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United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-K

[X]

☒

Annual Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

  

(Mark one)

for the fiscal year ended December 31, 2016

28, 2019
  
 Or

Or

  
☐

[   ]

Transition Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

for the transition period from to


Commission file number 0-20388

LITTELFUSE, INC.

(Exact name of registrant as specified in its charter)

Delaware

36-3795742

Delaware36-3795742
(State or other jurisdiction of

(I.R.S. Employer Identification No.)

incorporation or organization)

 

8755 West Higgins Road, Suite 500

Chicago, Illinois

60631

(Address of principal executive offices)

(ZIP Code)

773-628-1000


8755 West Higgins RoadSuite 500
Chicago, Illinois60631
(Registrant’sAddress of principal executive offices)

773-628-1000
 (Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange

On Which Registered

Common Stock, $0.01 par value

LFUS

NASDAQ
Global Select MarketSM


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [X]☒ No [  ]

☐


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [  ] ☐No [X]

☒


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]☒ No [  ]

☐


Indicate by check mark whether the registrant has submitted electronically, and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X]☒ No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “small reporting company,” and “small reporting“emerging growth company” in Rule 12b-2 of the Exchange Act (Check one): Large accelerated filer [X] Accelerated filer [  ] Non-accelerated filer [  ] Act:
Large accelerated filer☒Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐Emerging growth company☐

If an emerging growth company, [  ]

indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ]☐ No [X]

☒


The aggregate market value of 22,368,81724,104,227 shares of voting stock held by non-affiliates of the registrant was approximately $2,607,309,310$4,264,278,799 based on the last reported sale price of the registrant’s Common Stock as reported on the NASDAQ Global Select MarketSM on July 2, 2016.

June 29, 2019.

As of February 16, 2017,18, 2020, the registrant had outstanding22,632,855 24,425,955 shares of Common Stock, net of Treasury Shares.


DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Littelfuse, Inc. Proxy Statement for the 20172020 Annual Meeting of Stockholders (the “Proxy Statement”) are incorporated by reference into Part III of this Form 10-K.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Annual Report on Form 10-K that are not historical facts are intended to constitute “forward-looking statements” entitled to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995 (“PSRLA”). These statements may involve risks and uncertainties, including, but not limited to, risks relating to product demand and market acceptance,acceptance; economic conditions,conditions; the impact of competitive products and pricing,pricing; product quality problems or product recalls,recalls; capacity and supply difficulties or constraints,constraints; coal mining exposures reserves,reserves; failure of an indemnification for environmental liability,liability; exchange rate fluctuations,fluctuations; commodity price fluctuations,fluctuations; the effect of the company’s accounting policies,policies; labor disputes,disputes; restructuring costs in excess of expectations,expectations; pension plan asset returns less than assumed, integration of acquisitions,assumed; uncertainties related to political and regulatory changeschanges; integration of acquisitions may not be achieved in a timely manner, or at all; and other risks that may be detailed in “Item 1A. Risk Factors”Factors” below and in the company’sCompany’s other Securities and Exchange Commission filings.

AVAILABLE INFORMATION

We are

The Company is subject to the reporting and information requirements of the Securities Exchange Act of 1934, as amended and as a result, are obligated to file annual, quarterly, and current reports, proxy statements, and other information with the United States Securities and Exchange Commission (“SEC”). We makeThe Company makes these filings available free of charge on ourits website (http://www.littelfuse.com)investor.littelfuse.com) as soon as reasonably practicable after weit electronically filefiles them with, or furnish them to, the SEC. Information on ourthe Company’s website does not constitute part of this Annual Report on Form 10-K. In addition, the SEC maintains a website (http://www.sec.gov) that contains ourthe Company’s annual, quarterly, and current reports, proxy and information statements, and other information wethe Company electronically filefiles with, or furnishfurnishes to, the SEC. Any materials we file with, or furnish to, the SEC may also be read and/or copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. Our website address is included in this report for informational purposes only. OurThe Company’s website and the information contained therein or connected thereto are not incorporated into this Annual Report on Form 10-K.

PART I

ITEM 1. BUSINESS.

GENERAL

Littelfuse, Inc., was incorporated under the laws of the State of Delaware in 1991. References herein to the “company,“Company,” “we,” “our” or “Littelfuse” refer to Littelfuse, Inc. and its subsidiaries. References herein to “2016”“2019”, “fiscal 2016”2019” or “fiscal year 2016”2019” refer to the fiscal year ended December 31, 2016.28, 2019. References herein to “2015”“2018”, “fiscal 2015”2018” or “fiscal year 2015” refer to the fiscal year ended January 2, 2016. References herein to “2014”, “fiscal 2014” or “fiscal year 2014”2018” refer to the fiscal year ended December 27, 2014.29, 2018. References herein to “2017”, “fiscal 2017” or “fiscal year 2017” refer to the fiscal year ended December 30, 2017. The companyCompany operates on a 52-53 week fiscal year (4-4-5 basis) ending on the Saturday closest to December 31. Therefore, the financial results
OVERVIEW
Founded in 1927, Littelfuse is a global manufacturer of certain fiscal years and the associated 14 week quarters will not be exactly comparable to the prior and subsequent 52 week fiscal years and the associated quarters having only 13 weeks. As a result of using this convention, each of fiscal 2016 and fiscal 2014 contained 52 weeks whereas fiscal 2015 contained 53 weeks.

OVERVIEW

We are one of the world’s leading suppliers oftechnologies in circuit protection, power control and sensing. Serving over 100,000 end customers, the Company’s products for the electronics,are found in automotive and commercial vehicles, industrial markets, with expanding platforms inapplications, data and telecommunications, medical devices, consumer electronics and appliances. With its broad product portfolio of fuses, semiconductors, polymers, ceramics, relays and sensors, and power control componentsextensive global infrastructure, the Company’s worldwide associates partner with its customers to design, manufacture and modules. In addition to circuit protection productsdeliver innovative, high-quality solutions for a safer, greener 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. increasingly connected world.

Segments
The company has a network of global 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 consumer electronics to automobiles to industrial equipment.

Segments

The companyCompany conducts its business through three reportable segments which are defined by markets and consist of:segments: Electronics, Automotive, and Industrial. Within these segments, the Company designs, manufactures and sells components and modules for circuit protection, power control and sensing

products throughout the world. The circuit protection products protect against electrostatic discharge, power surges, short circuits, voltage spikes and other harmful occurrences; our power control products safely and efficiently control power and improve productivity and our sensor products are used to identify and detect temperature, proximity, flow speed and fluid level in various applications. For segment and geographical information and consolidated net sales and operating income see Item 7,Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 14,16, Segment Information,, of the Notes to Consolidated Financial Statements included in this Annual Report.

●

•

Electronics Segment: Provides circuit protection components for overcurrent and overvoltage protection, as well as sensor components and modules to leading global manufacturersConsists 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 has one of the broadest product offeringofferings in the industry, including fuses and protectors,fuse accessories, positive temperature coefficient (“PTC”) resettable fuses, varistors,solid state relays, polymer electrostatic discharge (“ESD”) suppressors, varistors, positions and fluid sensors, temperature sensors, reed switch based magnetic sensing, gas discharge tubes; semiconductor products such as discrete TVStransient voltage suppressor (“TVS”) diodes, TVS diode arrays, protection and switching thyristors, gas discharge tubes, power switching components, fuseholders, reed switch and sensor assemblies, insulated gate bipolar transistors (“IGBT”) blocks, and related accessories. The Electronics segment supplies products to leading manufacturers such as Cisco, Celestica, Delta, Flextronics, Foxconn, Huawei, IBM, Intel, Jabil, LG, Microsoft, Nokia, Panasonic, Quanta, Samsung, Sanmina-SCI, Seagate, Siemens, and Sony, as well as to leading electronics distributors such as Arrow Electronics, Future Electronics, TTI, Mouser Electronics and Digi-Key.

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and switching thyristors, metal-oxide-semiconductor field-effect transistors (“MOSFETs”), integrated circuits, silicon carbide diodes; and insulated gate bipolar transistors (“IGBT”) technologies. The segment covers a broad range of end markets, including industrial and automotive electronics, electric vehicle and related infrastructure, data and telecommunications, medical devices, alternative energy, consumer electronics and white goods.

●

•

Automotive Segment: Provides Consists of a wide range of circuit protection, power control and sensor products to the worldwide automotivesensing technologies for global original equipment manufacturers (“OEM”OEMs”), Tier-I suppliers and parts distributors ofin passenger automobiles, trucks, buses,car, heavy duty truck, off-road vehicles, material handling, agricultural, construction and off-road equipment. In addition, the company supplies heavy dutyother commercial vehicle end markets. Passenger car fuse products include fuses and fuse accessories for internal combustion engine vehicles and hybrid and electric vehicles including blade fuses, battery cable protectors, resettable fuses, high-current fuses, and high-voltage fuses. Commercial vehicle products include fuses and fuse holders, switches, high power relays, and power distribution modules switches and relays tofor the commercial vehicle industry. The company also sells its fuses, including blade fuses, high current fuses, battery cable protectors, and varistors, in theAutomotive sensor products include a wide range of automotive replacement parts market. In the automotive passenger car and commercial vehicle market,products designed to monitor passenger occupants, including comfort and convenience sensors, safety and environment as well as applications in the company’s end customers include worldwide OEMsvehicle’s powertrain.

•
Industrial Segment: Consists of power fuses and Tier One suppliers such as Autoliv, BMW, Caterpillar, Chrysler, Daimler Trucks NA, Delphi, Ford Motor Company, General Motors, Hyundai Group, John Deere, Key Safety Systems, Lear, Navistar, Stabilus,holders, protection relays and Volkswagen. The company also supplies wiring harness manufacturerscontrols and auto parts suppliers worldwide, including Advance Auto Parts, Alphabet, Continental, Delphi, Lear, O’Reilly Auto Parts, Pep Boys, Sumitomo, Valeo, and Yazaki.

●

Industrial Segment:Providesother circuit protection products for use in various 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 equipmentapplications such as oil, gas, mining, alternative energy, electric vehicle infrastructure, non-residential construction, HVAC systems, elevators and machine tools. The company also suppliesother industrial ground fault protection in mining and other large industrial operations. In the industrial market, the company supplies representative customers such as Agrium, Corning, Gamesa, LG, Mosaic, Potash Corporation of Saskatchewan, Trane, as well as leading industrial distributors.

equipment.


Strategy

In December 2016, wethe Company announced a newits five-year strategic plan. Building upon ourits achievements from ourits previous five-year plan and leveraging our position inthe global mega trends such asof safety, resource efficiency and connectivity, and energy efficiency, we arethe Company is targeting an average annual accelerated annual organic growth of 5-7%5-7 percent and annual growth from strategic acquisitions of 5-7%. Our5-7 percent. The Company’s strategic goals include the continued growth of ourgrowing its circuit protection, business, accelerated growth in our power control business and the doubling of the sensor platform revenue over the next five years. We expectplatforms. The Company expects to do this through content and share gains, targeting underpenetrated geographies and markets,high-growth niche applications, leveraging investments in its people, innovations and innovationoperating systems, and capitalizing on growth opportunities where technologies and applications are converging across its segments, while continuing to acquire and integrate businesses that fit ourits strategic focus areas.

Recent Acquisitions

In 2016, 2015, and 2014, we completed several acquisitions that have broadened our product offerings and contributed to our growth.

●

•

IXYS Corporation: On January 17, 2018, the Company acquired IXYS corporation ("IXYS"), a global pioneer in the power semiconductor and integrated circuit markets with a focus on medium to high voltage power semiconductors across the industrial, communications, consumer and medical markets. IXYS had a broad customer base, serving more than 3,500 customers through its direct sales force and global distribution partners. The purchase price for IXYS was $856.5 million, which included consideration of cash, Littelfuse common stock, and the value of converted, or cash settled IXYS equity awards. The operations of IXYS are included in the Electronics segment.

•
U.S. Sensor: On July 7, 2017, the Company acquired the assets of U.S. Sensor Corporation (“U.S. Sensor”) for $24.3 million. U.S. Sensor manufactures a variety of high quality negative temperature coefficient thermistor probes and assemblies. The acquisition expands the Company’s existing sensor portfolio in several key electronics and industrial end markets. The operations of U.S. Sensor are included in the Electronics segment.

•
Monolith Semiconductor Inc.: On February 28, 2017, pursuant to a Securities Purchase Agreement between the Company and the stockholders of Monolith Semiconductor Inc. (“Monolith”), a U.S. start-up Company developing silicon carbide technology, the Company increased its investment in Monolith by acquiring approximately 62% of the outstanding common stock of Monolith for $15.0 million. During 2018, the Company acquired the remaining outstanding stock of Monolith for $9.0 million based on Monolith meeting certain technical and sales targets, and now owns 100% of Monolith. The operations of Monolith are included in the Electronics segment.
•
ON Portfolio:On August 29, 2016, the companyCompany acquired certain assets of select businesses (the “ON Portfolio”) of ON Semiconductor Corporation for $104.0 million. 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 IGBTs for automotive ignition applications. The acquisition expands the company’sCompany’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’sCompany’s existing circuit protection business, will strengthen its channel partnerships and customer engagement, and expand its power semiconductor portfolio.

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Menber’s:On April 4, 2016, the companyCompany completed the acquisition of Menber’s S.p.A. (“Menber’s”) headquartered in Legnago, Italy for $19.2 million (net of cash acquired and after settlement of a working capital adjustment). The acquired business is part of the company'sCompany'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 transaction expands the company’sCompany’s commercial vehicle products business globally.


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•

PolySwitch:On March 25, 2016, the companyCompany acquired 100% of the circuit protection business (“PolySwitch”) of TE Connectivity Ltd. for $348.3 million (net of cash acquired and after settlement of certain post-closing adjustments). 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 companyCompany to strengthen its global circuit protection product portfolio, as well as expands its presence in the automotive electronics and battery protection end markets. The acquisition also significantly increases the company’sCompany’s presence in Japan.



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Sigmar: On October 1, 2015, the company acquired 100% of Sigmar S.r.l. (“Sigmar”) for $6.5 million (net of cash acquired and including estimated additional net payments of up to $0.9 million, a portion of which is subject to the achievement of certain milestones). Located in Ozegna, Italy, Sigmar is a leading global manufacturer of water-in-fuel sensors and also manufactures selective catalytic reduction (“SCR”) quality sensors and diesel fuel heaters for automotive and commercial vehicle applications. The acquisition further expanded the company’s automotive sensor product line offerings within its Automotive segment.

●

SymCom: On January 3, 2014, the company acquired 100% of SymCom, Inc. (“SymCom”) for $52.8 million (net of cash acquired). Located in Rapid City, South Dakota, SymCom provides overload relays and pump controllers primarily to the industrial market. The acquisition allows the company to strengthen its position in the relay products market by adding new products and new customers within its Industrial segment.

Sales and Operations

The companyCompany operates in three geographic regions: Asia-Pacific, the Americas, Europe, and Asia-Pacific.Europe. The companyCompany manufactures products and sells to customers in all three regions.

Net sales by segment for the periods indicated are as follows:

  

Fiscal Year

 

(in thousands)

 

2016

  

2015

  

2014

 

Electronics

 $535,191  $405,497  $410,065 

Automotive

  415,200   339,957   325,415 

Industrial

  105,768   122,410   116,515 

Total

 $1,056,159  $867,864  $851,995 

 Fiscal Year
(in millions)2019 2018 2017
Electronics$961.1
 $1,124.3
 $661.9
Automotive428.5
 479.8
 453.2
Industrial114.3
 114.4
 106.4
Total$1,503.9

$1,718.5

$1,221.5
Net sales in the company’sCompany’s three geographic regions, based upon the shipped-to destination, are as follows:

  

Fiscal Year

 

(in thousands)

 

2016

  

2015

  

2014

 

Americas

 $411,105  $401,173  $377,660 

Europe

  200,277   152,661   163,918 

Asia-Pacific

  444,777   314,030   310,417 

Total

 $1,056,159  $867,864  $851,995 

 Fiscal Year
(in millions)2019 2018 2017
Asia-Pacific$656.8
 $753.3
 $541.1
Americas508.4
 578.6
 436.5
Europe338.7
 386.6
 243.9
Total$1,503.9

$1,718.5

$1,221.5
The company’sCompany’s products are sold worldwide through distributors, a direct sales force and manufacturers’ representatives.representatives in certain regions. For the fiscal year 2016,2019, approximately 66%71% of the company’sCompany’s net sales were to customers outside the United States (“U.S.”), including approximately 25%28% to China.

The companyCompany manufactures many of its products on fully integrated manufacturing and assembly equipment. The companyCompany maintains product quality through a Global Quality Management System with most manufacturing sites certified under ISO 9001:2000. In addition, several of the Littelfuse manufacturing sites are also certified under TSIATF 16949 and ISO 14001.

Additional information regarding the company’sCompany’s sales by geographic area and long-lived assets in different geographic areas is in Note 14,16, Segment Information,, of the Notes to Consolidated Financial Statements included in this Annual Report.








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BUSINESS ENVIRONMENT

Electronics Segment

Electronic

The Company designs, develops and manufactures a wide range of components and modules that provide circuit protection, power control and sensing and control products are used to protect circuits infor a multitude of electronic, systems. The company’s product offering includes a complete line of overcurrenttransportation and overvoltage solutions including (i)industrial applications. Circuit protection technologies in the Electronics Segment are designed to protect against harmful occurrences like voltage spikes, short circuits, power surges and electrostatic discharge. Products include fuses and protectors, (ii)fuse accessories, PTC resettable fuses, (iii) varistors, (iv) polymer ESD suppressors, (v)varistors, gas discharge tubes, semiconductor products such as discrete TVS diodes, TVS diode arrays, protection and switching thyristors, (vi) gas discharge tubes, (vii)integrated circuits, and silicon carbide diodes.
The Company also offers a wide range of power switchingcontrol products used to convert and regulate energy and safely and efficiently control power across a broad spectrum of industrial applications like renewable energy and storage, motor drives and power conversion. Products include a comprehensive portfolio of semiconductor components (viii) fuseholders, (ix) reed switch and modules including thyristors, rectifiers and fast recovery diodes, IGBTs and wide band gap devices. The acquisition of IXYS helped the Company expand its power semiconductor portfolio in medium and high-power applications and technology expertise. The Company expects to continue to diversify and expand its presence within industrial electronics markets, leveraging the strong IXYS industrial OEM customer base.
As products become increasingly sophisticated, smarter and more connected, the need for complex sensor assemblies, (x) IGBT blocks, and (xi) related accessories.

Electronic fuses and protectors are devices that contain an element that melts in an overcurrent condition. Electronic miniature and subminiature fuses are designedtechnologies continues to provide circuit protectiongrow. Sensor products in the limited space requirements of electronic equipment. The company’s fuses are used in a wide variety of electronic products, including mobile phones, flat-screen TVs, computers, and telecommunications equipment. The company markets these products under trademarked brand names including PICO® II and NANO2® SMF.

Resettable fuses are PTC polymer devices that limit the current when an overcurrent condition exists and then reset themselves once the overcurrent condition has cleared. The company’s product line offers both radial leaded and surface mount products. Varistors are ceramic-based, high-energy absorption devices that provide transient overvoltage and surge suppression for automotive, telecommunication, consumer electronics, and industrial applications. The company’s product line offers both radial leaded and multilayer surface mount products.


Polymer ESD suppressors are polymer-based devices that protect an electronic system from failure due to rapid transfer of electrostatic charge to the circuit. The company’s PULSE-GUARD® line of ESD suppressors is used in PC and PC peripherals, digital consumer electronics, and wireless applications.

Discrete diodes, diode arrays, and protection thyristors are fast switching silicon semiconductor structures. Discrete diodes protect a wide variety of applications from overvoltage transients such as ESD, inductive load switching or lightning, while diode arrays are used primarily as ESD suppressors. Protection thyristors are commonly used to protect telecommunications circuits from overvoltage transients such as those resulting from lightning. Applications include telephones, modems, data transmission lines, and alarm systems. The company markets these products under trademarked brand names including TECCOR®, SIDACtor®, Battrax®, and SPA®.

Gas discharge tubes are very low capacitance devices designed to suppress any transient voltage event that is greater than the breakover voltage of the device. These devices are primarily used in telecommunication interface and conversion equipment applications as protection from overvoltage transients such as lightning.

Power switching components, such as switching thyristors and IGBTs, are used to regulate energy to various types of loads most commonly found in industrial and home applications. These components are easily activated from simple control circuits or interfaced to computers for more complex load control. Typical applications include heating, cooling, battery chargers and lighting.

Magnetic sensing products are used to monitor, sense, and measure magnetic fields in a number of applications.  The company’s product offerings include a line of reed switches, reed based sensors, and hall effect sensors. Reed switches are non-contact magnetically operated devices that provide an output based on the electrical load during the presence of magnetic field. TheyElectronics Segment are used in a wide variety of applications including security, medical, fluid monitoring, telephones, fitness equipment, metering, toys, white goods, building and consumerhome automation, industrial controls, and industrial controls. Reed switch sensors utilize reed switch technology in various packaging configurations with custom enclosures, terminations, and connectors to provide an application specific product as a final assembly.  Key applications include fluid level monitoring, position sensing, fluid flow, and proximity sensing. Hall effect sensors utilize hall chip technology to sense magnetic fields to provide ratio metric output based on magnetic fields.  Key applications include motor speed sensing, directional sensing, rotation, and linear sensing.

In addition to the above products, the company is also a supplier of fuse holders, fuse blocks (including OMNI-BLOK®), and fuse clips primarily to customers that purchase circuit protection devices from the company.

commercial vehicles.

Automotive Segment

Fuses are extensively used in automobiles, trucks, buses, and off-road equipment to protect electrical circuits and the wires that supply electrical power to operate lights, heating, air conditioning, radios, windows, and other controls. Currently, a typical automobile contains 30 to 100 fuses, depending upon the options installed.

The fuse content per vehicle is expected to continue to grow as more electronic features are included in automobiles and as a result of vehicle electrification such as 48 volt, hybrid, and battery electric vehicles, for which the company also supplies.

The companyCompany is a primary supplier of automotive fuses and circuit protection technologies to worldwideglobal automotive OEMs, through automotive fuse sales made to Tier One automotive suppliers, main-fuse box, and wire harness manufacturers that incorporate the fuses into their products, as well as automotive component parts manufacturers, and automotive parts distributors. The companyCompany also sells its fuses in the replacement parts market, with its products being sold through merchandisers, discount stores, and service stations, as well as under private label by national firms.

The company invented and owns U.S. and foreign patents related to blade-type fuses, which is the standard and most commonly used fuse

Circuit protection needs in the automotive industry. space are expected to generate additional content-per-vehicle exceeding global auto production, with the continued electronification of vehicles, as well as market growth, development, and penetration of hybrid and electric vehicles.
The company’s automotive fuse products are marketed under trademarked brand names, including ATO®, MINI®, MIDI®, MEGA®, Masterfuse®, JCASE®, and CABLE PRO®.

Products sold into the market include speed, position, and direction sensors, occupant safety sensors, solar sensors, fluid level, and quality sensors, fuel heating systems, rotary sensors for comfort applications, and water in fuel sensors. A majority of the company’sCompany also continues to focus on its automotive sensor sales are madebusiness and products. Products include a wide range of automotive and commercial vehicle products designed to Tier One suppliersmonitor passenger occupants, including comfort and distributors.

convenience sensors, safety and environment as well as applications in the vehicle’s powertrain.


The companyCompany has expanded the Automotive segment into the commercial vehicle market withend markets through various acquisitions, also expanding the company’s portfolio of power control products.as well as internal product development. Additional products in this market include:  power distribution modules, low current switches,and high current switches, solenoids and relays, electronic switches, battery management products, ignition key switches, and trailer connectors. Custom and market productsProducts are sold directly to a mix of OEMs, Tier One suppliers, aftermarket channels, as well as through general distribution. The company owns U.S. and foreign patents related to high current switching, power distribution modules, and switching.


 

Industrial Segment

The company manufacturesCompany designs and sells a broad range of low-voltagepower fuses and medium-voltageholders, protection relays and controls and other circuit protection products to electrical distributors and their customersfor use in the construction, OEM andvarious industrial maintenance, repair and operating supplies (“MRO”) markets. The company also designs and manufactures portable custom electrical equipment for the mining and utility industry in Canadaapplications such as well as protection relays for the global mining, oil and gas, mining, alternative energy, electric vehicle and generalrelated infrastructure, non-residential construction, HVAC systems, elevators and other industrial markets.

Power fuses are used to protect circuits in various types of industrial equipment and in industrial and commercial buildings. They are rated and listed under one of many Underwriters Laboratories’ fuse classifications. Major applications for power fuses include protection from overload and short-circuit currents in solar, motor branch circuits, heating and cooling systems, control systems, lighting circuits, solar and electrical distribution networks.

The company’s POWR-GARD® product line features the Indicator® series power fuse used in both the OEM and MRO markets. The Indicator® technology provides visual blown-fuse indication at a glance, reducing maintenance and downtime on production equipment. The Indicator® product offering is widely used in motor protection and industrial control panel applications.

Protection relaysThese products are used to protect personnel and equipment in mining, oil and gas, and industrial environments from excessive currents, over voltages, and electrical shock hazards called ground faults. Major applications for protection relays include protectionhazards.


Products are sold through electrical distributors, electronics channel partnerships and directly to OEM's. The Company sees growth opportunities through expanding the end markets and geographies it serves and growing its sales through electronics channel partnerships, and continuing to invest in new product development.



Table of motor, transformer, and power-line distribution circuits. Ground-fault relays are used to protect personnel and equipment in wet environments such as underground mining or water treatment applications where there is a greater risk for electricity to come in contact with water and create a shock hazard.

Littelfuse custom-engineered electrical equipment is designed and built for use in harsh or demanding environments where standard industrial electrical gear will not meet customer needs for reliability and durability.  Portable power substations are used throughout mines to transform voltage from distribution to utilization levels and provide local protection and control for equipment such as mining machines, pumps, fans, conveyors, and other electrical machinery. Custom-built switchgear is used in mining, oil and gas, and power generation where rugged designs, quick turnaround, unique footprints, or arc-resistant equipment is required.

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PRODUCT DESIGN AND DEVELOPMENT

The companyCompany employs scientific, engineering, and other personnel to continually improve its existing product lines and to develop new products at its research, product design, and development (“R&D”) and engineering facilities with primary locations in ChampaignChina, Germany, Italy, Japan, Lithuania, Mexico, Philippines, Taiwan(China), United Kingdom, and Mt. Prospect, Illinois, Fremont, California, Rapid City, South Dakota, Canada, China, Japan, Italy, the Philippines, Taiwan, Lithuania, Germany, and Mexico.U.S. The Product & Development Technology departments maintainCompany maintains a staff of engineers, chemists, material scientists and technicians whose primary responsibility is to design and develop new products.

Proposals for the development of new products are initiated primarily by sales, marketing, and product management personnel with input from customers. The entire product development process usually ranges from a few months to 18 monthsa few years based on the complexity of development, with continuous efforts to reduce the development cycle. During fiscal years 2016, 2015,2019, 2018, and 2014,2017, the companyCompany expended $42.2$80.5 million, $30.8$87.3 million, and $31.1$50.5 million, respectively, on R&D.


PATENTS, TRADEMARKS, AND OTHER INTELLECTUAL PROPERTY

The companyCompany generally relies on patents, trademarks, licenses, and nondisclosure agreements to protect its intellectual property and proprietary products. In cases where it is deemed necessary by management, key employees are required to sign an agreement that they will maintain the confidentiality of the company’sCompany’s proprietary information and trade secrets.

The companyCompany owns a large portfolio of patents worldwide and new products are continually being developed to replace older products. The companyCompany regularly applies for patent protection on such new products. Although,While, in the aggregate, the company’sCompany’s patents are important in the operation of its businesses, the companyCompany believes that the loss by expiration or otherwise of any one patent or group of patents would not materially affect its business.

MANUFACTURING

The companyCompany’s manufacturing facilities are in China, Germany, Italy, Japan, Lithuania, Mexico, Philippines, Portugal, the United Kingdom, and the United States. The Company performs the majority of its own fabrication stamps some of theand maintains in-house capabilities for metal components used in its fuses, holdersstamping, surface mount assembly, plating (silver, nickel, zinc, and switches from raw metal stockoxides) and makes its own contacts and springs.thermoplastic molding. In addition, the companyCompany fabricates siliconsemiconductor wafers for certain applications and performs its own plating (silver, nickel, zinc, tin,maintains in-house capability for epitaxy fabrication, die attach, and oxides). Thermoplastic molded component requirementswafer probe testing. After sub-components are met through the company’s in-house molding capabilities. After components are stamped, molded, plated, and readied for assembly, final assembly is accomplished on fully automatic and semi-automatic assembly machines. Quality assurance and operations personnel, using techniques such as statistical process control, perform tests, checks and measurements during the production process to maintain the highest levels of product quality, including safety and reliability, and customer satisfaction.

Additionally, the Company utilizes external wafer foundries and subcontracted test and assembly facilities for a portion of its semiconductor business.


The principal raw materials for the company’sCompany’s products include copper and copper alloys, heat-resistant plastics, zinc, melamine, glass, silver, gold, raw silicon, solder, and various gases. The companyCompany uses a single source for several heat-resistant plastics and for zinc but believes that suitablehas specifically identified capable alternative heat-resistant plastics and zinc are available from other sources at comparable prices.sources. All other raw materials are purchased from a number of readily available outside sources.


MARKETING

The company’s sales and marketing staff maintains relationships with major OEMs and global distributors. The company’s sales, marketing and engineering personnel also interact directly with OEM engineersCompany goes to ensure appropriate sensor design, circuit protection and reliability within the OEM’s parameters. The company also markets its products indirectlymarket through a worldwide selling organization consisting of over 60direct sales personnel, distribution partners and manufacturers’ representativesrepresentatives. The direct sales force closely works with global OEM, Tier One automotive, consulting engineers, and distributes through an extensive network of electronics, automotivemajor end customers to design-in and electrical distributors.


Electronics Segment

sell the Company’s circuit protection, power control and sensing products. The company sellsdistributors provide fulfillment for a majority of itscustomers including those partnered with electronic manufacturing services ("EMS"). The direct sales force is supplemented with manufacturers’ representatives. The Company has sales offices and direct sales channels in all major regions of the world.

Electronics Segment
Most Electronics segment products are sold through broad line distribution partners, including global distributors such as Arrow Electronics, Inc., Future Electronics and TTI, Inc, with most of the remainder soldand regional and high service distributors, including Digi-Key and Mouser, as well as directly to OEMs. In the Americas, the company maintains aOEM's. Many of our products are incorporated into applications with complex design technical support requirements. These may be sold through our direct sales staffsalesforce and utilizes manufacturers’ representatives to sell its electronics products in the U.S. and to call on major U.S. and international OEMs and distributors. In Canada, the company utilizes manufacturers’ representatives and distributors. In Europe and Asia-Pacific regions, the company also maintains a direct sales staff and utilizes distributors.

fulfilled through our distribution partners.





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Automotive Segment

The company maintainsCompany primarily uses a direct sales force to service all of the major automotive and commercial vehicle OEMs, system suppliers, and Tier One suppliersautomotive and aftermarket customers globally.

The Company also leverages its automotive customer relationships to sell products from the Electronics segment into automotive end markets, primarily to Tier One automotive customers. These revenues are reported in the U.S. The company also has manufacturers’ representatives that sell the company’s products to aftermarket fuse retailers and commercial vehicle product OEMs.

In Europe, the company uses both a direct sales force and manufacturers’ representatives to service its OEMs, major system suppliers and aftermarket distribution customers. In the Asia-Pacific region, the company uses both a direct sales force and distributors to supply to major OEM system suppliers and Tier One suppliers.

Electronics segment.


Industrial Segment

The companyCompany markets and sells its power fuses and protection relays through manufacturers’ representatives, and industrial and electrical distributors, primarily across North America. These representatives sell power fuse productsAmerica and through ana worldwide direct sales force & electronics channels. The electrical and industrial distribution network comprised of over 2,500 distributor buying locations. These distributors have customers that includeincludes electrical contractors, municipalities, utilities and factories (including both MRO and OEM).

factories.

CUSTOMERS
The company’s field sales force (including regional sales managers and application engineers) and manufacturers’ representatives call on both distributors and end-users (consulting engineers, municipalities, utilities, and OEMs) in an effort to educate these customers on the capabilities and characteristics of the company’s products.

CUSTOMERS

The companyCompany directly sells to over 6,000nearly 6,400 customers and distributors worldwide. Sales to Arrow Electronics, Inc., which were reported in our Electronics, Automotive and Industrial segments, were 10.7%, 10.7% and 10.6% of consolidated net sales in 2019, 2018, and 2017, respectively. No other single customer accounted for more than 10% of net sales during any of the last three years. During fiscal 2016, 2015,2019, 2018, and 2014,2017, net sales to customers outside the U.S. accounted for approximately 66%71%, 60%70%, and 63%69%, respectively, of the company’sCompany’s total net sales.

COMPETITION

The company’sCompany’s products compete with similar products of other manufacturers, some of which may have substantially greater financial resources than the company.Company. In the electronics market,Electronics segment, the company’sCompany’s competitors include Eaton Corporation, Bel Fuse Inc., Bourns Inc., EPCOS, ON Semiconductor Corporation, Infineon Technologies, STMicroelectronics NV, Semtech Corporation, and Vishay Intertechnology Inc. In the automotive market,Automotive segment, the company’sCompany’s competitors include Amphenol Corporation, Eaton Corporation, Pacific Engineering, MTA, CTS Corporation, Amphenol Corporation, Sensata Technologies Holding NV, and TE Connectivity Ltd. In the industrial market,Industrial segment, the company’sCompany’s major competitors include Eaton Corporation, GE Multilin, and Mersen. The companyCompany believes that it globally competes on the basis of innovative products, the breadth of its product line, the quality, design and designperformance of its products based on their reliability, consistency and safety, its technical capabilities and application expertise, and the responsiveness of its customer service, in addition to price.

service.
 

BACKLOG

BACKLOG

The backlog of unfilled orders at December 31, 201628, 2019 was approximately $110.3$477.6 million, compared to $96.4$405.7 million at January 2, 2016.December 29, 2018 with the increase primarily driven by the Electronics segment, partially offset by a decrease from the Automotive segment. Substantially all of the orders currently in backlog are scheduled for delivery in 2017.

2020.

EMPLOYEES

As of December 31, 2016,28, 2019, the companyCompany employed approximately 10,30011,300 employees worldwide.Approximately 1,900 employees in Mexico are covered by collective bargaining agreements. In Mexico the company has two separate collective bargaining agreements, one for 1,200 employees in Piedras Negras, expiring January 31, 2018 and the second for 720 employees in Matamoros, expiring January 1, 2018.worldwide. Approximately 18%20% of the company'sCompany's total workforce was employed under collective bargaining agreements at December 28, 2019. In Mexico, the Company has two separate collective bargaining agreements, one for 1,758 employees in Piedras Negras, expiring January 31, 2016.2022 and the second for 600 employees in Matamoros, expiring January 1, 2022. In Germany, the Company has collective bargaining agreements with approximately 375 employees in Lampertheim and Essen, expiring March 31, 2020. In the United Kingdom, the Company has a collective bargaining agreement with some of the employees in Chippenham. Overall, the companyCompany has historically maintained satisfactory employee relations and considers employee relations to be good.

ENVIRONMENTAL REGULATION

The companyCompany is subject to numerous foreign, federal, state, and local regulations relating to air and water quality, the disposal of hazardous waste materials, safety and health. Compliance with applicable environmental regulations has not significantly changed the company’sCompany’s competitive position, capital spending or earnings in the past and the companyCompany does not presently anticipate that compliance with such regulations will change its competitive position, capital spending or earnings for the foreseeable future.

The company employs a chemical engineer to monitor regulatory matters andCompany believes that it is currently in compliance in all material respects with applicable environmental laws and regulations.


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Littelfuse GmbH, which was acquired by the companyCompany in May 2004, is responsible for maintaining closed coal mines in Germany from legacy operations. The companyCompany is compliant with German regulations pertaining to the maintenance of the mines and has an accrual related to certain of these coal mine shafts based on an engineering study estimating the cost of remediating the dangers (such as a shaft collapse) of certain of these closed coal mine shafts in Germany. The accrual is reviewed annually and calculated based upon the costestimated costs of remediating the shafts. Further information regarding the coal mine liability accrual is provided in Note 1,Summary of Significant Accounting Policies and Other Information, of the Notes to Consolidated Financial Statements included in this Annual Report.


ITEM 1A. RISK FACTORS.

Our

The Company’s business, financial condition, and results of operations are subject to various risks and uncertainties, including the risk factors we haveit has identified below. Any of the following risk factors could materially and adversely affect ourthe Company’s business, financial condition, or results of operations. These factors are not necessarily listed in order of importance.

Our


1) Operational Risks:
The Company’sindustry is subject to intense competitive pressures.

We operate

The Company operates in markets that are highly competitive. We competeThe Company competes on the basis of price, product performance and quality, service, and / or brand name across the industries and markets we serve.it serves. Competitive pressures could affect the prices we arethe Company is able to charge ourits customers or the demand for ourits products.

We

The Company may not always be able to compete on price, particularly when compared to manufacturers with lower cost structures. Some of ourthe Company’s competitors have substantially greater sales, financial and manufacturing resources and may have greater access to capital than Littelfuse.the Company. As other companies enter ourits markets or develop new products, competition may further intensify. OurThe Company’s failure to compete effectively could materially adversely affect ourits business, financial condition, and results of operations.

We

The Company engages in strategic acquisitions and may not realize the anticipated benefits of the acquisitions and / or may encounter difficulties in integrating these businesses.
The Company seeks to grow through strategic acquisitions. In the past, the Company has acquired a number of businesses or companies and additional product lines and assets. The Company intends to continue to expand and diversify its operations with additional future acquisitions.
An acquired business, technology, service or product could under-perform relative to the Company’s expectations and the price paid for it, or not perform in accordance with the Company’s anticipated timetable. This could cause the Company’s financial results to differ from expectations in any given fiscal period, or over the long term. The success of these transactions also depends on the Company’s ability to integrate the assets, operations, and personnel associated with these acquisitions. The Company may encounter difficulties in integrating acquisitions with the Company’s operations and may not realize the degree or timing of the benefits that are anticipated from an acquisition.
The Company may also discover liabilities or deficiencies associated with the companies or assets it acquires that were not identified in advance, which may result in significant unanticipated costs. The effectiveness of the Company’s due diligence review and its ability to evaluate the results of such due diligence are dependent upon the accuracy and completeness of statements and disclosures made or actions taken by the companies acquired or their representatives, as well as the limited amount of time in which acquisitions are executed. In addition, the Company may fail to accurately forecast the financial impact of an acquisition transaction, including tax and accounting charges. Acquisitions may also result in recording of significant additional expenses to the results of operations and recording of substantial intangible assets on the balance sheet upon closing. Any of these factors may adversely affect the Company’s financial condition and results of operations.

Disruptions inthe Company’smanufacturing, supply or distribution chain could result in an adverse impact on results of operations.
The Company sources materials and sells product through various international network channels. A disruption could occur within the Company’s manufacturing, distribution or supply chain network. This could include damage or destruction due to various causes including natural disasters or political instability which would cause one or more of these network channels to become non-operational. This could adversely affect the Company’s ability to manufacture or deliver its products in a timely manner,
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impair its ability to meet customer demand for products and result in lost sales or damage to its reputation. Such a disruption could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Companymay be unable to manufacture and deliver products in a manner that is responsive to our itscustomers’ needs.

The end markets for ourthe Company’s products are characterized by technological change, frequent new product introductions and enhancements, changes in customer requirements and emerging industry standards. The introduction of products embodying new technologies and the emergence of new industry standards could render ourits existing products obsolete and unmarketable before weit can recover any or all of ourits research, development, and commercialization expenses on capital investments. Furthermore, the life cycles of ourits products may change and are difficult to estimate.

Our


The Company’s future success will depend upon ourits ability to manufacture and deliver products in a manner that is responsive to ourits customers’ needs. WeThe Company will need to develop and introduce new products and product enhancements on a timely basis that keep pace with technological developments and emerging industry standards and address increasingly sophisticated requirements of ourits customers. We investThe Company invests heavily in research and development without knowing that weit will recover these costs. OurThe Company’s competitors may develop products or technologies that will render ourits products non-competitive or obsolete. If weit cannot develop and market new products or product enhancements in a timely and cost-effective manner, ourits business, financial condition and results of operations could be materially adversely affected.



Our

The Company’sbusiness may be interrupted by labor disputes or other interruptions of supplies.

A work stoppage could occur at certain of ourCompany facilities, most likely as a result of disputes under collective bargaining agreements or in connection with negotiations of new collective bargaining agreements. In addition, wethe Company may experience a shortage of supplies for various reasons, such as financial distress, work stoppages, natural disasters, or production difficulties that may affect one of ourits suppliers. A significant work stoppage, or an interruption or shortage of supplies for any reason, if protracted, could substantially adversely affect ourthe Company’s business, financial condition and results of operations. The transfer of ourthe Company’s manufacturing operations and changes in ourits distribution model could disrupt operations for a limited time.

Our revenues

Failure to attract and retain qualified personnel could affectthe Company’sbusiness results.
The Company’s success, both generally and in connection with mergers and acquisitions, depends on the Company’s ability to attract, retain, and motivate a highly-skilled and diverse management team and workforce. Failure to ensure that the Company has the depth and breadth of personnel with the necessary skill set and experience could impede its ability to deliver growth objectives and execute the Company’s strategy. Competition for qualified employees among companies that rely heavily upon engineering and technology is at times intense, and the loss of qualified employees could hinder the Company’s ability to conduct research activities successfully and develop marketable products.
The Companymay vary significantly from periodnot besuccessful protectingits intellectual property.
The Company considers its intellectual property, including patents, trade names, and trademarks, to period.

Our revenues may vary significantly from one accounting periodbe of significant value to another dueits business as a whole. The Company’s products are manufactured, marketed, and sold under a portfolio of patents, trademarks, licenses, and other forms of intellectual property, some of which expire or are allowed to a varietylapse at various dates in the future. The Company develops and acquires new intellectual property on an ongoing basis and considers all of factors including:

●

changes in our customers’ buying decisions;

●

changes in demand for our products;

●

changes in our distributor inventory stocking;

●

our product mix;

●

our effectiveness in managing manufacturing processes;

●

costs and timing of our component purchases;

●

the effectiveness of our inventory control;

●

the degree to which we are able to utilize our available manufacturing capacity;

●

our ability to meet delivery schedules;

●

general economic and industry conditions;

●

local conditions and events that may affect our production volumes, such as labor conditions and political instability; and

●

seasonality of certain product lines.

its intellectual property to be valuable. The bankruptcyCompany's policy is to file applications and obtain patents for the great majority of its novel and innovative new products including product modifications and improvements. Based on the broad scope of its product lines, the Company believes that the loss or insolvencyexpiration of a major customer could adversely affect us.

The bankruptcy or insolvency of a major customer could result in lower sales revenue and causeany single intellectual property right would not have a material adverse effect on our business, financial condition, andupon its consolidated results of operations. In addition, the bankruptcyoperations, financial position and cash flows; however, multiple losses or insolvency of a major U.S. auto manufacturer or significant supplier likely could lead to substantial disruptions in the automotive supply base, resulting in lower demand for our products, which likely would cause a decrease in sales revenue and have a substantial adverse impact on our business, financial condition and results of operations.

Our ability to manage currency or commodity price fluctuations or supply shortages is limited.

As a resource-intensive manufacturing operation, we are exposed to a variety of market and asset risks, including the effects of changes in commodity prices, foreign currency exchange rates, and interest rates. We have multiple sources of supply for the majority of our commodity requirements. However, significant shortages that disrupt the supply of raw materials or result in price increases could affect prices we charge our customers, our product costs, and the competitive position of our products and services. We monitor and manage these exposures as an integral part of our overall risk management program, which recognizes the unpredictability of markets and seeks to reduce the potentially adverse effects on our results. Nevertheless, changes in currency exchange rates, commodity prices and interest rates cannot always be predicted. In addition, because of intense price competition and our high level of fixed costs, we may not be able to address such changes even if they are foreseeable. Substantial changes in these rates and pricesexpirations could have a material adverse effect on ourupon the Company’s consolidated results of operations, financial position and financial condition. In addition, significant portionscash flows.


2) Regulatory Risks:

Changes in U.S. and other countries trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our revenuesbusiness and earningsresults of operations.

The U.S. government has adopted a new approach to trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements. It has also imposed tariffs on certain foreign goods and products. These measures may materially increase costs for goods imported into the United States. This in turn could require us to materially increase prices to our customers which may reduce demand, or, if we do not or are unable to increase prices, could result in lower margins on products sold. Changes in U.S. trade policy have resulted in, and could result in more, U.S. trading partners adopting responsive
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trade policies making it more difficult or costly for us to export our products to those countries. Additionally, continued geo-political issues may result in customers in China seeking to source products from local suppliers, which could result in lower sales or lost customers.

The Company isexposed to changes in foreign currency rates. As we operate in multiple foreign currencies, changes in those currencies relative to the U.S. dollar will impact our revenues and expenses. The impact of possible currency devaluation in countries experiencing high inflation rates or significant exchange fluctuations can impact our results and financial guidance. For additional discussion of interest rate, currency or commodity price risk, see Item 7A,Quantitative and Qualitative Disclosures about Market Risks.

A significant fluctuation between the U.S. dollar and other currencies could adversely impact the Company's revenue and earnings.

Although the company's financial results are reported in U.S. dollars, the majority of the company’s operations consist of manufacturing and sales activities in foreign countries. The company’s most significant net long exposure is to the euro. The company’s most significant net short exposures are to the Chinese renminbi, Mexican peso, and Philippine peso. Changes in foreign exchange rates and in particular, an increase in the value of the U.S. dollar against foreign currencies, could have an adverse effect on profitability and financial condition.


We are exposed to political,political, economic, and other risks that arise from operating a multinational business.

We have significant operating activities

The Company's customers, suppliers, employees and operations are located in numerous countries around the globe thatworld, and contribute significantly to ourits revenues and earnings. Sales to customers outside the U.S. constituted approximately 71% of the Company's net sales in fiscal 2019. Many of the Company's key customers are located outside of U.S. and maintain global operations. Serving a global customer base and remaining competitive in the global marketplace requires the companyCompany to place our production in countriesdiversify its operations outside the U.S., including emerging markets, to capitalize on customer and market opportunities, build a global workforce and maintain a cost-efficientcost efficient structure. In addition, we sourcethe Company sources a significant amount of raw materials, components and other componentsfinished goods from third-party suppliers in low-cost countries. Ourand contract manufacturers.  The Company’s operating activities are subject to a number of risks generally associated with multi-national operations, including risks relating to the following:

●

general economic conditions;

●

currency fluctuations and exchange restrictions;

●

import and export duties and restrictions;

●

the imposition of tariffs and other import or export barriers;

●

compliance with regulations governing import and export activities;

●

current and changing regulatory requirements;

●

political and economic instability;

●

potentially adverse income tax consequences;

●

transportation delays and interruptions;

●

labor unrest;

●

natural disasters;

●

terrorist activities;

●

public health concerns;

●

difficulties in staffing and managing multi-national operations; and

●

limitations on our ability to enforce legal rights and remedies.


general economic conditions;
currency fluctuations and exchange restrictions;
import and export duties and restrictions;
the imposition of tariffs and other import or export barriers;
compliance with regulations governing import and export activities;
current and changing regulatory requirements;
political and economic instability;
potentially adverse income tax consequences;
transportation delays and interruptions;
labor unrest;
natural disasters;
terrorist activities;
public health concerns, including the recent outbreak of the coronavirus impacting China and elsewhere;
difficulties in staffing and managing multi-national operations; and
limitations on the Company’s ability to enforce legal rights and remedies.

More recently, the coronavirus outbreak originating from China at the beginning of 2020 has resulted in extended shutdowns of numerous business activities in the region and supply chain disruptions, which has impacted the sales, production and shipment of products in and out of its borders. These shutdowns and disruptions have impacted the Company’s manufacturing and supply chain operations, as well as those of its suppliers, contract manufacturers and customers. As new developments continue to arise, the Company is not yet able to fully ascertain the impact on its sales, manufacturing, supply chain and operations to its business and financial results, both inside and outside of China. Health concerns in China or other countries in which the Company or the Company’s suppliers, contract manufacturers and customers operate could result in social, economic, and labor instability.

Any of these factors could have a material adverse effect on our business, financial condition and results of operations.

We engage in strategic acquisitions and may not realize the anticipated benefits of the acquisitions and / or may encounter difficulties in integrating these businesses.

We are a company that seeks to grow through strategic acquisitions. We have in the past acquired a number of businesses or companies and additional product lines and assets. We intend to continue to expand and diversify our operations with additional future acquisitions.

An acquired business, technology, service or product could under-perform relative to our expectations and the price paid for it, or not perform in accordance with our anticipated timetable. This could cause our financial results to differ from expectations in any given fiscal period, or over the long term. The success of these transactions also depends on our ability to integrate the assets and personnel acquired in these acquisitions. We may encounter difficulties in integrating acquisitions with our operations and may not realize the degree or timing of the benefits that we anticipated from an acquisition.

We may also discover liabilities or deficiencies associated with the companies or assets we acquire that were not identified in advance, which may result in significant unanticipated costs. The effectiveness of our due diligence review and our ability to evaluate the results of such due diligence are dependent upon the accuracy and completeness of statements and disclosures made or actions taken by the companies we acquire or their representatives, as well as the limited amount of time in which acquisitions are executed. In addition, we may fail to accurately forecast the financial impact of an acquisition transaction, including tax and accounting charges. Acquisitions may also result in our recording of significant additional expenses to ourCompany’s consolidated results of operations, financial position and recordingcash flows.

Environmental liabilities could adversely impactthe Company’sfinancial position.
Foreign, federal, state and local laws and regulations impose various restrictions and controls on the discharge of substantial intangible assetsmaterials, chemicals and gases used in the Company’s manufacturing processes or in its finished goods. These environmental regulations have required the Company to expend a portion of its resources and capital on our balance sheet upon closing.relevant compliance programs. Under these laws and regulations, the Company could be held financially responsible for remedial measures if its current or former properties are contaminated or if it sends waste to a landfill or recycling facility that becomes contaminated, even if the Company did not cause the contamination. The Company may be subject to additional common law claims if it releases substances that damage or harm third parties. In addition, future changes in environmental laws or regulations may require additional investments in capital equipment or the implementation of additional compliance programs. Any failure to comply with new or existing environmental laws or regulations could subject the Company to significant liabilities and could have a material adverse effect on its consolidated results of operations, financial position and cash flows.
In the conduct of manufacturing operations, the Company has handled and does handle materials that are considered hazardous, toxic or volatile under federal, state, and local laws. The risk of accidental release of such materials cannot be completely eliminated. In addition, the Company operates or owns facilities located on or near real property that was formerly owned and operated by others. Certain of these factorsproperties were used in ways that involved hazardous materials. Contaminants may adversely affect our financial condition migrate from, within
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or results of operations.

through these properties. These releases or migrations may give rise to claims. Where third parties are responsible for contamination, the third parties may not have funds, or not make funds available when needed, to pay remediation costs imposed upon the Company under environmental laws and regulations.
 

The Company is responsible for the maintenance of discontinued coal mining operations in Germany. The risk of environmental remediation exists, and the Company is in the process of remediating the mines considered to be the most at risk.


3) Financial Risks:
Reorganization activities may lead to additional costs and material adverse effects.

In the past, we havethe Company has taken actions to restructure and optimize ourits production and manufacturing capabilities and efficiencies through relocations, consolidations, plant closings or asset sales. In the future, wethe Company may take additional restructuring actions including the consolidating, closing or selling of additional facilities. These actions could result in impairment charges and various charges for such items as idle capacity, disposition costs and severance costs, in addition to normal or attendant risks and uncertainties. WeThe Company may be unsuccessful in any of ourits current or future efforts to restructure or consolidate ourits business. Our plansPlans to minimize or eliminate any loss of revenues during restructuring or consolidation may not be achieved. These activities may have a material adverse effect upon ourthe Company’s business, financial condition orand results of operations.

Environmental liabilities could adversely impact our financial position.

Foreign, federal, state and local laws and regulations impose various restrictions and controls on

The Company’sability to manage currency or commodity price fluctuations or supply shortages is limited.
As a resource-intensive manufacturing operation, the discharge of materials, chemicals and gases used in our manufacturing processes or in our finished goods. These environmental regulations have required us to expend a portion of our resources and capital on relevant compliance programs. Under these laws and regulations, we could be held financially responsible for remedial measures if our current or former properties are contaminated or if we send wasteCompany is exposed to a landfillvariety of market and asset risks, including the effects of changes in commodity prices, foreign currency exchange rates, and interest rates. The Company has multiple sources of supply for the majority of its commodity requirements. However, significant shortages that disrupt the supply of raw materials or recycling facility that becomes contaminated,result in price increases could affect prices the Company charges its customers, its product costs, and the competitive position of its products and services. The Company monitors and manages these exposures as an integral part of its overall risk management program, which recognizes the unpredictability of markets and seeks to reduce the potentially adverse effects on its results. Nevertheless, changes in currency exchange rates, commodity prices and interest rates cannot always be predicted. In addition, because of intense price competition and the Company’s high level of fixed costs, it may not be able to address such changes even if we did not cause the contamination. We may be subject to additional common law claims if we release substances that damage or harm third parties. In addition, futurethey are foreseeable. Substantial changes in environmental laws or regulations may require additional investments in capital equipment or the implementation of additional compliance programs. Any failure to comply with new or existing environmental laws or regulations could subject us to significant liabilitiesthese rates and prices could have a material adverse effect on our business, financial condition orthe Company’s results of operations.

In the conduct of our manufacturing operations we have handled and do handle materials that are considered hazardous, toxic or volatile under federal, state, and local laws. The risk of accidental release of such materials cannot be completely eliminated.financial condition. In addition, we operatesignificant portions of its revenues and earnings are exposed to changes in foreign currency rates. As it operates in multiple foreign currencies, changes in those currencies relative to the U.S. dollar will impact its revenues and expenses. The impact of possible currency devaluation in countries experiencing high inflation rates or own facilities located onsignificant exchange fluctuations can impact the Company’s results and financial guidance. For additional discussion of interest rate, currency or near real property that was formerly ownedcommodity price risk, see Item 7A, Quantitative and operatedQualitative Disclosures about Market Risk.


The Company’s effective tax rate could materially increase as a consequence of various factors, includinginterpretations and administrative guidance in regard to the Tax Act (defined below),U.S. and/or international tax legislation, mix of the Company’s earnings by others. Certainjurisdiction, and U.S. and non-U.S. jurisdictional tax audits.
On December 22, 2017, the U.S. enacted legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"). Although certain administrative guidance has been issued, the appropriate application of these properties were usedmany provisions of the Tax Act remain uncertain. As discussed more fully in ways that involved hazardous materials. ContaminantsNote 14, Income Taxes, of the Notes to Consolidated Financial Statements included in this Annual Report, adjustments to income tax expense may migrate from, withinbe necessary in future periods if provisions of the Tax Act, and their interaction with other provisions of the U.S. Internal Revenue Code, are interpreted differently than interpretations made by the Company, whether through issuance of additional administrative guidance, or through these properties. These releases or migrations may give rise to claims. Where third parties are responsible for contamination,further review of the third parties may not have funds, or not make funds available when needed, to pay remediation costs imposed upon us under environmental lawsTax Act by the Company and regulations.

The company is responsible for the maintenance of discontinued coal mining operations in Germany. The risk of environmental remediation exists and the company is in the process of remediating the mines considered to be the most at risk.

Disruptions in our manufacturing, supply or distribution chain could result in an adverse impact on results of operations.

We source materials and sell product through various international network channels. A disruption could occur within our manufacturing, distribution or supply chain network. This could include damage or destruction due to various causes including natural disasters or political instability which would cause one or more of these network channels to become non-operational. This could adversely affect our ability to manufacture or deliver our products in a timely manner, impair our ability to meet customer demand for products and result in lost sales or damage to our reputation.its advisors. Such a disruptionadjustments could have a material adverse effect upon our business, financial condition or results of operations.

We derive a substantial portion of our revenues from customerson the Company’s future effective tax rate and cash flows.

The Company is subject to taxes in the automotive industryU.S. and we are susceptiblenumerous non-U.S. jurisdictions. Therefore, it is subject to trends and factors affecting this industrychanges in tax laws in each of these jurisdictions. Certain European jurisdictions, including industry cyclicality, and unexpected product recalls as well as the success of our customers’ products.

Net sales to the automotive industry represent a substantial portion of our revenues. Factors negatively affecting this industryGermany and the demand for products also negatively affect our business, financial conditionNetherlands, have enacted or results of operations. Any adverse occurrence, including industry slowdown, recession, political instability, costly or constraining regulations,will enact tax policies and regulations, armed hostilities, terrorism, excessive inflation, prolonged disruptions in one or more of our customers’ production schedules, unexpected product recalls or labor disturbances, that results in significant decline inlegislation based upon directives from the volume of sales in these industries, or in an overall downturn in the business and operations of our customers in these industries,European Union. Such legislation could materially adversely affect our business, financial condition or results of operations. To the extent that demandpotentially deny tax deductions for certain expenses and/or subject to tax the income earned in certain low tax jurisdictions. Although the Company believes such legislation will not adversely impact its future effective tax rate, there can be no assurance that its analysis, based upon the currently available information, is correct. The Company’s income tax rate in certain non-U.S. jurisdictions, including the Philippines, is substantially lower than the U.S. statutory tax rate. Legislative proposals have been made from time to time to reduce these tax benefits, in some cases with the tax increase phased in over a multi-year transition period. The Philippines is currently contemplating such

Table of our customers’ products declines,Contents




legislation which could adversely impact the demand for our products may decline. Reduced demand relatingCompany's future effective tax rate. The outcome of these and other legislative developments, including changes to general economic conditions, consumer preferences, or interest rates mayinterpretations of recently enacted legislation, could have a material adverse effect upon our business, financial conditionon the Company’s future effective tax rate and cash flows.
The Organization for Economic Co-operation and Development is working with a group of more than 100 countries to seek agreement to modify the international tax system before the end of 2020 to address the influence of the digital economy. This effort could result in a significant change to the tax treatment of multinationals, subjecting them to tax in additional jurisdictions, modifying the methods by which they allocate profits among jurisdictions, and subjecting them to a global or country by country minimum level of tax. The outcome of this effort could have a material adverse effect on the Company’s effective tax rate and cash flows.
The Company has three subsidiaries in China which benefit from lower tax rates due to “tax holidays” which apply for three-year periods, subject to extension. The tax holiday for two of these subsidiaries expired at the end of 2019 (one will seek an extension and the tax holiday benefits for the other is not material). The tax holiday for the third subsidiary will expire the end of 2020 and it will seek an extension. There can be no assurance that such extensions will be granted.
The tax rates applicable in the jurisdictions within which the Company operates vary widely. Therefore, the Company’s effective tax rate may be adversely affected by changes in the mix of its earnings by jurisdiction.
The Company’s tax returns are subject to examination by various U.S. and non-U.S. tax authorities, including the U.S. Internal Revenue Service. The Company regularly assesses the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for income taxes. However, there can be no assurance as to the outcome of these examinations.
A decline in expected profitability of the Company or individual reporting units of the Company could result in the impairment of assets, including goodwill and other long-lived assets.
The Company holds material amounts of goodwill and other long-lived assets on its balance sheet. A decline in expected profitability, particularly if there is a decline in the global economy, could call into question the recoverability of the Company’s related goodwill and other long-lived tangible and intangible assets and require the write-down or write-off of these assets. Such an occurrence could have a material adverse effect on the Company’s consolidated results of operations.

operations, financial position and cash flows.

A significant fluctuation between the U.S.dollar and other currencies could adversely impact theCompany's revenue and earnings.
Although the Company's financial results are reported in U.S. dollars, the majority of the Company’s operations consist of manufacturing and sales activities in foreign countries. The Company’s most significant net long exposure is to the euro. The Company’s most significant net short exposures are to the Chinese renminbi, Mexican peso, and Philippine peso. Changes in foreign exchange rates could have an adverse effect on the Company's results of operations, financial position and cash flows.
The Company’srevenues may vary significantly from period to period.
The Company’s revenues may vary significantly from one period to another due to a variety of factors including:
changes in customers’ buying decisions;
changes in demand for its products;
changes in its distributor inventory stocking;
the Company’s product mix;
the Company’s effectiveness in managing manufacturing processes;
costs and timing of its component purchases;
the effectiveness of its inventory control;
the degree to which it is able to utilize its available manufacturing capacity;
the Company’s ability to meet delivery schedules;
general economic and industry conditions;
local conditions and events that may affect its production volumes, such as labor conditions and political instability; and
seasonality of certain product lines.




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The bankruptcy or insolvency of a major customer could adversely affectthe Company.
The bankruptcy or insolvency of a major customer could result in lower sales revenue and cause a material adverse effect on the Company’s consolidated results of operations, financial position and cash flows. In addition, the bankruptcy or insolvency of a major auto manufacturer or significant supplier likely could lead to substantial disruptions in the automotive supply base, resulting in lower demand for the Company’s products, which would likely cause a decrease in sales revenue and have a substantial adverse impact on the Company’s consolidated results of operations, financial position and cash flows.


The inability to maintain access to capital markets may adversely affect our the Company’sbusiness and financial results.

Our

The Company’s ability to invest in ourits businesses, make strategic acquisitions, and refinance maturing debt obligations may require access to the capital markets and sufficient bank credit lines to support short-term borrowings. If we arethe Company is unable to access the capital markets or bank credit facilities, weit could experience a material adverse effect on our business, financial condition, andits consolidated results of operations.

operations, financial position and cash flows.
 


Fixed costs may reduce operating results if our sales fall below expectations.

Our

The Company’s expense levels are based, in part, on ourits expectations for future sales. Many of ourthe Company’s expenses, particularly those relating to capital equipment and manufacturing overhead, are relatively fixed. WeThe Company might not be unableable to reduce spending quickly enough to compensate for reductions in sales. Accordingly, shortfalls in sales could materially and adversely affect our operating results.

the Company’s consolidated results of operations, financial position and cash flows.


The volatility of our the Company’sstock price could affect the value of an investment in our the Company’sstock and our future financial position.

The market price of ourthe Company’s stock can fluctuate widely. Between January 2, 2016December 29, 2018 and December 31, 2016,28, 2019, the closing sale price of ourthe Company’s common stock ranged between a low of $90.61$149.80 and a high of $156.54.$206.00. The volatility of ourthe stock price may be related to any number of factors, such as volatility in the financial markets, general macroeconomic conditions, industry conditions, analysts’market expectations concerning ourthe Company’s results of operations, or the volatility of ourits revenues as discussed above under “Our“The Company’s Revenues May Vary Significantly from Period to Period.” The historic market price of ourthe Company’s common stock may not be indicative of future market prices. WeThe Company may not be able to sustain or increase the value of ourits common stock. Declines in the market price of ourthe Company’s stock could adversely affect ourthe Company’s ability to retain personnel with stock incentives, to acquire businesses or assets in exchange for stock and/or to conduct future financing activities with or involving ourthe Company’s common stock.


The Company isexposed to, and may be adversely affected by, potential security breaches or other disruptions toitsinformation technology systems and data security.
The Company relies on its information technology systems and networks in connection with many of its business activities. Some of these networks and systems are managed directly by the Company, while others are managed by third-party service providers and are not under the Company’s direct control. The Company’s operations routinely involve receiving, storing, processing and transmitting sensitive information pertaining to its business, customers, dealers, suppliers, employees, and other sensitive matters. As with most companies, the Company has experienced cyber-attacks, attempts to breach its systems, and other similar incidents, none of which have been material. Any future cyber incidents could, however, materially disrupt operational systems; result in loss of trade secrets or other proprietary or competitively sensitive information; compromise personally identifiable information regarding employees or customers or other third parties; and jeopardize the security of the Company’s facilities. A cyber incident could be caused by malicious outsiders using sophisticated methods to circumvent firewalls, encryption, and other security defenses. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until they are launched against a target, the Company may be unable to anticipate these techniques or to implement adequate preventative measures. Information technology security threats, including security breaches, computer malware, and other cyber-attacks are increasing in both frequency and sophistication and could create financial liability, subject the Company to legal or regulatory sanctions or damage the Company’s reputation with customers, dealers, suppliers, and other stakeholders. The Company continuously seeks to maintain a robust program of information security and controls, but the impact of a material information technology event could have a material adverse effect on the Company’s competitive position, reputation, results of operations, financial position and cash flows.
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Customer demands and new regulations related to conflict-free minerals may force us the Companyto incur additional expenses.

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires disclosure of use of “conflict” minerals mined from the Democratic Republic of Congo and adjoining countries and efforts to prevent the use of such minerals. In the semiconductor industry, these minerals are most commonly found in metals. As there may be only a limited number of suppliers offering “conflict free” metals, wethe Company cannot be certain that weit will be able to obtain necessary metals in sufficient quantities or at competitive prices. Also, wethe Company may face challenges with ourits customers and suppliers if we areit is unable to sufficiently verify that the metals used in ourits products are “conflict free.”

We are exposed to, and may be adversely affected by, potential security breaches or other disruptions to our information technology systems and data security.

We rely on our information technology systems and networks in connection with many of our business activities. Some of these networks and systems are managed by third-party service providers and are not under our direct control. Our operations routinely involve receiving, storing, processing and transmitting sensitive information pertaining to our business, customers, dealers, suppliers, employees, and other sensitive matters. As with most companies, we have experienced cyber-attacks, attempts to breach our systems, and other similar incidents, none of which have been material. Any future cyber incidents could, however, materially disrupt operational systems; result in loss of trade secrets or other proprietary or competitively sensitive information; compromise personally identifiable information regarding customers or employees; and jeopardize the security of our facilities. A cyber incident could be caused by malicious outsiders using sophisticated methods to circumvent firewalls, encryption, and other security defenses. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Information technology security threats, including security breaches, computer malware, and other cyber-attacks are increasing in both frequency and sophistication and could create financial liability, subject us to legal or regulatory sanctions or damage our reputation with customers, dealers, suppliers, and other stakeholders. We continuously seek to maintain a robust program of information security and controls, but the impact of a material information technology event could have a material adverse effect on our competitive position, reputation, results of operations, financial condition, and cash flows.

Lapses in disclosure controls and procedures or internal control over financial reporting could materially and adversely affect our operations, profitability or reputation.

We are committed to maintaining high standards of internal control over financial reporting and disclosure controls and procedures. Nevertheless, lapses or deficiencies in disclosure controls and procedures or in our internal control over financial reporting may occur from time to time.

There can be no assurance that our disclosure controls and procedures will be effective in the future or that a material weakness or significant deficiency in internal control over financial reporting will not exist. Any such lapses or deficiencies may materially and adversely affect our business and results of operations or financial condition, restrict our ability to access the capital markets, require us to expend significant resources to correct the lapses or deficiencies, expose us to regulatory or legal proceedings, subject us to fines, penalties, judgments or losses not covered by insurance, harm our reputation, or otherwise cause a decline in investor confidence.

  

Thecompany’s effective tax rate could materially increase as a consequence of various factors, including U.S. and/or international tax legislation, mix of thecompany’s earnings by jurisdiction, and U.S. and foreign jurisdictional tax audits.

The company is subject to taxes in the U.S. and numerous foreign jurisdictions. Therefore, it is subject to changes in tax laws in each of these jurisdictions and such changes could have a material adverse affect on the company’s effective tax rate and cash flows. As a U.S. company with significant non-U.S. operations (generally taxed at rates that are lower than the U.S. statutory rate), it is particularly susceptible to changes in U.S. tax rules. Various U.S. corporate tax legislative proposals are under consideration, some of which may have a material adverse effect on the company’s effective tax rate and cash flows. In addition, certain foreign jurisdictions are considering tax legislation based upon recommendations made by the Organisation for Economic Co-operation and Development in connection with itsBase Erosion and Profit Shifting study. The outcome of these legislative developments could have a material adverse effect on the company’s effective tax rate and cash flows.    

The tax rates applicable in the jurisdictions within which the company operates vary widely. Therefore, the company’s effective tax rate may be adversely affected by changes in the mix of its earnings by jurisdiction.

The company is also subject to examination of its tax returns by the U.S. Internal Revenue Service and other tax authorities and governmental bodies. The company regularly assesses the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for income taxes. However, there can be no assurance as to the outcome of these examinations.

Failure to attract and retain qualified personnel could affect our business results.

Our success, both generally and in connection with mergers and acquisitions, depends on our ability to attract, retain, and motivate a highly-skilled and diverse management team and workforce. Failure to ensure that we have the depth and breadth of personnel with the necessary skill set and experience could impede our ability to deliver our growth objectives and execute our strategy. Competition for qualified employees among companies that rely heavily upon engineering and technology is at times intense, and the loss of qualified employees could hinder our ability to conduct research activities successfully and develop marketable products.

We may not besuccessful protecting our patents and trademarks.

We consider our intellectual property, including patents, trade names, and trademarks, to be of significant value to our business as a whole. Our products are manufactured, marketed, and sold under a portfolio of patents, trademarks, licenses, and other forms of intellectual property, some of which expire or are allowed to lapse at various dates in the future. We develop and acquire new intellectual property on an ongoing basis and consider all of our intellectual property to be valuable. The company's policy is to file applications and obtain patents for the great majority of its novel and innovative new products including product modifications and improvements. Based on the broad scope of our product lines, management believes that the loss or expiration of any single intellectual property right would not have a material adverse effect upon our business, financial condition or results of operations; however, multiple losses or expirations could have a material adverse effect upon our business, financial condition or results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.


ITEM 2. PROPERTIES.


The company’s operationsCompany’s engineering and research and development, manufacturing, sales, and distribution centers are located in 51approximately 69 owned or leased facilities worldwide with primary operations in China, Germany, Italy, Japan, Lithuania, Mexico, Netherlands, Philippines, South Korea, United Kingdom, and the U.S. totaling approximately 2.83.5 million square feet. The company’sCompany’s owned facilities include approximately 2.0 million square feet and the Company’s leased facilities include approximately 1.5 million square feet. The Company’s corporate headquarters is located in the U.S. in Chicago, Illinois.
The company has North American manufacturing facilities in Saskatoon, Canada, Piedras Negras, Mexico, Melchor Muzquiz, Mexico, Matamoros, Mexico, and Rapid City, South Dakota. The company has European manufacturing facilities in Kaunas, Lithuania, and Legnago and Ozegna, Italy. Asia-Pacific operations include sales and distribution centers located in Singapore, Taiwan, Japan, China, and Korea, with manufacturing plants located in the Philippines, Japan, and various cities in China.

The company does not believe that it will encounter any difficulty in renewingCompany believes its existing leases upon the expiration of their current terms. Management believes that the company’s facilities are adequate to meet its requirements for the foreseeable future.

 

The following table provides certain information concerning the company’s facilities at December 31, 2016, and the use of these facilities during fiscal year 2016:

Location

 

Use

 

Size
(sq. ft.)

 

Lease/

Own

 

Lease

Expiration

Date

 

Primary Product

Chicago, Illinois

 

Administrative, Engineering, Research and Development and Testing

 

54,838

 

Leased

 

2024

 

Auto, Electronics, and Industrial

Mount Prospect, Illinois

 

Engineering and Research and Development

 

23,515

 

Leased

 

2018

 

Auto and Electronics

Champaign, Illinois

 

Research and Development

 

18,908

 

Leased

 

2025

 

Auto and Electronics

Lake Mills, Wisconsin

 

Administrative, Engineering, Sales, and Research and Development

 

65,000

 

Leased

 

2020

 

Electronics

Troy, Michigan

 

Sales

 

4,461

 

Leased

 

2021

 

Auto

Rapid City, South Dakota

 

Manufacturing and Administrative

 

230,000

 

Owned

 

—

 

Industrial

Waltham, Massachusetts

 

Administrative, Engineering, and Research and Development

 

3,858

 

Leased

 

2022

 

Auto

Fremont, CA

 

Research and Development

 

18,000

 

Leased

 

2023

 

Electronics

Bellingham, Washington

 

Sales and Research and Development

 

2,000

 

Leased

 

2017

 

Auto

Melchor Muzquiz, Mexico

 

Manufacturing

 

39,364

 

Leased

 

2019

 

Auto

Piedras Negras, Mexico

 

Administrative, Manufacturing

 

99,822

 

Leased

 

2017

 

Auto

Piedras Negras, Mexico

 

Manufacturing

 

291,860

 

Owned

 

—

 

Auto and Industrial

Matamoros, Mexico

 

Administrative, Logistics, Manufacturing, Engineering, Testing, and Distribution

 

104,000

 

Owned

 

—

 

Auto

Eagle Pass, Texas

 

Distribution

 

7,600

 

Leased

 

2017

 

Auto, Electronics, and Industrial

Saskatoon, Canada

 

Administrative, Manufacturing, Engineering, and Research and Development

 

88,390

 

Owned

 

—

 

Industrial

Sao Paulo, Brazil

 

Sales

 

3,229

 

Leased

 

2017

 

Electronics and Auto

Manaus, Brazil

 

Warehouse

 

2,152

 

Leased

 

2017

 

Electronics and Auto

Swindon, U.K.

 

Administrative

 

304

 

Leased

 

2017

 

Electronics

Norwich, U.K.

 

Engineering

 

7,964

 

Leased

 

2020

 

Auto

Deventer, The Netherlands

 

Administrative

 

1,076

 

Leased

 

2017

 

—

Essen, Germany

 

Leased to third party

 

37,244

 

Owned

 

—

 

—

Essen, Germany

 

Administrative

 

3,703

 

Leased

 

2017

 

Auto and Electronics

Bremen, Germany

 

Administrative

 

13,455

 

Leased

 

2021

 

Auto, Electronics, and Industrial

Lauf, Germany

 

Administrative

 

1,362

 

Leased

 

2018

 

Electronic

Taufkirchen, Germany

 

Administrative

 

318

 

Leased

 

2017

 

Electronic

Lenzenburg, Switzerland

 

Administrative

 

215

 

Leased

 

2017

 

Auto

Arstad, Sweden

 

Sales

 

328

 

Leased

 

2017

 

Auto

Kaunas, Lithuania

 

Administrative, Manufacturing, Research and Development, and Engineering

 

43,239

 

Owned

 

—

 

Auto

Kaunas, Lithuania

 

Manufacturing

 

84,712

 

Leased

 

2021

 

Auto

Kaunas, Lithuania

 

Research and Development

 

4,596

 

Leased

 

2017

 

Auto

Ozegna, Italy

 

Administrative, Manufacturing, and Research and Development

 

32,292

 

Leased

 

2021

 

Auto

Legnago, Italy

 

Administrative, Manufacturing, and Research and Development

 

96,875

 

Leased

 

2022

 

Auto

Singapore

 

Sales and Distribution

 

1,572

 

Leased

 

2018

 

Electronics

Taipei, Taiwan

 

Sales

 

7,876

 

Leased

 

2017

 

Electronics

Seoul, Korea

 

Sales

 

3,643

 

Leased

 

2017

 

Electronics

Lipa City, Philippines

 

Manufacturing

 

116,046

 

Owned

 

—

 

Electronics

Lipa City, Philippines

 

Manufacturing

 

105,827

 

Owned

 

—

 

Electronics

Dongguan, China

 

Administrative and Manufacturing

 

264,792

 

Leased

 

2023

 

Electronics

Suzhou, China

 

Manufacturing

 

143,458

 

Owned

 

—

 

Auto and Electronics

Beijing, China

 

Sales

 

452

 

Leased

 

2017

 

Electronics

Shenzhen, China

 

Sales

 

3,100

 

Leased

 

2017

 

Electronics

Shanghai, China

 

Sales

 

6,324

 

Leased

 

2018

 

Auto and Electronics

Chu-Pei City, Taiwan

 

Research and Development

 

10,505

 

Leased

 

2019

 

Electronics

Wuxi, China

 

Manufacturing

 

221,214

 

Owned

 

—

 

Electronics

Hong Kong, China

 

Sales

 

743

 

Leased

 

2017

 

Auto, Electronics, and Industrial

Tsukuba, Japan

 

Manufacturing

 

80,500

 

Owned

 

—

 

Auto and Electronics

Tokyo, Japan

 

Sales

 

4,123

 

Leased

 

2019

 

Auto and Electronics

Shanghai, China

 

Manufacturing

 

87,737

 

Leased

 

2021

 

Auto and Electronics

Shanghai, China

 

Warehouse

 

35,015

 

Leased

 

2017

 

Auto and Electronics

Kunshan, China

 

Manufacturing

 

293,282

 

Owned

 

—

 

Auto and Electronics

Kunshan, China

 

Warehouse

 

2,687

 

Owned

 

—

 

Auto and Electronics

Properties with lease expirations in 2017 may be renewed at various times throughout the year. The company does not anticipate any material impact as a result of such expirations.


ITEM 3. LEGAL PROCEEDINGS.

The companyCompany is not a party to any material legal proceedings, other than routine litigation incidental to ourits business.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.


Information about our Executive Officers.
The executive officers of the Company are as follows:
NameAgePosition
David W. Heinzmann56President and Chief Executive Officer
Meenal A. Sethna50Executive Vice President and Chief Financial Officer
Ryan K. Stafford52Executive Vice President, Chief Legal and Human Resources Officer and Corporate Secretary
Matthew J. Cole48Senior Vice President, Business Development and Strategy
Alexander Conrad54Senior Vice President and General Manager, Passenger Vehicle Business
Deepak Nayar60Senior Vice President and General Manager, Electronics and Industrial Business
Michael P. Rutz48Senior Vice President and General Manager, Semiconductor Products
David W. Heinzmann, President and Chief Executive Officer and a member of the Board of Directors. Mr. Heinzmann began his career at Littelfuse in 1985 as a manufacturing engineer and has held positions of increasing responsibility since that time, including Vice President, Global Operations, from 2007 to 2014, and Chief Operating Officer from 2014 until assuming his current position in 2017.
Meenal A. Sethna, Executive Vice President and Chief Financial Officer. Ms. Sethna joined Littelfuse in 2015 as Senior Vice President of Finance until assuming her current position in 2016. Prior to joining Littelfuse, Ms. Sethna served from 2011 to 2015 as Vice President and Corporate Controller of Illinois Tool Works Inc., a diversified manufacturer of specialized industrial equipment, consumables, and related service businesses. Ms. Sethna is a Certified Public Accountant in Illinois.
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Ryan K. Stafford, Executive Vice President, Chief Legal and Human Resources Officer and Corporate Secretary. Mr. Stafford joined Littelfuse as its first General Counsel in 2007 and became Corporate Secretary in 2017. Prior to joining Littelfuse, Mr. Stafford served in a number of roles at Tyco International Ltd., including Vice President of China Operations and Vice President & General Counsel for its Engineered Products & Services Business Segment.
Matthew J. Cole, Senior Vice President, Business Development and Strategy. Mr. Cole joined Littelfuse in 2015 as Senior Vice President and General Manager, Industrial Business Unit, and held that position until assuming his current position in February 2019. Prior to joining Littelfuse, Mr. Cole served from 2009 to 2015 as Vice President and General Manager of the Advanced Measurement Technology division of AMETEK, a global leader in electronic instruments and electromechanical devices.

Alexander Conrad, Senior Vice President and General Manager, Passenger Vehicle Business. Mr. Conrad joined Littelfuse in 2005 as Sales Manager, Germany & Eastern Europe. He then held various positions of increasing responsibility at Littelfuse including Sales Director EMEA; Global Director of Sales; Managing Director, Passenger Car Products from 2013 to 2014; and Vice President, Passenger Car Products, from 2015 until assuming his current position in July 2018.


Deepak Nayar, Senior Vice President and General Manager, Electronics and Industrial Business. Mr. Nayar joined Littelfuse in 2005 as Business Line Director of the Electronics Business Unit. He then held various positions of increasing responsibility at Littelfuse including Vice President, Global Sales, Electronics Business Unit, and from 2011 until assuming his current position in February 2019, Senior Vice President, Electronics Business Unit.
Michael P. Rutz, Senior Vice President and General Manager, Semiconductor Products. Mr. Rutz joined Littelfuse in 2014 as Vice President of Supply Chain and Operational Excellence. Mr. Rutz then served as Senior Vice President of Global Operations from 2015 until assuming his current position in February 2019. Prior to joining Littelfuse, Mr. Rutz served from 2011 to 2014 as Senior Vice President Global Supply Chain at WMS Industries Inc., a Chicago-based manufacturer of equipment and software for the gaming industry. 
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PART II


ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS,,AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Shares of the company’sCompany’s common stock are traded under the symbol “LFUS” on the NASDAQ Global Select MarketSM.

The table below provides information with respect to the company’s quarterly stock prices and cash dividends declared and paid for each quarter during fiscal 2016 and 2015:

  2016  

2015

 
  

4Q

  

3Q

  

2Q

  

1Q

  

4Q

  

3Q

  

2Q

  

1Q

 

High

 $156.54  $130.79  $123.15  $124.59  $114.90  $97.96  $102.78  $103.08 

Low

  124.32   113.42   106.26   90.61   87.32   82.53   93.31   89.11 

Close

  151.77   128.81   116.56   123.40   107.01   89.09   97.76   98.36 

Dividends

  0.33   0.33   0.29   0.29   0.29   0.29   0.25   0.25 

Number of Holders

As of February 16, 2017,18, 2020, there were 7669 holders of record of the company’sCompany’s common stock.

Dividend Policy

The company expects that its practice of paying quarterly dividends on its common stock will continue although future dividend policy will be determined by the Board of Directors based upon its evaluation of earnings, cash availability, and general business prospects. Currently, there are restrictions on the payment of dividends contained in the company’sCompany’s credit agreements that relate to the maintenance of certain financial ratios. However, the companyCompany expects to continue paying cash dividends on a quarterly basis for the foreseeable future.

Recent Sales of Unregistered Securities

There were no sales of unregistered securities by us or affiliates during the three monthsfiscal year ended December 31, 2016.

28, 2019.

Purchases of Equity Securities

The company’s

On May 2, 2018, the Company announced that the Company’s Board of Directors had authorized the repurchase of up to 1,000,000 shares of the company’sCompany’s common stock under a program for the period May 1, 20162018 to April 30, 2017. The company did not2019 (the "2018 program"). On May 1, 2019, the Company announced that the Company's Board of Directors had authorized a new program to repurchase anyup to 1,000,000 shares of the Company's common stock for the period May 1, 2019 to April 30, 2020 (the "2019 program"). As of April 30, 2019, 528,112 shares remained available for repurchases under the 2018 program. During the fiscal year ended December 28, 2019, the Company repurchased 579,916 shares of its common stock during fiscal 2016 and 1,000,000totaling $95.0 million. There were 500,000 shares may yet be purchasedremaining available for purchase under the 2019 program as of December 31, 2016.

28, 2019.

The table below presents shares of the company’sCompany’s common stock which were acquired by the companyCompany during the three monthsfiscal year ended December 31, 2016:

Period

Total number

of shares

purchased

Average price

paid per

share

Total number of

shares purchased

as part of publicly

announced plans

or programs

Maximum number

(or approximate dollar

value) of shares that

may yet be purchased

underthe plans or

programs

October 1 through October 31

———1,000,000

November 1 through November 30

———1,000,000

December 1 through December 31

———1,000,000

Total

———1,000,000

28, 2019:
 

PeriodTotal number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number of shares that may yet be purchased under the plans or programs
2018 Program       
December 30 through January 2666,796
 $169.11
 66,796
 541,232
January 27 through February 2313,120
 $172.16
 13,120
 528,112
February 24 through March 30—
 —
 —
 528,112
March 31 through April 30—
 —
 —
 528,112
2019 Program       
May 1 through May 2590,301
 $170.53
 90,301
 909,699
May 26 through June 2997,913
 $169.09
 97,913
 811,786
June 30 through July 2749,816
 $171.13
 49,816
 761,970
July 28 through August 24230,000
 $156.75
 230,000
 531,970
August 25 through September 2831,970
 $154.80
 31,970
 500,000
Total579,916
 $163.88
 579,916
 500,000




Table of Contents




Stock Performance Graph

The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the company Companyspecifically incorporates it by reference into such filing.

The following stock performance graph comparesthecompares the five-year cumulative total return on Littelfuse common stock to the five-year cumulative total returns on the Russell 20001000 Index and the Dow Jones Electrical Components and Equipment Industry Group Index. The companyCompany believes that the Russell 20001000 Index and the Dow Jones Electrical Components and Equipment Industry Group Index represent a broad market index and peer industry group for total return performance comparison. The stock performance shown on the graph below represents historical stock performance and is not necessarily indicative of future stock price performance.

stockperformancegraphv3.jpg
 12/14 12/15 12/16 12/17 12/18 12/19
Littelfuse, Inc.$100
 $112
 $160
 $211
 $184
 $207
Russell 1000100
 101
 113
 138
 131
 172
Dow Jones US Electrical Components & Equipment100
 94
 114
 146
 128
 158
Table of Contents




The Dow Jones Electrical Components and Equipment Industry Group Index includes the common stock of A. O. Smith Corp.; AAON, Inc.; American Superconductor Corp.; AMETEK, Inc.; Amphenol Corp.; Arrow Electronics, Inc.; Avnet, Inc.; AVX Corp.; Capstone Turbine Corp.; CTS Corp.; General Cable Corp.; Hubbell Inc. Class B; Jabil Circuit, Inc.; KEMET Corp.; Littelfuse, Inc.; Methode Electronics, Inc.; Plexus Corp.; Powerwave Technologies, Inc.; Regal-Beloit Corp.; Vicor Corp.; and Vishay Intertechnology, Inc.

In the case of the Russell 2000 Index


For Littelfuse, Inc. and the Dow Jones Electrical Components and Equipment Industry Group Index,all indexes noted above, a $100 investment made on December 31, 201127, 2014 and reinvestment of all dividends is assumed. In the case of the company, a $100 investment made on December 31, 2011 is assumed. Returns for the company’sCompany’s fiscal years presented above are as of the last day of the respective fiscal year which was December 29, 2012, December 28, 2013, December 27, 2014, January 2, 2016, and December 31, 2016, December 30, 2017, December 29, 2018, and December 28, 2019 for the fiscal years 2012, 2013, 2014, 2015, 2016, 2017, 2018, and 2016,2019, respectively.




ITEM 6. SELECTED FINANCIAL DATA.

The information presented below provides selected financial data of the companyCompany during the past five fiscal years and should be read in conjunction with Item 7,Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 8,Financial Statements and Supplementary Data, for the respective years presented:

(in thousands, except per share data)

 

2016

  

2015

  

2014

  

2013

  

2012

 

Net sales

 $1,056,159  $867,864  $851,995  $757,853  $667,913 

Gross profit

  413,117   330,499   324,428   296,232   258,467 

Operating income

  130,644   104,157   133,830   129,881   106,870 

Net income

  104,488   80,866   98,100   87,814   74,370 

Per share of common stock:

                    

Income from continuing operations

                    

- Basic

  4.63   3.58   4.35   3.94   3.41 

- Diluted

  4.60   3.56   4.32   3.90   3.37 

Cash dividends paid

  1.24   1.08   0.94   0.84   0.76 

Cash and cash equivalents

  275,124   328,786   297,571   305,192   235,404 

Total assets

  1,491,194   1,065,475   1,069,859   1,024,373   777,728 

Short-term debt

  6,250   87,000   88,500   126,000   84,000 

Long-term debt, less current portion

  447,892   83,753   105,691   93,750   — 

(in thousands, except per share data) 2019 2018 2017 2016 2015
Net sales $1,503,873
 $1,718,468
 $1,221,534
 $1,056,159
 $867,864
Gross profit 541,449
 652,541
 506,533
 413,117
 330,499
Operating income 192,791
 225,049
 218,511
 130,644
 104,157
Net income 139,082
 164,565
 119,519
 104,488
 80,866
Per share of common stock:          
Income from continuing operations          
- Basic 5.66
 6.62
 5.27
 4.63
 3.58
- Diluted 5.60
 6.52
 5.21
 4.60
 3.56
Cash dividends paid 1.82
 1.60
 1.40
 1.24
 1.08
Cash and cash equivalents 531,139
 489,733
 429,676
 275,124
 328,786
Total assets 2,559,898
 2,614,306
 1,740,102
 1,491,194
 1,065,475
Short-term debt 10,000
 10,000
 6,250
 6,250
 87,000
Long-term debt, less current portion 669,158
 684,730
 489,361
 447,892
 83,753

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Management’s Discussion

The following discussion of the Company's financial condition and Analysisresults of Financial Condition and Results of Operations ("MD&A") is designed to provide information that is supplemental to, andoperations should be read together with our consolidated financialthe Consolidated Financial Statements and notes to those statements included in Item 8 of Part II of this Annual Report on Form 10-K.

BUSINESS
For a description of the Company’s business, segments and product offerings, see Item 1, Business.
2019 EXECUTIVE OVERVIEW

Net sales decreased by $214.6 million, or 12.5%, in 2019 compared to 2018. The decrease was primarily driven by lower volume across the accompanying notes. Information in MD&A is intended to assist the reader in obtaining an understandingElectronics and Automotive segments and $25.0 million or 1.5% of (i) our consolidated financial statements, (ii) theunfavorable changes in certain key items within those financial statements from year-to-year, (iii) the primary factors that contributed to those changes, and (iv) any changes in known trends or uncertainties that we are aware of and that may have a material effect on our future performance. In addition, MD&A provides information about our segments and how the results of those segments impact our results of operations and financial condition as a whole.

Executive Overview

Littelfuse is one of the world’s leading suppliers of circuit protection products for the electronics, automotive, and industrial markets, with expanding platforms in sensor 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. 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 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 of Electronics, Automotive, and Industrial. The company’s customer base includes OEMs, Tier One automotive suppliers, and distributors.

Executive Summary

We experienced strong performance improvements in 2016 including crossing the milestone of $1 billion in revenue and recognizing record earnings and cash flow. We made substantial progress in growth from our strategic 2016 acquisitions which contributed approximately $250 million in annualized revenue. We are well positioned for success with our updated strategy, which focuses on accelerated organic growth, while continuing to add acquisitions aligned to our core circuit protection, sensor, and power control platforms.

For 2016, we recognized net sales of $1,056.2 million, a 22% increase versus the prior year period. Acquisitions contributed significantly to the growth in revenue. Organic growth was due to growth in most end markets across our electronics segment as well as our automotive fuses and sensor business. This wasforeign exchange rates, partially offset by declineshigher volume in our industrial segment and our commercial vehicle products business within our automotivethe Industrial segment.

We The Company recognized Net Incomenet income of $104.5$139.1 million, an increase of 29.2%. Diluted EPS was $4.60, a 29.2% increase over last year.


Business Outlook and Key Trends & Events

We continually look for ways to improve the efficiency and performance of our operations. Certain trends have affected our results of operations for 2016or $5.60 per diluted share, in 2019 compared to 2015 and 2014. These trends, as well as the key trends that we expect will impact our future resultsnet income of operations, are as follows.

●

Business Acquisitions –The company continues to review its existing product portfolio and looks for additional strategic acquisitions that complement existing product offerings or provide for further expansion of its portfolio. During 2016 and 2015, the company completed the following acquisitions:

●

On August 29, 2016, the company acquired the ON portfolio for $104.0 million. The acquired business, which is included in the Electronics segment, consists of a product portfolio that includes TVS diodes, switching thyristors and IGBTs for automotive ignition applications. This transaction expands the company’s presence in each of these product categories.

●

On April 4, 2016, the company acquired 100% of Menber’s for $19.2 million, net of cash acquired and after settlement of a working capital adjustment. Located in Legnago, Italy, Menber’s specializes in the design, manufacturing, and selling of manual and electrical battery switches and trailer connectors for commercial vehicles. The acquisition expands the company’s commercial vehicle platform globally.

●

On March 25, 2016, the company acquired PolySwitch, the circuit protection business of TE Connectivity Ltd., for $348.3 million, net of cash acquired and after settlement of certain post-closing adjustments. PolySwitch has operations in Fremont, California and 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.

●

On October 1, 2015, the company acquired 100% of Sigmar. The total purchase price for Sigmar was $6.5 million, net of cash acquired and including estimated additional net payments of up to $0.9 million, a portion of which is subject to the achievement of certain milestones. Located in Ozegna, Italy, Sigmar is a leading global manufacturer of water-in-fuel and SCR quality sensors, as well as diesel fuel heaters, solenoid valves, and rotating oil filters for automotive and commercial vehicle applications. The acquisition further expands the company’s automotive sensor product line offerings.

●

Financing – The company increased its already strong liquidity position during 2016. Cash flow from operations was $180.1 million for 2016, which was a 9% increase compared to the prior year. In March 2016, the company completed the refinancing of its credit facility, increasing capacity to $700 million with the potential for future increases of up to an additional $150 million and extending the maturity to March 2021. In December 2016, the company completed a private placement of approximately $350 million of senior notes denominated in both U.S. dollars and Euros, a portion of which was funded in December with the remaining funding occurring in February 2017. The senior notes range from five to twelve year maturities and have an average interest rate of approximately 2.25%.

●

Asset Impairment –During 2016, the potash mining industry experienced a continued decline in market pricing. Due to this continuing decline in potash pricing, the custom products reporting unit recognized charges of $14.8 million to write down the reporting unit’s carrying value. The charges included a goodwill impairment loss of $8.8 million and intangible assets impairments aggregating $6.0 million, 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.

●

Outlook–Sales for the first quarter of 2017 are expected to be in the range of $277 to $287 million which represents 29% revenue growth over the first quarter of 2016, at the midpoint of the range.

Resultsof Operations — 2016 compared with 2015

The following table summarizes the company’s consolidated results of operations for periods presented. The fiscal year 2016 includes approximately $50.0 million of non-segment charges.  These included $14.8 million of charges related to the impairment of the custom products reporting unit, $21.4 million of acquisition and integration costs associated with the company’s 2016 acquisitions, primarily PolySwitch, $7.8 million of non-cash fair value step-up inventory charges relating to the company’s 2016 acquisitions, primarily PolySwitch, as described in Note 3, Acquisitions, of the Notes to Consolidated Financial Statements included in this Annual Report, $1.9 million in charges related to the closure of the company’s manufacturing facility in Denmark, $1.6 million related to the company’s transfer of its reed sensor manufacturing operations from the U.S. and China to the Philippines, and $2.5 million related to restructuring costs. 


Fiscal year 2015 includes approximately $45.2 million of other non-segment charges.  These included $5.2 million related to the company’s transfer of its reed sensor manufacturing operations from the U.S. and China to the Philippines, $3.6 million related to restructuring, $4.6 million related to acquisition costs and $31.9 million of expense related to the planned termination of the U.S. pension as described in Note 10,Benefit Plans, of the Notes to Consolidated Financial Statements included in this Annual Report.

Fiscal year 2016 also included approximately $0.5 million in foreign currency expenses primarily attributable to changes in the value of the euro, Philippine peso and Chinese renminbi against the U.S. dollar,while fiscal year 2015 also included $1.5 million in foreign currency gains primarily attributable to changes in the value of both the euro and Philippine peso against the U.S. dollar.

  

Fiscal Year

     

(in thousands, except % change)

 

2016

  

2015

  

% Change

 

Sales

 $1,056,159  $867,864   22% 

Gross profit

  413,117   330,499   25% 

Operating expenses

  282,473   226,342   25% 

Operating income

  130,644   104,157   25% 

Other expense (income), net

  (1,730)  (5,417)  (68%) 

Income before income taxes

  123,274   106,948   15% 

Income taxes

  18,786   26,082   (28%) 

Net income

  104,488   80,866   29% 

Sales

Net sales for 2016 of $1,056.2 million increased $188.3$164.6 million, or 22%, compared to the prior year, reflecting $170.2 million of incremental revenues from businesses acquired over the previous two years as well as organic growth$6.52 per diluted share in 2018. The decrease in net income reflects lower operating income in the Electronics and Automotive segments, partially offset by lower sales from the Industrial segment due to weaker end markets. The company also experienced $7.3 million in unfavorable foreign currency effects in 2016non-segment charges compared to 2015 primarily resulting from sales denominated in Chinese renminbi.

The increase in sales in 2016 reflects a $75.2 million, or 22%, increase in Automotive segment sales and a $129.7 million, or 32%, increase in Electronics segment sales, partially offset by a $16.6 million, or 14%, decrease in Industrial segment sales.

Gross Profit

Gross profit was $413.1 million, or 39.1% of sales, in 2016, compared to $330.5 million, or 38.1% of sales, in 2015. Gross profit for 2016 was negatively impacted by $10.8 million of charges primarily related to the inventory step-up from the acquisition of PolySwitch and to a lesser extent the ON Portfolio and Menber’s acquisitions.Gross profit for 2015 was negatively impacted by $5.2 million of charges related to the transfer of the company’s reed switch production from the U.S. and China to the Philippines.

Operating Expenses

Total operating expense was $282.5 million, or 26.7% of net sales, for 2016 compared to $226.3 million, or 26.1% of net sales, for 2015. Operating expense in 2016 included $39.1 million of charges primarily consisting of acquisition and integration costs of $21.4 million and $14.8 million of charges related to the impairment of the custom products reporting unit. Operating expense in 2015 included $39.9 million of charges, primarily related to the U.S. pension settlement of $31.9 million and restructuring and acquisition costs of $8.0 million.

Operating Income

Operating income was $130.6 million, or 12.4% of net sales, in 2016 compared to $104.2 million, or 12.0% of net sales, in the prior year.The increase in operating income in the current year was due primarily to higher revenue as well as the factors affecting operating expenses discussed above.

Interest expense was $8.6 million in 2016 compared to $4.1 million in 2015 and is primarily related to the company’s increased borrowing to fund acquisitions.

Foreign exchange (gain) loss was $0.5 million of loss in 2016 compared to $1.5 million of gain in 2015. The fluctuation in foreign exchange was primarily attributable to changes in the value of the euro, Philippine peso and Chinese renminbi against the U.S. dollar in 2016 and 2015.


Other Expense (Income), Net

Other expense (income), net, consisting of interest income, royalties and non-operating income was $1.7 million of income in 2016 compared to $5.4 million of income in 2015. The year-over-year decrease in income primarily reflects lower interest income in 2016.

Income Taxes

Income tax expense was $18.8 million with an effective tax rate of 15.2% in 2016 compared to income tax expense of $26.1 million with an effective tax rate of 24.4% in 2015. The effective tax rates for these periods are lower than the U.S. statutory tax rate primarily due to income earned in lower tax jurisdictionsthe IXYS acquisition.


The Company continues to take actions to improve its cost structure and with respectdrive the synergies from the integration of IXYS. The Company expects to the 2016 period, 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 and taxes on unremitted earnings, and, with respect to the 2015 period, the impact of a pension settlement partially offset by the impactrealize cost savings from the restructuring activities taken during 2019 including the reorganization of the legal ownershipcertain

manufacturing, operations.

Segment Information

The company reports its operations by the following segments: Electronics, Automotiveselling and Industrial. Segment information is described more fully in Note 14,Segment Information, of the Notes to Consolidated Financial Statements included in this Annual Report.

 The following table is a summary of the company’s net sales by segment:

  

Fiscal Year

     

(in millions)

 

2016

  

2015

  

Change

 

Electronics

 $535.2  $405.5  $129.7 

Automotive

  415.2   340.0   75.2 

Industrial

  105.8   122.4   (16.6)

Total

 $1,056.2  $867.9  $188.3 

Electronics Segment

The Electronics segment, which accounted for approximately 51% of total sales in 2016, has produced modest organic revenue growth over the last few years. In 2016, sales increased $129.7 million, or 32%, compared to the prior year, reflecting $110.0 million of sales from businesses acquired in 2016as well as organic growth in sensor products and to a lesser extent passive and semiconductor products. Operating margins also improved in 2016 compared to 2015 due to better leverage from the higher sales, as well as favorable product and regional mix.

Fourth quarter 2016 sales were unseasonably strong due to higher demand in some markets including electric vehicle, mobile phone charging and base stations, along with an earlier than usual Chinese New Year. The book-to-bill ratio of 1.05 at the end of the fourth quarter is primarily due to stronger than normal seasonal trends.

Automotive Segment

The Automotive segment, which accounted for approximately 39% of total sales in 2016, has been the company’s fastest growing business over the last few years. In 2016, sales increased $75.2 million, or 22%, compared to the prior year, reflecting $60.2 million of incremental sales from businesses acquired in 2016administrative functions across all segments and the fourth quarter of 2015as well as organic growth related to sensor and passenger car products. These increases in sales were partially offset by lower sales of legacy commercial vehicle products, reflecting weakness in the North American heavy truck, construction, and agricultural end markets.

The segment realized growth in fuse content which was driven by more sophisticated electronics in vehicles and sales of our high-current products, especially the Masterfuse® line. Also contributing to segment performance was our automotive sensor business which experienced strong growth in sales and a significant improvement in margins. Sales in China were strong due to the Chinese government’s tax incentives for smaller cars driving higher growth in the China car industry.

Industrial Segment

The Industrial segment, which accounted for approximately 10% of total sales in 2016, experienced a sales decrease of 14% over the prior year with declines across all businesses. The company also divested certain non-core product lines during 2016. See Note 4,Divestitures, for additional information. The company’s power fuse business has benefited from a strong U.S. solar market in recent years; however, this market slowed in the second half of 2016. Sales in the protection relay business continued to be impacted by weakness in the heavy industrial and oil and gas markets, as those customers have restricted their capital spending. In the custom products business, the company continued to see a decline in the potash market, which has resulted in the aforementioned impairment charge in the third quarter of 2016. It is possible that we could recognize impairment charges for the relays reporting unit if we have declines in profitability or projected future operating results due to changes in volume, market pricing, cost, or the business environment.


Geographic Sales Information

Sales by geography represent sales to customer or distributor locations. The following table is a summary of the company’s net sales by geography:

  

Fiscal Year

     

(in millions)

 

2016

  

2015

  

Change

 

Americas

 $411.1  $401.2  $9.9 

Europe

  200.3   152.7   47.6 

Asia-Pacific

  444.8   314.0   130.8 

Total

 $1,056.2  $867.9  $188.3 

Americas

Sales in the Americas increased $9.9 million, or 2%, in 2016 compared to 2015, primarily due to acquisitions and increased demand for Electronics products, partially offset by lower Industrial sales. Electronics sales increased $23.3 million, or 20%, primarily due to acquisitions as well as increased sales for passive and sensor products. Industrial sales decreased $14.0 million, or 13%, resulting from decreases in demand for power fuses, custom products, and relay products.

Europe

European sales increased $47.6 million, or 31%, in 2016 compared to 2015 primarily due to acquisitions and increased demand for Automotive and Electronics products, partially offset by lower Industrial sales. Automotive sales increased $26.8 million, or 27%, in 2016 primarily due to acquisitions and increased sales for sensor products. Electronics sales increased $22.4 million, or 46%, primarily due to acquisitions as well as increased sales for the passive and sensor products. Industrial sales decreased $1.5 million, or 24%, in 2016 primarily from lower sales of fuse and relay products.

Asia-Pacific

Asia-Pacific sales increased $130.8 million, or 42%, in 2016 compared to 2015, primarily due to acquisitions and increased demand for Automotive and Electronics products offset by lower Industrial sales. Excluding currency effects, Asia-Pacific sales increased $136.2 million, or 43%. Electronics sales increased $84.0 million, or 35%, primarily due to acquisitions as well as increased sales for passive and sensor products. Excluding currency effects, Electronics sales increased $86.3 million, or 36%. Automotive sales increased $47.8 million, or 72%, primarily due to acquisitions as well as increased sales for passenger car and sensor products, partially offset by net unfavorable currency effects. Excluding currency effects, Automotive sales increased $51.1 million, or 77%. Industrial sales decreased $1.2 million, or 13%.

Results of Operations — 2015 compared with 2014

The following table summarizes the company’s consolidated results of operations for the periods presented. The fiscal year 2015 includes approximately $45.2 million of other non-segment charges.  These included $4.6 million in acquisition-related costs primarily related to the transaction and integration planning costs for the PolySwitch acquisition, $5.2 million in charges related to the transfer of the company’s reed switch manufacturing operations from its Lake Mills, Wisconsin and Suzhou, China locations to the Philippines, $3.6 million in internal restructuring costs that will improve the company’s worldwide legal structure and $31.9 million in U.S. pension settlement and wind-up costs.

Fiscal year 2015 also included $1.5 million in foreign currency gains primarily attributable to changes in the value of both the euro and Philippine peso against the U.S. dollar while fiscal year 2014 included $3.9 million in foreign currency losses primarily related to the value of the Philippine peso against the U.S. dollar.

  

Fiscal Year

     

(in thousands, except % change)

 

2015

  

2014

  

% Change

 

Sales

 $867,864  $851,995   2% 

Gross profit

  330,499   324,428   2% 

Operating expenses

  226,342   190,598   19% 

Operating income

  104,157   133,830   (22%) 

Other expense (income), net

  (5,417)  (6,644)  (18%) 

Income before income taxes

  106,948   131,646   (19%) 

Net income

  80,866   98,100   (18%) 


Sales

Net sales increased $15.9 million, or 2%, to $867.9 million for 2015 compared to $852.0 million in 2014 due primarily to strong growth in the Automotive segment and improvement in the Industrial segment partially offset by lower sales in the Electronics segment. The company also experienced $38.9 million in unfavorable foreign currency effects in 2015 compared to 2014 primarily resulting from sales denominated in the euro. Excluding currency effects, net sales increased $54.7 million, or 6%, in 2015 compared to 2014.

The increase in sales in 2015 reflects a $14.5 million, or 4%, increase in Automotive segment sales and a $5.9 million, or 5%, increase in Industrial segment sales, partially offset by a $4.6 million, or 1%, decrease in Electronics segment sales.

Gross Profit

Gross profit was $330.5 million, or 38.1% of sales, in 2015, compared to $324.4 million, or 38.1% of sales, in 2014. Gross profit for 2015 was negatively impacted by $5.3 million of charges related to costs incurred to transfer of the company’s reed switch production from the U.S. and China to the Philippines. Gross profit for 2014 was negatively impacted by $2.8 million for accounting adjustments related to the SymCom inventory which had been stepped up to fair value at the acquisition date as required by purchase accounting rules. Additionally, 2014 gross profit was negatively impacted by $2.7 million in severance charges. These severance charges primarily related to post-Hamlin acquisition reorganization changes. Excluding the impact of these charges, gross profit was $335.8 million, or 38.7% of sales, in 2015 compared to $329.9 million, or 38.7% of sales, in 2014.

Operating Expenses

Total operating expense was $226.3 million, or 26.1% of net sales, for 2015 compared to $190.6 million, or 22.4% of net sales, for 2014. Operating expense in 2015 included $39.9 million of charges that primarily related to U.S. pension settlement and wind-up costs of $31.9 million and restructuring and acquisition costs of $8.0 million. Operating expense in 2014 included $3.5 million in restructuring, acquisition, and impairment costs, $2.2 million of which was to effect changes in the company’s legal structure. Excluding these charges, total operating expense was $186.4 million, or 21.5% of net sales, for 2015 compared to $187.1 million, or 22.0% of net sales, in 2014.

Operating Income

Operating income was $104.2 million, or 12.0% of net sales, in 2015 compared to $133.8 million, or 15.7% of net sales, in the prior year.The decrease in operating income in the current year was due primarily to the factors affecting operating expenses discussed above.

Interest expense was $4.1 million in 2015 compared to $4.9 million in 2014 and is primarily related to the company’s increased borrowings to fund acquisitions. The lower interest expense in 2015 resulted from lower average debt balances compared to the prior year.

Foreign exchange (gain) loss was $1.5 million of gain in 2015 compared to $3.9 million of loss in 2014. The fluctuation in foreign exchange was primarily attributable to changes in the value of both the euro and the Philippine peso against the U.S. dollar in 2015 and 2014.

Other Expense (Income), Net

Other expense (income), net, consisting of interest income, royalties, and non-operating income was $5.4 million of income in 2015 compared to $6.6 million of income in 2014. The year-over-year decrease in income primarily reflects lower interest income in 2015.

Income Taxes

Income tax expense was $26.1 million in 2015 compared to $33.5 million in 2014. The 2015 effective income tax rate was 24.4% compared to 25.5% in 2014. The lower effective tax rate in 2015 is primarily related to more income earned in lower-tax jurisdictions in 2015 compared to 2014 and the impactclosure of a pension settlement, partially offset by the impact from the restructuring of the legal ownership of the company’s MexicanEuropean manufacturing operations.


Segment Information

The following table is a summary of the company’s net sales by segment:

  

Fiscal Year

     

(in millions)

 

2015

  

2014

  

Change

 

Electronics

 $405.5  $410.1  $(4.6)

Automotive

  340.0   325.4   14.6 

Industrial

  122.4   116.5   5.9 

Total

 $867.9  $852.0  $15.9 

Electronics Segment

The decrease in Electronics sales primarily resulted from net unfavorable currency effects of $11.7 million in 2015. Excluding currency effects, Electronics sales increased $7.2 million, or 2%, compared to 2014 reflecting solid growth for passive components offset by lower sensor sales. Strong sales of electronic products in Europe and China helped to offset continued adjustments in channel inventory and capacity constraints for our electronic sensor products as the company continues to transfer production from the U.S. and China to the Philippines.

Automotive Segment

The increase in Automotive sales was primarily due to strong growth for automotive sensor products. Sales in the commercial vehicle market were up slightly compared to 2014 as continued strength in the heavy truck market was offset by general market weakness in construction, agriculture, and the global mining industry. Automotive sales were negatively impacted by net unfavorable currency effects of $22.4 million in 2015 compared to 2014, primarily resulting from sales denominated in the euro.Excluding currency effects, Automotive sales increased $37.0 million, or 11% compared to 2014.

Industrial Segment

The increase in Industrial sales was primarily from higher custom and power fuse sales which were offset by lower relay sales. The Industrial segment experienced net unfavorable currency effects of $4.7 million, primarily from sales denominated in Canadian dollars and the euro. Excluding currency effects, Industrial sales increased $10.6 million, or 9%, compared to 2014. The increase in fuse sales is primarily due to continuing strength in the solar market, while higher custom product sales benefited from some recovery in the potash mining end market.

Geographic Sales Information

Sales by geography represent sales to customer or distributor locations. The following table is a summary of the company’s net sales by and geography:

  

Fiscal Year

     

(in millions)

 

2015

  

2014

  

Change

 

Americas

 $401.2  $377.7   23.5 

Europe

  152.7   163.9   (11.2)

Asia-Pacific

  314.0   310.4   3.6 

Total

 $867.9  $852.0   15.9 

Americas

Sales in the Americas increased $23.5 million, or 6%, in 2015 compared to 2014 due primarily to growth in all segments offset by $3.6 million in unfavorable currency effects resulting from sales denominated in Canadian dollars. Excluding currency effects, Americas sales increased $27.1 million, or 7%. Automotive sales increased $15.1 million, or 9% primarily reflecting strong growthfacility in the automotive sensor and passenger vehicle markets. Electronics sales increased $3.2 million, or 3%, primarily reflecting higher demand for passive products. Industrial sales increased $5.2 million, or 5%, resulting from increases in demand for power fuses and custom products.

Europe

European sales decreased $11.3 million, or 7%, in 2015 compared to 2014 primarily due to net unfavorable currency effects of $32.8 million primarily from sales denominated insensors business within the euro. Excluding currency effects, European sales increased $21.5 million, or 13%, reflecting strong demand across all segments. Automotive sales decreased $6.9 million, or 7%, in 2015 reflecting net unfavorable currency effects. Excluding currency effects, Automotive sales increased $14.2 million, or 13%, reflecting strong demand for automotive sensor products. Electronics sales decreased $3.7 million, or 7%, reflecting the impact of net unfavorable currency effects. Excluding currency effects, Electronics sales increased $6.6 million, or 13%, reflecting strong demand for semiconductor products. Industrial sales decreased $0.7 million, or 10%, in 2015 primarily from the impact of net unfavorable currency effects. Excluding currency effects, Industrial sales increased $0.7 million, or 10%.

segment.

Asia-Pacific

Asia-Pacific sales increased $3.6 million, or 1%, in 2015 compared to 2014 primarily due to increased demand for Automotive and Industrial products offset by lower Electronics sales. Net unfavorable currency effects amounted to $2.5 million. Excluding currency effects, Asia-Pacific sales increased $6.1 million, or 2%. Electronics sales decreased $4.1 million, or 2%, reflecting weakness in the Taiwan, Japan, and Korea markets. Automotive sales increased $6.4 million, or 11%, reflecting continued increased demand for passenger vehicles in China as well as gains in market share. Industrial sales increased $1.4 million, or 19%.

Liquidity and Capital Resources

As of December 31, 2016, $266.7 million of the $275.1 million of the company’s cash and cash equivalents was held by foreign subsidiaries. Of the $266.7 million held by foreign subsidiaries, at least $50 million can be repatriated with minimal tax consequences, considering both U.S. and foreign taxes. Other than amounts which can be repatriated with minimal tax consequences, the company expects to maintain its foreign cash balances for local operating requirements, to provide funds for future capital expenditures and for potential acquisitions and does not expect to repatriate these funds to the U.S.

The company has historically supported its liquidity needs through cash flows from operations. Management expects that the company’s (i) current level of cash, cash equivalents, and marketable securities, (ii) current and forecasted cash flows from operations, (iii) availability under existing funding arrangements, and (iv) access to capital in the capital markets will provide sufficient funds to support the company’s operations, capital expenditures, investments, and debt obligations on both a short-term and long-term basis.

Revolving Credit Facility/Term Loan

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 and terminated the company’s previous credit agreement. 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 million, subject to certain conditions 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, 2020 with the remaining balance due on March 4, 2021.

Outstanding borrowings under the credit agreement bear interest, at the company’s option, at either LIBOR, fixed for interest periods of one, two, three or six month periods, plus 1.00% to 2.00%, or at the bank’s Base Rate, as defined, plus 0.00% to 1.00%, based upon the company’s Consolidated Leverage Ratio, as defined. The company is also required to pay commitment fees on unused portions of the credit agreement ranging from 0.15% to 0.30%, based on the Consolidated Leverage Ratio, as defined. The effective interest rate on outstanding borrowings under the credit facility was 2.27% at December 31, 2016. As of December 31, 2016, the company had $0.1 million outstanding in letters of credit and had available $462.4 million of borrowing capacity under the revolving credit facility. Further information regarding the company’s credit agreement is provided in Note 8,Debt, of the Notes to Consolidated Financial Statements included in this Annual Report.

Senior Notes

On December 8, 2016, the company entered into a Note Purchase Agreement, pursuant to which the company issued and sold €212 million aggregate principal amount of senior notes in two series. The funding date for the Euro denominated senior notes occurred on December 8, 2016 for €117 million in aggregate amount of 1.14% Senior Notes, Series A, due December 8, 2023, and €95 million in aggregate amount of 1.83% Senior Notes, Series B due December 8, 2028 (together, the “Euro Senior Notes”). Interest on the Euro Senior Notes is payable semiannually on June 8 and December 8, commencing June 8, 2017.

On December 8, 2016, the company entered into a Note Purchase Agreement, pursuant to which the company issued and sold $125 million aggregate principal amount of senior notes in two series. On February 15, 2017, $25 million in aggregate principal amount of 3.03% Senior Notes, Series A, due February 15, 2022, and $100 million in aggregate principal amount of 3.74% Senior Notes, Series B, due February 15, 2027 (together, the “U.S. Senior Notes,” and together with the Euro Senior Notes, the “Senior Notes”) were funded. Interest on the U.S. Senior Notes will be payable semiannually on February 15 and August 15, commencing August 15, 2017. Further information regarding the company’s Senior Notes is provided in Note 8,Debt, of the Notes to Consolidated Financial Statements included in this Annual Report.



Cash Flow Overview

  

Fiscal Year

 

(in millions)

 

2016

  

2015

 

Net cash provided by operating activities

 $180.1  $165.8 

Net cash provided used in investing activities

  (511.2)  (44.2)

Net cash provided by (used in) financing activities

  284.2   (67.6)

Effect of exchange rate changes on cash and cash equivalents

  (6.8)  (22.8)

Increase (decrease) in cash and cash equivalents

  (53.7)  31.2 

Cash and cash equivalents at beginning of period

  328.8   297.6 

Cash and cash equivalents at end of period

 $275.1  $328.8 

Cash Flow from Operating Activities

Net cash provided by operating activities increased $14.3was $245.3 million in 2016 for the year ended December 28, 2019 as compared to 2015. Cash provided by operating activities in 2016 included $104.5$331.8 million in net income, $83.0 million in non-cash adjustments (primarily $53.1 million in depreciation and amortization) and $7.4 million of unfavorable changes in operating assets and liabilities.

Changes in operating assets and liabilities (including short-term and long-term items)that negatively impacted cash flows in 2016 consisted of changes in accounts receivable ($25.2 million), accrued taxes ($18.1 million) and prepaid expenses and other ($0.3 million). The increase in accounts receivable reflects increased sales in 2016 compared to the prior year. Positively impacting cash flows were changes in inventory ($8.5 million), accrued expenses including post-retirement ($2.3 million), accounts payable ($19.2 million) and accrued payroll and severance ($6.1 million).

Cash Flow from Investing Activities

Net cash used in investing activities increased $467.1 million in 2016 compared to 2015 primarily due to the acquisitions of PolySwitch ($344.5 million, net of cash acquired), the ON portfolio business ($104.0 million), and Menber’s ($19.2 million).

Cash Flow from Financing Activities

Net cash provided by financing activities increased $351.9 million in 2016 compared to 2015. The increase was primarily due to an increase in net proceeds from debt of $314.8 million in 2016 compared to 2015. In March the company replaced its credit agreement with a new agreement and in December the company received proceeds from the issuance of senior notes. Also contributing to the increase in comparative periods was the use of cash for the share repurchaseyear ended December 29, 2018. The decrease in 2015 of $31.3 million.Information regarding the company’s debt is provided in Note 8,Debt, of the Notes to Consolidated Financial Statements included in this Annual Report.

  

Fiscal Year

 

(in millions)

 

2015

  

2014

 

Net cash provided by operating activities

 $165.8  $153.1 

Net cash used in investing activities

  (44.2)  (104.0)

Net cash used in financing activities

  (67.6)  (43.2)

Effect of exchange rate changes on cash and cash equivalents

  (22.8)  (13.5)

Increase (decrease) in cash and cash equivalents

  31.2   (7.6)

Cash and cash equivalents at beginning of period

  297.6   305.2 

Cash and cash equivalents at end of period

 $328.8  $297.6 

Cash Flow from Operating Activities

Netnet cash provided by operating activities increased $12.7 million in 2015 compared to 2014. Net cash providedwas primarily driven by operating activities in 2015 was approximately $165.8 millionlower earnings and included $80.9 million in net income, $82.2 million in non-cash adjustments (primarily $41.7 million in depreciation and amortization) and $2.7 million of favorable changes in operating assets and liabilities.

Changes in operating assets and liabilities (including short-term and long-term items)that negatively impacted cash flows in 2015 consisted of changes in accounts receivable ($14.4 million), inventory ($3.6 million). Increases in accounts receivable and inventory resulted from higher sales volumes in 2015. Positively impacting cash flows were changes in accrued expenses including post-retirement ($6.5 million), accounts payable ($2.6 million), accrued payroll and severance ($5.9 million), accrued taxes ($0.6 million), and prepaid expenses and other ($5.2 million).

Cash Flow from Investing Activities

Net cash used in investing activities decreased $59.8 million in 2015 compared to 2014working capital levels primarily due to less cash used for business acquisitionsthe timing of supplier payments, payroll year-end cut off and higher annual incentive compensation payments in 2015 compared to 2014. In 2014 the company acquired Symcom for $52.8 million, net of cash acquired while in 2015 the company paid $4.6 million, net of cash acquired, toward the acquisition of Sigmar.

2019.
 

Cash Flow from Financing Activities

Net cash used in financing activities increased $24.4 million in 2015 compared to 2014 primarily due to increased use of cash forDuring the repurchase of stock. The company’s Board of Directors authorizedfiscal year 2019, the repurchase of up to 1,000,000 shares of the company’s common stock under a program for the period May 1, 2015 to April 30, 2016. The companyCompany repurchased 350,000579,916 shares of its common stock during 2015 under this program.

Capital Resources

We expend capital to support our operating and strategic plans. Such expenditures include strategic acquisitions, investments to maintain capital assets, develop new products or improve existing products, and to enhance capacity or productivity. Many oftotaling $95.0 million. During the associated projects have long lead-times and require commitments in advance of actual spending.

Share Repurchase Program

The company’s Board of Directors authorizedfiscal year 2018, the repurchase of up to 1,000,000 shares of the company’s common stock under a program for the period May 1, 2016 to April 30, 2017. The company did not repurchase anyCompany repurchased 391,972 shares of its common stock during fiscal 2016totaling $67.9 million. From September 30, 2018 until December 28, 2019, the Company repurchased 971,888 shares of its common stock at an average price of $167.65 totaling $162.9 million.


OUTLOOK
Vision andStrategy
The Company works with its customers to design and develop technologies that help them build safer, more reliable and more efficient products for a safer, greener and increasingly connected world in virtually every market that uses electrical energy; for example, automotive and commercial vehicles, industrial applications like renewable energy and storage, motor drives and power conversion, data and telecommunications, medical devices, consumer electronics and appliances. Built upon that framework, the full 1,000,000 shares may yet be purchased underCompany’s strategy is centered on growing its circuit protection, power control and sensor platforms.
The Company’s strategic plan is focused on increasing shareholder value by driving profitable sales growth, earnings per share growth, strong cash flow generation, and deploying capital consistent with its long-term capital allocation priorities. The Company pursues the program asfollowing major strategic initiatives, which are summarized below, along with more specific areas of December 31, 2016.

Contractual Obligationsfocus.

Strategic Objective2020 and Future Priorities
Double digit sales growth●Grow through increased product content with existing customers and increased market share
●Expand portfolio into new and underpenetrated geographies and end markets
●Increase innovation capabilities and investments
●Expand presence in products and applications that are converging across business segments
●Targeted mergers and acquisitions
EPS growth●Focus on higher profitability growth opportunities
●Improve operating margins through operational excellence
●Disciplined approach to balancing costs with long-term strategic investments
Cash flow and liquidity●Disciplined management of working capital
●Deployment of capital consistent with capital allocation priorities
●Mergers and acquisitions that align with strategy and financial metrics
●Grow dividend in line with earnings
●Opportunistic share repurchases
The Company’s strategy is to generate profitable sales growth. In order to accomplish this, the Company is focusing on accelerating organic growth by increasing its content and Commitments

share gains, enhancing technology efforts to drive innovation, capitalizing on cross segment opportunities, and gaining traction in underpenetrated geographies and markets. The following table summarizes contractual obligationsCompany will continue to make targeted strategic acquisitions that align to its strategy and commitments as of December 31, 2016:

(in thousands)

 

Total

  

Less than

1 Year

  

1 to 3

Years

  

3 to 5

Years

  

Greater

than 5

Years

 

Revolving credit facility

 $112,500  $—  $—  $112,500  $— 

Term loan

  120,313   6,250   23,437   90,626   — 

Entrusted loan

  3,522   —   3,522   —   — 

Euro Senior Notes, Series A

  122,313   —   —   —   122,313 

Euro Senior Notes, Series B

  99,314   —   —   —   99,314 

Interest payments

  52,002   8,611   16,534   11,614   15,243 

Supplemental ExecutiveRetirement Plan

  2,470   1,886   359   63   162 

Operating lease payments

  39,322   11,971   11,112   8,214   8,025 

Purchase obligations

  90,712   90, 712   —   —   — 

Total

 $642,468  $119,430  $54,964  $223,017  $245,057 

Off-Balance Sheet Arrangements

As of December 31, 2016, the company did not have any off-balance sheet arrangements, as defined under SEC rules. Specifically, the company was not liable for guarantees of indebtedness owed by third parties, the company was not directly liable for the debt of any unconsolidated entityfinancial metrics to support new business, products, markets, 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 Pronouncements

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 withtechnologies while leveraging existing customers and will supersede most current revenue recognition guidance. targeting new customers.


Management believes that profitable growth through a combination of organic growth and strategic acquisitions is critical to the Company’s competitiveness, while enhancing value the Company delivers to its customers and other stakeholders. In addition,
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the Company continues to implement initiatives across all platforms to enhance productivity while managing its cost structure to align with business conditions, including integration of operations and streamlining administrative and support activities to drive improved operating margins.
The guidance permits two implementation approaches, one requiring retrospective application ofCompany seeks to deploy its capital consistent with capital allocation priorities. Priorities for capital deployment, over time, include investments to drive increased organic growth, targeted acquisitions that align to the new standard with restatement of prior yearsCompany’s strategic and one requiring prospective application offinancial metrics and returning capital to shareholders through dividends and opportunistic share repurchases.
The Company uses several key indicators to gauge progress toward achieving these objectives. These indicators include organic sales growth, operating margins, cash flow from operations and capital expenditures. Through cycles, 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. 2014-09Company targets double-digit long-term (2017-2021) sales growth, split between 5-7% average annual accelerated organic sales growth and 5-7% average annual accelerated growth from strategic acquisitions, while targeting operating margins between 17% and 19% and double-digit earnings per share growth. Cash flow from operations less capital expenditures is targeted 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 isapproximate or exceed net income but in the process of performing its initial 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 standards, 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-affectedany given year can be significantly impacted 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.

non-recurring or infrequent expenditures.


Significant Accounting Policies and Critical Estimates
 

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. The company is currently evaluating the impact of this ASU on its consolidated financial statements.

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.

Critical Accounting Policies and Estimates

Certain

The preparation of the accounting policies as discussed below require the application of significant judgment byfinancial statements in conformity with GAAP requires management in selecting the appropriateto make estimates and assumptions for calculatingthat affect the reported amounts to record inof assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ fromstatements and the reported amounts of revenues and expenses during the reporting period. The Company’s most critical accounting policies are those estimatesthat are most important to the portrayal of its financial condition and assumptions, impacting the reported results of operations, and financial position.which require the Company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. The Company has identified the following as its most critical accounting policies and judgments. Although management believes that its estimates and assumptions are reasonable, they are based upon information available when they are made, and therefore, actual results may differ from these estimates under different assumptions or conditions. The Company has reviewed these critical accounting policies and related disclosures with the Audit Committee of its Board of Directors. Significant accounting policies are more fully described in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report. Certain accounting policies, however, are considered to be critical in that they are most important to
Revenue Recognition
 On December 31, 2017, the depictionCompany adopted new guidance on revenue from contracts with customers using the modified retrospective method. The adoption did not have a significant impact on the Company’s consolidated financial statements.
Revenue Disaggregation
The following table disaggregates the Company’s revenue by primary business units for the fiscal years ended December 28, 2019 and December 29, 2018: 
  Fiscal Year Ended December 28, 2019
(in thousands) 
Electronics
Segment
 
Automotive
Segment
 
Industrial
Segment
 
 
Total
Electronics – Semiconductor $563,572
 $—
 $—
 $563,572
Electronics – Passive Products and Sensors 397,508
 —
 —
 397,508
Passenger Car Products —
 218,560
 —
 218,560
Commercial Vehicle Products —
 111,972
 —
 111,972
Automotive Sensors —
 98,001
 —
 98,001
Industrial Products —
 —
 114,260
 114,260
Total $961,080
 $428,533
 $114,260
 $1,503,873
Table of the company’s financial conditionContents




  Fiscal Year Ended December 29, 2018
(in thousands) 
Electronics
Segment
 
Automotive
Segment
 
Industrial
Segment
 
 
Total
Electronics – Semiconductor $648,967
 $—
 $—
 $648,967
Electronics – Passive Products and Sensors 475,329
 —
 —
 475,329
Passenger Car Products —
 240,501
 —
 240,501
Commercial Vehicle Products —
 121,562
 —
 121,562
Automotive Sensors —
 117,728
 —
 117,728
Industrial Products —
 —
 114,381
 114,381
Total $1,124,296
 $479,791
 $114,381
 $1,718,468

See Note 16, Segment Information, for net sales by segment and results of operations and their application requires management’s subjective judgment in making estimates about the effect of matters that are inherently uncertain. The company believes the following accounting policies are the most critical to aid in fully understanding and evaluating its reported financial results, as they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. The company has reviewed these critical accounting policies and related disclosures with the Audit Committee of its Board of Directors.

Net Sales

countries.

Revenue Recognition:
The companyCompany recognizes revenue on product sales in the period in which the sales processCompany satisfies its performance obligation and control of the product is complete. This generally occurs when persuasive evidence of an arrangement exists, products are shipped (FOB origin)transferred to the customercustomer. The Company’s sales arrangements with customers are predominately short term in accordance withnature and generally provide for transfer of control at the termstime of shipment as this is the sale, thepoint at which title and risk of loss has been transferred, collectability is reasonably assured andof the pricing is fixed and determinable.product transfers to the customer. At the end of each period, for those shipments where title to the products and the risk of loss and rewards of ownership do not transfer until the product has been received by the customer, the companyCompany adjusts salesrevenues and cost of sales for the delay between the time that the products are shipped and when they are received by the customer. The company’samount of revenue recorded reflects the consideration to which the Company expects to be entitled in exchange for goods and may include adjustments for customer allowance, rebates and price adjustments. The Company’s distribution channels are primarily through direct sales and independent third partythird-party distributors.

The Company has elected the practical expedient under Accounting Standards Codification ("ASC") 340-40-25-4 to expense commissions when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less than one year.
Revenue and Billing:
The companyCompany generally accepts orders from customers through receipt of purchase orders or electronic data interchange based on long term purchasing contracts and written sales agreements.agreements and purchasing contracts. Contract pricing and selling agreement terms are based on market factors, costs, and competition. Pricing normally is often negotiated as an adjustment (premium or discount) from the company’sCompany’s published price lists. The customer is invoiced when the company’sCompany’s products are shipped to them in accordance with the terms of the sales agreement.

Returns As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company also elected the practical expedient provided in ASC 606-10-25-18B to treat all product shipping and Credits: handling activities as fulfillment activities, and therefore recognize the gross revenue associated with the contract, inclusive of any shipping and handling revenue. This is similar to the Company’s prior practice and therefore the effect of the new guidance is immaterial.


Ship and Debit Program
Some of the terms of the company’sCompany’s sales agreements and normal business conditions provide customers (distributors) the ability to receive price adjustments on products previously shipped and invoiced. This practice is common in the industry and is referred to as a “ship and debit” program. This program allows the distributor to debit the companyCompany for the difference between the distributors’ contracted price and a lower price for specific transactions. Under certain circumstances (usually in a competitive situation or large volume opportunity), a distributor will request authorization for pricing allowances to reduce its price to its buyer. Ifprice. When the companyCompany approves such a reduction, the distributor is authorized to “debit” its account for the difference between the contracted price and the lower approved price. The companyCompany establishes reserves for this program based on historic activity, electronic distributor inventory levels and actual authorizations for the debit and recognizes these debits as a reduction of revenue.






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Return to Stock:
The companyCompany has a return to stock policy whereby a customercertain customers, with previousprior authorization from Littelfusethe Company's management, can return previously purchased goods for full or partial credit. The companyCompany establishes an estimated allowance for these returns based on historic activity. Sales revenue and cost of sales are reduced to anticipate estimated returns.

Volume Rebates:Rebates
The companyCompany offers volume-based sales incentives to certain customers to encourage greater product sales. If customers achieve their specific quarterly or annual sales targets. If customers achieve their sales targets, they are entitled to rebates. The companyCompany estimates the future costprojected amount of these rebates that will be achieved by the customer and recognizes this estimated cost as a reduction to revenue as products are sold.



Allowance for Doubtful Accounts:

The companyCompany evaluates the collectability of its trade receivables based on a combination of factors. The companyCompany regularly analyzes its significant customer accounts and, when the companyCompany becomes aware of a specific customer’s inability to meet its financial obligations, the companyCompany records a specific reserve for bad debt to reduce the related receivable to the amount the companyCompany reasonably believes is collectible. The companyCompany also records allowances for all other customers based on a variety of factors including the length of time the receivables are past due, the financial health of the customer, macroeconomic considerations and past experience. Historically, the allowance for doubtful accounts has been adequate to cover bad debts. If circumstances related to specific customers change, the estimates of the recoverability of receivables could be further adjusted.


Inventory

The companyCompany performs regular detailed assessments of inventory, which include a review of, among other factors, demand requirements, product life cycle and development plans, component cost trends, product pricing, shelf life, and quality issues. Based on the analysis, the companyCompany records adjustments to inventory for excess quantities, obsolescence or impairment when appropriate to reflect inventory at net realizable value. Historically, inventory reserves have been adequate to reflect inventory at net realizable values. During 2016,
Goodwill
The Company’s methodology for allocating the company was required to step uppurchase price of acquisitions is based on established valuation techniques that reflect the valueconsideration of inventory acquired in business combinations to its selling prices lessa number of factors, including valuations performed by third-party appraisers when appropriate. Goodwill is measured as the excess of the cost of an acquired entity over the fair value assigned to sell under business combination accounting. This step-up was approximately $7.8 millionidentifiable assets acquired and liabilities assumed. Based on its current organization structure, the Company has seven reporting units for the PolySwitch, ON portfolio,which cash flows are determinable and Menber’s acquisitions in 2016.

Goodwill and Other Intangible Assets

to which goodwill has been allocated.

The companyCompany annually tests goodwill for impairment on the first day of its fiscal fourth quarter, or atmore frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company also performs an interim date if therereview for indicators of impairment each quarter to assess whether an interim impairment review is an eventrequired for any reporting unit. As part of its interim reviews, management analyzes potential changes in the value of individual reporting units based on each reporting unit’s operating results for the period compared to expected results as of the prior year’s annual impairment test. In addition, management considers how other key assumptions, including discount rates and expected long-term growth rates, used in the last annual impairment test, could be impacted by changes in market conditions and economic events. Based on the interim assessments, management concluded that no events or changechanges in circumstances indicated that indicatesit was more likely than not that the asset may be impaired. Management determinesfair value for any reporting unit had declined below its carrying value.
Quantitative Assessment for Impairment
For the seven reporting units with goodwill, the Company compares the estimated fair value of each reporting unit to its carrying value. If the carrying value of a reporting unit exceeded the estimated fair value, the difference between the estimated fair value and carrying value is recorded as the amount of the goodwill impairment charge. The results of the goodwill impairment test as of September 30, 2019 indicated that the estimated fair values for each of the seven reporting units exceeded their respective carrying values. Accordingly, there were no goodwill impairment charges recorded as part of the Company’s 2019 annual goodwill impairment test.
As part of its impairment test for these reporting units, the Company engaged a third-party appraisal firm to assist in the Company’s determination of the estimated fair values. This determination included estimating the fair value of each reporting unit using both
Table of its reporting units by using a discounted cash flow model (which includes forecasted five-yearContents




the income statement and working capital projections, a market-based weighted average cost of capital and terminal values after five years)market approaches. The income approach requires management to estimate a number of factors for each reporting unit, including projected operating results, economic projections, anticipated future cash flows, discount rates and the allocation of shared or corporate items. The market value. In addition,approach estimates fair values using comparable marketplace fair value data from within a comparable industry grouping. The Company weighted both the company comparesincome and market approach equally to estimate the concluded fair value of each reporting unit. The determination of fair value requires the Company to make significant estimates and assumptions, which primarily include, but are not limited to: the selection of appropriate peer group companies; control premiums appropriate for acquisitions in which the Company competes; the discount rate; terminal growth rates; and forecasts of revenue, operating income, depreciation and amortization and capital expenditures.
Goodwill Impairment Assumptions
Although the Company believes its derived enterpriseestimates of fair value on a consolidated basisare reasonable, actual financial results could differ from those estimates due to the company’s market capitalization asinherent uncertainty involved in making such estimates. Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on the fair value of its test date to ensure its derived value approximates the reporting units. Future declines in the overall market value of the company when taken asCompany’s equity may also result in a whole.

Due to negative events inconclusion that the potash market in 2016, management revisited its long term projections and conducted a step one goodwill impairment analysis for its custom products reporting unit in the third quarter of 2016. The reporting unit failed the step one test and management conducted a step two analysis with the revised projections. The fair value of one or more reporting units has declined below its carrying value.

One measure of the unit was estimated usingsensitivity of the expected present valueamount of future cash flows over a seven year forecast period and appraisal of certain assets. As a result, the company recognized a charge for goodwill impairment of $8.8 million as it wrote offcharges to key assumptions is the entireamount by which each reporting unit “passed” (fair value exceeds the carrying value) the goodwill balance. In addition, the company recognized intangible assets impairments aggregating $6.0 million, including a $3.8 million reduction of the custom products trade names to a $0.7 million remaining value and a $2.2 million reductionimpairment test. All seven of the reporting unit’s customer relationships to zero value.

units passed the goodwill impairment test, with fair values that exceeded the carrying values by between 40% and 268% of their respective estimated fair values. As of the most recent annual test conducted on October 2, 2016,September 30, 2019, the company had seven reporting units for goodwill testing purposes and concluded the fair value of each of the reporting units exceeded its carrying value of invested capital and therefore, no potential goodwill impairment existed. Specifically, the companyCompany noted that the excess of fair value over the carrying value, of invested capital, was 65%217%, 154%42%, 218%137%, 132%213%, 70%40%, 15%89%, and 150%268% for its reporting units; electronics (non-silicon), electronics (silicon), passenger car, commercial vehicle products, sensors, relays,units: Electronics-Passive Products and power fuse, respectively, at October 2, 2016.

CertainSensors, Electronics-Semiconductor, Passenger Car Products, Commercial Vehicle Products, Automotive Sensors, Relays, and Power Fuse, respectively. Relatively small changes in the Company’s key assumptions usedwould not have resulted in any reporting units failing the goodwill impairment test.

Generally, changes in estimates of expected future cash flows would have a similar effect on the estimated fair value of the reporting unit. That is, a 1.0% decrease in estimated annual test included a discount ratefuture cash flows would decrease the estimated fair value of 9.8% and athe reporting unit by approximately 1.0%. The estimated long-term net sales growth rate can have a significant impact on the estimated future cash flows, and therefore, the fair value of 3.0% which were used for alleach reporting units except for relays which had a discount rate of 10.3% as a result of a 0.5% premium factor.

In addition, the company performed a sensitivity test at October 2, 2016 that showed either a 100 basis point increase in its discount rate or a 100 basis pointunit. A 1.0% decrease in the long-term net sales growth rate for eachwould have resulted in no reporting unit would not have changedunits failing the company’s conclusion that no potential goodwill impairment existed at October 2, 2016.

The company will continue to perform a goodwill impairment test as required on an annual basis and on an interim basis, if certain conditions exist. Factorstest. Of the company considers important, 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 toother key assumptions that impact the diverse end user base and non-discretionary product demand,estimated fair values, most reporting units have 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 we could recognize impairment charges for the relays reporting unit if we have declines in profitability or projected future operating results duegreatest sensitivity to changes in the estimated discount rate. The estimated discount rate was 9.7% for the Electronics-Semiconductor, Passenger Car Products and Commercial Vehicle Products reporting units, and 10.7% for the Electronics-Passive Products and Sensor reporting unit and 11.7% for the Automotive Sensors, Power Fuse and Relays reporting units. A 1.0% increase in the estimated discount rates would have resulted in no reporting units failing the annual goodwill impairment test. The Company believes that its estimates of future cash flows and discount rates are reasonable, but future changes in the underlying assumptions could differ due to the inherent uncertainty in making such estimates. Additionally, price deterioration or lower volume market pricing, cost, orcould have a significant impact on the business environment. Asfair values of the 2016 annual test date, the relays reporting unit had $41.4 million of goodwill and intangible assets.

units.
 

Long-Lived Assets

The companyCompany evaluates the recoverability of other long-lived asset groups on an ongoing basis. Long-lived asset groups are reviewed for impairmentassets, including property, plant and equipment and certain identifiable intangible assets, whenever events or changes in circumstances indicate that the carrying amountvalue of the relatedan asset or asset group may not be recoverable. RecoverabilityFactors which could trigger an impairment review include significant underperformance relative to historical or projected operating results, significant changes in the manner of assets to be held and used is measured by a comparisonuse of the carrying amountassets or the strategy for the overall business, a significant decrease in the market value of the asset toassets or significant negative industry or economic trends. When the Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the indicators, the assets are assessed for impairment based on the estimated future undiscounted cash flows expected to be generated byresult from the use of the asset group.and its eventual disposition. If it is determined to be impaired, the impairment recognized is measured by the amount by which the carrying value of thean asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset’s carrying value over its fair value. The company’s estimates of future cash flows from such assets could be impacted if it underperforms relative to historical or projected future operating results. The company did not record asset impairment charges in 2016 or 2015, but did recognize assetDuring the year-ended December 28, 2019, the Company recognized non-cash impairment charges of $0.3 million for certain machinery and equipment related to the closure of a European manufacturing facility in 2014.

the automotive sensors business within the Automotive segment. During the year ended December 29, 2018, the Company recognized non-cash impairment charges of $1.6 million and $0.5 million related to a building for sale and the Custom Products reporting unit trade name, respectively, associated with the exit of the Custom business within the Industrial Segment. During the year ended December 30, 2017, the Company recognized a loss of $2.9 million related to certain machinery and equipment in the Electronics and Automotive segments due to changes in the expected use of these certain assets.



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Environmental Liabilities

Environmental liabilities are accrued based on estimates of the probability of potential future environmental exposure. Costs related to on-going maintenance of environmental sites are expensed as incurred. If actual or estimated probable future losses exceed the company’sCompany’s recorded liability for such claims, it would record additional charges as other expense during the period in which the actual loss or change in estimate occurred. The companyCompany evaluates its reserve for coal mine remediation annually utilizing a third partythird-party expert.

Pension andSupplemental Executive Retirement Plan

Littelfuse has

The Company records annual income and expense amounts relating to its pension and postretirement benefits plans based on calculations which include various actuarial assumptions including discount rates, expected long-term rates of return and compensation increases. The Company reviews its actuarial assumptions on an annual basis as of the fiscal year-end balance sheet date (or more frequently if a numbersignificant event requiring remeasurement occurs) and modifies the assumption based on current rates and trends when it is appropriate to do so. The effects of company-sponsoredmodifications are recognized immediately on the Consolidated Balance Sheets but are generally amortized into operating earnings over future periods, with the deferred amount recorded in accumulated other comprehensive income (loss). The Company believes that the assumptions utilized in recording its obligations under its plans are reasonable based on its experience, market conditions and input from its actuaries and investment advisors. The Company maintains several pension plans in international locations. The expected returns on plan assets and discount rates are determined based on each plan’s investment approach, local interest rates and plan participant profiles. The weighted-average
discount rates for the Company’s defined benefit plans primarily in Europe and the Asia-Pacific region. The company recognizesregions at December 28, 2019 and December 29, 2018 were 2.3% and 3.1%, respectively.

A 50 basis point change in the full unfunded status of these plansdiscount rates at December 28, 2019 would have the following effect on the balance sheet. Actuarial gains and losses and prior service costs and credits are recognized as a component of accumulated other comprehensive income. Accounting for pensions requires estimating the futureprojected benefit cost and recognizing the cost over the employee’s expected period of employment with the company. Certain assumptions are required in the calculation of pension costs and obligations. These assumptions include the discount rate, salary scales and the expected long-term rate of return on plan assets. The discount rate is intended to represent the rate at which pension benefit obligations could be settled by purchase of an annuity contract. These assumptions are subject to change based on stock and bond market returns and other economic factors. Actual results that differ from the company’s assumptions are accumulated and amortized over future periods and, therefore, generally affect its recognized expense and accrued liability in such future periods. While the company believes that its assumptions are appropriate given current economic conditions and its actual experience, significant differences in results or significant changes in the company’s assumptions may materially affect its pension obligations and related future expense. During 2015, the company settled its U.S. defined benefit pension plan as described in Note 10,Benefit Plans, of the Notes to Consolidated Financial Statements included in this Annual Report.Further information regarding these plans is also provided in Note 10,Benefit Plans, of the Notes to Consolidated Financial Statements included in this Annual Report.

obligation:

(in millions)
0.5%
Increase
 
0.5%
Decrease
Projected benefit obligation$(8.9) $9.7

Equity-based Compensation

Equity-based compensation expense is recorded for stock-option awards and restricted share units based upon the fair values of the awards. The fair value of stock-option awards is estimated at the grant date using the Black-Scholes option pricing model, which includes assumptions for volatility, expected term, risk-free interest rate and dividend yield. Expected volatility is based on implied volatilities from traded options on Littelfuse stock, historical volatility of Littelfuse stock and other factors. Historical data is used to estimate employee termination experience and the expected term of the options. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The companyCompany initiated a quarterly cash dividend in 2010 and expects to continue making cash dividend payments in the foreseeable future.

The fair value of restricted share units is determined based on the Company's stock price on the grant date reduced by the present value of expected dividends through the vesting period.

Total equity-based compensation expense for all equity compensation plans was $12.8$19.9 million, $10.7$28.2 million, and $9.4$17.3 million in 2016, 2015,2019, 2018, and 2014,2017, respectively. Further information regarding this expense is provided in Note 11,Shareholders’ Equity12, Stock-Based Compensation, of the Notes to Consolidated Financial Statements included in this Annual Report.


Income Taxes

The companyCompany accounts for income taxes using the liability method. Deferred taxes are recognized for the future effects of temporary differences between financial and income tax reporting using tax rates in effect for the years in which the differences are expected to reverse. The companyCompany recognizes deferred taxes for temporary differences, operating loss carryforwards and tax credit carryforwards.and other tax attribute carryforwards (excluding carryforwards where usage has been determined to be remote). Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. FederalU.S. state and statenon-U.S. income taxes are provided on the portion of foreignnon-U.S. income that is expected to be remitted to the U.S. and be taxable (and foreignnon-U.S. income taxes are provided on the portion of foreignnon-U.S. income that is expected to be remitted to an upper-tier foreignnon-U.S. entity).

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

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Deferred income taxes are not provided on the excess of the investment value for financial reporting over the tax basis of investments in those non-U.S. subsidiaries for which such excess is considered to be permanently reinvested in those operations. Management regularly evaluates whether non-U.S. earnings are expected to be permanently reinvested. This evaluation requires judgment about the future operating and liquidity needs of the Company and its non-U.S. subsidiaries. Changes in economic and business conditions, non-U.S. or U.S. tax laws (such as the Tax Act), or the Company’s financial situation could result in changes to these judgments and the need to record additional tax liabilities.
The companyCompany recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

On December 22, 2017, the U.S. enacted legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"). Among other things, the Tax Act reduces the U.S. corporate federal income tax rate from 35% to 21%, adds base broadening provisions which limit deductions and address excessive international tax planning, imposes a one-time tax (the “Toll Charge”) on accumulated earnings of certain non-U.S. subsidiaries and enables repatriation of earnings of non-U.S. subsidiaries free of U.S. federal income tax. Other than the Toll Charge (which, except for the IXYS impact, was applicable to the Company for 2017), the provisions are generally applicable to the Company in 2018 and beyond.
In accordance with the guidance provided in SEC Staff Accounting Bulletin (“SAB”) No. 118, in the fourth quarter of 2017 the Company recorded a charge of $47.0 million as a provisional reasonable estimate of the impact of the Tax Act, including $49.0 million for the Toll Charge net of $2.0 million for other net tax benefits. In the fourth quarter of 2018, within the measurement period outlined in SAB No. 118, the Company finalized its estimates of the impact of the Tax Act as of December 29, 2018 and recorded a charge of $3.2 million, including $2.3 million for the Toll Charge and $0.9 million for the net impact of other items. In addition, the Company recorded $7.0 million for the Toll Charge associated with IXYS as part of the IXYS acquisition purchase price allocation. This was reflected in the opening balance sheet as an increase to goodwill and other long-term liabilities.

One of the base broadening provisions of the Tax Act is the global intangible low-taxed income provisions ("GILTI"). In accordance with guidance issued by the FASB staff, the Company has adopted an accounting policy to treat any GILTI inclusions as a period cost if and when incurred. Thus, for the fiscal years ended December 28, 2019 and December 29, 2018, deferred taxes were computed without consideration of the possible future impact of the GILTI provisions, and any current year impact was recorded as a part of the current portion of income tax expense.
Further information regarding income taxes, including a detailed reconciliation of current year activity, is provided in Note 12,14, Income Taxes, of the Notes to Consolidated Financial Statements included in this Annual Report.


Off-Balance Sheet Arrangements

The Company does not have off-balance sheet arrangements as defined under SEC rules. 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.

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In the financial review that follows, the Company discusses its consolidated results of operations, financial position, cash flows and certain other information. This discussion should be read in conjunction with the Company’s Consolidated Financial Statements and related notes.
 

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 28, 2019 AS COMPARED TO THE YEAR ENDED DECEMBER 29, 2018

The fiscal year 2019 included approximately $21.9 million of non-segment charges, of which $8.9 million of charges are acquisition- related and integration charges primarily related to the IXYS acquisition and other contemplated acquisitions, and $13.0 million of restructuring charges primarily related to employee termination costs. See Note 8, Restructuring, Impairment and Other Charges, for further discussion.


The fiscal year 2018 included approximately $88.7 million of non-segment charges, of which $82.9 million of charges are primarily related to the IXYS acquisition as described in Note 2, Acquisitions and Dispositions, of the Notes to Consolidated Financial Statements included in this Annual Report. These charges include $36.9 million of purchase accounting inventory step-up charges, $18.7 million in acquisition-related and integration costs primarily related to legal, accounting and other expenses, $12.4 million in backlog amortization costs, $8.3 million of employee termination costs and other restructuring charges, $4.5 million of stock compensation expense recognized immediately upon close for converted IXYS options related to prior service periods, and $2.1 million change in control expense related to IXYS. In addition, there were $5.8 million of employee termination costs, impairment and other restructuring charges and acquisition-related expenses for other contemplated acquisitions, which included charges associated with the exit of the Custom business in the second quarter within the Industrial segment.

Fiscal year 2019 also included approximately $5.2 million in foreign currency exchange losses primarily attributable to changes in the value of the euro, Chinese renminbi, and Japanese Yen against the U.S. dollar, while fiscal year 2018 also included approximately $0.9 million in foreign currency exchange gains primarily attributable to changes in the value of the euro, Mexico peso, Philippine peso and Chinese renminbi against the U.S. dollar.

 Fiscal Year    
(in thousands, except % change)2019 2018 Change % Change
Net sales$1,503,873
 $1,718,468
 $(214,595) (12.5)%
Gross profit541,449
 652,541
 (111,092) (17.0)%
Operating expenses348,658
 427,492
 (78,834) (18.4)%
Operating income192,791
 225,049
 (32,258) (14.3)%
Other income, net(583) (1,599) 1,016
 (63.5)%
Income before income taxes165,884
 204,942
 (39,058) (19.1)%
Income taxes26,802
 40,377
 (13,575) (33.6)%
Net income139,082
 164,565
 (25,483) (15.5)%
Net Sales
Net sales for 2019 of $1,503.9 million decreased $214.6 million, or 12.5%, compared to the prior year primarily due to lower volume across the Electronics and Automotive segments driven by electronics distribution partners and end customers reducing excess inventories, a decline in global auto production and a decline in global end market demand, and $25.0 million or 1.5% of unfavorable changes in foreign exchange rates. 

Gross Profit
Gross profit was $541.4 million, or 36.0% of net sales, in 2019, compared to $652.5 million, or 38.0% of net sales, in 2018. The decrease in gross profit is primarily due to lower volumes across the Electronics and Automotive segments driven by electronics distribution partners and end customers reducing excess inventories, a decline in global auto production and a decline in global
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end market demand, unfavorable price and product mix, and costs related to restructuring activities taken during 2019. In 2018 the IXYS purchase accounting inventory step-up charge of $36.9 million negatively impacted the 2018 gross margin by 2.1%.
Operating Expenses
Total operating expenses were $348.7 million, or 23.2% of net sales, for 2019 compared to $427.5 million, or 24.9% of net sales, for 2018. The decrease in operating expenses of $78.8 million was primarily due to lower annual incentive compensation expenses, reduced backlog amortization expense of $12.4 million, lower acquisition-related and integration costs of $11.3 million, global cost saving initiatives, and $4.5 million stock compensation expense and $2.1 million of change in control expense related to the 2018 IXYS acquisition.
Operating Income
Operating income for 2019 was $192.8 million, a decrease of $32.3 million or 14.3% compared to $225.0 million for 2018. The decrease in operating income is primarily due to lower gross profit across the Electronics and Automotive segments, partially offset by lower operating expenses noted above and the $36.9 million purchase accounting inventory step-up charges in 2018. Operating margins decreased from 13.1% in 2018 to 12.8% in 2019 primarily driven by lower gross profit margin discussed above.

Income Before Income Taxes
Income before income taxes for 2019 was $165.9 million, or 11.0% of net sales compared to $204.9 million, or 11.9% of net sales, for 2018. In addition to the factors impacting comparative results for operating income discussed above, income before income taxes was unfavorably impacted by foreign exchange losses of $5.2 million during the fiscal year ended December 28, 2019 compared to foreign exchange gains of $0.9 million during the fiscal year ended December 29, 2018, and decreases of $1.0 million in other income primarily due to the impairment charges of $7.3 million for certain other investments and a $2.6 million loss on the disposal of a business within the Electronics segment during the fiscal year 2019, partially offset by unrealized investment gains associated with our equity investments and higher interest income.


Income Taxes
Income tax expense for 2019 was $26.8 million, or an effective tax rate of 16.2% compared to income tax expense of $40.4 million, or an effective tax rate of 19.7%, for 2018. The 2019 income tax expense includes a benefit of $3.3 million from the recognition of previously unrecognized tax benefits (and the reversal of the related accrued interest) due to a lapse in the statute of limitations.
The 2018 income tax expense includes a charge of $3.2 million associated with finalizing the 2017 provisional reasonable estimate, including $2.3 million for the Toll Charge and $0.9 million for the net impact of other items. Additionally, our tax rates are lower than the applicable U.S. statutory tax rate primarily due to income earned in lower tax jurisdictions, partially offset by the impact of taxes on unremitted earnings, the GILTI tax provisions and non-U.S. losses and expenses with no tax benefit.


Segment Information
The Company reports its operations by the following segments: Electronics, Automotive and Industrial. Segment information is described more fully in Note 16, Segment Information, of the Notes to Consolidated Financial Statements included in this Annual Report.
The following table is a summary of the Company’s net sales by segment:
 Fiscal Year    
(in millions)2019 2018 Change % Change
Electronics$961.1
 $1,124.3
 $(163.2) (14.5)%
Automotive428.5
 479.8
 (51.3) (10.7)%
Industrial114.3
 114.4
 (0.1) (0.1)%
Total$1,503.9

$1,718.5

$(214.6) (12.5)%

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Electronics Segment
The Electronics segment net sales decreased $163.2 million, or 14.5%, in 2019 compared to 2018 primarily due to lower volume across all businesses due to electronics distribution partners and end customer reducing excess inventories, a decline in global end market demand, and unfavorable changes in foreign exchange rates of $13.5 million.
Automotive Segment
Net sales in the Automotive segment decreased $51.3 million, or 10.7%, in 2019 compared to 2018 due to lower volume across all businesses primarily from a decline in global auto production, declines in commercial vehicle end market demand, and unfavorable changes in foreign exchange rates of $10.9 million.

Industrial Segment
The Industrial segment net sales decreased slightly by $0.1 million, or 0.1%, in 2019 compared to 2018 primarily due to the exit of the Custom business during the second quarter of 2018 and unfavorable changes in foreign exchange rates of $0.6 million, partially offset by higher volume across all businesses.


Geographic Net Sales Information
Net sales by geography represent net sales to customer or distributor locations. The following table is a summary of the Company’s net sales by geography:
 Fiscal Year    
(in millions)2019 2018 Change % Change
Asia-Pacific$656.8
 $753.3
 $(96.5) (12.8)%
Americas508.4
 578.6
 (70.2) (12.1)%
Europe338.7
 386.6
 (47.9) (12.4)%
Total$1,503.9
 $1,718.5
 $(214.6) (12.5)%
Asia-Pacific
Asia-Pacific net sales decreased $96.5 million, or 12.8%, in 2019 compared to 2018. The decrease in net sales was primarily due to lower volume across all businesses within the Electronics segment and the Automotive segment, and unfavorable changes in foreign exchange rates of $6.8 million.

Americas
Net sales in the Americas decreased $70.2 million, or 12.1%, in 2019 compared to 2018 primarily due to lower volume across all businesses within the Electronics segment and the Automotive segment, the exit of the Custom business within Industrial segment during the second quarter of 2018 and unfavorable changes in foreign exchange rates of $0.8 million, partially offset by higher volume in the power fuse and relay business within Industrial segments.
Europe
European net sales decreased $47.8 million, or 12.4%, in 2019 compared to 2018. The decrease in net sales was primarily due to lower volume across all businesses within the Electronics segment and the Automotive segment, and unfavorable changes in foreign exchange rates of $17.4 million, partially offset by higher volume in the power fuse business within the Industrial segment.



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RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 29, 2018 AS COMPARED TO THE YEAR ENDED DECEMBER 30, 2017
The following table summarizes the Company’s consolidated results of operations for periods presented. The fiscal year 2018 includes approximately $88.7 million of non-segment charges, of which $82.9 million of charges are primarily related to the IXYS acquisition as described in Note 2, Acquisitions and Dispositions, of the Notes to Consolidated Financial Statements included in this Annual Report. These charges include $36.9 million of purchase accounting inventory step-up charges, $18.7 million in acquisition-related and integration costs primarily related to legal, accounting and other expenses, $12.4 million in backlog amortization costs, $8.3 million of employee termination costs and other restructuring charges, $4.5 million of stock compensation expense recognized immediately upon close for converted IXYS options related to prior service periods, and $2.1 million change in control expense related to IXYS. In addition, there were $5.8 million of employee termination costs, impairment and other restructuring charges and acquisition-related expenses for other contemplated acquisitions and included charges associated with the exit of the Custom business in the second quarter within the Industrial segment.
The fiscal year 2017 includes approximately $10.3 million of non-segment charges. These included acquisition-related and integration costs related to legal, accounting and other expenses associated with completed or pending acquisitions of approximately $8.0 million, including $1.6 million of purchase accounting inventory charges related to the Company’s 2017 acquisition of U.S. Sensor as described in Note 2, Acquisitions and Dispositions, of the Notes to Consolidated Financial Statements included in this Annual Report, and $2.2 million of charges related to restructuring and production transfers in the Company’s Asia operations.
Fiscal year 2018 also included approximately $0.9 million in foreign currency exchange gains primarily attributable to changes in the value of the euro, Mexico peso, Philippine peso and Chinese renminbi against the U.S. dollar, while fiscal year 2017 also included approximately $2.4 million in foreign currency exchange losses primarily attributable to changes in the value of the euro, Philippine peso and Chinese renminbi against the U.S. dollar.

 Fiscal Year    
(in thousands, except % change)2018 2017 Change % Change
Net sales$1,718,468
 $1,221,534
 $496,934
 40.7 %
Gross profit652,541
 506,533
 146,008
 28.8 %
Operating expenses427,492
 288,022
 139,470
 48.4 %
Operating income225,049
 218,511
 6,538
 3.0 %
Other income, net(1,599) (1,282) (317) 24.7 %
Income before income taxes204,942
 204,037
 905
 0.4 %
Income taxes40,337
 84,518
 (44,181) (52.3)%
Net income164,565
 119,519
 45,046
 37.7 %
Net Sales
Net sales for 2018 of $1,718.5 million increased $496.9 million, or 40.7%, compared to the prior year with increases of $378.2 million and $6.5 million resulting from incremental net sales related to the IXYS and U.S. Sensor acquisitions, respectively, $16.7 million of favorable changes in foreign exchange rates, and volume growth across all three segments.

Gross Profit
Gross profit was $652.5 million, or 38% of net sales, in 2018, compared to $506.5 million, or 41.5% of net sales, in 2017. The increase in gross profit reflects the IXYS acquisition and volume growth and expense leverage across all segments. The decrease in gross margin is primarily due to the purchase accounting inventory charges of $36.9 million, which negatively impacted gross margin by 2.1 percentage points, and an unfavorable mix of products from the IXYS acquisition, which historically had lower gross margins.

Operating Expenses
Total operating expenses were $427.5 million, or 24.9% of net sales, for 2018 compared to $288.0 million, or 23.6% of net sales, for 2017. The increase in operating expenses of $139.5 million was primarily due to the incremental operating expenses related
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to the IXYS and U.S. Sensor acquisitions, an increase in amortization expense of $27.5 million resulting from the acquisition of IXYS as well as higher acquisition-related and integration costs of $12.1 million. Total operating expenses as a percent of net sales increased from 23.6% in 2017 to 24.9% in 2018 primarily due to the higher amortization expense and acquisition-related and integration charges noted above.
Operating Income
Operating income for 2018 was $225.0 million, an increase of $6.5 million or 3.0% compared to $218.5 million for 2017. The increase in operating income is primarily due to the acquisition of IXYS and volume growth in the Electronics and Industrial segments, partially offset by $36.9 million of purchase accounting inventory charges, higher acquisition-related and integration charges and amortization expense. Operating margins decreased from 17.9% in 2017 to 13.1% in 2018 driven by the purchase accounting inventory charges, higher amortization expense and acquisition-related and integration charges that negatively impacted margins by 2.1%, 1.6% and 0.7%, respectively.
Income Before Income Taxes
Income before income taxes for 2018 was $204.9 million, or 11.9% of net sales compared to $204.0 million, or 16.7% of net sales, for 2017. In addition to the factors impacting comparative results for operating income discussed above, income before income taxes was unfavorably impacted by higher interest expense of $9.2 million mainly resulting from increased borrowings, partially offset by increases in foreign exchange gains of $3.2 million.

Income Taxes
Income tax expense for 2018 was $40.4 million, or an effective tax rate of 19.7% compared to income tax expense of $84.5 million, or an effective tax rate of 41.4%, for 2017. The 2018 income tax expense includes a charge of $3.2 million associated with finalizing the 2017 provisional reasonable estimate, including $2.3 million for the Toll Charge and $0.9 million for the net impact of other items. The 2017 income tax expense includes a charge of $47 million as a provisional reasonable estimate of the impact of the Tax Act, including $49 million for the Toll Charge net of $2 million for other net tax benefits. Additionally, our tax rates are lower than the applicable U.S. statutory tax rate primarily due to income earned in lower tax jurisdictions, partially offset by the impact of taxes on unremitted earnings, and, with respect to 2018, the impact of the GILTI provisions of the Tax Act and non-U.S. losses and expenses with no tax benefit.

Segment Information
The Company reports its operations by the following segments: Electronics, Automotive and Industrial. Segment information is described more fully in Note 16, Segment Information, of the Notes to Consolidated Financial Statements included in this Annual Report.
The following table is a summary of the Company’s net sales by segment:
 Fiscal Year    
(in millions)2018 2017 Change % Change
Electronics$1,124.3
 $661.9
 $462.4
 69.9%
Automotive479.8
 453.2
 26.6
 5.9%
Industrial114.4
 106.4
 8.0
 7.5%
Total$1,718.5
 $1,221.5
 $497.0
 40.7%

Electronics Segment
The Electronics segment net sales increased $462.4 million, or 69.9%, in 2018 compared to 2017 due to incremental net sales related to the IXYS and U.S. Sensor acquisitions of $378.2 million and $6.5 million, respectively, volume growth driven by the continued strong demand across various end markets and geographies, and favorable foreign exchange impacts of $6.5 million.





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Automotive Segment
Net sales in the Automotive segment increased $26.6 million, or 5.9%, in 2018 compared to 2017 due to volume growth across all businesses primarily led by the commercial vehicle and sensor businesses, and favorable foreign exchange impacts of $9.8 million.

Industrial Segment
The Industrial segment net sales increased $8.0 million, or 7.5%, in 2018 compared to 2017 primarily due to volume growth in the power fuse and relay businesses and favorable foreign exchange impacts of $0.4 million, partially offset by a decline in sales from the exit of the Custom business during 2018.

Geographic Net Sales Information
Net sales by geography represent net sales to customer or distributor locations. The following table is a summary of the Company’s net sales by geography:
 Fiscal Year    
(in millions)2018 2017 Change % Change
Asia-Pacific$753.3
 $541.1
 $212.2
 39.2%
Americas578.6
 436.5
 142.1
 32.6%
Europe386.6
 243.9
 142.7
 58.5%
Total$1,718.5
 $1,221.5
 $497.0
 40.7%
Asia-Pacific
Asia-Pacific net sales increased $212.2 million, or 39.2%, in 2018 compared to 2017. The increase in net sales was primarily due to incremental net sales related to the IXYS acquisition of $173.9 million and volume growth across all segments as well as favorable foreign exchange impacts of $3.7 million.

Americas
Net sales in the Americas increased $142.1 million, or 32.6%, in 2018 compared to 2017 driven by incremental net sales related to the IXYS and U.S. Sensor acquisitions of $90.7 million and $5.5 million, respectively, volume growth across all segments and favorable foreign exchange impacts of $0.4 million.
Europe
European net sales increased $142.7 million, or 58.5%, in 2018 compared to 2017. The increase in net sales was primarily due to incremental net sales related to the IXYS acquisition of $113.6 million with volume growth across the Electronics and Automotive segments as well as favorable foreign exchange impacts of $12.6 million. 


Liquidity and Capital Resources
Cash and cash equivalents were $531.1 million as of December 28, 2019, an increase of $41.4 million as compared to December 29, 2018.
As of December 28, 2019, $333.2 million of the Company's $531.1 million cash and cash equivalents was held by non-U.S. subsidiaries. Of the $333.2 million, at least $165 million can be repatriated with minimal tax consequences, although in certain cases a non-U.S. withholding tax would be payable but subsequently refunded. With respect to the remaining $168.2 million, the Company has recognized deferred tax liabilities on approximately $78.5 million as of December 28, 2019 because the amounts are not considered to be permanently reinvested, and the Company may access additional amounts through loans and other means. Repatriation of some non-U.S. cash balances is restricted by local laws. Management regularly evaluates whether foreign earnings are expected to be permanently reinvested. This evaluation requires judgment about the future operating and liquidity needs of the Company and its foreign subsidiaries. Changes in economic and business conditions, non-U.S. or U.S. tax laws could result in changes to these judgments and the need to record additional tax liabilities.
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The Company has historically supported its liquidity needs through cash flows from operations. Management expects that the Company’s (i) current level of cash, cash equivalents, and marketable securities, (ii) current and forecasted cash flows from operations, (iii) availability under existing funding arrangements, and (iv) access to capital in the capital markets will provide sufficient funds to support the Company’s operations, capital expenditures, investments, and debt obligations on both a short-term and long-term basis.
Revolving Credit Facility/Term Loan
On March 4, 2016, the Company entered into a five-year credit agreement (“Credit Agreement”) with a group of lenders for up to $700.0 million. The Credit Agreement consisted of an unsecured revolving credit facility (“Revolving Credit Facility”) of $575.0 million and an unsecured term loan credit facility (“Term Loan”) of up to $125.0 million. In addition, the Company had the ability, from time to time, to increase the size of the Revolving Credit Facility and the Term Loan by up to an additional $150.0 million, in the aggregate, in each case in minimum increments of $25.0 million, subject to certain conditions and the agreement of participating lenders.
On October 13, 2017, the Company amended the Credit Agreement to increase the Revolving Credit Facility from $575.0 million to $700.0 million and increase the Term Loan 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 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 of $125.0 million occurred on October 13, 2017 and the second advance of $75.0 million occurred on January 16, 2018. For the Term Loan, the Company is required to make quarterly principal payments of 1.25% of the original term loan ($2.5 million quarterly) through maturity, with the remaining balance due on October 13, 2022. The Company paid $10.0 million of principal payments on the Term Loan for the fiscal year ended December 28, 2019.

Outstanding borrowings under the Credit Agreement bear interest, at the Company’s option, at either LIBOR fixed for interest periods of one, two, three or six-month periods plus 1.00% to 2.00%, or at the bank’s Base Rate, as defined, plus 0.00% to 1.00%, based upon the Company’s Consolidated Leverage Ratio, as defined. The Company is also required to pay commitment fees on unused portions of the credit agreement ranging from 0.15% to 0.25%, based on the Consolidated Leverage Ratio, as defined in the agreement. The credit agreement includes representations, covenants and events of default that are customary for financing transactions of this nature. The effective interest rate on outstanding borrowings under the credit facility was 3.20% at December 28, 2019.

As of December 28, 2019, the Company had no amounts outstanding in letters of credit and had available $353.4 million of borrowing capacity under the Revolving Credit Facility.

Senior Notes
On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold €212 million aggregate principal amount of senior notes in two series. The funding date for the Euro denominated senior notes occurred on December 8, 2016 for €117 million in aggregate amount of 1.14% Senior Notes, Series A, due December 8, 2023 (“Euro Senior Notes, Series A due 2023”), and €95 million in aggregate amount of 1.83% Senior Notes, Series B due December 8, 2028 (“Euro Senior Notes, Series B due 2028”) (together, the “Euro Senior Notes”). Interest on the Euro Senior Notes is payable semiannually on June 8 and December 8, commencing June 8, 2017.
On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold $125 million aggregate principal amount of senior notes in two series. On February 15, 2017, $25 million in aggregate principal amount of 3.03% Senior Notes, Series A, due February 15, 2022 (“U.S. Senior Notes, Series A due 2022”), and $100 million in aggregate principal amount of 3.74% Senior Notes, Series B, due February 15, 2027 (“U.S. Senior Notes, Series B due 2027”) (together, the “U.S. Senior Notes due 2022 and 2027”) were funded. Interest on the U.S. Senior Notes due 2022 and 2027 is payable semiannually on February 15 and August 15, commencing August 15, 2017.
On November 15, 2017, the Company entered into a Note Purchase Agreement pursuant to which the Company issued and sold $175 million in aggregate principal amount of senior notes in two series. On January 16, 2018, $50 million aggregate principal amount of 3.48% Senior Notes, Series A, due February 15, 2025 (“U.S. Senior Notes, Series A due 2025”) and $125 million in aggregate principal amount of 3.78% Senior Notes, Series B, due February 15, 2030 (“U.S. Senior Notes, Series B due 2030”) (together, the “U.S. Senior Notes due 2025 and 2030” and with the Euro Senior Notes and the U.S. Senior Notes due 2022 and
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2027, the “Senior Notes”) were funded. Interest on the U.S. Senior Notes due 2025 and 2030 is payable semiannually on February 15 and August 15, commencing August 15, 2018.
The Company was in compliance with its debt covenants as of December 28, 2019 and expects to remain in compliance based on management’s estimates of operating and financial results for 2020 and the foreseeable future. As of December 28, 2019, the Company met all the conditions required to borrow under the Credit Agreement and management expects the Company to continue to meet the applicable borrowing conditions.
Acquisitions
During the year ended December 29, 2018, the Company paid $306.5 million, net of cash acquired, for the acquisition of IXYS. Pursuant to the Securities Purchase Agreement, the Company paid $9.0 million for the acquisition of the remaining 38% outstanding common stock of Monolith during the year ended December 29, 2018. The Company financed the cash portion of the IXYS acquisition with a combination of cash on hand and borrowings under the credit facility.

During the year ended December 30, 2017, the Company paid $38.5 million, net of cash acquired, for the acquisitions of U.S Sensor and Monolith. The Company financed these acquisitions with a combination of cash on hand and borrowings under the credit facility.
Cash Flow Overview
Operating cash inflows are largely attributable to sales of the Company’s products. Operating cash outflows are largely attributable to recurring expenditures for raw materials, labor, rent, interest, taxes and other operating activities.
The following describes the Company’s cash flows for the twelve months ended December 28, 2019 and December 29, 2018:
 Fiscal Year
(in millions)2019 2018
Net cash provided by operating activities$245.3
 $331.8
Net cash used in investing activities(56.4) (382.3)
Net cash (used in) provided by financing activities(146.3) 121.9
Effect of exchange rate changes on cash and cash equivalents(1.2) (11.4)
Increase in cash and cash equivalents41.4

60.0
Cash and cash equivalents at beginning of year489.7
 429.7
Cash and cash equivalents at end of year$531.1

$489.7
CashFlowfrom Operating Activities

Net cash provided by operating activities was $245.3 million for 2019, compared to $331.8 million during 2018. The decrease in net cash provided by operating activities was primarily driven by lower earnings and higher working capital levels primarily due to the timing of supplier payments, payroll year-end cut off and higher annual incentive compensation payments in 2019.

CashFlowfrom Investing Activities
Net cash used in investing activities was $56.5 million for 2019, compared to $382.3 million during 2018. Net cash used for the acquisition of IXYS was $306.5 million and $9.0 million for the acquisition of the remaining 38% outstanding common stock of Monolith in 2018. Capital expenditures were $61.9 million, representing a decrease of $12.9 million compared to 2018. The Company also received proceeds of $6.2 million in 2019 primarily as a result of the sale of a property within the Industrial segment.
CashFlowfrom Financing Activities
Net cash used in financing activities was $146.3 million for 2019 compared to net cash provided by financing activities of $121.9 million for 2018. The Company repurchased 579,916 shares of its common stock during fiscal 2019 totaling $95.0 million, but made payments of $99.4 million related to settled share repurchases. The Company made payments of $10.0 million on the term
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loan in 2019 as compared to $310.0 million of proceeds from the credit facility, term loan and senior notes payable and $102.5 million of payments on the credit facility and term loan during 2018.
The following describes the Company’s cash flows for the twelve months ended December 29, 2018 and December 30, 2017:
 Fiscal Year
(in millions)2018 2017
Net cash provided by operating activities$331.8
 $269.2
Net cash used in investing activities(382.3) (96.1)
Net cash provided by (used in) financing activities121.9
 (24.7)
Effect of exchange rate changes on cash and cash equivalents(11.4) 6.2
Increase (decrease) in cash and cash equivalents60.0

154.6
Cash and cash equivalents at beginning of year429.7
 275.1
Cash and cash equivalents at end of year$489.7

$429.7
CashFlowfrom Operating Activities
Net cash provided by operating activities was $331.8 million for 2018, compared to $269.2 million during 2017. The increase in net cash provided by operating activities was primarily driven by higher earnings and favorable working capital management that more than offset higher payments related to cash taxes and acquisition and integration costs.
CashFlowfrom Investing Activities
Net cash used in investing activities was $382.3 million for 2018, compared to $96.1 million during 2017. Net cash used for the acquisition of IXYS was $306.5 million in 2018 compared to acquisitions of $38.5 million in 2017 related to the acquisition of a majority stake in Monolith for $14.2 million and the acquisition of U.S. Sensor for $24.3 million. Capital expenditures were $74.8 million, representing an increase of $8.8 million compared to 2017. The Company also received proceeds of $9.6 million in 2018 primarily as a result of the sale of a building.
CashFlowfrom Financing Activities
Net cash provided by financing activities was $121.9 million for 2018 compared to net cash used in financing activities of $24.7 million for 2017. The Company had $310.0 million of proceeds from the credit facility, term loan and senior notes payable partially offset by payments of $102.5 million on credit facility and the term loan in 2018 as compared to $149.4 million of proceeds from the credit facility, term loan and senior notes payable and $134.7 million of payments on credit facility and the term loan during 2017. The Company repurchased 391,972 shares of its common stock during fiscal 2018 totaling $63.6 million.
Dividends
Cash dividends paid totaled $44.7 million, $40.0 million and $31.8 million for 2019, 2018 and 2017, respectively. On January 29, 2020, the Board of Directors of the Company declared a quarterly cash dividend of $0.48 per share, payable on March 5, 2020 to stockholders of record as of February 20, 2020.
Capital Resources
The Company expends capital to support its operating and strategic plans. Such expenditures include strategic acquisitions, investments to maintain capital assets, develop new products or improve existing products, and to enhance capacity or productivity. Many of the associated projects have long lead-times and require commitments in advance of actual spending.
Share Repurchase Program

 On May 2, 2018, the Company announced that the Company’s Board of Directors had authorized the repurchase of up to 1,000,000 shares of the Company’s common stock under a program for the period May 1, 2018 to April 30, 2019 (the "2018 program"). On May 1, 2019, the Company announced that the Company's Board of Directors had authorized a new program to repurchase up to 1,000,000 shares of the Company's common stock for the period May 1, 2019 to April 30, 2020 (the "2019 program"). As of April 30, 2019, 528,112 shares remained available for repurchases under the 2018 program. During the fiscal
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year ended December 28, 2019, the Company repurchased 579,916 shares of its common stock totaling $95.0 million. There were 500,000 shares remaining available for purchase under the 2019 program as of December 28, 2019.


Contractual Obligations and Commitments
The following table summarizes outstanding contractual obligations and commitments as of December 28, 2019:
 Payments Due By Period
(in thousands)Total 
Less than
1 Year
 
1 to 3
 Years
 
3 to 5
 Years
 
Greater
than
 5 Years
Long-term debt(a)
$682,827
 $10,000
 $162,619
 $129,808
 $380,400
Interest payments(b)
114,695
 18,114
 33,998
 23,858
 38,725
Operating lease payments(c)
27,028
 8,207
 11,680
 6,683
 458
Income Tax Obligation(d)
26,754
 3,000
 5,273
 11,534
 6,947
Purchase obligations(e)
22,773
 19,377
 947
 942
 1,507
Total$874,077
 $58,698

$214,517

$172,825

$428,037
(a)Excludes offsetting issuance costs of $3.7 million. Euro denominated debt amounts are converted based on the Euro to U.S. Dollar spot rate at year end. For more information see Note 9, Debt, of the Notes to Consolidated Financial Statements.

(b)Amounts represent estimated contractual interest payments on outstanding debt. Rates in effect as of December 28, 2019 are used for variable rate debt. For more information see Note 9, Debt, of the Notes to Consolidated Financial Statements.

(c)For more information see Note 7, Lease Commitments, of the Notes to Consolidated Financial Statements.

(d)The Income Tax Obligation represents the remaining amounts payable regarding the 2017 Littelfuse Toll Charge. The Company has elected to pay the 2017 Littelfuse Toll Charge over the eight-year period prescribed by the Tax Act. For more information see Note 14, Income Taxes, of the Notes to Consolidated Financial Statements.

(e)Purchase obligations include purchase commitments and commitments for capital expenditures not recognized in the Company’s Consolidated Balance Sheets.

In addition to the above contractual obligations and commitments, the Company had the following obligations at December 28, 2019: 

The Company has Company-sponsored defined benefit pension plans covering employees at various non-U.S. subsidiaries including the U.K., Germany, the Philippines, China, Japan, Mexico, Italy and France. At December 28, 2019, the Company had a net unfunded status of $38.4 million. The Company expects to make approximately $2.3 million of contributions to the plans in 2020. For additional information, see Note 11, Benefit Plans, of the Notes to Consolidated Financial Statements.
The Company has a non-qualified Supplemental Retirement and Savings Plan which provides additional retirement benefits for certain management employees and named executive officers by allowing participants to defer a portion of their annual compensation. As of December 28, 2019, there was $10.5 million of accrued compensation benefits included in Other long-term liabilities. For additional information, see Note 11, Benefit Plans, of the Notes to Consolidated Financial Statements.
As of December 28, 2019, the Company recognized various accruals related to employee compensation including its annual incentive program that are expected to be paid in 2020.
Due to the uncertainty with respect to the cash outflows, the preceding table excludes unrecognized tax benefits of $16.7 million. The Company does not expect to make significant payments of these liabilities within the next year. For additional information, see Note 14, Income Taxes, of the Notes to Consolidated Financial Statements.




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Off-Balance Sheet Arrangements
As of December 28, 2019, the Company did not have any off-balance sheet arrangements, as defined under SEC rules. Specifically, the Company was not liable for guarantees of indebtedness owed by third parties, the Company was not directly liable for the debt of any unconsolidated entity and the Company did not have any retained or contingent interest in assets. The Company does not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.

Recent Accounting Pronouncements
Recently issued accounting standards and their estimated effect on the Company’s Consolidated Financial Statements are described in Note 1, Summary of Significant Accounting Policies and Other Information, of the Notes to Consolidated Financial Statements.


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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The companyCompany is exposed to market risk from changes in interest rates, foreign exchange rates and commodity prices.

Interest Rates

Risk

The companyCompany had $232.8$145.0 million in debt outstanding at December 31, 201628, 2019 related to the unsecured revolving credit facility and term loan. Because 100% of this debt hasWith variable interest rates, the companyCompany is subject to future interest rate fluctuations in relation to these borrowings which could potentially have a negative impact on cash flows of the company.Company. A prospective increase of 100 basis points in the interest rate applicable to the company’sCompany’s outstanding borrowings under its credit facility would result in an increase of approximately $2.3$1.5 million in annual interest expense. The companyCompany is not party to any currency exchange or interest rate protection agreements as of December 31, 2016.

28, 2019.

Foreign Exchange Rates

Rate Risk

The majority of the company’s operations consist of manufacturing and sales activities in foreign countries. The companyCompany has manufacturing facilitiesoperations in the U.S.,China, Germany, Mexico, Canada, China, Italy,Philippines, United Kingdom, Japan, Lithuania, JapanNetherlands, Portugal, Singapore, South Korea, Spain, and the Philippines.U.S. During 2016,2019, sales to customers outside the U.S. were approximately 66%71% of total net sales. During 2015,2018, sales to customers outside the U.S. were approximately 60%70% of total net sales. Substantially all sales in Europe are denominated in euros and substantially all sales in the Asia-Pacific region are denominated in U.S. dollars, Chinese renminbi, Japanese yen, or Korean won, Chinese renminbi or Taiwanese dollars.

won.

The company’s foreign exchange exposures result primarily from inter-company loans, external borrowings, sale of products in foreign currencies, foreign currency denominated purchases, external borrowings, inter-company loans, employee-related and other costs of running operations in foreign countries and translation of balance sheet accounts denominated in foreign currencies.countries. The company’s most significant net long exposure isforeign currency exposures are to the euro. The company’s most significant net short exposures are toeuro, the Chinese renminbi, Mexican peso, and Philippine peso. Changes in foreign exchange rates could affect the company’s sales, costs, balance sheet values and earnings. The company uses netting and offsetting intercompany account management techniques
At December 28, 2019, the net value of the Company’s assets with exposure to reduce known foreign currency exposures where possible.

Commodity Prices

risk was approximately $147 million, with the largest exposure being a Japanese yen denominated inter-company loan with a Euro functional currency subsidiary. The companyreduction in earnings from a hypothetical instantaneous 10% adverse change in quoted foreign currency spot rates applied to foreign currency sensitive asset instruments would be $15 million at December 28, 2019. At December 28, 2019, the net value of the Company’s liabilities with exposure to foreign currency risk was $369 million, with the largest exposure being U.S. Dollar denominated inter-company loans with a Euro functional currency subsidiary. The reduction in earnings from a hypothetical instantaneous 10% adverse change in quoted foreign currency spot rates applied to foreign currency sensitive liability instruments would be $37 million at December 28, 2019. As a result of the mix in currencies impacting the hypothetical 10% changes, the movements in some instruments would offset movements in other instruments reducing the hypothetical exposure to the Company.

CommodityPrice Risk
The Company uses various metals in the manufacturing of its products, including copper, zinc, tin, gold, and silver. Prices of these commodities can rise and do fluctuate significantly, which can impactresult in materially higher costs of producing our products. The Company believes it has adequate primary and secondary sources of supply for each of our key materials and that, in periods of rising prices, the company’s earnings. The most significantCompany expects to recover a majority of these exposures isthe increased cost in the form of higher selling prices. However, recoveries typically lag the effect of cost increases due to copper, zinc, gold, and silver, where at current prices and volumes, a 10% price change would affect annual pre-tax profit by approximately $2.4 million for copper, $0.9 million for zinc, $0.2 million for gold, $0.5 million for silver, and $0.3 million for tin.

the nature of our markets.

The cost of oil has fluctuated dramatically over the past several years. Consequently, there is a risk that a return to high prices for oil and electricity in 20172020 could have a significant impact on the company’sCompany’s transportation and utility expenses.

While the companyCompany is exposed to significant changes in certain commodity prices and foreign currency exchange rates, the companyCompany actively monitors these exposures and takesmay take various actions from time to time to mitigate any negative impacts of these exposures.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Index

IndexPage

  

Report of Independent Registered Public Accounting Firm – Consolidated Financial Statements

33

40

Report of Independent Registered Public Accounting Firm – Internal Control Over Financial Reporting

34

42

Consolidated Financial Statements

 

Consolidated Balance Sheets

35

43

Consolidated Statements of Net Income

36

44

Consolidated Statements of Comprehensive Income

36

45

Consolidated Statements of Cash Flows

37

46

Consolidated Statements of Equity

38

47

Notes to Consolidated Financial Statements

 

1. Summary of Significant Accounting Policies and Other Information

39

48

2. Correction of Immaterial Errors

Acquisitions and Dispositions

44

56

3. Acquisitions

Inventories

45

60

4. Divestitures

Property, Plant, and Equipment

48

61

5. Inventories

49

6.

5. Goodwill and Other Intangible Assets

49

61

6. Accrued Liabilities
62
7. Lease Commitments

50

63

8. Debt

Restructuring, Impairment and Other Charges

50

64

9. Debt
65
10. Fair Value of Assets and Liabilities

52

68

10.

11. Benefit Plans

53

70

11. Shareholders’ Equity

57

12. Stock-Based Compensation
74

12.

13. Other Comprehensive (Loss) Income
76
14. Income Taxes

58

77

13.

15. Earnings Per Share

60

81

14.

16. Segment Information

61

81

15.

17. Selected Quarterly Financial Data (Unaudited)

64

84
18. Related Party Transactions
85

 


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Report of Independent Registered Public Accounting Firm

The

Board of Directors and Shareholders of
Littelfuse, Inc.


Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Littelfuse, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 201628, 2019 and January 2, 2016, andDecember 29, 2018, the related consolidated statements of net income, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2016. Our audits28, 2019, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the basicCompany as of December 28, 2019 and December 29, 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 28, 2019, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 28, 2019, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 21, 2020, expressed an unqualified opinion.

Change in accounting principle
As discussed in Note 1 to the consolidated financial statements, included the financial statement schedule listed inCompany has changed its method of accounting for operating leases as of December 30, 2018 due to the index appearing under Item 15(a)(2)adoption of ASU 2016-02, Leases (Topic 842).
Basis for opinion
These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesethe Company’s financial statements and financial statement schedule based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesmisstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An auditOur audits also includes assessingincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.

In


Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Littelfuse, Inc. and subsidiaries as of December 31, 2016 and January 2, 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements, taken as a whole, present fairly, in all material respects,and we are not, by communicating the information set forth therein.

We also have audited, in accordance withcritical audit matter below, providing a separate opinion on the standards ofcritical audit matter or on the Public Company Accounting Oversight Board (United States), theaccounts or disclosures to which it relates.

Goodwill Impairment Analysis
The Company’s internal control over financial reportingconsolidated goodwill balance was $820.6 million as of December 31, 2016, based on criteria established28, 2019. As described in Note 1 to the consolidated financial statements, the Company evaluates goodwill for impairment at the reporting unit level annually and performed quantitative goodwill impairment assessment for each of its seven reporting units. The quantitative impairment assessment involves the comparison of the fair value of a reporting unit to its carrying amount. The Company used a weighting of the income and market approaches to determine the fair value of the reporting unit.
We identified the goodwill impairment analysis as a critical audit matter for certain reporting units because management's quantitative goodwill impairment test involved a high degree of auditor judgment due to the significant estimation required to
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determine the fair value of the reporting unit. In particular, the fair value estimate was sensitive to significant assumptions, such as forecasted revenues, operating income margins, long-term discount rate, perpetual growth rate, and estimated valuation multiples.
Our audit procedures related to the goodwill impairment analysis of certain reporting units included the following, among others. We tested the design and operating effectiveness of key controls over the Company's goodwill impairment assessment process including review of the valuation model and significant assumptions used. We tested the significant assumptions discussed above by assessing the reasonableness of management’s forecasts compared to current results and forecasted industry trends. We performed sensitivity analyses of certain assumptions to evaluate changes in the 2013 Internal Control—Integrated Framework issued byfair value that would result from changes in the Committeeassumptions. With the assistance of Sponsoring Organizationsour valuation specialists, we evaluated the selection of the Treadway Commission (COSO),long-term discount rate and perpetual growth rate, including testing the underlying source information and the mathematical accuracy of the calculations by developing a range of independent estimates and comparing those to the rates selected by management. We also involved our report dated February 27, 2017 expressed an unqualified opinion

valuation specialists to evaluate the market approach, including evaluating the reasonableness of estimated valuation multiples.

/s/ GRANT THORNTON LLP

Chicago, Illinois

February 27, 2017

 

We have served as the Company’s auditor since 2014.
Southfield, Michigan
February 21, 2020


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Report of Independent Registered Public Accounting Firm

The

Board of Directors and Shareholders of
Littelfuse, Inc.

Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Littelfuse, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2016,28, 2019, based on criteria established in the 2013Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)("COSO"). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 28, 2019, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 28, 2019, and our report dated February 21, 2020 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting (“Management’s Report”). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. Our audit of,We are a public accounting firm registered with the PCAOB and opinion on,are required to be independent with respect to the Company’s internal control over financial reporting does not includeCompany in accordance with the internal control over financial reporting of PolySwitch, Menber’sU.S. federal securities laws and the ON Portfolio businesses, wholly-owned subsidiaries, whose financial statements reflect total assetsapplicable rules and revenues constituting 36 percent and 16 percent, respectively, in aggregate,regulations of the related consolidated financial statement amounts as ofSecurities and for the year ended December 31, 2016. As indicated in Management’s Report, PolySwitch, Menber’sExchange Commission and the ON Portfolio businesses were acquired during 2016. Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of PolySwitch, Menber’s and the ON Portfolio businesses.

PCAOB.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on criteria established in the 2013Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidatedfinancial statements of the Company as of and for the year ended December 31, 2016, and our report dated February 27, 2017 expressed an unqualified opinionon those financial statements.


/s/ GRANT THORNTON LLP

Chicago, Illinois

Southfield, Michigan
February 27, 2017

21, 2020
 




LITTELFUSE, INC.
CONSOLIDATED BALANCE SHEETS

(in thousands)

 

December 31,2016

  

January 2,2016

 

ASSETS

        

Current assets:

        

Cash and cash equivalents

 $275,124  $328,786 

Short-term investments

  3,690   4,179 

Accounts receivable, less allowances (2016 - $25,874; 2015 - $17,486)

  198,095   142,882 

Inventories

  114,063   98,629 

Prepaid income taxes

  11,671   1,510 

Prepaid expenses and other current assets

  9,438   7,943 

Total current assets

  612,081   583,929 

Property, plant, and equipment:

        

Land

  9,268   5,236 

Buildings

  80,553   71,383 

Equipment

  439,542   382,429 

Accumulated depreciation and amortization

  (312,188)  (296,480)

Net property, plant, and equipment

  217,175   162,568 

Intangible assets, net of amortization:

        

Patents, licenses and software

  83,607   20,221 

Distribution network

  18,995   16,490 

Customer relationships, trademarks and tradenames

  110,425   54,912 

Goodwill

  403,544   189,767 

Investments

  13,933   15,197 

Deferred income taxes

  20,585   8,333 

Other assets

  10,849   14,058 

Total assets

 $1,491,194  $1,065,475 

LIABILITIES AND EQUITY

        

Current liabilities:

        

Accounts payable

 $90,712  $51,658 

Accrued payroll

  42,810   32,611 

Accrued expenses

  36,138   24,145 

Accrued severance

  2,785   3,798 

Accrued income taxes

  8,846   11,836 

Current portion of long-term debt

  6,250   87,000 

Total current liabilities

  187,541   211,048 

Long-term debt, less current portion

  447,892   83,753 

Deferred income taxes

  7,066   8,014 

Accrued post-retirement benefits

  13,398   5,653 

Other long-term liabilities

  20,366   17,755 

Shareholders’ equity:

        

Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, 2016 –22,626,922; 2015 –22,420,785

  228   224 

Treasury stock, at cost: 409,115 and 362,748 shares, respectively

  (36,510)  (32,766)

Additional paid-in capital

  291,258   259,553 

Accumulated other comprehensive income

  (74,579)  (45,673)

Retained earnings

  634,391   557,771 

Littelfuse, Inc. shareholders’ equity

  814,788   739,109 

Non-controlling interest

  143   143 

Total equity

  814,931   739,252 

Total liabilities and equity

 $1,491,194  $1,065,475 

(in thousands, except share and per share data)December 28, 2019 December 29, 2018
ASSETS   
Current assets:   
Cash and cash equivalents$531,139
 $489,733
Short-term investments44
 34
Trade receivables, less allowances of $42,043 and $36,038 at December 28, 2019 and December 29, 2018, respectively202,309
 232,892
Inventories237,507
 258,228
Prepaid income taxes and income taxes receivable4,831
 2,339
Prepaid expenses and other current assets28,564
 49,291
Total current assets1,004,394

1,032,517
Net property, plant, and equipment344,617

339,894
Intangible assets, net of amortization321,247
 361,474
Goodwill820,589
 826,715
Investments24,099
 25,405
Deferred income taxes8,069
 7,330
Rights of use lease assets, net21,918
 —
Other assets14,965
 20,971
Total assets$2,559,898

$2,614,306
LIABILITIES AND EQUITY   
Current liabilities:   
Accounts payable$117,320
 $126,323
Accrued liabilities84,120
 138,405
Accrued income taxes14,122
 20,547
Current portion of long-term debt10,000
 10,000
Total current liabilities225,562

295,275
Long-term debt, less current portion669,158
 684,730
Deferred income taxes49,763
 51,853
Accrued post-retirement benefits38,198
 31,874
Non-current operating lease liabilities17,166
 —
Other long-term liabilities64,037
 72,232
Shareholders’ equity:   
Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, 25,855,203 and 25,641,959 in 2019 and 2018, respectively256
 254
Treasury stock, at cost: 1,473,901 and 868,045 shares, respectively(216,447) (116,454)
Additional paid-in capital867,996
 835,828
Accumulated other comprehensive loss(106,823) (97,924)
Retained earnings950,901
 856,507
Littelfuse, Inc. shareholders’ equity1,495,883

1,478,211
Non-controlling interest131
 131
Total equity1,496,014
 1,478,342
Total liabilities and equity$2,559,898

$2,614,306
See accompanying Notes to Consolidated Financial Statements.


LITTELFUSE, INC.
CONSOLIDATED STATEMENTS OF NET INCOME

  

Year Ended

 

(in thousands, except per share data)

 

December 31,

2016

  

January 2,

2016

  

December 27,

2014

 
             

Net sales

 $1,056,159  $867,864  $851,995 

Cost of sales

  643,042   537,365   527,567 

Gross profit

  413,117   330,499   324,428 
             

Selling, general, and administrative expenses

  206,129   153,714   146,975 

Research and development expenses

  42,198   30,802   31,122 

Pension settlement expenses

  —   29,928   — 

Amortization of intangibles

  19,337   11,898   12,501 

Impairment of goodwill and intangible assets

  14,809   —   — 

Total operating expenses

  282,473   226,342   190,598 

Operating income

  130,644   104,157   133,830 
             

Interest expense

  8,628   4,091   4,903 

Foreign exchange (gain) loss

  472   (1,465)  3,925 

Other expense (income), net

  (1,730)  (5,417)  (6,644)

Income before income taxes

  123,274   106,948   131,646 

Income taxes

  18,786   26,082   33,546 

Net income

 $104,488  $80,866  $98,100 
             

Income per share:

            

Basic

 $4.63  $3.58  $4.35 

Diluted

 $4.60  $3.56  $4.32 
             

Weighted-average shares and equivalentshares outstanding:

            

Basic

  22,559   22,565   22,543 

Diluted

  22,727   22,719   22,727 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

  

Year Ended

 

(in thousands)

 

December 31,

2016

  

January 2,

2016

  

December 27,

2014

 
             

Net income

 $104,488  $80,866  $98,100 

Other comprehensive income (loss):

            

Pension and postemployment liability adjustments (net of tax of $1,302, $106 and $6,308, respectively)

  (3,673)  (1,761)  (12,475)

Pension and postemployment reclassification adjustments, (net of tax of $0, $746 and $0, respectively)

  412   1,530   — 

Unrealized gain (loss) on investments

  (815)  793   1,398 

Reclassification of pension settlement costs to expense (net of tax of $0, $11,742 and $0, respectively)

  —   21,124   — 

Foreign currency translation adjustments

  (24,832)  (46,231)  (30,466)

Comprehensive income

 $75,580  $56,321  $56,557 

 Fiscal Year Ended
(in thousands, except per share data)December 28, 2019 December 29, 2018 December 30, 2017
Net sales$1,503,873
 $1,718,468
 $1,221,534
Cost of sales962,424
 1,065,927
 715,001
Gross profit541,449

652,541

506,533
      
Selling, general, and administrative expenses228,093
 288,001
 212,833
Research and development expenses80,539
 87,301
 50,489
Amortization of intangibles40,026
 52,190
 24,700
Total operating expenses348,658

427,492

288,022
Operating income192,791

225,049

218,511
      
Interest expense22,266
 22,569
 13,380
Foreign exchange loss (gain)5,224
 (863) 2,376
Other income, net(583) (1,599) (1,282)
Income before income taxes165,884

204,942

204,037
Income taxes26,802
 40,377
 84,518
Net income$139,082

$164,565

$119,519
      
Income per share:     
Basic$5.66
 $6.62
 $5.27
Diluted$5.60
 $6.52
 $5.21
      
Weighted average shares and equivalent shares outstanding:     
Basic24,576
 24,870
 22,687
Diluted24,818
 25,235
 22,931
See accompanying Notes to Consolidated Financial Statements.



LITTELFUSE, INC.
CONSOLIDATED STATEMENTS OFCASH FLOWS

  

Year Ended

 

(in thousands)

 

December31,

2016

  

January2,

2016

  

December 27,

2014

 

Operating activities

            

Net income

 $104,488  $80,866  $98,100 

Adjustments to reconcile net income to net cash provided by operating activities:

            

Depreciation

  33,800   29,701   29,374 

Amortization of intangibles

  19,337   11,898   12,501 

Impairment of assets

  14,809   —   293 

Provision for bad debts

  1,769   164   130 

Non-cash inventory charge

  7,834   —   2,769 

Net loss on pension settlement, net of tax

  —   19,308   — 

Loss on sale of product line

  1,391   —   — 

Loss on sale of property, plant, and equipment

  813   1,253   1,042 

Stock-based compensation

  11,987   10,266   9,069 

Excess tax benefit on share-based compensation

  (3,421)  (1,891)  (2,843)

Deferred income taxes

  (5,269)  11,479   (4,488)

Changes in operating assets and liabilities:

            

Accounts receivable

  (25,235)  (14,377)  (13,062)

Inventories

  8,539   (3,577)  (2,258)

Accounts payable

  19,190   2,573   17,281 

Accrued expenses (including post-retirement)

  2,287   6,482   (1,577)

Accrued payroll and severance

  6,131   5,883   2,360 

Accrued taxes

  (18,062)  557   769 

Prepaid expenses and other

  (255)  5,241   3,681 

Net cash provided by operating activities

  180,133   165,826   153,141 
             

Investing activities

            

Acquisitions of businesses, net of cash acquired

  (471,118)  (4,558)  (56,368)

Purchases of short-term investments

  —   —   (4,331)

Purchase of cost method investment

  —   (3,500)  — 

Proceeds from maturities of short-term investments

  345   —   6,770 

Decrease (increase) in entrusted loan

  5,510   7,811   (17,908)

Purchases of property, plant, and equipment

  (46,228)  (44,019)  (32,281)

Proceeds from sale of property, plant, and equipment

  248   102   125 

Net cash used in investing activities

  (511,243)  (44,164)  (103,993)
             

Financing activities

            

Proceeds of revolving credit facility

  367,000   49,000   97,500 

Proceeds of term loan

  125,000   —   — 

Proceeds of senior notes payable

  226,428   —   — 

Payments of term loan

  (89,688)  (8,750)  (5,000)

Payments of revolving credit facility

  (331,500)  (55,500)  (135,000)

Proceeds from exercise of stock options

  20,494   9,150   14,061 

Proceeds (Payments) from entrusted loan

  (5,510)  (7,811)  17,908 

Debt issuance costs

  (3,583)  (42)  (107)

Cash dividends paid

  (27,866)  (24,341)  (21,175)

Excess tax benefit on share-based compensation

  3,421   1,891   2,843 

Purchases of common stock

  —   (31,252)  (14,283)

Net cash provided by (used in) financing activities

  284,196   (67,655)  (43,253)

Effect of exchange rate changes on cash and cash equivalents

  (6,748)  (22,792)  (13,516)

Increase (decrease) in cash and cash equivalents

  (53,662)  31,215   (7,621)

Cash and cash equivalents at beginning of year

  328,786   297,571   305,192 

Cash and cash equivalents at end of year

 $275,124  $328,786  $297,571 

COMPREHENSIVE INCOME

 Year Ended
(in thousands)December 28, 2019 December 29, 2018 December 30, 2017
Net income$139,082
 $164,565
 $119,519
Other comprehensive income (loss):     
Pension and postemployment adjustments, net of tax(8,087) 877
 1,147
Unrealized loss on investments—
 —
 (974)
Foreign currency translation adjustments(812) (25,338) 10,738
Comprehensive income$130,183

$140,104

$130,430
See accompanying Notes to Consolidated Financial Statements.



LITTELFUSE, INC.
CONSOLIDATED STATEMENTS OF EQUITY

  

Littelfuse, Inc. Shareholders’ Equity

         
                      

(in thousands)

 

Common

Stock

  

Addl. Paid in Capital

  

Treasury

Stock

  

Accum. Other Comp. Inc. (Loss)

  

Retained Earnings

  

Non-

controlling Interest

  

Total

 

Balance at December 28, 2013

 $225  $223,425  $(2,353) $20,417  $445,059  $143  $686,916 

Prior period restatement

  —   —   —   —   (2,028)  —   (2,028)

Balance at December 28, 2013 (restated)

 225  223,425  (2,353) 20,417  443,031  143  684,888 

Comprehensive income:

                            

Net income for the year

  —   —   —   —   98,100   —   98,100 

Pension liability adjustments,, net

  —   —   —   (12,475)  —   —   (12,475)

Unrealized gain on investments

  —   —   —   1,398   —   —   1,398 

Foreign currency translation adjustments

  —   —   —   (30,466)  —   —   (30,466)

Comprehensive income

                          56,557 

Stock-based compensation

  —   6,926   —   —   —   —   6,926 

Withheld 19,439 shares on restricted share units for withholding taxes

  —   —   (2,655)  —   —   —   (2,655)

Purchase of 161,751 shares of common stock

  (2)  (565)  (13,716)  —   —   —   (14,283)

Stock options exercised, including tax impact of ($2,143)

  3   14,058   —   —   —   —   14,061 

Cash dividends paid ($0.94 per share)

  —   —   —   —   (21,175)  —   (21,175)

Balance at December 27, 2014

 226  243,844  (18,724) (21,126) 519,956  143  724,319 

Comprehensive income:

                            

Net income for the year

  —   —   —   —   80,866   —   80,866 

Pension liability adjustments, net

  —   —   —   (1,761)  —   —   (1,761)

Pension settlement, including tax impact of ($11,742)

  —   —   —   21,124   —   —   21,124 

Pension and postemployment reclassification adjustments, including tax impact of ($746)

  —   —   —   1,530   —   —   1,530 

Unrealized gain on investments

  —   —   —   793   —   —   793 

Foreign currency translation adjustments

  —   —   —   (46,231)  —   —   (46,231)

Comprehensive income

                          56,321 

Stock-based compensation

  —   7,782   —   —   —   —   7,782 

Withheld 28,286 shares on restricted share units for withholding taxes

  —   —   (2,727)  —   —   —   (2,727)

Retirement of 214,609 shares of treasury stock

  —   —   18,712   —   (18,712)  —   — 

Purchase 350K shares of common stock

  (4)  (1,221)  (30,027)  —   —   —   (31,252)

Stock options exercised, including tax impact of ($2,485)

  2   9,148   —   —   —   —   9,150 

Cash dividends paid ($1.08 per share)

  —   —   —   —   (24,341)  —   (24,341)

Balance at January 2, 2016

 224  259,553  (32,766) (45,671) 557,769  143  739,252 

Comprehensive income:

                            

Net income for the year

  —   —   —   —   104,488   —   104,488 

Pension and postemployment liability adjustments, net

  —   —   —   (3,673)  —   —   (3,673)

Pension and postemployment reclassification adjustments, including tax impact of ($0)

  —   —   —   412   —   —   412 

Unrealized gain on investments

  —   —   —   (815)  —   —   (815)

Foreign currency translation adjustments

  —   —   —   (24,832)  —   —   (24,832)

Comprehensive income

                          75,580 

Stock-based compensation

  —   7,471   —   —   —   —   7,471 

Withheld 31,040 shares on restricted share units for withholding taxes

  —   —   (3,744)  —   —   —   (3,744)

Stock options exercised, including tax impact of ($7,400)

  4   24,234   —   —   —   —   24,238 

Cash dividends paid ($1.24 per share)

  —   —   —   —   (27,866)  —   (27,866)

Balance at December 31, 2016

 $228  $291,258  $(36,510) $(74,579  $634,391  $143  $814,931 

CASH FLOWS

 Year Ended
(in thousands)December 28, 2019 December 29, 2018 December 30, 2017
OPERATING ACTIVITIES     
Net income$139,082
 $164,565
 $119,519
Adjustments to reconcile net income to net cash provided by operating activities:     
Depreciation52,477
 51,003
 38,311
Amortization of intangibles40,026
 52,190
 24,700
Impairment charges322
 2,218
 —
Deferred revenue(318) 3,965
 —
Non-cash inventory charges—
 36,927
 1,607
Stock-based compensation19,046
 27,431
 16,315
Loss (gain) on investments and other assets4,854
 (670) —
Deferred income taxes(1,147) (4,679) 17,063
Other6,638
 620
 6,048
Changes in operating assets and liabilities:     
Trade receivables28,497
 (3,539) (11,087)
Inventories22,094
 (33,971) (20,180)
Accounts payable(22,574) 13,708
 6,494
Accrued liabilities and income taxes(54,242) 29,329
 50,626
Prepaid expenses and other assets10,573
 (7,269) 19,754
Net cash provided by operating activities245,328
 331,828
 269,170
      
INVESTING ACTIVITIES     
Acquisitions of businesses, net of cash acquired(775) (318,474) (38,512)
Proceeds from sales and maturities of short-term investments—
 1,407
 3,739
Decrease in entrusted loan—
 —
 3,599
Purchases of property, plant, and equipment(61,895) (74,753) (65,925)
Proceeds from sale of property, plant, and equipment6,213
 9,572
 962
Net cash used in investing activities(56,457) (382,248) (96,137)
      
FINANCING ACTIVITIES     
Proceeds of revolving credit facility—
 60,000
 15,000
Proceeds of term loan—
 75,000
 9,375
Proceeds from senior notes payable—
 175,000
 125,000
Payments of term loan(10,000) (42,500) (7,188)
Payments of revolving credit facility—
 (60,000) (127,500)
Net proceeds (payments) related to stock-based award activities7,800
 18,857
 (2,373)
Payments of entrusted loan—
 —
 (3,599)
Cash dividends paid(44,689) (39,993) (31,770)
Purchases of common stock(99,387) (63,564) —
Other—
 (903) (1,626)
Net cash (used in) provided by financing activities(146,276) 121,897
 (24,681)
Effect of exchange rate changes on cash and cash equivalents(1,189) (11,420) 6,200
Increase in cash and cash equivalents41,406
 60,057
 154,552
Cash and cash equivalents at beginning of year489,733
 429,676
 275,124
Cash and cash equivalents at end of year$531,139
 $489,733
 $429,676
Supplementary Cash Flow Information     
Cash paid during the period for interest$21,240
 $18,462
 $10,569
Cash paid during the period for income taxes, net of refunds$40,518
 $41,904
 $18,088
Capital expenditures, not yet paid$11,110
 $—
 $—
See accompanying Notes to Consolidated Financial Statements.


LITTELFUSE, INC.
CONSOLIDATED STATEMENTS OF EQUITY
 

 Littelfuse, Inc. Shareholders’ Equity    
(in thousands, except share and per share data)Common Stock Addl. Paid in Capital Treasury Stock Accum. Other Comp. Inc. (Loss) Retained Earnings Non-controlling Interest Total
Balance at December 31, 2016$228
 $291,258
 $(36,510) $(74,579) $634,391
 $143
 $814,931
Net income—
 —
 —
 —
 119,519
 —
 119,519
Other comprehensive income (loss), net of tax      10,911
     10,911
Stock-based compensation—
 16,315
 —
 —
 —
 —
 16,315
Non-controlling interest—
 —
 —
 —
 —
 (6) (6)
Withheld 30,459 shares on restricted share units for withholding taxes—
 —
 (4,784) —
 —
 —
 (4,784)
Stock options exercised1
 2,439
 —
 —
 —
 —
 2,440
Cash dividends paid ($1.40 per share)—
 —
 —
 —
 (31,770) —
 (31,770)
Balance at December 30, 2017$229
 $310,012
 $(41,294) $(63,668) $722,140
 $137
 $927,556
Net income—
 —
 —
 —
 164,565
 —
 164,565
Other comprehensive income (loss), net of tax      (24,461)     (24,461)
Cumulative effect adjustment—
 —
 —
 (9,795) 9,795
 —
 —
Stock-based compensation—
 27,431
 —
 —
 —
 —
 27,431
Non-controlling interest—
 —
 —
 —
 —
 (6) (6)
Withheld 36,482 shares on restricted share units for withholding taxes—
 —
 (7,252) —
 —
 —
 (7,252)
Stock options exercised4
 26,105
 —
 —
 —
 —
 26,109
Issuance of common stock21
 472,280
         472,301
Repurchases of common stock—
 —
 (67,908) —
 —
 —
 (67,908)
Cash dividends paid ($1.60 per share)—
 —
 —
 —
 (39,993) —
 (39,993)
Balance at December 29, 2018$254
 $835,828
 $(116,454) $(97,924) $856,507
 $131
 $1,478,342
Net income—
 —
 —
 —
 139,082
 —
 139,082
Other comprehensive income (loss), net of tax      (8,899)     (8,899)
Stock-based compensation—
 19,046
 —
 —
 —
 —
 19,046
Withheld 25,940 shares on restricted share units for withholding taxes—
 —
 (4,957) —
 —
 —
 (4,957)
Stock options exercised2
 13,122
 —
 —
 —
 —
 13,124
Repurchases of common stock—
 —
 (95,036) —
 —
 —
 (95,036)
Cash dividends paid ($1.82 per share)—
 —
 —
 —
 (44,688) —
 (44,688)
Balance at December 28, 2019$256
 $867,996
 $(216,447) $(106,823) $950,901
 $131
 $1,496,014
See accompanying Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




1. Summary of Significant Accounting Policies and Other Information

Nature of Operations

Littelfuse, Inc. and subsidiaries (the “company”“Company”) is a global manufacturer of leading technologies in circuit protection, power control and sensing. The company's products are found in automotive and commercial vehicles, industrial applications, data and telecommunications, medical devices, consumer electronics and appliances. With its broad product portfolio of fuses, semiconductors, polymers, ceramics, relays and sensors, and extensive global infrastructure, the Company’s worldwide associates partner with its customers to design, manufacture and sell circuit protection devicesdeliver innovative, high-quality solutions for use in the automotive, electronics,a safer, greener and industrial markets throughout theincreasingly connected world. The company is one of the world’s leading suppliers of circuit protection products for the electronics, automotive, and industrial markets, 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. 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 devices protect products in virtually every market that uses electrical energy, from consumer electronics to automobiles to industrial equipment.

Fiscal Year

References herein to “2016”“2019”, “fiscal 2016”2019” or “fiscal year 2016”2019” refer to the fiscal year ended December 31, 2016.28, 2019. References herein to “2015”“2018”, “fiscal 2015”2018” or “fiscal year 2015” refer to the fiscal year ended January 2, 2016. References herein to “2014”, “fiscal 2014” or “fiscal year 2014”2018” refer to the fiscal year ended December 27, 2014.29, 2018. References herein to “2017”, “fiscal 2017” or “fiscal year 2017” refer to the fiscal year ended December 30, 2017. The companyCompany operates on a 52-53 week fiscal year (4-4-5 basis) ending on the Saturday closest to December 31. Therefore, the financial results of certain fiscal years and the associated 14 week quarters will not be exactly comparable to the prior and subsequent 52 week fiscal years and the associated quarters having only 13 weeks. As a result of using this convention, each of fiscal 2016 and fiscal 2014 contained 52 weeks whereas fiscal 2015 contained 53 weeks.

Basis of Presentation

The Consolidated Financial Statements include the accounts of Littelfuse, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. The company’sCompany’s Consolidated Financial Statements were prepared in accordance with generally accepted accounting principles in the United States of America and include the assets, liabilities, sales and expenses of all wholly-owned subsidiaries and majority-owned subsidiaries over which the companyCompany exercises control.

Use of Estimates

The process of preparing financial statements in conformity with U.S. generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities at the date of the Consolidated Financial Statements, and the reported amounts of revenues and expenses and the accompanying notes. The companyCompany evaluates and updates its assumptions and estimates on an ongoing basis and may employ outside experts to assist in its evaluation, as considered necessary. Actual results could differ from those estimates.

Cash Equivalents

All highly liquid investments, with an original maturity of three months or less when purchased, are considered to be cash equivalents.

Short-Term and Long-Term Investments

As of December 28, 2019, the Company has an investment in Polytronics Technology Corporation Ltd. (“Polytronics”). The Company’s Polytronics shares held at the end of fiscal 2019 and 2018 represent approximately 7.2% of total Polytronics shares outstanding. The Polytronics investment is carried at fair value. The fair value of the Polytronics investment was €11.6 million (approximately $12.8 million) at December 28, 2019 and €8.9 million (approximately $10.2 million) at December 29, 2018.
As a result of the Company’s acquisition of IXYS, the Company has equity ownerships in various investments that are accounted for under the equity method. The Company owns 45% of the outstanding equity of Powersem GmbH, a module manufacturer based in Germany, approximately 19% of the outstanding equity of EB Tech Ltd., a company with expertise in radiation technology based in South Korea, and approximately 24% of the outstanding common shares of Automated Technology, Inc., a supplier located in the Philippines that provides assembly and test services. All equity-level investments are less than majority owned. The Company recognized $0.6 million in losses and $0.7 million in gains from its equity method investments for the fiscal years ended December 28, 2019 and December 29, 2018, respectively. The balance of equity method investments was $11.1 million and $11.6 million as of the fiscal years ended December 28, 2019 and December 29, 2018, respectively. See Note 18, Related Party Transactions, for further discussion.

The balance of the Company's investments accounted for under the cost method was $0.4 million and $7.9 million for the fiscal years ended December 28, 2019 and December 29, 2018, respectively. During the twelve months ended December 28, 2019,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


the Company recorded impairment charges of $7.3 million in Other income, net in the Consolidated Statements of Net Income to adjust these certain investments to their estimated fair value of $0.4 million. See Note 10, Fair Value of Assets and Liabilities, for further discussion.

The Company has determined that certain ofinvestments related to its non-qualified Supplemental Retirement and Savings Plan. The Company maintains accounts for participants through which participants make investment elections. The investment securities are subject to be classified as available-for-sale. Available-for-salethe claims of the Company’s creditors. The investment securities are carriedall mutual funds. The investment securities are measured at fair value withnet asset value. As of December 28, 2019 and December 29, 2018, the unrealized gainsinvestment securities balance was $10.5 million and losses reported as a component of “Accumulated Other Comprehensive Income (Loss).” Realized gains$9.1 million, respectively, related to the plan and losses and declines in unrealized value judged to be other-than-temporary on available-for-sale securities are included in other expense (income), net. The cost of securities sold is basedOther assets on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income. Short-term investments, which are primarily certificates of deposits, are carried at cost which approximates fair value.

Accounts Receivable

Consolidated Balance Sheets.

Trade Receivables
The companyCompany performs credit evaluations of customers’ financial condition and generally does not require collateral. Credit losses are provided for in the financial statements based upon specific knowledge of a customer’s inability to meet its financial obligations to the company.Company. Historically, credit losses have consistently been within management’s expectations and have not been a material amount. A receivable is considered past due if payments have not been received within agreed upon invoice terms. Write-offs are recorded at the time a customer receivable is deemed uncollectible.

The companyCompany also maintains allowances against accounts receivabletrade receivables for the settlement of rebates and sales discounts to customers. These allowances are based upon specific customer sales and sales discounts as well as actual historical experience.

 

Inventories

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Inventories

Inventories are stated at the lower of cost or market (first in, first out method),net realizable value, which approximates current replacement cost. Cost is principally determined using the first-in, first-out method. The companyCompany maintains excess and obsolete allowancesreserves against inventory to reduce the carrying value to the expected net realizable value. These allowancesreserves 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.

Investments

As of December 31, 2016 the company had investments in Polytronics Technology Corporation Ltd. (“Polytronics”), a Taiwanese publicly traded company and Monolith Semiconductor, Inc. (“Monolith”), a Texas-based startup company.

Polytronics

The company’s Polytronics shares held at the end of fiscal 2016 and 2015 represent approximately 7.2% of total Polytronics shares outstanding. The Polytronics investment is classified as available-for-sale and is carried at fair value with the unrealized gains and losses reported as a component of “Accumulated Other Comprehensive Income (Loss).” The fair value of the Polytronics investment was €10.0 million (approximately $10.4 million) at December 31, 2016 and €10.7 million (approximately $11.7 million) at January 2, 2016. Included in 2016 and 2015, other comprehensive income is an unrealized loss of $0.8 million and an unrealized gain of $0.9 million, respectively, due to changes in fair market value of the Polytronics investment. The remaining movement year over year was due to the impact of changes in exchange rates.

Monolith

In December 2015, the company invested $3.5 million in the preferred stock of Monolith, a U.S. start-up company developing silicon carbide technology, which represents approximately 12% of the common stock of Monolith on an as-converted basis. The company accounts for its investment in Monolith under the cost method with any changes in value recorded in other comprehensive income. The value of the Monolith investment was $3.5 million at December 31, 2016 and January 2, 2016.

Property, Plant,,and Equipment

Land, buildings, and equipment are carried at cost. Depreciation is calculated using the straight-line method with useful lives of 21 years for buildings, seventhree to nineten years for equipment, seven years for furniture and fixtures, five years for tooling and three years for computer equipment.

Goodwill Leasehold improvements are depreciated over the lesser of their useful life or the lease term. Maintenance and Indefinite-Lived Intangible Assets

repair costs are charged to expense as incurred. Major overhauls that extend the useful lives of existing assets are capitalized.

Goodwill
The companyCompany annually tests goodwill and indefinite-lived intangible assets for impairment on the first day of its fiscal fourth quarter, or at other datesmore frequently if there is an event occurs or circumstances change in circumstances that indicates the asset may be impaired. Management determineswould more likely than not reduce the fair value of a reporting unit below its carrying value.
The Company compares each reporting unit’s fair value, estimated based on comparable company market valuations and expected future discounted cash flows to be generated by the reporting unit, to its carrying value. The results of the goodwill impairment test as of September 30, 2019 indicated that the estimated fair values for each of itsthe 7 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 to 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.

Due to negative events in the potash market in 2016, management revisited its long term projections and conducted a step one goodwill impairment analysis for its custom products reporting unit in the third quarter of 2016. The reporting unit failed the step one test and management conducted a step two analysis with the revised projections. 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. As a result, the company recognized a charge for goodwill impairment of $8.8 million as it wrote off the entire goodwill balance. In addition, the company recognized intangible assets impairments aggregating $6.0 million, 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.

exceeded their respective carrying values. As of the most recent annual test conducted on October 2, 2016,September 30, 2019, the company had seven reporting units for goodwill testing purposes and concluded the fair value of each of the reporting units exceeded its carrying value of invested capital and therefore, no potential goodwill impairment existed. Specifically, the companyCompany noted that the excess of fair value over the carrying value, of invested capital, was 65%217%, 154%42%, 218%137%, 132%213%, 70%40%, 15%89%, and 150%268% for its reporting units; electronics (non-silicon), electronics (silicon), passenger car, commercial vehicle products, sensors, relays,Electronics-Passive Products and power fuse, respectively, at October 2, 2016.

CertainSensors, Electronics-Semiconductor, Passenger Car Products, Commercial Vehicle Products, Automotive Sensors, Relays, and Power Fuse, respectively. Relatively small changes in the Company’s key assumptions would not have resulted in any reporting units failing the goodwill impairment test. See Note 5, Goodwilland Other Intangible Assets, for additional information.

The Company also performs an interim review for indicators of impairment each quarter to assess whether an interim impairment review is required for any reporting unit. As part of its interim reviews, management analyzes potential changes in the value of individual reporting units based on each reporting unit’s operating results for the period compared to expected results as of the prior year’s annual impairment test. In addition, management considers how other key assumptions, including discount rates and expected long-term growth rates, used in the last annual impairment test, included a discount ratecould be impacted by changes in market conditions and economic events. Based on the interim assessments as of 9.8% and a long-term growth rate of 3.0% which were usedDecember 28, 2019, management concluded that no events or changes in circumstances indicated that it was more likely than not that the fair value for allany reporting units except for relays whichunit had a discount rate of 10.3% as a result of a 0.5% premium factor.

declined below its carrying value.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The company will continue to perform a goodwill and indefinite-lived intangible asset impairment test as required on an annual basis and on an interim basis, if certain impairment conditions exist. Factors the company considers important, 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 we could recognize impairment charges for the relays reporting unit if we have declines in profitability or projected future operating results due to changes in volume, market pricing, cost, or the business environment. As of the 2016 annual test date, the relays reporting unit had $41.4 million of goodwill and intangible assets.

Other Intangible



Long-Lived Assets

Customer relationships, trademarks and tradenames are amortized using the straight-line method over estimated useful lives that have a range of five5 to 20 years. Patents, licenses and software are amortized using the straight-line method or an accelerated method over estimated useful lives that have a range of five5 to 17 years. The distribution networks are amortized on either a straight-line or accelerated basis over estimated useful lives that have a range of three4 to 2010 years. OtherLand use rights are amortized using the straight-line method over 50 years which is the term of the land use rights.
The Company assesses potential impairments to its long-lived assets if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impaired asset is written down to its estimated fair value based upon the most recent information available. Estimated fair market value is generally measured by discounting estimated future cash flows. Long-lived assets, other than goodwill and other intangible assets, that are also testedheld for impairment when there is a significant event that may causesale are recorded at the assetlower of carrying value or the fair market value less the estimated cost to be impaired. As described above, in 2016 the company recognized an impairment charge of $2.2 million to reduce the custom products reporting unit’s customer relationships to zero value.

sell.


Environmental Liabilities

Environmental liabilities are accrued based on engineering studies estimating the cost of remediating sites. Expenses related to on-going maintenance of environmental sites are expensed as incurred. If actual or estimated probable future losses exceed the company’sCompany’s recorded liability for such claims, the companyCompany would record additional charges during the period in which the actual loss or change in estimate occurred.

Pension and Other Post-retirement Benefits

Accounting for pensions requires estimating the future benefit cost

The Company records annual income and recognizing the cost over the employee’s expected period of employment with the company. Certainexpense amounts relating to its pension and post-retirement benefits plans based on calculations which include various actuarial assumptions are required in the calculation of pension costs and obligations. These assumptions include theincluding discount rate, salary scales and therates, expected long-term raterates of return and compensation increases. The Company reviews its actuarial assumptions on plan assets. The discount rate is intended to representan annual basis as of the rate at which pension benefit obligations could be settled by purchase of an annuity contract. These assumptions are subject to changefiscal year-end balance sheet date (or more frequently if a significant event requiring remeasurement occurs) and modifies the assumption based on stockcurrent rates and bond market returns and other economic factors. Actual results that differ fromtrends when it is appropriate to do so. The effects of modifications are recognized immediately on the company’s assumptionsConsolidated Balance Sheets, but are accumulated andgenerally amortized into operating earnings over future periods, and therefore generally affect its recognized expense and accrued liabilitywith the deferred amount recorded in such future periods. While the companyaccumulated other comprehensive income (loss). The Company believes that the assumptions utilized in recording its assumptionsobligations under its plans are appropriate given current economicreasonable based on its experience, market conditions and input from its actual experience,actuaries and investment advisors.
Revenue Recognition

Adoption
On December 31, 2017, the Company adopted new guidance on revenue from contracts with customers using the modified retrospective method. The adoption did not have a significant differences in results or significant changes inimpact on the company’s assumptions may materially affect its pension obligationsCompany’s consolidated financial statements.
Revenue Disaggregation
The following table disaggregates the Company’s revenue by primary business units for the fiscal years ended December 28, 2019 and related future expense. During 2015, the company terminated the U.S. defined benefit pension plan which resulted in a settlement of the plan’s liabilities resulting in a pre-tax charge of $29.9 million. December 29, 2018:
  Fiscal Year Ended December 28, 2019
(in thousands) 
Electronics
Segment
 
Automotive
Segment
 
Industrial
Segment
 
 
Total
Electronics – Semiconductor $563,572
 $—
 $—
 $563,572
Electronics – Passive Products and Sensors 397,508
 —
 —
 397,508
Passenger Car Products —
 218,560
 —
 218,560
Commercial Vehicle Products —
 111,972
 —
 111,972
Automotive Sensors —
 98,001
 —
 98,001
Industrial Products —
 —
 114,260
 114,260
Total $961,080
 $428,533
 $114,260
 $1,503,873

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


  Fiscal Year Ended December 29, 2018
(in thousands) 
Electronics
Segment
 
Automotive
Segment
 
Industrial
Segment
 
 
Total
Electronics – Semiconductor $648,967
 $—
 $—
 $648,967
Electronics – Passive Products and Sensors 475,329
 —
 —
 475,329
Passenger Car Products —
 240,501
 —
 240,501
Commercial Vehicle Products —
 121,562
 —
 121,562
Automotive Sensors —
 117,728
 —
 117,728
Industrial Products —
 —
 114,381
 114,381
Total $1,124,296
 $479,791
 $114,381
 $1,718,468


See Note 10,Benefit Plans,16, Segment Information, for additional information.

Revenue Recognition

net sales by segment and countries.

The companyCompany recognizes revenue on product sales in the period in which the sales processCompany satisfies its performance obligation and control of the product is complete. This generally occurs when persuasive evidence of an arrangement exists, products are shipped (FOB origin)transferred to the customercustomer. The Company’s sales arrangements with customers are predominately short term in accordance withnature and generally provide for transfer of control at the termstime of shipment as this is the sale, thepoint at which title and risk of loss has been transferred, collectability is reasonably assured, andof the pricing is fixed and determinable.

product transfers to the customer. At the end of each period, for those shipments where title to the products and the risk of loss and rewards of ownership do not transfer until the product has been received by the customer, the companyCompany adjusts revenues and cost of sales for the delay between the time that the products are shipped and when they are received by the customer. The company’samount of revenue recorded reflects the consideration to which the Company expects to be entitled in exchange for goods and may include adjustments for customer allowance, rebates and price adjustments. The Company’s distribution channels are primarily through direct sales and independent third partythird-party distributors.

The Company has elected the practical expedient under Accounting Standards Codification ("ASC") 340-40-25-4 to expense commissions when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less than one year.
Revenue and Billing

The companyCompany generally accepts orders from customers through receipt of purchase orders or electronic data interchange based on long term purchasing contracts and written sales agreements.agreements and purchasing contracts. Contract pricing and selling agreement terms are based on market factors, costs, and competition. Pricing normally is often negotiated as an adjustment (premium or discount) from the company’sCompany’s published price lists. The customer is invoiced when the company’sCompany’s products are shipped to them in accordance with the terms of the sales agreement.

Returns As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company also elected the practical expedient provided in ASC 606-10-25-18B to treat all product shipping and Credits

handling activities as fulfillment activities, and therefore recognize the gross revenue associated with the contract, inclusive of any shipping and handling revenue. This is similar to the Company’s prior practice and therefore the effect of the new guidance is immaterial.

Ship and Debit Program
Some of the terms of the company’sCompany’s sales agreements and normal business conditions provide customers (distributors) the ability to receive price adjustments on products previously shipped and invoiced. This practice is common in the industry and is referred to as a “ship and debit” program. This program allows the distributor to debit the companyCompany for the difference between the distributors’ contracted price and a lower price for specific transactions. Under certain circumstances (usually in a competitive situation or large volume opportunity), a distributor will request authorization for pricing allowances to reduce its price to its buyer. Ifprice. When the companyCompany approves such a reduction, the distributor is authorized to “debit” its account for the difference between the contracted price and the lower approved price. The companyCompany establishes reserves for this program based on historic activity, electronic distributor inventory levels and actual authorizations for the debit and recognizes these debits as a reduction of revenue.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Return to Stock

The companyCompany has a return to stock policy whereby a customercertain customers, with prior authorization from Littelfusethe Company's management, can return previously purchased goods for full or partial credit. The companyCompany establishes an estimated allowance for these returns based on historic activity. Sales revenue and cost of sales are reduced to anticipate estimated returns.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Volume Rebates

The companyCompany offers volume-based sales incentives to certain customers to encourage greater product sales. If customers achieve their specific quarterly or annual sales targets. If customers achieve their sales targets, they are entitled to rebates. The companyCompany estimates the future costprojected amount of these rebates that will be achieved by the customer and recognizes this estimated cost as a reduction to revenue as products are sold.


Allowance for Doubtful Accounts


The companyCompany evaluates the collectability of its trade receivables based on a combination of factors. The companyCompany regularly analyzes its significant customer accounts and, when the companyCompany becomes aware of a specific customer’s inability to meet its financial obligations, the companyCompany records a specific reserve for bad debt to reduce the related receivable to the amount the companyCompany reasonably believes is collectible. The companyCompany also records allowances for all other customers based on a variety of factors including the length of time the receivables are past due, the financial health of the customer, macroeconomic considerations and past experience. Accounts receivable balances that are deemed to be uncollectible, are written off against the reserve on a case-by-case basis. Historically, the allowance for doubtful accounts has been adequate to cover bad debts. If circumstances related to specific customers change, the estimates of the recoverability of receivables could be further adjusted. However, due to the company’s diverse customer base and lack of credit concentration, the company does not believe its estimates would be materially impacted by changes in its assumptions.


Advertising Costs

The companyCompany expenses advertising costs as incurred, which amounted to $2.7 million, $2.8 million, and $2.9 million $2.3 million,in fiscal years 2019, 2018 and $2.8 million in 2016, 2015, and 2014,2017, respectively, and are included as a component of selling, general, and administrative expenses.

Shipping and Handling Fees and Costs

Amounts billed to customers related to shipping and handling is classified as revenue. Costs incurred for shipping and handling of $9.1$11.0 million, $7.0$12.3 million, and $6.7$10.9 million in 2016, 2015,fiscal years 2019, 2018, and 2014,2017, respectively, are classified in selling, general, and administrative expenses.

Foreign Currency Translation/Remeasurement

The company’sCompany’s foreign subsidiaries use the local currency or the U.S. dollar as their functional currency, as appropriate. Assets and liabilities are translated using exchange rates at the balance sheet date, and revenues and expenses are translated at weighted average rates. The amount of foreign currency gain or loss from remeasurement recognized in the income statement was a loss of $0.5$5.2 million in 2016,fiscal year 2019, a gain of $1.5$0.9 million in 2015,fiscal year 2018, and a loss of $3.9$2.4 million in 2014.fiscal year 2017. Adjustments from the translation process are recognized in “Shareholders’ equity” as a component of “Accumulated other comprehensive income.income/ (loss).”

Stock-based


Stock-Based Compensation

The companyCompany recognizes compensation expense for the cost of awards of equity compensation using a fair value method. Benefits of tax deductions in excess of recognized compensation expense are reported as both operating and financing cash flows. See Note 11,Shareholders’ Equity12, Stock-Based Compensation, for additional information on stock-based compensation.


Coal Mining Liability


Included in other long-term liabilities is an accrual related to former coal mining operations at Littelfuse GmbH (formerly known as Heinrich Industries, AG) for the amounts of €1.4€0.6 million ($1.50.7 million) and €1.8€1.1 million ($2.01.3 million) at December 31, 201628, 2019 and January 2, 2016,December 29, 2018, respectively. Management, in conjunction with an independent third-party, performs an annual evaluation of the former coal mining operations in order to develop an estimate of the probable future obligations in regard to remediating the dangers (such as a shaft collapse) of abandoned coal mine shafts in the former coal mining operations. Management accrues for costs associated with such remediation efforts based on management's best estimate when such costs are probable and reasonably able to be estimated. The ultimate determination can only be done after respective investigations because the concrete conditions are mostly unknown at this time. The accrual is not discounted as management cannot reasonably estimate when such remediation efforts will take place.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Expense (Income),Income, Net

Other expense (income),income, net generally consists of interest income, royalties, change in fair value of available-for-sale securities, pension non-service costs and other non-operating income.

expense (income).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Income Taxes

The companyCompany accounts for income taxes using the liability method. Deferred taxes are recognized for the future effects of temporary differences between financial and income tax reporting using enacted tax rates in effect for the years in which the differences are expected to reverse. The companyCompany recognizes deferred taxes for temporary differences, operating loss carryforwards, and tax credit carryforwards.and other tax attribute carryforwards (excluding carryforwards where usage has been determined to be remote). Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. FederalU.S. state and statenon-U.S. income taxes are provided on the portion of foreignnon-U.S. income that is expected to be remitted to the U.S. and be taxable.

Reclassifications

Certain amounts presentedtaxable (and non-U.S. income taxes are provided on the portion of non-U.S. income that is expected to be remitted to an upper-tier non-U.S. entity). Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Deferred U.S. income taxes and non-U.S. taxes are not provided on the excess of the investment value for financial reporting over the tax basis of investments in those non-U.S. subsidiaries for which such excess is considered to be permanently reinvested in those operations. Management regularly evaluates whether non-U.S. earnings are expected to be permanently reinvested. This evaluation requires judgment about the future operating and liquidity needs of the Company and its non-U.S. subsidiaries.  Changes in economic and business conditions, non-U.S. or U.S. tax laws, or the Company’s financial situation could result in changes to these judgments and the need to record additional tax liabilities.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the 2015 financial statements have been reclassifiedfrom such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
On December 22, 2017, the U.S. enacted legislation commonly referred to conformas the Tax Cuts and Jobs Act (the "Tax Act"). Among other things, the Tax Act reduces the U.S. corporate federal income tax rate from 35% to 21%, adds base broadening provisions which limit deductions and address excessive international tax planning, imposes a one-time tax (the “Toll Charge”) on accumulated earnings of certain non-U.S. subsidiaries and enables repatriation of earnings of non-U.S. subsidiaries free of U.S. federal income tax. Other than the Toll Charge (which, except for the IXYS impact, was applicable to the 2016 presentation. Company for 2017), the provisions are generally applicable to the Company in 2018 and beyond.
In April 2015,accordance with the guidance provided in SEC Staff Accounting Bulletin (“SAB”) No. 118, in the fourth quarter of 2017 the Company recorded a charge of $47.0 million as a provisional reasonable estimate of the impact of the Tax Act, including $49.0 million for the Toll Charge net of $2.0 million for other net tax benefits. In the fourth quarter of 2018, within the measurement period outlined in SAB No. 118, the Company finalized its estimates of the impact of the Tax Act as of December 30, 2017 and recorded a charge of $3.2 million, including $2.3 million for the Toll Charge and $0.9 million for the net impact of other items. In addition, the Company recorded $7.0 million for the Toll Charge associated with IXYS as part of the IXYS acquisition purchase price allocation. This was reflected in the opening balance sheet as an increase to goodwill and other long-term liabilities.
Although certain administrative guidance has been issued, including final and proposed regulations, the appropriate application of many provisions of the Tax Act remain uncertain. The Company used its best judgment as to the application of these provisions in determining its final estimates of the impact of the Tax Act as of December 30, 2017, the Toll Charge associated with the IXYS acquisition as well as the Company’s income tax expense for the fiscal years ended December 28, 2019 and December 29, 2018. Adjustments to income tax expense may be necessary in future periods if provisions of the Tax Act, and their interaction with other provisions of the U.S. Internal Revenue Code, are interpreted differently than interpretations made by the Company, whether through issuance of additional administrative guidance, or through further review of the Tax Act by the Company and its advisors.
The Company has elected to pay the 2017 Littelfuse Toll Charge over the eight-year period prescribed by the Tax Act. The long-term portion of this Toll Charge which remains payable as of December 28, 2019, totaling $23.8 million, is included in Other long-term liabilities, and the anticipated 2020 annual installment payment of $3.0 million is included in Accrued income taxes, on the Consolidated Balance Sheet as of December 28, 2019. The Company did not elect to pay the 2018 IXYS Toll Charge over the eight year period provided by the Tax Act and therefore there is no long-term portion of this Toll Charge which remains payable as of December 28, 2019.
One of the base broadening provisions of the Tax Act is commonly referred to as the “GILTI” provisions. In accordance with guidance issued by the FASB staff, the Company has adopted an accounting policy to treat any GILTI inclusions as a period cost if and when incurred. Thus, for the fiscal years ended December 28, 2019 and December 29, 2018, deferred taxes were computed
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


without consideration of the possible future impact of the GILTI provisions, and any current year impact was recorded as a part of the current portion of income tax expense.
Fair Value Measurements
Certain assets and liabilities are required to be recorded at fair value on a recurring basis. Fair value is determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company records the fair value of its available-for-sale securities and pension plan assets on a recurring basis. Assets measured at fair value on a nonrecurring basis include long-lived assets held and used, long-lived assets held for sale, goodwill and other intangible assets. The fair value of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate their carrying values. The three-tier value hierarchy, which prioritizes valuation methodologies based on the reliability of the inputs, is:
Level 1 – Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2 – Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3 – Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants.
RecentlyAdoptedAccounting Standards
In February 2016, the Financial Accounting Standards Board (the “FASB”(“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03,Interest - Imputation2016-02, "Leases" (Topic 842), ("ASC 842"). This ASU requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases of Interest (Subtopic 835-30)greater than twelve months.

The Company adopted the standard on December 30, 2018 using the alternative modified retrospective transition method provided in ASU No. 2018-11, "Leases (Topic 842): SimplifyingTarget Improvements." Under this method, the Company recorded a cumulative-effect adjustment as of December 30, 2018 and did not record any retrospective adjustments to comparative periods to reflect the adoption of ASC 842. The new standard provides a number of optional practical expedients in transition. The Company has elected the ‘package of practical expedients’ which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The Company has not elected the use-of-hindsight. Adoption of ASC 842 resulted in the recognition of operating lease right-of-use assets ("ROU") net of deferred rent of $26.1 million and lease liabilities of $29.4 million, as of December 30, 2018 for operating leases on its Consolidated Balance Sheets, with no impact to the Company's Consolidated Statements of Net Income and Consolidated Statements of Cash Flow. See Note 7, Lease Commitments, for further discussion.

In February 2018, the FASB issued ASU No. 2018-02 “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which permits the reclassification of tax effects stranded in accumulated other comprehensive income to retained earnings as a result of the Tax Act. The standard also requires entities to disclose whether or not they elected to reclassify the tax effects related to the Tax Act as well as their policy for releasing income tax effects from accumulated other comprehensive income. The standard allows the option of applying either a retrospective adoption, meaning the standard is applied to all periods in which the effect of the Tax Act is recognized, or applying the amendments in the period of adoption, meaning an adjustment is made to shareholder’s equity as of the beginning of the reporting period. The Company adopted the new standard on December 30, 2018. The adoption of this guidance did not have a material effect on the Company's Consolidated Financial Statements.

In January 2018, the FASB released guidance on the accounting for the GILTI provisions of the 2017 U.S. Tax Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or treating any taxes on GILTI inclusions as period cost are both acceptable methods subject to an accounting policy election. The Company has adopted an accounting policy to treat any GILTI inclusions as a period cost if and when incurred. Thus, for the year ended December 29, 2018, deferred taxes were computed without consideration of the possible future impact of the GILTI provisions, and any current year impact was recorded as a part of the current portion of income tax expense.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


In March 2017, the FASB issued ASU No. 2017-07 “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Debt Issuance Costs.Net Periodic Pension Cost and Net Periodic Post-Retirement Benefit Cost,” which changed the presentation of net periodic pension and post-retirement benefit cost (net benefit cost) within the consolidated Statements of Net Income. Under the previous guidance, net benefit cost was reported as an employee cost within operating income. The amendments in this ASU require that debt issuance costs relatedamendment required the bifurcation of net benefit cost, with the service cost component to a recognized debt liability 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 was effective for the first quarter of 2018 with the Company adopting the new standard on December 31, 2017.
In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments-Recognition and Measurement of Financial Assets and Financial Liabilities” which addressed certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. The ASU requires the Company to recognize any changes in the balance sheet as a direct deduction from the carrying amountfair value of that debt liability, consistent with debt discounts.certain equity investments in net income. Previously these changes were recognized in other comprehensive income ("OCI"). The amended guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amended guidance is to be applied on a retrospective basis. The companyCompany adopted the new guidancestandard on January 3, 2016December 31, 2017, on a modified retrospective basis, recognizing the cumulative effect as a $9.8 million increase to retained earnings. As a result of the adoption of the new standard and has made the corresponding reclassification on its balance sheetchange in fair value of our equity investments, for the fiscal year ended January 2, 2016. The adoptionDecember 29, 2018, the Company recognized an unrealized loss of $0.7 million in Other income, net in the new guidance had no effect on the company’s net income, cash flows or shareholders’ equity. Additionally, the company has reclassified a portionConsolidated Statements of its current tax position at January 2, 2016 to more accurately reflect its prepaid/liability position at a jurisdictional level.

Recently Issued Accounting Standards

Net Income.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue“Revenue from Contracts with Customers"Customers” (Topic 606) which supersedes the revenue recognition requirements in ASC 605, "Revenue“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. The Company adopted the new standard on December 31, 2017 using the modified retrospective method, however, no adjustment to retained earnings was needed. The new guidance did not have a material effect on the Company’s Consolidated Statements of Net Income. See the Revenue Recognition section above for further discussion.
In August, 2015,October 2016, the FASB issued ASU No. 2015-14, which postponed2016-16, "Income Taxes” (Topic 740). This ASU update requires entities to recognize the income tax consequences of many intercompany asset transfers at the transaction date. The seller and buyer will immediately recognize the current and deferred income tax consequences of an intercompany transfer of an asset other than inventory. The tax consequences were previously deferred. The Company adopted the new standard on December 31, 2017 and it did not have a material impact.

Recently Issued Accounting Standards
In June 2016, the FASB issued ASU 2016- 13, “Financial Instruments- Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.” The standard modifies the measurement approach for credit losses on financial instruments, including trade receivables, from an incurred loss method to a current expected credit loss method (“CECL”). The standard requires the measurement of expected credit losses to be based on relevant information, including historical experience, current conditions and a forecast that is supportable. The standard is effective datefor fiscal years beginning after December 15, 2019, including interim periods within those fiscal years; early adoption is permitted. The standard must be adopted by applying a cumulative adjustment to retained earnings. The Company anticipates adopting the standard in the first quarter of 2020, although it does not expect a material impact to the Company’s Consolidated Financial Statements.

In August 2018, the FASB issued ASU No. 2014-092018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement." ASU 2018-13 modified the disclosure requirements in Topic 820, "Fair Value Measurement," based on the FASB Concepts Statement, "Conceptual Framework for Financial Reporting - Chapter 8: Notes to Financial Statements," including consideration of costs and benefits. The guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years, beginningwith early adoption permitted. The company is currently evaluating the potential effects of this guidance on its Consolidated Financial Statements.

In August 2018, the FASB issued ASU No. 2018-14 "Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans," which amends ASC 715-20, Compensation - Retirement Benefits - Defined Benefit Plans - General. The amended guidance modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans by removing and adding certain disclosures for these plans. The eliminated disclosures include (a) the amounts in OCI expected to be recognized in net periodic benefit costs over the next fiscal year, and (b) the effects of a one percentage point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for post-retirement health care benefits. Additional disclosures include descriptions of significant gains and losses affecting the benefit obligation for the period.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


This guidance will be effective for financial statements issued for fiscal years ending after December 15, 2017, with early2020. The adoption permittedof this guidance will modify our disclosures but will not have a material effect on the originalCompany's Consolidated Financial Statements.

In August 2018, the FASB issued ASU No. 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force).” ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The guidance is effective date offor fiscal years beginning after December 15, 2016. The company is in the process of performing its initial assessment of the potential impact on its consolidated financial statements2019 and has not concluded on its adoption methodology. While the company is currently assessing the impact of the new standards, 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. 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.

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. The companyCompany is currently evaluating the impact of this ASUguidance on its consolidated financial statements.

Consolidated Financial Statements.


In January 2017,December 2019, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other”2019-12, "Income Taxes (Topic 350). This ASU modifies740) - Simplifying 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 allAccounting for Income Taxes" as part of its assets and liabilities as if that reporting unit had been acquiredinitiative to reduce complexity 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 ASUaccounting standards. The guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020,2021 with early adoption permitted. The Company is permitted for interim or annual goodwill impairment tests performedcurrently evaluating this guidance on testing dates after January 1, 2017.

its Consolidated Financial Statements, The Company does not expect material effect from the adoption of this guidance on the Company's Consolidated Financial Statements.


2. Acquisitions
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Correction of immaterial errors

In the second quarter of 2016, management determined that the company may incur additional income taxes and interest in a foreign jurisdiction with respect to the 2011 through 2015 fiscal years. The cumulative adjustment for this income tax (including interest of $1.5 million) as of January 2, 2016, is approximately $4.9 million. The adjustment applicable to 2015, 2014, 2013, 2012, and 2011 was $1.6 million, $1.3 million, $1.0 million, $0.9 million, and $0.1 million, respectively.

Pursuant to the guidance of Staff Accounting Bulletin ("SAB") No. 99, Materiality, the company concluded that the errors were not material to any of its applicable prior period annual and quarterly financial statements. Although the errors were immaterial to prior periods, the prior period annual and interim financial statements were revised, in accordance with SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, due to the significance of the out-of-period correction. The adjustment for each year has been treated as applicable to the fourth quarter of each year.

The following is a reconciliation of the effects of the adjustments to the previously reported balance sheet at January 2, 2016 follows:

  

January 2, 2016

 

(in thousands)

 

Previously

Reported

  

Adjustment

  

As Revised

 

Other long-term liabilities

 $12,809  $4,946  $17,755 

Total shareholders’ equity

  744,198   (4,946

)

  739,252 

The following is a reconciliation of the effects of the adjustments to the previously reported statements of net income for the years ended January 2, 2016 and December 27, 2014 follows:

  

Year Ended January 2, 2016

  

Year Ended December 27, 2014

 

(in thousands except per share amounts)

 

Previously

Reported

  

Adjustment

  

As Revised

  

Previously

Reported

  

Adjustment

  

As Revised

 

Income taxes

 $24,482  $1,600  $26,082  $32,228  $1,318  $33,546 

Net income

  82,466   (1,600

)

  80,866   99,418   (1,318

)

  98,100 

Income per share:

                        

Basic

 $3.65  $(0.07

)

 $3.58  $4.41  $(0.06

)

 $4.35 

Diluted

 $3.63  $(0.07

)

 $3.56  $4.37  $(0.05

)

 $4.32 

The following is a reconciliation of the effects of the adjustments to the previously reported statements of cash flows for the years ended January 2, 2016 and December 27, 2014 follows:

  

Year Ended January 2, 2016

  

Year Ended December 27, 2014

 

(in thousands)

 

Previously

Reported

  

Adjustment

  

As Revised

  

Previously

Reported

  

Adjustment

  

As Revised

 

Net income

 $82,466  $(1,600

)

 $80,866  $99,418  $(1,318

)

 $98,100 

Accrued taxes

  (1,043

)

  1,600   557   (549

)

  1,318   769 

Net cash provided by operating activities

  165,826   —   165,826   153,141   —   153,141 

The following is a reconciliation of the effects of the adjustments to the previously reported statements of equity for the years ended January 2, 2016 and December 27, 2014 follows:

  

Year Ended January 2, 2016

  

Year Ended December 27, 2014

 

(in thousands)

 

Previously

Reported

  

Adjustment

  

As Revised

  

Previously

Reported

  

Adjustment

  

As Revised

 

Net income

 $82,466  $(1,600

)

 $80,866  $99,418  $(1,318

)

 $98,100 

Comprehensive income

  57,921   (1,600

)

  56,321   57,875   (1,318

)

  56,557 

Retained earnings

  562,717   (4,946

)

  557,771   523,302   (3,346

)

  519,956 

Total shareholders’ equity

  744,198   (4,946

)

  739,252   727,665   (3,346

)

  724,319 


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a reconciliation of the effects of the adjustments to the previously reported statement of equity at December 28, 2013 follows:

  

December 28, 2013

 

(in thousands)

 

Previously

Reported

  

Adjustment

  

As Revised

 

Retained earnings

 $445,059  $(2,028

)

 $443,031 

Total shareholders’ equity

  686,916   (2,028

)

  684,888 

3. Acquisitions

The companyCompany accounts for acquisitions using the acquisition method in accordance with ASC 805, “Business Combinations,” in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition. The operating results of the acquired business are included in the company’s consolidated financial statementsCompany’s Consolidated Financial Statements from the date of the acquisition.

ON Portfolio

IXYS Corporation
On August 29, 2016,January 17, 2018, the companyCompany acquired certain assetsIXYS Corporation (“IXYS”), a global pioneer in the power semiconductor and integrated circuit markets with a focus on medium to high voltage power semiconductors across the industrial, communications, consumer and medical markets. IXYS has a broad customer base, serving more than 3,500 customers through its direct sales force and global distribution partners. The acquisition of select businesses (the “ON Portfolio”)IXYS is expected to accelerate the Company’s growth across the power control market driven by IXYS’s extensive power semiconductor portfolio and technology expertise. With IXYS, the Company will be able to diversify and expand its presence within industrial electronics markets, leveraging the strong IXYS industrial OEM customer base. The Company also expects to increase long-term penetration of ON Semiconductor Corporation for $104.0 million. The company fundedits power semiconductor portfolio in automotive markets, expanding its global content per vehicle.

Upon completion of the acquisition, at IXYS stockholders’ election and subject to proration, each share of IXYS common stock, par value $0.01 per share, owned immediately prior to the effective time were canceled and extinguished and automatically converted into the right to receive: (i) $23.00 in cash (subject to applicable withholding tax), without interest (referred to as the cash consideration), or (ii) 0.1265 of a share of common stock, par value $0.01 per share, of Littelfuse (referred to as the stock consideration). IXYS stockholders received cash in lieu of any fractional shares of Littelfuse common stock that the IXYS stockholders would otherwise have been entitled to receive. Additionally, each outstanding option to purchase shares of IXYS common stock granted under an IXYS equity plan were assumed by Littelfuse and converted into an option to acquire (i) a number of shares of Littelfuse common stock equal to the number of shares of IXYS common stock subject to such option immediately prior to the effective time multiplied by 0.1265, rounded down to the nearest whole share, with available(ii) an exercise price per share of Littelfuse common stock equal to the exercise price of such IXYS stock option immediately prior to the effective time divided by 0.1265, rounded up to the nearest whole cent.
Based on the $207.5 per share opening price of Littelfuse common stock on January 17, 2018, the consideration IXYS stockholders received in exchange of their IXYS common stock in the acquisition had a value of $814.8 million comprised of $380.6 million of cash and proceeds from its credit facility. The acquired business, which is$434.2 million of Littelfuse stock. In addition to the consideration transferred related to IXYS common stock, the value of consideration transferred, and included in the Electronics segment, consistspurchase price, related to IXYS stock options that were converted to Littelfuse stock options, or cash settled, had a value of $41.7 million. As a product portfolio that includes transient voltage suppression (“TVS”) diodes, switching thyristorsresult, total consideration was valued at $856.5 million.
The total purchase price of $856.5 million has been allocated to assets acquired and insulated gate bipolar transistors (“IGBTs”) for automotive ignition applications. Theliabilities assumed, as of the completion of 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.

based on estimated fair values. The following table summarizes the purchase price allocation of the fair value of assets acquired and liabilities assumed in the ON PortfolioIXYS 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 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(in thousands)
Purchase Price
Allocation
Total purchase consideration:
Cash, net of cash acquired302,865
Cash settled stock options3,622
Littelfuse stock434,192
Converted stock options38,109
Total purchase consideration778,788
Allocation of consideration to assets acquired and liabilities assumed:
Current assets, net155,930
Property, plant, and equipment77,442
Intangible assets212,720
Goodwill382,360
Other non-current assets28,706
Other non-current liabilities(78,370)
778,788

Approximately $49.1 million of net receivables was included in IXYS’s current assets, All the ON Portfolio businessIXYS goodwill, and other assets and liabilities were recorded in the Electronics segment and areprimarily reflected in the Americas and EuropeEuropean 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’sCompany’s expected future product sales and synergies from combining the ON PortfolioIXYS’s products and technology with the company’s existingpower 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.

Included in the company’s consolidated statement of net income for the year ended December 31, 2016 are net sales of approximately $21.8 million since the August 29, 2016 acquisition of the ON Portfolio business.

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.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the preliminary 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’s products with the company’sCompany’s existing automotiveelectronics product portfolio. Goodwill forresulting from the aboveIXYS acquisition is not expected to be deductible for tax purposes.

The Company recorded $7.0 million for the Toll Charge associated with IXYS as part of the IXYS acquisition purchase price allocation (this reflects a reduction of $1.0 million recorded in the fourth quarter of 2018 and $2.0 million recorded in the third quarter of 2018 as a consequence of revisions to the Company’s original estimates. For additional information, see Note 14, Income Taxes. As a result of the Company completing its fair value analysis, in the fourth quarter of 2018, the company recorded a reduction of $2.6 million in certain investments held by IXYS.

Included in the Company’s Consolidated Statements of Net Income for the fiscal year ended December 29, 2018 are net sales of approximately $378.2 million, and loss before income taxes of $22.2 million, since the January 17, 2018 acquisition of IXYS. The Company recognized approximately $11.9 million of stock compensation expense related to IXYS stock options converted to Littelfuse stock options during the fiscal year ended December 29, 2018, of which $4.5 million was recognized immediately as it related to prior service periods.

As required by purchase accounting rules, the companyCompany recorded a $0.2$36.9 million step-up of inventory to its fair value as of the acquisition date based on the preliminary valuation. The step-up was fully amortized as a non-cash charge to cost of goods sold during 2016,the first and second quarters of 2018, as the acquired inventory was sold, with the chargeand reflected as other non-segment costs.

Included in

During the company’s consolidated statements of net income for thefiscal year ended December 31, 2016 are net sales29, 2018, the Company incurred approximately $11.0 million of approximately $17.3 million sincelegal and professional fees related to this acquisition which were primarily recognized as selling, general, and administrative expenses. These costs were reflected as other non-segment costs.
2017 Acquisitions
U.S. Sensor
On July 7, 2017, the April 4, 2016Company acquired the assets of U.S. Sensor Corporation (“U.S. Sensor”). The acquisition purchase price of Menber’s.

PolySwitch

On March 25, 2016, the company acquired 100% of the circuit protection business (“PolySwitch”) of TE Connectivity Ltd. for $348.3$24.3 million, net of acquired cash and after settlementthe finalization of certain post-closing adjustments. At December 31, 2016, $344.5 million ofan income tax gross up which was settled in the $348.3 million purchase price has been paid with the remaining consideration expected to be paid by the secondfourth quarter of 2017. The company2017, was funded the acquisition with available cash on handcash. The acquired business expands the Company’s existing sensor portfolio in several key electronics and borrowings under the company’s revolving credit facility. The PolySwitch business, which is split between the Automotive and Electronics segments, hasindustrial end markets. U.S. Sensor manufactures 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,variety of high quality negative temperature coefficient thermistors as well as strengthen its presence in the automotive electronicsthermistor probes and battery end markets. The acquisitionassemblies. Product lines also significantly increases the company’s presence in Japan.

include thin film platinum resistance temperature detectors (“RTDs”) and RTD assemblies.
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the purchase price allocation of the fair value of assets acquired and liabilities assumed in the PolySwitchU.S. Sensor 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 to be 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 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(in thousands)Purchase Price Allocation
Total purchase consideration: 
Cash$24,340
Allocation of consideration to assets acquired and liabilities assumed: 
Current assets, net$4,635
Patented and unpatented technologies1,090
Trademarks and tradenames200
Non-compete agreement50
Customer relationships2,830
Goodwill16,075
Current liabilities(540)
 $24,340

Included in U.S. Sensor’s current assets, net was approximately $1.5 million of receivables. All PolySwitchU.S. Sensor goodwill, and other assets and liabilities were recorded in the Electronics and Automotive segmentssegment and reflected in allthe U.S. geographic areas. The customer relationships are being amortized over 15 years. The patented and unpatented technologies are being amortized over 10 years.area. The goodwill resulting from this acquisition consists largely of the company’sCompany’s expected future product sales and synergies from combining PolySwitchU.S. Sensor’s products and technology with the company’sCompany’s existing automotive and electronics product portfolio. $103.8 million and $61.3 million of the goodwillGoodwill for the above acquisition has been assigned to the Electronics and Automotive segments, respectively, with $64.9 millionis expected to be deductible for tax purposes.

As required by purchase accounting rules, the companyCompany recorded a $6.9$1.6 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 secondthird quarter of 2016,2017, as the acquired inventory was sold, and reflected as other non-segment costs.

Included

Monolith
In December 2015, the Company invested $3.5 million in the company’s consolidated statementspreferred stock of net incomeMonolith Semiconductor Inc. (“Monolith”), a U.S. start-up Company developing silicon carbide technology, which represented approximately 12% of the common stock of Monolith on an as-converted basis. The Company accounted for its investment in Monolith under the year endedcost method with any changes in value recorded in other comprehensive income. The value of the Monolith investment was $3.5 million at December 31, 2016 are net2016.
On February 28, 2017, pursuant to a Securities Purchase Agreement between the Company and the stockholders of Monolith (“Securities Purchase Agreement”) and conditioned on Monolith achieving a product development milestone and other provisions, the Company acquired 62% of the outstanding common stock of Monolith for $15.0 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 times based on Monolith meeting certain technical and sales targets. During the first quarter of approximately $126.52018, Monolith met the next set of technical and sales targets. As a result, and pursuant to the Securities Purchase Agreement, in April 2018 the Company acquired an additional 19% of the outstanding common stock of Monolith for $5.0 million, sinceof which $4.0 million was paid to the March 25, 2016 acquisitionstockholders of PolySwitch.

Sigmar S.r.l

Monolith. On October 1, 2015,5, 2018, the companyCompany acquired 100%the remaining 19% outstanding common stock for $5.0 million.

The additional investment, in the first quarter of Sigmar S.r.l. (“Sigmar”).2017, resulted in the Company gaining control of Monolith and was accounted for as a step-acquisition with the fair value of the original investment immediately before the acquisition estimated to be approximately $3.5 million. As the fair value of the investment immediately prior to the transaction equaled the carrying value, there was no impact on the Company’s Consolidated Statements 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 Consolidated Balance Sheets. The totaloriginal investment of $3.5 million, additional cash consideration of $14.2 million (net of cash acquired), and the non-cash consideration of the fair value of the commitment to purchase the non-controlling interest of $9.0 million resulted in a purchase price for Sigmarof $26.7 million. Changes in the fair value of the non-controlling interest are recognized in the Company’s Consolidated Statements of Net Income.
Commencing March 1, 2017, Monolith was $6.5 million, net of cash acquired and including estimated additional net payments of up to $0.9 million,reflected as a portion of which is subject toconsolidated subsidiary within the achievement of certain milestones.

Located in Ozegna, Italy, Sigmar is a leading global manufacturer of water-in-fuel sensors and also manufactures selective catalytic reduction (“SCR”) quality sensors and diesel fuel heaters for automotive and commercial vehicle applications. The acquisition further expanded the company’s automotive sensor product line offerings within its Automotive segment. The company fundedCompany’s Consolidated Financial Statements. Had the acquisition with available cash.

occurred as of January 1, 2017, the impact on the Company’s consolidated Statements of Net Income would not have been material.
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The following table summarizes the purchase price allocation of the fair value of assets acquired and liabilities assumed in the SigmarMonolith acquisition:

(in thousands)

 

Purchase Price

Allocation

 

Total purchase consideration:

    

Cash, net of acquired cash

 $5,558 

Estimated additional consideration payable

  901 

Total purchase consideration

 $6,459 

Allocation of consideration to assets acquired and liabilities assumed:

    

Current assets, net

 $2,519 

Property, plant, and equipment

  1,097 

Goodwill

  4,084 

Patents

  2,845 

Current liabilities

  (1,518)

Other non-current liabilities

  (2,568)
  $6,459 

(in thousands)
Purchase Price
Allocation
Total purchase consideration: 
Original investment$3,500
Cash, net of cash acquired14,172
Non-cash, fair value of commitment to purchase non-controlling interest9,000
Total purchase consideration$26,672
Allocation of consideration to assets acquired and liabilities assumed: 
Current assets, net$891
Property, plant, and equipment789
Patented and unpatented technologies6,720
Non-compete agreement140
Goodwill20,641
Current liabilities(639)
Other non-current liabilities(1,870)
 $26,672

Included in Monolith’s current assets, net was approximately $0.7 million of receivables. All SigmarMonolith goodwill, and other assets and liabilities were recorded in the AutomotiveElectronics segment and reflected in the EuropeU.S. geographic area. The patents are being amortized over 10 years. The goodwill resulting from this acquisition consists largely of the company’sCompany’s expected future product sales and synergies from combining Sigmar’sMonolith’s products and technology with the company’sCompany’s existing automotiveelectronics product offerings.portfolio. Goodwill for the above acquisition is not expected to be deductible for tax purposes.


Pro Forma Results

The following table summarizes, on aan unaudited pro forma basis, the combined results of operations of the companyCompany and the acquired PolySwitch and the ON Portfolio businessesIXYS as though the acquisitionsacquisition had occurred as of December 28, 2014.January 1, 2017. The companyCompany has not included pro forma results of operations for Menber’sU.S. Sensor or SigmarMonolith as these results were not material to the company.Company. The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the PolySwitch or ON Portfolio acquisitionsIXYS acquisition occurred as of December 28, 2014January 1, 2017 or of future consolidated operating results.

  

For the Year Ended

 

(in thousands, except per share amounts)

 

2016

  

2015

 

Net sales

 $1,130,645  $1,104,838 

Income before income taxes

  143,110   120,370 

Net income

  124,388   92,983 

Net income per share — basic

  5.51   4.12 

Net income per share — diluted

  5.47   4.09 

  For the Fiscal Year Ended
(in thousands, except per share amounts) December 29,
2018		 December 30,
2017
Net sales $1,735,181
 $1,564,956
Income before income taxes 272,724
 142,150
Net income 215,228
 75,604
Net income per share — basic 8.61
 3.05
Net income per share — diluted 8.53
 3.00










NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Pro forma results presented above primarily reflect: (i) incremental depreciation relating to fair value adjustments to property, plant, and equipment; (ii) amortization adjustments relating to fair value estimates of intangible assets; (iii) incremental interest expense on assumed indebtedness; and (iv) additional cost of goods sold relating toreflect the capitalization of gross profit as part of purchase accounting recognized for purposesfollowing adjustments:
  For the Fiscal Year Ended
(in thousands) December 29,
2018		 December 30,
2017
Amortization(a)
 $12,009
 $(25,203)
Depreciation —
 556
Transaction costs(b)
 9,976
 (9,976)
Amortization of inventory step-up(c)
 36,927
 (36,927)
Stock compensation(d)
 5,845
 (6,635)
Interest expense(e)
 —
 (10,326)
Income tax impact of above items (15,446) 29,336

(a)The amortization adjustment for the twelve months ended December 29, 2018 primarily reflects the reduction of amortization expense in the period related to the Order backlog intangible asset. The Order backlog has a useful life of twelve months and is fully amortized in the fiscal 2017 pro forma results. The amortization adjustment for the twelve months ended December 30, 2017 reflects incremental amortization resulting for the measurement of intangibles at their fair values.
(b)The transaction cost adjustments reflect the reversal of certain bank and attorney fees from the twelve months ended December 29, 2018 and recognition of those fees during the twelve months ended December 30, 2017.
(c)The amortization of inventory step-up adjustment reflects the reversal of the amount recognized during the twelve months ended December 29, 2018 and the recognition of the full amortization during the twelve months ended December 30, 2017. The inventory step-up was amortized over five months as the inventory was sold.
(d)The stock compensation adjustment reflects the reversal of the portion of stock compensation for IXYS stock options that were converted to Littelfuse stock options and expensed immediately during the twelve months ended December 29, 2018. The adjustment for the twelve months ended December 30, 2017 reflect the incremental stock compensation for the converted stock options.
(e)The interest expense adjustment reflects incremental interest expense related to the financing of the transaction.

For the pro forma as if it was recognized during the company’s first quarter of 2015. Pro forma adjustments described above have been tax affected using the company's effective rate during the respective periods.

The historical PolySwitch and ON Portfolio business results for the years ended December 31, 2016 and January 2, 2016 do not include a provision for income taxes. Income tax expense for the historical PolySwitch business was only provided at the end of the business’s fiscal year ended September 25, 2015. Income tax expense forDecember 28, 2019, the historical ON Portfolio business was not provided on a standalone basis.

4. Divestitures

During the first quarterCompany recorded $2.7 million of 2016, the company sold its tangible and intangible assets relating to a marine product line that it acquired as part of its acquisition of Selco A/S in 2011. In connectionacquisition-related expenses associated with this sale, the company recorded a loss on sale of the product line of $1.4 million reflectedcontemplated acquisitions within selling,Selling, general and administrative expenses for in the year ended December 31, 2016. This loss was recognized as an “other” charge for segment reporting purposes.

Consolidated Statements of Net Income.

3. Inventories
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Inventories

The components of inventories at December 31, 201628, 2019 and January 2, 2016December 29, 2018 are as follows:

(in thousands)

 

2016

  

2015

 

Raw materials

 $32,231  $33,599 

Work in process

  23,354   16,479 

Finished goods

  58,478   48,551 

Total

 $114,063  $98,629 

6.

(in thousands)2019 2018
Raw materials$76,732
 $76,060
Work in process84,561
 97,645
Finished goods110,388
 117,207
Inventory reserves(34,174) (32,684)
Total$237,507

$258,228


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4. Property, Plant, and Equipment
The components of net property, plant, and equipment at December 28, 2019 and December 29, 2018 are as follows:
(in thousands)2019 2018
Land$24,758
 $25,630
Building108,501
 114,636
Equipment631,273
 583,043
Accumulated depreciation and amortization(419,915) (383,415)
Total$344,617
 $339,894


The Company recorded depreciation expense of $52.5 million, $51.0 million, and $38.3 million for the fiscal years ended December 28, 2019, December 29, 2018, and December 30, 2017, respectively.


5. Goodwill and Other Intangible Assets

The amounts for goodwill and changes in the carrying value by segment are as followsfollows:
(in thousands)Electronics Automotive Industrial Total
As of December 30, 2017$278,959
 $135,829
 $38,626
 $453,414
Additions(a)
382,903
 —
 —
 382,903
Foreign currency translation adjustments(5,823) (3,497) (282) (9,602)
As of December 29, 2018$656,039

$132,332

$38,344

$826,715
Foreign currency translation adjustments(5,243) (1,011) 128
 (6,126)
As of December 28, 2019$650,796

$131,321

$38,472

$820,589


(a)The 2018 additions resulted primarily from the acquisition of IXYS.


The components of intangible assets at December 31, 201628, 2019 and January 2, 2016:

(inthousands)

 

2016

  

Additions

(Reductions)(a)

  

Adjustments(c)

  

2015

  

Additions

(Reductions)(b)

  

Adjustments(c)

  

2014

 

Electronics

 $215,765  $162,172  $(4,653) $58,246  $(524) $(1,740) $60,510 

Automotive

  144,585   70,762   (6,439)  80,262   1,994   (3,449)  81,717 

Industrial

  43,194   (8,794)  729   51,259   —   (2,770)  54,029 

Total

 $403,544  $224,140  $(10,363) $189,767  $1,470  $(7,959) $196,256 

(a)

The net additions of $224,140 resulted primarily from the acquisitions of PolySwitch, ON and Menber’s, partially offset by the impairment of custom products reporting unit goodwill.

(b)

Electronics reduction resulted from reclassification of goodwill to customer relationships. Automotive addition of $2.0 million resulted from business acquisitions.

(c)

Adjustments reflect the impact of changes in foreign exchange rates.

The company recognized a goodwill impairment chargeDecember 29, 2018 are as follows:

 As of December 28, 2019
(in thousands)
Gross
Carrying
Value
 
 
Accumulated
Amortization
 
 
Net Book
Value
Land use rights$9,649
 $1,730
 $7,919
Patents, licenses and software$131,164
 $78,828
 $52,336
Distribution network43,239
 36,163
 7,076
Customer relationships, trademarks, and tradenames360,534
 106,618
 253,916
Total$544,586

$223,339

$321,247
 As of December 29, 2018
(in thousands)
Gross
Carrying
Value
 
 
Accumulated
Amortization
 
 
Net Book
Value
Land use rights$6,792
 $1,168
 $5,624
Patents, licenses and software$132,621
 $68,263
 $64,358
Distribution network43,876
 34,564
 9,312
Customer relationships, trademarks, and tradenames374,246
 92,066
 282,180
Total$557,535

$196,061

$361,474

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


During the year ended December 29, 2018, the Company recorded additions to other intangible assets of $8.8$212.7 million, in 2016, but none in 2015 and 2014. The charge related tofor acquisitions during 2018, the custom products reporting unit in the Industrial segment.

components of which were as follows:

 2018
(in thousands, except weighted average useful life)
Weighted Average
Useful Life (Years)
 Amount
Patents, licenses and software8.0 $51,500
Customer relationships, trademarks, and tradenames17.2 148,800
Order backlog1.0 12,420
Total  $212,720

For intangible assets with definite lives, the companyCompany recorded amortization expense of $19.3$40.0 million, $11.9$52.2 million, and $12.5$24.7 million in 2016, 2015,2019, 2018, and 2014,2017, respectively. Additionally for 2016, the company recognized an impairment charge of $6.0 million. The details of other intangible assets and related future amortization expense of existing intangible assets at December 31, 2016 and January 2, 2016 are as follows:

  

2016

  

2015

 

(inthousands)

 

Weighted

Average

Useful Life

  

Gross

Carrying

Value

  

Accumulated Amortization

  

Weighted

Average

Useful Life

  

Gross

Carrying

Value

  

Accumulated Amortization

 

Patents, licenses and software

  11.4  $131,611  $48,004   11.6  $61,297  $41,076 

Distribution network

  12.1   49,150   30,155   12.4   45,564   29,074 

Customer relationships, trademarks and tradenames

  14.4   150,227   40,463   13.0   81,233   30,534 

Tradenames(a)

  —   4,319   3,659   —   4,213   — 

Total

  12.9  $335,307  $122,281   12.4  $192,307  $100,684 

(a)

Tradenames with indefinite lives.

Estimated annual amortization expense related to intangible assets with definite lives at December 31, 201628, 2019 is as follows:

(inthousands)

 

Estimated

Amortization

 

2017

 $23,945 

2018

  23,497 

2019

  23,786 

2020

  23,242 

2021

  21,816 

2022 and thereafter

  96,740 
  $213,026 

 

(in thousands)
Amount
2020$39,660
202137,865
202236,724
202332,372
202429,273
2025 and thereafter145,353
Total$321,247


6. Accrued Liabilities
The components of accrued liabilities at December 28, 2019 and December 29, 2018 are as follows:
(in thousands)2019 2018
Employee-related liabilities$40,774
 $60,640
Operating lease liability7,259
 —
Interest5,058
 5,137
Professional services3,986
 6,169
Restructuring liabilities2,679
 3,887
Other non-income taxes1,940
 21,523
Accrued share repurchases—
 4,349
Other22,424
 36,700
Total$84,120
 $138,405


Employee-related liabilities consist primarily of payroll, sales commission, bonus, employee benefit accruals and workers’ compensation. Bonus accruals include amounts earned pursuant to the Company’s primary employee incentive compensation plans. Other accrued liabilities include miscellaneous operating accruals and other client-related liabilities.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



7. Lease Commitments


The companyCompany leases office and production space under various non-cancellable operating leases that expire no later than 2025. Certain real estate leases include one or more options to renew. The exercise of lease renewal options is at the Company's sole discretion. Options to extend the lease are included in the lease term when it is reasonably certain the Company will exercise the option. The Company also has production equipment, office equipment and vehicles under operating leases. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option that is reasonably certain of exercise. Certain leases include rental payments adjusted periodically for inflation. The lease agreements do not contain any material residual value guarantee or material restrictive covenants.

The Company does not have a published credit rating because it has no publicly traded debt; therefore, the Company is generating its incremental borrowing rate (IBR), using a synthetic credit rating model that compares its credit quality to other rated companies based on certain financial metrics and ratios. The reference rate will be based on the yield curve of companies with similar credit quality based on the metrics and adjusted for currency in regions where we have significant operations.

All leases with an initial term of 12 months or less that do not include an option to extend or purchase the underlying asset that the Company is reasonably certain to exercise (“short-term leases”) are not recorded on the Consolidated Balance Sheets. Short-term lease expenses are recognized on a straight-line basis over the lease term.

The following table presents the classification of ROU assets and lease liabilities as of December 28, 2019:
Leases
(in thousands)
Consolidated Balance Sheet ClassificationDecember 28, 2019
Assets  
Operating ROU assetsRight of use lease assets, net$21,918
Liabilities  
Current operating lease liabilitiesAccrued liabilities$7,259
Non-current operating lease liabilitiesNon-current operating lease liabilities17,166
Total lease liabilities $24,425


The following table represents the lease costs for 2019:
Leases cost
(in thousands)
Consolidated Statements of Net Income ClassificationFiscal Year Ended December 28, 2019
Short-term lease expensesCost of sales, SG&A expenses$562
Variable lease expensesCost of sales, SG&A expenses916
Operating lease rent expensesCost of sales, SG&A expenses8,664
Total operating lease costsCost of sales, SG&A expenses$10,142

The Company leases certain office and warehouse space as well as certain machinery and equipment under non-cancellable operating leases. Rent expense under these leases was $12.6$10.1 million, $11.1$9.6 million, and $8.9$11.6 million in 2016, 2015,2019, 2018, and 2014,2017, respectively.

Rent expense is recognized on a straight-line basis over the term of the leases. The difference between straight-line basis rent and the amount paid has been recorded as accrued lease obligations. The company also has leases that have lease renewal provisions. As of December 31, 2016, all operating leases outstanding were with third parties. The company did not have any capital leases as of December 31, 2016.

Future

Maturity of Lease Liabilities as of December 28, 2019
(in thousands)
Operating leases
2020$8,207
20216,383
20225,297
20233,518
20243,165
2025 and thereafter458
Total lease payments$27,028
  
Present value of lease liabilities24,425

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Operating Lease Term and Discount RateFiscal Year Ended December 28, 2019
Weighted-average remaining lease term (years)4.05
Weighted-average discount rate5.11%


Other Information
(in thousands)
Fiscal Year Ended December 28, 2019
Cash paid for amounts included in the measurement of lease liabilities 
Operating cash flow payments for operating leases$(8,936)
Leased assets obtained in exchange for operating lease liabilities3,962


Under ASC 840, future minimum payments for all non-cancellable operating leases with initial terms of one year or more at December 31, 201629, 2018 are as follows:

(inthousands)

 

Future MinimumPayments

 

2017

 $11,971 

2018

  6,149 

2019

  4,963 

2020

  4,458 

2021

  3,756 

2022 and thereafter

  8,025 
  $39,322 

(in thousands)
Fiscal Year Ended
December 29, 2018
20199,133
20207,590
20215,574
20224,590
20232,946
2024 and thereafter2,774
Total$32,607



8. Restructuring, Impairment and Other Charges

The Company recorded restructuring, impairment and other charges for fiscal years 2019, 2018, and 2017 as follows:

 Fiscal Year Ended December 28, 2019
(in thousands)Electronics Automotive Industrial Total
Employee terminations$5,313
 $4,251
 $795
 $10,359
Other restructuring charges188
 1,714
 450
 2,352
   Total restructuring charges5,501
 5,965
 1,245
 12,711
Impairment—
 322
 —
 322
   Total$5,501
 $6,287
 $1,245
 $13,033

 Fiscal Year Ended December 29, 2018
(in thousands)Electronics Automotive Industrial Total
Employee terminations$8,742
 $634
 $127
 $9,503
Other restructuring charges670
 192
 —
 862
   Total restructuring charges9,412
 826
 127
 10,365
Impairment—
 88
 2,130
 2,218
   Total$9,412
 $914
 $2,257
 $12,583

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 Fiscal Year Ended December 30, 2017
(in thousands)Electronics Automotive Industrial Total
Employee terminations$1,244
 $371
 $378
 $1,993
Other restructuring charges234
 —
 —
 234
   Total restructuring charges1,478
 371
 378
 2,227


2019
For the year ended December 28, 2019, the Company recorded total restructuring charges of $12.7 million for employee termination costs and other restructuring charges. These charges primarily related to the reorganization of operations and selling, general and administrative functions as well as the integration of IXYS within the Electronics segment and the reorganization of operations in the automotive sensors and commercial vehicle products businesses within the Automotive segment. 

In April 2019, we announced the closure of a European manufacturing facility in the automotive sensors business within the Automotive segment. The Company recorded $1.7 million of employee termination costs and $1.4 million of other restructuring and impairment charges associated with this plant closure.

2018
For the year ended December 29, 2018, the Company recorded total restructuring charges of $10.4 million for employee termination costs and other restructuring charges related to lease termination and facility closure. These charges primarily related to the integration of IXYS and the reorganization of the IXYS Radio Pulse business within the Electronics segment and the reorganization of operations in the Commercial Vehicle Products business within the Automotive segment.

For the year ended December 29, 2018, the Company recorded impairment charges of $2.2 million primarily related to the impairment of a building and a trade name associated with the exit of the Custom business within the Industrial segment.

2017
For the year ended December 30, 2017, the Company recorded total restructuring charges of $2.2 million for employee termination costs and other restructuring charges. The Company recorded $2.0 million for employee termination costs primarily related to the reorganization of selling, general, and administrative functions within the Electronics segments as well as the reorganization of certain operations.

The restructuring reserves as of December 28, 2019 and December 29, 2018 are $2.7 million and $3.9 million, respectively. The restructuring reserves are included within accrued liabilities. Payments associated with employee terminations reflected in the above table were substantially completed by December 28, 2019. The Company anticipates that the remaining payments associated with employee terminations will be completed in fiscal 2020.

9. Debt

The carrying amounts of debt at December 31, 201628, 2019 and January 2, 2016December 29, 2018 are as follows:

(inthousands)

 

2016

  

2015

 

Revolving credit facility

 $112,500  $77,000 

Term loan

  120,313   85,000 

Entrusted loan

  3,522   9,474 

Euro Senior Notes, Series A due 2023

  122,313   — 

Euro Senior Notes, Series B due 2028

  99,314   — 

Unamortized debt issuance costs

  (3,820)  (721)

Total debt

  454,142   170,753 

Less: Current maturities

  (6,250)  (87,000)

Total long-term debt

 $447,892  $83,753 

(in thousands)
2019 2018
Term Loan$145,000
 $155,000
Euro Senior Notes, Series A due 2023129,808
 133,417
Euro Senior Notes, Series B due 2028105,400
 108,330
U.S. Senior Notes, Series A due 202225,000
 25,000
U.S. Senior Notes, Series B due 2027100,000
 100,000
U.S. Senior Notes, Series A due 202550,000
 50,000
U.S. Senior Notes, Series B due 2030125,000
 125,000
Other2,619
 2,619
Unamortized debt issuance costs(3,669) (4,636)
Total debt679,158

694,730
Less: Current maturities(10,000) (10,000)
Total long-term debt$669,158

$684,730

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Revolving Credit Facility / Term Loan

On March 4, 2016, the companyCompany entered into a new five yearfive-year credit agreement (“Credit Agreement”) with a group of lenders for up to $700.0 million. The new credit agreement consistsCredit Agreement consisted of an unsecured revolving credit facility (“Revolving Credit Facility”) of $575.0 million and an unsecured term loan credit facility (“Term Loan”) of up to $125.0 million. In addition, the company hasCompany had the ability, from time to time, to increase the size of the revolving credit facilityRevolving Credit Facility and the term loan facilityTerm Loan by up to an additional $150.0 million, in the aggregate, in each case in minimum increments of $25.0 million, subject to certain conditions and the agreement of participating lenders.
On October 13, 2017, the Company amended the Credit Agreement to increase the Revolving Credit Facility from $575.0 million to $700.0 million and increase the Term Loan 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 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 2 advances. The first advance of $125.0 million occurred on October 13, 2017 and the second advance of $75.0 million occurred on January 16, 2018. For the term loan credit facility,Term Loan, the companyCompany is required to make quarterly principal payments of $1.61.25% of the original term loan ($2.5 million quarterly) through March 31, 2018 and $3.1 million from June 30, 2018 through December 31, 2020maturity, with the remaining balance due on March 4, 2021.

October 13, 2022. The Company paid $10.0 million of principal payments on the Term Loan for the fiscal year ended December 28, 2019.

Outstanding borrowings under the credit agreementCredit Agreement bear interest, at the company’sCompany’s option, at either LIBOR fixed for interest periods of one, two, three or six monthsix-month periods plus 1.00% to 2.00%, or at the bank’s Base Rate, as defined, plus 0.00% to 1.00%, based upon the company’sCompany’s Consolidated Leverage Ratio, as defined. The companyCompany is also required to pay commitment fees on unused portions of the credit agreement ranging from 0.15% to 0.30%0.25%, based on the Consolidated Leverage Ratio, as defined.defined in the agreement. The credit agreement includes representations, covenants and events of default that are customary for financing transactions of this nature. The effective interest rate on outstanding borrowings under the credit facility was 2.27%3.20% at December 31, 2016.

28, 2019.

As of December 31, 2016,28, 2019, the companyCompany had $0.1 million0 amounts outstanding in letters of credit and had available $462.4$353.4 million of borrowing capacity under the revolving credit facility.Revolving Credit Facility. At December 31, 2016,28, 2019, the companyCompany was in compliance with all covenants under the credit agreement.

Credit Agreement.
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The company previously entered into credit agreement with J.P. Morgan Securities LLC on May 31, 2013, for up to $325.0 million which consisted of an unsecured revolving credit facility of $225.0 million and an unsecured term loan of $100.0 million. The credit agreement was for a five year period. On January 30, 2014, the company increased the unsecured revolving credit facility by $50.0 million, thereby increasing the total revolver borrowing capacity from $225.0 million to $275.0 million. Along with entering into the new five year credit agreement on March 4, 2016, the company terminated this credit agreement. At January 2, 2016, the company had available borrowing capacity of $197.9 million under the credit agreement at an interest rate of LIBOR plus 1.25%, or a total interest rate of 1.68% as of January 2, 2016. For the fiscal years ended January 2, 2016, the company had $0.1 million outstanding in letters of credit and no amounts were drawn under these lines of credit at January 2, 2016.

Senior Notes

On December 8, 2016, the companyCompany entered into a Note Purchase Agreement, pursuant to which the companyCompany issued and sold €212 million aggregate principal amount of senior notes in two2 series. The funding date for the Euro denominated senior notes occurred on December 8, 2016 for €117 million in aggregate amount of 1.14% Senior Notes, Series A, due December 8, 2023 (“Euro Senior Notes, Series A due 2023”), and €95 million in aggregate amount of 1.83% Senior Notes, Series B due December 8, 2028 (“Euro Senior Notes, Series B due 2028”) (together, the “Euro Senior Notes”). Interest on the Euro Senior Notes is payable semiannually on June 8 and December 8, commencing June 8, 2017.

On December 8, 2016, the companyCompany entered into a Note Purchase Agreement, pursuant to which the company will issueCompany issued and sellsold $125 million aggregate principal amount of senior notes in two2 series. On February 15, 2017, $25 million in aggregate principal amount of 3.03% Senior Notes, Series A, due February 15, 2022 (“U.S. Senior Notes, Series A due 2022”), and $100 million in aggregate principal amount of 3.74% Senior Notes, Series B, due February 15, 2027 (“U.S. Senior Notes, Series B due 2027”) (together, the “U.S. Senior Notes” due 2022 and together2027”) were funded. Interest on the U.S. Senior Notes due 2022 and 2027 is payable semiannually on February 15 and August 15, commencing August 15, 2017.
On November 15, 2017, the Company entered into a Note Purchase Agreement pursuant to which the Company issued and sold $175 million in aggregate principal amount of senior notes in 2 series. On January 16, 2018, $50 million aggregate principal amount of 3.48% Senior Notes, Series A, due February 15, 2025 (“U.S. Senior Notes, Series A due 2025”) and $125 million in aggregate principal amount of 3.78% Senior Notes, Series B, due February 15, 2030 (“U.S. Senior Notes, Series B due 2030”) (together, the “U.S. Senior Notes due 2025 and 2030” and with the Euro Senior Notes and the U.S. Senior Notes 2022 and 2027, the “Senior Notes”) were funded. Interest on the U.S. Senior Notes due 2025 and 2030 will be payable semiannually on February 15 and August 15, commencing on August 15, 2017.

2018.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Senior Notes have not been registered under the Securities Act, or applicable state securities laws. The Senior Notes are general unsecured senior obligations and rank equal in right of payment with all existing and future unsecured unsubordinated indebtedness of the company.

Company.

The Senior Notes are subject to certain customary covenants, including limitations on the company’sCompany’s ability, with certain exceptions, to engage in mergers, consolidations, asset sales and transactions with affiliates, to engage in any business that would substantially change the general business of the company,Company, and to incur liens. In addition, the companyCompany is required to satisfy certain financial covenants and tests relating to, among other matters, interest coverage and leverage. At December 31, 2016,28, 2019, the companyCompany was in compliance with all covenants under the revolving credit facility and the Senior Notes.

The companyCompany may redeem the Senior Notes upon the satisfaction of certain conditions and the payment of a make-whole amount to noteholders, and are required to offer to repurchase the Senior Notes at par following certain events, including a change of control.


Interest paid on all Company debt was approximately $21.2 million,  $18.5 million, and $10.6 million in fiscal year ended 2019, 2018, and 2017, respectively.

Debt Issuance Costs

The companyCompany paid debt issuance costs of $0.9 million in relation to the $175 million Note Purchase Agreement that was entered on November 15, 2017. The Company incurred debt issuance costs of $1.7$1.6 million in relation to the new credit agreement2017 amendment to the Credit Agreement which, along with the remaining balance of debt issuance costs of the previous credit facility, are being amortized over the life of the new credit agreement. This new credit agreement was determined to be a modification under ASC 470-50 of the previous credit agreement.Credit Agreement. The company additionallyCompany incurred aggregate debt issuance costs of $1.8 million in relation to the Senior Notes issued previously which are being amortized over the respective lives of the Series A and B of each of the U.S. Senior Notes and Euro Senior Notes.

Entrusted Loan

During 2014, the company entered into an entrusted loan arrangement (“Entrusted Loan”) ofChinese renminbi 110.0 million (approximately U.S. $17.9 million) between two of its China legal entities, Littelfuse Semiconductor (“Wuxi”) Company (the “lender”) and Suzhou Littelfuse OVS Ltd. (the “borrower”), utilizing Bank of America, N.A., Shanghai Branch as agent. Direct borrowing and lending between two commonly owned commercial entities was strictly forbidden at the time under China’s regulations requiring the use of a third party agent to enable loans between Chinese legal entities. As a result, the Entrusted Loan is reflected as both a long-term asset and long-term debt on the company’s Consolidated Balance Sheets and is reflected in the investing and financing activities in its Consolidated Statements of Cash Flows. Interest expense and interest income will be recorded between the lender and borrower with no net impact on the company’s Consolidated Statements of Income since the amounts will be offsetting. The loan interest rate per annum is 5.25%. The Entrusted Loan is used to finance the operation and working capital needs of the borrower and matures in November 2019. The balance of the Entrusted Loan wasChinese renminbi 24.5 million (approximately U.S. $3.5 million) at December 31, 2016.

Interest paid on all company debt was approximately $8.6 million, $4.1 million, and $4.9 million in 2016, 2015, and 2014, respectively.

notes.
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt Maturities

Scheduled maturities of the company’sCompany’s long-term debt for each of the five years succeeding December 31, 201628, 2019 and thereafter are summarized as follows:

(inthousands)

 

Scheduled

Maturities

 

2017

 $6,250 

2018

  10,937 

2019

  16,022 

2020

  12,500 

2021

  190,626 

2022 and thereafter

  221,627 
  $457,962 

9.

(in thousands)
Scheduled
Maturities
2020$10,000
202110,000
2022152,619
2023129,808
2024—
2025 and thereafter380,400
 $682,827


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


10. Fair Value of Assets and Liabilities

Applicable accounting literature establishes a hierarchy for inputs used in measuring

For assets and liabilities measured at fair value that maximizes the useon a recurring and nonrecurring basis, a three-level hierarchy of measurements based upon observable inputs and minimizes the use of unobservable inputs by requiring thatis used to arrive at fair value. Observable inputs are developed based on market data obtained from independent sources, while unobservable inputs reflect the most observable inputs be used when available. Applicable accounting literature defines levels within the hierarchyCompany’s assumptions about valuation based on the reliability ofbest information available in the circumstances. Depending on the inputs, the Company classifies each fair value measurement as follows:

Level 1—1—Valuations based on unadjusted quoted prices for identical assets or liabilities in active markets;

Level 2—2—Valuations based upon quoted prices forsimilar instruments, prices for identical or similar instruments in markets that are not active, or model-derived valuations, all of whose significant inputs are observable, and

Level 3—Valuationsbased3—Valuations based upon one or more significant unobservable inputs.

Following is a description of the valuation methodologies used for instruments measured at fair value and their classification in the valuation hierarchy.


Cash Equivalents

Cash equivalents primarily consist of money market funds, which are held with an institution with sound credit rating and are highly liquid. The Company classified cash equivalents as Level 1 and are valued at cost, which approximates fair value.
Investments

in Equity Securities

Investments in equity securities listed on a national market or exchange are valued at the last sales price. Such securities are further detailed in Note 1,Summary of Significant Accounting Policies and Other Information,price and classified within Level 1 of the valuation hierarchy.

Such securities are further detailed in Note 1, Summary of Significant Accounting Policies and Other Information.

The Company has certain convertible debt and convertible preferred stock investments that are accounted for under the cost method reflected in Investments and Other assets in the Consolidated Balance Sheets. During the fiscal year ended December 28, 2019, the Company recorded impairment charges of $7.3 million in Other Expense (income), net in the Consolidated Statements of Net Income to adjust these certain investments to their estimated fair value of $0.4 million. The fair value of these investments are measured on a nonrecurring basis and determined to be Level 3 under the fair value hierarchy. The Company's accounting and finance management determines the valuation policies and procedures for Level 3 fair value measurements and is responsible for the development and determination of unobservable inputs.

Defined Benefit Plan Assets / Non-qualified Supplemental Retirement and Savings PlanInvestments
See Note 11, Benefit Plans, for description of valuation methodologies and investment balances for defined benefit plan assets and investments related to the Company’s Non-Qualified Supplemental Retirement and Savings Plan.
There were no changes during 20162019 to the company’sCompany’s valuation techniques used to measure asset and liability fair values on a recurring basis. On October 30, 2019, the Company entered a foreign currency exchange forward contract to mitigate the currency fluctuation risk between the Chinese renminbi and U.S dollar. The foreign currency contract was not designated as a hedge instrument and was marked to market on a monthly basis. The loss of $0.2 million associated with the change in fair values of the foreign currency exchange forward contract was recognized in Other income, net in the Consolidated Statements of Net Income along with a $0.2 million liability recorded in Accrued Liabilities on the Consolidated Balance Sheets. The notional value of the forward contracts at December 28, 2019 was $16.0 million and expires on May 5, 2020. The Company does not use derivative financial instruments for trading or speculative purposes. The fair values of the foreign currency forward contract was determined to be Level 2 under the fair value hierarchy and is valued using market exchange rates. As of December 31, 2016 and January 2, 2016,29, 2018, the companyCompany held no non-financial assets or liabilities that are required to be measured at fair value on a recurring basis.






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The following table presents assets measured at fair value by classification within the fair value hierarchy as of December 31, 2016:

  

Fair Value Measurements Using

     

(inthousands)

 

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

  

Significant
Other
Observable
Inputs
(Level 2)

  

Significant
Unobservable
Inputs
(Level 3)

  

Total

 

Investment in Polytronics

 $10,435  $—  $—  $10,435 

28, 2019:

 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$118,999
 $—
 $—
 $118,999
Investments in equity securities12,969
 —
 —
 12,969
Mutual funds10,464
 —
 —
 10,464

The following table presents assets measured at fair value by classification within the fair value hierarchy as of January 2, 2016:

  

Fair Value Measurements Using

     

(inthousands)

 

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

  

Significant
Other
Observable
Inputs
(Level 2)

  

Significant
Unobservable
Inputs
(Level 3)

  

Total

 

Investment in Polytronics

 $11,697  $—  $—  $11,697 

December 29, 2018:
 

 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
Investments in equity securities$10,312
 $—
 $—
 $10,312
Mutual funds9,112
 —
 —
 9,112

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In addition to the methods and assumptions used for the financial instruments recorded at fair value as discussed above, the following methods and assumptions are used to estimate the fair value of other financial instruments that are not marked to market on a recurring basis. The company’sCompany’s other financial instruments include cash and cash equivalents, short-term investments, accounts receivabletrade receivables and its long-term debt. Due to their short-term maturity, the carrying amounts of cash and cash equivalents, short-term investments and accounts receivabletrade receivables approximate their fair values. The company’sCompany’s revolving and term loan debt facilities’ fair values approximate book value at January 2, 2016December 28, 2019 and December 27, 2014,29, 2018, as the rates on these borrowings are variable in nature.
The carrying value and estimated fair values of the company’sCompany’s Euro Senior Notes, Series A and Series B were $122.6 million and $99.2 million, respectively, at December 31, 2016 and are considered Level 2 in the valuation hierarchy. Carrying values of the EuroUSD Senior Notes, Series A and Series B, as of December 28, 2019 and December 29, 2018 were $122.3 million and 99.3 million, respectively, at December 31, 2016.

10.as follows:

 December 28, 2019 December 29, 2018
(in thousands)
Carrying
Value
 
Estimated
Fair Value
 
Carrying
Value
 
Estimated
Fair Value
Euro Senior Notes, Series A due 2023$129,808
 $131,710
 $133,417
 $130,888
Euro Senior Notes, Series B due 2028105,400
 110,336
 108,330
 103,774
USD Senior Notes, Series A due 202225,000
 25,054
 25,000
 24,115
USD Senior Notes, Series B due 2027100,000
 102,548
 100,000
 94,458
USD Senior Notes, Series A due 202550,000
 50,775
 50,000
 47,434
USD Senior Notes, Series B due 2030125,000
 127,701
 125,000
 114,731



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


11. Benefit Plans

The companyCompany has company-sponsoredCompany-sponsored defined benefit pension plans covering employees in the United Kingdom ("U.K."), Germany, the Philippines, China, Japan, Mexico, Italy and France. The amount of the retirement benefits provided under the plans is based on years of service and final average pay.

PolySwitch

IXYS Acquisition

During 2016,2018, as a result of the PolySwitchIXYS acquisition, past servicepension liabilities were assumed by the companyCompany in China, France, Germany, Japan, Mexico,Philippines, and Taiwan, together with a small amount of plan assets in Taiwan.

Littelfuse Inc. Retirement Plan Termination

The company received approval from the IRS on April 14, 2015 on its Application for Determination for Terminating Plan to terminate the U.S. defined benefit pension plan, the Littelfuse Inc. Retirement Plan, effective July 30, 2014. All plan liabilities were settled (either via lump sum payout or purchase of a group annuity contract) in the third quarter of 2015. A cash contribution of $9.1 million was made to the U.S. defined benefit plan’s trust in the third quarter of 2015 to fully fund the plan on a buyout basis, and the eventual settlement of the plan’s liabilities triggered a settlement charge of $30.2 million in the third quarter of 2015. In the fourth quarter of 2015 there was an adjustment to the price of the annuity contract which resulted in a refund of premium to the company of $0.3 million. This refund of premium, effectively a re-measurement gain, was recognized in the fourth quarter of 2015 as a dollar-for-dollar adjustment to the $30.2 million earnings charge recognized in the third quarter of 2015, resulting in a final settlement loss of $29.9 million for the fiscal year ended January 2, 2016.

During 2016, there were two further adjustments to the price of the annuity contract. Their combined effect resulted in a further refund of premium to the company of $0.3 million. This refund of premium was considered additional actual return on the assets during 2016, followed by a negative employer contribution of that same amount in the asset reconciliation table below.

Total pension expense was $1.5 million, $32.4 million, and $0.3 million in 2016, 2015, and 2014, respectively. The changes in pension expense primarily resulted from the termination and settlement of the U.S. plan, together with the effect of the PolySwitch acquisition.

U.K.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Benefit plan related information is as follows:

  2016  2015 

(inthousands)

 

U.S.

  

Foreign

  

Total

  

U.S.

  

Foreign

  

Total

 

Change in benefit obligation:

                        

Benefit obligation at beginning of year

 $—  $50,282  $50,282  $105,759  $52,740  $158,499 

Service cost

  —   1,509   1,509   750   824   1,574 

Interest cost

  —   1,662   1,662   3,093   1,735   4,828 

Net actuarial loss (gain)

  —   10,190   10,190   (9,127)  648   (8,479)

Benefits paid from the trust

  —   (2,329)  (2,329)  (100,475)  (1,732)  (102,207)

Benefits paid directly by company

  —   250   250   —   (410)  (410)

Curtailments and settlements

  —   (427)  (427)  —   (294)  (294)

Acquisitions

  —   2,023   2,023   —   —   — 

Effect of exchange rate movements

  —   (7,554)  (7,554)  —   (3,229)  (3,229)

Benefit obligation at end of year

 $—  $55,606  $55,606  $—  $50,282  $50,282 
                         

Change in plan assets at fair value:

                        

Fair value of plan assets at beginning of year

 $—  $44,629  $44,629  $93,991  $47,593  $141,584 

Actual return on plan assets

  341   6,588   6,929   (2,375)  389   (1,986)

Employer contributions

  (341)  215   (126)  8,859   1,072   9,931 

Benefits paid

  —   (2,329)  (2,329)  (100,475)  (1,732)  (102,207)

Acquisitions

  —   24   24   —   —   — 

Effect of exchange rate movements

  —   (6,919)  (6,919)  —   (2,693)  (2,693)

Fair value of plan assets at end of year

  —   42,208   42,208   —   44,629   44,629 

Net amount recognized/(unfunded status)

 $—  $(13,398) $(13,398) $—  $(5,653) $(5,653)
                         

Amounts recognized in the Consolidated Balance Sheet consist of:

                        

Current portion of accrued benefit liability

 $—  $—  $—  $—  $—  $— 

Accrued benefit liability

  —   (13,398)  (13,398)  —   (5,653)  (5,653)

Total liability recognized

  —   (13,398)  (13,398)  —   (5,653)  (5,653)

Accumulated other comprehensive loss

 $—  $13,107  $13,107  $—  $9,383  $9,383 

follows for the years 2019 and 2018:

(in thousands)
2019 2018
Change in benefit obligation:   
Benefit obligation at beginning of year$102,833
 $67,268
Service cost2,040
 2,266
Interest cost3,169
 3,104
Net actuarial gain/(loss)11,286
 (7,321)
Benefits paid from the trust(3,323) (2,479)
Benefits paid directly by the Company(1,540) (1,802)
Settlements(1,924) (1,291)
Acquisitions—
 48,358
Effect of exchange rate movements1,735
 (6,918)
Plan amendment and other2,645
 1,648
Benefit obligation at end of year$116,921

$102,833
    
Change in plan assets at fair value:   
Fair value of plan assets at beginning of year$70,676
 $48,123
Actual return on plan assets8,222
 (2,847)
Employer contributions2,233
 2,341
Benefits paid(3,323) (2,479)
Settlements(1,072) (1,291)
Acquisitions—
 31,954
Effect of exchange rate movements1,766
 (5,125)
Fair value of plan assets at end of year78,502

70,676
Net amount unfunded status$(38,419)
$(32,157)


Amounts recognized in the Consolidated Balance Sheets as of December 28, 2019 and December 29, 2018 consist of the following:
(in thousands)
2019 2018
Amounts recognized in the Consolidated Balance Sheets consist of:   
Noncurrent assets$885
 $811
Current benefit liability(1,106) (1,094)
Noncurrent benefit liability(38,198) (31,874)
Net liability recognized$(38,419)
$(32,157)


The amounts included in accumulated other comprehensive income (loss), pre-tax consist of:

  

2016

  

2015

 

(inthousands)

 

U.S.

  

Foreign

  

Total

  

U.S.

  

Foreign

  

Total

 

Net actuarial loss

 $—  $13,107  $13,107  $—  $9,383  $9,383 

Prior service (cost)

  —   —   —   —   —   — 

Net amount recognized /occurring, pre-tax

 $—  $13,107  $13,107  $—  $9,383  $9,383 

loss in the Consolidated Balance Sheets, excluding tax effects, that have not yet been recognized as components of net periodic benefit costs as of December 28, 2019 and December 29, 2018 were as following:


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(in thousands)
2019 2018
Net actuarial loss$15,635
 $9,777
Prior service cost4,273
 1,607
Total$19,908

$11,384

The estimated net actuarial loss (gain)and prior service cost which will be amortized from accumulated other comprehensive income (loss) into benefit cost in 2017 isapproximately $0.3 million.

2020 is approximately $0.4 million and $0.2 million, respectively.


The pre-tax amounts recognized in other comprehensive income (loss) in 2019 as components of net periodic benefit costs were as follows:

  
(in thousands)
2019
Amortization of: 
Prior service cost$80
Net actuarial loss163
Amount arising during the period: 
Prior service cost(2,645)
Net actuarial loss(6,251)
Settlement loss260
Foreign currency adjustments(131)
Total$(8,524)


The components of total pension expense (income)net periodic benefits costs for the fiscal years 2016, 2015,2019, 2018, and 20142017 are as follows: 

  

U.S.

  

Foreign

 

(inthousands)

 

2016

  

2015

  

2014

  

2016

  

2015

  

2014

 

Components of net periodic benefit cost:

                        

Service cost

 $—  $750  $600  $1,509  $824  $925 

Interest cost

  —   3,093   3,884   1,662   1,735   2,060 

Expected return on plan assets

  —   (2,749)  (5,646)  (1,935)  (2,346)  (2,292)

Amortization of prior service (credit)

  —   —   —   —   —   — 

Amortization of losses

  —   870   549   306   221   216 

Total cost (credit) of the plan for the year

  —   1,964   (613)  1,542   434   909 

Expected plan participants’ contributions

  —   —   —   —   —   — 

Net periodic benefit cost (credit)

  —   1,964   (613)  1,542   434   909 

Curtailment/Settlement loss (gain)

  —   29,928   —   (36)  —   — 

Total expense (income) for the year

 $—  $31,892  $(613) $1,506  $434  $909 

 

      
(in thousands)
2019 2018 2017
Components of net periodic benefit cost:     
Service cost$2,040
 $2,266
 $2,037
Interest cost3,169
 3,104
 1,887
Expected return on plan assets(3,187) (3,222) (1,990)
Amortization of prior service and net actuarial loss243
 291
 337
Net periodic benefit cost2,265

2,439

2,271
Settlement loss / curtailment (gain)260
 238
 (25)
Total expense for the year$2,525

$2,677

$2,246

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Weighted average assumptions used to determine net periodic benefit cost for the fiscal years 2016, 2015,2019, 2018, and 20142017 are as follows:

  

U.S.

  

Foreign

 
  

2016

  

2015

  

2014

  

2016

  

2015

  

2014

 

Discount rate

  —   3.9%  4.8%  3.7%  3.7%  3.7%

Expected return on plan assets

  —   6.8%  6.8%  4.9%  5.1%  4.9%

Compensation increase rate

  —   —   —   5.3%  5.3%  3.8%
Measurement dates  —   12/31/14   12/31/13   12/31/15   12/31/14   12/31/13 

      
 2019 2018 2017
Discount rate3.1% 2.8% 3.0%
Expected return on plan assets4.5% 4.2% 4.5%
Compensation increase rate4.6% 5.0% 4.5%

The accumulated benefit obligation for the foreign plans was $51.3$111.3 million and $46.2$99.6 million at December 31, 201628, 2019 and January 2, 2016,December 29, 2018, respectively.

The following table provides a summary of under-funded or unfunded pension benefit plans with projected benefit obligations in excess of plan assets as of December 28, 2019 and December 29, 2018:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(in thousands)
2019 2018
Projected benefit obligation$81,362
 $70,579
Fair value of plan assets42,058
 37,611

The following table provides a summary of under-funded or unfunded pension benefit plans with accumulated benefit obligations in excess of plan assets as of December 28, 2019 and December 29, 2018:
(in thousands)
2019 2018
Accumulated benefit obligation$75,744
 $66,049
Fair value of plan assets42,058
 36,003

Weighted average assumptions used to determine benefit obligations at year-end 2016, 2015as of December 28, 2019, December 29, 2018 and 2014December 30, 2017 are as follows:

  

U.S.

  

Foreign

 
  

2016

  

2015

  

2014

  

2016

  

2015

  

2014

 

Discount rate

  —   3.9%  3.9%  2.6%  3.8%  3.7%

Compensation increase rate

  —   —   —   4.5%  6.2%  5.3%
Measurement dates  —   9/30/15   12/31/14   12/31/16   12/31/15   12/31/14 

 2019 2018 2017
Discount rate2.3% 3.1% 3.1%
Compensation increase rate4.7% 4.6% 5.0%

Expected benefit payments to be paid to participants for the fiscal year ending are as follows:

(inthousands)

 

Expected Benefit

Payments

(Foreign)

 

2017

 $1,906 

2018

  1,961 

2019

  2,040 

2020

  2,165 

2021

  2,207 
2022-2026  12,789 

(in thousands)Expected Benefit Payments
2020$4,511
20214,726
20224,624
20234,900
20244,910
2025-2029 and thereafter29,364

The Company expects to make approximately $2.3 million of contributions to the plans in 2020.
The Company also sponsors certain post-employment plans in foreign countries and other statutory benefit plans. For the fiscal year ended December 28, 2019, December 29, 2018, and December 30, 2017, the Company recorded $1.4 million, $1.8 million, $1.1 million expense, respectively, in Cost of Sales and Other expense (income), net within the Consolidated Statements of Net Income. As of December 28, 2019 and December 29, 2018, the Company reported benefit liabilities of $2.8 million and $2.7 million for these plans, of which $0.9 million and $1.1 million was recorded in Accrued liabilities and $1.9 million and $1.6 million was recorded in Other long-term liabilities on the Consolidated Balance Sheets, respectively. For fiscal year ended December 28, 2019, the pre-tax amounts recognized in other comprehensive income (loss) as components of net periodic benefit costs for these plans were $0.6 million.

Defined Benefit Plan Assets

Based upon analysis of the target asset allocation and historical returns by type of investment, the companyCompany has assumed that the expected long-term rate of return will be 4.9%4.5% on foreign plan assets. Assets are invested to maximize long-term return taking into consideration timing of settlement of the retirement liabilities and liquidity needs for benefits payments. Pension plan assets were invested as follows, and were not materially different from the target asset allocation:

  

Foreign Asset Allocation

 
  

2016

  

2015

 

Equity securities

  32%  30%

Debt securities

  65%  65%

Cash

  3%  5%
   100%  100%

 

 Asset Allocation
 2019 2018
Equity securities27% 30%
Debt securities72% 66%
Cash and cash equivalents, and other1% 4%
 100%
100%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The Company segregated its plan assets by the following major categories and level for determining their fair value as of December 28, 2019 and December 29, 2018. All plan assets that are valued using the net asset value per share (“NAV”) practical expedient have not been included within the fair value hierarchy but are separately disclosed.
Cash and cash equivalents – Carrying value approximates fair value. As such, these assets were classified as Level 1. The Company also invests in certain short-term investments which are valued using the amortized cost method and at NAV.
Equity – The values of individual equity securities were based on quoted prices in active markets. As such, these assets are classified as Level 1. Additionally, the Company invests in certain equity funds that are valued at calculated NAV.
Fixed income – Fixed income securities are typically priced based on a last trade basis and are exchange-traded. Accordingly, the Company classified fixed income securities as Level 1. The Company also invests in certain fixed income funds which are valued at NAV.
Insurance Contracts and other – This category includes insurance contracts that are valued by the re-insurer with the valuation inputs being not highly observable or traded on an open market. Accordingly, insurance contracts was categorized as Level 3. Additionally, this category includes other assets and liabilities including futures or swaps valued at NAV.

For any Level 2 and Level 3 plan assets, management reviews significant investments on a periodic basis including investigation of unusual fluctuations in price or returns and obtaining an understanding of the pricing methodology to assess the reliability of third-party pricing estimates.
The valuation methodologies described above may generate a fair value calculation that may not be indicative of net realizable value or future fair values. While the Company believes the valuation methodologies used are appropriate, the use of different methodologies or assumptions in calculating fair value could result in different amounts. The Company invests in various assets in which valuation is determined by NAV. The Company believes that the NAV is representative of fair value at the reporting date, as there are no significant restrictions on redemption of these investments or other reasons to indicate that the investment would be redeemed at an amount different than the NAV.

The following table presents the company’sCompany’s pension plan assets measured at fair value by classification within the fair value hierarchy as of December 31, 2016:

  

Fair Value Measurements Using

     

(inthousands)

 

Quoted Prices inActiveMarketsfor
Identical Assets
(Level 1)

  

Significant
Other
Observable
Inputs
(Level 2)

  

Significant
Unobservable
Inputs
(Level 3)

  

Total

 

Equities:

                

Global Equity 50:50 Index Fund

 $—  $6,321  $—  $6,321 

Global Equity 50:50 GBP Hedged Fund

  —   6,406   —   6,406 

Philippine Stock

  906   —   —   906 

Fixed income:

                

Investment Grade Corporate Bond Funds

  5,372   —   —   5,372 

Over 15y Gilts Index Fund

  —   3,265   —   3,265 

Active Corp Bond – Over 10 Yr Fund

  —   5,902   —   5,902 

Over 5y Index-Linked Gilts Fund

  —   10,724   —   10,724 

Philippine Long Government Securities

  1,133   —   —   1,133 

Philippine Long Corporate Bonds

  751   —   —   751 

Cash and equivalents

  476   952   —   1,428 

Total pension plan assets

 $8,638  $33,570  $—  $42,208 

28, 2019:

 Fair Value Measurements Using    
(in thousands)
Level 1 Level 2 Level 3 NAV Total
Equities$1,796
 $—
 $—
 $19,139
 $20,935
Fixed income4,535
 —
 —
 51,711
 56,246
Insurance contracts and other—
 —
 609
 147
 756
Cash and cash equivalents387
 —
 —
 178
 565
Total pension plan assets$6,718

$—

$609

$71,175

$78,502

The following table presents the company’sCompany’s pension plan assets measured at fair value by classification within the fair value hierarchy as of January 2, 2016:

  

Fair Value Measurements Using

     

(inthousands)

 

Quoted Prices in
Active Marketsfor
Identical Assets
(Level 1)

  

Significant
Other
Observable
Inputs
(Level 2)

  

Significant
Unobservable
Inputs
(Level 3)

  

Total

 

Equities:

                

Global Equity 50:50 Index Fund

 $—  $12,801  $—  $12,801 

Philippine Stock

  836   —   —   836 

Fixed income:

                

Investment Grade Corporate Bond Funds

  6,807   —   —   6,807 

Over 15y Gilts Index Fund

  —   3,428   —   3,428 

Active Corp Bond – Over 10 Year Fund

  —   6,440   —   6,440 

Over 5y Index-Linked Gilts Fund

  —   10,248   —   10,248 

Philippine Long Government Securities

  1,227   —   —   1,227 

Philippine Long Corporate Bonds

  781   —   —   781 

Cash and equivalents

  2,061   —   —   2,061 

Total pension plan assets

 $11,712  $32,917  $—  $44,629 

December 29, 2018:

 Fair Value Measurements Using    
(in thousands)
Level 1 Level 2 Level 3 NAV Total
Equities$1,361
 $—
 $—
 $19,527
 $20,888
Fixed income3,336
 —
 —
 43,134
 46,470
Insurance contracts and other—
 —
 632
 1,161
 1,793
Cash and cash equivalents702
 —
 —
 823
 1,525
Total pension plan assets$5,399

$—

$632

$64,645

$70,676



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Defined Contribution Plans

Plan

The companyCompany also maintains a 401(k) savings plan covering substantially all U.S. employees. The companyCompany matches 100% of the employee’s annual contributions for the first 4% of the employee’s eligible compensation. The Company may provide an additional discretionary match to participants and made discretionary matches of 2% of the employee’s eligible compensation for each of the fiscal year ended December 28, 2019, December 29, 2018 and December 30, 2017. Employees are immediately vested in their contributions plus actual earnings thereon, as well as the companyCompany contributions. Company matching contributions amounted to $3.2$5.6 million, $2.8$4.5 million, and $2.1$3.5 million in 2016, 2015,2019, 2018, and 2014,2017, respectively.

Non-qualified Supplemental Retirement and Savings Plan
The companyCompany has a non-qualified Supplemental Retirement and Savings Plan. The companyPlan which provides additional retirement benefits for certain management employees and named executive officers by allowing participants to contribute up to 90%defer a portion of their annual compensation. The Company maintains accounts for participants through which participants make investment elections. The investments are subject to the claims of the Company’s creditors and the Company is responsible for the payment of all benefits under the plan from its general assets. As of December 28, 2019, there was $10.5 million of marketable securities related to the plan included in Other assets and $10.5 million of accrued compensation benefits included in Other long-term liabilities. The marketable securities are classified as Level 1 under the fair value hierarchy as they are maintained in mutual funds with readily determinable fair value. The Company made matching contributions to the plan of 4% of the participant’s annual compensation$0.4 million in excess of the IRS compensation limits.

2019.


12. Stock-Based Compensation
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Shareholders’ Equity

Equity Plans: The companyCompany has equity-based compensation plans authorizing the granting of stock options, restricted shares, restricted share units, performance shares and other stock rights ofto employees and directors. As of December 31, 2016,28, 2019, there were 0.41.2 million shares available for issuance of future awards under the company’sCompany’s equity-based compensation plans.

Stock options granted prior to 2002 vested over a five-year period and are exercisable over a ten-year period commencing from the date of vesting. The stock options granted in 2002 through February 2005 vested over a five-year period and are exercisable over a ten-year period commencing from the date of the grant. Stock options granted after February 2005generally vest over a three, four or five-year period and are exercisable over either a seven or ten-year period commencing from the date of the grant. Restricted shares and share units granted by the companyCompany generally vest over three to four years.

Stock options and restricted share units may have accelerated vesting upon meeting certain qualified conditions.


Upon completion of the IXYS acquisition, IXYS outstanding options were assumed by the Company and converted into options of 499,027 shares. The Company recognized approximately $11.9 million of stock compensation expense related to IXYS stock options converted to Littelfuse stock options during the fiscal year ended December 29, 2018, of which $4.5 million was recognized immediately as it related to prior service periods. See Note 2, Acquisitions and Dispositions, for further discussion.
The following table provides a reconciliation of outstanding stock options for the fiscal year ended December 31, 2016.

  

Shares Under Option

  

Weighted

Average

Price

  

Weighted

Average

Remaining

Contract Life (Years)

  

Aggregate

Intrinsic

Value (000’s)

 

Outstanding January 2, 2016

  470,904  $80.53         

Granted

  123,435   120.15         

Exercised

  (229,319)  73.42         

Forfeited

  (8,836)  87.86         

Outstanding December 31, 2016

  356,184   98.65   5.0  $18,920 

Exercisable December 31, 2016

  112,714   78.16   3.6   8,297 

28, 2019.

 
Shares Under
Option
 
Weighted
Average
Price
 
Weighted
Average
Remaining
Contract Life
(Years)
 
Aggregate
Intrinsic
Value
(000’s)
Outstanding December 29, 2018669,356
 $116.29
    
Granted76,742
 199.24
    
Exercised(134,982) 97.22
    
Forfeited(10,651) 108.23
    
Outstanding December 28, 2019600,465
 131.32
 4.6 $37,048
Exercisable December 28, 2019413,109
 111.65
 4.0 33,215

The following table provides a reconciliation of non-vested restricted share and share unit awards ("RSU") for the fiscal year ended December 31, 2016.

  

Shares

  

WeightedAverage

Grant-Date

Fair Value

 

Nonvested January 2, 2016

  194,461  $89.32 

Granted

  115,121   117.79 

Vested

  (93,742)  84.94 

Forfeited

  (8,543)  93.85 

Nonvested December 31, 2016

  207,297   106.92 

28, 2019.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 Shares 
Weighted Average
Grant-Date Fair Value
Nonvested December 29, 2018160,794
 $164.61
Granted70,225
 195.71
Vested(84,990) 154.38
Forfeited(11,893) 181.70
Nonvested December 28, 2019134,136
 185.86

The total intrinsic value of options exercised during 2016, 2015,2019, 2018, and 20142017 was $13.3$12.5 million, $5.0$38.3 million, and $9.6$2.2 million, respectively. The total fair value of the vested RSU shares vested was $10.7$15.5 million, $8.1$20.8 million, and $7.6$15.0 million for 2016, 2015,2019, 2018, and 2014,2017, respectively. The total amount of share-based liabilities paid was $0.6$0.9 million, $0.4$1.1 million and $0.3$0.9 million for 2016, 2015,2019, 2018, and 2014,2017, respectively.

The companyCompany recognizes compensation cost of all share-based awards as an expense on a straight-line basis over the vesting period of the awards. At December 31, 2016,28, 2019, the unrecognized compensation cost for options and restricted shares and performance shares was $17.0$17.4 million before tax, and will be recognized over a weighted-averageweighted average period of 1.91.8 years. Compensation cost included as a component of cost of sales, research and development and selling, general, and administrative expenseexpenses for all equity compensation plans discussed above was $12.8$19.9 million, $10.7$28.2 million, and $9.4$17.3 million for 2016, 2015,2019, 2018, and 2014,2017, respectively. The total related income tax benefit recognized in the Consolidated Statements of Net Income was $4.4$3.3 million, $3.7$6.0 million and $3.3$6.0 million for 2016, 2015,2019, 2018, and 2014,2017, respectively.

The companyCompany uses the Black-Scholes option valuation model to determine the fair value of stock option awards granted. The weighted average fair value of and related assumptions for options granted are as follows:

  

2016

  

2015

  

2014

 

Weighted average fair value of options granted

 $26.06  $21.99  $26.25 

Assumptions:

            

Risk-free interest rate

  1.37%  1.25%  1.67%

Expected dividend yield

  0.97%  1.04%  0.93%

Expected stock price volatility

  26.0%  28.0%  33.0%

Expected life of options (years)

  4.6   4.6   4.6 

 

 2019 2018 2017
Weighted average fair value of options granted$47.63 $45.19 $30.77
Assumptions:     
Risk-free interest rate2.33% 2.79% 1.79%
Expected dividend yield0.86% 0.77% 0.86%
Expected stock price volatility27.0% 25.0% 23.0%
Expected life of options (years)4.4 4.4 4.4

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Expected volatilities are based on the historical volatility of the company’sCompany’s stock price. The expected life of options is based on historical data for options granted by the company.Company. The risk-free rates are based on yields available at the time of grant on U.S. Treasury bonds with maturities consistent with the expected life assumption.

Accumulated Other Comprehensive Income (Loss) (“AOCI”): Historical nonvested forfeiture information is the basis for the forfeiture rate assumptions.


The following table sets forthfair value of RSU is determined based on the changes inCompany's stock price on the componentsgrant date reduced by the present value of AOCI by component for fiscal years 2016, 2015, and 2014:

(inthousands)

 

Pension and postretirement liability and reclassification adjustments(a)

  

Gain on

investments

  

Foreign

currency

translation

adjustment

  

Accumulated

other

comprehensive

income (loss)

 

Balance at December 27, 2014

 $(29,615) $10,791  $(2,302) $(21,126)

2015 activity

  20,893   793   (46,231)  (24,545)

Balance at January 2, 2016

  (8,722)  11,584   (48,533)  (45,671)

2016 activity

  (3,261)  (815)  (24,832)  (28,908)

Balance at December 31, 2016

 $(11,983) $10,769  $(73,365) $(74,579)

(a) Net of tax of $1.1 million, $0.7 million, and $12.6 million for 2016, 2015, and 2014, respectively.

expected dividends through the vesting period.


Preferred Stock: The Board of Directors may authorize the issuance of preferred stock from time to time in one or more series with such designations, preferences, qualifications, limitations, restrictions, and optional or other special rights as the Board may fix by resolution.

The company’s

Share Repurchase Program

On May 2, 2018, the Company announced that the Company’s Board of Directors had authorized the repurchase of up to 1,000,000 shares of the company’sCompany’s common stock under a program for the period May 1, 20162018 to April 30, 2017. The company’s prior share2019 ("2018 program"). On May 1, 2019, the Company announced that the Company's Board of Directors had authorized a new program to repurchase authorization ofup to 1,000,000 shares expired onof the Company's common stock for the period May 1, 2019 to April 30, 2016 with 650,000 shares remaining in2020 ("2019 program"). During the program. The company did not repurchase anyfiscal year 2019, the Company repurchased 579,916 shares of its common stock duringtotaling $95.0 million. During the fiscal 2016 underyear 2018, the either stock repurchase program. The companyCompany repurchased 350,000391,972 shares of its sharescommon stock totaling $67.9 million.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


13. Other Comprehensive Income (Loss)

Changes in other comprehensive income (loss) by component for fiscal 2015 underyears 2019, 2018, and 2017 were as follows:

 Fiscal Year Ended
 December 28, 2019 December 29, 2018 December 30, 2017
(in thousands)Pre-tax Tax Net of tax Pre-tax Tax Net of tax Pre-tax Tax Net of tax
Defined benefit pension plan and other adjustments$(9,149) $1,062
 $(8,087) $924
 $47
 $877
 $1,532
 $385
 $1,147
Unrealized loss on investments—
 —
 —
 —
 —
 —
 (974) —
 (974)
Foreign currency translation adjustments(1,476) 664
 (812) (25,338) —
 (25,338) 10,738
 —
 10,738
Total change in other comprehensive (loss) income$(10,625) $1,726
 $(8,899) $(24,414) $47
 $(24,461) $11,296
 $385
 $10,911


Accumulated Other Comprehensive Income (Loss) (“AOCI”): The following table sets forth the changes in the components of AOCI by component for fiscal years 2019, 2018, and 2017:
(in thousands)
Pension and postretirement liability and reclassification adjustments Gain (loss) on investments Foreign currency translation adjustments Accumulated other comprehensive income (loss)
Balance at December 31, 2016$(11,983) $10,769
 $(73,365) $(74,579)
2017 activity1,147
 (974) 10,738
 10,911
Balance at December 30, 2017(10,836) 9,795
 (62,627) (63,668)
Cumulative effect adjustment (a)
$—
 $(9,795) $—
 $(9,795)
2018 activity877
 —
 (25,338) (24,461)
Balance at December 29, 2018(9,959) —
 (87,965) (97,924)
 2019 activity(8,087) —
 (812) (8,899)
Balance at December 28, 2019(18,046) —
 (88,777) (106,823)
(a)
The Company adopted ASU 2016-01 on December 31, 2017 on a modified retrospective basis, recognizing the cumulative effect as a $9.8 million increase to retained earnings. See Note 1, Summary of Significant Accounting Policies and Other Information, for further discussion.

Amounts reclassified from accumulated other comprehensive income (loss) to earnings for fiscal years 2019, 2018, and 2017 were as follows:

  Fiscal Year Ended
(in thousands) December 28, 2019 December 29, 2018 December 30, 2017
Pension and postemployment and other plans:      
Amortization of prior service, net actuarial loss, and other $372
 $291
 $337
Settlement loss/curtailment (gain) 260
 238
 (25)
Total $632
 $529
 $312


The Company recognizes the amortization of prior share repurchase program.

12.service costs and settlement loss and curtailment gain in other income, net within the Consolidated Statements of Net Income.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


14. Income Taxes

On December 22, 2017, the U.S. enacted legislation referred to as the "Tax Act". Among other things, the Tax Act reduces the U.S. corporate federal income tax rate from 35% to 21%, adds base broadening provisions which limit deductions and address excessive international tax planning, imposes a Toll Charge on accumulated earnings of certain non-U.S. subsidiaries and enables repatriation of earnings of non-U.S. subsidiaries free of U.S. federal income tax. Other than the Toll Charge (which, except for the IXYS impact, was applicable to the Company for 2017), the provisions are generally applicable to the Company in 2018 and beyond.
In accordance with the guidance provided in SEC SAB No. 118, in the fourth quarter of 2017 the Company recorded a charge of $47.0 million as a provisional reasonable estimate of the impact of the Tax Act, including $49.0 million for the Toll Charge net of $2.0 million for other net tax benefits. In the fourth quarter of 2018, within the measurement period outlined in SAB No. 118, the Company finalized its estimates of the impact of the Tax Act as of December 30, 2017 and recorded a charge of $3.2 million, including $2.3 million for the Toll Charge and $0.9 million for the net impact of other items. In addition, the Company recorded $7.0 million for the Toll Charge associated with IXYS as part of the IXYS acquisition purchase price allocation. This was reflected in the opening balance sheet as an increase to goodwill and other long-term liabilities.
Although certain administrative guidance has been issued, including final and proposed regulations, the appropriate application of many provisions of the Tax Act remain uncertain. The Company used its best judgment as to the application of these provisions in determining its final estimates of the impact of the Tax Act as of December 30, 2017, the Toll Charge associated with the IXYS acquisition as well as the Company’s income tax expense for the fiscal years ended December 28, 2019 and December 29, 2018. Adjustments to income tax expense may be necessary in future periods if provisions of the Tax Act, and their interaction with other provisions of the U.S. Internal Revenue Code, are interpreted differently than interpretations made by the Company, whether through issuance of additional administrative guidance, or through further review of the Tax Act by the Company and its advisors.
The Company has elected to pay the 2017 Littelfuse Toll Charge over the eight-year period prescribed by the Tax Act. The long-term portion of this Toll Charge which remains payable as of December 28, 2019, totaling $23.8 million, is recorded in Other long-term liabilities, and the anticipated 2020 annual installment payment of $3.0 million is included in Accrued income taxes, on the Consolidated Balance Sheet as of December 28, 2019. The Company did not elect to pay the 2018 IXYS Toll Charge over the eight year period provided by the Tax Act and therefore there is no long-term portion of this Toll Charge which remains payable as of December 28, 2019.
One of the base broadening provisions of the Tax Act is commonly referred to as the “GILTI” provisions. In accordance with guidance issued by the FASB staff, the Company has adopted an accounting policy to treat any GILTI inclusions as a period cost if and when incurred. Thus, for the fiscal years ended December 28, 2019 and December 29, 2018, deferred taxes were computed without consideration of the possible future impact of the GILTI provisions, and any current year impact was recorded as a part of the current portion of income tax expense.
Domestic and foreign income (loss) before income taxes is as follows:

(inthousands)

 

2016

  

2015

  

2014

 

Domestic

 $(9,563) $1,313  $35,264 

Foreign

  132,837   105,635   96,382 

Income before income taxes

 $123,274  $106,948  $131,646 

(in thousands)
2019 2018 2017
Domestic$(11,970) $(49,995) $(20,496)
Foreign177,854
 254,937
 224,533
Income before income taxes$165,884

$204,942

$204,037













NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Federal, state and foreign income tax expense (benefit) expense consists of the following:

(inthousands)

 

2016

  

2015

  

2014

 

Current:

            

Federal

 $(3,992) $(6,686) $8,003 

State

  (648)  2,078   1,275 

Foreign

  28,695   19,211   28,756 

Subtotal

  24,055   14,603   38,034 

Deferred:

            

Federal and State

  (1,594)  11,330   (1,513)

Foreign

  (3,675)  149   (2,975)

Subtotal

  (5,269)  11,479   (4,488)

Provision for income taxes

 $18,786  $26,082  $33,546 

(in thousands)
2019 2018 2017
Current:     
Federal$(3,495) $(3,193) $34,060
State834
 119
 450
Foreign30,610
 48,130
 32,945
Subtotal27,949

45,056

67,455
Deferred:     
Federal and State1,839
 (3,896) 16,562
Foreign(2,986) (783) 501
Subtotal(1,147)
(4,679)
17,063
Provision for income taxes$26,802

$40,377

$84,518

The current federal tax benefit for 20162019 includes an estimated $3a benefit of $3.3 million benefit as a resultfrom the recognition of previously unrecognized tax benefits (and the reversal of the anticipated carry-backrelated accrued interest) due to a lapse in the statute of the 2016 U.S. federal net operating loss to the 2014 tax year.

limitations.


The current federal tax benefit for 20152018 includes an $11.7 millionthe benefit reclassified from accumulated other comprehensive income as a resultof current year losses (which served to partially offset the amount of the company’s termination of the U.S. defined benefit pension plan as described in Note 10,Benefit PlansIXYS Toll Charge that would otherwise have been payable).

 

The current federal and state income tax expense for 2017 includes the preliminary estimate of $49 million for the Toll Charge as discussed above, partially offset by 13.0 million of foreign tax credits.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation between income taxes computed on income before income taxes at the federal statutory rate and the provision for income taxes is provided below:

(inthousands)

 

2016

  

2015

  

2014

 

Tax expense at statutory rate of 35%

 $43,146  $37,432  $46,076 

State and local taxes, net of federal tax benefit

  (415)  1,907   1,186 

Foreign income tax rate differential

  (25,471)  (18,253)  (13,663)

Impairment of goodwill without tax benefit

  3,088   —   — 

Tax on unremitted earnings

  2,747   —   — 

Mexico manufacturing operations restructuring

  —   4,841   — 

Nondeductible professional fees

  313   1,011   — 

Tax deduction for stock of foreign subsidiary

  (3,896)  —   — 

Other, net

  (726)  (856)  (53)

Provision for income taxes

 $18,786  $26,082  $33,546 

(in thousands)
2019 2018 2017
Tax expense at statutory rate of 21% (35% for 2017)$34,836
 $43,038
 $71,413
Non-U.S. income tax rate differential(22,457) (20,472) (47,077)
Non-U.S. losses and expenses with no tax benefit6,570
 3,107
 —
Net impact associated with the GILTI tax provisions6,469
 5,075
 —
Tax on unremitted earnings2,136
 4,660
 12,202
Certain changes in unrecognized tax benefits and related accrued interest(1,468) 208
 914
State and local taxes, net of federal tax benefit1,080
 (1,238) 292
Nondeductible professional fees195
 1,001
 1,240
2017 Toll Charge (and 2018 adjustment)—
 2,278
 49,000
Provisional Tax Act impact other than Toll Charge (and 2018 adjustment)—
 966
 (1,962)
Other, net(559) 1,754
 (1,504)
Provision for income taxes$26,802

$40,377

$84,518



Deferred income taxes are provided for the tax effects of temporary differences between the financial reporting bases and the tax bases of the company’s assets and liabilities. Significant components of the company’s deferred tax assets and liabilities at December 31, 201628, 2019 and January 2, 2016,December 29, 2018, are as follows:

(inthousands)

 

2016

  

2015

 

Deferred tax assets:

        

Accrued expenses

 $31,770  $19,738 

Foreign tax credit carryforwards

  6,472   1,529 

Accrued restructuring

  456   1,115 

Capital losses

  4,557   4,557 

Domestic and foreign net operating loss carryforwards

  2,223   684 

Gross deferred tax assets

  45,478   27,623 

Less: Valuation allowance

  (6,738)  (4,557)

Total deferred tax assets

  38,740   23,066 
         

Deferred tax liabilities:

        

Tax depreciation and amortization in excess of book

  23,471   22,747 

Foreign tax on unremitted earnings

  1,750   — 

Total deferred tax liabilities

  25,221   22,747 

Net deferred tax assets

 $13,519  $319 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(in thousands)2019 2018
Deferred tax assets:   
Accrued expenses and reserves$28,294
 $34,113
Domestic and non-U.S. net operating loss carryforwards10,511
 8,613
Non-U.S. interest expense carryforwards5,324
 885
U.S. research credit carryforwards2,581
 1,245
Capitalized expenses2,400
 —
U.S. foreign tax credit carryforwards1,320
 1,506
Other1,261
 1,000
Gross deferred tax assets51,691

47,362
Less: Valuation allowance(5,957) (4,794)
Total deferred tax assets45,734

42,568
    
Deferred tax liabilities:   
Excess of book basis over the tax basis of assets74,460
 74,410
Tax on unremitted earnings12,968
 12,681
Total deferred tax liabilities87,428

87,091
Net deferred tax liabilities$41,694

$44,523

The deferred tax asset valuation allowance is related to a U.S. capitalcertain net operating loss carryover and with respect to 2016, tax attributes of certain foreign subsidiariesnon-U.S. interest expense carryforwards which are not expected to be realized. The remaining domestic and foreign net operating lossesloss and non-U.S. interest expense carryforwards either have no expiration date or are expected to be utilized prior to expiration. expiration (which begin expiring in 2021). No deferred tax asset nor valuation allowance has been recorded for certain U.S. and non-U.S. net operating loss carryforwards for which the possibility of usage has been determined to be remote.
The foreign tax credit carryforwards begin to expire in 2020. The companyCompany paid income taxes of $35.6$47.6 million, $23.3$46.2 million, and $26.6$31.8 million in 2016, 2015,2019, 2018, and 2014,2017, respectively, and received income tax refunds of $7.1 million, $4.3 million, and 13.7 million in 2019, 2018, and 2017, respectively.

U.S.

Deferred income taxes wereare not provided on a cumulative totalthe excess of approximately $498 millionthe investment value for financial reporting over the tax basis of undistributed earnings for certaininvestments in those non-U.S. subsidiaries for which such excess is considered to be permanently reinvested in those operations. The Company believes the determination of the amount of such deferred income taxes is impractical as it would depend upon income tax laws and circumstances at the time of the hypothetical distributions or dispositions. As of December 28, 2019, unremitted earnings of the Company’s non-U.S. subsidiaries was approximately $776 million. A distribution of such earnings will generally not be subject to U.S. federal income tax. The Company recognized deferred tax liabilities of $13.0 million ($12.6 million for non-U.S. taxes net of related U.S. foreign tax credits, and $0.4 million for U.S. state taxes) as of December 31, 2016,28, 2019 and accordingly, no deferred$12.7 million ($12.5 million for non-U.S. taxes net of related U.S. foreign tax liability has been established relativecredits, and $0.2 million for U.S. state taxes) as of December 29, 2018, related to taxes on certain non-U.S. earnings which are not considered to be permanently reinvested. Some of these earnings. The determinationnon-U.S. taxes will provide a U.S. federal income tax benefit as a foreign tax credit, and the amounts as of December 28, 2019 and December 29, 2018 are net of such benefit (some of which, in respect of the deferred tax liability associated withyear ended December 29, 2018, was recorded as part of finalizing the distributionprovisional reasonable estimate of these earnings is not practicable. the impact of the Tax Act).
The company accrued $1.8 million for certain foreign taxes on unremitted earnings of non-U.S. subsidiaries because of anticipated distributions (no U.S. tax is expected to be incurred on such distributions). The companyCompany has three subsidiaries in China onwhich benefit from lowered income tax rates due to “tax holidays.”holidays” which apply for three-year periods, subject to extension. The tax holidays beginholiday for two of these subsidiaries expired at the end of 2019 (one will seek an extension and the tax holiday benefits for the other was not material). The tax holiday for the third subsidiary will expire at the end of 2020 and the Company plans to expire in 2017. The company expects to be granted extensions.seek an extension. Such tax holidays contributed $2.7$4.2 million in tax benefits, ($0.12or $0.17 per diluted share)share, during 2016 with similar amounts expected in future years while2019. Future year tax holidays are in effect.

benefits will depend upon the Company’s ability to obtain extensions, and the level of income earned by the two applicable subsidiaries.
 







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 31, 2016, January 2, 2016,28, 2019, December 29, 2018, and December 27, 201430, 2017 is as follows:

(in thousands)

 

Unrecognized

TaxBenefits

 

Balance at December 27, 2014

 $2,550 

Additions for tax positions taken in the current year

  982 

Balance at January 2, 2016

  3,532 

Additions for tax positions taken in the current year

  2,696 

Additions for tax positions taken in the pre-acquisition periods of acquired subsidiaries

  2,491 

Settlements

  (102)

Balance at December 31, 2016

 $8,617 

(in thousands)
Unrecognized Tax Benefits
Balance at December 30, 2017$7,660
Additions for tax positions taken in the current year2,929
Additions for tax positions related to the pre-acquisition periods of acquired subsidiaries9,394
Decreases due to a lapse in the statute of limitations(1,257)
Other(467)
Balance at December 29, 201818,259
Additions for tax positions taken in the current year1,305
Decreases due to a lapse in the statute of limitations(2,758)
Other(85)
Balance at December 28, 201916,721

The company recognizes accrued interest and penalties associated with uncertain tax positions as part of income tax expense. The company recognized such interest expense of $1.3 million (net of a $0.6 million decrease due to a lapse in the statute of limitations), $1.5 million (net of a $0.3 million decrease due to a lapse in the statute of limitations), and $0.9 million $0.2 million,in 2019, 2018, and $0.3 million in 2016, 2015, and 20142017, respectively. Accrued interest for such matters included in Other long-term liabilities within the Consolidated Balance Sheets was $2.4 million, $1.5$7.2 million and $1.3$5.9 million as of December 31, 2016, January 2, 2016,28, 2019 and December 27, 2014,29, 2018, respectively.

The amount of unrecognized tax benefits atincluded in Other long-term liabilities within the Consolidated Balance Sheets was $16.7 million and $18.3 million as of December 31, 2016 was $8.6 million. This28, 2019 and December 29, 2018, respectively. The December 28, 2019 total represents the net amount of tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. The company does not expect a decreaseOf this amount, approximately $0.1 million may be recognized in unrecognized tax benefits2020 based upon the possible lapse in the next 12 months.statute of limitations. None of the positions included in unrecognized tax benefits are related to tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility.
The U.S. federal statute of limitations remains open for 2013 onwardthe Company for the 2016 tax year and later years, although the companyCompany has been audited for 2014 (during 2016)the 2016 tax year and the audit has been concluded in 2018 with no additionalsignificant adjustments. The U.S. federal statute of limitations remains open for IXYS pre-acquisition tax due. Foreignperiods ending March 31, 2017 and January 17, 2018. Non-U.S. and U.S. state statutestatutes of limitations generally range from three to seven years. The Germanyears, although certain jurisdictions do not have a statute expiration. Non-U.S. tax authority concluded the examination of the company’s tax years 2008 through 2010 with less than $0.1 million of additional tax dueexaminations occur from time to time, including examinations currently in process in Italy, Canada, and is currently conducting its examination for tax years 2011 through 2014.Hong Kong. The company does not expect to recognize a significant amount of additional tax expense as a result of concluding German tax examination.

13.these examinations.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

(inthousands, except per share amounts)

 

2016

  

2015

  

2014

 

Numerator:

            

Net income as reported

 $104,488  $80,866  $98,100 
             

Denominator:

            

Weighted average shares outstanding

            

Basic

  22,559   22,565   22,543 

Effect of dilutive securities

  167   154   184 

Diluted

  22,727   22,719   22,727 
             

Earnings Per Share:

            

Basic earnings per share

 $4.63  $3.58  $4.35 

Diluted earnings per share

 $4.60  $3.56  $4.32 

(in thousands, except per share amounts)
2019 2018 2017
Numerator:     
Net income as reported$139,082
 $164,565
 $119,519
      
Denominator:     
Weighted average shares outstanding     
Basic24,576
 24,870
 22,687
Effect of dilutive securities242
 365
 244
Diluted24,818

25,235

22,931
      
Earnings Per Share:     
Basic earnings per share$5.66
 $6.62
 $5.27
Diluted earnings per share$5.60
 $6.52
 $5.21

Potential shares of common stock attributable to stock options excluded from the earnings per share calculation because their effect would be anti-dilutive were 53,448 shares, 113,130 shares,129,658, 42,305, and 43,69337,443 shares in 2016, 2015,2019, 2018, and 2014,2017, respectively.

 

On January 17, 2018, the Company acquired IXYS through a combination of cash, Littelfuse common stock, and the value of converted, or cash settled IXYS equity awards. The Company issued approximately 2.1 million shares of Littelfuse common stock and converted IXYS equity awards into approximately 0.5 million Littelfuse equity awards.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14.

During the fiscal year 2019, the Company repurchased 579,916 shares of its common stock totaling $95.0 million. During the fiscal year 2018, the Company repurchased 391,972 shares of its common stock totaling $67.9 million. See Note 12 Stock-Based Compensation for further discussion.


16. Segment Information

The companyCompany and its subsidiaries design, manufacture and sell components and modules for circuit protection, power control and sensing throughout the world. The companyCompany reports its operations by the following segments: Electronics, Automotive, 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’sCompany’s President and Chief Executive Officer (“CEO”). The CODM allocates resources to and assesses the performance of each operating segment using information about its revenue and operating income (loss) before interest and taxes, but does not evaluate the operating segments using discrete balance sheet information.

Sales, marketing, and research and development expenses are charged directly into each operating segment. Manufacturing, purchasing,Purchasing, logistics, customer service, finance, information technology, and human resources are shared functions that are allocated back to the three3 operating segments. The companyCompany 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 companyCompany 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 companyCompany as a whole.

●

•

Electronics Segment: Provides circuit protection components for overcurrent and overvoltage protection, as well as sensor components and modules to leading global manufacturersConsists 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,fuse accessories, positive temperature coefficient (“PTC”) resettable fuses, varistors, polymer electrostatic discharge (“ESD”) suppressors, varistors, reed switch based magnetic sensing, gas discharge tubes; semiconductor products such as discrete TVStransient voltage suppressor (“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 manufacturersmetal-oxide-semiconductor field-effect transistors (“OEM”MOSFETs”) and parts distributors of passenger automobiles, trucks, buses,silicon carbide diodes; 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.

insulated gate bipolar transistors (“IGBT”) technologies.

●

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.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The companysegment covers a broad range of end markets, including industrial and automotive electronics, electric vehicle and related infrastructure, data and telecommunications, medical devices, alternative energy, consumer electronics and white goods.

•
Automotive Segment: Consists of a wide range of circuit protection, power control and sensing technologies for global original equipment manufacturers (“OEMs”), Tier-I suppliers and parts distributors in passenger car, heavy duty truck, off-road vehicles, material handling, agricultural, construction and other commercial vehicle end markets. Passenger car fuse products include fuses and fuse accessories for internal combustion engine vehicles and hybrid and electric vehicles including blade fuses, battery cable protectors, resettable fuses, high-current fuses, and high-voltage fuses. Commercial vehicle products include fuses, switches, relays, and power distribution modules for the commercial vehicle industry. Automotive sensor products include a wide range of automotive and commercial vehicle products designed to monitor the passenger compartment occupants, safety and environment as well as the vehicle’s powertrain.

•
Industrial Segment: Consists of power fuses, protection relays and controls and other circuit protection products for use in various industrial applications such as oil, gas, mining, alternative energy, electric vehicle infrastructure, non-residential construction, HVAC systems, elevators and other industrial equipment.

The Company has provided this segment information for all comparable prior periods.Segmentperiods. Segment information is summarized as follows:

(inthousands)

 

2016

  

2015

  

2014

 

Net sales

            

Electronics

 $535,191  $405,497  $410,065 

Automotive

  415,200   339,957   325,415 

Industrial

  105,768   122,410   116,515 

Total net sales

 $1,056,159  $867,864  $851,995 
             

Depreciation and amortization

            

Electronics

 $29,141  $22,936  $22,177 

Automotive

  18,107   13,437   14,204 

Industrial

  5,889   5,268   5,494 

Total depreciation and amortization

 $53,137  $41,641  $41,875 
             

Operating income (loss)

            

Electronics

 $117,088  $78,194  $86,981 

Automotive

  59,905   53,086   45,086 

Industrial

  3,615   18,094   10,674 

Other(a)

  (49,964)  (45,217)  (8,911)

Total operating income

  130,644   104,157   133,830 

Interest expense

  8,628   4,091   4,903 

Foreign exchange loss (gain)

  472   (1,465)  3,925 

Other expense (income), net

  (1,730)  (5,417)  (6,644)

Income before income taxes

 $123,274  $106,948  $131,646 

(in thousands)
2019 2018 2017
Net sales     
Electronics$961,080
 $1,124,296
 $661,928
Automotive428,533
 479,791
 453,227
Industrial114,260
 114,381
 106,379
Total net sales$1,503,873

$1,718,468

$1,221,534
      
Depreciation and amortization     
Electronics$60,345
 $61,779
 $35,215
Automotive27,922
 23,333
 22,459
Industrial4,236
 5,661
 5,337
Other—
 12,420
 —
Total depreciation and amortization$92,503

$103,193

$63,011
      
Operating income (loss)     
Electronics$145,594
 $241,426
 $155,880
Automotive46,719
 54,982
 62,571
Industrial22,407
 17,335
 10,334
Other(a)
(21,929) (88,694) (10,274)
Total operating income192,791

225,049

218,511
Interest expense22,266
 22,569
 13,380
Foreign exchange (gain) loss5,224
 (863) 2,376
Other income, net(583) (1,599) (1,282)
Income before income taxes$165,884
 $204,942
 $204,037

(a) Included in “Other” Operating income (loss) for 2016 are2019 is $8.9 million of acquisition-related and integration charges related to the IXYS acquisition and other contemplated acquisitions. In addition, there were $13.0 million of restructuring charges primarily related to employee termination costs. See Note 8, Restructuring, Impairment and Other Charges, for further discussion.

Included in “Other” Operating income (loss) for 2018 is $88.7 million of charges primarily related to the IXYS acquisition, which include $36.9 million of purchase accounting inventory step-up charges, $18.7 million in acquisition-related and integration costs primarily related to legal, accounting and other expenses, $12.4 million in backlog amortization costs, $8.3 million of employee termination costs, impairment and other restructuring charges, and $4.5 million in stock compensation expense recognized immediately upon close for converted IXYS options related to prior service periods and $2.1 million change in control expense related to IXYS. In addition, there were $5.8 million of employee termination costs, impairment and other restructuring charges
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


and acquisition-related expenses for other contemplated acquisitions which included $2.2 million of impairment charges primarily related to the impairment of a building and a trade name associated with the custom products reporting unit ($14.8 million),exit of the Custom business within the Industrial segment.

Included in “Other” Operating income (loss) for 2017 are costs related to acquisition and integration costs associated with the company’s 2016Company’s completed and pending acquisitions in 2017 ($29.28.0 million in Cost of sales (“COS” ("COS") and Selling, general, and administrative expenses (“SG&A)&A”), transfer of the company’s reed switch manufacturing operations from its Lake Mills, Wisconsin and Suzhou, China locations to the Philippines ($1.6 million in COS), impairment and severance costscharges related to restructuring and production transfers in the closure of the company’s manufacturing facility in Denmark ($1.9 million in SG&A), and restructuring costs ($2.5 million in SG&A and R&D).

Included in “Other” Operating income (loss) for 2015 are costs related to the transfer of the company’s reed switch manufacturingCompany’s Asia operations from its Lake Mills, Wisconsin and Suzhou, China locations to the Philippines ($5.2 million in COS), acquisition related fees ($4.6 million included in SG&A), pension settlement and other costs ($31.9 million in SG&A), and restructuring costs ($3.6 million in SG&A).

Included in “Other” Operating income (loss) for 2014 are acquisition related fees ($0.4 million included in SG&A), non-cash charges for the sale of inventory that had been stepped-up to fair value at the acquisition date of SymCom ($2.8 million included in COS), severance charges ($2.7 million in COS and $0.5 million in SG&A), restructuring costs ($2.2 million in SG&A) and asset impairments ($0.2 million in Research and development and $0.1 million in SG&A).



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The company’s significantCompany’s net sales, long-lived assets and additions to long-lived assets by country for the fiscal years ended 2016, 2015,2019, 2018, and 20142017 are as follows:

(inthousands)

 

2016

  

2015

  

2014

 

Net sales

            

United States

 $356,674  $344,305  $313,762 

China

  263,701   193,792   189,191 

Other countries

  435,784   329,767   349,042 

Total net sales

 $1,056,159  $867,864  $851,995 
             

Long-lived assets

            

United States

 $23,731  $23,965  $34,179 

China

  65,345   37,241   40,981 

Canada

  9,880   10,488   12,899 

Other countries

  118,219   90,874   70,581 

Total long-lived assets

 $217,175  $162,568  $158,640 
             

Additions to long-lived assets

            

United States

 $4,694  $8,609  $9,134 

China

  13,181   9,710   7,265 

Canada

  177   506   555 

Other countries

  28,176   25,194   15,327 

Total additions to long-lived assets

 $46,228  $44,019  $32,281 


(in thousands)
2019 2018 2017
Net sales     
United States$440,461
 $511,544
 $383,025
China416,385
 468,174
 321,111
Other countries(a)
647,027
 738,750
 517,398
Total net sales$1,503,873

$1,718,468

$1,221,534
      
Long-lived assets     
United States$58,081
 $58,691
 $23,490
China88,306
 95,806
 86,866
Mexico73,096
 70,495
 62,510
Germany36,025
 36,548
 1,082
Philippines51,738
 32,459
 31,129
Other countries37,371
 45,895
 45,500
Total long-lived assets$344,617

$339,894

$250,577
      
Additions to long-lived assets     
United States$5,864
 $5,567
 $3,518
China10,400
 29,286
 32,775
Mexico13,827
 18,723
 19,395
Germany4,017
 5,208
 93
Philippines22,944
 7,605
 2,979
Other countries9,314
 8,364
 7,165
Total additions to long-lived assets$66,366

$74,753

$65,925


(a)Each country included in other countries are less than 10% of net sales.
For the year ended January 2, 2016,December 28, 2019, approximately 66%71% of the company’sCompany’s net sales were to customers outside the United States (exports and foreign operations), including 25%approximately 28% to China. For the year ended December 29, 2018, approximately 70% of the Company's net sales were to customers outside the U.S. (exports and foreign operations), including approximately 27% to China. For the year ended December 30, 2017, approximately 69% of the Company's net sales were to customers outside the U.S. (exports and foreign operations), including approximately 26% to China. Sales to Arrow Electronics, Inc., which were included in the Electronics, Automotive, and Industrial segments, were 10.7%, 10.7%, and 10.6% of consolidated net sales in 2019, 2018, and 2017 respectively. No other single customer accounted for more than 10% of net sales during the last three years.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15.



17. Selected Quarterly Financial Data (Unaudited)

The quarterly periods for 20162019 are for the 13-weeks ended December 31, 2016, October 1, 2016, July 2, 2016,28, 2019, September 28, 2019, June 29, 2019, and April 2, 2016,March 30, 2019, respectively. The quarterly periods listed in the table below for 20152018 are for the 14-weeks ended January 2, 2016 and the 13-weeks ended December 29, 2018, September 26, 2015,29, 2018, June 27, 2015,30, 2018, and March 28, 2015,31, 2018, respectively.

(in thousands, except per share data)

  

2016

  

2015

 
  

4Q(a)

  

3Q(b)

  

2Q(c)

  

1Q(d)

  

4Q(e)

  

3Q(f)

  

2Q(g)

  

1Q(h)

 

Net sales

 $284,518  $280,331  $271,912  $219,398  $220,020  $215,510  $222,021  $210,313 

Gross profit

  114,337   113,759   97,866   87,155   82,706   86,182   85,281   76,330 

Operating income

  40,988   27,526   29,702   32,428   29,854   8,584   36,171   29,548 

Net income

  27,245   30,802   27,152   19,289   22,863   11,324   28,684   19,995 

Net income per share:

                                

Basic

 $1.20  $1.36  $1.21  $0.86  $0.93  $0.50  $1.26  $0.88 

Diluted

 $1.19  $1.35  $1.20  $0.85  $0.92  $0.50  $1.26  $0.88 

(a)

In the fourth quarter of 2016, the company recorded ($0.1) million gain related to the company’s transfer of its reed sensor manufacturing operations from the U.S. and China to the Philippines, $1.2 million of restructuring costs, $3.2 million in acquisition and integration costs and $0.3 million in non-cash inventory charges related to the 2016 acquisitions.

(b)

In the third quarter of 2016, the company recorded $0.9 million of restructuring costs, $5.9 million in acquisition and integration costs, $14.8 million of charges related to the impairment of the custom products reporting unit and $0.5 million in non-cash inventory charges as noted above.

(c)

In the second quarter of 2016, the company recorded $0.7 million related to the reed sensor manufacturing transfer as noted above, $0.1 million of restructuring costs, $6.1 million in acquisition and integration costs, $0.3 million in charges related to the closure of the manufacturing facility in Denmark and $6.9 million in non-cash inventory charges as noted above.

(d)

In the first quarter of 2016, the company recorded $1.0 million related to the reed sensor manufacturing transfer as noted above, $0.4 million of restructuring costs, $6.2 million in acquisition and integration costs, and $1.6 million in charges related to the closure of the manufacturing facility in Denmark.

(e)

In the fourth quarter of 2015, the company recorded $2.1 million related to the company’s transfer of its reed switch manufacturing operations from the U.S. and China to the Philippines, ($0.1) million related to the reorganization of its internal legal structure, $4.0 million in acquisition costs, ($0.3) million in pension settlement refunds (See Note 10) and ($0.3) million in other.

(f)

In the third quarter of 2015, the company recorded $1.2 million related to the reed switch manufacturing transfer as noted above, $0.9 million related to the company’s reorganization of its internal legal structure as noted above, $0.3 million in acquisition costs, $30.8 million in pension settlement and wind-up costs (See Note 10) and $0.1 million in other.

(g)

In the second quarter of 2015, the company recorded $0.9 million related to the reed switch manufacturing transfer as noted above, $1.7 million related to the company’s reorganization of its internal legal structure as noted above, $0.2 million in acquisition costs, and $0.7 million in pension wind-up costs.

(h)

In the first quarter of 2015, the company recorded $1.0 million related to the reed switch manufacturing transfer as noted above, $1.2 million in charges related to the reorganization of its internal legal structure as noted above, $0.2 million in acquisition costs, and $0.7 million in pension wind-up costs.

 

(in thousands, except per share data)
  
 2019 2018
 
4Q(a)
 
3Q(b)
 
2Q(c)
 
1Q(d)
 
4Q(e)
 
3Q(f)
 
2Q(g)
 
1Q(h)
Net sales$338,523
 $361,971
 $397,879
 $405,500
 $402,281
 $439,191
 $459,183
 $417,813
Gross profit113,467
 130,946
 141,808
 155,228
 154,337
 179,594
 168,987
 149,623
Operating income32,317
 47,167
 52,634
 60,673
 51,628
 76,228
 59,622
 37,571
Net income22,654
 35,647
 43,792
 36,989
 32,665
 53,546
 42,326
 36,029
Net income per share               
Basic$0.93
 $1.46
 $1.77
 $1.50
 $1.31
 $2.13
 $1.69
 $1.48
Diluted$0.92
 $1.44
 $1.75
 $1.48
 $1.29
 $2.10
 $1.67
 $1.45

(a)In the fourth quarter of 2019, the Company recorded $1.9 million in acquisition-related and integration costs and $2.1 million in restructuring, impairment and other costs, and $4.2 million impairment charges related to certain other investments, partially offset by a $3.3 million benefit for previously unrecognized tax benefits in respect of which the statute of limitation has expired.

(b)In the third quarter of 2019, the Company recorded $3.2 million in acquisition-related and integration costs and $2.5 million in restructuring and impairment charge

(c)In the second quarter of 2019, the Company recorded $5.7 million in restructuring and impairment charges, $1.5 million in acquisition-related and integration costs, and $0.4 million costs primarily related to a sale of building and $0.2 million impairment charges related to a certain other investment.

(d)In the first quarter of 2019, the Company recorded $2.8 million impairment charges to certain other investments, $2.6 million loss on the disposal of a business, $2.7 million in restructuring costs, $2.4 million in acquisition-related and integration costs, and $0.3 million gain primarily related to the final payments for the acquisition of Monolith

(e)In the fourth quarter of 2018, the Company recorded an estimated one-time tax charge of $3.2 million related to the finalization of 2017 provisional reasonable estimate in connection with the Tax Act, partially offset by a $1.5 million benefit for previously unrecognized tax benefits in respect of which the statute of limitation has expired, $3.7 million in backlog amortization expense from the IXYS acquisition, $3.2 million in acquisition-related and integration costs and $2.4 million in restructuring, impairment and other costs.

(f)In the third quarter of 2018, the Company recorded $5.2 million in restructuring and impairment charges, $3.1 million in backlog amortization expense from the IXYS acquisition and $2.9 million in acquisition-related and integration costs

(g)In the second quarter of 2018, the Company recorded $19.0 million for purchase accounting inventory adjustments associated with the acquisition of IXYS, $4.2 million in restructuring and impairment charges, $3.1 million in backlog amortization expense from the IXYS acquisition $2.4 million in acquisition-related and integration costs.

(h)In the first quarter of 2018, the Company recorded $17.9 million for purchase accounting inventory adjustments associated with the acquisition of IXYS, $11.7 million in acquisition-related and integration costs, $4.5 million of stock compensation expense recognized immediately upon close for converted IXYS options related to prior services periods, $2.5 million in backlog amortization expense,$2.1 million expense related to change in control and $0.8 million in restructuring costs.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


18. Related Party Transactions
As a result of the Company’s acquisition of IXYS, the Company has equity ownerships in various investments that are accounted for under the equity method. The following is a description of the investments and related party transactions.
Powersem GmbH: The Company owns 45% of the outstanding equity of Powersem GmbH (“Powersem”), a module manufacturer based in Germany.
EB-Tech Co., Ltd.: The Company owns approximately 19% of the outstanding equity of EB-Tech Co., Ltd. (“EB Tech”), a company with expertise in radiation technology based in South Korea.
Automated Technology (Phil), Inc.: The Company owns approximately 24% of the outstanding common shares of Automated Technology (Phil), Inc. (“ATEC”), a supplier located in the Philippines that provides assembly and test services. One member of the Company's Board of Directors serves on the Board of Directors of ATEC.

 Fiscal Year Ended
 December 28, 2019 December 29, 2018
(in millions)Powersem EB Tech ATEC Powersem EB Tech ATEC
Sales to related party$0.6
 $—
 $—
 $0.7
 $—
 $—
Purchase material/service from related party3.2
 0.4
 7.9
 4.5
 0.5
 9.9
Account Receivable balance—
 —
 —
 0.1
 —
 —
Account Payable balance$0.2
 $—
 $0.1
 $0.2
 $0.1
 $0.5

 Additionally, the Company has certain cost method investments in VTOOL Ltd. and Securepush Ltd. with a total book value of $0.4 million as of December 28, 2019 where one member of the Company’s Board of Directors is currently an investor and a director of VTOOL Ltd. and Securepush Ltd.

On April 26, 2019, the Company sold its subsidiary Microwave Technology, LLC. (“MWT”) resulting in a loss on disposal of $2.6 million reflected in Other income (expense), net in the Consolidated Statements of Net Income. The operations of MWT were included in the Electronics segment. One member of the Company’s Board of Directors is an owner of a company that purchased MWT.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.


None.



ITEM 9A. CONTROLSAND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in ourits reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including ourthe Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, managementthe Company recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and managementthe Company is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 15d-15(b), wethe Company carried out an evaluation, under the supervision and with the participation of ourits management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of ourits disclosure controls and procedures pursuant to SEC Rule 13a-15 as of the end of the period covered by this report. Based on the foregoing, ourthe Company’s Chief Executive Officer and Chief Financial Officer concluded that ourthe Company’s disclosure controls and procedures were effective as of December 31, 2016.

Management’s28, 2019.

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Management’s Report on Internal Control over Financial Reporting

Section 404 of the Sarbanes-Oxley Act of 2002 requires management to include in this Annual Report on Form 10-K a report on management’s assessment of the effectiveness of the company’sCompany’s internal control over financial reporting, as well as an attestation report from the company’sCompany’s independent registered public accounting firm on the effectiveness of the company’sCompany’s internal control over financial reporting. The management of LittelfuseManagement is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f) and 15d-15(f). The LittelfuseCompany’s internal control system was designed to provide reasonable assurance to its management and the Board of Directors regarding the preparation and fair presentation of published financial statements.

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 cash and after settlement of certain post-closing adjustments. The PolySwitch business 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. On April 4, 2016, the company acquired 100% of Menber’s S.p.A. (“Menber’s”) for $19.2 million, net of cash acquired and after settlement of a working capital adjustment. Located in Legnago, Italy, Menber’s specializes in the design, manufacturing, and selling of manual and electrical battery switches and trailer connectors for commercial vehicles. The acquisition expands the company’s commercial vehicle platform globally. On August 29, 2016, the company acquired certain assets of select businesses (the “ON Portfolio”) of ON Semiconductor Corporation for $104.0 million. The acquired business consists of a product portfolio that includes transient voltage suppression (“TVS”) diodes, switching thyristors and insulated gate bipolar transistors (“IGBT”) for automotive ignition applications.

The company is now integrating processes, employees, technologies, systems and operations of these three acquisitions into Littelfuse. As permitted by the rules and regulations of the SEC we have excluded PolySwitch, Menber’s and the ON Portfolio businesses from our assessment of our control over financial reporting as of December 31, 2016. Management will continue to evaluate internal controls as we complete the integration of these acquisitions. As of December 31, 2016, PolySwitch, Menber’s and ON Portfolio businesses in aggregate represented 36% of Littelfuse total assets and 16% of total net revenue for the year ended.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined effective can provide only reasonable assurance with respect to financial statement preparation and presentation. A material weakness is a deficiency, or a combination of deficiencies, in the internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financialstatement will not be prevented or detected on a timely basis.

Littelfuse

The Company’s management, including the company’s principal executive officerits Principal Executive Officer and principal financial officer,Principal Financial Officer, assessed the effectiveness of the company’sCompany’s internal control over financial reporting as of December 31, 2016,28, 2019, based upon the updated framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in 1992 and updated in May 2013. Based on this assessment, the company’sCompany’s management concluded that, as of December 31, 2016,28, 2019, the company’sCompany’s internal control over financial reporting was effective.

 

Changes in Internal Control over Financial Reporting

There has been no change in the company’sCompany’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the 12 months or fiscal quarter ended December 31, 2016,28, 2019, that has materially affected, or is reasonably likely to materially affect, the company’sCompany’s internal control over financial reporting.


ITEM 9B. OTHER INFORMATION.

None.

 

None.


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PART III


ITEM 10. DIRECTORS, EXECUTIVE OFFICERS,,AND CORPORATE GOVERNANCE.

Except as set forth below, the information required by this item will be contained in our 2017the Company’s Proxy Statement related to our 2020 Annual Meeting of Stockholders (the "proxy statement") and is incorporated herein by reference.

Information concerning directors and nominees for director is set forth in the section titled “Proposal No. 1 Election of Directors” in ourthe Company’s proxy statement and is incorporated herein by reference.

Information concerning ourthe Company’s Audit Committee and Audit Committee financial expert is set forth in the sectionsections titled "Board Committees" and “Director Independence; Financial Experts” in ourthe Company's proxy statement and is incorporated herein by reference.

Information concerning the procedures by which security holders may recommend nominees to ourthe Company’s Board of Directors is set forth in the section titled “Director Candidates”Nomination” in ourthe Company’s proxy statement and is incorporated herein by reference.

Information concerning compliance with Section 16 of the Securities Exchange Act of 1934 is set forth in the section titled “Section“Delinquent Section 16(a) Beneficial Ownership Reporting Compliance”Reports” in ourthe Company’s proxy statement and is incorporated herein by reference.

Information regarding the Executive Officers of the Registrant.

The executive officersCompany can be found in Part I of this Annual Report on Form 10-K under the Company are as follows:

Name

Age

Position

Gordon Hunter

65

Executive Chairman of the Board

David W. Heinzmann

53

President and Chief Executive Officer

Meenal A. Sethna

47

Executive Vice President and Chief Financial Officer

Ryan K. Stafford

49

Executive Vice President, Chief Legal and Human Resources Officer and Corporate Secretary

Matthew J. Cole

45

Senior Vice President and General Manager, Industrial Business Unit

Ian Highley

53

Senior Vice President and General Manager, Semiconductor Products and Chief Technology Officer

Deepak Nayar

57

Senior Vice President and General Manager, Electronics Business Unit

Dieter Roeder

60

Senior Vice President and General Manager, Automotive Business Unit

Michael P. Rutz

45

Senior Vice President, Global Operations

Gordon Hunter has served as thecaption "Information about our Executive Chairman of the Board since January 2017. He has served as a director since 2002, and served as our Chairman of the Board, President and Chief Executive Officer from 2005 until January 2017. From 2003 to 2005 he served as our Chief Operating Officer. Prior to joining Littelfuse, Mr. Hunter served as vice president, Intel communications group, and general manager, optical products group for Intel Corporation (NASDAQ:INTC) from 2002 to 2003. Prior to joining Intel in 2002, he served as president of Elo TouchSystems, a subsidiary of Raychem Corporation. Mr. Hunter also served in a variety of positions during a 20-year career at Raychem Corporation, including Vice President of Commercial Electronics and a variety of sales, marketing, engineering and management positions. Mr. Hunter served on the council of advisors of Shure Incorporated from 2003 through April 2016, and became a member of the board of directors in April 2016. He also has served on the board of directors of Veeco Instruments, Inc. (NASDAQ:VECO) since 2010, and the board of directors of CTS Corporation (NYSE:CTS) since 2011. Mr. Hunter holds a BS in electrical engineering from the University of Liverpool, England, and an MBA from London Business School.

David W. Heinzmann has served as the President and Chief Executive Officer and a member of the Board of Directors since January 2017. He previously served as our Chief Operating Officer, since 2014. Mr. Heinzmann began his career at Littelfuse in 1985 as a manufacturing engineer and has held positions of increasing responsibility since that time. From 2004 through 2007, he served as Vice President and General Manager, Automotive segment, and then as Vice President, Global Operations until 2014. Mr. Heinzmann has served on the board of directors of Pulse Electronics Corporation, since 2014. Mr. Heinzmann holds a BS in mechanical engineering from Missouri University of Science and Technology.

Meenal A. Sethna, Executive Vice President and Chief Financial Officer, joined the company in May 2015 and is responsible for finance and accounting, investor relations, mergers and acquisitions, and internal audit. Prior to joining Littelfuse, Ms. Sethna spent four years at Illinois Tool Works Inc. as Vice President and Corporate Controller. Previous to that, she worked at Motorola Inc., most recently as Vice President, Finance. She began her career at Baxter International, holding a variety of finance roles during her tenure. Ms. Sethna is a graduate of the Kellogg School of Management at Northwestern University and the University of Illinois-Urbana, and is a Certified Public Accountant in Illinois.

Officers."
 

Ryan K. Stafford, Executive Vice President, Chief Legal and Human Resources Officer and Corporate Secretary, leads the company’s legal, compliance, internal audit, human resources and corporate marketing and communications functions. Mr. Stafford joined the company’s executive team as its first general counsel in January 2007. Prior to joining the company, Mr. Stafford served in a number of roles at Tyco International Ltd., including Vice President of China Operations and Vice President & General Counsel for its Engineered Products & Services Business Segment. Prior to that he was with the law firm Sulloway & Hollis P.L.L.C.

Matthew J. Cole,Senior Vice President and General Manager, Industrial Business Unit, joined Littelfuse in July 2015 and is responsible for the electrical fuse, protection relay and custom electrical products businesses. Mr. Cole has more than 20 years of experience in general management, strategy development, mergers and acquisitions, and operations. Prior to joining Littelfuse, he was Vice President and General Manager of AMETEK’s Advanced Measurement Technology division, a global leader in electronic instruments and electromechanical devices. His career also includes positions in general management, marketing and operations at Danaher and Allied Signal/Honeywell.

Ian Highley, Senior Vice President and General Manager, Semiconductor Products and Chief Technology Officer, is responsible for the marketing, sales, product development and strategic planning efforts of the company’s semiconductor products in addition to being responsible for the company’s overall information technology efforts. Mr. Highley joined the company in 2002 as Product Line Director, Semiconductor Products. Mr. Highley served as General Manager Semiconductor Products from August 2008 to May 2012 and Vice President and General Manager, Semiconductor Products from May 2012 to January 2015. Mr. Highley was promoted to his current position in January 2015.

Deepak Nayar, Senior Vice President and General Manager, Electronics Business Unit, is responsible for marketing, sales, product development and customer relationships of the Electronics Business Unit. Mr. Nayar joined the company in 2005 as Business Line Director of the Electronics Business Unit. In July 2007, Mr. Nayar was promoted to Vice President, Global Sales, Electronics Business Unit, before he was promoted to his current position in 2011. Prior to joining the company, Mr. Nayar served as Worldwide Sales Director of Tyco Electronics Power Components Division from 1999 to 2005. Before that, Mr. Nayar served as Director of Business Development, Raychem Electronics OEM Group from 1997 to 1999.

Dieter Roeder, Senior Vice President and General Manager, Automotive Business Unit, is responsible for marketing, sales, product development and customer relationships for all automotive business units. Mr. Roeder joined the company in 2005 leading the Automotive Business Unit's European sales team, based in Germany, before he was promoted to his current position in August 2007. Prior to joining the company, Mr. Roeder served as Director of Business Development Europe for TDS Automotive from 2002 to 2005. Before that, Mr. Roeder spent ten years with Raychem GmbH (later Tyco Electronics) where he had various sales and marketing responsibilities within the European automotive industry.

Michael P. Rutz, Senior Vice President, Global Operations, is responsible for the company’s sourcing, supplier development, supply chain, quality and manufacturing engineering services. From February 2014 to January 2015, Mr. Rutz was Vice President of Supply Chain and Operational Excellence. From August 2011 to February 2014, Mr. Rutz was Senior Vice President Global Supply Chain at WMS Industries Inc., a Chicago-based manufacturer of equipment and software for the gaming industry.  Prior to that, Mr. Rutz served for 16 years in various positions of increasing responsibility, at Motorola Solutions, Inc., most recently as Vice President of Networks Supply Chain from 2009 until August 2011.

Code of Ethics

The company has adopted a Code of Conduct (Code of Ethics) that applies to all of ourthe Company’s employees including our principal executive officer, principal financial officer, principal accounting officerthe Company’s Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and persons performing similar functions. It has posted the text of the Code of Conduct on its website athttp://investor.littelfuse.com/governance.cfmgovernance and intends to disclose on such website any amendments to, or waivers from the Code of Conduct. The company’s website is not incorporated by reference into this Annual Report.


ITEM 11. EXECUTIVE COMPENSATION.

Information concerning compensation of ourthe Company’s executive officers and directors for the fiscal year ended December 31, 2016,28, 2019, is set forth in the sections titled “Compensation Discussion & Analysis”Analysis,” “Compensation Tables”Tables,” "Compensation Committee Report," "CEO Pay Ratio," "Potential Payments Upon Termination or Change in Control" and “Director Compensation” in ourthe Company’s proxy statement and is incorporated herein by reference, except the section titled “Compensation Committee Report” is hereby “furnished” and not “filed” with this Annual Report on Form 10-K.

Information concerning compensation committee interlocks is set forth in the section titled “Compensation Committee Interlocks and Insider Participation” in ourthe Company’s proxy statement and is incorporated herein by reference.



Table of Contents





ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Information concerning the security ownership of certain beneficial owners, ourthe Company’s directors and executive officers as of March 1, 2017,February 27, 2020, is set forth in the section titled “Ownership of Littelfuse, Inc. Common Stock” in ourthe Company’s proxy statement and is incorporated herein by reference.

Information concerning ourthe Company’s equity compensation plan isplans are set forth in the section titled “Compensation Plan Information” in ourthe Company’s proxy statement and is incorporated herein by reference.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

Information concerning the independence of ourthe Company’s directors, certain relationships and related transactions during 20162019 and ourthe Company’s policies with respect to such transactions is set forth in the sections titled “Proposal No. 1 Election of Directors”"Director Independence; Financial Experts", “Related Person Transaction Policy” and “Certain Relationships and Related“Related Party Transactions” in ourthe Company’s proxy statement and is incorporated herein by reference.


ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

Information concerning principal accountant fees and services is set forth in the section titled ”Audit“Audit Related Matters” in ourthe Company’s proxy statement and is incorporated herein by reference.



Table of Contents




PART IV
 


PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)


(a)Financial Statements and Schedules

(1)

The following Financial Statements are filed as a part of this report:

(i)

Reports of Independent Registered Public Accounting Firms (pages 33-34).

(ii)

Consolidated Balance Sheets as of December 31, 2016 and January 2, 2016 (page 35).

(iii)

Consolidated Statements of Net Income for the years ended December 31, 2016, January 2, 2016 and December 27, 2014 (page 36).

(iv)

Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, January 2, 2016 and December 27, 2014 (page 36).

(v)

Consolidated Statements of Cash Flows for the years ended December 31, 2016, January 2, 2016 and December 27, 2014 (page 37).

(vi)

Consolidated Statements of Equity for the years ended December 31, 2016, January 2, 2016 and December 27, 2014 (page 38).

(vii)

Notes to Consolidated Financial Statements (pages 39-64).

(2)

The following Financial Statement Schedule is submitted herewith for the periods indicated therein.

(i)

Schedule II - Valuation and Qualifying Accounts and Reserves (page 71).

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.

(3)

Exhibits. See Exhibit Index on pages 73-77.

Schedules

 Page
1.The following Financial Statements are filed as a part of this report: 
 i.Reports of Independent Registered Public Accounting Firms
40 - 42
 ii.Consolidated Balance Sheets as of December 28, 2019 and December 29, 2018
43
 iii.Consolidated Statements of Net Income for the fiscal years ended December 28, 2019, December 29, 2018 and December 30, 2017
44
 vi.Consolidated Statements of Comprehensive Income for the fiscal years ended December 28, 2019, December 29, 2018 and December 30, 2017
45
 v.Consolidated Statements of Cash Flows for the fiscal years ended December 28, 2019, December 29, 2018 and December 30, 2017
46
 vi.Consolidated Statements of Equity for the fiscal years ended December 28, 2019, December 29, 2018 and December 30, 2017
47
 vii.Notes to Consolidated Financial Statements
48 - 85
 
2.The following Financial Statement Schedule is submitted herewith for the periods indicated therein. 
 i.Schedule II - Valuation and Qualifying Accounts and Reserves
90
 
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.
 
3.Exhibits. See Exhibit Index
92 

Item 16.FORM 10-K SUMMARY
 

None.

Table of Contents




SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

Description

 

Balance at

Beginning

of Year

  

Charged to

Costs and

Expenses (a)

  

Deductions (b)

  

Other (c)

  

Balance at

End

of Year

 

(inthousands)

                    

Year ended December 31, 2016

                    

Allowance for losses on accounts receivable

 $319  $1,769  $(42) $33  $2,079 

Reserves for sales discounts and allowances

 $17,168  $91,632  $(90,837) $5,862  $23,825 

Deferred tax valuation allowance

 $4,557  $—  $—  $2,181  $6,738 
                     

Year ended January 2, 2016

                    

Allowance for losses on accounts receivable

 $278  $164  $150  $27  $319 

Reserves for sales discounts and allowances

 $19,140  $81,335  $82,997  $(310) $17,168 

Deferred tax valuation allowance

 $4,557  $—  $—  $—  $4,557 
                     

Year ended December 27, 2014

                    

Allowance for losses on accounts receivable

 $790  $130  $656  $14  $278 

Reserves for sales discounts and allowances

 $16,117  $85,825  $82,568  $(234) $19,140 

Deferred tax valuation allowance

 $6,250  $—  $1,693  $—  $4,557 

 
 
Description
Balance at
Beginning
of Year
 
Charged to
Costs and
Expenses (a)
 
 
 
Deductions (b)
 
 
 
Other (c)
 
Balance at
End
of Year
(in thousands)
         
Fiscal year ended December 28, 2019         
Allowance for losses on accounts receivable$1,062
 $410
 $(172) $10
 $1,310
Reserves for sales discounts and allowances$34,976
 $133,434
 $(127,330) $(347) $40,733
          
Fiscal year ended December 29, 2018         
Allowance for losses on accounts receivable$1,172
 $319
 $(557) $128
 $1,062
Reserves for sales discounts and allowances$26,344
 $124,638
 $(118,438) $2,432
 $34,976
          
Fiscal year ended December 30, 2017         
Allowance for losses on accounts receivable$2,079
 $3,068
 $(4,070) $95
 $1,172
Reserves for sales discounts and allowances$23,825
 $106,781
 $(104,941) $679
 $26,344

(a)

(a)Includes provision for doubtful accounts, sales returns and sales discounts granted to customers.

(b)

(b)Represents uncollectible accounts written off, net of recoveries and credits issued to customers and the write-off of certain deferred tax assets that previously had full valuation allowances.

customers.

(c)

(c)Represents business acquisitions foreign subsidiary tax attributes and foreign currency translation adjustments.



Table of Contents




SIGNATURES
 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Littelfuse, Inc.

By:

Littelfuse, Inc.

/s/ 

By: /s/ David W. Heinzmann

David W. Heinzmann,

President and Chief Executive Officer

Date: February 27, 2017

21, 2020


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant on February 27, 201721, 2020 and in the capacities indicated.

/s/ Gordon Hunter

 

Executive Chairman of the Board of Directors

Gordon Hunter

  
   

/s/ David W. Heinzmann

 

Director, President and Chief Executive Officer

David W. Heinzmann

 

(Principal Executive Officer)

   

/s/ Tzau-Jin Chung

Kristina A. Cerniglia		 

Director

Tzau-Jin Chung

Kristina A. Cerniglia		  
   

/s/ Cary T. Fu

Tzau-Jin Chung		 

Director

Cary T. Fu

Tzau-Jin Chung		  
   

/s/ Anthony Grillo

Cary T. Fu		 

Director

Anthony Grillo

Cary T. Fu		  
   

/s/ John E. Major

Anthony Grillo		 

Director

John E. Major

Anthony Grillo		  
   

/s/ William P. Noglows

John E. Major		 

Director

William P. Noglows

John E. Major		  
   

/s/ Ronald L. Schubel

William P. Noglows		 

Director

Ronald L. Schubel

William P. Noglows		  
   

Director
Maria Green
Director
Nathan Zommer
/s/ Meenal A. Sethna

 

Executive Vice President and Chief Financial Officer

Meenal A. Sethna

 (Principal Financial Officer)
/s/ Jeffrey G. GorskiCorporate Controller and Chief Accounting Officer
Jeffrey G. Gorski(Principal Accounting Officer)

 

Table of Contents




EXHIBIT INDEX


The following documents listed below that have been previously filed with the SEC (1934 Act File No. 0-20388) are incorporated herein by reference:

     

 

Incorporated by Reference Herein

Exhibit No.

  

 Description

 

Form

Exhibit

Filing Date

File No.

2.1+

  

Stock Purchase Agreement, dated as of April 15, 2013, by and among Littelfuse, Inc. and Key Safety Systems, Inc.

 

8-K

2.1

04/15/2013

0-20388

         

2.2+

  

Stock and Asset Purchase Agreement, dated November 7, 2015, by and between Littelfuse, Inc. and TE Connectivity Ltd.

 

8-K

2.1

11/12/2015

0-20388

         

3.1*

  

Certificate of Incorporation dated November 25, 1991, as amended April 25, 1997.

     
         

3.2

  

Certificate of Designations of Series A Preferred Stock.

 

8-K

4.2

12/01/1995

0-20388

         

3.3

  

Bylaws, as amended and restated October 24, 2014.

 

10-Q

3.1

10/31/2014

0-20388

         

10.1

  

Form of Non-Qualified Stock Option Agreement under the 1993 Stock Plan for Employees and Directors of Littelfuse, Inc. for employees.++

 

8-K

99.1

11/12/2004

0-20388

         

10.2

  

Form of Non-Qualified Stock Option Agreement under the 1993 Stock Plan for Employees and Directors of Littelfuse, Inc., for non-employee directors. ++

 

10-K

10.24

03/17/2004

0-20388

         

10.3

  

Form of Non-Qualified Stock Option Agreement under the Littelfuse, Inc. Equity Incentive Compensation Plan. ++

 

8-K

99.4

05/11/2006

0-20388

         

10.4

  

Form of Non-Qualified Stock Option Agreement under the Littelfuse, Inc. Outside Directors Stock Option Plan.++

 

8-K

99.6

05/11/2006

0-20388

         

10.5

  

Amended and Restated Employment Agreement dated as of December 31, 2007, between Littelfuse, Inc. and Gordon Hunter .++

 

10-K

10.1

02/27/2008

0-20388

         

10.6

  

Littelfuse, Inc. Retirement Plan as Amended and Restated, effective January 1, 2008 .++

 

10-K

10.13

02/27/2008

0-20388

         

10.7

  

Form of Stock Option Award Agreement under the Littelfuse, Inc. Outside Directors' Equity Plan.++

 

8-K

99.3

05/01/2008

0-20388

         

10.8

  

Form of Restricted Stock Unit Award Agreement under the Littelfuse, Inc. Outside Directors' Equity Plan.++

 

8-K

99.4

05/01/2008

0-20388

         

10.9

  

Amended and Restated, Littelfuse, Inc. Deferred Compensation Plan for Non-Employee Directors.++

 

10-K

10.4

02/27/2008

0-20388

         


 Incorporated by Reference Herein
Exhibit No. 

Description
FormExhibitFiling DateFile No.
2.1 
Agreement and Plan of Merger, dated August 25, 2017, as amended by Amendment No. 1, dated December 4, 2017, by and among IXYS Corporation, Littelfuse, Inc., Iron Merger Co., Inc., and IXYS Merger Co., LLC.
S-4/AAnnex A12/11/2017333-22114
3.1 
Certificate of Incorporation dated November 25, 1991, as amended April 25, 1997.
10-K3.12/27/20170-20388
3.2 Certificate of Designations of Series A Preferred Stock.8-K4.212/1/19950-20388
3.3 
Bylaws, as amended and restated January 24, 2019.
8-K3.11/25/20190-20388
4.1* 
Description of Securities of Littelfuse, Inc.
    
10.1 
Form of Stock Option Award Agreement under the Littelfuse, Inc. Outside Directors' Equity Plan.++
8-K99.35/1/20080-20388
10.2 
Form of Restricted Stock Unit Award Agreement under the Littelfuse, Inc. Outside Directors' Equity Plan.++
8-K99.45/1/20080-20388
10.3 
Amended and Restated, Littelfuse, Inc. Deferred Compensation Plan for Non-Employee Directors.++
10-K10.42/27/20080-20388
10.4 
Form of Stock Option Award Agreement under the Littelfuse, Inc. Equity Incentive Compensation Plan .++
8-K10.24/28/20090-20388
10.5 
Littelfuse, Inc. Long-Term Incentive Plan, effective February 3, 2010.++
8-K10.15/5/20100-20388
10.6 
Form of Restricted Stock Unit Award Agreement (Outside Director) under the Littelfuse, Inc. Long-Term Incentive Plan.++
S-84.45/19/20100-20388
10.7 
Form of Stock Option Award Agreement under the Littelfuse, Inc. Long-Term Incentive Plan.++
S-84.65/19/20100-20388
10.8 
First Amendment to the Littelfuse, Inc. Long-Term Incentive Plan, effective July 27, 2012.++
10-K10.362/27/20130-20388
10.9 
Littelfuse, Inc. Annual Incentive Plan, effective January 1, 2014. ++
DEF14AA3/17/20140-20388
10.10 
Form of Restricted Stock Unit Award Agreement (Executive) under the Littelfuse, Inc. Long-Term Incentive Plan.++
10-Q10.27/31/20150-20388
10.11 
Form of Restricted Stock Unit Award Agreement (Tier II Management) under the Littelfuse, Inc. Long-Term Incentive Plan.++
10-Q10.37/31/20150-20388
10.12 
Credit Agreement, dated as of March 4, 2016 among Littelfuse, Inc. and Certain Subsidiaries as borrowers, Guarantors party thereto, Bank of America, N.A. as Agent, Swing Line Lender and L/C Issuer and JPMorgan Chase Bank, N.A. as Syndication Agent, BMO Harris Bank, N.A., PNC Bank, National Association and Wells Fargo Bank, National Association as Co-Documentation Agents, Merrill, Lynch, Pierce, Fenner & Smith Incorporated, as Sole Bookrunner and Joint Lead Arranger and JPMorgan Chase Bank, N.A., as Joint Lead Arranger.  
8-K10.13/10/20160-20388
10.13 
Form of Stock Option Award Agreement (Executive) under the Littelfuse, Inc. Long-Term Incentive Plan. ++
10-Q10.35/6/20160-20388
10.14 
Form of Stock Option Award Agreement (Outside Director – 2016 Grant) under the Littelfuse, Inc. Long-Term Incentive Plan. ++
10-Q10.45/6/20160-20388
10.15 
Form of Restricted Stock Unit Award Agreement (Executive) under the Littelfuse, Inc. Long-Term Incentive Plan. ++
10-Q10.55/6/20160-20388
Table of Contents



     

 

Incorporated by Reference Herein

Exhibit No.

  Description FormExhibitFiling DateFile No.

10.10

  

Form of Restricted Stock Award Agreement under the Littelfuse, Inc. Equity Incentive Compensation Plan .++

 

8-K

10.1

04/28/2009

0-20388

         

10.11

  

Form of Stock Option Award Agreement under the Littelfuse, Inc. Equity Incentive Compensation Plan .++

 

8-K

10.2

04/28/2009

0-20388

         

10.12

  

First Amendment to the Amended and Restated Littelfuse, Inc. Retirement Plan, effective March 25, 2009.++

 

10-K

10.30

02/26/2010

0-20388

         

10.13

  

Littelfuse, Inc. Long-Term Incentive Plan, effective February 3, 2010.++

 

8-K

10.1

05/05/2010

0-20388

         

10.14

  

Form of Restricted Stock Unit Award Agreement (Outside Director) under the Littelfuse, Inc. Long-Term Incentive Plan.++

 

S-8

4.4

05/19/2010

0-20388

         

10.15

  

Form of Stock Option Award Agreement under the Littelfuse, Inc. Long-Term Incentive Plan.++

 

S-8

4.6

05/19/2010

0-20388

         

10.16

  

First Amendment to the Littelfuse, Inc. Long-Term Incentive Plan, effective July 27, 2012.++

 

10-K

10.36

02/27/2013

0-20388

         

10.17

  

Credit Agreement, dated as of May 31, 2013, among Littelfuse, Inc., as borrower, JPMorgan Chase Bank, N.A. as Agent, Bank of America, N.A., as Syndication Agent, Wells Fargo Bank, National Association and PNC Bank, National Association, as Co-Documentation Agents, J.P. Morgan Securities LLC, as Sole Bookrunner and Joint Lead Arranger, and Merrill, Lynch, Pierce, Fenner & Smith Incorporated, as Joint Lead Arranger.

 

8-K

10.1

06/05/2013

0-20388

         

10.18

  

Master Increasing Lender Supplement, dated as of January 30, 2014, among Littelfuse, Inc., as borrower, JPMorgan Chase Bank, N.A. as Administrative Agent, and each of the banks, financial institutions and other institutional lenders listed on the respective signature pages thereof.

 

8-K

10.1

02/04/2014

0-20388

         

10.19

  

Littelfuse, Inc. Annual Incentive Plan, effective January 1, 2014. ++

 

DEF14A

A

03/17/2014

0-20388

         

10.20

  

Amended and Restated Employment Agreement, effective as of January 1, 2014, between Littelfuse Europe GmbH and Dieter Roeder .++

 

10-K

10.2

05/02/2014

0-20388

         

10.21

  

Change of Control Agreement effective as of February 10, 2014, between Littelfuse, Inc. and Michael Rutz.++ 

 

10-Q

10.1

05/02/2014

0-20388

         

10.22

  

Termination Amendment to the Littelfuse, Inc. Retirement Plan, effective July 31, 2014. ++

 

10-Q

10.1

10/31/2014

0-20388

         

10.23

  

Change of Control Agreement effective as of January 1, 2015, between Littelfuse, Inc. and Gordon Hunter.++ 

 

8-K

10.1

12/22/2014

0-20388

         

10.24

  

Change of Control Agreement effective as of January 1, 2015, between Littelfuse, Inc. and Philip G. Franklin.++

 

8-K

10.2

12/22/2014

0-20388

         



 Incorporated by Reference Herein
Exhibit No. 

Description
FormExhibitFiling DateFile No.
10.16 
Form of Restricted Stock Unit Award Agreement (Tier II Management) under the Littelfuse, Inc. Long-Term Incentive Plan. ++
10-Q10.65/6/20160-20388
10.17 
Form of Restricted Stock Unit Award Agreement (Outside Director – 2016 Grant) under the Littelfuse, Inc. Long-Term Incentive Plan. ++
10-Q10.75/6/20160-20388
10.18 
Form of Restricted Stock Unit Award Agreement (Executive) under the Littelfuse Inc. Long-Term Incentive Plan. ++
8-K10.17/26/20160-20388
10.19 
Letter Agreement entered into between Littelfuse, Inc. and David W. Heinzmann. Effective January 1, 2017. ++
8-K10.211/16/20160-20388
10.20 
Littelfuse, Inc. 3.03% Senior Note, Series A, due February 15, 2022, and 3.74% Senior Note, Series B, due February 15, 2027 Note Purchase Agreement.
8-K10.112/9/20160-20388
10.21 
Littelfuse, Netherland C.V. 1.14% Senior Note, Series A, due December 8, 2023, and 1.83% Senior Note, Series B, due December 8, 2028 Note Purchase Agreement.
8-K10.212/9/20160-20388
10.22 
Subsidiary Guaranty Agreement, dated December 8, 2016.
8-K10.412/9/20160-20388
10.23 
Subsidiary Guaranty Agreement, dated as of February 15, 2017.
8-K10.22/15/20170-20388
10.24 
Restated Littelfuse, Inc. Supplemental Retirement and Savings Plan, effective January 1, 2017. ++
10-K10.502/27/20170-20388
10.25 
Amended and Restated Littelfuse, Inc. 401(k) Retirement and Savings Plan, effective January 1, 2017.++
10-K10.512/27/20170-20388
10.26 
Amended and Restated Littelfuse, Inc. Long-Term Incentive Plan. ++
8-K10.15/1/20170-20388
10.27 
Form of 2017 Restricted Stock Unit Award Agreement. ++
8-K10.25/1/20170-20388
10.28 
Form of 2017 Stock Option Award Agreement. ++
8-K10.35/1/20170-20388
10.29 
Employment offer letter between Littelfuse, Inc. and Jeffrey Gorski, dated June 28, 2017. ++
8-K10.18/14/20170-20388
10.30 
Form of Change of Control Agreement (J. Gorski). ++
8-K10.28/14/20170-20388
10.31 
First Amendment to Credit Agreement, dated as of November 1, 2016, among Littelfuse, Inc., certain subsidiaries of the company, as designated borrowers, certain subsidiaries of the company, as guarantors, the lenders party thereto and Bank of America, N.A., as agent.
8-K10.110/16/20170-20388
10.32 
Second Amendment to Credit Agreement, dated as of October 13. 2017, among Littelfuse, Inc., certain subsidiaries of the company, as designated borrowers, certain subsidiaries of the company, as guarantors, the lenders party thereto and Bank of America, N.A., as agent.
8-K10.210/16/20170-20388
10.33 
Joinder Agreement, dated as of October 13, 2017, by and between Iron Merger Co., Inc. and Bank of America, N.A., as agent.
8-K10.310/16/20170-20388
10.34 
Joinder Agreement, dated as of October 13, 2017, by and between IXYS Merger Co., LLC and Bank of America, N.A., as agent.
8-K10.410/16/20170-20388
10.35 
U.S. Subsidiary Guarantor Supplement, dated as of October 13, 2017, made by Iron Merger Co., Inc. in favor of the note purchasers and the other holders.
8-K10.510/16/20170-20388
10.36 
U.S. Subsidiary Guarantor Supplement, dated as of October 13, 2017, made by IXYS Merger Co., LLC in favor of the note purchasers and the other holders.
8-K10.610/16/20170-20388
10.37 
Cross Border Subsidiary Guarantor Supplement, dated as of October 13, 2017, made by Iron Merger Co., Inc. in favor of the note purchasers and the other holders.
8-K10.710/16/20170-20388
Table of Contents



     

 

Incorporated by Reference Herein

Exhibit No.

  Description FormExhibitFiling DateFile No.

10.25

  

Change of Control Agreement effective as of January 1, 2015, between Littelfuse, Inc. and Dieter Roeder.++ 

 

8-K

10.4

12/22/2014

0-20388

         

10.26

  

Change of Control Agreement effective as of January 1, 2015, between Littelfuse, Inc. and Ryan K. Stafford.++ 

 

8-K

10.5

12/22/2014

0-20388

         

10.27

  

Change of Control Agreement effective as of January 1, 2015, between Littelfuse, Inc. and Ian Highley.++

 

10-K

10.11

02/24/2015

0-20388

         

10.28

  

Change of Control Agreement effective as of January 1, 2015, between Littelfuse, Inc. and Deepak Nayar.++

 

10-K

10.12

02/24/2015

0-20388

         

10.29

  

Amendment No. 1, dated as of May 2, 2014, to Credit Agreement, dated as of May 30, 2013, by and among Littelfuse, Inc., as borrower, JPMorgan Chase Bank, N.A. as Agent, and each of the banks, financial institutions listed on the respective signature pages thereof.

 

10-K

10.47

02/24/2015

0-20388

         

10.30

  

Amendment No. 2, dated as of January 14, 2015, to Credit Agreement, dated as of May 31, 2013, by and among Littelfuse, Inc., as borrower, JPMorgan Chase Bank, N.A. as Agent, and each of the banks, financial institutions listed on the respective signature pages thereof.

 

10-K

10.48

02/24/2015

0-20388

         

10.31

  

Form of Restricted Stock Unit Award Agreement (Executive) under the Littelfuse, Inc. Long-Term Incentive Plan.++

 

10-Q

10.2

07/31/2015

0-20388

         

10.32

  

Form of Restricted Stock Unit Award Agreement (Tier II Management) under the Littelfuse, Inc. Long-Term Incentive Plan.++

 

10-Q

10.3

07/31/2015

0-20388

         

10.33

  

Amendment No. 3, dated as of May 4, 2015, to Credit Agreement, dated as of May 31, 2013, by and among Littelfuse, Inc., as borrower, JPMorgan Chase Bank, N.A., as Agent, and each of the banks, financial institutions listed on the respective signature pages thereof.

 

10-Q

10.1

07/31/2015

0-20388

         

10.34

  

Change of Control Agreement effective as of February 1, 2016, between Littelfuse, Inc. and Meenal A. Sethna. ++

 

8-K

10.1

02/03/2016

0-20388

         

10.35

  

Change of Control Agreement effective as of May 26, 2015 between Littelfuse, Inc. and Matt Cole.++

 

10-K

10.13

03/01/2016

0-20388

         



 Incorporated by Reference Herein
Exhibit No. 

Description
FormExhibitFiling DateFile No.
10.38 
Cross Border Subsidiary Guarantor Supplement, dated as of October 13, 2017, made by IXYS Merger Co., LLC in favor of the note purchasers and the other holders.
8-K10.810/16/20170-20388
10.39 
Note Purchase Agreement, dated November 15, 2017, among Littelfuse, Inc. and note purchasers listed on the signature pages thereto.
8-K10.111/15/20170-20388
10.40 
Form of 3.78% Senior Note, Series B, due February 15, 2030.
8-K4.211/15/20170-20388
10.41 
Form of 3.48% Senior Note, Series A, due February 15, 2025,
8-K4.111/15/20170-20388
10.42 
Subsidiary Guaranty Agreement, dated as of January 16, 2018, made by LFUS LLC, Littelfuse Commercial Vehicle, LLC, Iron Merger Co., Inc., IXYS Merger Co., LLC and SymCom, Inc. in favor of the note purchasers and the other holders.
8-K10.21/18/20180-20388
10.43 
Littelfuse, Inc. Executive Severance Policy. ++
8-K10.41/18/20180-20388
10.44 
Form of Tier I Change of Control Agreement.++
8-K10.11/23/20180-20388
10.45 
First Amendment to Littelfuse Deferred Compensation Plan for Non-Employee Directors, effective as of January 1, 2008.++
10-K10.7302/23/20180-20388
10.46 
Second Amendment to the Littelfuse Deferred Compensation Plan for Non-Employee Directors, effective as of October 25, 2013.++
10-K10.7402/23/20180-20388
10.47 
First Amendment to the Littelfuse, Inc. 401(K) Retirement and Savings Plan, effective January 1, 2018.++
10-K10.7502/23/20180-20388
10.48 
Altra In-Plan Roth Rollover Amendment to the Littelfuse, Inc. 401(K) Retirement and Savings Plan, effective as of February 1, 2018.++
10-K10.7602/23/20180-20388
10.49 
Form of Indemnity Agreement between Nathan Zommer and IXYS Corporation. ++
10-K10.36/12/2008000-26124
10.50 
IXYS Corporation 2009 Equity Incentive Plan++
S-84.41/19/2018333-221147
10.51 
IXYS Corporation 2011 Equity Incentive Plan++
S-84.51/19/2018333-221147
10.52 
IXYS Corporation 2013 Equity Incentive Plan++
S-84.61/19/2018333-221147
10.53 
IXYS Corporation 2016 Equity Incentive Plan++
S-84.71/19/2018333-221147
10.54 
Zilog, Inc. 2002 Omnibus Stock Incentive Plan++
S-84.81/19/2018333-221147
10.55 
Zilog, Inc. 2004 Omnibus Stock Incentive Plan++
S-84.91/19/2018333-221147
10.56 
Notice of Stock Option Grant and Agreement for the IXYS Corporation 2009 Equity Incentive Plan++
10-Q10.48/10/2009000-26124
10.57 
Form of Nonqualified Stock Option Agreement for Stock Options pursuant to the Zilog, Inc. 2002 Omnibus Stock Incentive Plan++
10-K10.266/11/2010000-26124
10.58 
Form of Nonqualified Stock Option Agreement for Stock Options pursuant to the Zilog, Inc. 2004 Omnibus Stock Incentive Plan++
10-K10.286/11/2010000-26124
10.59 
Notice of Stock Option Grant and Agreement for IXYS Corporation 2011 Equity Incentive Plan++
10-Q10.28/5/2011000-26124
10.60 
Notice of Stock Option Grant and Agreement for IXYS Corporation 2013 Equity Incentive Plan++
10-Q10.68/9/2013000-26124
10.61 
Notice of Stock Option Grant and Agreement for IXYS Corporation 2016 Equity Incentive Plan++
10-Q10.111/3/2016000-26124
Table of Contents



     

 

Incorporated by Reference Herein

Exhibit No.

  Description FormExhibitFiling DateFile No.

10.36

  

Credit Agreement, dated as of March 4, 2016 among Littelfuse, Inc. and Certain Subsidiaries as borrowers, Guarantors party thereto, Bank of America, N.A. as Agent, Swing Line Lender and L/C Issuer and JPMorgan Chase Bank, N.A. as Syndication Agent, BMO Harris Bank, N.A., PNC Bank, National Association and Wells Fargo Bank, National Association as Co-Documentation Agents, Merril, Lynch, Pierce, Fenner & Smith Incorporated, as Sole Bookrunner and Joint Lead Arranger and JPMorgan Chase Bank, N.A., as Joint Lead Arranger.

 

8-K

10.1

03/10/2016

0-20388

         

10.37

  

Form of Stock Option Award Agreement (Executive) under the Littelfuse, Inc. Long-Term Incentive Plan. ++

 

10-Q

10.3

05/06/2016

0-20388

         

10.38

  

Form of Stock Option Award Agreement (Outside Director – 2016 Grant) under the Littelfuse, Inc. Long-Term Incentive Plan. ++

 

10-Q

10.4

05/06/2016

0-20388

         

10.39

  

Form of Restricted Stock Unit Award Agreement (Executive) under the Littelfuse, Inc. Long-Term Incentive Plan. ++

 

10-Q

10.5

05/06/2016

0-20388

         

10.40

  

Form of Restricted Stock Unit Award Agreement (Tier II Management) under the Littelfuse, Inc. Long-Term Incentive Plan. ++

 

10-Q

10.6

05/06/2016

0-20388

         

10.41

  

Form of Restricted Stock Unit Award Agreement (Outside Director – 2016 Grant) under the Littelfuse, Inc. Long-Term Incentive Plan. ++

 

10-Q

10.7

05/06/2016

0-20388

         

10.42

  

Form of Restricted Stock Unit Award Agreement (Executive) under the Littelfuse Inc. Long-Term Incentive Plan. ++

 

8-K

10.1

07/26/2016

0-20388

         

10.43

  

Executive Retirement Agreement entered into between Littelfuse, Inc. and Gordon Hunter, effective January 1, 2017. ++

 

8-K

10.1

11/16/2016

0-20388

         

10.44

  

Letter Agreement entered into between Littelfuse, Inc. and David W. Heinzmann. Effective January 1, 2017. ++

 

8-K

10.2

11/16/2016

0-20388

         

10.45

  

Change of Control Agreement effective as of January 1, 2017, between Littelfuse, Inc. and David W. Heinzmann. ++

 

8-K

10.3

11/16/2016

0-20388

         

10.46

  

Littelfuse, Inc. 3.03% Senior Note, Series A, due February 15, 2022, and 3.74% Senior Note, Series B, due February 15, 2027 Note Purchase Agreement.

 

8-K

10.1

12/09/2016

0-20388

         

10.47

  

Littelfuse, Netherland C.V. 1.14% Senior Note, Series A, due December 8, 2023, and 1.83% Senior Note, Series B, due December 8, 2028 Note Purchase Agreement.

 

8-K

10.2

12/09/2016

0-20388

         

10.48

  

Subsidiary Guaranty Agreement, dated December 8, 2016.

 

8-K

10.4

12/09/2016

0-20388

         



 Incorporated by Reference Herein
Exhibit No. 

Description
FormExhibitFiling DateFile No.
10.62 
Joinder Agreement, dated as of March 14, 2018, by and between Clare Capital, Inc., Clare Components, Inc., Clare Electronics, Inc., Clare Instruments, Inc., Clare Services, Inc., Clare Technologies, Inc., Directed Energy, Inc., IXYS Buckeye, LLC, IXYS Integrated Circuits Division AV Inc., IXYS Integrated Circuits Divisions Inc., IXYS Long Beach, Inc., IXYS USA, Inc., Microwave Technology, Inc., Pele Technology, Inc., Reaction Technology Incorporation, Zilog, Inc., and Bank of America, N.A., as agent.
10-Q10.105/02/20180-20388
10.63 
U.S. Subsidiary Guarantor Supplement, dated as of March 14, 2018, made by Clare Capital, Inc., Clare Components, Inc., Clare Electronics, Inc., Clare Instruments, Inc., Clare Services, Inc., Clare Technologies, Inc., Directed Energy, Inc., IXYS Buckeye, LLC, IXYS Integrated Circuits Division AV Inc., IXYS Integrated Circuits Divisions Inc., IXYS Long Beach, Inc., IXYS USA, Inc., Microwave Technology, Inc., Pele Technology, Inc., Reaction Technology Incorporation and Zilog, Inc. in favor of the note purchasers and the other holders.
10-Q10.205/02/20180-20388
10.64 
Cross Border Subsidiary Guarantor Supplement, dated as of March 14, 2018, made by Clare Capital, Inc., Clare Components, Inc., Clare Electronics, Inc., Clare Instruments, Inc., Clare Services, Inc., Clare Technologies, Inc., Directed Energy, Inc., IXYS Buckeye, LLC, IXYS Integrated Circuits Division AV Inc., IXYS Integrated Circuits Divisions Inc., IXYS Long Beach, Inc., IXYS USA, Inc., Microwave Technology, Inc., Pele Technology, Inc., Reaction Technology Incorporation and Zilog, Inc. in favor of the note purchasers and the other holders.
10-Q10.305/02/20180-20388
10.65 
Note Purchase Agreement Subsidiary Guarantor Supplement, dated as of March 14, 2018, made by Clare Capital, Inc., Clare Components, Inc., Clare Electronics, Inc., Clare Instruments, Inc., Clare Services, Inc., Clare Technologies, Inc., Directed Energy, Inc., IXYS Buckeye, LLC, IXYS Integrated Circuits Division AV Inc., IXYS Integrated Circuits Divisions Inc., IXYS Long Beach, Inc., IXYS USA, Inc., Microwave Technology, Inc., Pele Technology, Inc., Reaction Technology Incorporation and Zilog, Inc. in favor of the note purchasers and the other holders.
10-Q10.405/02/20180-20388
10.66 
Consulting Agreement between Nathan Zommer and Littelfuse, Inc., effective August 1, 2018. ++
10-Q10.110/31/20180-20388
10.67 
Joinder Agreement, dated as of August 22, 2018, by and between Reaction Technology Epi, LLC and Reaction Tech RE, LLC and Bank of America, N.A., as agent.
10-Q10.210/31/20180-20388
10.68 
U.S. Subsidiary Guarantor Supplement, dated as of August 22, 2018, made by Reaction Technology Epi, LLC and Reaction Tech RE, LLC in favor of the note purchasers and the other holders.
10-Q10.310/31/20180-20388
10.69 
Cross Border Subsidiary Guarantor Supplement, dated as of August 22, 2018, made by Reaction Technology Epi, LLC and Reaction Tech RE, LLC in favor of the note purchasers and the other holders.
10-Q10.410/31/20180-20388
10.70 
Note Purchase Agreement Subsidiary Guarantor Supplement, dated as of August 22, 2018, made by Reaction Technology Epi, LLC and Reaction Tech RE, LLC in favor of the note purchasers and the other holders.
10-Q10.510/31/20180-20388
10.71 
Joinder Agreement, dated as of October 22, 2018, by and between each of (i) Littelfuse International Holding, LLC, (ii) Littelfuse Holding, LLC and (iii) Monolith Semiconductor Inc. and Bank of America, N.A., as agent.
10-K10.10302/22/20190-20388
Table of Contents



     

 

Incorporated by Reference Herein

Exhibit No.

  Description FormExhibitFiling DateFile No.

10.49

  

Subsidiary Guaranty Agreement, dated as of February 15, 2017.

 

8-K

10.2

2/15/2017

0-20388

         

10.50*

  

Restated Littelfuse, Inc. Supplemental Retirement and Savings Plan, effective January 1, 2017. ++

     
         

10.51*

  

Amended and Restated Littelfuse, Inc. 401(k) Retirement and Savings Plan, effective January 1, 2017.++

     
         

10.52*

  

Summary of Director Compensation.++

     
         

21.1*

  

Subsidiaries.

     
         

23.1*

  

Consent of Independent Registered Public Accounting Firm.

     
         

31.1*

  

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

     
         

31.2*

  

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

     
         

32.1+++

  

Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

     
         

101.INS*

  

XBRL Instance Document.

     
         

101.SCH*

  

XBRL Taxonomy Extension Schema Document.

     
         

101.CAL*

  

XBRL Taxonomy Extension Calculation Linkbase Document.

     
         

101.LAB*

  

XBRL Taxonomy Extension Label Linkbase Document.

     
         

101.PRE*

  

XBRL Taxonomy Extension Presentation Linkbase Document.

     
         

101.DEF*

  

XBRL Taxonomy Extension Definition Linkbase Document.

     
         


 Incorporated by Reference Herein
Exhibit No. 

Description
FormExhibitFiling DateFile No.
10.72 
U.S. Subsidiary Guarantor Supplement, dated as of October 22, 2018, made by Littelfuse International Holding, LLC, Littelfuse Holding, LLC and Monolith Semiconductor, Inc. in favor of the note purchasers and the other holders.
10-K10.10402/22/20190-20388
10.73 
U.S. (November 2017) Subsidiary Guarantor Supplement, dated as of October 22, 2018, made by Littelfuse International Holding, LLC, Littelfuse Holding, LLC and Monolith Semiconductor, Inc. in favor of the note purchasers and the other holders.
10-K10.10502/22/20190-20388
10.74 
Cross Border Assumption Agreement, dated as of October 3, 2018, made by each of New Dutch B.V. and IXYS Dutch B.V. in favor of the note purchasers and the other holders.
10-K10.10602/22/20190-20388
10.75 
Cross Border Subsidiary Guarantor Supplement, dated as of October 22, 2018, made by Littelfuse International Holding, LLC, Littelfuse Holding, LLC and Monolith Semiconductor, Inc. in favor of the note purchasers and the other holders.
10-K10.10702/22/20190-20388
10.76 
Consulting Agreement Extension entered into between Littelfuse, Inc. and Dr. Nathan Zommer, dated July 25, 2019. ++
10-Q10.110/30/20190-20388
10.77* 
Amended and Restated Employment Agreement entered into between Littelfuse Europe GmbH and Alexander Conrad, effective April 1, 2019. ++
    
10.78* 
Summary of Non-Employee Director Compensation.++
    
21.1* 
Subsidiaries.
    
23.1* 
Consent of Independent Registered Public Accounting Firm.
    
31.1* 
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
    
31.2* 
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
    
32.1+++ 
Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
    
101.INS* XBRL Instance Document.    
101.SCH* XBRL Taxonomy Extension Schema Document.    
101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document.    
101.LAB* XBRL Taxonomy Extension Label Linkbase Document.    
101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document.    
101.DEF* XBRL Taxonomy Extension Definition Linkbase Document.    
104 The cover page on this Annual Report on Form 10-K for the fiscal year ended December 28, 2019, formatted in Inline XBRL and contained in Exhibit 101.    
* Filed with this Report.

+ Exhibits and schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. Littelfuse agrees to furnish a supplemental copy of an omitted exhibit or schedule to the SEC upon request.

++ Management contract or compensatory plan or arrangement.

+++ Furnished with this Report.

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