Net cash provided by operating activities $ 53,407 $ 51,731 Net cash used in investing activities (183,188) (29,788) Net cash used in financing activities (12,204) (37,070) Effect of exchange rate changes on cash, cash equivalents, and restricted cash 4,571 (2,738) Decrease in cash, cash equivalents, and restricted cash (137,414) (17,865) Cash, cash equivalents, and restricted cash at beginning of period 564,939 482,836 Cash, cash equivalents, and restricted cash at end of period $ 427,525 $ 464,971 Company’sCompany’s products. Operating cash outflows are largely attributable to recurring expenditures for raw materials, labor, rent, interest, taxes and other operating activities.$181.3$53.4 million for the first ninethree months of 2017,ended April 1, 2023 as compared to $100.0$51.7 million duringfor the ninethree months ended October 1, 2016.April 2, 2022. The increase in net cash provided by operating activities was primarily driven by higher cash earnings, lower cash taxes and the timing of supplier paymentsdue to reductions in working capital, partially offset by the timing of customer payments and inventory.$79.2$183.2 million for the ninethree months ended September 30, 2017,April 1, 2023 compared to $498.4$29.8 million during the ninethree months ended October 1, 2016.April 2, 2022. Net cash usedpaid for acquisitions of $38.6West Automation acquisition was $158.3 million induring the ninethree months ended September 30, 2017 primarily related to the acquisition of a majority stake in Monolith Semiconductor ($14.2 million) and the acquisition of U.S. Sensor ($24.4 million). Net cash used for acquisitions of $468.6 million for the nine months ended OctoberApril 1, 2016 primarily related to the acquisitions of Polyswitch ($344.5 million), the ON portfolio business ($104.0 million) and Menber’s ($19.2 million).2023. Capital expenditures was $48.5were $25.7 million, representing an increasea decrease of $14.0$4.1 million compared to 2016.$6.5$12.2 million for the ninethree months ended 2017April 1, 2023 compared to net cash provided byused in financing activities of $262.4$37.1 million for the ninethree months ended 2016. TheApril 2, 2022. During the three months ended April 2, 2022, the Company had $140.0paid $25.0 million of proceeds fromU.S. Senior Notes, Series A due on February 15, 2022. Additionally, the credit facilityCompany paid dividends of $14.9 million and senior notes payable and $117.2 million of payments on the term loan and credit facility in 2017 as compared to $492.0 million of proceeds from the credit facility and term loan and $216.6 million of payments on the term loan and credit facility. Additionally, dividends paid increased $3.0 million from $20.4$13.1 million in 2016 to $23.4 million for the ninethree months ended September 30, 2017.The’s announced that the Board of Directors authorized thea new three-year program to repurchase of up to 1,000,000$300 million in the aggregate of shares of the Company’s common stock under a program for the period May 1, 20172021 to April 30, 2018 (“Share Repurchase Program”). 2024 to replace its previous 2020 program.duringfor the third quarter of 2017.three months ended April 1, 2023, and April 2, 2022.27September 30, 2017,April 1, 2023, 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 debtdebt 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.Recent Accounting PronouncementsIn March 2017, the FASB issued ASU No. 2017-07 “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-Retirement Benefit Cost,” which changes the presentation of net periodic pension and post-retirement benefit cost (net benefit cost) within the Statement of Income. Under the current guidance, net benefit cost is reported as an employee cost within operating income. The amendment requires the bifurcation of net benefit cost, with the service cost component to be presented with other employee compensation costs in operating income while the other components will be reported separately outside of income from operations. ASU No. 2017-07 will be effective for the first quarter of 2018 and is required to be retrospectively adopted. Had this guidance been adopted as of January 1, 2017, operating income within the Condensed Consolidated Statements of Income for the three months and nine months ended September 30, 2017 would have not changed by a material amount.In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other” (Topic 350). This ASU modifies the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Because the update will eliminate Step 2 from the goodwill impairment test, it should reduce the cost and complexity of evaluating goodwill for impairment. This ASU is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020, with early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company expects to adopt the new standard in 2017.In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments-Recognition and Measurement of Financial Assets and Financial Liabilities” which addresses certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. The ASU will require the Company to recognize any changes in the fair value of certain equity investments in net income. These changes are currently recognized in other comprehensive income ("OCI"). This guidance is effective for interim and fiscal years beginning after December 15, 2017.In February 2016, the FASB issued ASU No. 2016-02, "Leases" (Topic 842). This ASU requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases of greater than twelve months. The accounting by lessors will remain largely unchanged. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. Adoption will require a modified retrospective transition, however the Company plans to adopt the standard in the first quarter of 2019. The Company is currently evaluating the impact of ASU 2016-02.In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" (Topic 606) which supersedes the revenue recognition requirements in ASC 605, "Revenue Recognition." This ASU provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. In August, 2015, the FASB issued ASU No. 2015-14, which postponed the effective date of ASU No. 2014-09 to fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted on the original effective date of fiscal years beginning after December 15, 2016. The Company is in the process of performing its assessment of the potential impact on its consolidated financial statements and has not concluded on its adoption methodology. While the Company is currently assessing the impact of the new standard, the Company’s revenue is primarily generated from the sale of finished products to customers. Sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks, and rewards transfer. These are largely un-affected by the new standard. The Company does not expect this new guidance to have a material impact on the amount of overall sales recognized; however, the timing of sales on certain projects may be affected. The Company has not yet quantified this potential impact.28CriticalCritical Accounting Policies and EstimatesCompany’sCompany’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.2016.2022. During the three months ended September 30, 2017,April 1, 2023, there were no significant changes in the application of critical accounting policies.RISK.ourthe Company's Annual Report on Form 10-K for the year ended December 31, 2016.2022. During the three months ended September 30, 2017,April 1, 2023, there have been no material changes in ourthe Company's exposure to market risk.13a-15(b)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.ourthe Company's disclosure controls and procedures as of September 30, 2017.April 1, 2023. Based on that evaluation, ourthe Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the quarter ended September 30, 2017, ourApril 1, 2023, the Company's disclosure controls and procedures were effective.ourthe Company's internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(f)13a-15(f) and 15d-15(f) under the Exchange Act that occurred during the quarter ended September 30, 2017April 1, 2023 that have materially affected, or are reasonably likely to materially affect, ourthe Company's internal control over financial reporting.29During the three months ended September 30, 2017, therefromin the Company's risk factors from those disclosed in ourthe Company's Annual Report on Form 10-K for ourits year ended December 31, 2016.2022.None.INFORMAITON 30ExhibitDescription2.110.110.210.310.410.510.610.710.810.910.1031.1*Certification of David W. Heinzmann, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2*Certification of Meenal A. Sethna, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1**Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.101.INS*XBRL Instance Document101.SCH*XBRL Taxonomy Extension Schema Document101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document101.DEF*XBRL Taxonomy Definition Linkbase Document101.LAB*XBRL Taxonomy Extension Label Linkbase Document101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document+Certain schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K promulgated by the SEC. The registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.*Filed herewith.**Furnished herewith.Incorporated by Reference Herein Exhibit Description Form Exhibit Filing Date File No. 3.1 8-K 3.1 2/3/2023 0-20388 31.1* 31.2* 32.1** 101 The following financial information from LITTELFUSE, Inc.'s Quarterly Report on Form 10-Q for the quarter ended April 1, 2023 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. 104 The cover page from this Quarterly Report on Form 10-Q for the quarter ended April 1, 2023, formatted in Inline XBRL. * Filed herewith. ** Furnished herewith. 31September 30, 2017,April 1, 2023, to be signed on its behalf by the undersigned thereunto duly authorized.Littelfuse, Inc.Littelfuse, Inc. By:By: /s/ Meenal A. Sethna Date: November 1, 2017Date: May 3, 2023 By: 32